FIRST AMENDMENT
                           dated as of March 15, 1999
                                       to
                      Amended and Restated Credit Agreement
                           dated as of August 31, 1998
                         and Notes dated August 31, 1998


      This FIRST AMENDMENT dated as of March 15, 1999 is among Midcoast Energy
Resources, Inc., a Nevada corporation (the "Borrower"), the subsidiaries of the
Borrower listed on the signature pages hereof under the caption "Guarantors",
CIBC, Inc., individually as a Lender and as syndication agent, NationsBank,
N.A., individually as a Lender and as documentation agent, and Bank One, Texas,
National Association, individually and as administrative agent.

                                 R E C I T A L S

      A. The Borrower, the subsidiaries of the Borrower party thereto as
guarantors, CIBC, Inc., NationsBank, N.A. and Bank One, Texas, National
Association, individually and as administrative agent, are parties to that
certain Amended and Restated Credit Agreement dated as of August 31, 1998 (the
"Existing Agreement").

      B. The Borrower has requested that the Aggregate Initial Commitment be
increased to $125,000,000.

      C. The Borrower has also requested that the Lenders agree to make Canadian
Dollar loans and various other amendments to the Existing Agreement in
connection with its pending acquisition of certain Canadian assets.

      D. The Lenders are willing to agree to the requested amendments to the
Existing Agreement.

      NOW THEREFORE, the parties hereto agree as follows:

       Section 1.  DEFINITIONS.  Unless the context otherwise requires, each
term used herein which is defined in the Existing Agreement shall have the
meaning assigned to it therein.

      Section 2. AGGREGATE INITIAL COMMITMENT INCREASE. Pursuant to Section 2.4
of the Existing Agreement, but effective only when the conditions precedent set
forth in Section 7 of this First Amendment are satisfied, the parties hereto
agree that for all purposes of the Existing Agreement as amended hereby and the
other Loan Documents:
<PAGE>

            (i) On and as of the date hereof, a $125,000,000 Aggregate Increased
      Commitment will be effective under the Existing Agreement as amended
      hereby, and

            (ii) On and as of the date hereof, an Increased Commitment will be
      effective under the Existing Agreement as amended hereby for each Lender
      in the amount set forth below opposite the name of such Lender:

            LENDER                        INCREASED COMMITMENT

            Bank One, Texas,                   $41,666,666.67
            National Association

            CIBC, Inc.                         $41,666,666.67

            NationsBank, N.A.                  $41,666,666.66

      Section 3. AMENDMENTS TO THE EXISTING AGREEMENT. Upon satisfaction of the
conditions precedent set forth in Section 7 of this First Amendment, but
effective as of the date of this First Amendment, the Existing Agreement shall
be amended as follows:

            (i) Section 1.2 of the Existing Agreement is hereby amended by
      deleting therefrom in their entirety the existing definitions of
      "Available Commitment", "Borrowing Request", "Business Day", "Default
      Rate", "Insolvency Proceeding", "Interest Period", "L/C Exposure", "Loan"
      and "Subsidiary", and substituting in lieu thereof the following new
      definitions of "Available Commitment", "Borrowing Request", "Business
      Day", "Default Rate", "Insolvency Proceeding", "Interest Period", "L/C
      Exposure", "Loan" and "Subsidiary":

                  "'AVAILABLE COMMITMENT' shall mean, at any time, an amount
            equal to (a) the Aggregate Initial Commitment or the Aggregate
            Increased Commitment, as the case may be, less (b) the sum of (i)
            the Dollar Equivalent of the total Loan Balance, plus (ii) the L/C
            Exposure at such time."

                  "'BORROWING REQUEST' shall mean each written request, in
            substantially the form attached hereto as EXHIBIT II, by the
            Borrower to the Administrative Agent for a borrowing, conversion, or
            prepayment pursuant to SECTIONS 2.1 or 2.9, each of which shall:


                                       2
<PAGE>

                  (a)   be signed by a Responsible Officer of the Borrower;

                  (b)   specify the amount and type of Loan requested, and, as
                        applicable, the Loan to be converted or prepaid and the
                        date of the borrowing, conversion, or prepayment (which
                        shall be a Business Day);

                  (c)   when requesting a Floating Rate Loan or a Canadian
                        Floating Rate Loan , be delivered to the Administrative
                        Agent no later than 10:00 a.m., Central Standard or
                        Daylight Savings Time, as the case may be, on the
                        Business Day of the requested borrowing, conversion, or
                        prepayment; and

                  (d)   when requesting a LIBO Rate Loan or a Canadian LIBO Rate
                        Loan, be delivered to the Administrative Agent no later
                        than 10:00 a.m., Central Standard or Daylight Savings
                        Time, as the case may be, three (3) Business Days
                        preceding the requested borrowing, conversion, or
                        prepayment and designate the Interest Period requested
                        with respect to such Loan."

                  "'BUSINESS DAY' shall mean (a) for all purposes other than as
            covered by clause (b) of this definition, a day other than a
            Saturday, Sunday, legal holiday for commercial banks under the laws
            of the State of Texas, or any other day when banking is suspended in
            the State of Texas, and (b) with respect to all requests, notices,
            and determinations in connection with, and payments of principal and
            interest on, Canadian Floating Rate Loans, LIBO Rate Loans or
            Canadian LIBO Rate Loans, a day which is (i) a Business Day
            described in clause (a) of this definition, (ii) a day (other than a
            Saturday or Sunday) on which banks generally are open in Chicago and
            New York for the conduct of substantially all of their commercial
            lending activities, (iii) in the case of LIBO Rate Loans, a day for
            trading by and between banks for Dollar deposits in the London
            interbank market, and (iv) in the case of Canadian Floating Rate
            Loans and Canadian LIBO Rate Loans, a day for trading by and between
            banks for Canadian Dollar deposits in the London interbank market."


                                       3
<PAGE>

                  "'DEFAULT RATE' shall mean (i) with respect to any Loan or any
            portion of the Loan Balance denominated in Dollars, a per annum
            interest rate equal to the Base Rate plus five percent (5%), but in
            no event exceeding the Highest Lawful Rate, and (ii) with respect to
            any Loan or any portion of the Loan Balance denominated in Canadian
            Dollars, a per annum interest rate equal to the Canadian Base Rate
            plus five percent (5%), but in no event exceeding the Highest Lawful
            Rate."

                  "'INSOLVENCY PROCEEDING' shall mean application (whether
            voluntary or instituted by another Person) for, or the consent to
            the appointment of, a receiver, trustee, conservator, custodian, or
            liquidator of any Person or of all or a substantial part of the
            Property of such Person, or the filing of a petition (whether
            voluntary or instituted by another Person) commencing a case under
            Title 11 of the United States Code, the Bankruptcy and Insolvency
            Act (Canada) or any similar law, seeking liquidation,
            reorganization, or rearrangement or taking advantage of any
            bankruptcy, insolvency, debtor's relief, or other similar law of
            Canada, the United States, the State of Texas, or any other
            jurisdiction, or the commission of an act of bankruptcy as such term
            is defined in Section 42 of the Bankruptcy and Insolvency Act
            (Canada)."

                  "'INTEREST PERIOD' shall mean, subject to the limitations set
            forth in SECTION 2.21, with respect to any LIBO Rate Loan or
            Canadian LIBO Rate Loan, a period commencing on the date such Loan
            is made or converted from a Loan of another type pursuant to this
            Agreement or the last day of the next preceding Interest Period with
            respect to such Loan and ending on the numerically corresponding day
            in the calendar month that is one, two, three, or six months
            thereafter, as the Borrower may request in the Borrowing Request for
            such Loan."

                  "'L/C EXPOSURE' shall mean, at any time, the SUM of (a) the
            Dollar Equivalent of the total face amount of all issued, undrawn
            and uncancelled Letters of Credit, PLUS (b) the Dollar Equivalent of
            the total unpaid reimbursement obligations of the Borrower under
            drawings under any Letter of Credit."

                                       4
<PAGE>


                  "'LOAN' individually shall mean any loan made in either
            Dollars or Canadian Dollars by any Lender to or for the benefit of
            the Borrower pursuant to this Agreement up to the Dollar Equivalent
            of $150,000,000 which shall include up to the Dollar Equivalent of
            $15,000,000 of Letters of Credit issued in Dollars or Canadian
            Dollars and any payment made by the Issuing Lender under a Letter of
            Credit, and "LOANS" collectively shall mean all loans made in either
            Dollars or Canadian Dollars by the Lenders to or for the benefit of
            the Borrower pursuant to this Agreement and all payments made by
            Issuing Lender under all Letters of Credit issued in either Dollars
            or Canadian Dollars."

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

            (i) Section 1.2 of the Existing Agreement is hereby amended by
      inserting therein in the appropriate alphabetical order the following new
      definitions:

                  "CANADIAN ADJUSTED LIBO RATE" shall mean, for any Canadian
            LIBO Rate Loan, an interest rate per annum (rounded upwards, if
            necessary, to the nearest 1/100 of l%) to be equal to the sum of the
            Canadian LIBO Rate for such Loan plus the Applicable Margin, but in
            no event exceeding the Highest Lawful Rate."

                  "'CANADIAN BASE RATE' shall mean the interest rate per annum
            announced from time to time by First Chicago NBD Bank, Canada as its
            "Canadian Prime Rate", which rate shall change upon any change in
            such "Canadian Prime Rate" and which rate may not be the lowest
            interest rate charged by First Chicago NBD Bank, Canada."

5
<PAGE>

                  "'CANADIAN DOLLARS' and "C$" shall mean the lawful currency
            of Canada."

                  "'CANADIAN DOLLAR EQUIVALENT' of any amount of any currency at
            any date shall mean (i) if such currency is Canadian Dollars, the
            amount of such currency, or (ii) if such currency is Dollars, the
            equivalent in Canadian Dollars of such amount of such currency,
            calculated on the basis of the arithmetical mean of the buy and sell
            spot rates of exchange of The First National Bank of Chicago for
            Canadian dollars on the London market at approximately 11:00 a.m.,
            London time, on the date on or as of which such amount is to be
            determined."

                  "'CANADIAN FLOATING RATE' shall mean the Canadian Base
            Rate, but in no event exceeding the Highest Lawful Rate."

                  "'CANADIAN FLOATING RATE LOAN' shall mean any Loan and any
            portion of the Loan Balance which the Borrower has requested, in the
            initial Borrowing Request for such Loan or a subsequent Borrowing
            Request for such portion of the Loan Balance, be made in or
            converted to Canadian Dollars and bear interest at the Canadian Base
            Rate, or which pursuant to the terms hereof is denominated in
            Canadian Dollars and otherwise required to bear interest at the
            Canadian Base Rate."

                  "'CANADIAN LIBO RATE' shall mean, with respect to any Interest
            Period for any Canadian LIBO Rate Loan, the lesser of (a) the rate
            per annum (rounded upwards, if necessary, to the nearest 1/16th of
            1%) equal to the average of the offered quotations for Canadian
            Dollars appearing on Telerate Page 3740 (or if such Telerate Page
            shall not be available, any successor or similar service selected by
            the Administrative Agent and the Borrower) as the London interbank
            offered rate as of approximately 11:00 a.m., Central Standard or
            Daylight Savings Time, as the case may be, on the day two Business
            Days prior to the first day of such Interest Period for Dollar
            deposits in an amount comparable to the principal amount of such
            Canadian LIBO Rate Loan and having a term comparable to the Interest
            Period for such Canadian LIBO Rate Loan, or (b) the Highest Lawful
            Rate. If neither such Telerate Page 3740 nor any successor or
            similar service is available, the term "CANADIAN LIBO RATE" shall
            mean, with respect to any Interest Period for any Canadian LIBO Rate
            Loan, the lesser of (a) the rate per annum (rounded upwards if
            necessary, to the nearest 1/16th of 1%) determined by the
            Administrative Agent at approximately 11:00 a.m., London time (or as
            soon thereafter as practicable) two Business Days prior to the first
            day of the Interest Period for such Canadian LIBO Rate Loan to be
            the rate quoted by The First National Bank of Chicago for the
            offering by The First National Bank of Chicago to leading banks in
            the London interbank market of Canadian Dollar deposits in an amount
            comparable to the principal amount of such Canadian LIBO Rate Loan
            and having a term comparable to the Interest Period for such
            Canadian LIBO Rate Loan, or (b) the Highest Lawful Rate."


                                       6

<PAGE>

                  "'CANADIAN LIBO RATE LOAN' shall mean any Loan and any portion
            of the Loan Balance which the Borrower has requested, in the initial
            Borrowing Request for such Loan or a subsequent Borrowing Request
            for such portion of the Loan Balance, be made in or converted to
            Canadian Dollars and bear interest at the Canadian Adjusted LIBO
            Rate and which is permitted by the terms hereof to bear interest at
            the Canadian Adjusted LIBO Rate."

                  "'CANADIAN SUBSIDIARY' shall mean MCCI or MCOC."

                  "'DOLLAR EQUIVALENT' of any amount of any currency at any date
            shall mean (i) if such currency is Dollars, the amount of such
            currency, or (ii) if such currency is any currency other than
            Dollars, the equivalent in Dollars of such amount of such currency,
            calculated on the basis of the arithmetical mean of the buy and sell
            spot rates of exchange of The First National Bank of Chicago for
            such currency on the London market at approximately 11:00 a.m.,
            London time, on the date on or as of which such amount is to be
            determined."

                  "'DOMESTIC SUBSIDIARY' shall mean any Subsidiary of the
            Borrower other than a Canadian Subsidiary."

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


                                       7
<PAGE>

                  "'MCCI' shall mean Midcoast Canada Capital, Inc., a
            corporation formed under the Business Corporation Act of the
            Province of Alberta, Canada."

                  "'MCOC' shall mean Midcoast Canada Operating Corporation, a
            corporation formed under the Business Corporation Act of the
            Province of Alberta, Canada."

                  "'MCOC BANK DEBT' shall mean Indebtedness for borrowed money
            of MCOC incurred by MCOC in Canadian Dollars for the purpose of
            financing or refinancing the acquisition of assets located in Canada
            and payable to a Lender or an affiliate of a Lender."

                  "'PRO RATA SHARE' shall mean, with respect to each Lender, a
            portion equal to a fraction the numerator of which is such Lender's
            Initial Commitment and the denominator of which is the Aggregate
            Initial Commitment."

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

                  "'TYPE' means, with respect to any Loan, its nature as a
            Floating Rate Loan, a LIBO Rate Loan, a Canadian Floating Rate Loan
            or a Canadian LIBO Rate Loan."

            (iii) The first sentence of Section 2.1(a) of the Existing Agreement
      is hereby amended by deleting it in its entirety and substituting in lieu
      thereof the following new sentence:

            "Upon the terms and conditions (including, without limitation, the
            right of the Lenders to decline to make any Loan so long as any
            Default or Event of Default exists) and relying on the
            representations and warranties contained in this Agreement, each
            Lender severally agrees, during the Commitment Period, to make Loans
            to the Borrower from time to time in an aggregate principal amount
            that will not result in (a) the sum of the Dollar Equivalent of such
            Lender's Loans, plus such Lender's Pro Rata Share of the Dollar
            Equivalent of the aggregate outstanding principal amount of the MCOC
            Bank Debt (after giving effect to any reduction of such aggregate

                                       8
<PAGE>

            outstanding principal amount to be effected with the proceeds of the
            Loans being made by the Lenders), exceeding such Lender's Initial
            Commitment (or, if the Initial Commitment of such Lender has been
            increased pursuant to SECTION 2.4, such Lender's Increased
            Commitment), (b) the sum of the Dollar Equivalent of the total Loans
            plus the L/C Exposure, plus the Dollar Equivalent of the aggregate
            outstanding principal amount of the MCOC Bank Debt (after giving
            effect to any reduction of such aggregate outstanding principal
            amount to be effected with the proceeds of the Loans being made by
            the Lenders) exceeding the Aggregate Initial Commitment (or, if the
            Aggregate Initial Commitment has been increased pursuant to SECTION
            2.4, the Aggregate Increased Commitment), or (c) the aggregate
            outstanding principal amount of the Canadian Floating Rate Loans and
            the Canadian LIBO Rate Loans exceeding an amount equal to (A) Fifty
            Million Canadian Dollars (C$50,000,000), minus (B) the aggregate
            outstanding principal amount of the MCOC Bank Debt (after giving
            effect to any reduction of the MCOC Bank Debt to be effected with
            the proceeds of the Loans being made by the Lenders)."

            (iv) Section 2.1(c) of the Existing Agreement is hereby amended by
      deleting it in its entirety and substituting in lieu thereof the following
      new Section 2.1(c):

                  "(c) Subject to the terms of this Agreement, during the
            Commitment Period, the Borrower may borrow, repay, and reborrow and
            convert Loans of one type or with one Interest Period into Loans of
            another type or with a different Interest Period. If any Floating
            Rate Loan or LIBO Rate Loan is converted into a Canadian Floating
            Rate Loan or a Canadian LIBO Rate Loan, the amount of the resulting
            Loan shall be equal to the Canadian Dollar Equivalent of such
            converted Floating Rate Loan or LIBO Rate Loan; and, if any Canadian
            Floating Rate Loan or Canadian LIBO Rate Loan is converted into a
            Floating Rate Loan or LIBO Rate Loan, the amount of the resulting
            Loan shall be equal to the Dollar Equivalent of such converted
            Canadian Floating Rate Loan or Canadian LIBO Rate Loan. Each
            borrowing, conversion, and prepayment of principal of Loans shall be
            in an amount the Dollar Equivalent of which is at least equal to
            $1,000,000. Each borrowing, prepayment, or conversion of or into a
            Loan of a different type or, in the case of a LIBO Rate Loan or a
            Canadian LIBO Rate Loan, having a different Interest Period, shall

                                       9
<PAGE>

            be deemed a separate borrowing, conversion, and prepayment for
            purposes of the foregoing, one for each type of Loan or Interest
            Period. Anything in this Agreement to the contrary notwithstanding,
            (i) the aggregate principal amount of LIBO Rate Loans having the
            same Interest Period shall be at least equal to $1,000,000, (ii) if
            any LIBO Rate Loan would otherwise be in a lesser principal amount
            for any period, such Loan shall be a Floating Rate Loan during such
            period, (iii) the aggregate principal amount of Canadian LIBO Rate
            Loans having the same Interest Period shall be at least equal to
            $1,000,000, and (iv) if any Canadian LIBO Rate Loan would otherwise
            be in a lesser principal amount for any period, such Loan shall be a
            Canadian Floating Rate Loan during such period."

            (v) Clause (b) of the PROVISO that appears at the end of Section
      2.2(a) of the Existing Agreement is hereby amended by deleting it in its
      entirety and substituting in lieu thereof the following new clause (b):

            "(b) the Issuing Lender shall not be obligated to issue any Letter
            of Credit in any currency other than Dollars or Canadian Dollars, or
            if (i) the Dollar Equivalent of the face amount thereof plus the
            Dollar Equivalent of the aggregate outstanding principal amount of
            the MCOC Bank Debt would exceed the Available Commitment, or (ii)
            after giving effect to the issuance thereof, (A) the L/C Exposure,
            when added to the sum of the Dollar Equivalent of the Loan Balance
            then outstanding, plus the Dollar Equivalent of the aggregate
            outstanding principal amount of the MCOC Bank Debt, would exceed the
            Aggregate Initial Commitment (or, if the Aggregate Initial
            Commitment has been increased pursuant to SECTION 2.4, the Aggregate
            Increased Commitment), or (B) the L/C Exposure would exceed Fifteen
            Million Dollars ($15,000,000)."

            (vi) Section 2.5 of the Existing Agreement is hereby amended by
      deleting it in its entirety and substituting in lieu thereof the following
      new Section 2.5:

                  "'2.5 INTEREST. Subject to the terms of this Agreement
            (including, without limitation, SECTION 2.17), interest on the Loans
            shall accrue and be payable at a rate per annum equal to the
            Floating Rate for each Floating Rate Loan, the Adjusted LIBO Rate
            for each LIBO Rate Loan, the Canadian Floating Rate for each

                                       10
<PAGE>

            Canadian Floating Rate Loan and the Canadian Adjusted LIBO Rate for
            each Canadian LIBO Rate Loan. Interest on all Floating Rate Loans
            and all Canadian Floating Rate Loans shall be computed on the basis
            of a year of 365 or 366 days, as the case may be, and actual days
            elapsed (including the first day but excluding the last day) during
            the period for which payable. Interest on all LIBO Rate Loans and
            all Canadian LIBO Rate Loans shall be computed on the basis of a
            year of 360 days, and actual days elapsed (including the first day
            but excluding the last day) during the period for which payable.
            Notwithstanding the foregoing, interest on past due principal and,
            to the extent permitted by applicable law, past due interest, shall
            accrue at the Default Rate, computed on the basis of a year of 365
            or 366 days, as the case may be, and actual days elapsed (including
            the first day but excluding the last day) during the period for
            which payable, and shall be payable upon demand by a Lender at any
            time as to all or any portion of such interest. In the event that
            the Borrower fails to select the duration of any Interest Period for
            any LIBO Rate Loan within the time period and otherwise as provided
            herein, such Loan (if outstanding as a LIBO Rate Loan) will be
            automatically converted into a Floating Rate Loan on the last day of
            the then current Interest Period for such Loan or (if outstanding as
            a Floating Rate Loan) will remain as, or (if not then outstanding)
            will be made as, a Floating Rate Loan. In the event that the
            Borrower fails to select the duration of any Interest Period for any
            Canadian LIBO Rate Loan within the time period and otherwise as
            provided herein, such Loan (if outstanding as a Canadian LIBO Rate
            Loan) will be automatically converted into a Canadian Floating Rate
            Loan on the last day of the then current Interest Period for such
            Loan or (if outstanding as a Canadian Floating Rate Loan) will
            remain as, or (if not then outstanding) will be made as, a Canadian
            Floating Rate Loan. Interest provided for herein shall be calculated
            on unpaid sums actually advanced and outstanding pursuant to the
            terms of this Agreement and only for the period from the date or
            dates of such advances until repayment."

            (vii) Section 2.6 of the Existing Agreement is hereby amended by
      deleting it in its entirety and substituting in lieu thereof the following
      new Section 2.6:

                  "2.6 REPAYMENT OF LOANS AND INTEREST. Accrued and unpaid
            interest on each outstanding Floating Rate Loan and each outstanding
            Canadian Floating Rate Loan shall be due and payable monthly
 
                                       11
<PAGE>

            commencing on the first day of October, 1998, and continuing on the
            first day of each calendar month thereafter while any Floating Rate
            Loan or Canadian Floating Rate Loan remains outstanding, the payment
            in each instance to be the amount of interest which has accrued and
            remains unpaid in respect of the relevant Loan. Accrued and unpaid
            interest on each outstanding LIBO Rate Loan and each outstanding
            Canadian LIBO Rate Loan shall be due and payable on the last day of
            the Interest Period for such LIBO Rate Loan or Canadian LIBO Rate
            Loan, as the case may be, and, in the case of any Interest Period in
            excess of three months, on the day of the third calendar month
            following the commencement of such Interest Period corresponding to
            the day of the calendar month on which such Interest Period
            commenced, the payment in each instance to be the amount of interest
            which has accrued and remains unpaid in respect of the relevant
            Loan. The Loan Balance together with all accrued and unpaid interest
            thereon, shall be due and payable at Final Maturity. At the time of
            making each payment hereunder or under the Notes, the Borrower shall
            specify to the Administrative Agent the Loans or other amounts
            payable by the Borrower hereunder to which such payment is to be
            applied. In the event the Borrower fails to so specify, or if an
            Event of Default has occurred and is continuing, the Administrative
            Agent may apply such payment as it may elect in its sole discretion;
            PROVIDED, HOWEVER, the Administrative Agent will apply the payments
            to the Loans in the descending order of interest costs.

                  "(b) If at any time the sum of the Dollar Equivalent of the
            Loan Balance then outstanding, plus the L/C Exposure, plus the
            Dollar Equivalent of the aggregate outstanding principal amount of
            the MCOC Bank Debt, would exceed the Aggregate Initial Commitment
            (or, if the Aggregate Initial Commitment has been increased pursuant
            to SECTION 2.4, the Aggregate Increased Commitment), the Borrower
            shall immediately prepay the Loans, ratably among the Lenders, by
            the amount of such excess."

            (viii) Sections 2.8 and 2.9 of the Existing Agreement are hereby
      amended by deleting each of them in its entirety and substituting in lieu
      thereof the following new Sections 2.8 and 2.9:

                                       12
<PAGE>

                  "2.8 TIME, PLACE AND METHOD OF PAYMENT. All payments required
            pursuant to this Agreement or the Notes shall be deemed received by
            the Administrative Agent on the next Business Day following receipt
            if such receipt is after 2:00 p.m., Central Standard or Daylight
            Savings Time, as the case may be, on any Business Day, and shall be
            made at the Principal Office. All payments of principal or interest
            required pursuant to this Agreement or the Notes on or with respect
            to Canadian Floating Rate Loans or Canadian LIBO Rate Loans shall be
            made in Canadian Dollars and in such funds as may then be customary
            for the settlement of international transactions in Canadian
            Dollars, and all other payments required pursuant to this Agreement
            or the Notes shall be made in Dollars and in immediately available
            funds. Except as provided to the contrary herein, if the due date of
            any payment hereunder or under the Notes would otherwise fall on a
            day which is not a Business Day, such date shall be extended to the
            next succeeding Business Day, and interest shall be payable for any
            principal so extended for the period of such extension.
            Notwithstanding the foregoing provisions of this Section 2.8, if,
            after the making of any Loan in Canadian Dollars, currency control
            or exchange regulations are imposed in Canada with the result that
            Canadian Dollars no longer exist or the Borrower is not able to make
            payment to the Administrative Agent for the account of the Lenders
            in Canadian Dollars, then all payments to be made by the Borrower
            hereunder in Canadian Dollars shall instead be made when due in
            Dollars in an amount equal to the Dollar Equivalent (as of the date
            of repayment) of such payment due, it being the intention of the
            parties hereto that the Borrower takes all risks of the imposition
            of any such currency control or exchange regulations.

                  "2.9 VOLUNTARY PREPAYMENTS AND CONVERSIONS OF LOANS. (a)
            Subject to applicable provisions of this Agreement, the Borrower
            shall have the right at any time or from time to time to prepay
            Loans and to convert Loans of one type or with one Interest Period
            into Loans of another type or with a different Interest Period;
            PROVIDED, HOWEVER, that (i) the Borrower shall give the
            Administrative Agent notice of each such prepayment or conversion of
            all or any portion of a LIBO Rate Loan or Canadian LIBO Rate Loan no
            less than three (3) Business Days prior to prepayment or conversion,
            (ii) any LIBO Rate Loan or Canadian LIBO Rate Loan may be prepaid or
            converted only on the last day of an Interest Period for such Loan,
            (iii) the Borrower shall pay all accrued and unpaid interest on the
            amounts prepaid or converted, and (iv) no such prepayment or
            conversion shall serve to postpone the repayment when due of any
            Obligation.


                                       13
<PAGE>

                  "(b) The Borrower may prepay all or any portion of the
            principal amount of a Loan bearing interest at a LIBO Rate or a
            Canadian LIBO Rate, provided that if the Borrower makes any such
            prepayment other than on the last day of the applicable Interest
            Period, the Borrower (i) with such prepayment, shall pay all accrued
            interest on the principal amount prepaid (unless less than all of
            the principal amount of the Loan is being prepaid, in which case
            such interest shall be due and payable on the next scheduled
            interest payment date), and (ii) on demand, shall reimburse the
            Lenders and hold the Lenders harmless from all losses and expenses
            incurred by the Lenders as a result of such prepayment, including,
            without limitation, any losses and expenses arising from the
            liquidation or reemployment of deposits acquired to fund or maintain
            the principal amount prepaid. Such reimbursement with respect to the
            prepayment of LIBO Rate Loans shall be calculated as though the
            Lenders funded the principal amount prepaid through the purchase of
            Dollar deposits in the London, England interbank market having a
            maturity corresponding to such Interest Period and bearing an
            interest rate equal to the LIBO Rate for such Interest Period,
            whether in fact that is the case or not. Such reimbursement with
            respect to the prepayment of Canadian LIBO Rate Loans shall be
            calculated as though the Lenders funded the principal amount prepaid
            through the purchase of Canadian Dollar deposits in the London,
            England interbank market having a maturity corresponding to such
            Interest Period and bearing an interest rate equal to the Canadian
            LIBO Rate for such Interest Period, whether in fact that is the case
            or not. Each Lender's determination of the amount of any such
            reimbursement shall be conclusive in the absence of manifest error."

            (ix) Section 2.14 of the Existing Agreement is hereby amended by
      deleting it in its entirety and substituting in lieu thereof the following
      new Section 2.14:


                                       14
<PAGE>
                  "LETTER OF CREDIT FEES. The Borrower agrees to pay to the
            Issuing Lender, on the date of issuance of each Letter of Credit, a
            fee equal to the greater of (i) $400 and (ii) one percent (1%) per
            annum, calculated on the basis of a year of 365 or 366 days, as the
            case may be, and actual days elapsed (including the first day but
            excluding the last day), on the Dollar Equivalent of the face amount
            of such Letter of Credit during the period for which such Letter of
            Credit is issued; PROVIDED, HOWEVER, in the event such Letter of
            Credit is canceled prior to its original expiry date or a payment is
            made by the Issuing Lender with respect to such Letter of Credit,
            the Issuing Lender shall, within ten days after such cancellation or
            the making of such payment, rebate to the Borrower the unearned
            portion (calculated in the case of any Letter of Credit denominated
            in Canadian Dollars by taking into account the daily fluctuations in
            the Dollar Equivalent of the face amount of such Letter of Credit)
            of such fee. The Borrower also agrees to pay to the Issuing Lender
            on demand its customary letter of credit transactional fees,
            including, without limitation, amendment fees, payable with respect
            to each Letter of Credit."

            (x) Sections 2.18 and 2.19 of the Existing Agreement are hereby
      amended by deleting each of them in its entirety and substituting in lieu
      thereof the following new Sections 2.18 and 2.19:

                  "2.18 LIMITATION ON TYPES OF LOANS. (a) Anything herein to the
            contrary notwithstanding, no more than eight (8) separate Loans
            shall be outstanding at any one time, with, for purposes of this
            Section, all Floating Rate Loans constituting one Loan, all Canadian
            Floating Rate Loans constituting one Loan, each borrowing consisting
            of LIBO Rate Loans made by the Lenders at one time and for a
            particular Interest Period constituting one Loan and each borrowing
            consisting of Canadian LIBO Rate Loans made by the Lenders at one
            time and for a particular Interest Period constituting one Loan.

                  "(b) Anything herein to the contrary notwithstanding, if, on
            or prior to the determination of any interest rate for any LIBO Rate
            Loan for any Interest Period therefor:

                        (i) any Lender determines (which determination shall be
                  conclusive) that quotations of interest rates for the deposits
                  referred to in the definition of "LIBO RATE" in SECTION 1.2
                  are not being provided in the relevant amounts or for the
                  relevant maturities for purposes of determining the rate of
                  interest for such Loan as provided in this Agreement; or

                                       15
<PAGE>

                        (ii) any Lender determines (which determination shall be
                  conclusive) that the rates of interest referred to in the
                  definition of "LIBO RATE" in SECTION 1.2 upon the basis of
                  which the rate of interest for such Loan for such Interest
                  Period is to be determined do not accurately reflect the cost
                  to such Lender of making or maintaining such Loan for such
                  Interest Period,

            then such Lender shall give the Administrative Agent and the
            Borrower prompt notice thereof; and so long as such condition
            remains in effect, such Lender shall be under no obligation to make
            LIBO Rate Loans or to convert Loans of any other type into LIBO Rate
            Loans, and the Borrower shall, on the last day of the then current
            Interest Period for each outstanding LIBO Rate Loan, either prepay
            such LIBO Rate Loan or convert such Loan into another type of Loan
            in accordance with SECTION 2.9. Before giving such notice pursuant
            to this Section, the affected Lender will designate a different
            available Applicable Lending Office for LIBO Rate Loans or take such
            other action as the Borrower may request if such designation or
            action will avoid the need to suspend the obligation of such Lender
            to make LIBO Rate Loans hereunder and will not, in the opinion of
            such affected Lender, be disadvantageous to such Lender.

                  "(c) Anything herein to the contrary notwithstanding, if, on
            or prior to the determination of any interest rate for any Canadian
            LIBO Rate Loan for any Interest Period therefor:

                        (i) any Lender determines (which determination shall be
                  conclusive) that quotations of interest rates for the deposits
                  referred to in the definition of "CANADIAN LIBO RATE" in
                  SECTION 1.2 are not being provided in the relevant amounts or
                  for the relevant maturities for purposes of determining the
                  rate of interest for such Loan as provided in this Agreement;
                  or

                        (ii) any Lender determines (which determination shall be
                  conclusive) that the rates of interest referred to in the
                  definition of "CANADIAN LIBO RATE" in SECTION 1.2 upon the
                  basis of which the rate of interest for such Loan for such
                  Interest Period is to be determined do not accurately reflect
                  the cost to such Lender of making or maintaining such Loan for
                  such Interest Period,


                                       16
<PAGE>

            then such Lender shall give the Administrative Agent and the
            Borrower prompt notice thereof; and so long as such condition
            remains in effect, such Lender shall be under no obligation to make
            Canadian LIBO Rate Loans or to convert Loans of any other type into
            Canadian LIBO Rate Loans, and the Borrower shall, on the last day of
            the then current Interest Period for each outstanding Canadian LIBO
            Rate Loan, either prepay such Canadian LIBO Rate Loan or convert
            such Loan into another type of Loan in accordance with SECTION 2.9.
            Before giving such notice pursuant to this Section, the affected
            Lender will designate a different available Applicable Lending
            Office for Canadian LIBO Rate Loans or take such other action as the
            Borrower may request if such designation or action will avoid the
            need to suspend the obligation of such Lender to make Canadian LIBO
            Rate Loans hereunder and will not, in the opinion of such affected
            Lender, be disadvantageous to such Lender."

                  "2.19 ILLEGALITY. (a) Notwithstanding any other provision of
            this Agreement, in the event that it becomes unlawful for any Lender
            or its Applicable Lending Office to (a) honor its obligation to make
            LIBO Rate Loans hereunder, or (b) maintain LIBO Rate Loans
            hereunder, then such Lender shall promptly notify the Administrative
            Agent and the Borrower thereof; and the obligation of such Lender
            hereunder to make LIBO Rate Loans and to convert other types of
            Loans into LIBO Rate Loans shall be suspended until such time as
            such Lender may again make and maintain LIBO Rate Loans, and the
            outstanding LIBO Rate Loans of such Lender shall be converted into
            Floating Rate Loans in accordance with SECTION 2.9. Before giving
            such notice pursuant to this Section, such Lender will designate a
            different available Applicable Lending Office for its LIBO Rate
            Loans or take such other action as the Borrower may request if such
            designation or action will avoid the need to suspend the obligation
            of such Lender to make LIBO Rate Loans and will not, in the opinion
            of the affected Lender, be disadvantageous to such Lender.


                                       17
<PAGE>

                  "(b) Notwithstanding any other provision of this Agreement, in
            the event that it becomes unlawful for any Lender or its Applicable
            Lending Office to (a) honor its obligation to make Canadian Floating
            Rate Loans or Canadian LIBO Rate Loans hereunder, or (b) maintain
            Canadian Floating Rate Loans or Canadian LIBO Rate Loans hereunder,
            then such Lender shall promptly notify the Administrative Agent and
            the Borrower thereof; and the obligation of such Lender hereunder to
            make Canadian Floating Rate Loans or Canadian LIBO Rate Loans, as
            the case may be, and to convert other types of Loans into Canadian
            Floating Rate Loans or Canadian LIBO Rate Loans, as the case may be,
            shall be suspended until such time as such Lender may again make and
            maintain Canadian Floating Rate Loans or Canadian LIBO Rate Loans,
            as the case may be, and, in the case of a Lender's notice pursuant
            to this Section 2.19(b) with respect to its Canadian LIBO Rate
            Loans, the Canadian LIBO Rate Loans of such Lender shall be
            converted into Canadian Floating Rate Loans in accordance with
            SECTION 2.9. Before giving such notice pursuant to this Section,
            such Lender will designate a different available Applicable Lending
            Office for Canadian Floating Rate Loans or Canadian LIBO Rate Loans,
            as the case may be, or take such other action as the Borrower may
            request if such designation or action will avoid the need to suspend
            the obligation of such Lender to make Canadian Floating Rate Loans
            or Canadian LIBO Rate Loans, as the case may be, and will not, in
            the opinion of the affected Lender, be disadvantageous to such
            Lender."

            (xi) Section 2.21 of the Existing Agreement is hereby amended by
      deleting it in its entirety and substituting in lieu thereof the following
      new Section 2.21:

                  "2.21 LIMITATIONS ON INTEREST PERIODS. Each Interest Period
            selected by the Borrower (a) which commences on the last Business
            Day of a calendar month (or, with respect to any LIBO Rate Loan or
            Canadian LIBO Rate Loan, any day for which there is no numerically
            corresponding day in the appropriate subsequent calendar month)
            shall end on the last Business Day of the appropriate subsequent
            calendar month, (b) which would otherwise end on a day which is not
            a Business Day shall end on the next succeeding Business Day (or, if
            such next succeeding Business Day falls in the next succeeding
            calendar month, on the next preceding Business Day), (c) which would
            otherwise commence before and end after Final Maturity shall end on
            Final Maturity, and (d) shall have an Interest Period no shorter
            than one month, and if shorter than one month, the relevant Loan
            shall be (i) a Floating Rate Loan during such period if it is
            denominated in Dollars and (ii) a Canadian Floating Rate Loan during
            such period if it is denominated in Canadian Dollars."


                                       18
<PAGE>

            (xii) Article II of the Existing Agreement is hereby amended by
      adding at the end thereof the following new Sections 2.22, 2,23, 2.24,
      2.35, 2.26 and 2.27:

                  "2.22 MARKET DISRUPTION. Notwithstanding the satisfaction of
            all conditions referred to in Article II and Article IV with respect
            to any Loans to be made in Canadian Dollars, if there shall occur on
            or prior to the date of such Loans any change in national or
            international financial, political or economic conditions or
            exchange controls which would in the reasonable opinion of the
            Administrative Agent or the Majority Lenders make it impracticable
            for such Loans to be denominated in Canadian Dollars, then the
            Administrative Agent shall forthwith give notice thereof to the
            Borrower and the Lenders, and such Loans shall not be denominated in
            Canadian Dollars but shall be made in Dollars, in an aggregate
            principal amount equal to the Dollar Equivalent of the aggregate
            principal amount of Canadian Dollars specified in the related
            Borrowing Request, as Floating Rate Loans, unless the Borrower
            notifies the Administrative Agent at least one Business Day before
            such date that it elects not to borrow on such date.

                  "2.23. JUDGMENT CURRENCY. If for the purpose of obtaining
            judgment in any court it is necessary to convert a sum due from the
            Borrower or any Guarantor hereunder in Canadian Dollars into
            Dollars, the parties hereto agree, to the fullest extent that they
            may effectively do so, that the rate of exchange used shall be that
            at which in accordance with normal banking procedures the
            Administrative Agent could purchase Canadian Dollars with Dollars at
            the Administrative Agent's main Chicago office on the Business Day
            preceding that on which final, non-appealable judgment is given. The
            obligations of the Borrower and each Guarantor in respect of any sum
            due to any Lender or the Administrative Agent hereunder in Canadian
            Dollars shall, notwithstanding any judgment in Dollars, be
            discharged only to the extent that on the Business Day following
            receipt by such Lender or the Administrative Agent (as the case may
            be) of any sum adjudged to be so due in Dollars such Lender or the
            Administrative Agent (as the case may be) may in accordance with
            normal, reasonable banking procedures purchase Canadian Dollars with
            Dollars. If the amount of Canadian Dollars so purchased is less than
            the sum originally due to such Lender or the Administrative Agent,
            as the case may be, in Canadian dollars, the Borrower and each
            Guarantor agrees, to the fullest extent that it may effectively do
            so, as a separate obligation and notwithstanding any such judgment,
            to indemnify such Lender or the Administrative Agent, as the case
            may be, against such loss, and if the amount of Canadian Dollars so
            purchased exceeds (a) the sum originally due to any Lender or the
            Administrative Agent, as the case may be, in Canadian Dollars, and
            (b) any amounts shared with other Lenders as a result of allocations
            of such excess as a disproportionate payment to such Lender under
            Section 11.14, such Lender or the Administrative Agent, as the case
            may be, agrees to remit such excess to the Borrower or the
            applicable Guarantor.


                                       19
<PAGE>

                  "2.24 YIELD PROTECTION. If, on or after the date of this
            Agreement, the adoption of any law or any governmental or
            quasi-governmental rule, regulation, policy, guideline or directive
            (whether or not having the force of law), or any change in the
            interpretation or administration thereof by any governmental or
            quasi-governmental authority, central bank or comparable agency
            charged with the interpretation or administration thereof, or
            compliance by any Lender or Applicable Lending Office with any
            request or directive (whether or not having the force of law) of any
            such authority, central bank or comparable agency:

                  (i) subjects any Lender or any Applicable Lending Office to
                  any Taxes, or changes the basis of taxation of payments (other
                  than with respect to Excluded Taxes) to any Lender in respect
                  of its LIBO Rate Loans, its Canadian Floating Rate Loans or
                  its Canadian LIBO Rate Loans, or

                  (ii) imposes or increases or deems applicable any reserve,
                  assessment, insurance charge, special deposit or similar
                  requirement against assets of, deposits with or for the
                  account of, or credit extended by, any Lender or any
                  Applicable Lending Office, or


                                       20
<PAGE>

                  (iii) imposes any other condition the result of which is to
                  increase the cost to any Lender or any Applicable Lending
                  Office of making, funding or maintaining its LIBO Rate Loans,
                  its Canadian Floating Rate Loans or its Canadian LIBO Rate
                  Loans or reduces any amount receivable by any Lender or any
                  Applicable Lending Office in connection with its LIBO Rate
                  Loans, its Canadian Floating Rate Loans or its Canadian LIBO
                  Rate Loans, or requires any Lender or any Applicable Lending
                  Office to make any payment calculated by reference to the
                  amount of LIBO Rate Loans, Canadian Floating Rate Loans or
                  Canadian LIBO Rate Loans held or interest received by it, by
                  an amount deemed material by such Lender,

            and the result of any of the foregoing is to increase the cost to
            such Lender or Applicable Lending Office of making or maintaining
            its LIBO Rate Loans, its Canadian Floating Rate Loans or its
            Canadian LIBO Rate Loans or its commitment to make LIBO Rate Loans,
            Canadian Floating Rate Loans or Canadian LIBO Rate Loans or to
            reduce the return received by such Lender or Applicable Lending
            Office in connection with its LIBO Rate Loans, its Canadian Floating
            Rate Loans or its Canadian LIBO Rate Loans or commitment to make
            LIBO Rate Loans, Canadian Floating Rate Loans or Canadian LIBO Rate
            Loans, then, within 15 days of demand by such Lender, the Borrower
            shall pay such Lender such additional amount or amounts as will
            compensate such Lender for such increased cost or reduction in
            amount received.

                  "2.25 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender
            determines the amount of capital required or expected to be
            maintained by such Lender, any Applicable Lending Office of such
            Lender or any corporation controlling such Lender is increased as a
            result of a Change, then, within 15 days of demand by such Lender,
            the Borrower shall pay such Lender the amount necessary to
            compensate for any shortfall in the rate of return on the portion of
            such increased capital which such Lender determines is attributable
            to this Agreement, its LIBO Rate Loans, its Canadian Floating Rate
            Loans, its Canadian LIBO Rate Loans or its commitment to make LIBO
            Rate Loans, Canadian Floating Rate Loans or Canadian LIBO Rate Loans
            hereunder (after taking into account such Lender's policies as to


                                       21

<PAGE>
            capital adequacy). "Change" means (i) any change after the date of
            this Agreement in the Risk-Based Capital Guidelines, or (ii) any
            adoption of or change in any other law, governmental or
            quasi-governmental rule, regulation, policy, guideline,
            interpretation, or directive (whether or not having the force of
            law) after the date of this Agreement which affects the amount of
            capital required or expected to be maintained by any Lender or any
            Applicable Lending Office or any corporation controlling any Lender.
            "Risk-Based Capital Guidelines" means (i) the risk-based capital
            guidelines in effect in the United States on the date of this
            Agreement, including transition rules, and (ii) the corresponding
            capital regulations promulgated by regulatory authorities outside
            the United States implementing the July 1988 report of the Basle
            Committee on Banking Regulation and Supervisory Practices Entitled
            "International Convergence of Capital Measurements and Capital
            Standards," including transition rules, and any amendments to such
            regulations adopted prior to the date of this Agreement.

                  "2.26 TAXES. (a) All payments by the Borrower to or for the
            account of any Lender or the Administrative Agent hereunder or under
            any Note shall be made free and clear of and without deduction for
            any and all Taxes. If the Borrower shall be required by law to
            deduct any Taxes from or in respect of any sum payable hereunder to
            any Lender or the Administrative Agent, (i) the sum payable shall be
            increased as necessary so that after making all required deductions
            (including deductions applicable to additional sums payable under
            this Section 2.26) such Lender or the Administrative Agent (as the
            case may be) receives an amount equal to the sum it would have
            received had no such deductions been made, (ii) the Borrower shall
            make such deductions, (iii) the Borrower shall pay the full amount
            deducted to the relevant authority in accordance with applicable
            law, and (iv) the Borrower shall furnish to the Administrative Agent
            the original copy of a receipt evidencing payment thereof within 30
            days after such payment is made.

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

                                       22
<PAGE>
                  "(c) The Borrower hereby agrees to indemnify the
            Administrative Agent and each Lender for the full amount of Taxes or
            Other Taxes (including, without limitation, any Taxes or Other Taxes
            imposed on amounts payable under this Section 2.26) paid by the
            Administrative Agent or such Lender and any liability (including
            penalties, interest and expenses) arising therefrom or with respect
            thereto. Payments due under this indemnification shall be made
            within 30 days of the date the Administrative Agent or such Lender
            makes demand therefor pursuant to Section 2.27.

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

                  "(e) If the U.S. Internal Revenue Service or any other
            governmental authority of the United States or any other country or
            any political subdivision thereof asserts a claim that the
            Administrative Agent did not properly withhold tax from amounts paid
            to or for the account of any Lender (because the appropriate form
            was not delivered or properly completed, because such Lender failed
            to notify the Administrative Agent of a change in circumstances
            which rendered its exemption from withholding ineffective, or for
            any other reason), such Lender shall indemnify the Administrative
            Agent fully for all amounts paid, directly or indirectly, by the
            Administrative Agent as tax, withholding therefor, or otherwise,
            including penalties and interest, and including taxes imposed by any
            jurisdiction on amounts payable to the Administrative Agent under
            this subsection, together with all costs and expenses related
            thereto (including attorneys fees and time charges of attorneys for
            the Administrative Agent, which attorneys may be employees of the
            Administrative Agent). The obligations of the Lenders under this
            Section 2.26 shall survive the payment of the Obligations and
            termination of this Agreement.


                                       23
<PAGE>
                  "2.27 LENDER STATEMENTS; SURVIVAL OF INDEMNITY. Each Lender
            shall deliver a written statement of such Lender to the Borrower
            (with a copy to the Administrative Agent) as to the amount due, if
            any, under Section 2.24, 2.25 or 2.26. Such written statement shall
            set forth in reasonable detail the calculations upon which such
            Lender determined such amount and shall be final, conclusive and
            binding on the Borrower in the absence of manifest error.
            Determination of amounts payable under such Sections in connection
            with a Canadian LIBO Rate Loan shall be calculated as though each
            Lender funded its Canadian LIBO Rate Loan through the purchase of a
            deposit of the type and maturity corresponding to the deposit used
            as a reference in determining the Canadian LIBO Rate applicable to
            such Loan, whether in fact that is the case or not. Unless otherwise
            provided herein, the amount specified in the written statement of
            any Lender shall be payable on demand after receipt by the Borrower
            of such written statement. The obligations of the Borrower under
            Sections 2.24, 2.25 or 2.26 shall survive payment of the Obligations
            and termination of this Agreement."

            (xiii) Section 6.17 of the Existing Agreement is hereby amended by
      deleting it in its entirety and substituting in lieu thereof the following
      new Section 6.17:

                  "6.17 ADDITIONAL SUBSIDIARIES. The Borrower will immediately
            cause any Person that becomes a Subsidiary of the Borrower
            subsequent to the Closing Date to (i) execute a Subsidiary Guarantor
            Counterpart and to deliver same to the Administrative Agent and (ii)
            deliver such other Security Instruments as the Administrative Agent
            requests; PROVIDED, HOWEVER, that the Borrower shall not be
            obligated to comply with the terms of this Section 6.17 with respect
            to any such Subsidiary until the Dollar Equivalent of the aggregate
            book value of the assets of such Subsidiary equals $500,000) or
            more."

            (xiv) Section 7.1 of the Existing Agreement is hereby amended by
      deleting everything after the words "Administrative Agent" that appear at
      the end of clause (e) thereof and substituting in lieu thereof the
      following:


                                       24
<PAGE>
            ", (f) inter-company Indebtedness (i) incurred by the Borrower or
            any Guarantor and payable to the Borrower or another Guarantor, or
            (ii) incurred by a Canadian Subsidiary and payable to the Borrower,
            a Guarantor or another Canadian Subsidiary, including any
            extensions, renewals and replacements of any thereof, and (g) MCOC
            Bank Debt, PROVIDED that, after giving effect to the incurrence of
            any MCOC Bank Debt, the sum of (i) the Canadian Dollar Equivalent of
            the aggregate outstanding principal amount of all loans and advances
            made by the Borrower and the Guarantors to the Canadian
            Subsidiaries, plus (ii) the Canadian Dollar Equivalent of the
            aggregate amount of all equity Investments made by the Borrower and
            the Guarantors in the Canadian Subsidiaries, plus (iii) the
            aggregate outstanding principal amount of the MCOC Bank Debt, does
            not exceed Fifty Million Canadian Dollars (C$50,000,000), including
            any extensions, renewals and replacements of any thereof."

            (xv) Section 7.2 of the Existing Agreement is hereby amended by
      deleting everything after the comma that appears at the end of clause (c)
      thereof and substituting in lieu thereof the following new clauses (d) and
      (e):

            "(d) guaranties by the Borrower of Indebtedness of its Domestic
            Subsidiaries permitted under SECTION 7.1, or (e) guaranties of, or
            commitments to buy, MCOC Bank Debt entered into by the Borrower."

            (xvi) Section 7.6 of the Existing Agreement is hereby amended by
      deleting everything after the comma that appears at the end of clause (c)
      thereof and substituting in lieu thereof the following new clauses (d),
      (e) and (f):

            "(d) loans or advances to joint ventures in amounts not to exceed
            Ten Million Dollars ($10,000,000) in the aggregate PROVIDED that
            within three (3) Business Days of the making of such a loan or
            advance, the Borrower provides the Administrative Agent with written
            notice thereof which shall include a detailed explanation of the
            business purpose for such loan or advance, (e) loans or advances
            made by one Canadian Subsidiary to another Canadian Subsidiary, or
            (f) loans or advances made by the Borrower or a Guarantor to a
            Canadian Subsidiary PROVIDED that, after giving effect to the making
            by the Borrower or a Guarantor of any loan or advance to a Canadian
            Subsidiary, the sum of (i) the Canadian Dollar Equivalent of the
            aggregate outstanding principal amount of all loans and advances
            made by the Borrower and the Guarantors to the Canadian
            Subsidiaries, plus (ii) the Canadian Dollar Equivalent of the
            aggregate amount of all equity Investments made by the Borrower and
            the Guarantors in the Canadian Subsidiaries, plus (iii) the
            aggregate outstanding principal amount of the MCOC Bank Debt, does
            not exceed Fifty Million Canadian Dollars (C$50,000,000)."


                                       25
<PAGE>

            (xvii) Section 7.7 of the Existing Agreement is hereby amended by
      deleting clause (a) thereof and substituting in lieu thereof the following
      new clause (a):

            "(a) assets of hydrocarbon trucking operations, pipelines,
            processing plants, gathering lines or oil and gas properties
            (PROVIDED that all such assets and properties acquired by the
            Borrower or a Guarantor are located in the United States of
            America), the stock of any Canadian Subsidiary owning any such
            assets or properties located in Canada, and the stock of any other
            Person owning any such assets or properties located in the United
            States of America,"

            (xviii) Section 7.7 of the Existing Agreement is hereby further
      amended by deleting everything after the comma that appears at the end of
      clause (e) thereof and substituting in lieu thereof the following new
      clauses (f), (g), (h) and (i):

            "(f) interests in joint ventures doing business solely in the United
            States of America as to which the Borrower or any of its
            Subsidiaries is a venturer, so long as such joint venture is engaged
            in the same line of business as the Borrower (or such Subsidiary) as
            of the date hereof, (g) equity Investments by a Canadian Subsidiary
            in another Canadian Subsidiary, (h) MCOC Bank Debt by MCCI, or (i)
            equity Investments by the Borrower or a Guarantor in a Canadian
            Subsidiary PROVIDED that, after giving effect to the making by the
            Borrower or any Guarantor of any equity Investment in a Canadian
            Subsidiary, the sum of (i) the Canadian Dollar Equivalent of the
            aggregate outstanding principal amount of all loans and advances
            made by the Borrower and the Guarantors to the Canadian
            Subsidiaries, plus (ii) the Canadian Dollar Equivalent of the
            aggregate amount of all equity Investments made by the Borrower and
            the Guarantors in the Canadian Subsidiaries, plus (iii) the
            aggregate outstanding principal amount of the MCOC Bank Debt, does
            not exceed Fifty Million Canadian Dollars (C$50,000,000)."

                                       26
<PAGE>

            (xix) Section 7.13 of the Existing Agreement is hereby amended by
      deleting the first sentence thereof and substituting in lieu thereof the
      following new sentence):

            "Permit Cash Flow for any four consecutive fiscal quarters (plus the
            Cash Flow of any acquired Company for such period) to be less than
            1.25 times the sum of (i) the Borrower's consolidated interest
            expense for such period, plus (ii) the greater of (A) current
            maturities of funded long term bank debt, or (B) 1/10th of the sum
            of (1) the aggregate outstanding principal balance of the Loans,
            plus (2) the Dollar Equivalent of the aggregate outstanding
            principal balance of the MCOC Bank Debt."

            (xx) Section 9.1(d) of the Existing Agreement is hereby amended by
      deleting it in its entirety and substituting in lieu thereof the following
      new Section 9.1(d):

                  "(d) the Borrower or any of its Subsidiaries shall fail to pay
            when due any of its Indebtedness; or the Borrower or any of its
            Subsidiaries shall default in the performance (beyond the applicable
            grace period with respect thereto, if any) of any term, provision or
            condition contained in any bond, debenture, note, instrument, credit
            agreement, loan agreement, indenture or other agreement under which
            any such Indebtedness was created or is governed, or any other event
            shall occur or condition exist, the effect of which default or event
            is to cause, or to permit the holder or holders of any such
            Indebtedness to cause, such Indebtedness to become due prior to its
            stated maturity; or any Indebtedness of the Borrower or any of its
            Subsidiaries shall be declared to be due and payable or required to
            be prepaid or repurchased (other than by a regularly scheduled
            payment) prior to the stated maturity thereof; or the Borrower or
            any of its Subsidiaries shall not pay, or admit in writing its
            inability to pay, its debts generally as they become due."

            (xxi) Section 9.1 of the Existing Agreement is hereby amended by (A)
      deleting the word "and" that appears at the end of subsection 9.1(l)
      thereof, (B) deleting the period that appears at the end of subsection
      9.1(m) thereof and substituting in lieu thereof a semi-colon, and (C)
      adding at the end thereof the following new subsections (n) and (o):


                                       27
<PAGE>

                  "(n) The Borrower shall fail to comply with any of the terms
            or conditions of any agreement pursuant to which it has committed or
            agreed to purchase, guaranty or otherwise assure any holder of any
            of the MCOC Bank Debt against loss with respect to any of the MCOC
            Bank Debt; and

                  "(o) MCOC shall fail to pay when due any amount payable on or
            with respect to any MCOC Bank Debt; or MCOC shall default in the
            performance of any term, provision or condition contained in any
            note or agreement under which any MCOC Bank Debt was created or is
            governed, or any other event shall occur or condition exist, the
            effect of which default or event is to cause, or to permit the
            holder or holders of any MCOC Bank Debt to cause, any part or all of
            the MCOC Bank Debt to become due prior to its stated maturity; or
            any part or all of the MCOC Bank Debt shall be declared to be due
            and payable or required to be prepaid or repurchased (other than by
            a regularly scheduled payment) prior to the stated maturity
            thereof."

            (xxii) Exhibit II to the Existing Agreement is hereby amended by
      deleting it in its entirety and substituting in lieu thereof the form of
      Borrowing Request attached hereto as Exhibit II.

            (xxiii) Exhibit V to the Existing Agreement is hereby amended by
      deleting it in its entirety and substituting in lieu thereof the list of
      Disclosures attached hereto as Exhibit V.

      Section 4. AMENDMENTS TO NOTES. Upon satisfaction of the conditions
precedent set forth in Section 7 of this First Amendment, but effective as of
the date of this First Amendment, each of the Notes shall be amended by (i)
deleting the reference to "$50,000,000.00" which appears at the upper left of
each of the Notes, and (ii) deleting the words "the sum of FIFTY MILLION AND
NO/100 DOLLARS ($50,000,000.00) or so much thereof as may be advanced against
this Note" which appear in the paragraph of each of the Notes which begins with
the words "FOR VALUE RECEIVED" and substituting in lieu thereof the words "the
aggregate unpaid principal amount of all Loans made in either Dollars or
Canadian Dollars by the Payee to the Borrower". The foregoing constitutes an
amendment and modification, but not a novation of the Notes.


                                       28
<PAGE>

      Section 5. WAIVERS WITH RESPECT TO SECTIONS 6.17 AND 7.3. Notwithstanding
anything to the contrary set forth in Section 6.17 or Section 7.3 of the
Existing Agreement as amended hereby, the Borrower, the Guarantors, the
Administrative Agent and the Lenders hereby agree as follows:

      (a) Each of the Lenders hereby specifically waives any violation of
Section 6.17 of the Existing Agreement or the Existing Agreement as amended
hereby and any Default or Event of Default caused thereby to the extent such
violation or Default or Event of Default is caused by the failure to satisfy at
any time before or after the date hereof any of the requirements of said Section
6.17 with respect to DPI/Midcoast, Inc. ("DPI"), SeaCrest Company, L.L.C.
("SeaCrest"), MCCI or MCOC; PROVIDED, HOWEVER, that the Borrower, DPI and
SeaCrest fully comply with all of the terms and conditions of Sections 5(b) and
5(c) of this First Amendment.

      (b) Promptly after the date hereof, but in any event on or before March
31, 1999, the Borrower will satisfy all of the requirements of Section 6.17 of
the Existing Agreement as amended hereby with respect to each of DPI and
SeaCrest (collectively, the "New Domestic Subsidiaries") and will cause each of
the New Domestic Subsidiaries to satisfy all of the requirements of Section 6.17
of the Existing Agreement as amended hereby.

      (c) Promptly after the date hereof, but in any event on or before March
31, 1999, the Borrower will pledge 66% of the capital stock of both MCCI and
MCOC to the Administrative Agent to secure the Obligations pursuant to such
Security Instruments as the Administrative Agent requests.

      (d) Each of the Lenders hereby specifically waives any violation of
Section 7.3 of the Existing Agreement or the Existing Agreement as amended
hereby and any Default or Event of Default caused thereby to the extent such
violation or Default or Event of Default is caused by SeaCrest granting a Lien
on any or all of its assets to Mid Louisiana Gas Transmission Company ("Mid
Louisiana") to secure up to $3,500,000 of loans made to SeaCrest by Mid
Louisiana; PROVIDED, HOWEVER, that Mid Louisiana fully complies with all of the
terms and conditions of Section 5(e) of this First Amendment.

      (e) Promptly after the date hereof, but in any event on or before March
31, 1999, Mid Louisiana will pledge all loans made by it to SeaCrest and all
collateral securing any of them to the Administrative Agent to secure the
Obligations pursuant to such Security Instruments as the Administrative Agent
requests.


                                       29
<PAGE>

      (f) Any violation of any of the foregoing provisions of this Section 5
shall constitute an Event of Default under the Existing Agreement as amended
hereby.

      (g) The specific waivers set forth in Sections 5(a) and 5(d) of this First
Amendment are limited to the express circumstances described therein and shall
not be construed to constitute (i) a waiver of any other event, circumstance or
condition or of any other right or remedy available to the Administrative Agent
or any Lender pursuant to the Existing Agreement or the Existing Agreement as
amended hereby, or (ii) a consent to any departure by the Borrower or any
Guarantor from any other term or requirement under the Existing Agreement or the
Existing Agreement as amended hereby.

      Section 6. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders
to execute and deliver this First Amendment, the Borrower hereby confirms,
reaffirms and restates as of the date hereof the representations and warranties
set forth in Article V of the Existing Agreement provided that such
representations and warranties shall be and hereby are amended as follows: each
reference therein to "this Agreement", including, without limitation, such a
reference included in the term "Loan Documents", shall be deemed to be a
collective reference to the Existing Agreement, this First Amendment and the
Existing Agreement as amended by this First Amendment. An Event of Default under
and as defined in the Existing Agreement as amended by this First Amendment
shall be deemed to have occurred if any representation or warranty made pursuant
to the foregoing sentence of this Section 6 shall be materially false as of the
date on which made.

      Section 7. CONDITIONS PRECEDENT. This First Amendment, the Increased
Commitments provided for herein and the amendments to the Existing Agreement and
the Notes provided for herein shall become effective as of the date (the "First
Amendment Closing Date") on which all of the following conditions precedent
shall have been satisfied:

            (i) This First Amendment shall have been duly executed and delivered
      by the Administrative Agent, the Borrower and the Guarantors on one
      counterpart and all of the Lenders shall have signed a counterpart or
      counterparts hereof and notified the Administrative Agent by telex or
      telephone that such action has been taken and that such executed
      counterpart or counterparts will be mailed or otherwise delivered to the
      Administrative Agent.


                                       30
<PAGE>

            (ii) The Administrative Agent shall have received $37,500 from the
      Borrower in payment of the additional facility fees payable to the Lenders
      pursuant to Section 2.13(b) of the Credit Agreement in connection with the
      Increased Commitments provided for in Section 2 of this First Amendment.

            (iii) Each of the representations and warranties of the Borrower
      contained in the Credit Agreement shall be true and correct on and as of
      the First Amendment Closing Date as if made on and as of the First
      Amendment Closing Date.

            (iv) No Default or Event of Default shall exist.

            (v)  Each of DPI/Midcoast, Inc. and SeaCrest Company, L.L.C.
      shall have executed and delivered to the Administrative Agent a
      Subsidiary Guarantor Counterpart.

      Section 8. EFFECT ON THE EXISTING AGREEMENT. Except as expressly amended
hereby, all of the representations, warranties, terms, covenants and conditions
of the Existing Agreement and the other Loan Documents (a) shall remain
unaltered, (b) shall continue to be, and shall remain, in full force and effect
in accordance with their respective terms, and (c) are hereby ratified and
confirmed in all respects. Upon the effectiveness of this First Amendment, all
references in the Existing Agreement (including references in the Existing
Agreement as amended by this First Amendment) to "this Agreement" (and all
indirect references such as "hereby", "herein", "hereof" and "hereunder") shall
be deemed to be references to the Existing Agreement as amended by this First
Amendment.

      SECTION 9. ENTIRE AGREEMENT. THIS FIRST AMENDMENT, THE EXISTING AGREEMENT
AS AMENDED BY THIS FIRST AMENDMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN THE PARTIES HERETO RELATING
TO THE SUBJECT MATTER HEREOF.

      SECTION 10. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW; EXCEPT THAT, (A) CHAPTER 346 OF THE TEXAS FINANCE
CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING
TRIPARTY ACCOUNTS) SHALL NOT APPLY AND (B) IF AT ANY TIME THE LAWS OF THE UNTIED
STATES OF AMERICA OR ANY STATE THEREOF APPLICABLE TO A LENDER PERMIT SUCH LENDER
TO CONTRACT FOR, TAKE, RESERVE, CHARGE OR RECEIVE A HIGHER RATE OF INTEREST THAN
IS ALLOWED BY THE LAWS OF THE STATE OF TEXAS, THEN SUCH OTHER LAWS SHALL TO SUCH
EXTENT GOVERN AS TO THE RATE OF INTEREST WHICH SUCH LENDER IS ALLOWED TO
CONTRACT FOR, TAKE, RESERVE, CHARGE OR RECEIVE UNDER THIS FIRST AMENDMENT AND
THE AGREEMENT AS AMENDED HEREBY AND SUCH LENDER'S NOTE.


                                       31
<PAGE>

      Section 11.  HEADINGS.  The headings, captions, and arrangements used
in this First Amendment are for convenience only and shall not affect the
interpretation of this First Amendment.

      Section 12. COUNTERPARTS. This First Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this First Amendment by
signing any such counterpart.

               REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK


                                       32
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed as of the date first above written.

BORROWER:                               MIDCOAST ENERGY RESOURCES, INC.

                                       By:________________________________
                                                Richard A. Robert
                                                Chief Financial Officer
                                                and Treasurer

ADMINISTRATIVE AGENT
AND LENDERS:                   BANK ONE, TEXAS,
                               NATIONAL ASSOCIATION,
                                 individually and as Administrative Agent

                              By:________________________________

                               Title:____________________________


                               CIBC, INC.,
                                 individually and as Syndication Agent
                              By:________________________________

                               Title:____________________________


                               NATIONSBANK, N.A.,
                                 individually and as Documentation Agent

                              By:________________________________

                               Title:____________________________

                                       23
<PAGE>
GUARANTORS:

MAGNOLIA PIPELINE CORPORATION           H&W PIPELINE CORPORATION

By:____________________________         By:___________________________
      Richard A. Robert                         Richard A. Robert
      Treasurer                                 Treasurer


MAGNOLIA RESOURCES, INC.                MAGNOLIA GATHERING, INC.

By:____________________________         By:___________________________
      Richard A. Robert                         Richard A. Robert
      Treasurer                                 Treasurer


MIDCOAST HOLDINGS NO. ONE, INC.         MIDCOAST GAS PIPELINE, INC.,
                                          a Texas corporation

By:____________________________         By:___________________________
      Richard A. Robert                         Richard A. Robert
      Treasurer                                 Treasurer


NUGGET DRILLING CORPORATION             MIDCOAST MARKETING, INC.

By:____________________________         By:___________________________
      Richard A. Robert                         Richard A. Robert
      Treasurer                                 Treasurer


MIDCOAST GAS PIPELINE, INC.,            TENNESSEE RIVER INTRASTATE
  a Delaware corporation                GAS COMPANY, INC.

By:____________________________         By:___________________________
      Richard A. Robert                         Richard A. Robert
      Treasurer                                 Treasurer

                                       34
<PAGE>

MID LOUISIANA GAS COMPANY               CREOLE GAS PIPELINE CORPORATION

By:____________________________         By:___________________________
      Richard A. Robert                         Richard A. Robert
      Treasurer                                 Treasurer


MID LOUISIANA GAS TRANSMISSION          MIDCOAST INTERSTATE
COMPANY                                 TRANSMISSION, INC.

By:____________________________         By:___________________________
      Richard A. Robert                         Richard A. Robert
      Treasurer                                 Treasurer


MIDCOAST GAS SERVICES, INC.             MIDCOAST ENERGY MARKETING, INC.

By:____________________________         By:___________________________
      Richard A. Robert                         Richard A. Robert
      Treasurer                                 Treasurer


SEACREST COMPANY, L.L.C.                DPI/MIDCOAST, INC.

By:____________________________         By:___________________________
      Richard A. Robert                         Richard A. Robert
      Treasurer                                 Treasurer


                                       35
<PAGE>
                                   EXHIBIT II

                           [FORM OF BORROWING REQUEST]

Bank One, Texas, National Association,
  Administrative Agent
910 Travis
Houston, Texas 77002-5860
Attention:  Energy Group, 6th Floor

      Re:   Amended and Restated Credit Agreement dated as of August 31, 1998,
            by and among Midcoast Energy Resources, Inc. ("BORROWER"), Bank One,
            Texas, National Association, individually and as administrative
            agent, and the lenders party thereto (as amended, restated, or
            supplemented from time to time, the "CREDIT Agreement")

Ladies and Gentlemen:

      Pursuant to the Credit Agreement, the Borrower hereby makes the requests
indicated below:

      1.    Dollar Loans

            (a)  Amount of new Loan:  $

            (b)  Requested funding date:  _______________, 19___

            (c) $_________ of such Loan is to be a Floating Rate Loan;

            (d) $_________ of such Loan is to be a LIBO Rate Loan;

                 and

            (e)  Requested Interest Period for LIBO Rate Loan: __ months;

      2.    Canadian Dollar Loans

            (a)  Amount of new Loan:  C$

            (b)  Requested funding date:  _______________, 19___

            (c) C$_________ of such Loan is to be a Canadian Floating Rate Loan;

            (d) C$_________ of such Loan is to be a Canadian LIBO Rate Loan;

                 and
<PAGE>

            (e)  Requested Interest Period for Canadian LIBO Rate Loan: __
            months;

?     3.    $_______________ of such Loan is to be a LIBO Rate Loan maturing
            on ________________:

            (a)  Amount to be continued as a LIBO Rate Loan is
                 $_________________, with an Interest Period of ___ months;

            (b) Amount to be converted to a Floating Rate Loan is $_________;

?     4.    C$_______________ of such Loan is to be a Canadian LIBO Rate Loan
            maturing on ________________:

            (a)  Amount to be continued as a Canadian LIBO Rate Loan is
                 C$_________________, with an Interest Period of ___ months;

            (b)  Amount to be converted to a Canadian Floating Rate Loan is
                 C$________;

      5.    Conversion of Floating Rate Loan:

            (a)  Requested conversion date:  __________________, 19___.

            (b)  Amount to be converted to a LIBO Rate Loan is $______________
                 with an Interest Period of ____ months.

?     6.    Conversion of Canadian Floating Rate Loan:

            (a)  Requested conversion date:  __________________, 19___.

            (b)  Amount to be converted to a Canadian LIBO Rate Loan is
                 C$______________ with an Interest Period of ____ months.

      The undersigned certifies that [s]he is the [_________________] of the
Borrower, has obtained all consents necessary, and as such [s]he is authorized
to execute this request on behalf of the Borrower. The undersigned further
certifies, represents, and warrants on behalf of the Borrower that the Borrower
is entitled to receive the requested borrowing, continuation, or conversion
under the terms and conditions of the Credit Agreement.

      Each capitalized term used but not defined herein shall have the meaning
assigned to such term in the Credit Agreement.

                                    Very truly yours,

                                    MIDCOAST ENERGY RESOURCES, INC.

                                    By:_________________________________
                                    Printed Name:_______________________
                                    Title:______________________________

                                       2
<PAGE>
                                    EXHIBIT V

                                   DISCLOSURES

Section 5.8                         LIABILITIES

                                      None

                                   LITIGATION

                                      None

Section 5.10                              COMPLIANCE


Section 5.12                              ENVIRONMENTAL MATTERS

                                      None

Section 5.17                              REFUNDS

                                      None

Section 5.19                              CASUALTIES

                                      None

Section 5.21                              SUBSIDIARIES

                                    Magnolia Pipeline Corporation
                                    H&W Pipeline Corporation
                                    Magnolia Resources, Inc.
                                    Magnolia Gathering, Inc.
                                    Midcoast Holdings No. One, Inc.
                                    Midcoast Gas Pipeline, Inc.,
                                          a Texas corporation
                                    Midcoast Gas Pipeline, Inc.,
                                          a Delaware corporation
                                    Midcoast Marketing, Inc. (inactive)
                                    Nugget Drilling Corporation (inactive)
                                    Tennessee River Intrastate Gas Company, Inc.
                                    Mid Louisiana Gas Company
                                    Creole Gas Pipeline Corporation
                                    Mid Louisiana Gas Transmission Company
                                    Midcoast Interstate Transmission, Inc.
                                    Midcoast Gas Services, Inc.
                                    Midcoast Energy Marketing, Inc.
                                    SeaCrest Company, L.L.C.
                                    DPI/Midcoast, Inc.
                                    Midcoast Canada Capital, Inc.
                                    Midcoast Canada Operating Corporation