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                                                                     EXHBIT 99.1

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                                CREDIT AGREEMENT

                         Dated as of September 5, 1997

                                     among

                            NABORS INDUSTRIES, INC.,
                               as a Borrower, and

                         NABORS ALASKA DRILLING, INC.,
                           NABORS DRILLING USA, INC.,
                          NABORS INTERNATIONAL, INC.,
                       SUNDOWNER OFFSHORE SERVICES, INC.,
                      NABORS OFFSHORE DRILLING, INC., and
                     NABORS DRILLING INTERNATIONAL LIMITED,
                          as Subsidiary Borrowers, and


                              THE OTHER SUBSIDIARY
                   BORROWERS FROM TIME TO TIME PARTY HERETO,


                         BANK OF AMERICA NATIONAL TRUST
                            AND SAVINGS ASSOCIATION,
                          as Administrative Agent and
             as Letter of Credit Issuing Bank and Swing Loan Bank,

                 WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION
                            as Documentation Agent,

                                      and


                     THE OTHER FINANCIAL INSTITUTIONS FROM
                           TIME TO TIME PARTY HERETO



                                  Arranged by


                          BANCAMERICA SECURITIES, INC.



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                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
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<S>                                                                                                                    <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
   1.01 Certain Defined Terms   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
   1.02 Other Interpretive Provisions   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
   1.03 Accounting Principles   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16

ARTICLE II THE CREDITS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
   2.01 Amounts and Terms of Commitments; Loan Accounts   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
              (a) The Revolving Credit  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
              (b) Swing Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
              (c) Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
              (d) Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
   2.02 Certain Pricing Terms   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
   2.03 Procedure for Borrowing.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
              (a) Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
              (b) Funding Mechanics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
              (c) Interest Rate Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
   2.04 Conversion and Continuation Elections Regarding Loans   . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
   2.05 Voluntary Termination or Reduction of Commitments   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
   2.06 Optional Prepayments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
   2.07 Mandatory Prepayments of Loans  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
   2.08 Repayment   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
              (a) The Revolving Credit  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
              (b) Swing Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
   2.09 Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
   2.10 Fees  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
              (a) Arrangement, Agency Fees  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
              (b) Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
   2.11 Computation of Fees and Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
   2.12 Payments by the Borrowers   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
   2.13 Payments by the Banks to the Agent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
   2.14 Sharing of Payments, Etc.   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
   2.15 Special Provisions for Swing Loans  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
              (a) Banks to Make Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
              (b) Participations in Swing Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
              (c) Acknowledged Privity  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
              (d) Unconditional Obligation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25

ARTICLE III THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
   3.01 The Letter of Credit Subfacility  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
   3.02 Issuance, Amendment and Renewal of Letters of Credit  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
   3.03 Risk Participations, Drawings and Reimbursements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
   3.04 Repayment of Participations   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29
   3.05 Role of the Issuing Bank  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
   3.06 Obligations Absolute  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
   3.07 Cash Collateral Pledge  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
   3.08 Letter of Credit Fees   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
              (a) Risk Participation Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
              (b) Fronting Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
</TABLE>





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<TABLE>
<S>                                                                                                                    <C>
              (c) Computation and Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
              (d) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
   3.09 Uniform Customs and Practice  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32

ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
   4.01 Taxes   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
   4.02 Illegality  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
   4.03 Increased Costs and Reduction of Return   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
   4.04 Funding Losses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
   4.05 Inability to Determine Rates  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
   4.06 Reserves on Offshore Rate Loans   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
   4.07 Survival  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36

ARTICLE V CONDITIONS PRECEDENT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
   5.01 Conditions of Initial Credit Extensions   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
              (a) Loan Documents  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
              (b) Resolutions; Incumbency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
              (c) Organization Documents; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
              (d) Legal Opinions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
              (e) Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
              (f) Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
              (g) Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
   5.02 Conditions of Initial Advance to each Subsidiary Borrower   . . . . . . . . . . . . . . . . . . . . . . . . .  37
   5.03 Conditions to All Credit Extensions   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
              (a) Notice, Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
              (b) Continuation of Representations and Warranties  . . . . . . . . . . . . . . . . . . . . . . . . . .  38
              (c) No Existing Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
              (d) Legality  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39

ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
   6.01 Corporate Existence and Power   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
   6.02 Corporate Authorization; No Contravention   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
   6.03 Governmental Authorization  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
   6.04 Binding Effect  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
   6.05 Litigation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
   6.06 No Default  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
   6.07 ERISA Compliance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
   6.08 Use of Proceeds; Margin Regulations   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
   6.09 Title to Properties   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
   6.10 Taxes   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
   6.11 Financial Condition   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
   6.12 Environmental Matters   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
   6.13 Regulated Entities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
   6.14 No Burdensome Restrictions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
   6.15 Copyrights, Patents, Trademarks and Licenses, etc.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
   6.16 Subsidiaries  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
   6.17 Insurance   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
   6.18 Labor Controversies   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
   6.19 Full Disclosure   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43

ARTICLE VII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
   7.01 Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
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<TABLE>
<S>                                                                                                                    <C>
   7.02 Certificates; Other Information   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
   7.03 Notices   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
   7.04 Preservation of Corporate Existence, Etc.   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
   7.05 Maintenance of Property   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
   7.06 Insurance   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
   7.07 Payment of Obligations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
   7.08 Compliance with Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
   7.09 Compliance with ERISA   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
   7.10 Inspection of Property and Books and Records  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
   7.11 Environmental Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
   7.12 Use of Proceeds   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
   7.13 New Subsidiary Guarantors.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
   7.14 Further Assurances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
   7.15 Certain Terms Concerning Subordinated Debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47

ARTICLE VIII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48
   8.01 Limitation on Liens   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48
   8.02 Disposition of Assets   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  50
   8.03 Consolidations and Mergers  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51
   8.04 Loans and Investments   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51
   8.05 Transactions with Affiliates  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52
   8.06 Use of Proceeds   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52
   8.07 Joint Ventures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52
   8.08 Change in Structure; Subsidiary Borrowers   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52
   8.09 ERISA   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
   8.10 Change in Business  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
   8.11 Accounting Changes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
   8.12 Foreign Subsidiary Indebtedness   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
   8.13 Capitalization Ratio  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
   8.14 Minimum Net Worth   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
   8.15 Interest Coverage Ratio   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
   8.16 Subsidiary Dividends  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
   8.17 Debt of SPVs; No Liens or Stock Held by SPVs  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54

ARTICLE IX EVENTS OF DEFAULT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
   9.01 Event of Default  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
              (a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
              (b) Representation or Warranty  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
              (c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
              (d) Other Defaults  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
              (e) Cross-Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
              (f) Insolvency; Voluntary Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55
              (g) Involuntary Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55
              (h) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55
              (i) Monetary Judgments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55
              (j) Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55
              (k) Guarantor Defaults  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56
   9.02 Remedies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56
   9.03 Rights Not Exclusive  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56

ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56
   10.01 Appointment and Authorization; Agent   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56
   10.02 Delegation of Duties   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  57
</TABLE>





                                    - iii -
<PAGE>   5



<TABLE>
<S>                                                                                                                    <C>
   10.03 Liability of Agent-Related Persons and Documentation Agent   . . . . . . . . . . . . . . . . . . . . . . . .  57
   10.04 Reliance by Agent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  57
   10.05 Notice of Default  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  58
   10.06 Credit Decision  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  58
   10.07 Indemnification of Agent-Related Persons and Documentation Agent   . . . . . . . . . . . . . . . . . . . . .  59
   10.08 Agent and Documentation Agent in Individual Capacity   . . . . . . . . . . . . . . . . . . . . . . . . . . .  59
   10.09 Successor Agent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  59
   10.10 Withholding Tax  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  60
   10.11 Documentation Agent; Arranger  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  61

ARTICLE XI MISCELLANEOUS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  62
   11.01 Amendments and Waivers   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  62
   11.02 Notices  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  62
   11.03 No Waiver; Cumulative Remedies   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  63
   11.04 Costs and Expenses   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  63
   11.05 Indemnification  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  63
   11.06 Payments Set Aside   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  64
   11.07 Successors and Assigns   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  64
   11.08 Assignments, Participations, etc.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  64
   11.09 Confidentiality  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  65
   11.10 Set-off  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  66
   11.11 Company as Subsidiary Borrower Representative  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  66
   11.12 Interest   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67
   11.13 Indemnity and Subrogation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67
   11.14 Notification of Addresses, Lending Offices, Etc.   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67
   11.15 Counterparts   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  68
   11.16 Severability   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  68
   11.17 No Third Parties Benefited   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  68
   11.18 GOVERNING LAW AND JURISDICTION   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  68
   11.19 WAIVER OF JURY TRIAL   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69
   11.20 Entire Agreement   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69
</TABLE>





                                     - iv -
<PAGE>   6



SCHEDULES

Schedule 2.01             Commitments                           
Schedule 2.02             Pricing Chart                         
Schedule 6.16             Subsidiaries and Investments          
Schedule 8.01             Permitted Liens                       
Schedule 11.02            Lending Offices; Addresses for Notices


EXHIBITS

Exhibit A                 Form of Notice of Borrowing
Exhibit B                 Form of Notice of Conversion/Continuation
Exhibit C                 Form of Compliance Certificate
Exhibit D-1               Form of Legal Opinion of Outside Counsel to the
                          Company and Subsidiaries
Exhibit D-2               Form of Legal Opinion of Internal Counsel to the
                          Company and Subsidiaries
Exhibit E                 Form of Assignment and Acceptance
Exhibit F                 Form of Revolving Note
Exhibit G                 Form of Swing Loan Note
Exhibit H                 Form of Parent Guaranty
Exhibit I                 Form of Subsidiary Guaranty
Exhibit J                 Form of Subsidiary Borrower Counterpart
Exhibit K                 Form of Swing Loan Participation Certificate


     Certain schedules and the exhibits have been omitted. The Company agrees
to furnish to the Securities and Exchange Commission supplementally a copy of
any omitted schedule or exhibit.


                                     - v -
<PAGE>   7
                                CREDIT AGREEMENT


         This CREDIT AGREEMENT is entered into as of September 5, 1997, among
NABORS INDUSTRIES, INC., a Delaware corporation (the "Company"), NABORS ALASKA
DRILLING, INC., an Alaska corporation and a Wholly-Owned Subsidiary of the
Company, NABORS DRILLING USA, INC., a Delaware corporation and a Wholly-Owned
Subsidiary of the Company, NABORS INTERNATIONAL, INC., a Delaware corporation
and a Wholly-Owned Subsidiary of the Company, SUNDOWNER OFFSHORE SERVICES,
INC., a Nevada corporation and a Wholly-Owned Subsidiary of the Company, NABORS
OFFSHORE DRILLING, INC., a Delaware corporation and a Wholly-Owned Subsidiary
of the Company, NABORS DRILLING INTERNATIONAL LIMITED, a Delaware corporation
and a Wholly-Owned Subsidiary of the Company, the other Subsidiary Borrowers
(as defined herein) from time to time party to this Agreement, the several
financial institutions from time to time party to this Agreement (collectively,
the "Banks"; individually, a "Bank"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing Bank, as Swing Loan Bank and as administrative
agent (the "Agent") for the Banks and WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, as documentation agent (the "Documentation Agent").

         WHEREAS, the Company and the Subsidiary Borrowers have requested, and
the Banks have agreed to make available to the Company and the Subsidiary
Borrowers, a revolving credit facility, including a letter of credit
subfacility and swingline subfacility, upon the terms and conditions set forth
in this Agreement;

         NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, and for other good and valuable consideration
the receipt and sufficiency of which are acknowledged hereby, the parties
hereto agree as follows, intending to be legally bound:


                                   ARTICLE I

                                  DEFINITIONS

         1.01    Certain Defined Terms. The following terms have the following
meanings:

                 "Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a)
the acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of 50%
of the capital stock, partnership interests, membership interests or equity of
any Person, or otherwise causing any Person to become a Subsidiary, or (c) a
merger or consolidation or any other combination with another Person (other
than a Person that is a Subsidiary) provided that the Company or the Subsidiary
is the surviving entity.

                 "Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, membership
interests, by contract, or otherwise.

                 "Agent" means BofA in its capacity as administrative agent for
the Banks hereunder, and any successor agent arising under Section 10.09.





<PAGE>   8



                 "Agent-Related Persons" means BofA and any successor Agent
arising under Section 10.09 and any successor Issuing Bank or Swing Loan Bank
hereunder, together with their respective Affiliates (including the Arranger),
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.

                 "Agent's Payment Office" means the address for payments set
forth on Schedule 11.02 or such other address as the Agent may from time to
time specify.

                 "Agreement" means this Credit Agreement.

                 "Applicable Margin" means the amount determined in accordance
with the provisions of Section 2.02 of this Agreement.

                 "Arranger" means BancAmerica Securities, Inc., a Delaware
corporation.

                 "Assignee" has the meaning specified in subsection 11.08(a).

                 "Attorney Costs" of a Person means and includes all fees and
disbursements of any law firm or other external counsel and all disbursements
of internal counsel.

                 "Bank" has the meaning specified in the introductory clause
hereto. References to the "Banks" shall include BofA, including in its capacity
as Issuing Bank and in its capacity as Swing Loan Bank; for purposes of
clarification only, to the extent that BofA may have any rights or obligations
in addition to those of the Banks due to its status as Issuing Bank or Swing
Loan Bank, its status as such will be specifically referenced.

                 "Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.).

                 "Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the per annum rate of
interest in effect for such day as publicly announced from time to time by BofA
in San Francisco, California, as its "reference rate." (The "reference rate" is
a rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the reference rate announced by BofA shall
take effect at the opening of business on the day specified in the public
announcement of such change.

                 "Base Rate Loan" means a Revolving Loan or a Swing Loan that
bears interest based on the Base Rate.

                 "Basis Point" means one one-hundredth of one percent (1/100th
of 1%).

                 "BofA" means Bank of America National Trust and Savings
Association, a national banking association.

                 "Borrowers" means the Company, Nabors Alaska Drilling, Inc.,
Nabors Drilling USA, Inc., Nabors International, Inc., Sundowner Offshore
Services, Inc., Nabors Offshore Drilling, Inc., Nabors Drilling International
Limited, and the other Subsidiary Borrowers from time to time party hereto.

                 "Borrowing" means a borrowing hereunder consisting of
Revolving Loans or Swing Loans of the same Type made to a Borrower on the same
day by the Banks under Article II, and, other than in the case of Base Rate
Loans, having the same Interest Period.





                                     - 2 -
<PAGE>   9



                 "Borrowing Date" means any date on which a Borrowing occurs
under Article II.

                 "Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in Houston, Texas, New York, New York, or
San Francisco, California are authorized or required by law to close and, if
the applicable Business Day relates to any Offshore Rate Loan, means such a day
on which dealings are carried on in the applicable offshore dollar interbank
market.

                 "Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.

                 "Capital Lease" means a capital lease as determined in
accordance with GAAP.

                 "Capitalization Ratio" means, at any time, the ratio of
Consolidated Total Debt to Consolidated Total Capitalization.

                 "Cash Collateralize" means to pledge and deposit with or
deliver to the Agent, for the benefit of the Agent and the Banks, as collateral
for the Obligations of the Borrowers, cash or deposit account balances pursuant
to documentation in form and substance satisfactory to the Agent and the
Issuing Bank (which documents are hereby consented to by the Banks).
Derivatives of such term shall have corresponding meaning. Each of the Company
and each Borrower hereby grants the Agent, for the benefit of the Agent and the
Banks, a security interest in all such cash and deposit account balances, if
any, which are required pursuant to the terms of this Agreement. Cash
collateral shall be maintained in blocked, non-interest bearing deposit
accounts at BofA.

                 "Change of Control" means (a) purchase or acquisition,
directly or indirectly, by any "person" or "group" within the meaning of
Section 13(d)(3) and 14(d)(2) of the Securities and Exchange Act of 1934 (a
"Group"), of "beneficial ownership" (as such term is defined in Rule 13d-3
under the Exchange Act) of securities of the Company which, together with any
securities owned beneficially by any "affiliates" or "associates" of such Group
(as such terms are defined in Rule 12b-2 under the Exchange Act), shall
represent more than fifty percent (50%) of the combined voting power of the
Company's securities which are entitled to vote generally in the election of
directors and which are outstanding on the date immediately prior to the date
of such purchase or acquisition and controls the majority of the Board of
Directors; or (b) a sale of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole to any Person or Group (other
than to another Subsidiary Borrower(s)); or (c) the liquidation or dissolution
of the Company; or (d) the first day on which a majority of the Board of
Directors of the Company are not Continuing Directors (as herein defined). As
herein used, "Continuing Director" means any member of the Board of Directors
of the Company who (x) is a member of such Board of Directors as of the date of
this Agreement or (y) was nominated for election or elected to such Board of
Directors with the affirmative vote of two-thirds of the Continuing Directors
who were members of such Board of Directors at the time of such nomination or
election.

                 "Closing Date" means the date on which all conditions
precedent set forth in Section 5.01 are satisfied or waived by all Banks (or,
in the case of subsection 5.01(e), waived by the Person entitled to receive
such payment).





                                     - 3 -
<PAGE>   10



                 "Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.

                 "Commitment", as to each Bank, has the meaning specified in
Section 2.01.

                 "Commitment Fee" has the meaning set forth in subsection
2.10(b).

                 "Compliance Certificate" means a certificate substantially in
the form of Exhibit C.

                 "Consolidated EBITDA" means, for the relevant period, the sum
of: (a) the Consolidated Net Income for such period, (b) Consolidated Interest
Expense, (c) all taxes measured by income to the extent included in the
determination of such Consolidated Net Income and (d) all amounts treated as
expenses for depreciation and the amortization of intangibles of any kind for
such period to the extent included in the determination of such Consolidated
Net Income for the relevant period; provided, however, that Consolidated Net
Income shall be computed for the purposes of this definition (i) without regard
to non-recurring costs incurred in connection with any acquisition or non-cash
write-ups and write-downs, (ii) without giving effect to extraordinary losses
or extraordinary gains for such period, (iii) without including net income (or
loss) of any Person not a Subsidiary except to the extent of cash dividends or
distributions actually received by the Company and its Subsidiaries and (iv)
without including earnings in respect of assets or interests securing
Non-Recourse Debt.

                 "Consolidated Interest Expense" means, for the relevant
period, for the Company and its Subsidiaries, without duplication, the amount
of interest expense, determined on a consolidated basis in accordance with
GAAP, for such period on the aggregate principal amount of the Indebtedness of
the Company and its Subsidiaries.

                 "Consolidated Net Income" means, for any period, the net
income (or net loss) of the Company and its Subsidiaries for such period taken
as a single accounting period determined in accordance with GAAP.

                 "Consolidated Net Worth" means, at any date, an amount equal
to the consolidated stockholders' equity of the Company and its Subsidiaries
determined in accordance with GAAP determined as of such date, excluding (i)
any Redeemable Preferred Stock, (ii) the book value of any assets or interests
securing Non-Recourse Debt and the Non- Recourse Debt secured by a lien on such
assets or interests, (iii) the cumulative effect on retained earnings of the
net income or loss of any SPV, except to the extent that the Company and its
Subsidiaries have actually received cash in respect of dividends or
distributions from such Person, and (iv) the book value of all investments in
SPVs.

                 "Consolidated Total Assets" means, at any time, the aggregate
book value of assets of the Company and its Subsidiaries which would be shown
as assets on a consolidated balance sheet of the Company and its Subsidiaries
as of such time prepared in accordance with GAAP, after eliminating (x) all
amounts attributable to interests in SPVs and (y) the book value of assets or
interests securing Non-Recourse Debt.

                 "Consolidated Total Capitalization" means, at any time, the
sum of (a) Consolidated Total Debt and (b) Consolidated Net Worth for such
period.

                 "Consolidated Total Debt" means, for the Company and its
Subsidiaries, at any time, without duplication, the sum of: (a) Indebtedness
for borrowed money (including subordinated debt) or for the deferred purchase
price of property or services, and all other interest-bearing Indebtedness, (b)
obligations under leases which in





                                     - 4 -
<PAGE>   11



accordance with GAAP should be recorded as Capital Leases, and (c) all
Redeemable Preferred Stock, valued at the applicable redemption price.

                 "Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of that Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b) with
respect to any Surety Instrument (other than any Letter of Credit) issued for
the account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings or payments; (c) to purchase any materials, supplies
or other property from, or to obtain the services of, another Person if the
relevant contract or other related document or obligation requires that payment
for such materials, supplies or other property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or other
property is ever made or tendered, or such services are ever performed or
tendered, or (d) in respect of any Swap Contract. The amount of any Contingent
Obligation shall, in the case of Guaranty Obligations, be deemed equal to the
stated or determinable amount of the primary obligation in respect of which
such Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and in the case of
other Contingent Obligations other than in respect of Swap Contracts, shall be
equal to the maximum reasonably anticipated liability in respect thereof and,
in the case of Contingent Obligations in respect of Swap Contracts, shall be
equal to the Swap Termination Value.

                 "Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument,
document or agreement to which such Person is a party or by which it or any of
its property is bound.

                 "Conversion/Continuation Date" means any date on which, under
Section 2.04, a Borrower (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.

                 "Credit Extension" means and includes (a) the making of any
Revolving Loan hereunder, (b) the making of any Swing Loan hereunder, and (c)
the Issuance of any Letter of Credit hereunder.

                 "Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.

                 "Default Rate" has the meaning set forth in subsection
2.09(c).

                 "Documentation Agent" means Wells Fargo Bank (Texas), National
Association, in its capacity as documentation agent.

                 "Dollars", "dollars" and "$" each mean lawful money of the
United States.





                                     - 5 -
<PAGE>   12



                 "Effective Amount" means (i) with respect to any Revolving
Loans, on any date, the aggregate outstanding principal amount thereof after
giving effect to any Borrowings and prepayments or repayments of Revolving
Loans occurring on such date; (ii) with respect to any Swing Loans, on any
date, the aggregate outstanding principal amount thereof after giving effect to
any Borrowings and prepayments or repayments of Swing Loans occurring on such
date; and (iii) with respect to any outstanding L/C Obligations on any date,
the amount of such L/C Obligations on such date after giving effect to any
Issuances of Letters of Credit occurring on such date and any other changes in
the aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements of outstanding unpaid drawings under any Letters
of Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.

                 "Eligible Assignee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $200,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital and
surplus of at least $200,000,000, provided that such bank is acting through a
branch or agency located in the United States; and (c) a Person that is
primarily engaged in the business of commercial banking and that is (i) a
Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.

                 "Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.

                 "Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land
use matters.

                 "ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.

                 "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

                 "ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due





                                     - 6 -
<PAGE>   13



but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.

                 "Event of Default" means any of the events or circumstances
specified in Section 9.01.

                 "Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.

                 "Existing HKB Secured Creditor" means The Hongkong and
Shanghai Banking Corporation Limited ("HKB") as lender under the Credit
Agreement dated March 24, 1995, as amended, between Nabors Drilling USA, Inc.
and HKB.

                 "FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal functions.

                 "Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.

                 "Fee Letter" has the meaning specified in subsection 2.10(a).

                 "Foreign Subsidiary" means, as of any date of determination, a
Subsidiary which is incorporated or organized under the laws of any
jurisdiction other than the District of Columbia or the United States of
America or any state thereof.

                 "FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its principal
functions.

                 "Fronting Fee" has the meaning set forth in Section 3.08(b)
hereof.

                 "Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, net income taxes and franchise taxes),
and all liabilities with respect thereto, imposed by any jurisdiction on
account of amounts payable or paid pursuant to Section 4.01.

                 "GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of
the date of determination.

                 "Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.





                                     - 7 -
<PAGE>   14



                 "Guaranties" means, collectively, the Parent Guaranty and the
Subsidiary Guaranties.

                 "Guarantors" means the Company and each of the Subsidiary
Guarantors.

                 "Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."

                 "Honor Date" has the meaning specified in subsection 3.03(b).

                 "IBOR Rate" means, for any Interest Period, with respect to
IBOR Rate Loans comprising part of the same Borrowing, the rate of interest per
annum (rounded upward to the next 1/16th of 1%), determined by the Agent to be,
the rate at which dollar deposits in the approximate amount of BofA's Offshore
Rate Loan for such Interest Period would be offered by BofA's Grand Cayman
Branch, Grand Cayman B.W.I. (or such other office as may be designated for such
purpose by BofA), to major banks in the offshore dollar interbank market at
their request at approximately 11:00 a.m. (New York City time) two Business
Days prior to the commencement of such Interest Period.

                 "IBOR Rate Loan" means a Swing Loan that bears interest based 
on the IBOR Rate.

                 "Indebtedness" of any Person means, without duplication, (a)
all indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all reimbursement or payment obligations, whether matured or not
matured, with respect to outstanding Surety Instruments; (d) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in
the event of default are limited to repossession or sale of such property); (f)
all obligations with respect to Capital Leases; (g) all indebtedness referred
to in clauses (a) through (f) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; and (h) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (g) above; provided, however, Indebtedness shall not include
Non-Recourse Debt. For all purposes of this Agreement, the Indebtedness of any
Person shall include all recourse Indebtedness of any partnership in which such
Person is a general partner except to the extent recourse against such Person
is limited by the instruments governing such Indebtedness.

                 "Indemnified Liabilities" has the meaning specified in Section
11.05.

                 "Indemnified Person" has the meaning specified in Section
11.05.

                 "Independent Auditor" has the meaning specified in subsection
7.01(a).

                 "Insolvency Proceeding" means, with respect to any Person, (a)
any case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit





                                     - 8 -
<PAGE>   15



of creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.

                 "Interest Coverage Ratio" means, for any period, the ratio of
Consolidated EBITDA to Consolidated Interest Expense.

                 "Interest Payment Date" means, as to any Loan other than a
Base Rate Loan, the last day of each Interest Period applicable to such Loan
and, as to any Base Rate Loan, the last Business Day of each calendar quarter
and each date such Loan is converted into another Type of Loan or is paid or
payable pursuant to the terms hereof (whether by maturity, optional prepayment,
mandatory prepayment or acceleration); provided, however, that if any Interest
Period for an Offshore Rate Loan exceeds three months, the date that falls
three months after the beginning of such Interest Period and after each
Interest Payment Date thereafter is also an Interest Payment Date.

                 "Interest Period" means, as to any Offshore Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or continued
as an Offshore Rate Loan, and ending on the date one, two, three or six months
thereafter, in the case of LIBOR Rate Loans, or one to seven days thereafter,
in the case of IBOR Rate Loans, as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation;

         provided that:

                          (i)     if any Interest Period would otherwise end on
         a day that is not a Business Day, that Interest Period shall be
         extended to the following Business Day unless, in the case of a LIBOR
         Rate Loan, the result of such extension would be to carry such
         Interest Period into another calendar month, in which event such
         Interest Period shall end on the preceding Business Day;

                          (ii)    any Interest Period pertaining to a LIBOR
         Rate Loan that begins on the last Business Day of a calendar month (or
         on a day for which there is no numerically corresponding day in the
         calendar month at the end of such Interest Period) shall end on the
         last Business Day of the calendar month at the end of such Interest
         Period; and

                          (iii)   no Interest Period for any Loan shall extend
         beyond the Maturity Date.

                 "Investment Grade" means a rating of BBB-/Baa3 or higher.

                 "Investments" has the meaning set forth in Section 8.04.

                 "IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.

                 "Issuance Date" has the meaning specified in subsection
3.01(a).

                 "Issue" means, with respect to any Letter of Credit, to issue
or to extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.





                                     - 9 -
<PAGE>   16



                 "Issuing Bank" means BofA in its capacity as issuer of one or
more Letters of Credit hereunder, together with any replacement letter of
credit issuer arising under subsection 10.01(b) or Section 10.09.

                 "Joint Venture" means a single-purpose corporation,
partnership, limited liability company, joint venture or other legal
arrangement (whether created by contract or conducted through a separate legal
entity) now or hereafter formed by the Company or any of its Subsidiaries with
another Person in order to conduct a common venture or enterprise with such
Person.

                 "L/C Advance" means each Bank's participation in any L/C
Borrowing in accordance with its Pro Rata Share.

                 "L/C Amendment Application" means an application form for
amendment of outstanding standby letters of credit as shall at any time be in
use at the Issuing Bank, as the Issuing Bank may request.

                 "L/C Application" means an application form for issuances of
standby letters of credit as shall at any time be in use at the Issuing Bank,
as the Issuing Bank may request.

                 "L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed on the
date when made in accordance with Section 3.03(b) nor converted into a
Borrowing of Revolving Loans in accordance with subsection 3.03(c).

                 "L/C Commitment" means the commitment of the Issuing Bank to
Issue, and the commitment of the Banks severally to participate in, Letters of
Credit from time to time Issued or outstanding under Article III, in an
aggregate amount not to exceed on any date the amount of $25,000,000, as the
same shall be reduced as a result of a reduction in the L/C Commitment pursuant
to Section 2.05; provided that the L/C Commitment is a part of the combined
Commitments, rather than a separate, independent commitment, and, therefore, in
no event may at any time exceed the combined Commitments.

                 "L/C Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding, plus (b)
the amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding L/C Borrowings.

                 "L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Issuing Bank's standard form
documents for letter of credit issuances.

                 "Lending Office" means, as to any Bank, the office or offices
of such Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 11.02, or such other
office or offices as such Bank may from time to time notify the Company and the
Agent.

                 "Letters of Credit" means any letters of credit Issued by the
Issuing Bank pursuant to Article III.

                 "LIBOR Rate" means, for any Interest Period, with respect to
LIBOR Rate Loans comprising part of the same Borrowing, the rate of interest
per annum determined by the Agent to be the rate of interest at which dollar
deposits in the approximate amount of the amount of the Loan to be made or
continued as, or converted into, a LIBOR Rate Loan by the Agent (in its
capacity as a Bank) or any Agent-Related Person and having a





                                     - 10 -
<PAGE>   17



maturity comparable to such Interest Period would be offered by BofA to major
banks in the London interbank market at their request at approximately 11:00
a.m. (London time) two Business Days prior to the commencement of such Interest
Period.

                 "LIBOR Rate Loan" means a Revolving Loan that bears interest
based on the LIBOR Rate.

                 "Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention agreement,
the interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing
of any financing statement naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code or any comparable law) and
any contingent or other agreement to provide any of the foregoing, but not
including the interest of a lessor under an operating lease.

                 "Loan" means an extension of credit by a Bank to the Company
under Article II in the form of a Revolving Loan or a Swing Loan.

                 "Loan Documents" means this Agreement, the Notes, the
Guaranties, the Fee Letter, the L/C-Related Documents, and all other documents
delivered to the Agent or any Bank in connection herewith.

                 "Majority Banks" means at any time Banks then holding at least
66-2/3% of the then aggregate unpaid principal amount of the Loans, or, if no
such principal amount is then outstanding, Banks then having at least 66-2/3%
of the Commitments.

                 "Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.

                 "Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole; (b) a material impairment of the ability of the Company, the
Subsidiary Borrowers and the Subsidiary Guarantors, taken as a whole, to
perform under the Loan Documents and to avoid any Event of Default; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against the Company, the Subsidiary Borrowers and the Subsidiary
Guarantors of the Loan Documents, taken as a whole.

                 "Material Subsidiary" means a Subsidiary of the Company with
total assets with a book value equal to five percent (5%) or more of
Consolidated Total Assets.

                 "Maturity Date" means September 5, 2002.

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

                 "Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or, during
the preceding three calendar years, has made, or been obligated to make,
contributions.

                 "Non-Investment Grade" means a rating of BB+/Ba1 or lower.





                                     - 11 -
<PAGE>   18



                 "Non-Recourse Debt" means, with respect to any Person,
Indebtedness of such Person incurred after the date of this Agreement for the
purpose of financing the cost of acquiring or constructing assets after the
date of this Agreement, if the obligee has no recourse to such Person except as
to certain named or described assets acquired with the proceeds of such
Indebtedness, and Capital Leases entered into by a Person after the date of
this Agreement (with respect to property hereafter acquired) if there is no
recourse to such Person under such Capital Lease.

                 "Notes" means the Revolving Notes and the Swing Loan Notes.

                 "Notice of Borrowing" means a notice in substantially the form
of Exhibit A.

                 "Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.

                 "Obligations" of a Borrower means all advances, debts,
liabilities, obligations, covenants and duties arising under any Loan Document
owing by such Borrower to any Bank, the Agent, or any Indemnified Person,
whether direct or indirect (including those acquired by assignment), absolute
or contingent, due or to become due, now existing or hereafter arising. Unless
otherwise specified, "Obligations" shall refer to all of the Obligations of the
Company and the other Borrowers under the Loan Documents.

                 "Offshore Rate Loan" means an IBOR Rate Loan or a LIBOR Rate
Loan.

                 "Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all resolutions of the
board of directors (or any committee thereof) of such corporation applicable to
this Agreement or the transactions contemplated hereby.

                 "Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.

                 "Parent Guaranty" means the Guaranty substantially in the form
of Exhibit "H" hereto executed by the Company, in favor of the Agent and the
Banks, as the same may be amended, supplemented or otherwise modified from time
to time.

                 "Participant" has the meaning specified in subsection
11.08(d).

                 "PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.

                 "Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Company or any Subsidiary
of the Company sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding five (5) plan years.

                 "Permitted Liens" has the meaning specified in Section 8.01.

                 "Permitted Lines of Business" has the meaning set forth in
Section 8.10.





                                     - 12 -
<PAGE>   19



                 "Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or other entity or Governmental
Authority.

                 "Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company or any Subsidiary of the Company sponsors or
maintains or to which the Company or any Subsidiary of the Company makes, is
making, or is obligated to make contributions and includes any Pension Plan.

                 "Pricing Level" means Pricing Level I, II, III, IV, V or VI,
as applicable, as set forth in Schedule 2.02 attached hereto.

                 "Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Bank's Commitment divided by the combined
Commitments of all Banks.

                 "Rating" means the rating assigned by the applicable Rating
Agency to senior unsecured (non-credit enhanced) long-term debt of the Company.

                 "Rating Agencies" means S&P and Moody's, respectively.

                 "Redeemable Preferred Stock" means preferred stock that has,
or is convertible into any security that has, mandatory redemption or
repurchase requirements (other than those exercisable solely at the option of
the issuer of said stock) on or prior to the Revolving Termination Date.

                 "Reportable Event" means, any of the events set forth in
Section 4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.

                 "Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.

                 "Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants, the Vice President of Finance or the treasurer of the Company, or
any other officer having substantially the same authority and responsibility.

                 "Revolving Loan" has the meaning specified in Section 2.01(a),
and may be a Base Rate Loan or a LIBOR Rate Loan.

                 "Revolving Note" means a promissory note in substantially the
form of Exhibit "F" hereto, duly executed and delivered to the Agent by a
Borrower and payable to the order of a Bank in the amount of such Bank's
Commitment, including any amendment, modification, renewal or replacement of
such promissory note.

                 "Revolving Termination Date" means the earlier to occur of:

                          (a)     the Maturity Date; and

                          (b)     the date on which the Commitments terminate
         in accordance with the provisions of this Agreement.





                                     - 13 -
<PAGE>   20



                 "Risk Participation Fee" means the fee payable pursuant to
subsection 3.08(a) hereof, calculated in accordance with Section 2.02 of this
Agreement.

                 "S&P" means Standard & Poor's Corporation.

                 "SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.

                 "SPV" or "Special Purpose Vehicle" means any Person in which
the Company and/or one or more of its Subsidiaries has an equity interest that
is not a Borrower or a Guarantor and that is designated by the Company as an
SPV, provided, that the requirements of Section 8.17 are satisfied. The Company
may elect to treat any Subsidiary, including a consolidated Subsidiary, as an
SPV (provided such Subsidiary would otherwise qualify as such under Section
8.17), and thereafter such entity shall be considered an "SPV" for purposes of
this Agreement and shall no longer be considered a "Subsidiary" for purposes of
this Agreement. The Company may rescind any such prior election, by giving
written notice thereof to the Agent specifying the name of such SPV, and the
effective date of such election, which shall be a date within sixty (60) days
after the date such notice is given. The election to treat a particular Person
as an SPV may only be made once.

                 "Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, Joint Venture or other business entity
(other than an SPV) of which more than 50% (or 50%, in the case of entities
that are consolidated for financial reporting purposes with the Company
pursuant to GAAP) of the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.

                 "Subsidiary Borrower" means each Subsidiary that has executed
and delivered this Agreement (including by means of execution and delivery of a
Subsidiary Borrower Counterpart) and has satisfied the requirements of Section
5.02 of this Agreement, and its permitted successors and assigns.

                 "Subsidiary Borrower Counterpart" means a counterpart in
substantially the form of Exhibit "J" hereto.

                 "Subsidiary Guaranties" means each of the Guaranties
substantially in the form of Exhibit "I" hereto executed by each of the
Subsidiary Guarantors, each in favor of the Agent and the Banks, as they may be
amended, supplemented or otherwise modified from time to time.

                 "Subsidiary Guarantors" means the Subsidiary Borrowers, each
of whom have executed a Subsidiary Guaranty, and any other Subsidiaries who
execute a Guaranty in favor of the Agent and the Banks, and "Subsidiary
Guarantor" means a single such Subsidiary Guarantor.

                 "Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.

                 "Swap Contract" means any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option,





                                     - 14 -
<PAGE>   21



interest rate option, forward foreign exchange transaction, cap, collar or
floor transaction, currency swap, cross- currency rate swap, swaption, currency
option or any other, similar transaction (including any option to enter into
any of the foregoing) or any combination of the foregoing, and, unless the
context otherwise clearly requires, any master agreement relating to or
governing any or all of the foregoing.

                 "Swap Termination Value" means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include any Bank).

                 "Swing Loan" has the meaning set forth in Section 2.01(b), and
may be a Base Rate Loan or an IBOR Rate Loan.

                 "Swing Loan Bank" means BofA, its successors and assigns.

                 "Swing Loan Commitment" means the commitment of the Swing Loan
Bank to make loans from time to time pursuant to subsection 2.01(b) in an
aggregate amount not to exceed on any date the amount of $10,000,000 (in
integral multiples of $500,000), as the same shall be reduced as a result of a
reduction in the Swing Loan Commitment pursuant to Section 2.05; provided that
the Swing Loan Commitment is a part of the combined Commitments, rather than a
separate, independent commitment, and, therefore, in no event may at any time
exceed the combined Commitments.

                 "Swing Loan Note" means a promissory note in substantially the
form of Exhibit "G" hereto, duly executed and delivered to the Agent by a
Borrower and payable to the order of the Swing Loan Bank in the amount of its
Swing Loan Commitment, including any amendment, modification, renewal or
replacement of such promissory note.

                 "Swing Loan Participation Certificate" means a participation
certificate substantially in the form of Exhibit "K".

                 "Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of
each Bank and the Agent, respectively, taxes imposed on or measured by its net
income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Bank or the Agent, as the case may be, is organized or
maintains a Lending Office.

                 "Type" means a Base Rate Loan, a LIBOR Rate Loan or an IBOR
Rate Loan.

                 "Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

                 "United States" and "U.S." each means the United States of
America.

                 "Wholly-Owned Subsidiary" means any corporation in which
(other than directors' qualifying shares required by law) 100% of the capital
stock of each class having ordinary voting power, and 100% of the capital stock
of every other class, in each





                                     - 15 -
<PAGE>   22



case, at the time as of which any determination is being made, is owned,
beneficially and of record, by the Company, or by one or more of the other
Wholly-Owned Subsidiaries, or both.

         1.02    Other Interpretive Provisions. (a) The meanings of defined
terms are equally applicable to the singular and plural forms of the defined
terms.

                 (b)      The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.

                 (c)  (i)         The term "documents" includes any and all
         instruments, documents, agreements, certificates, indentures, notices
         and other writings, however evidenced.

                      (ii)        The term "including" is not limiting and
         means "including without limitation."

                      (iii)       In the computation of periods of time from a
         specified date to a later specified date, the word "from" means "from
         and including"; the words "to" and "until" each mean "to but
         excluding", and the word "through" means "to and including."

                 (d)      Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.

                 (e)      The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.

                 (f)      This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative
and shall each be performed in accordance with their terms. Unless otherwise
expressly provided, any reference to any action of the Agent or the Banks by
way of consent, approval or waiver shall be deemed modified by the phrase "in
its/their sole discretion."

                 (g)      This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent,
the Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agent merely
because of the Agent's or Banks' involvement in their preparation.

         1.03    Accounting Principles. (a) Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied.

                 (b)      References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.





                                     - 16 -
<PAGE>   23



                                   ARTICLE II

                                  THE CREDITS

         2.01    Amounts and Terms of Commitments; Loan Accounts.

                 (a)      The Revolving Credit. Each Bank severally agrees, on
the terms and conditions set forth herein, to make loans to the Borrowers (each
such loan, a "Revolving Loan") from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date, in an aggregate
amount not to exceed at any time outstanding the amount set forth on Schedule
2.01 (such amount, as the same may be reduced under Section 2.05 or as a result
of one or more assignments under Section 11.08, the Bank's "Commitment");
provided, however, that, after giving effect to any Borrowing of Revolving
Loans, the Effective Amount of all outstanding Revolving Loans and Swing Loans,
together with the Effective Amount of all L/C Obligations, shall not at any
time exceed the combined Commitments; and provided further, that (i) the
Effective Amount of the Revolving Loans of any Bank, plus (ii) the aggregate
principal amount of such Bank's participation in the Swing Loans, plus (iii) if
such Bank is the Swing Loan Bank, the principal amount of Swing Loans in which
other Banks have not participated, plus (iv) the participation of such Bank in
the Effective Amount of all L/C Obligations, shall not at any time exceed such
Bank's Commitment. Within the limits of each Bank's Commitment, and subject to
the other terms and conditions hereof, the Borrowers may borrow under this
subsection 2.01(a), prepay under Section 2.06 and reborrow under this
subsection 2.01(a).

                 (b)      Swing Loan Commitment. Subject to the terms and
conditions of this Agreement, the Swing Loan Bank agrees to make one or more
loans to the Borrowers (each such loan, a "Swing Loan") from time to time on
any Business Day during the period from the Closing Date to the Revolving
Termination Date, in an aggregate amount not to exceed the Swing Loan
Commitment; provided, however, that, after giving effect to any Borrowing of
Swing Loans, the Effective Amount of all outstanding Revolving Loans and all
outstanding Swing Loans, together with the Effective Amount of all L/C
Obligations, shall not at any time exceed the combined Commitments. Within the
limits of the Swing Loan Bank's Swing Loan Commitment, and subject to the other
terms and conditions hereof, the Borrowers may borrow Swing Loans under this
subsection 2.01(b), prepay Swing Loans under Section 2.06 and reborrow Swing
Loans under this subsection 2.01(b).

                 (c)      Loan Accounts. The Loans made by each Bank and the
Letters of Credit Issued by the Issuing Bank shall be evidenced by one or more
accounts or records maintained by such Bank or Issuing Bank, as the case may
be, in the ordinary course of business. The accounts or records maintained by
the Agent, the Issuing Bank and each Bank shall be conclusive absent manifest
error of the amount of the Loans made by the Banks to each Borrower and the
Letters of Credit Issued hereunder, and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of any Borrower hereunder to pay any amount
owing by such Borrower with respect to the Loans made to such Borrower or any
Letter of Credit issued for the account of such Borrower.

                 (d)      Notes. Upon the request of any Bank made through the
Agent, the Revolving Loans made by such Bank may be evidenced by one or more
Revolving Notes, instead of or in addition to loan accounts, and upon the
request of the Swing Loan Bank made through the Agent, the Swing Loans may be
evidenced by one or more Swing Notes, instead of or in addition to loan
accounts. Each Bank may endorse on the schedules annexed to its Note(s) the
date, amount and maturity of each Loan made by it and the amount of each
payment of principal made by or on behalf of the relevant Borrower with





                                     - 17 -
<PAGE>   24



respect thereto. Each such Bank is irrevocably authorized by the Borrowers to
endorse its Note(s) and each Bank's record shall be conclusive absent manifest
error; provided, however, that the failure of a Bank to make, or an error in
making, a notation thereon with respect to any Loan shall not limit or
otherwise affect the obligations of the Borrowers hereunder or under any such
Note to such Bank.

         2.02    Certain Pricing Terms. The Applicable Margin, Commitment Fee
and Risk Participation Fee applicable under this Agreement at any time shall be
calculated as the respective number of Basis Points per annum specified in
Schedule 2.02 attached hereto in the column identified by the Pricing Level
corresponding to the then applicable Rating assigned by the Rating Agencies;
provided, however, that (a) if different Ratings are assigned by S&P and
Moody's and both ratings are Investment Grade or both ratings are
Non-Investment Grade, then the higher of the two Ratings shall control, and (b)
if different Ratings are assigned by S&P and Moody's and one Rating is
Investment Grade and one Rating is Non-Investment Grade, then the lower of the
two Ratings shall control. If any Rating established by any of the Rating
Agencies shall be changed, such change shall be effective for purposes of the
determination of the Applicable Margin, Commitment Fee and Risk Participation
Fee hereunder, respectively, as of the date on which it is first announced by
the applicable Rating Agency; provided, however, that the Agent shall not be
deemed to have notice of any change in any Rating unless it receives notice
thereof from the Company or any Bank, together with a copy of the announcement
from the applicable Rating Agency. The Company shall give written notice to the
Agent and the Banks of any Ratings issued by the Rating Agencies, and of any
changes to such Ratings, within three (3) Business Days thereof.

         2.03    Procedure for Borrowing.

                 (a)      Notice of Borrowing.

                          (i)     Revolving Loans. Each Borrowing of Revolving
         Loans shall be made upon the irrevocable written notice by any
         Borrower delivered to the Agent in the form of a Notice of Borrowing,
         which notice must be received by the Agent prior to (x) 11:30 a.m.
         (Houston time) three (3) Business Days prior to the requested
         Borrowing Date, in the case of LIBOR Rate Loans, and (y) 1:00 p.m.
         (Houston time) one Business Day prior to the requested Borrowing Date,
         in the case of Base Rate Loans, specifying: (A) the name of the
         Borrower; (B) the amount of the Borrowing, which shall be in an
         aggregate minimum amount of $1,000,000 or any multiple of $1,000,000
         in excess thereof; (C) the requested Borrowing Date, which shall be a
         Business Day; (D) the Type of Loans comprising the Borrowing; and (E)
         the duration of the Interest Period applicable to any LIBOR Rate Loans
         included in such notice. If the Notice of Borrowing fails to specify
         the duration of the Interest Period for any Borrowing comprised of
         LIBOR Rate Loans, such Interest Period shall be one month.

                          (ii)    Swing Loans. Each Borrowing of Swing Loans
         shall be made upon the irrevocable written notice by any Borrower
         delivered to the Agent (with a copy to the Swing Loan Bank) in the
         form of a Notice of Borrowing, which notice must be received by the
         Agent and the Swing Loan Bank at or prior to (x) 11:30 a.m. (Houston
         time) on the requested Borrowing Date, in the case of IBOR Rate Loans,
         and (y) 2:00 p.m. (Houston time) on the requested Borrowing Date, in
         the case of Base Rate Loans, specifying: (A) the name of the Borrower;
         (B) the amount of the Borrowing, which shall be in an aggregate
         minimum amount of $500,000 or any integral multiple of $500,000 in
         excess thereof; (C) the requested Borrowing Date, which shall be a
         Business Day; (D) the Type of Loans





                                     - 18 -
<PAGE>   25



         comprising the Borrowing; and (E) the duration of the Interest Period
         applicable to any IBOR Rate Loans included in such notice. If the
         Notice of Borrowing fails to specify the duration of the Interest
         Period for any Borrowing, such Interest Period shall be one day.

                 (b)      Funding Mechanics.

                          (i)     Revolving Loans. (A) The Agent will promptly
         notify each Bank of its receipt of any Notice of Borrowing of
         Revolving Loans and of the amount of such Bank's Pro Rata Share of
         that Borrowing (in the case of Base Rate Loans, if a Borrower gives a
         Notice of Borrowing on a Business Day by the time required by clause
         (y) of subsection 2.03(a)(i), the Agent shall give notice pursuant to
         this subsection by 4:00 p.m. Houston, Texas time on the same Business
         Day) and (B) each Bank will make the amount of its Pro Rata Share of
         each Borrowing of Revolving Loans available to the Agent for the
         account of the applicable Borrower, at the Agent's Payment Office by
         1:00 p.m. (Houston time) on the Borrowing Date requested in the Notice
         of Borrowing in funds immediately available to the Agent. The proceeds
         of all such Loans will then be made available by the Agent to the
         Borrower specified in the Notice of Borrowing by the Agent's
         initiating a wire transfer on the Borrowing Date to any Bank located
         in the United States in accordance with written instructions provided
         to the Agent by such Borrower.

                          (ii)    Swing Loans. The Swing Loan Bank will make
         available proceeds of Swing Loans to the applicable Borrower by
         initiating a wire transfer on the Borrowing Date to any Bank located
         in the United States in accordance with written instructions provided
         by such Borrower.

                 (c)      Interest Rate Periods. After giving effect to any
Borrowing, there may not be more than 6 different Interest Periods in effect.

         2.04    Conversion and Continuation Elections Regarding Loans. (a) Any
Borrower may, upon irrevocable written notice to the Agent in accordance with
subsection 2.04(b):

                      (i)         elect, as of any Business Day, in the case of
         Base Rate Loans, or as of the last day of the applicable Interest
         Period, in the case of LIBOR Rate Loans, to convert any such Loans (or
         any part thereof in an amount not less than $1,000,000, or that is in
         an integral multiple of $1,000,000 in excess thereof) into Revolving
         Loans of the other Type; or

                      (ii)        elect as of the last day of the applicable
         Interest Period, to continue any Revolving Loans having Interest
         Periods expiring on such day (or any part thereof in an amount not
         less than $1,000,000, or that is in an integral multiple of $1,000,000
         in excess thereof);

provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the
right of the Company to continue such Loans as, and convert such Loans into,
LIBOR Rate Loans shall terminate.

                 (b)      A Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 11:30 a.m.
(Houston time) (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or





                                     - 19 -
<PAGE>   26



continued as LIBOR Rate Loans; and (ii) on the Conversion/Continuation Date, if
the applicable Revolving Loans are to be converted into Base Rate Loans,
specifying:

                          (A)     the proposed Conversion/Continuation Date;

                          (B)     the aggregate amount of Loans to be converted
                 or continued;

                          (C)     the Type of Loans resulting from the proposed
                 conversion or continuation; and

                          (D)     other than in the case of conversions into
                 Base Rate Loans, the duration of the requested Interest
                 Period.

                 (c)      If upon the expiration of any Interest Period
applicable to LIBOR Rate Loans, a Borrower has failed to select timely a new
Interest Period to be applicable to such LIBOR Rate Loans, or if any Default or
Event of Default then exists, such Borrower shall be deemed to have elected to
convert such LIBOR Rate Loans into Base Rate Loans effective as of the
expiration date of such Interest Period.

                 (d)      The Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by any Borrower, the Agent will promptly notify each Bank of the
details of any automatic conversion. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Bank.

                 (e)      Unless the Majority Banks otherwise consent, during
the existence of a Default or Event of Default, no Borrower may elect to have a
Loan converted into or continued as a LIBOR Rate Loan.

                 (f)      After giving effect to any conversion or continuation
of Loans, there may not be more than 6 different Interest Periods in effect.

                 (g)      No Swing Loan of any Type may be converted to a Loan
of another Type.

         2.05    Voluntary Termination or Reduction of Commitments. The
Borrowers may, upon not less than five Business Days' prior notice to the
Agent, terminate the Commitments, or permanently reduce the Commitments by an
aggregate minimum amount of $5,000,000 or any integral multiple of $1,000,000
in excess thereof; unless, after giving effect thereto and to any prepayments
of Loans made on the effective date thereof, (a) the Effective Amount of all
Revolving Loans, Swing Loans and L/C Obligations together would exceed the
amount of the combined Commitments then in effect, or (b) the Effective Amount
of all L/C Obligations then outstanding would exceed the L/C Commitment or (c)
the Effective Amount of all Swing Loans would exceed the Swing Loan Commitment.
Once reduced in accordance with this Section, the Commitments may not be
increased. Any reduction of the Commitments shall be applied to each Bank
according to its Pro Rata Share. If and to the extent specified by the
Borrowers in the notice to the Agent, some or all of the reduction in the
combined Commitments shall be applied to reduce the Swing Loan Commitment
and/or the L/C Commitment (which in no event may exceed in either case the
combined Commitments). All accrued Commitment Fees to, but not including, the
effective date of any reduction or termination of Commitments, shall be paid on
the effective date of such reduction or termination.





                                     - 20 -
<PAGE>   27



         2.06    Optional Prepayments. Subject to Section 4.04, each Borrower
may, at any time or from time to time, on any Business Day, upon irrevocable
notice given not later than 11:30 a.m. (Houston time) such day to the Agent, in
the case of Base Rate Loans, and three Business Days' irrevocable notice to the
Agent, in the case of LIBOR Rate Loans, ratably prepay Revolving Loans in whole
or in part, in minimum amounts of $1,000,000 or any multiple of $1,000,000 in
excess thereof. Such notice of prepayment shall specify the date and amount of
such prepayment and the Type(s) of Loans to be prepaid. The Agent will promptly
notify each Bank of its receipt of any such notice, and of such Bank's Pro Rata
Share of such prepayment. If such notice is given by a Borrower, such Borrower
shall make such prepayment and the payment amount specified in such notice
shall be due and payable on the date specified therein, together with accrued
interest to each such date on the amount prepaid and any amounts required
pursuant to Section 4.04.

         2.07    Mandatory Prepayments of Loans. If on any date the Effective
Amount of L/C Obligations exceeds the L/C Commitment, the Company shall Cash
Collateralize on such date the Obligations in an amount equal to the excess of
the maximum amount then available to be drawn under the Letters of Credit over
the aggregate L/C Commitment. Subject to Section 4.04, if on any date after
giving effect to any Cash Collateralization made on such date pursuant to the
preceding sentence, the Effective Amount of all Revolving Loans and Swing Loans
then outstanding plus the Effective Amount of all L/C Obligations exceeds the
combined Commitments, each Borrower shall immediately, and without notice or
demand, prepay the outstanding principal amount of the Revolving Loans, Swing
Loans and L/C Advances by an aggregate amount equal to such excess.

         2.08    Repayment.

                 (a)      The Revolving Credit. Each Borrower shall repay to
the Banks on the Maturity Date the aggregate principal amount of Revolving
Loans made to such Borrower outstanding on such date.

                 (b)      Swing Loans. Each Borrower shall repay to the Swing
Loan Bank each Swing Loan made to such Borrower, (i) on the last day of the
applicable Interest Period, in the case of any Swing Loan which is an IBOR Rate
Loan, and (ii) no later than the earlier of (A) the seventh (7th) day after the
date such Swing Loan is made and (B) the Maturity Date, in the case of any
Swing Loan which is a Base Rate Loan.

         2.09    Interest. (a) Each Revolving Loan and Swing Loan shall bear
interest on the outstanding principal amount thereof from the applicable
Borrowing Date at a rate per annum equal to the LIBOR Rate, the IBOR Rate or
the Base Rate, as the case may be (and subject to the Borrower's right to
convert to other Types of Loans under Section 2.04), plus the Applicable
Margin.

                 (b)      Interest on each Revolving Loan and Swing Loan shall
be paid in arrears on each Interest Payment Date. Interest shall also be paid
on the date of any prepayment of Loans under Section 2.06 or 2.07 for the
portion of the Loans so prepaid and upon payment (including prepayment) in full
thereof and, during the existence of any Event of Default, interest shall be
paid on demand of the Agent at the request or with the consent of the Majority
Banks.

                 (c)      Notwithstanding subsection (a) of this Section, while
any Event of Default exists or after acceleration of all or any portion of the
Loans, each Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of all
outstanding Obligations of such Borrower at a rate per annum equal to the Base
Rate plus 2% (the "Default Rate").





                                     - 21 -
<PAGE>   28



                 (d)      Anything herein to the contrary notwithstanding, the
obligations of the Borrowers to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder to the extent (but only to the extent)
that contracting for, charging or receiving such payment by such Bank would be
contrary to the provisions of any law applicable to such Bank limiting the
highest nonusurious rate of interest that may be contracted for, charged or
received by such Bank, and in such event the Borrowers shall pay such Bank
interest at the highest nonusurious rate permitted by applicable law.

         2.10    Fees. In addition to certain fees described in Section 3.08:

                 (a)      Arrangement, Agency Fees. The Company shall pay an
arrangement fee to the Arranger for the Arranger's own account, and shall pay
an agency fee to the Agent for the Agent's own account, as required by the
letter agreement ("Fee Letter") between the Company and the Arranger and Agent
dated July 1, 1997.

                 (b)      Commitment Fees. The Borrowers, jointly and
severally, shall pay to the Agent for the account of each Bank a commitment fee
(the "Commitment Fee") on the average daily unused portion of such Bank's
Commitment, computed on a quarterly basis in arrears on the last Business Day
of each calendar quarter, as calculated by the Agent, equal to the rate per
annum determined in accordance with the provisions of Section 2.02 of this
Agreement. For purposes of calculating utilization under this subsection, the
Commitments shall be deemed used to the extent of the Effective Amount of
Revolving Loans and Swing Loans then outstanding, plus the Effective Amount of
L/C Obligations then outstanding. Such commitment fee shall accrue from the
date of this Agreement to the Maturity Date and shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter,
commencing on September 30, 1997, through the Maturity Date, with the final
payment to be made on the Maturity Date; provided that, in connection with any
reduction or termination of Commitments under Section 2.05, the accrued
Commitment Fee calculated for the period ending on such date shall also be paid
on the date of such reduction or termination, with the following quarterly
payment being calculated on the basis of the period from such reduction or
termination date to such quarterly payment date. The Commitment Fee provided in
this subsection shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or more conditions in
Article V are not met.

         2.11    Computation of Fees and Interest. (a) All computations of
interest for Base Rate Loans when the Base Rate is determined by BofA's
"reference rate", and computation of the Commitment Fee, the Risk Participation
Fee and the Fronting Fee, shall be made on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed. All other computations of
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof.

                 (b)      Each determination of an interest rate by the Agent
shall be conclusive and binding on the Borrowers and the Banks in the absence
of manifest error.

         2.12    Payments by the Borrowers. (a) All payments to be made by the
Borrowers shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrowers shall be
made to the Agent for the account of the Banks at the Agent's Payment Office,
and shall be made in dollars and in immediately available funds. The Company or
the applicable Borrower shall make such payment by initiating a wire transfer
to the Agent no later than 11:30 a.m. (Houston time) on the date such payment
is due pursuant to the terms hereof. The Agent will promptly distribute to each
Bank its Pro Rata Share (or other applicable share as expressly provided





                                     - 22 -
<PAGE>   29



herein) of such payment in like funds as received. If the Company initiates a
wire transfer after 11:30 a.m. (Houston time) to make a payment, such payment
shall be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue. If the Agent receives any
such payment by 2:00 p.m. (Houston time) on a Business Day and fails to send to
any Bank its portion of such payment by the close of business on such day, the
Agent shall pay to such Bank interest on its portion of such payment from such
day until the date such Bank's portion of such payment is sent to such Bank, at
the Federal Funds Rate. If the Agent receives any such payment after 2:00 p.m.
(Houston time) and the Agent fails to send to any Bank its portion of such
payment by the close of business on the following day, the Agent shall pay to
such Bank interest on its portion of such payment from such following day until
the date such Bank's portion of such payment is sent to such Bank, at the
Federal Funds Rate.

                 (b)      Subject to the provisions set forth in the definition
of "Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.

                 (c)      Unless the Agent receives notice from a Borrower
prior to the date on which any payment is due to the Banks that such Borrower
will not make such payment in full as and when required, the Agent may assume
that such Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Bank on such due date an
amount equal to the amount then due such Bank. If and to the extent a Borrower
has not made such payment in full to the Agent, each Bank shall repay to the
Agent on demand such amount distributed to such Bank, together with interest
thereon at the Federal Funds Rate for each day from the date such amount is
distributed to such Bank until the date repaid.

         2.13    Payments by the Banks to the Agent. (a) Unless the Agent
receives notice from a Bank on or prior to the Closing Date or, with respect to
any Borrowing after the Closing Date, at least one Business Day prior to the
date of such Borrowing, that such Bank will not make available as and when
required hereunder to the Agent for the account of a Borrower the amount of
that Bank's Pro Rata Share of the Borrowing, the Agent may assume that each
Bank has made such amount available to the Agent in immediately available funds
on the Borrowing Date and the Agent may (but shall not be so required), in
reliance upon such assumption, make available to the applicable Borrower on
such date a corresponding amount. If and to the extent any Bank shall not have
made its full amount available to the Agent in immediately available funds and
the Agent in such circumstances has made available to the applicable Borrower
such amount, that Bank shall on the Business Day following such Borrowing Date
make such amount available to the Agent, together with interest at the Federal
Funds Rate for each day during such period. A notice of the Agent submitted to
any Bank with respect to amounts owing under this subsection (a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement.  If such amount is not made available to
the Agent on the Business Day following the Borrowing Date, the Agent will
notify the applicable Borrower of such failure to fund and, upon demand by the
Agent, the applicable Borrower shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.

                 (b)      The failure of any Bank to make any Loan on any
Borrowing Date shall not relieve any other Bank of any obligation hereunder to
make a Loan on such Borrowing Date, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank on any
Borrowing Date.





                                     - 23 -
<PAGE>   30



         2.14    Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank (or any Participant pursuant to subsection 11.08(d))
shall obtain on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Pro Rata Share, such Bank shall immediately (a) notify the Agent
of such fact, and (b) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment pro rata with each of them; provided, however, that if all
or any portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded and each other
Bank shall repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable share (according to
the proportion of (i) the amount of such paying Bank's required repayment to
(ii) the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Borrowers agree that any Bank so purchasing a
participation from another Bank may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 11.10) with respect to such participation as fully as if such Bank
were the direct creditor of the Company in the amount of such participation.
The Agent will keep records (which shall be conclusive and binding in the
absence of manifest error) of participations purchased under this Section and
will in each case notify the Banks following any such purchases or repayments.

         2.15    Special Provisions for Swing Loans.

                 (a)      Banks to Make Revolving Loans.

                          (i)     The Swing Loan Bank, at any time in its
         discretion after the occurrence of a Default or an Event of Default or
         in order to repay Swing Loans that are to be repaid pursuant to
         Section 2.08(b)(ii), upon written request to the Banks through the
         Agent (with a copy to the applicable Borrower), may require each Bank
         (including the Swing Loan Bank) to make a Revolving Loan, subject to
         the provisions of subsection 2.01(a) hereof, in an amount equal to
         such Bank's Pro Rata Share of any outstanding Swing Loan that is a
         Base Rate Loan. The Swing Loan Bank shall deliver such request to the
         Agent prior to 2:00 p.m. (Houston time) on the Business Day next
         preceding the date (which shall be a Business Day) on which such
         Revolving Loans are to be made. Promptly upon receipt of any such
         request, the Agent shall give notice thereof to the Banks. The Agent
         shall apply the proceeds of such Revolving Loans to repay the Swing
         Loans of the Swing Loan Bank; provided, however, that the Agent shall
         be obligated to make the proceeds of such Revolving Loans available
         only to the extent received by it from the Banks. All Revolving Loans
         made pursuant to this subsection 2.15(a) shall be Base Rate Loans.

                          (ii)    In the event the Agent advances proceeds of
         any Revolving Loan to the Swing Loan Bank and one or more of the Banks
         (other than the Swing Loan Bank) fail to fund all or any portion of
         such Revolving Loan immediately upon receipt of notice from the Agent,
         then (A) such Bank shall pay directly to Agent the amount thereof
         together with interest thereon (1) at the Federal Funds Rate, if
         payment is received by the Agent on or before the third Business Day
         following the date when due, and (2) at the Default Rate, if payment
         is received after such third Business Day, and (B) if not paid by such
         Bank, the Swing Loan Bank will repay directly to the Agent such amount
         as will equal the amount such other Bank(s) failed to fund, together
         with interest at a rate equal to the weighted average of the





                                     - 24 -
<PAGE>   31



         rates on Federal Funds transactions with members of the Federal
         Reserve System arranged by Federal Funds brokers, as published by the
         Federal Reserve Bank of New York (in Weekly Release 11.15) for the day
         on which such Bank shall fail to make such payments, or, if such rate
         is not so published for any such day, the average of the quotations
         for such day on such transactions received by the Agent from three
         Federal Funds brokers of recognized standing selected by the Agent,
         whereupon the Swing Loans will be reinstated pro rata.

                 (b)      Participations in Swing Loans.

                          (i)     After the occurrence of a Default or an Event
         of Default, the Swing Loan Bank may require each Bank to purchase,
         subject to subsection 2.01(a) hereof, an undivided participation in
         all outstanding Swing Loans, and at any time after the date that a
         Swing Loan is required to be repaid pursuant to Section 2.08(b)(ii),
         if such Swing Loan is not repaid on such date, the Swing Loan Bank may
         require each Bank to purchase an undivided participation in such Swing
         Loan. Each Bank, promptly upon such request by the Swing Loan Bank
         delivered to the Agent, shall purchase an undivided participation
         interest in all such Swing Loans in an amount equal to its Pro Rata
         Share times the outstanding amount of such Swing Loans. Each Bank
         (other than the Swing Loan Bank) will transfer immediately to the
         Swing Loan Bank, in immediately available funds, the amount of its
         participation and, upon receipt thereof, the Swing Loan Bank will
         deliver to such other Bank a Swing Loan Participation Certificate,
         dated the date of receipt of such funds and in the amount of such
         Bank's participation.

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

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

                 (d)      Unconditional Obligation. Each Bank's obligation to
make the Revolving Loans or to purchase participation interests in the Swing
Loans as provided in this Section 2.15 shall be absolute and unconditional and
shall not be affected by any circumstance, including without limitation, (i)
any set-off, counterclaim, recoupment, defense or other right which such Bank
may have against the Swing Loan Bank, any Borrower or any other Person for any
reason whatsoever, (ii) the existence of any Default or Event of Default at any
time, (iii) the occurrence of any event or existence of any condition that
might have a Material Adverse Effect, or (iv) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.





                                     - 25 -
<PAGE>   32



                                  ARTICLE III

                             THE LETTERS OF CREDIT

         3.01    The Letter of Credit Subfacility. (a) On the terms and
conditions set forth herein (i) the Issuing Bank agrees, (A) from time to time
on any Business Day during the period from the Closing Date to the Maturity
Date to issue Letters of Credit for the account of any Borrower, and to amend
or renew Letters of Credit previously issued by it, in accordance with
subsections 3.02(c) and 3.02(d), and (B) to honor drafts under the Letters of
Credit; and (ii) the Banks severally agree to participate in Letters of Credit
Issued for the account of any Borrower; provided, that the Issuing Bank shall
not be obligated to Issue, and no Bank shall be obligated to participate in,
any Letter of Credit if as of the date of Issuance of such Letter of Credit
(the "Issuance Date"), and giving effect thereto (1) the Effective Amount of
all L/C Obligations plus the Effective Amount of all Revolving Loans and all
Swing Loans would exceed the combined Commitments, (2) the participation of any
Bank in the Effective Amount of all L/C Obligation, plus the Effective Amount
of the Revolving Loans of such Bank, plus (x) the aggregate principal amount of
such Bank's participation in Swing Loans and (y) if such Bank is the Swing Loan
Bank, the principal amount of all Swing Loans in which other Banks have not
participated, exceeds such Bank's Commitment, or (3) the Effective Amount of
L/C Obligations exceeds the L/C Commitment.  Within the foregoing limits, and
subject to the other terms and conditions hereof, the Borrowers' ability to
obtain Letters of Credit shall be fully revolving, and, accordingly, any
Borrower may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit which have expired or which have been drawn upon and
reimbursed.

                 (b)      Each Letter of Credit shall have an expiry date that
is not later than the Maturity Date, unless all of the Banks approve in writing
a later expiry date (provided, however, that this sentence shall not be deemed
to prohibit the issuance of a Letter of Credit of the type described in Section
3.02(d)). The Issuing Bank is under no obligation to Issue any Letter of Credit
if:

                          (i)     any order, judgment or decree of any
         Governmental Authority or arbitrator shall by its terms purport to
         enjoin or restrain the Issuing Bank from Issuing such Letter of
         Credit, or any Requirement of Law applicable to the Issuing Bank or
         any request or directive (whether or not having the force of law) from
         any Governmental Authority with jurisdiction over the Issuing Bank
         shall prohibit, or request that the Issuing Bank refrain from, the
         Issuance of letters of credit generally or such Letter of Credit in
         particular or shall impose upon the Issuing Bank with respect to such
         Letter of Credit any restriction, reserve or capital requirement (for
         which the Issuing Bank is not otherwise compensated hereunder) not in
         effect on the Closing Date, or shall impose upon the Issuing Bank any
         unreimbursed loss, cost or expense which was not applicable on the
         Closing Date and which the Issuing Bank in good faith deems material
         to it;

                          (ii)    the Issuing Bank has received written notice
         from any Bank, the Agent or any Borrower, on or prior to the Business
         Day prior to the requested date of Issuance of such Letter of Credit,
         that one or more of the applicable conditions contained in Article V
         is not then satisfied;

                          (iii)   the expiry date of any requested Letter of
         Credit is prior to the maturity date of any financial obligation to be
         supported by the requested Letter of Credit (this limitation is not
         intended to apply to Letters





                                     - 26 -
<PAGE>   33



         of Credit supporting performance or bid bonds or other non-payment
         performance obligations of a Borrower);

                          (iv)    any requested Letter of Credit does not
         provide for drafts, or is not otherwise in form and substance
         acceptable to the Issuing Bank, or the Issuance of a Letter of Credit
         shall violate any applicable policies of the Issuing Bank; or

                          (v)     any standby Letter of Credit is for the
         purpose of supporting the issuance of any letter of credit by any
         other Person.

         3.02    Issuance, Amendment and Renewal of Letters of Credit. (a) Each
Letter of Credit shall be issued upon the irrevocable written request of a
Borrower received by the Issuing Bank (with a copy sent by such Borrower to the
Agent) at least three days (or such shorter time as the Issuing Bank may agree
in a particular instance in its sole discretion) prior to the proposed date of
issuance. Each such request for issuance of a Letter of Credit shall be by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Application, and shall specify in form and detail satisfactory to the Issuing
Bank: (i) the proposed date of issuance of the Letter of Credit (which shall be
a Business Day); (ii) the face amount of the Letter of Credit; (iii) the expiry
date of the Letter of Credit; (iv) the name and address of the beneficiary
thereof; (v) the documents, if any, to be presented by the beneficiary of the
Letter of Credit in case of any drawing thereunder; (vi) the full text of any
certificate to be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as the Issuing Bank may require. Each
Letter of Credit (x) will be for the account of the requesting Borrower, (y)
will be a nontransferable standby letter of credit and (z) will contain such
terms and provisions as may be customarily required by the Issuing Bank.

                 (b)      At least two Business Days prior to the Issuance of
any Letter of Credit, the Issuing Bank will confirm with the Agent (by
telephone or in writing) that the Agent has received a copy of the L/C
Application or L/C Amendment Application from a Borrower and, if not, the
Issuing Bank will provide the Agent with a copy thereof. Unless the Issuing
Bank has received notice on or before the Business Day immediately preceding
the date the Issuing Bank is to issue a requested Letter of Credit from the
Agent (A) directing the Issuing Bank not to issue such Letter of Credit because
such issuance is not then permitted under subsection 3.01(a) as a result of the
limitations set forth in clauses (1) through (3) thereof or subsection
3.01(b)(ii); or (B) that one or more conditions specified in Article V are not
then satisfied or waived; then, subject to the terms and conditions hereof, the
Issuing Bank shall, on the requested date, issue a Letter of Credit for the
account of such Borrower in accordance with the Issuing Bank's usual and
customary business practices.

                 (c)      From time to time while a Letter of Credit is
outstanding and prior to the Maturity Date, the Issuing Bank will, upon the
written request of a Borrower received by the Issuing Bank (with a copy sent by
such Borrower to the Agent) at least three days (or such shorter time as the
Issuing Bank may agree in a particular instance in its sole discretion) prior
to the proposed date of amendment, amend any Letter of Credit issued by it.
Each such request for amendment of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in the form of an
L/C Amendment Application and shall specify in form and detail satisfactory to
the Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed
date of amendment of the Letter of Credit (which shall be a Business Day);
(iii) the nature of the proposed amendment; and (iv) such other matters as the
Issuing Bank may require.  The Issuing Bank shall be under no obligation to
amend any Letter of Credit if: (A) the Issuing Bank would have no obligation at
such time to issue such Letter of Credit in its amended form under the terms of
this Agreement; or (B) the beneficiary of any such Letter of Credit does not
accept the





                                     - 27 -
<PAGE>   34



proposed amendment to the Letter of Credit. Upon receipt of notice from the
Issuing Bank, the Agent will promptly notify the Banks of the Issuance of a
Letter of Credit and any amendment thereto.

                 (d)      If any outstanding Letter of Credit shall provide
that it shall be automatically renewed unless the beneficiary thereof receives
notice from the Issuing Bank that such Letter of Credit shall not be renewed,
the Issuing Bank shall be permitted to allow such Letter of Credit to renew,
subject to subsection 3.02(e) hereof. The Borrowers and the Banks hereby
authorize such renewal. The Issuing Bank shall not be obligated to allow such
Letter of Credit to renew if the Issuing Bank would have no obligation at such
time to issue or amend such Letter of Credit under the terms of this Agreement.

                 (e)      The Issuing Bank will deliver such notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, as may be
permissible pursuant to the terms of the applicable Letter of Credit, in order
to cause the expiry date of any Letter of Credit to be a date not later than
the Maturity Date.

                 (f)      This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of Credit).

                 (g)      The Issuing Bank will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or
amendment to a Letter of Credit.

         3.03    Risk Participations, Drawings and Reimbursements.

                 (a)      Immediately upon the Issuance of each Letter of
Credit, each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank a participation in
such Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) the Pro Rata Share of such Bank, times (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of such
drawing, respectively. For purposes of subsection 2.01(a), each Issuance of a
Letter of Credit shall be deemed to utilize the Commitment of each Bank by an
amount equal to the amount of such participation.

                 (b)      In the event of any request for a drawing under a
Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank
will promptly notify the applicable Borrower. Such Borrower shall reimburse the
Issuing Bank prior to 11:30 a.m. (Houston time), on each date that any amount
is paid by the Issuing Bank under any Letter of Credit (each such date, an
"Honor Date"), in an amount equal to the amount so paid by the Issuing Bank. In
the event such Borrower fails to reimburse the Issuing Bank for the full amount
of any drawing under any Letter of Credit by 11:30 a.m. (Houston time) on the
Honor Date, the Issuing Bank will promptly notify the Agent and the Agent will
promptly notify each Bank thereof, and such Borrower shall be deemed to have
requested that Base Rate Loans be made by the Banks to be disbursed on the
Honor Date under such Letter of Credit, subject to the amount of the unutilized
portion of the Commitment and subject to the conditions set forth in Section
5.03. Any notice given by the Issuing Bank or the Agent pursuant to this
subsection 3.03(b) may be oral if immediately confirmed in writing (including
by facsimile); provided that the lack of such an immediate confirmation shall
not affect the conclusiveness or binding effect of such notice.

                 (c)      Each Bank shall upon any notice pursuant to
subsection 3.03(b) make available to the Agent for the account of the relevant
Issuing Bank an amount in Dollars





                                     - 28 -
<PAGE>   35



and in immediately available funds equal to its Pro Rata Share of the amount of
the drawing, whereupon the participating Banks shall (subject to subsection
3.03(d)) each be deemed to have made a Revolving Loan consisting of a Base Rate
Loan to the applicable Borrower in that amount. If any Bank so notified fails
to make available to the Agent for the account of the Issuing Bank the amount
of such Bank's Pro Rata Share of the amount of the drawing by no later than
1:30 p.m.  (Houston time) on the Honor Date, then interest shall accrue on such
Bank's obligation to make such payment, from the Honor Date to the date such
Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in
effect from time to time during such period. The Agent will promptly give
notice to each Bank of the occurrence of the Honor Date, but failure of the
Agent to give any such notice on the Honor Date or in sufficient time to enable
any Bank to effect such payment on such date shall not relieve such Bank from
its obligations under this Section 3.03.

                 (d)      With respect to any unreimbursed drawing that is not
converted into Revolving Loans consisting of Base Rate Loans to the applicable
Borrower in whole or in part, because of the failure of the applicable Borrower
to satisfy the conditions set forth in Section 5.03 or for any other reason
permitted hereunder, the applicable Borrower shall be deemed to have incurred
from the Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at a rate per annum equal to the Base Rate plus 2% per annum, and
each Bank's payment to the Issuing Bank pursuant to subsection 3.03(c) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Bank in satisfaction of its participation
obligation under this Section 3.03.

                 (e)      Each Bank's obligation in accordance with this
Agreement to make the Revolving Loans or L/C Advances, as contemplated by this
Section 3.03, as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the Issuing Bank and shall
not be affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against the Issuing
Bank, the applicable Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of a Default, an Event of Default or a
Material Adverse Effect; or (iii) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided, however,
that each Bank's obligation to make Revolving Loans under this Section 3.03 is
subject to the conditions set forth in Section 5.03.

         3.04    Repayment of Participations. (a) Upon (and only upon) receipt
by the Agent for the account of the Issuing Bank of immediately available funds
from a Borrower (i) in reimbursement of any payment made by the Issuing Bank
under the Letter of Credit with respect to which any Bank has paid the Agent
for the account of the Issuing Bank for such Bank's participation in the Letter
of Credit pursuant to Section 3.03 or (ii) in payment of interest thereon, the
Agent will pay to each Bank, in the same funds as those received by the Agent
for the account of the Issuing Bank, the amount of such Bank's Pro Rata Share
of such funds, and the Issuing Bank shall receive the amount of the Pro Rata
Share of such funds of any Bank that did not so pay the Agent for the account
of the Issuing Bank. If the Agent fails to send to any Bank its portion of any
payment timely received by the Agent hereunder by the close of business on the
day such payment is deemed received pursuant to subsection 2.12(a), the Agent
shall pay to such Bank interest on its portion of such payment from the day
such payment is deemed received by the Agent until the date such Bank's portion
of such payment is sent to such Bank, at the Federal Funds Rate.

                 (b)      If the Agent or the Issuing Bank is required at any
time to return to a Borrower, or to a trustee, receiver, liquidator, custodian,
or any official in any Insolvency Proceeding, any portion of the payments made
by the Borrower to the Agent for the





                                     - 29 -
<PAGE>   36



account of the Issuing Bank pursuant to subsection 3.04(a) in reimbursement of
a payment made under the Letter of Credit or interest or fee thereon, each Bank
shall, on demand of the Agent, forthwith return to the Agent or the Issuing
Bank the amount of its Pro Rata Share of any amounts so returned by the Agent
or the Issuing Bank plus interest thereon from the date such demand is made to
the date such amounts are returned by such Bank to the Agent or the Issuing
Bank, at a rate per annum equal to the Federal Funds Rate in effect from time
to time.

         3.05    Role of the Issuing Bank. (a) Each Bank and each Borrower
agrees that, in paying any drawing under a Letter of Credit, the Issuing Bank
shall not have any responsibility to obtain any document (other than any sight
draft and certificates expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document.

                 (b)      No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Bank shall be liable
to any Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Banks (including the Majority Banks, as
applicable); (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any L/C-Related Document.

                 (c)      The Borrowers hereby assume all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude a Borrower from pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. No Agent-Related Person, nor any of the respective correspondents,
participants or assignees of the Issuing Bank, shall be liable or responsible
for any of the matters described in clauses (i) through (vii) of Section 3.06;
provided, however, anything in such clauses to the contrary notwithstanding,
that the Borrower for whose account the applicable Letter of Credit was Issued
may have a claim against the Issuing Bank, and the Issuing Bank may be liable
to such Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by such Borrower which
such Borrower proves were caused by the Issuing Bank's willful misconduct or
gross negligence or the Issuing Bank's willful failure to pay under any Letter
of Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing: (i) the Issuing
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Issuing Bank shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

         3.06    Obligations Absolute. The obligations of the Borrowers under
this Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any
drawing under a Letter of Credit converted into Revolving Loans, shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and each such other L/C-Related Document under all
circumstances, including the following:

                          (i)     any lack of validity or enforceability of
         this Agreement or any L/C-Related Document;





                                     - 30 -
<PAGE>   37



                          (ii)    any change in the time, manner or place of
         payment of, or in any other term of, all or any of the obligations of
         any Borrower in respect of any Letter of Credit or any other amendment
         or waiver of or any consent to departure from all or any of the
         L/C-Related Documents;

                          (iii)   the existence of any claim, set-off, defense
         or other right that any Borrower may have at any time against any
         beneficiary or any transferee of any Letter of Credit (or any Person
         for whom any such beneficiary or any such transferee may be acting),
         the Issuing Bank or any other Person, whether in connection with this
         Agreement, the transactions contemplated hereby or by the L/C- Related
         Documents or any unrelated transaction;

                          (iv)    any draft, demand, certificate or other
         document presented under any Letter of Credit proving to be forged,
         fraudulent, invalid or insufficient in any respect or any statement
         therein being untrue or inaccurate in any respect; or any loss or
         delay in the transmission or otherwise of any document required in
         order to make a drawing under any Letter of Credit;

                          (v)     any payment by the Issuing Bank under any
         Letter of Credit against presentation of a draft or certificate that
         does not strictly comply with the terms of any Letter of Credit; or
         any payment made by the Issuing Bank under any Letter of Credit to any
         Person purporting to be a trustee in bankruptcy, debtor-in-possession,
         assignee for the benefit of creditors, liquidator, receiver or other
         representative of or successor to any beneficiary or any transferee of
         any Letter of Credit, including any arising in connection with any
         Insolvency Proceeding;

                          (vi)    any exchange, release or non-perfection of
         any collateral, or any release or amendment or waiver of or consent to
         departure from any other guarantee, for all or any of the obligations
         of any Borrower in respect of any Letter of Credit; or

                          (vii)   any other circumstance or happening
         whatsoever, whether or not similar to any of the foregoing, including
         any other circumstance that might otherwise constitute a defense
         available to, or a discharge of a Borrower or a guarantor.

         3.07    Cash Collateral Pledge. Upon (i) the request of the Agent, (A)
if the Issuing Bank has honored any full or partial drawing request on any
Letter of Credit and such drawing has resulted in an L/C Borrowing hereunder,
or (B) if, as of the Maturity Date, any Letters of Credit may for any reason
remain outstanding and partially or wholly undrawn, or (ii) the occurrence of
the circumstances described in Section 2.07 requiring the Company to Cash
Collateralize the Obligations of the Borrowers, then, the Company shall
immediately Cash Collateralize the Obligations of the Borrowers in an amount
equal to the L/C Obligations.





                                     - 31 -
<PAGE>   38



         3.08    Letter of Credit Fees.

                 (a)      Risk Participation Fees. Each Borrower for whose
account a Letter of Credit is Issued shall pay to the Agent for the account of
each of the Banks a letter of credit fee ("Risk Participation Fee") with
respect to such Letters of Credit, calculated at the rate per annum determined
in accordance with the provisions of Section 2.02 of this Agreement multiplied
by the average daily maximum amount available to be drawn on such outstanding
Letters of Credit.

                 (b)      Fronting Fees. In addition to the foregoing, each
Borrower for whose account a Letter of Credit is Issued shall pay to the Agent
for the account of the Issuing Bank a letter of credit fee (the "Fronting Fee")
for each Letter of Credit Issued by the Issuing Bank equal to 0.125% per annum
multiplied by the average daily maximum amount available to be drawn on such
outstanding Letters of Credit.

                 (c)      Computation and Payment of Fees. The Risk
Participation Fee and the Fronting Fee each shall be computed on a quarterly
basis in arrears on the last Business Day of each calendar quarter based upon
Letters of Credit outstanding for that quarter as calculated by the Agent. Such
fees shall be due and payable quarterly in arrears on the last Business Day of
each calendar quarter during which Letters of Credit are outstanding,
commencing on the first such quarterly date to occur after the Closing Date,
through the Maturity Date (or such later date upon which the outstanding
Letters of Credit shall expire), with the final payment to be made on the
Maturity Date (or such later expiration date, as applicable).

                 (d)      Other. Each Borrower for whose account a Letter of
Credit is issued also shall pay to the Issuing Bank from time to time on demand
the normal issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the Issuing Bank relating to letters of
credit as from time to time in effect.

         3.09    Uniform Customs and Practice. The Uniform Customs and Practice
for Documentary Credits as published by the International Chamber of Commerce
most recently at the time of issuance of any Letter of Credit shall (unless
otherwise expressly provided in the Letters of Credit) apply to the Letters of
Credit.


                                   ARTICLE IV

                     TAXES, YIELD PROTECTION AND ILLEGALITY

         4.01    Taxes. (a) Any and all payments by the Borrowers to the Banks
or the Agent under this Agreement and any other Loan Document shall be made
free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Borrowers shall pay all Other Taxes.

                 (b)      If any Borrower shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum
payable hereunder to any Bank or the Agent, then:

                          (i)     the sum payable shall be increased as
         necessary so that, after making all required deductions and
         withholdings (including deductions and withholdings applicable to
         additional sums payable under this Section), such Bank or the Agent,
         as the case may be, receives and retains an amount equal to the sum it
         would have received and retained had no such deductions or
         withholdings been made;





                                     - 32 -
<PAGE>   39



                          (ii)    the Borrower shall make such deductions and
         withholdings;

                          (iii)   the Borrower shall pay the full amount
         deducted or withheld to the relevant taxing authority or other
         authority in accordance with applicable law; and

                          (iv)    the Borrower shall also pay to each Bank or
         the Agent for the account of such Bank, at the time interest is paid,
         Further Taxes in the amount that the respective Bank specifies as
         necessary to preserve the after-tax yield the Bank would have received
         if such Taxes, Other Taxes or Further Taxes had not been imposed.

                 (c)      Each Borrower agrees to indemnify and hold harmless
each Bank and the Agent for the full amount of i) Taxes, ii) Other Taxes, and
iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such Taxes, Other Taxes or
Further Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Bank or the
Agent makes written demand therefor.

                 (d)      Within 30 days after the date of any payment by a
Borrower of Taxes, Other Taxes or Further Taxes, such Borrower shall furnish to
each Bank or the Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to such Bank or the
Agent.

                 (e)      If any Borrower is required to pay any amount to any
Bank or the Agent pursuant to subsection (b) or (c) of this Section, then such
Bank shall use reasonable efforts (subject to and consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by such Borrower which may thereafter
accrue, if such change in the sole judgment of such Bank is not otherwise
disadvantageous to such Bank.

         4.02    Illegality. (a) If any Bank determines that the introduction
of any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Borrowers
through the Agent, any obligation of that Bank to make Offshore Rate Loans
shall be suspended until the Bank notifies the Agent and the Borrowers that the
circumstances giving rise to such determination no longer exist.

                 (b)      If a Bank determines that it is unlawful to maintain
any Offshore Rate Loan, the Borrowers shall, upon receipt of notice of such
fact and demand from such Bank (with a copy to the Agent), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 4.04, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loan. If any Borrower is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, such Borrower may borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.





                                     - 33 -
<PAGE>   40



                 (c)      If the obligation of any Bank to make or maintain
Offshore Rate Loans has been so terminated or suspended, the Borrowers may
elect, by giving notice to the Bank through the Agent that all Loans which
would otherwise be made by the Bank as Offshore Rate Loans shall be instead
Base Rate Loans.

                 (d)      Before giving any notice to the Agent under this
Section, the affected Bank shall designate a different Lending Office with
respect to its Offshore Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Bank, be inconsistent with applicable legal or regulatory restrictions, illegal
or otherwise disadvantageous to the Bank.

         4.03    Increased Costs and Reduction of Return. (a) If any Bank
determines that, due to either (i) the introduction of or any change (other
than any change by way of imposition of or increase in reserve requirements for
which the applicable Bank is compensated pursuant to Section 4.06, or in
respect of the assessment rate payable by any Bank to the FDIC for insuring
U.S. deposits) in or in the interpretation of any law or regulation or (ii) the
compliance by that Bank with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Offshore Rate Loans or participating in Letters of
Credit, or, in the case of the Issuing Bank, any increase in the cost to the
Issuing Bank of agreeing to issue, issuing or maintaining any Letter of Credit
or of agreeing to make or making, funding or maintaining any unpaid drawing
under any Letter of Credit, then the Borrowers shall be liable for, and shall
from time to time, upon demand (with a copy of such demand to be sent to the
Agent), pay to the Agent for the account of such Bank, additional amounts as
are sufficient to compensate such Bank for such increased costs.

                 (b)      If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration
of any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Bank (or its Lending Office) or any corporation controlling
the Bank with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration such Bank's or
such corporation's policies with respect to capital adequacy and such Bank's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitment, loans, credits or obligations
under this Agreement, then, upon demand of such Bank to the Borrowers through
the Agent, the Borrowers shall pay to the Bank, from time to time as specified
by the Bank, additional amounts sufficient to compensate the Bank for such
increase.

                 (c)      Each Bank that determines to seek compensation under
this Section 4.03 shall give written notice to the Company (and, if applicable,
the other Borrowers), with a copy of such demand to be sent to the Agent, of
the amount demanded and the circumstances that entitle such Bank to such
compensation no later than ninety (90) days after such Bank receives actual
notice or obtains actual knowledge of any such law, regulation, guideline,
request, interpretation or occurrence of another event giving rise to a claim
hereunder. The Borrowers shall not be obligated to pay any amount with respect
to claims pursuant to this Section 4.03 accruing prior to the ninetieth day
preceding such written demand. Each Bank shall use reasonable efforts to avoid
the need for, or reduce the amount of, such compensation and any payment under
this Section 4.03, including, without limitation, the designation of a
different Lending Office, if such action or designation will not, in the sole
judgment of such Bank made in good faith, be inconsistent with applicable legal
or regulatory restrictions or otherwise disadvantageous to it; provided that
the foregoing shall not in any way affect the rights of any Bank or the





                                     - 34 -
<PAGE>   41



obligations of the Borrowers under this Section 4.03. A certificate of the
Agent or any Bank, as applicable, claiming compensation under this Section 4.03
and setting forth the additional amount or amounts to be paid to it hereunder
and accompanied by a statement prepared by such Bank, describing in reasonable
detail the calculations thereof shall be rebuttable presumptive evidence
thereof in the absence of manifest error. In determining such amount, such Bank
may use any reasonable averaging and attribution methods.

         4.04    Funding Losses. The Borrowers shall reimburse each Bank and
hold each Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of:

                 (a)      the failure of any Borrower to make on a timely basis
any payment of principal of any Offshore Rate Loan;

                 (b)      the failure of any Borrower to borrow, continue or
convert a Loan after such Borrower has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation (including by reason
of the failure of any condition precedent thereto);

                 (c)      the failure of any Borrower to make any prepayment in
accordance with any notice delivered under Section 2.06;

                 (d)      the prepayment (including pursuant to Section 2.06 or
2.07, but not including Section 4.02) or other payment (including after
acceleration thereof) of an Offshore Rate Loan on a day that is not the last
day of the relevant Interest Period; or

                 (e)      the automatic conversion under Section 2.04 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the
relevant Interest Period;

including in each instance any such loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain its Offshore
Rate Loans or from fees payable to terminate the deposits from which such funds
were obtained.  For purposes of calculating amounts payable by the Borrowers to
the Banks under this Section and under subsection 4.03(a), each Offshore Rate
Loan made by a Bank (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the LIBOR or
IBOR used in determining the interest rate for such Offshore Rate Loan by a
matching deposit or other borrowing in the interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such Offshore
Rate Loan is in fact so funded.

         4.05    Inability to Determine Rates. If the Agent determines that for
any reason adequate and reasonable means do not exist for determining the
Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to subsection
2.09(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Agent will promptly so notify the Borrowers and each
Bank. Thereafter, the obligation of the Banks to make or maintain Offshore Rate
Loans hereunder shall be suspended until the Agent upon the instruction of the
Majority Banks revokes such notice in writing. Upon receipt of such notice, any
Borrower may revoke any unfunded Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Borrower does not revoke
such Notice, the Banks shall make, convert or continue the Loans, as proposed
by the Borrower, in the amount specified in the applicable notice submitted by
the Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.





                                     - 35 -
<PAGE>   42



         4.06    Reserves on Offshore Rate Loans. The applicable Borrower shall
pay to each Bank, as long as such Bank shall be required under regulations of
the FRB to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as
"Eurocurrency Liabilities"), additional costs on the unpaid principal amount of
each Offshore Rate Loan equal to the actual costs of such reserves allocated to
such Loan by the Bank (as determined by the Bank in good faith, payable on each
date on which interest is payable on such Loan, provided that such Bank shall
give written notice to the Company (with a copy of such demand to be sent to
the Agent) no later than ninety (90) days after such Bank receives actual
notice or obtains actual knowledge of the imposition of such requirements. The
Borrowers shall not be obligated to pay any amount with respect to claims
pursuant to this Section 4.06 accruing prior to the ninetieth day preceding
such written demand. If a Bank fails to give notice 15 days prior to the
relevant Interest Payment Date, such additional interest shall be payable 15
days from receipt of such notice.

         4.07    Survival. The agreements and obligations of the Borrowers in
this Article IV shall survive the payment of all other Obligations.


                                   ARTICLE V

                              CONDITIONS PRECEDENT

         5.01    Conditions of Initial Credit Extensions. The obligation of
each Bank to make its initial Credit Extension, and, correspondingly, the
obligation of the Issuing Bank to Issue the first Letter of Credit, hereunder
each is subject to the condition that the Agent shall have received on or
before the date of the initial Credit Extension all of the following, in form
and substance satisfactory to the Agent and each Bank, and in sufficient copies
for each Bank:

                 (a)      Loan Documents. This Agreement, the Guaranties and
all other Loan Documents to be delivered to the Agent and the Banks in
connection therewith, duly executed by each party thereto;

                 (b)      Resolutions; Incumbency.

                          (i)     Copies of the resolutions of the board of
         directors of the Company, each Subsidiary Borrower and each Subsidiary
         Guarantor authorizing the transactions contemplated hereby, certified
         as of the Closing Date by the Secretary or an Assistant Secretary of
         such Person; and

                          (ii)    A certificate of the Secretary or Assistant
         Secretary of the Company, each Subsidiary Borrower and each Subsidiary
         Guarantor certifying the names and true signatures of the officers of
         the Company and each such Subsidiary, respectively, authorized to
         execute, deliver and perform, as applicable, this Agreement, and all
         other Loan Documents to be delivered by it hereunder;

                 (c)      Organization Documents; Good Standing. Each of the
following documents:

                          (i)     the articles or certificate of incorporation
         and the bylaws of the Company and each Subsidiary party to any Loan
         Document as in effect on the Closing Date, certified by the Secretary
         or Assistant Secretary of the Company and each such Subsidiary,
         respectively, as of the Closing Date; and





                                     - 36 -
<PAGE>   43



                          (ii)    a good standing and tax good standing
         certificate for the Company and each Subsidiary party to any Loan
         Document from the Secretary of State (or similar, applicable
         Governmental Authority) of its state of incorporation as of a recent
         date;

                 (d)      Legal Opinions.

                          (i)     an opinion of Baker & McKenzie, counsel to
         the Company and its Subsidiaries and addressed to the Agent and the
         Banks, substantially in the form of Exhibit D-1;

                          (ii)    an opinion of internal counsel to the Company
         and its Subsidiaries and addressed to the Agent and the Banks,
         substantially in the form of Exhibit D-2; and

                          (iii)   a favorable opinion of Butler & Binion,
         L.L.P., special counsel to the Agent;

                 (e)      Payment of Fees. Evidence of payment by the Borrowers
of all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with Attorney Costs of BofA to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute BofA's reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude final settling of accounts between
the Borrowers and BofA); including any such costs, fees and expenses arising
under or referenced in Sections 2.10 and 11.04;

                 (f)      Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:

                          (i)     the representations and warranties contained
         in Article V are true and correct on and as of such date, as though
         made on and as of such date;

                          (ii)    no Default or Event of Default exists or
         would result from the Credit Extension; and

                          (iii)   there has occurred since September 30, 1996,
         no event or circumstance that has resulted or could reasonably be
         expected to result in a Material Adverse Effect; and

                 (g)      Other Documents. Such other approvals, opinions,
documents or materials as the Agent or the Majority Banks (acting through the
Agent) may reasonably request.

         5.02    Conditions of Initial Advance to each Subsidiary Borrower.
After the Closing Date, any Wholly-Owned Subsidiary (other than a Foreign
Subsidiary) may become a Subsidiary Borrower. The Banks shall not be required
to make an initial Advance to a Subsidiary Borrower hereunder unless such
Subsidiary Borrower has furnished to the Agent with sufficient copies for the
Banks:

                 (a)      A Subsidiary Borrower Counterpart executed by such
Subsidiary and acknowledged by each of the Company and the Subsidiary
Guarantors, together with a schedule of litigation as may be necessary in
connection with such Subsidiary making the representations and warranties set
forth in Section 6.05 of this Agreement, such schedule





                                     - 37 -
<PAGE>   44



to be in form and substance reasonably satisfactory to the Agent and each of
the Banks in their sole discretion;

                 (b)      A current certificate of existence and, for the
states where available, a certificate of good standing, both certified by the
appropriate governmental officer, in its jurisdiction of incorporation;

                 (c)      Copies, certified by the Secretary or Assistant
Secretary of such Subsidiary Borrower, of its Certificate or Articles of
Incorporation, Bylaws and Board of Directors' resolutions authorizing the
execution of the Loan Documents to which it is a party;

                 (d)      An incumbency certificate, executed by the Secretary
or Assistant Secretary of such Subsidiary Borrower, which shall identify by
name and title and bear the signature of the officers of the Subsidiary
Borrower authorized to sign the Loan Documents to which it is a party and to
make borrowings hereunder, upon which certificates the Agent and the Banks
shall be entitled to rely until informed of any change in writing by such
Subsidiary Borrower;

                 (e)      A written opinion of counsel (which may be internal
counsel) to such Subsidiary Borrower in form and substance satisfactory to the
Agent and the Banks, substantially in the form set forth in Exhibit "D-1" and
Exhibit "D-2" hereto;

                 (f)      If requested by Bank(s) through the Agent, Notes
executed by such Subsidiary Borrower and payable to the order of each of the
requesting Banks;

                 (g)      A Guaranty executed by such Subsidiary Borrower; and

                 (h)      Such other documents as the Majority Banks through
the Agent may have reasonably requested.

         5.03    Conditions to All Credit Extensions. The obligation of each
Bank to make any Revolving Loan to be made by it (including its initial
Revolving Loan) or to continue or convert any Revolving Loan under Section
2.04, the obligation of the Swing Loan Bank to make any Swing Loan (including
its initial Swing Loan) and the obligation of the Issuing Bank to Issue any
Letter of Credit (including the initial Letter of Credit) is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date, Conversion/Continuation Date or Issuance Date, as applicable:

                 (a)      Notice, Application. The Agent shall have received
(with, in the case of the initial Revolving Loan only, a copy for each Bank) a
Notice of Borrowing or a Notice of Conversion/Continuation, as applicable, or
in the case of any Issuance of any Letter of Credit, the Issuing Bank and the
Agent shall have received an L/C Application or L/C Amendment Application, as
applicable, as required under Section 3.02;

                 (b)      Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct on and
as of such Borrowing Date or Conversion/Continuation Date or Issuance Date, as
applicable, with the same effect as if made on and as of such Borrowing Date or
Conversion/Continuation Date or Issuance Date (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they shall be true and correct as of such earlier date);

                 (c)      No Existing Default. No Default or Event of Default
shall exist or shall result from such Borrowing or continuation or conversion
or Issuance; and





                                     - 38 -
<PAGE>   45



                 (d)      Legality. The making of the Loans and the issuance of
Letters of Credit shall be permitted by the laws and regulations of each
applicable jurisdiction to which the Agent, the Banks, the Company and any of
its Subsidiaries are subject (including, without limitation, Regulations U and
X), and shall not subject any Bank or the Agent to any penalty.

Each Notice of Borrowing, Notice of Conversion/Continuation and L/C Application
or L/C Amendment Application submitted by a Borrower hereunder shall constitute
a representation and warranty by such Borrower hereunder, as of the date of
each such notice and as of each Borrowing Date, Conversion/Continuation Date,
or Issuance Date, as applicable, that the conditions in this Section 5.03 (and,
as applicable, Sections 5.01 and 5.02) are satisfied.


                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

         Each of the Borrowers represents and warrants to the Agent and each
Bank that:

         6.01    Corporate Existence and Power.

                 (a)      the Company and each Subsidiary Borrower and each
Subsidiary Guarantor is a corporation duly organized and validly existing under
the laws of its jurisdiction of incorporation;

                 (b)      (i) the Company, each Subsidiary Borrower is in good
standing under the laws of the jurisdiction of its incorporation, and (ii) each
Subsidiary Guarantor is in good standing under the laws of the jurisdiction of
its incorporation;

                 (c)      the Company, each Subsidiary Borrower and each
Subsidiary Guarantor has the power and authority to execute, deliver, and
perform its obligations under the Loan Documents to which it is a party;

                 (d)      the Company and each of its Subsidiaries has all
governmental licenses, authorizations, consents and approvals to own its assets
and carry on its business;

                 (e)      the Company and each of its Subsidiaries is duly
qualified as a foreign corporation and is licensed and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification or license;
and

                 (f)      the Company and each of its Subsidiaries is in
compliance with all Requirements of Law;

except, in each case referred to in clause (b)(ii), (d), (e) or (f), to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

         6.02    Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company, the Subsidiary Borrowers and the
Subsidiary Guarantors of this Agreement and each other Loan Document to which
each such Person is party, have been duly authorized by all necessary corporate
action, and do not and will not:

                 (a)      contravene the terms of any of that Person's
Organization Documents;





                                     - 39 -
<PAGE>   46



                 (b)      conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing
any Contractual Obligation to which such Person is a party or any order,
injunction, writ or decree of any Governmental Authority to which such Person
or its property is subject; or

                 (c)      violate any Requirement of Law.

         6.03    Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of the Agreement or any other Loan Document to which
such Person is a party.

         6.04    Binding Effect. This Agreement and each other Loan Document to
which the Company or any of its Subsidiaries is a party constitute the legal,
valid and binding obligations of the Company and any of its Subsidiaries to the
extent each such Person is a party thereto, enforceable against such Person in
accordance with its respective terms, except as enforceability may be limited
by applicable bankruptcy, fraudulent conveyance, insolvency, or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.

         6.05    Litigation. There are no actions, suits, proceedings, claims
or disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, any of its Subsidiaries or any of their
respective properties which:

                 (a)      purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby or thereby;
or

                 (b)      if determined adversely to the Company or its
Subsidiaries, would reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin
or restrain the execution, delivery or performance of this Agreement or any
other Loan Document, or directing that the transactions provided for herein or
therein not be consummated as herein or therein provided.

         6.06    No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Borrowers. As of the
Closing Date, neither the Company nor any Subsidiary of the Company is in
default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect, or that would, if such default had
occurred after the Closing Date, create an Event of Default under subsection
9.01(e).

         6.07    ERISA Compliance.

                 (a)      Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code
has received a favorable determination letter from the IRS and to the best
knowledge of the Borrowers, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.





                                     - 40 -
<PAGE>   47



                 (b)      There are no pending or, to the best knowledge of the
Borrowers, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been
no prohibited transaction or violation of the fiduciary responsibility rules
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect.

                 (c)      (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither the Company nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither the Company nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither the Company nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.

         6.08    Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely for the purposes set forth in and permitted by Section
7.12 and Section 8.06. Neither the Company nor any Subsidiary is generally
engaged in the business of purchasing or selling Margin Stock or extending
credit for the purpose of purchasing or carrying Margin Stock. Margin Stock
does not constitute more than 25% of the value of the consolidated assets of
the Company and its Subsidiaries, and the Company does not have any present
intention that Margin Stock will constitute more than 25% of the value of such
assets.

         6.09    Title to Properties. The Company and each of its Subsidiaries
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of
their respective businesses, except for such defects in title as could not,
individually or in the aggregate, have a Material Adverse Effect. As of the
Closing Date, the property of the Company and its Subsidiaries is subject to no
Liens, other than Permitted Liens.

         6.10    Taxes. The Company and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided
in accordance with GAAP. There is no proposed tax assessment against the
Company or any Subsidiary that would, if made, have a Material Adverse Effect.

         6.11    Financial Condition. (a) The unaudited consolidated financial
statements of the Company and its Subsidiaries dated June 30, 1997, and the
related consolidated statements of income or operations and cash flows for the
fiscal quarter ended on that date:

                          (i)     were prepared in accordance with GAAP
         consistently applied throughout the period covered thereby, except as
         otherwise expressly noted therein, subject to ordinary, good faith
         year end audit adjustments;

                          (ii)    fairly present the financial condition of the
         Company and its Subsidiaries as of the date thereof and results of
         operations for the period covered thereby; and





                                     - 41 -
<PAGE>   48



                          (iii)   show all material indebtedness and other
         liabilities, direct or contingent, of the Company and its Subsidiaries
         as of the date thereof, including liabilities for taxes, material
         commitments and Contingent Obligations.

                 (b)      Since September 30, 1996, there has been no Material
Adverse Effect.

         6.12    Environmental Matters. The Company conducts in the ordinary
course of business a review of the effect of existing Environmental Laws and
existing Environmental Claims on its and its Subsidiaries' business, operations
and properties, and as a result thereof the Company has reasonably concluded
that such Environmental Laws and Environmental Claims could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

         6.13    Regulated Entities. None of the Company, any Person
controlling the Company, or any Subsidiary of the Company, is an "Investment
Company" within the meaning of the Investment Company Act of 1940. None of the
Borrowers is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other Federal or state statute or regulation limiting
its ability to incur Indebtedness or Contingent Obligations.

         6.14    No Burdensome Restrictions. Neither the Company nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.

         6.15    Copyrights, Patents, Trademarks and Licenses, etc. The Company
and its Subsidiaries own or are licensed or otherwise have the right to use all
of the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Borrowers, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Company or any
Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Borrowers,
proposed, which, in either case, could reasonably be expected to have a
Material Adverse Effect.

         6.16    Subsidiaries. As of the Closing Date, Schedule 6.16 sets
forth, with respect to each Subsidiary, the full legal name, type and
jurisdiction of organization of such Person, the percentage ownership of such
Person held by the Company and its Subsidiaries (and the respective percentages
held by each) and the aggregate book value of the assets of each such Person,
respectively, and, with respect to each Investment, the nature of each such
Investment by the Company and each of its Subsidiaries, the holder of each such
Investment, and the amount of each such Investment, respectively. As of the
Closing Date, the Company has no Subsidiaries other than those specifically
disclosed in part (a) of Schedule 6.16 hereto and has no Investments in any
other corporation or entity other than those specifically disclosed in part (b)
of Schedule 6.16. Other than the Subsidiary Guarantors, as of the Closing Date,
the Company has no Material Subsidiaries incorporated under the laws of any
state in the United States of America.

         6.17    Insurance. The properties of the Company and its Subsidiaries
are insured with financially sound and reputable insurance companies not
Affiliates of the Company,





                                     - 42 -
<PAGE>   49



in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or such Subsidiary operates.

         6.18    Labor Controversies. There are no labor controversies pending
or, to the best knowledge of the Company, threatened against the Company or any
of its Subsidiaries that are reasonably likely to have a Material Adverse
Effect.

         6.19    Full Disclosure. None of the representations or warranties
made by the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.


                                  ARTICLE VII

                             AFFIRMATIVE COVENANTS

         So long as any Bank shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in
writing:

         7.01    Financial Statements. The Company shall deliver to the Agent,
in form and detail satisfactory to the Agent and the Majority Banks, with
sufficient copies for each Bank:

                 (a)      as soon as available, but not later than one hundred
and twenty (120) days after the end of each fiscal year (commencing with the
fiscal year ended September 30, 1997), a copy of the audited consolidated
balance sheet of the Company and its Subsidiaries as at the end of such year
and the related consolidated statements of income or operations, shareholders'
equity and cash flows for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, and accompanied by the opinion
of Coopers & Lybrand, L.L.P. or another nationally- recognized independent
public accounting firm ("Independent Auditor") which report shall state that
such consolidated financial statements present fairly the financial position
for the periods indicated in conformity with GAAP applied on a basis consistent
with prior years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by the Independent Auditor of any material
portion of the Company's or any Subsidiary's records;

                 (b)      as soon as available, but not later than sixty (60)
days after the end of each of the first three fiscal quarters of each fiscal
year (commencing with the fiscal quarter ended December 31, 1997), a copy of
the unaudited consolidated balance sheet of the Company and its Subsidiaries as
of the end of such quarter and the related consolidated statements of income
and cash flows for the period commencing on the first day and ending on the
last day of such quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial position and the results of operations of the
Company and its Subsidiaries;





                                     - 43 -
<PAGE>   50



                 (c)      as soon as available, but not later than one hundred
and twenty (120) days after the end of each fiscal year (commencing with the
fiscal year ended September 30, 1997), a copy of an unaudited consolidating
balance sheet of the Company and its Subsidiaries (and any SPVs) as at the end
of such year and the related consolidating statements of income for such year,
certified by a Responsible Officer as having been developed and used in
connection with the preparation of the financial statements referred to in
subsection 7.01(a); and

                 (d)      as soon as available, but not later than sixty (60)
days after the end of each of the first three fiscal quarters of each fiscal
year (commencing with the fiscal quarter ended December 31, 1997), a copy of
the unaudited consolidating balance sheets of the Company and its Subsidiaries
(and any SPVs), and the related consolidating statements of income for such
quarter, all certified by a Responsible Officer as having been developed and
used in connection with the preparation of the financial statements referred to
in subsection 7.01(b).

         7.02    Certificates; Other Information. The Company shall furnish to
the Agent, with sufficient copies for each Bank:

                 (a)      concurrently with the delivery of the financial
statements referred to in subsection 7.01(a), a certificate of the Independent
Auditor stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in such
certificate;

                 (b)      concurrently with the delivery of the financial
statements referred to in subsections 7.01(a) and (b), a Compliance Certificate
executed by a Responsible Officer, including information setting forth all
appropriate calculations excluding the effects of SPVs and the effects of
Non-Recourse Debt;

                 (c)      promptly, copies of all financial statements and
reports that the Company or any of its Subsidiaries sends to its shareholders,
and copies of all financial statements and regular, periodical or special
reports (including Forms 10K, 10Q and 8K) that the Company or any Subsidiary
may make to, or file with, the SEC; and

                 (d)      promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any Subsidiary as
the Agent, at the request of any Bank, may request from time to time.

         7.03    Notices. The Company shall promptly notify the Agent and each
Bank of the following, promptly upon obtaining knowledge thereof:

                 (a)      of the occurrence of any Default or Event of Default,
and of the occurrence or existence of any event or circumstance that
foreseeably will become a Default or Event of Default;

                 (b)      of any matter that has resulted or may result in a
Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Company or any Subsidiary or any
SPV; (ii) any dispute, litigation, investigation, proceeding or suspension
between the Company or any Subsidiary or any SPV and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Subsidiary or any SPV;
including pursuant to any applicable Environmental Laws;

                 (c)      of the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event more than 10 days
after such event), and deliver to the Agent and each Bank a copy of any notice
with respect to such event





                                     - 44 -
<PAGE>   51



that is filed with a Governmental Authority and any notice delivered by a
Governmental Authority to the Company or any ERISA Affiliate with respect to
such event:

                          (i)     an ERISA Event;

                          (ii)    a material increase in the Unfunded Pension
         Liability of any Pension Plan;

                          (iii)   the adoption of, or the commencement of
         contributions to, any Plan subject to Section 412 of the Code by the
         Company or any ERISA Affiliate; or

                          (iv)    the adoption of any amendment to a Plan
         subject to Section 412 of the Code, if such amendment results in a
         material increase in contributions or Unfunded Pension Liability; and

                 (d)      of any material change in accounting policies or
financial reporting practices by the Company or any of its Subsidiaries.

Each notice under this Section shall be accompanied by a written statement by a
Responsible Officer setting forth details of the occurrence referred to
therein, and stating what action the Company or any affected Subsidiary
proposes to take with respect thereto and at what time. Each notice under
subsection 7.03(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.

         7.04    Preservation of Corporate Existence, Etc.

                 (a)      The Company shall, and shall cause each Subsidiary
Borrower and each Subsidiary Guarantor to, preserve and maintain in full force
and effect its corporate existence under the laws of its state or jurisdiction
of incorporation;

                 (b)      the Company shall, and shall cause each Subsidiary
Borrower and each Subsidiary Guarantor to, preserve and maintain its good
standing under the laws of its state of incorporation;

                 (c)      the Company shall, and shall cause each of its
Subsidiaries to, preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business;

                 (d)      the Company shall, and shall cause each of its
Subsidiaries to, use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and

                 (e)      the Company shall, and shall cause each of its
Subsidiaries to, preserve or renew all of its registered patents, trademarks,
trade names and service marks;

except in each case referred to in clauses (c), (d) and (e) above, to the
extent failure to do so could not reasonably be expected to have a Material
Adverse Effect.

         7.05    Maintenance of Property. The Company shall maintain, and shall
cause each Subsidiary to maintain, and preserve all its property which is used
or useful in its business in good working order and condition, ordinary wear
and tear excepted and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect. The





                                     - 45 -
<PAGE>   52



Company and each Subsidiary shall use the standard of care typical in the
industry in the operation and maintenance of its facilities.

         7.06    Insurance. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.

         7.07    Payment of Obligations. The Company shall, and shall cause
each Subsidiary to, pay and discharge as the same shall become due and payable,
all their respective obligations and liabilities, including:

                 (a)      all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings and adequate reserves
in accordance with GAAP are being maintained by the Company or such Subsidiary;

                 (b)      all lawful claims which, if unpaid, would by law
become a Lien upon its property, except as may be contested in good faith or as
to which a bona fide dispute may exist; and

                 (c)      all Indebtedness, as and when due and payable, except
as may be contested in good faith or as to which a bona fide dispute may exist
and subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.

         7.08    Compliance with Laws. The Company shall comply, and shall
cause each Subsidiary to comply, in all material respects with all Requirements
of Law of any Governmental Authority having jurisdiction over it or its
business (including the Federal Fair Labor Standards Act), except such as may
be contested in good faith or as to which a bona fide dispute may exist.

         7.09    Compliance with ERISA. The Company shall, and shall cause each
of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Code.

         7.10    Inspection of Property and Books and Records. The Company
shall maintain, and shall cause each Subsidiary and each SPV, if any, to
maintain, proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Company and such Subsidiary or SPV. The Company shall permit, and shall cause
each Subsidiary and each SPV, if any, to permit, representatives and
independent contractors of the Agent or any Bank to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
the Company and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Company; provided, however, when an Event of Default exists the Agent or any
Bank may do any of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice.





                                     - 46 -
<PAGE>   53



         7.11    Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
material compliance with all Environmental Laws.

         7.12    Use of Proceeds. The initial Loans shall be made to the
Company and shall be used to repay outstanding loans made to Nabors Drilling
USA, Inc. by the Existing HKB Secured Creditor. The Borrowers shall use the
proceeds of the Loans (after the initial Loan) for liquidity for commercial
paper, working capital and other general corporate purposes and future
Acquisitions not in contravention of any Requirement of Law or of any Loan
Document.

         7.13    New Subsidiary Guarantors. If, at any time after the date of
this Agreement, there exists any Material Subsidiary incorporated under the
laws of any state in the United States of America, then the Company shall cause
each such Subsidiary to do the following: (i) execute and deliver a Guaranty to
the Agent substantially in the form of Exhibit "I" hereto and (ii) furnish the
Agent with a written opinion of counsel (which may be internal counsel) for
each such Subsidiary Guarantor in substantially the form set forth in Exhibit
"D-1" and Exhibit "D-2".

         7.14    Further Assurances.

                 (a)      Each of the Company and the other Borrowers will
ensure and will cause each of their Subsidiaries to ensure, that all written
information, exhibits and reports furnished to the Agent and the Banks do not
and will not contain any untrue statement of a material fact and do not and
will not omit to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made, and will, and will cause each of their Subsidiaries to, promptly
disclose to the Agent and the Banks and correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgment
or recordation thereof.

                 (b)      Promptly upon request by the Majority Banks or the
Agent, each of the Company and the other Borrowers will, and will cause each of
their Subsidiaries to, do, execute, acknowledge, deliver, record, re-record,
file, and re-file, any and all such further acts, certificates, assurances and
other instruments as the Agent or such Banks may reasonably require from time
to time in order (i) to carry out more effectively the purposes of this
Agreement or any other Loan Document, and (ii) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agent and the Banks the
rights granted or now or hereafter intended to be granted to the Agent and the
Banks under any Loan Document or under any other instrument executed in
connection therewith.

         7.15    Certain Terms Concerning Subordinated Debt. The Agent may, or
shall, if directed to do so by the Majority Banks, (a) issue a Payment Blockage
Notice as defined in the Subordinated Note Supplemental Indenture No. 1
(hereinafter defined in this Section 7.15) upon the occurrence of an Event of
Default hereunder, and (b) give any and all other notices permitted or required
to be given by holders of senior Indebtedness pursuant to the terms of any
agreements now or hereafter governing Indebtedness of the Company or its
Subsidiaries that is subordinated in right of payment to the Obligations
("Subordinated Debt Documents"). The Company agrees that all Subordinated Debt
Documents to which the Company or its Subsidiaries is or are parties shall be
worded so as to give the Agent and the Banks rights which are equal to the
rights given to all holders of other senior Indebtedness. As used herein,
"Subordinated Note Supplemental Indenture No. 1" means that certain
Supplemental Indenture No. 1 dated as of May 15, 1996, from the Company to
Marine Midland Bank, Trustee relating to 5% Convertible Subordinated Notes Due
2006 in the original principal amount of $172,500,000.





                                     - 47 -
<PAGE>   54



                                  ARTICLE VIII

                               NEGATIVE COVENANTS

         So long as any Bank shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in
writing:

         8.01    Limitation on Liens. (a) The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, make, create,
incur, assume or suffer to exist any Lien upon or with respect to any part of
its property, whether now owned or hereafter acquired, other than the following
("Permitted Liens"):

                          (i)     any Lien existing on property of the Company
         or any Subsidiary on the Closing Date and set forth in Schedule 8.01
         securing Indebtedness outstanding on such date, as such Indebtedness
         may be renewed, extended, refinanced and modified;

                          (ii)    any Lien created under any Loan Document;

                          (iii)   Liens for taxes, fees, assessments or other
         governmental charges which are not delinquent or remain payable
         without penalty, or to the extent that non-payment thereof is
         permitted by Section 7.07, provided that no notice of lien has been
         filed or recorded under the Code;

                          (iv)    carriers', warehousemen's, mechanics',
         landlords', materialmen's, repairmen's or other similar Liens arising
         in the ordinary course of business which are not delinquent or remain
         payable without penalty or which are being contested in good faith and
         by appropriate proceedings, which proceedings have the effect of
         preventing the forfeiture or sale of the property subject thereto;

                          (v)     Liens (other than any Lien imposed by ERISA)
         consisting of pledges or deposits required in the ordinary course of
         business in connection with workers' compensation, unemployment
         insurance and other social security legislation or public or statutory
         obligations;

                          (vi)    Liens on the property of the Company or its
         Subsidiary securing (i) the non-delinquent performance of bids or
         tenders, trade contracts (other than for borrowed money), leases and
         statutory obligations, (ii) contingent obligations on surety and
         appeal bonds, and (iii) other non-delinquent obligations of a like
         nature, in each case, incurred in the ordinary course of business,
         provided all such Liens in the aggregate would not (even if enforced)
         cause a Material Adverse Effect;

                          (vii)   Liens consisting of judgment or judicial
         attachment liens, provided that the enforcement of such Liens is
         effectively stayed and all such Liens in the aggregate at any time
         outstanding for the Company and its Subsidiaries do not exceed
         $15,000,000;

                          (viii)  easements, rights-of-way, restrictions and
         other similar encumbrances incurred in the ordinary course of business
         which, in the aggregate, are not substantial in amount, and which do
         not in any case materially detract from the value of the property
         subject thereto or interfere





                                     - 48 -
<PAGE>   55



         with the ordinary conduct of the businesses of the Company and its
         Subsidiaries;

                          (ix)    Liens on assets of corporations which become
         Subsidiaries after the date of this Agreement and Liens on property
         acquired after the date of this Agreement, provided, however, that
         such Liens existed at the time the respective corporations became
         Subsidiaries (or the property was acquired) and were not created in
         anticipation thereof;

                          (x)     Liens arising solely by virtue of any
         statutory or common law provision relating to banker's liens, rights
         of set-off or similar rights and remedies as to deposit accounts or
         other funds maintained with a creditor depository institution;
         provided that (i) such deposit account is not a dedicated cash
         collateral account and is not subject to restrictions against access
         by the Company or its Subsidiaries, as applicable, in excess of those
         set forth by regulations promulgated by the FRB, and (ii) such deposit
         account is not intended by the Company or any Subsidiary to provide
         collateral to the depository institution;

                          (xi)    inchoate Liens arising under ERISA to secure
         current service pension liabilities as they are incurred under the
         provisions of Pension Plans from time to time in effect;

                          (xii)   Liens arising by operation of law on vessels
         owned or leased by the Company and any of its Subsidiaries (i) for
         crew's wages accrued and unpaid for not more than 90 days or for
         collision or salvage to the extent fully covered by valid and
         collectible insurance, (ii) in favor of suppliers of necessaries for
         vessels or other similar Liens arising in the ordinary course of the
         business of the Company or its Subsidiaries which are not overdue for
         a period of more than 90 days or which are being contested in good
         faith and by appropriate proceedings and for which adequate reserves
         have been made, (iii) for loss, damage or expense, which are fully
         covered by valid and collectible insurance, in respect of which a bond
         or other security has been posted by the Company or any Subsidiary
         with the appropriate Governmental Authority to prevent the arrest or
         secure the release of a vessel owned by the Company or a Subsidiary
         from arrest on account of such claim; in each case which do not secure
         the payment of Indebtedness and which do not in the aggregate impair
         in any material respect the use of property or assets in the operation
         of the business of the Company or any Subsidiary;

                          (xiii)  rights of lessees or sublessees under leases
         or subleases of property, whether real, personal or mixed, to other
         Persons, if such leases or subleases are not prohibited by Article
         VIII;

                          (xiv)   Liens arising in respect of any sale and
         lease-back transactions permitted within the dollar limits set forth
         in subsection 8.02(d) of this Agreement;

                          (xv)    contractual rights of set-off in general
         depository accounts granted to financial institutions pursuant to
         guarantees of Indebtedness (or other obligations) of the Company or
         any Subsidiary otherwise permitted by this Agreement, provided that
         (i) the aggregate dollar amount on deposit in depository accounts
         subject to such rights of set-off does not at any time exceed
         $10,000,000 in the aggregate, and (ii) the





                                     - 49 -
<PAGE>   56



         Company (or the applicable Subsidiary) maintains (subject to such
         right of set-off) dominion and control over such account(s);

                          (xvi)   (A) Liens on assets acquired or constructed
         by the Company or its Subsidiaries after the date hereof, so long as
         such liens secure only Non-Recourse Debt of the Company or a
         Subsidiary and such liens are incurred for the purpose of financing or
         constructing such property and Capital Leases that are within the
         definition of Non-Recourse Debt, and (B) Liens on the capital stock of
         an SPV so long as such Liens secure only Indebtedness or Non-Recourse
         Debt incurred by such SPV after the date of this Agreement;

                          (xvii)  subject to Section 8.01(b) hereof, purchase
         money security interests on any property hereafter acquired by the
         Company or its Subsidiaries in the ordinary course of business,
         securing Indebtedness incurred for the purpose of financing all or any
         part of the cost of acquiring or constructing such property; provided
         that (A) any such Lien attaches to such property concurrently with or
         within 20 days after the acquisition thereof, (B) such Lien attaches
         solely to the property so acquired in such transaction, and (C) the
         principal amount of the debt secured thereby does not exceed 100% of
         the cost of such property;

                          (xviii) subject to Section 8.01(b) hereof, liens
         securing obligations in respect of Capital Leases on assets hereafter
         acquired by the Company or its Subsidiaries in the ordinary course of
         business subject to such leases, provided that such Capital Leases are
         otherwise permitted hereunder; and

                          (xix)   subject to Section 8.01(b) hereof, Liens not
         otherwise permitted pursuant to the foregoing securing Indebtedness;
         provided, however that from and after the funding of the initial Loans
         hereunder to repay certain outstanding secured Indebtedness in
         accordance with Section 7.12, the outstanding amount of such
         Indebtedness, together with the outstanding amount of Indebtedness
         permitted pursuant to Section 8.01(a)(i), shall not exceed an
         aggregate amount equal to fifteen percent (15%) of Consolidated Net
         Worth.

                 (b)      Indebtedness secured by Liens permitted by Section
8.01(a)(i), (xvii), (xviii) and (xix) shall not at any time exceed the
aggregate amount of twenty-five percent (25%) of Consolidated Net Worth.

         8.02    Disposition of Assets. The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, sell, assign,
lease, convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse, and including assets to be leased back pursuant to a
sale-leaseback transaction) or enter into any agreement to do any of the
foregoing, except:

                 (a)      dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business, including without
limitation loss of or damage to equipment in the ordinary course of business
(e.g., equipment lost in hole);

                 (b)      the sale of equipment to the extent that such
equipment is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement equipment;





                                     - 50 -
<PAGE>   57



                 (c)      dispositions of assets, properties or businesses by
the Company or any Subsidiary to the Company or any Subsidiary pursuant to
reasonable business requirements;

                 (d)      arrangements with a Person ("sale and leaseback
transactions") providing for the leasing by the Company or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Company or such Subsidiary to such Person, provided, that the aggregate book
value of all assets subject to such arrangements shall not at any time exceed
an amount equal to ten percent (10%) of Consolidated Net Worth; and

                 (e)      dispositions not otherwise permitted hereunder which
are made for fair market value; provided, that (i) at the time of any
disposition, no Event of Default shall exist or shall result from such
disposition, (ii) the aggregate sales price from such disposition shall be paid
in cash or otherwise on payment terms satisfactory to the Company or applicable
Subsidiary, and (iii) unless otherwise consented to by the Majority Banks
(which consent shall not be unreasonably withheld), the aggregate sales of
assets by the Company and its Subsidiaries in any period of four consecutive
fiscal quarters shall not result in a reduction in the aggregate book value of
all assets of the Company and its Subsidiaries (determined in accordance with
GAAP) to an amount that is less than eighty percent (80%) of the aggregate book
value of all assets of the Company and its Subsidiaries (determined in
accordance with GAAP) as at the beginning of such period; provided, however,
that none of the foregoing is intended to or shall permit any disposition of
accounts receivable of the Company or any of its Subsidiaries, with or without
recourse, except in connection with the sale of the assets of a Subsidiary or
an operating unit or division thereof to whom such accounts receivable are
payable.

         8.03    Consolidations and Mergers. The Company shall not, and shall
not suffer or permit any Subsidiary to, merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to or in favor of any Person, except:

                 (a)      any Subsidiary may merge with the Company, provided
that the Company shall be the continuing or surviving corporation, or with any
one or more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation and, if any transaction shall be
between a Borrower and a non-Borrower, the Borrower shall be the continuing or
surviving corporation;

                 (b)      the Company or any Subsidiary of the Company may
merge or consolidate with any other Person other than the Company or a
Subsidiary of the Company, provided that (i) the Company or such Subsidiary is
the survivor of such merger or consolidation and (ii) such merger or
consolidation is not otherwise prohibited by the terms of this Agreement; and

                 (c)      any Subsidiary may sell all or substantially all of
its assets (upon voluntary liquidation, dissolution or otherwise), to the
Company or a Wholly-Owned Subsidiary.

         8.04    Loans and Investments. The Company shall not purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit (including the incurrence of a Guaranty Obligation)





                                     - 51 -
<PAGE>   58



or capital contribution to or any other investment in, any Person including any
Affiliate of the Company (together, "Investments"), except for:

                 (a)      Investments held by the Company or Subsidiary in the
form of cash equivalents;

                 (b)      extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business;

                 (c)      Investments in Persons not engaged in lines of
business other than the Permitted Lines of Business; and

                 (d)      Investments in Persons engaged in lines of business
other than Permitted Lines of Business, provided that such Investments in the
aggregate outstanding do not exceed at any time ten percent (10%) of
Consolidated Net Worth.

         8.05    Transactions with Affiliates. The Company shall not, and shall
not suffer or permit any Subsidiary to, enter into any transaction (other than
executive compensation approved by the Compensation Committee of the Company's
Board of Directors) with any Affiliate of the Company, except upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person not an Affiliate
of the Company or such Subsidiary.

         8.06    Use of Proceeds. (a) The Company shall not, and shall not
suffer or permit any Subsidiary to, use any portion of the Loan proceeds or any
Letter of Credit, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the Company or
others incurred to purchase or carry Margin Stock, (iii) to extend credit for
the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.

                 (b)      The Company shall not, directly or indirectly, use
any portion of the Loan proceeds or any Letter of Credit (i) knowingly to
purchase Ineligible Securities from the Arranger during any period in which the
Arranger makes a market in such Ineligible Securities, (ii) knowingly to
purchase during the underwriting or placement period Ineligible Securities
being underwritten or privately placed by the Arranger, or (iii) to make
payments of principal or interest on Ineligible Securities underwritten or
privately placed by the Arranger and issued by or for the benefit of the
Company or any Affiliate of the Company. The Arranger is a registered
broker-dealer and permitted to underwrite and deal in certain Ineligible
Securities; and "Ineligible Securities" means securities which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.

         8.07    Joint Ventures. The Company shall not, and shall not suffer or
permit any Subsidiary to, enter into any Joint Venture, other than in the
ordinary course of business.

         8.08    Change in Structure; Subsidiary Borrowers. The Company shall
not, and shall not permit any Subsidiary to, make any changes in its capital
structure (including, without limitation, in the terms of its outstanding
capital stock) or amend its articles or certificate of incorporation or by-laws
in a manner that will adversely affect performance of the obligations under the
Loan Documents. For so long as a Subsidiary shall be a Subsidiary Borrower
hereunder, such Subsidiary shall be a Wholly-Owned Subsidiary of the Company.





                                     - 52 -
<PAGE>   59



         8.09    ERISA. The Company shall not, and shall not suffer or permit
any of its ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably expected to result in a Material Adverse
Effect; or (b) engage in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.

         8.10    Change in Business. The Company shall not, and shall not
suffer or permit any Subsidiary or SPV to, engage in any material line of
business substantially different from the Permitted Lines of Business, except
as permitted by Section 8.04(d) of this Agreement. As used in this Agreement,
"Permitted Lines of Business" means those lines of business carried on by the
Company and its Subsidiaries on the date hereof, and includes any line of
business that is considered part of the oilfield services or energy and
petroleum industries.

         8.11    Accounting Changes. The Company shall not, and shall not
suffer or permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as permitted by GAAP.

         8.12    Foreign Subsidiary Indebtedness. The Company shall not permit
any Foreign Subsidiary to create, incur or suffer to exist any Indebtedness,
except (i) Indebtedness owed to the Company or to a Wholly-Owned Subsidiary of
the Company, and (ii) Indebtedness, other than Indebtedness owed to the Company
or to a Wholly-Owned Subsidiary of the Company, in an aggregate amount for all
such Foreign Subsidiaries not to exceed 10% of Consolidated Net Worth at any
time. For purposes of determining the amount of "Indebtedness" under this
Section 8.12, any guaranties issued by a Foreign Subsidiary with respect to
Indebtedness of a Borrower or Guarantor shall constitute "Indebtedness" of such
Foreign Subsidiary.

         8.13    Capitalization Ratio.

                 (a)      The Company shall not permit the Capitalization Ratio
to be greater than the amounts specified at any time during the periods
specified below, to-wit:

<TABLE>
<CAPTION>
                        Period                                        Maximum Capitalization Ratio
                        ------                                        ----------------------------
<S>                                                                           <C>
From  and  including  the  Closing  Date  through  and
including September 29, 1998                                                  0.50 : 1.00

From  and including  September  30, 1998  through  and
including September 29, 1999                                                  0.45 : 1.00

From  and  including September  30,  1999  through and
including the Maturity Date                                                   0.40 : 1.00
</TABLE>

         8.14    Minimum Net Worth. The Company will not permit its
Consolidated Net Worth at any time to be less than the sum of (i) $530,514,000,
plus (ii) 50% of Consolidated Net Income for each fiscal quarter beginning with
the fiscal quarter ending September 30, 1997 (provided that no negative
adjustment will be made for any fiscal quarter in the event that Consolidated
Net Income is a deficit figure for such fiscal quarter).

         8.15    Interest Coverage Ratio. The Company shall not permit (as of
the end of any fiscal quarter) the Interest Coverage Ratio for any period of
four consecutive fiscal quarters to be less than the 3.00 to 1.00.





                                     - 53 -
<PAGE>   60



         8.16    Subsidiary Dividends. The Company will not, and it will not
permit any of its Subsidiaries to, be a party to or enter into any agreement,
instrument or other document which prohibits or restricts in any way, or to
otherwise, directly or indirectly, create or cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary of
the Company to (i) pay dividends or make any other distributions in respect of
its capital stock or any other equity interest or participation in any
Subsidiary, or pay or repay any Indebtedness owed to the Company or any
Subsidiary, (ii) make loans or advances to the Company or (iii) transfer any of
its properties or assets to the Company or any Subsidiary (subject to the
rights of any holder of a Lien on any such properties or assets which Lien is a
Permitted Lien). Notwithstanding the foregoing, this Section 8.16 shall not
prohibit a Foreign Subsidiary from entering into or being a party to agreements
of the type customarily entered into by Persons engaged in the same or similar
business under similar circumstances in such countries.

         8.17    Debt of SPVs; No Liens or Stock Held by SPVs. Neither the
Company nor any Subsidiary shall at any time (a) be directly or indirectly
liable, by virtue of the Company or such Subsidiary being the primary obligor
on, or a guarantor of (by way of Guaranty Obligation, statute, common law or
otherwise), or otherwise contractually liable in any respect on, any
Indebtedness of any SPV or (b) create or suffer to exist, upon or with respect
to any part of its property, any Liens to secure any obligations owed by an
SPV, except for Liens on the stock of an SPV permitted pursuant to Section
8.01(a)(xvi). The Company shall not permit any SPV to own or hold, directly or
indirectly, any capital stock of, or any interest in or Lien on any property
of, the Company or any Subsidiary.


                                   ARTICLE IX

                               EVENTS OF DEFAULT

         9.01    Event of Default. Any of the following shall constitute an
"Event of Default":

                 (a)      Non-Payment. Any Borrower fails to pay (i) when and
as required to be paid herein, any amount of principal of any Loan or of any
L/C Obligation, or (ii) within five (5) Business Days after the same becomes
due, any interest, fee or other amount payable hereunder or under any other
Loan Document; or

                 (b)      Representation or Warranty. Any representation or
warranty by the Company or any other Borrower or any Guarantor made or deemed
made herein, in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the Company, any
Subsidiary, or any Responsible Officer, furnished at any time under this
Agreement, or in or under any other Loan Document, is incorrect in any material
respect on or as of the date made or deemed made; or

                 (c)      Specific Defaults. The Company fails to perform or
observe any term contained in Section 7.03(a) or Article VIII; or

                 (d)      Other Defaults. The Company or any other Borrower or
Guarantor party thereto fails to perform or observe any other term or covenant
contained in this Agreement or any other Loan Document, and such default shall
continue unremedied for a period of 30 days after the date upon which written
notice thereof is given to the Company by Agent or any Bank;

                 (e)      Cross-Default. The Company or any Subsidiary (A)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation having an aggregate principal amount (including amounts owing to all
creditors under any combined or





                                     - 54 -
<PAGE>   61



syndicated credit arrangement) of more than $10,000,000 when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise)
and such failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure; or (B) fails to
perform or observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating to any
such Indebtedness or Contingent Obligation, if the effect of such failure,
event or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries)
to cause such Indebtedness to be declared to be due and payable prior to its
stated maturity or such Contingent Obligation to become payable or cash
collateral in respect thereof to be demanded; or

                 (f)      Insolvency; Voluntary Proceedings. The Company, any
Subsidiary Borrower, any Subsidiary Guarantor or any Material Subsidiary (i)
ceases or fails to be solvent, or generally fails to pay, or admits in writing
its inability to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (ii) voluntarily
ceases to conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action to
effectuate or authorize any of the foregoing; or

                 (g)      Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company, any Subsidiary
Borrower, any Subsidiary Guarantor or any Material Subsidiary, or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Company's, any Subsidiary Borrower's,
any Subsidiary Guarantor's or any Material Subsidiary's properties, and any
such proceeding or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be released,
vacated or fully bonded within 60 days after commencement, filing or levy; (ii)
the Company, any Subsidiary Borrower, any Subsidiary Guarantor or any Material
Subsidiary admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or (iii) the Company, any
Subsidiary Borrower, any Subsidiary Guarantor or any Material Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other similar
Person for itself or a substantial portion of its property or business; or

                 (h)      ERISA. (i) An ERISA Event shall occur with respect to
a Pension Plan or Multiemployer Plan which has resulted in an unsatisfied
liability of the Company or any Material Subsidiary under Title IV of ERISA to
the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
excess of $10,000,000; the aggregate amount of Unfunded Pension Liability among
all Pension Plans at any time exceeds $10,000,000; or (ii) the Company or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an
aggregate amount in excess of $10,000,000; or

                 (i)      Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any Material Subsidiary involving in the aggregate a
liability (to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage) as to any single or related series
of transactions, incidents or conditions, of $10,000,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of
30 days after the entry thereof; or

       (j)      Change of Control. There occurs any Change of Control; or





                                     - 55 -
<PAGE>   62



                 (k)      Guarantor Defaults. Any Guaranty is for any reason
(other than sale of a Subsidiary Guarantor as is permitted by this Agreement)
partially (including with respect to future advances) or wholly revoked or
invalidated, or otherwise ceases to be in full force and effect, or any
Guarantor or any other Person contests in any material respect the validity or
enforceability thereof or denies that it has any further liability or
obligation thereunder.

         9.02    Remedies. If any Event of Default occurs and is continuing,
the Agent shall, at the request of, or may, with the consent of, the Majority
Banks,

                 (a)      declare the commitment of each Bank to make Loans and
any obligation of the Issuing Bank to Issue Letters of Credit to be terminated,
whereupon such commitments and obligation shall be terminated;

                 (b)      declare an amount equal to the maximum aggregate
amount that is or at any time thereafter may become available for drawing under
any outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby expressly
waived by the Company and the other Borrowers;

                 (c)      require cash collateral as provided in Section 3.07;
and

                 (d)      exercise on behalf of itself and the Banks all rights
and remedies available to it and the Banks under the Loan Documents or
applicable law;

provided, however, that upon the occurrence of any event specified in
subsection (f) or (g) of Section 9.01 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the obligation
of each Bank to make Loans and any obligation of the Issuing Bank to Issue
Letters of Credit shall automatically terminate, the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent, the
Issuing Bank or any Bank cash collateral as set forth in Section 3.07 shall
automatically be due and payable, in each case without further act of the
Agent, the Issuing Bank or any Bank and without presentment, demand, protest,
notice of intention to accelerate, notice of acceleration or any other notice
of any kind, all of which are hereby expressly waived by the Company and each
other Borrower.

         9.03    Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.


                                   ARTICLE X

                                   THE AGENT

         10.01   Appointment and Authorization; Agent. (a) Each Bank hereby
irrevocably (subject to Section 10.09) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document





                                     - 56 -
<PAGE>   63



and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.

                 (b)      The Issuing Bank shall act on behalf of the Banks
with respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at the
request of the Majority Banks to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the
benefits and immunities (i) provided to the Agent in this Article X with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent", as used in this Article X,
included the Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing Bank.

         10.02   Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.

         10.03   Liability of Agent-Related Persons and Documentation Agent.
None of the Agent-Related Persons nor the Documentation Agent shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by the Company or any
Subsidiary or Affiliate of the Company, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent or the Documentation Agent under or in connection with, this Agreement or
any other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Company or any other party to any Loan Document to
perform its obligations hereunder or thereunder. None of the Agent-Related
Persons nor the Documentation Agent shall be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.

         10.04   Reliance by Agent. (a) The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of





                                     - 57 -
<PAGE>   64



legal counsel (including counsel to the Company), independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Majority Banks and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Banks.

                 (b)      For purposes of determining compliance with the
conditions specified in Section 5.01, each Bank that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to such
Bank for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to the Bank.

         10.05   Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the Agent
shall have received written notice from a Bank or a Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". The Agent will notify the Banks of its receipt
of any such notice. Subject to subsection 10.04(a), the Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Majority Banks in accordance with Article IX; provided, however, that
unless and until the Agent has received any such request, the 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 or in the best interest of the Banks.

         10.06   Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons nor the Documentation Agent has made any representation
or warranty to it, and that no act by any Agent-Related Person or the
Documentation Agent hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person or the Documentation
Agent to any Bank. Each Bank represents to the Agent and the Documentation
Agent that it has, independently and without reliance upon any Agent- Related
Person or the Documentation Agent and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Company and its Subsidiaries, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the
Borrowers hereunder. Each Bank also represents that it will, independently and
without reliance upon any Agent-Related Person or the Documentation Agent and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the Agent,
neither the Agent nor the Documentation Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrowers which may





                                     - 58 -
<PAGE>   65



come into the possession of any of the Agent-Related Persons or the
Documentation Agent.

         10.07   Indemnification of Agent-Related Persons and Documentation
Agent. Whether or not the transactions contemplated hereby are consummated, the
Banks shall indemnify upon demand each Agent-Related Person and the
Documentation Agent (to the extent not reimbursed by or on behalf of the
Borrowers and without limiting the obligation of the Borrowers to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Bank shall be liable for the payment to any such indemnified Person of
any portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank shall reimburse the Agent upon demand for its ratable share of any
costs and out-of-pocket expenses (including Attorney Costs) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Borrowers. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent or the Documentation
Agent.

         10.08   Agent and Documentation Agent in Individual Capacity. Each of
BofA, Wells Fargo Bank (Texas), N.A.  ("WFB") and their respective Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though BofA were not the Agent or the
Issuing Bank hereunder, and as though WFB were not the Documentation Agent
hereunder, and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, BofA or its Affiliates and WFB or its
Affiliates may receive information regarding the Company or its Subsidiaries or
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary or Affiliate) and
acknowledge that neither the Agent-Related Persons nor WFB shall be under any
obligation to provide such information to them. With respect to their
respective Loans, each of BofA and WFB shall have the same rights and powers
under this Agreement as any other Bank and may exercise the same as though it
were not the Agent or the Issuing Bank, or the Documentation Agent,
respectively.

         10.09   Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If the
Agent resigns under this Agreement, the Majority Banks shall appoint from among
the Banks a successor agent for the Banks. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Banks and the Company, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X and Sections 11.04 and 11.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of the Agent
hereunder until such time, if any, as the Majority Banks appoint a successor
agent as provided for above.  Notwithstanding the foregoing, however, BofA may
not be removed as the Agent at the request of the Majority Banks unless BofA
shall also simultaneously be replaced as





                                     - 59 -
<PAGE>   66



"Issuing Bank" hereunder pursuant to documentation in form and substance
reasonably satisfactory to BofA.

         10.10   Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Agent and the
Borrowers, to deliver to the Agent:

                          (i)     if such Bank claims an exemption from, or a
         reduction of, withholding tax under a United States tax treaty, two
         properly completed and executed copies of IRS Form 1001 before the
         payment of any interest in the first calendar year and before the
         payment of any interest in each third succeeding calendar year during
         which interest may be paid under this Agreement;

                          (ii)    if such Bank claims that interest paid under
         this Agreement is exempt from United States withholding tax because it
         is effectively connected with a United States trade or business of
         such Bank, two properly completed and executed copies of IRS Form 4224
         before the payment of any interest is due in the first taxable year of
         such Bank and in each succeeding taxable year of such Bank during
         which interest may be paid under this Agreement; and

                          (iii)   such other form or forms as may be required
         under the Code or other laws of the United States as a condition to
         exemption from, or reduction of, United States withholding tax.

Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

                 (b)      If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Borrowers to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrowers to such Bank. To the extent of
such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.

                 (c)      If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrowers to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.

                 (d)      If any Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment to
such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to the Agent, then
the Agent may withhold from any interest payment to such Bank not providing
such forms or other documentation an amount equivalent to the applicable
withholding tax without reduction.

                 (e)      If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed,
or because such Bank failed to notify the Agent of





                                     - 60 -
<PAGE>   67



a change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason, other than by reason of
the Agent's gross negligence or willful misconduct) such Bank shall indemnify
the Agent fully for all amounts paid, directly or indirectly, by the Agent as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to the Agent under this
Section, together with all costs and expenses (including Attorney Costs). The
obligation of the Banks under this subsection shall survive the payment of all
Obligations and the resignation or replacement of the Agent.

         10.11   Documentation Agent; Arranger. The Documentation Agent shall
not have any right, power, obligation, liability, responsibility or duty under
this Agreement other than those applicable to all Banks as such. The Arranger
shall not have any obligations, liabilities, responsibilities or duties under
this Agreement or the other Loan Documents. Without limiting the foregoing,
neither the Documentation Agent nor the Arranger, shall have or be deemed to
have any fiduciary relationship with any Bank. Each Bank acknowledges that it
has not relied, and will not rely, on the Documentation Agent or on the
Arranger in deciding to enter into this Agreement or in taking or not taking
action hereunder.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





                                     - 61 -
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                                   ARTICLE XI

                                 MISCELLANEOUS

         11.01   Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company or any applicable Subsidiary therefrom,
shall be effective unless the same shall be in writing and signed by the
Majority Banks (or by the Agent at the written request of the Majority Banks)
and the Company (or Subsidiary, as applicable) and acknowledged by the Agent,
and then any such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing
and signed by all the Banks and the Company and acknowledged by the Agent, do
any of the following:

                 (a)      increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 9.02);

                 (b)      postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document;

                 (c)      reduce the principal of, or the rate of interest
specified herein on any Loan, or (subject to clause (iii) below) any fees or
other amounts payable hereunder or under any other Loan Document;

                 (d)      change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Banks
or any of them to take any action hereunder;

                 (e)      amend this Section, or Section 2.14, or any provision
herein providing for consent or other action by all Banks; or

                 (f)      discharge any Guarantor;

and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Issuing Bank in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the Issuing
Bank under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to the Majority
Banks or all the Banks, as the case may be, affect the rights or duties of the
Agent under this Agreement or any other Loan Document, and (iii) the Fee Letter
may be amended, or rights or privileges thereunder waived, only in a writing
executed by the parties thereto.

         11.02   Notices. (a) All notices, requests, consents, approvals,
waivers and other communications shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission, provided that
any matter transmitted by the Company or any other Borrower by facsimile (i)
shall be immediately confirmed by a telephone call to the recipient at the
number specified on Schedule 11.02, and (ii) shall be followed promptly by
delivery of a hard copy original thereof) and mailed, faxed or delivered, to
the address or facsimile number specified for notices on Schedule 11.02; or, as
directed to the Company or the Agent, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Company and the Agent.





                                     - 62 -
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                 (b)      All such notices, requests and communications shall,
when transmitted by overnight delivery, or faxed, be effective when delivered
for overnight (next Business Day) delivery, or transmitted in legible form by
facsimile machine, respectively, or if mailed, upon the third Business Day
after the date deposited into the U.S. mail, or if delivered, upon delivery;
except that notices pursuant to Article II, III or X to the Agent shall not be
effective until actually received by the Agent, and notices pursuant to Article
III to the Issuing Bank shall not be effective until actually received by the
Issuing Bank at the address specified for the "Issuing Bank" on the applicable
signature page hereof.

                 (c)      Any agreement of the Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Borrowers. Accordingly, the Agent and the Banks shall
be entitled to rely on the authority of any Person purporting to be a Person
authorized by the Company or any other Borrower to give such notice and the
Agent and the Banks shall not have any liability to the Company or any other
Borrower or other Person on account of any action taken or not taken by the
Agent or the Banks in reliance upon such telephonic or facsimile notice. The
obligation of the Borrowers to repay the Loans and L/C Obligations shall not be
affected in any way or to any extent by any failure by the Agent and the Banks
to receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Banks of a confirmation which is at variance with
the terms understood by the Agent and the Banks to be contained in the
telephonic or facsimile notice.

         11.03   No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.

         11.04   Costs and Expenses. Each of the Company and the other
Borrowers agree, jointly and severally, to:

                 (a)      whether or not the transactions contemplated hereby
are consummated, pay or reimburse BofA (including in its capacity as Agent and
Issuing Bank) within fifteen Business Days after demand (subject to subsection
5.01(e)) for all costs and expenses incurred by BofA (including in its capacity
as Agent and Issuing Bank) in connection with the development, preparation,
delivery, administration and execution of, and any amendment, supplement,
waiver or modification to (in each case, whether or not consummated), this
Agreement, any Loan Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including reasonable Attorney Costs incurred by BofA
(including in its capacity as Agent and Issuing Bank) with respect thereto; and

                 (b)      pay or reimburse the Agent, the Arranger and each
Bank within five Business Days after demand (subject to subsection 5.01(e)) for
all costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).

         11.05   Indemnification. Whether or not the transactions contemplated
hereby are consummated, each of the Borrowers, jointly and severally, shall
indemnify, defend and hold the Agent-Related Persons, the Documentation Agent,
and each Bank and each of their respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each,





                                     - 63 -
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an "Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans, the termination of the Letters of Credit and the
termination, resignation or replacement of the Agent or the Documentation Agent
or replacement of any Bank) be imposed on, incurred by or asserted against any
such Indemnified Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Indemnified
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement
or the Loans or Letters of Credit or the use of the proceeds thereof, whether
or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the Borrowers
shall have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.

         11.06   Payments Set Aside. To the extent that one or more of the
Borrowers makes a payment to the Agent or the Banks, or the Agent or the Banks
exercise their right of set-off, and such payment or the proceeds of such
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Agent or such Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Bank severally agrees to pay to the
Agent upon demand its pro rata share of any amount so recovered from or repaid
by the Agent.

         11.07   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, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and each Bank.

         11.08   Assignments, Participations, etc. (a) Any Bank may, with the
written consent of the Company at all times other than during the existence of
an Event of Default and the Agent and the Issuing Bank, which consents shall
not be unreasonably withheld, at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of the Company, the Agent
or the Issuing Bank shall be required in connection with any assignment and
delegation by a Bank to an Eligible Assignee that is an Affiliate of such Bank)
(each an "Assignee") all, or any ratable part of all, of the Loans, the
Commitments, the L/C Obligations and the other rights and obligations of such
Bank hereunder, in a minimum amount of $10,000,000 (or such lesser amount as
may than be held by such Bank); provided, however, that in the event a Bank
assigns less than all of its interests hereunder, it shall retain a Commitment
of not less than $10,000,000 after the consummation of the assignment;
provided, further, that the Borrowers and the Agent may continue to deal solely
and directly with an assigning Bank in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Agent by such Bank and
the Assignee; (ii) such Bank and its Assignee shall have delivered to the
Company and the Agent an Assignment and Acceptance in the form of Exhibit E
("Assignment and Acceptance"), together with any Note or Notes subject to such
assignment, and (iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $3,500.





                                     - 64 -
<PAGE>   71



                 (b)      From and after the date that the Agent notifies the
assignor Bank that it has received (and provided its consent with respect to)
an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.

                 (c)      Within ten Business Days after its receipt of notice
by the Agent that it has received an executed Assignment and Acceptance and
payment of the processing fee, (and provided that they consent to such
assignment in accordance with, and to the extent such consent is required
under, subsection 11.08(a)), if requested by the Assignee named in such
Assignment and Acceptance, the Borrowers shall execute and deliver to the
Agent, new Notes evidencing such Assignee's assigned Loans and Commitment and,
if the assignor Bank has retained a portion of its Loans and its Commitment and
if Assignor so requests, replacement Notes in the principal amount of the
Commitment retained by the assignor Bank (such Notes to be in exchange for, but
not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Bank
pro tanto.

                 (d)      Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank (the "originating Bank") hereunder
and under the other Loan Documents; provided, however, that (i) the originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company, the Issuing Bank and the Agent shall continue
to deal solely and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Banks as described in the first proviso to Section
11.01. In the case of any such participation, the Participant shall be entitled
to the benefit of Sections 4.01, 4.03 and 11.05 as though it were also a Bank
hereunder, and if amounts outstanding under this Agreement are due and unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement.

                 (e)      Notwithstanding any other provision in this
Agreement, any Bank may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement and the
Notes held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.

         11.09   Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of





                                     - 65 -
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all information identified as "confidential" or "secret" by the Company and
provided to it by the Company or any Subsidiary, or by the Agent on the
Company's or such Subsidiary's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with the Company or any Subsidiary; except
to the extent such information (i) was or becomes generally available to the
public other than as a result of disclosure by the Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality agreement with the
Company known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent,
any Bank or their respective Affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (F) to such Bank's independent auditors and
other professional advisors; (G) with the consent of the Company (which consent
shall not be unreasonably withheld and which consent shall not be necessary
during the existence of an Event of Default), to any Assignee, actual or
potential, provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Banks hereunder; (H) to any
Participant, actual or potential, provided that such Person agrees in writing
to keep such information confidential to the same extent required of the Banks
hereunder; and (I) to its Affiliates for use in connection with administration
of this Agreement.

         11.10   Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Borrowers, any such notice being waived by the Borrowers 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 by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of any one or more of the Borrowers against any and all Obligations
owing to such Bank, now or hereafter existing, irrespective of whether or not
the Agent or such Bank shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Bank agrees promptly to notify the Company and the Agent after any such set-off
and application made by such Bank; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.

         11.11   Company as Subsidiary Borrower Representative. Each Subsidiary
Borrower hereby irrevocably designates and appoints the Company as the agent of
such Subsidiary Borrower under this Agreement and the other Loan Documents for
the purpose of receiving or giving notices and taking other actions permitted
or required to be taken by a Borrower pursuant to the terms of this Agreement
and the other Loan Documents. In furtherance of the foregoing, each Subsidiary
Borrower hereby irrevocably grants to the Company such Subsidiary Borrower's
power-of-attorney, and hereby authorizes the Company, to act in place of such
Subsidiary Borrower with respect to such matters pursuant to the terms of this
Agreement and the other Loan Documents and to take such other actions as are
reasonably incidental thereto. The Company hereby agrees to provide prompt
notice to the relevant Subsidiary Borrower of any action taken by the Company
under this Agreement and the other Loan Documents in place of such Subsidiary
Borrower, provided that the failure to so provide such notice shall not affect
the obligations of such Subsidiary Borrower hereunder. The Agent is hereby
authorized to





                                     - 66 -
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direct to the Company all invoices and similar statements showing amounts due
by the Borrowers hereunder.

         11.12   Interest. It is the intention of the parties hereto to comply
strictly with applicable usury laws; accordingly, notwithstanding any provision
to the contrary in this Agreement, the Notes or in any of the other Loan
Documents securing the payment hereof or otherwise relating hereto, in no event
shall this Agreement, the Notes or such other Loan Documents require or permit
the payment, charging, taking, reserving, or receiving of any sums constituting
interest under applicable laws which exceed the maximum nonusurious amount
permitted by such laws. If any such excess interest is contracted for, charged,
taken, reserved, or received in connection with the Loans evidenced by the
Notes or in any of the Loan Documents securing the payment hereof or otherwise
relating hereto, or in any communication by Agent or the Banks or any other
person to any Borrower or any other person, or in the event all or part of the
principal or interest thereof shall be prepaid or accelerated, so that under
any of such circumstances or under any other circumstance whatsoever the amount
of interest contracted for, charged, taken, reserved, or received on the amount
of principal actually outstanding from time to time under the Notes shall
exceed the maximum nonusurious amount of interest permitted by applicable usury
laws, then in any such event it is agreed as follows: (i) the provisions of
this paragraph shall govern and control, (ii) any such excess shall be deemed
an accidental and bona fide error and canceled automatically to the extent of
such excess, and shall not be collected or collectible, (iii) any such excess
which is or has been paid or received notwithstanding this paragraph shall be
credited against the then unpaid principal balance of the Notes, or, if no
principal balance is then outstanding, refunded to the applicable Borrower, and
(iv) the effective rate of interest shall be automatically reduced to the
maximum nonusurious rate allowed under applicable laws as construed by courts
having jurisdiction thereof or hereof. Without limiting the foregoing, all
calculations of the rate of interest contracted for, charged, taken, reserved,
or received in connection with the Notes or this Agreement which are made for
the purpose of determining whether such rate exceeds the maximum nonusurious
rate shall be made to the extent permitted by applicable laws by amortizing,
prorating, allocating and spreading during the period of the full term of the
Loans, including all prior and subsequent renewals and extensions, all interest
at any time contracted for, charged, taken, reserved, or received. The terms of
this paragraph shall be deemed to be incorporated in every document and
communication relating to the Notes, the Loans or any other Loan Document.

         11.13   Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law, each
Borrower agrees that in the event a payment shall be made by any Guarantor
under a Guaranty in respect of a Loan to such Borrower, such Borrower shall
indemnify such Guarantor for the full amount of such payment and such Guarantor
shall be subrogated to the rights of the person to whom such payment shall have
been made to the extent of such payment subject to the provisions of the
Guaranty executed by such Guarantor.  Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under this Section
11.13 and all other rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full of the Obligations. No failure on the part of a Borrower to
make the payments required by this Section (or any other payments required
under applicable law or otherwise) shall in any respect limit the obligations
and liabilities of any Guarantor with respect to any Guaranty, and each
Guarantor shall remain liable for the full amount of the obligations of such
Guarantor under each such Guaranty in accordance therewith.

         11.14   Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Agent in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of any Lending Office, of
payment instructions in respect of all





                                     - 67 -
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payments to be made to it hereunder and of such other administrative
information as the Agent shall reasonably request.

         11.15   Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.

         11.16   Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.

         11.17   No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrowers, the Banks, the
Agent and the Agent-Related Persons, and their permitted successors and
assigns, and no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection with,
this Agreement or any of the other Loan Documents.

         11.18   GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT AND THE
NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND
APPLICABLE FEDERAL LAW.

                 (b)      ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT 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 BORROWERS, THE AGENT
AND THE BANKS (OTHER THAN EDC) CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
BORROWERS, THE AGENT AND THE BANKS (OTHER THAN EDC) IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH BORROWER HEREBY IRREVOCABLY
DESIGNATES, APPOINTS AND EMPOWERS THE CORPORATION SERVICE COMPANY WITH OFFICES
ON THE DATE HEREOF AT 80 STATE STREET, ALBANY, NEW YORK 12207, 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 BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND
AGENT IN NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE AGENT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
BORROWER 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 SET FORTH IN SCHEDULE 11.02, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS
AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY
BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL





                                     - 68 -
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PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY BORROWER IN ANY OTHER
JURISDICTION. THE BORROWERS, THE AGENT AND THE BANKS (OTHER THAN EDC) EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW. As used in this subparagraph
11.18(b), "EDC" means Export Development Corporation but does not include
assignees of Export Development Corporation under Section 11.08.

         11.19   WAIVER OF JURY TRIAL. THE BORROWERS, THE BANKS AND THE AGENT
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE BORROWERS, THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.

         11.20   Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Borrowers,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.

         THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN LOAN
DOCUMENTS EXECUTED IN CONNECTION HEREWITH, REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

         THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





                                     - 69 -
<PAGE>   76





         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.

                                       NABORS INDUSTRIES, INC.
                                       
                                       
                                       By /s/ BRUCE P. KOCH
                                         --------------------------------------
                                       
                                       Name: Bruce P. Koch 
                                            -----------------------------------
                                       
                                       Title: Vice President - Finance
                                             ----------------------------------
                                       
                                       -The Company-
                                       
                                       NABORS ALASKA DRILLING, INC.
                                       
                                       By /s/ RICHARD A. STRATTON
                                         --------------------------------------
                                       
                                       Name:  Richard A. Stratton              
                                            -----------------------------------
                                       
                                       Title: Executive Vice President         
                                             ----------------------------------
                                       
                                       
                                       NABORS DRILLING USA, INC.
                                       
                                       By /s/ RICHARD A. STRATTON              
                                         --------------------------------------
                                       
                                       Name:  Richard A. Stratton              
                                            -----------------------------------
                                       
                                       Title: President                        
                                             ----------------------------------
                                       
                                       
                                       NABORS INTERNATIONAL, INC.
                                       
                                       By /s/ ELIZABETH A. LEDIG               
                                         --------------------------------------
                                       
                                       Name:  Elizabeth A. Ledig               
                                            -----------------------------------
                                       
                                       Title: Vice President - Finance         
                                             ----------------------------------
                                       
                                       
                                       SUNDOWNER OFFSHORE SERVICES,
                                       INC.
                                       
                                       By /s/ JERRY C. SHANKLIN                
                                         --------------------------------------
                                       
                                       Name:  Jerry C. Shanklin                
                                            -----------------------------------
                                       
                                       Title: President                        
                                             ----------------------------------





                                     - 70 -
<PAGE>   77


                                       NABORS OFFSHORE DRILLING, INC.
                                       
                                       By /s/ JERRY C. SHANKLIN                
                                         --------------------------------------
                                       
                                       Name:  Jerry C. Shanklin                
                                            -----------------------------------
                                       
                                       Title: President                        
                                             ----------------------------------
                                       
                                       
                                       NABORS DRILLING INTERNATIONAL
                                       LIMITED
                                       
                                       By /s/ ELIZABETH A. LEDIG               
                                         --------------------------------------
                                       
                                       Name:  Elizabeth A. Ledig               
                                            -----------------------------------
                                       
                                       Title: Vice President - Finance         
                                             ----------------------------------
                                       
                                       -The Subsidiary Borrowers-
                                       
                                       
                                       BANK OF AMERICA NATIONAL TRUST
                                       AND SAVINGS ASSOCIATION,
                                       as Administrative Agent
                                       
                                       
                                       By /s/ CLAIRE LIU                       
                                         --------------------------------------
                                       
                                       Name:  Claire Liu                       
                                            -----------------------------------
                                       
                                       Title: Vice President                   
                                             ----------------------------------
                                       
                                       -The Agent-
                                       
                                       
                                       BANK OF AMERICA NATIONAL TRUST
                                       AND SAVINGS ASSOCIATION, as
                                       Issuing Bank, Swing Loan Bank and a Bank
                                       
                                       
                                       By /s/ CLAIRE LIU                       
                                         --------------------------------------
                                       
                                       Name:  Claire Liu                       
                                            -----------------------------------
                                       
                                       Title: Vice President                   
                                             ----------------------------------
                                       


                                    - 71 -
<PAGE>   78

                               
                                       WELLS FARGO BANK (TEXAS),
                                       NATIONAL ASSOCIATION, as
                                       Documentation Agent and as a Bank
                                       
                                       
                                       By /s/ FRANK W. SCHAGEMAN
                                         --------------------------------------
                                       
                                       Name:  Frank W. Schageman               
                                            -----------------------------------
                                       
                                       Title: Vice President                   
                                             ----------------------------------
                                       
                                       
                                       THE BANK OF NOVA SCOTIA
                                       
                                       
                                       By /s/ [ILLEGIBLE]                    
                                         --------------------------------------
                                       
                                       Name:  [ILLEGIBLE]                   
                                            -----------------------------------
                                       
                                       Title: Senior Manager Loan Operations   
                                             ----------------------------------
                                       
                                       
                                       BANK ONE, TEXAS, NA
                                       
                                       
                                       By /s/ STEPHEN SHATTO           
                                         --------------------------------------
                                       
                                       Name:  Stephen Shatto                 
                                            -----------------------------------
                                       
                                       Title: Vice President                   
                                             ----------------------------------
                                       
                                       
                                       THE BANK OF TOKYO-MITSUBISHI, 
                                       LTD., HOUSTON AGENCY
                                       
                                       
                                       By /s/ JOHN W. MCGHEE                   
                                         --------------------------------------
                                       
                                       Name:  John W. McGhee                   
                                            -----------------------------------
                                              Title: Vice President & Manager  
                                             ----------------------------------
                                       
                                       
                                       THE DAI-ICHI KANGYO BANK, LIMITED
                                       
                                       
                                       By /s/ SEIJI IMAJ                       
                                         --------------------------------------
                                       
                                       Name:  Seiji Imaj                       
                                            -----------------------------------
                                       
                                       Title: Vice President                   
                                             ----------------------------------
                                       
                                       


                                    - 72 -
<PAGE>   79


                                       EXPORT DEVELOPMENT CORPORATION
                                       
                                       
                                       By /s/ WILLIAM J. CLEMENTS
                                         --------------------------------------
                                       
                                       Name:  William J. Clements              
                                            -----------------------------------
                                       
                                       Title: Financial Services Manager
                                             ----------------------------------


                                       By /s/ STEPHEN DEMPSEY                  
                                         --------------------------------------
                                       
                                       Name:  Stephen Dempsey
                                            -----------------------------------
                                       
                                       Title: Vice President
                                             ----------------------------------
                                       
                                       
                                       THE FUJI BANK, LIMITED -
                                       HOUSTON AGENCY
                                       
                                       
                                       By /s/ NATE ELLIS                       
                                         --------------------------------------
                                       
                                       Name:  Nate Ellis                       
                                            -----------------------------------
                                       
                                       Title: Vice President & Manager
                                             ----------------------------------
                                       
                                       
                                       ROYAL BANK OF CANADA
                                       
                                       
                                       By /s/ J.D. FROST                       
                                         --------------------------------------
                                       
                                       Name:  J. D. Frost                      
                                            -----------------------------------
                                       
                                       Title: Senior Manager
                                             ----------------------------------





                                     - 73 -
<PAGE>   80
                                 SCHEDULE 2.01

                                  COMMITMENTS
                              AND PRO RATA SHARES


<TABLE>
<CAPTION>
                                                                                           Pro Rata
                   Bank                              Commitment                             Share
                   ----                              ----------                             -----
<S>                                                  <C>                                    <C>
Bank of America National
Trust and Savings                                    $31,000,000                            15.5%
Association

Wells Fargo Bank (Texas),                            $29,000,000                            14.5%
National Association


Bank of Nova Scotia                                  $20,000,000                             10%


Bank One, Texas, NA                                  $20,000,000                             10%


The Bank of Tokyo-Mitsubishi,   Ltd.,                $20,000,000                             10%
Houston Agency


The Dai-Ichi Kangyo Bank, Limited                    $20,000,000                             10%


Export Development Corporation                       $20,000,000                             10%


The Fuji Bank, Limited -                             $20,000,000                             10%
Houston Agency


Royal Bank of Canada                                 $20,000,000                             10%


         TOTAL                                      $200,000,000                            100%
</TABLE>





<PAGE>   81
                                 SCHEDULE 2.02

                                 PRICING CHART



<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Pricing Level                   I             II            III             IV             V            VI
-------------------------------------------------------------------------------------------------------------
Rating                        A/A2           A-/A3         BBB+/           BBB/          BBB-/       BB+/Bal
                           or better                       Baa1           Baa2           Baa3       or lower
=============================================================================================================
<S>                           <C>            <C>           <C>             <C>           <C>           <C>
Applicable Margin-
LIBOR Rate Loans             20.00          25.00         30.00           35.00         42.50         70.00
-------------------------------------------------------------------------------------------------------------
Applicable Margin-
    IBOR Rate Loans          50.00          50.00         50.00           50.00         50.00         50.00
-------------------------------------------------------------------------------------------------------------
Applicable Margin-
    Base Rate Loans           0.00          0.00           0.00            0.00          0.00          0.00
-------------------------------------------------------------------------------------------------------------
    Commitment Fee            6.50          8.50          10.00           12.50         15.00         25.00
-------------------------------------------------------------------------------------------------------------
Risk Participation Fee       20.00          25.00         30.00           35.00         42.50         70.00
-------------------------------------------------------------------------------------------------------------
</TABLE>