<PAGE>


                             REVOLVING CREDIT AGREEMENT


                                       among


                       PROTECTION ONE ALARM MONITORING, INC.
                                      BORROWER


                                 NATIONSBANK, N.A.,
                                ADMINISTRATIVE AGENT


                             FIRST UNION NATIONAL BANK,
                                 SYNDICATION AGENT


                          TORONTO DOMINION (TEXAS), INC.,
                                DOCUMENTATION AGENT

                                        and


                             THE LENDERS NAMED HEREIN,
                                      LENDERS

                                    $500,000,000

                           DATED AS OF DECEMBER 21, 1998

                        MORGAN STANLEY SENIOR FUNDING, INC.,
                                   Managing Agent

                             THE CHASE MANHATTAN BANK,
                                   Managing Agent

               WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
                                      Co-Agent

                       NATIONSBANC MONTGOMERY SECURITIES LLC,
                                   LEAD ARRANGER

<PAGE>
                                       
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                             PAGE
<S>                                                                          <C>
SECTION 1   DEFINITIONS AND TERMS. . . . . . . . . . . . . . . . . . . . . . .1
     1.1    Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
     1.2    Number and Gender of Words; Other References . . . . . . . . . . 17
     1.3    Accounting Principles. . . . . . . . . . . . . . . . . . . . . . 17

SECTION 2   BORROWING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 17
     2.1    Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
     2.2    LC Subfacility . . . . . . . . . . . . . . . . . . . . . . . . . 18
     2.3    Voluntary Termination of Commitments . . . . . . . . . . . . . . 22
     2.4    Borrowing Procedure. . . . . . . . . . . . . . . . . . . . . . . 22

SECTION 3   TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . 23
     3.1    Loan Accounts and Payments . . . . . . . . . . . . . . . . . . . 23
     3.2    Interest and Principal Payments. . . . . . . . . . . . . . . . . 24
     3.3    Interest Options . . . . . . . . . . . . . . . . . . . . . . . . 24
     3.4    Quotation of Rates . . . . . . . . . . . . . . . . . . . . . . . 25
     3.5    Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 25
     3.6    Interest Recapture . . . . . . . . . . . . . . . . . . . . . . . 25
     3.7    Interest Calculations. . . . . . . . . . . . . . . . . . . . . . 25
     3.8    Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 25
     3.9    Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . 26
     3.10   Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
     3.11   Order of Application . . . . . . . . . . . . . . . . . . . . . . 27
     3.12   Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . . . 27
     3.13   Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
     3.14   Booking Borrowings . . . . . . . . . . . . . . . . . . . . . . . 28
     3.15   Replacement of Lenders under Certain Circumstances . . . . . . . 28

SECTION 4   CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . . . . . . . . . . 28
     4.1    Increased Cost and Reduced Return. . . . . . . . . . . . . . . . 28
     4.2    Limitation on Types of Borrowings. . . . . . . . . . . . . . . . 30
     4.3    Illegality.. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
     4.4    Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . 30
     4.5    Compensation.. . . . . . . . . . . . . . . . . . . . . . . . . . 31
     4.6    Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

SECTION 5   FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     5.1    Treatment of Fees. . . . . . . . . . . . . . . . . . . . . . . . 33
     5.2    Fees of Administrative Agent . . . . . . . . . . . . . . . . . . 33
     5.3    LC Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     5.4    LC Issuance and Fronting Fees. . . . . . . . . . . . . . . . . . 33
     5.5    Commitment Fees. . . . . . . . . . . . . . . . . . . . . . . . . 33

SECTION 6.  GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

                                      (i)
<PAGE>

     6.1    POI Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . 34
     6.2    Subsidiary Guaranty. . . . . . . . . . . . . . . . . . . . . . . 34
     6.3    Other Guaranties . . . . . . . . . . . . . . . . . . . . . . . . 34

SECTION 7   CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 34
     7.1    Conditions Precedent to Closing. . . . . . . . . . . . . . . . . 34
     7.2    Conditions to all Borrowings.. . . . . . . . . . . . . . . . . . 36

SECTION 8   REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 37
     8.1    Purpose of Credit Facility . . . . . . . . . . . . . . . . . . . 37
     8.2    Existence, Good Standing, Authority, and Authorizations. . . . . 37
     8.3    Subsidiaries; Capital Stock. . . . . . . . . . . . . . . . . . . 37
     8.4    Authorization and Contravention. . . . . . . . . . . . . . . . . 37
     8.5    Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 38
     8.6    Financial Statements . . . . . . . . . . . . . . . . . . . . . . 38
     8.7    Litigation, Claims, Investigations . . . . . . . . . . . . . . . 38
     8.8    Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
     8.9    Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 39
     8.10   Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 39
     8.11   Properties; Liens. . . . . . . . . . . . . . . . . . . . . . . . 39
     8.12   Government Regulations . . . . . . . . . . . . . . . . . . . . . 39
     8.13   Material Agreements. . . . . . . . . . . . . . . . . . . . . . . 39
     8.14   Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 39
     8.15   Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
     8.16   Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 40
     8.17   Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 40
     8.18   Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 40
     8.19   Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . 40
     8.20   Senior Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . 40

SECTION 9   AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 41
     9.1    Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 41
     9.2    Books and Records. . . . . . . . . . . . . . . . . . . . . . . . 41
     9.3    Items to be Furnished. . . . . . . . . . . . . . . . . . . . . . 41
     9.4    Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
     9.5    Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
     9.6    Maintenance of Existence, Assets, and Business . . . . . . . . . 42
     9.7    Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
     9.8    Preservation and Protection of Rights. . . . . . . . . . . . . . 43
     9.9    Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . 43
     9.10   Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . 43
     9.11   Compliance with Laws.  . . . . . . . . . . . . . . . . . . . . . 43
     9.12   After-Acquired Subsidiaries. . . . . . . . . . . . . . . . . . . 43
     9.13   Other Required Guarantors. . . . . . . . . . . . . . . . . . . . 44

SECTION 10  NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 44
     10.1   Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 44

                                      (ii)
<PAGE>

     10.2   Debt of Foreign Subsidiaries . . . . . . . . . . . . . . . . . . 44
     10.3   Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
     10.4   Transactions with Affiliates . . . . . . . . . . . . . . . . . . 46
     10.5   Compliance with Documents  . . . . . . . . . . . . . . . . . . . 46
     10.6   Fiscal Year and Accounting Methods . . . . . . . . . . . . . . . 46
     10.7   New Business . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.8   Loans, Advances, and Investments . . . . . . . . . . . . . . . . 47
     10.9   Distributions and Subordinated Debt Payments . . . . . . . . . . 47
     10.10  Restrictions on Companies. . . . . . . . . . . . . . . . . . . . 48
     10.11  Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 48
     10.12  Mergers and Dissolutions; Sale of Capital Stock. . . . . . . . . 49
     10.13  Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . 49

SECTION 11  DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
     11.1   Payment of Obligation. . . . . . . . . . . . . . . . . . . . . . 49
     11.2   Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
     11.3   Debtor Relief. . . . . . . . . . . . . . . . . . . . . . . . . . 50
     11.4   Judgments and Attachments. . . . . . . . . . . . . . . . . . . . 50
     11.5   Misrepresentation. . . . . . . . . . . . . . . . . . . . . . . . 50
     11.6   Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 50
     11.7   Default Under Other Debt and Agreements. . . . . . . . . . . . . 50
     11.8   Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 51
     11.9   Validity and Enforceability of Loan Documents. . . . . . . . . . 51
     11.10  Environmental Liability. . . . . . . . . . . . . . . . . . . . . 52

SECTION 12  RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . 52
     12.1   Remedies Upon Default. . . . . . . . . . . . . . . . . . . . . . 52
     12.2   Company Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 52
     12.3   Performance by Administrative Agent. . . . . . . . . . . . . . . 52
     12.4   Delegation of Duties and Rights. . . . . . . . . . . . . . . . . 53
     12.5   Not in Control . . . . . . . . . . . . . . . . . . . . . . . . . 53
     12.6   Course of Dealing. . . . . . . . . . . . . . . . . . . . . . . . 53
     12.7   Cumulative Rights. . . . . . . . . . . . . . . . . . . . . . . . 53
     12.8   Application of Proceeds. . . . . . . . . . . . . . . . . . . . . 53
     12.9   Certain Proceedings. . . . . . . . . . . . . . . . . . . . . . . 54
     12.10  Expenditures by Lenders. . . . . . . . . . . . . . . . . . . . . 54
     12.11  INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 54

SECTION 13  AGREEMENT AMONG LENDERS. . . . . . . . . . . . . . . . . . . . . 55
     13.1   Administrative Agent . . . . . . . . . . . . . . . . . . . . . . 55
     13.2   Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
     13.3   Proportionate Absorption of Losses . . . . . . . . . . . . . . . 57
     13.4   Delegation of Duties; Reliance . . . . . . . . . . . . . . . . . 57
     13.5   Limitation of Liability. . . . . . . . . . . . . . . . . . . . . 57
     13.6   Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
     13.7   Limitation of Liability. . . . . . . . . . . . . . . . . . . . . 59
     13.8   Relationship of Lenders. . . . . . . . . . . . . . . . . . . . . 59

                                     (iii)
<PAGE>

     13.9   Benefits of Agreement. . . . . . . . . . . . . . . . . . . . . . 59
     13.10  Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
     13.11  Obligations Several. . . . . . . . . . . . . . . . . . . . . . . 59

SECTION 14  MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 59
     14.1   Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
     14.2   Nonbusiness Days . . . . . . . . . . . . . . . . . . . . . . . . 59
     14.3   Communications . . . . . . . . . . . . . . . . . . . . . . . . . 60
     14.4   Form and Number of Documents . . . . . . . . . . . . . . . . . . 60
     14.5   Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 60
     14.6   Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
     14.7   Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 60
     14.8   Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . 60
     14.9   Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
     14.10  Jurisdiction; Venue; Service of Process; Jury Trial. . . . . . . 61
     14.11  Amendments, Consents, Conflicts, and Waivers . . . . . . . . . . 62
     14.12  Multiple Counterparts. . . . . . . . . . . . . . . . . . . . . . 63
     14.13  Successors and Assigns; Assignments and Participations . . . . . 63
     14.14  Discharge Only Upon Payment in Full; Reinstatement in Certain
            Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . 65
     14.15  Designated Senior Indebtedness . . . . . . . . . . . . . . . . . 65
</TABLE>


                                     (iv)
<PAGE>

                               SCHEDULES AND EXHIBITS

<TABLE>
<S>                      <C>
Schedule 2.1        -    Lenders and Commitments; Addresses for Notice
Schedule 8.2        -    Companies
Schedule 8.3        -    Subsidiaries and Stock
Schedule 10.3       -    Existing Capital Leases
Schedule 10.4       -    Affiliate Transactions
Schedule 10.8       -    Existing Investments

Exhibit A-1         -    Form of Compliance Certificate
Exhibit A-2         -    Form of Permitted Acquisition Compliance Certificate
Exhibit B           -    Form of Note
Exhibit C-1         -    Form of Notice of Borrowing
Exhibit C-2         -    Form of Notice of Conversion
Exhibit C-3         -    Form of Notice of LC
Exhibit D-1         -    Form of POI Guaranty
Exhibit D-2         -    Form of Subsidiary Guaranty
Exhibit E           -    Form of Opinion of Counsel of Borrower
Exhibit F           -    Form of Assignment and Acceptance Agreement
</TABLE>

                                     (viii)
<PAGE>

                             REVOLVING CREDIT AGREEMENT

     THIS REVOLVING CREDIT AGREEMENT is entered into as of December 21, 1998, 
among PROTECTION ONE ALARM MONITORING, INC., a Delaware corporation 
("BORROWER"), Lenders (hereinafter defined), NATIONSBANK, N.A., a national 
banking association, as Administrative Agent (hereinafter defined), FIRST 
UNION NATIONAL BANK, a national banking association, as Syndication Agent 
(hereinafter defined), and TORONTO DOMINION (TEXAS), INC., as Documentation 
Agent (hereinafter defined).

                                   R E C I T A L S

     A.    Borrower has requested that Lenders extend credit to Borrower in 
the form of this Agreement, providing for a revolving credit and letter of 
credit facility in the aggregate principal amount of $500,000,000.

     B.    Upon and subject to the terms and subject to the conditions of 
this Agreement, Lenders are willing to extend such credit to Borrower.

     NOW, THEREFORE, for good and valuable consideration, the receipt and 
sufficiency of which are hereby acknowledged, Borrower, Administrative Agent, 
and Lenders agree, as follows:

SECTION 1   DEFINITIONS AND TERMS.

      1.1   DEFINITIONS.  As used herein:

      ACQUISITION means any transaction or series of related transactions for 
the purpose of, or resulting in, directly or indirectly, (a) the acquisition 
by any Company of all or substantially all of the assets of a Person or of 
any line of business or division of a Person, (b) the acquisition by any 
Company of more than fifty percent (50%) of any class of Stock (or similar 
ownership interests) of any Person (PROVIDED THAT formation or organization 
of any entity shall not constitute an "ACQUISITION" to the extent that the 
amount of the loan, advance, investment, or capital contribution in such 
entity constitutes a permitted investment under SECTION 10.8); or (c) a 
merger, consolidation, amalgamation, or other combination by any Company with 
another Person if a Company is the surviving entity; PROVIDED THAT in any 
merger involving Borrower, Borrower must be the surviving entity.

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

      ADMINISTRATIVE AGENT means NationsBank, N.A., and its permitted 
successors or assigns as "ADMINISTRATIVE AGENT" for Lenders under this 
Agreement.

      AFFILIATE as to any Person means any other Person who directly or
indirectly controls, or is controlled by, or is under common control with, such
Person, and, for purposes of this definition only, "CONTROL," "CONTROLLED BY,"
and "UNDER COMMON CONTROL WITH" mean possession, directly or indirectly, of the
power to 

                                       
<PAGE>

direct or cause the direction of management or policies (whether through 
ownership of voting securities, by contract, or otherwise).

      AGENTS means, collectively, Administrative Agent, Syndication Agent, 
Documentation Agent, and Lead Arranger, and AGENT means any one of the Agents.

      AGREEMENT means this Revolving Credit Agreement (as the same may 
hereafter be amended, modified, supplemented, or restated from time to time).

      APPLICABLE LENDING OFFICE  means, for each Lender and for each Type of 
Borrowing, the "LENDING OFFICE" of such Lender (or an Affiliate of such 
Lender) designated on SCHEDULE 2.1 attached hereto or such other office that 
such Lender (or an Affiliate of such Lender) may from time to time specify to 
Administrative Agent and Borrower by written notice in accordance with the 
terms hereof.

      APPLICABLE MARGIN means, as of any date of determination, the interest 
margin over Base Rate or the Eurodollar Rate, as the case may be, that 
corresponds to the Moody's Rating AND the S & P Rating set forth below on 
such date of determination:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
                                            APPLICABLE    APPLICABLE    APPLICABLE
 LEVEL       MOODY'S      S & P RATING        MARGIN      MARGIN FOR    MARGIN FOR
             RATING                        FOR BASE RATE  EURODOLLAR    COMMITMENT
                                            BORROWINGS    BORROWINGS       FEES
----------------------------------------------------------------------------------
<S>       <C>            <C>               <C>            <C>           <C>
   1      Baa2 or        BBB or better          0%           1.00%        0.20%
          better
----------------------------------------------------------------------------------
   2      Baa3           BBB-                   0%           1.25%        0.25%
----------------------------------------------------------------------------------
   3      Ba1            BB+                   0.25%         1.50%        0.275%
----------------------------------------------------------------------------------
   4      Ba2            BB                    0.50%         1.75%        0.30%
----------------------------------------------------------------------------------
   5      Ba3 or lower   BB- or lower          0.65%         2.00%        0.375%
          or             or
          Not Rated      Not Rated
----------------------------------------------------------------------------------
</TABLE>

For purposes of the foregoing: (a) if the Moody's Rating and the S & P Rating 
shall fall within different LEVELS (but not more than one (1) LEVEL apart), 
then the Applicable Margin shall be determined by reference to the 
numerically lower LEVEL (E.G., if the S & P Rating is in LEVEL 1 and the 
Moody's Rating is in LEVEL 2, then the Applicable Margin shall be determined 
by reference to LEVEL 1); (b) if the Moody's Rating and the S & P Rating 
shall fall within different LEVELS (and by more than one (1) LEVEL), then the 
Applicable Margin shall be determined by reference to the LEVEL that is one 
(1) LEVEL higher than the numerically lower LEVEL (E.G., if the S & P Rating 
is in LEVEL 1 and the Moody's Rating is in LEVEL 4, then the Applicable 
Margin shall be determined by reference to LEVEL 2); and (c) if either 
Moody's or S & P no longer publishes ratings and Borrower and Administrative 
Agent cannot agree on another ratings agency to replace Moody's or S & P, as 
the case may be, then the Moody's Rating or the S & P Rating, as the case may 
be, shall be deemed to be "NOT RATED." Each change in the Applicable Margin 
shall be effective commencing on the fifth (5th) Business Day following the 
earlier to occur of (i) Administrative Agent's receipt of notice from 
Borrower, as required 

                                       2
<PAGE>

in SECTION 9.3(f), of a change in the Moody's Rating or the S & P Rating, and 
(ii) Administrative Agent's actual knowledge of a change in the Moody's 
Rating or the S & P Rating.

      AUTHORIZATIONS means all filings, recordings, and registrations with, 
and all validations or exemptions, approvals, orders, authorizations, 
consents, franchises, licenses, certificates, and permits from, any 
Governmental Authority.

      BASE RATE means, for any day, the rate per annum equal to THE GREATER 
OF (a) the Federal Funds Rate for such day plus one-half of one percent 
(.5%), and (b) the Prime Rate for such day.  Any change in the Base Rate due 
to a change in the Prime Rate or the Federal Funds Rate shall be effective on 
the effective date of such change in the Prime Rate or the Federal Funds 
Rate, as applicable.

      BASE RATE BORROWING means a Borrowing bearing interest at the SUM of 
the Base Rate PLUS the Applicable Margin for Base Rate Borrowings.

      BORROWER is defined in the preamble to this Agreement.

      BORROWING means any amount disbursed (a) by one or more Lenders to 
Borrower under the Loan Documents, whether such amount constitutes an 
original disbursement of funds, the Continuation of an amount outstanding, or 
payment of a draft under an LC, or (b) by any Lender in accordance with, and 
to satisfy the obligations of any Obligor under, any Loan Document.

      BORROWING DATE is defined in SECTION 2.4(a).

      BUDGET means the annual financial budget for the Companies delivered to 
Administrative Agent pursuant to SECTION 9.3(c), together with any 
adjustments, if any, to any such budget listed on a schedule to a Permitted 
Acquisition Compliance Certificate provided to Administrative Agent in 
connection with a Material Acquisition.

      BUSINESS DAY means (a) for all purposes, any day OTHER THAN Saturday, 
Sunday, and any other day on which commercial banking institutions are 
required or authorized by Law to be closed in Dallas, Texas, New York, New 
York, or Los Angeles, California, and (b) in addition to the foregoing, in 
respect of any Eurodollar Borrowing, a day on which dealings in United States 
dollars are conducted in the London interbank market and commercial banks are 
open for international business in London.

      CAPITAL LEASE means any capital lease or sublease which should be 
capitalized on a balance sheet in accordance with GAAP.

      CLOSING DATE means the date upon which this Agreement has been executed 
by Borrower and the Credit Parties and all conditions precedent specified in 
SECTION 7.1 have been satisfied or waived.

      CODE means the INTERNAL REVENUE CODE OF 1986, as amended.

      COMMITMENT USAGE means, at the time of any determination thereof, THE 
SUM OF (without duplication) (a) the Total Principal Debt, PLUS (b) the LC 
Exposure.

                                       3
<PAGE>

      COMMITTED SUM means, for any Lender at any date of determination, the 
amount stated beside each Lender's name on the most-recently amended SCHEDULE 
2.1 (which amount is subject to increase, reduction, or cancellation in 
accordance with this Agreement).

      COMPANIES means, as of any date, POI and each of its Subsidiaries, and 
COMPANY means any one of the Companies.

      COMPLIANCE CERTIFICATE means a certificate signed by a Responsible 
Officer, substantially in the form of EXHIBIT A-1.

      CONSEQUENTIAL LOSS means any loss or expense which any Lender 
reasonably incurs in respect of a Eurodollar Borrowing as a consequence of 
any event described in SECTION 4.5.

      CONSOLIDATED DEBT means, as of any date of determination, all Debt of 
the Companies, on a consolidated basis, of the types described in CLAUSES 
(a)(i) and (a)(ii) of the definition of Debt.

      CONSOLIDATED EBITDA means, for any period of determination, the EBITDA 
of the Companies, on a consolidated basis.

      CONSOLIDATED INTEREST EXPENSE means, for any period of determination, 
the Interest Expense of the Companies, on a consolidated basis.

      CONSTITUENT DOCUMENTS means, with respect to any Person, its articles 
or certificate of incorporation, bylaws, partnership agreements, limited 
liability company agreements, trust agreement, or such other document as may 
govern such Person's formation or organization.

      CONTINUE, CONTINUATION, and CONTINUED refers to the continuation 
pursuant to SECTION 3.10 hereof of a Eurodollar Borrowing from one Interest 
Period to the next Interest Period.

      CONVERT, CONVERSION, and CONVERTED refers to a conversion pursuant to 
SECTION 3.10 of one Type of Borrowing into another Type of Borrowing.

      CONVERTIBLE NOTE INDENTURE means that certain Indenture dated as of 
August 29, 1996, as supplemented by that certain Supplemental Indenture No. 1 
for the 6-3/4 Convertible Senior Subordinated Notes due 2003 dated as of 
September 20, 1996, by and among State Street Bank and Trust Company, as 
Trustee, Borrower, and POI, as the same may be amended, supplemented, or 
otherwise modified from time to time.

      CONVERTIBLE NOTES means the notes issued pursuant to the Convertible 
Note Indenture.

      CREDIT PARTIES means Agents and Lenders, and "CREDIT PARTY" means any 
one of the Credit Parties.

      CURRENT FINANCIALS means, at the time of any determination thereof, the 
more recently delivered to Lenders of either (a) the Financial Statements for 
the fiscal year ended December 31, 1997, and the nine-month period ended 
September 30, 1998, calculated on a consolidated basis for the Companies, or 
(b) the Financial Statements required to be delivered under SECTIONS 9.3(a) 
or 9.3(b), as the case may be.

                                       4
<PAGE>

      DEALER ACQUISITIONS means the acquisition of the assets or contracts 
(but not Stock) of a Person who is engaged in the business of originating 
security, monitoring, and emergency response contracts.

      DEBT means (without duplication), for any Person, the sum of the 
following: (a) all liabilities, obligations, and indebtedness of such Person 
which in accordance with GAAP should be classified upon such Person's balance 
sheet as liabilities in respect of (i) money borrowed, including, without 
limitation, the Principal Debt, (ii) obligations of such Person under Capital 
Leases, and (iii) obligations of such Person issued or assumed as the 
deferred purchase price of property, all conditional sale obligations, and 
obligations under any title retention agreement (but excluding trade accounts 
payable arising in the ordinary course of business); (b) all obligations of 
the type referred to in CLAUSES (a)(i) through (a)(iii) preceding of other 
Persons for the payment of which such Person is responsible or liable as 
obligor, guarantor, or otherwise; (c) all obligations of the type referred to 
in CLAUSES (a)(i) through CLAUSE (a)(iii) and CLAUSE (b) preceding of other 
Persons secured by any Lien on any property or asset of such Person (whether 
or not such obligation is assumed by such Person), the amount of such 
obligation being deemed to be the lesser of the fair value of such property 
or assets or the amount of the obligation so secured as determined in good 
faith by such Person; (d) the face amount of all letters of credit and 
banker's acceptances issued for the account of such Person, and without 
duplication, all drafts drawn and unpaid thereunder; and (e) net liabilities 
under Financial Hedges.

      DEBTOR RELIEF LAWS means the BANKRUPTCY CODE OF THE UNITED STATES OF 
AMERICA and all other applicable liquidation, conservatorship, bankruptcy, 
moratorium, rearrangement, receivership, insolvency, reorganization, 
fraudulent transfer or conveyance, suspension of payments, or similar Laws 
from time to time in effect affecting the Rights of creditors generally.

      DEFAULT is defined in SECTION 11.

      DEFAULTING LENDER means, as of any date, any Lender that has (a) failed 
to make a Borrowing required to be made by it hereunder, or (b) given notice 
to Administrative Agent or Borrower that it will not make, or that it has 
disaffirmed or repudiated any obligation to make, any Advances hereunder 
(unless such notice is given by all Lenders).

      DEFAULT RATE means a per annum rate of interest equal from day to day 
to THE LESSER OF (a) the sum of the Base Rate PLUS the Applicable Margin for 
Base Rate Borrowings PLUS two percent (2%), and (b) the Maximum Rate.

      DISTRIBUTION for any Person means, with respect to any Stock issued by 
such Person, (a) the retirement, redemption, purchase, or other acquisition 
for value of any such Stock, (b) the declaration or payment of any dividend 
on or with respect to any such Stock, and (c) any other payment by such 
Person with respect to such Stock.

      DOCUMENTATION AGENT means, collectively, Toronto Dominion (Texas), Inc. 
and its respective permitted successors or assigns as "DOCUMENTATION AGENT" 
under this Agreement.

      DOLLARS and the symbol $ means lawful money of the United States of 
America.

      DOMESTIC SUBSIDIARY means any Subsidiary of POI other than a Foreign 
Subsidiary.

                                       5
<PAGE>

      EBITDA means, with respect to any Person for any fiscal period, an 
amount equal to (a) consolidated net income of such Person for such period, 
MINUS (b) THE SUM OF (i) income tax credits, (ii) interest income, (iii) 
gains from extraordinary items for such period, and (iv) any aggregate net 
gain during such period arising from the sale, exchange, or other disposition 
of capital assets by such Person (including any fixed assets, whether 
tangible or intangible, and all inventory sold in conjunction with the 
disposition of fixed assets, but excluding asset sales in the ordinary course 
of business permitted pursuant to SECTION 10.11), in each case to the extent 
included in the calculation of consolidated net income of such Person for 
such period in accordance with GAAP, but without duplication, MINUS (c) any 
cash payments made in respect of any item of extraordinary loss accrued 
during a prior period and added back to EBITDA in such prior period pursuant 
to CLAUSE (d)(v) below, PLUS (d) THE SUM OF (i) any provision for income 
taxes, (ii) Interest Expense, (iii) the amount of depreciation and 
amortization for such period, (iv) the amount of any deduction to 
consolidated net income as the result of any Stock option expense, (v) the 
amount of any item of extraordinary loss not paid in cash in such period, and 
(vi) the absolute value of any aggregate net loss during such period arising 
from the sale, exchange, or other disposition of capital assets by such 
Person (including any fixed assets, whether tangible or intangible, and all 
inventory sold in conjunction with the disposition of fixed assets, but 
excluding asset sales in the ordinary course of business permitted pursuant 
to SECTION 10.11), in each case to the extent included in the calculation of 
consolidated net income of such Person for such period in accordance with 
GAAP, but without duplication.  In the case of any Permitted Acquisition 
during any period of calculation, EBITDA shall, for the purposes of the 
foregoing calculations, be adjusted to give effect to such Permitted 
Acquisition, as if such Permitted Acquisition occurred on the first (1st) day 
of such period, by increasing, if positive, or decreasing, if negative, 
EBITDA by the EBITDA of such newly-acquired business during such period of 
calculation occurring prior to the date of such Permitted Acquisition.

      ELIGIBLE ASSIGNEE means: (a) a Lender; (b) an Affiliate of a Lender (so 
long as such assignment is not made in conjunction with the sale of such 
Affiliate); and (c) any other Person approved by Administrative Agent (which 
approval will not be unreasonably withheld or delayed by Administrative 
Agent) and, unless a Payment Default has occurred and is continuing at the 
time any assignment is effected in accordance with SECTION 14.13, Borrower, 
such approval not to be unreasonably withheld or delayed by Borrower and such 
approval to be deemed given by Borrower if no objection is received by the 
assigning Lender and Administrative Agent from Borrower within five (5) 
Business Days after notice of such proposed assignment has been provided by 
the assigning Lender to Borrower; PROVIDED, HOWEVER, that neither Borrower 
nor any Affiliate of Borrower shall qualify as an Eligible Assignee.

      EMPLOYEE PLAN means an employee pension benefit plan covered by TITLE 
IV of ERISA and established or maintained by Borrower or any ERISA Affiliate, 
but not including any Multiemployer Plan.

      ENVIRONMENTAL LAW means any applicable Law that relates to (a) the 
condition or protection of the environment (including air, groundwater, 
surface water, soil, other environmental media, or natural resources) and 
remediation to the environment, (b) the regulation of any Hazardous 
Substances, or (c) the Release or threatened Release of Hazardous Substances, 
including, without limitation, the COMPREHENSIVE ENVIRONMENTAL RESPONSE, 
COMPENSATION, AND LIABILITY ACT (42 U.S.C. SECTION 9601 ET SEQ.) ("CERCLA"), 
the CLEAN AIR ACT (42 U.S.C. SECTION 7401 ET SEQ.), the FEDERAL WATER 
POLLUTION CONTROL ACT, as amended by the CLEAN WATER ACT (33 U.S.C. SECTION 
1251 ET SEQ.), the FEDERAL INSECTICIDE, FUNGICIDE, AND RODENTICIDE ACT (7 
U.S.C. SECTION 136 ET SEQ.), the EMERGENCY PLANNING AND COMMUNITY RIGHT TO 
KNOW ACT OF 1986 (42 U.S.C. SECTION 11001 ET SEQ.), the HAZARDOUS MATERIALS 
TRANSPORTATION ACT (49 U.S.C. SECTION 1801 ET SEQ.), the NATIONAL 
ENVIRONMENTAL POLICY ACT OF 1969 (42 U.S.C. SECTION 4321 ET SEQ.), the OIL 
POLLUTION ACT (33 U.S.C. SECTION 2701 ET SEQ.), the RESOURCE CONSERVATION AND 
RECOVERY ACT (42 U.S.C. SECTION 6901 ET SEQ.), the RIVERS AND HARBORS ACT (33 
U.S.C. SECTION 401 ET 

                                       6
<PAGE>

SEQ.), the SAFE DRINKING WATER ACT (42 U.S.C. SECTION 201 and SECTION 300f ET 
SEQ.), the SOLID WASTE DISPOSAL ACT, as amended by the RESOURCE CONSERVATION 
AND RECOVERY ACT OF 1976 and the HAZARDOUS AND SOLID WASTE AMENDMENTS OF 1984 
(42 U.S.C. SECTION 6901 ET SEQ.), the TOXIC SUBSTANCES CONTROL ACT (15 U.S.C. 
SECTION 2601 ET SEQ.), and analogous state and local Laws, as any of the 
foregoing may have been and may be amended or supplemented from time to time, 
and any analogous future enacted or adopted Law.

      ERISA means the EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, as 
amended.

      ERISA AFFILIATE means any company or trade or business (whether or not 
incorporated) which, for purposes of TITLE IV of ERISA, is a member of 
Borrower's controlled group or which is under common control with Borrower 
within the meaning of SECTION 414(b), (c), (m), or (o) of the Code.

      EURODOLLAR RATE means, for any Eurodollar Borrowing for any Interest 
Period therefor, the rate per annum (rounded upwards, if necessary, to the 
nearest 1/100 of 1%) appearing on Dow Jones Markets (Telerate) Page 3750 (or 
any successor page) as the London interbank offered rate for deposits in 
Dollars at approximately 11:00 a.m. (London time) two (2) Business Days prior 
to the first (1st) day of such Interest Period for a term comparable to such 
Interest Period. If for any reason such rate is not available, then the term 
"EURODOLLAR RATE" shall mean, for any Eurodollar Borrowing for any Interest 
Period therefor, the rate per annum (rounded upwards, if necessary, to the 
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London 
interbank offered rate for deposits in Dollars at approximately 11:00 a.m. 
(London time) two (2) Business Days prior to the first (1st) day of such 
Interest Period for a term comparable to such Interest Period; PROVIDED, 
HOWEVER, if more than one (1) rate is specified on Reuters Screen LIBO Page, 
then the applicable rate shall be the arithmetic mean of all such rates 
(rounded upwards, if necessary, to the nearest 1/100 of 1%).

      EURODOLLAR BORROWING means a Borrowing bearing interest at the SUM of 
the Adjusted Eurodollar Rate PLUS the Applicable Margin for Eurodollar 
Borrowings.

      EXCLUDED TAXES is defined in SECTION 4.6(a).

      EXHIBIT means an exhibit to this Agreement unless otherwise specified.

      FACILITY means the credit facility as described in and subject to the 
limitations set forth in SECTION 2.1 hereof.

      FEDERAL FUNDS RATE means, for any day, the rate per annum (rounded 
upwards, if necessary, to the nearest 1/100 of 1%) determined (which 
determination shall be conclusive and binding, absent manifest error) by 
Administrative Agent to be equal to the weighted average of the rates on 
overnight Federal funds transactions with member banks of the Federal Reserve 
System arranged by Federal funds brokers on such day, as published by the 
Federal Reserve Bank of New York on the Business Day next succeeding such 
day; PROVIDED THAT (a) if such day is not a Business Day, then the Federal 
Funds Rate for such day shall be such rate on such transactions on the next 
preceding Business Day as so published on the next succeeding Business Day, 
and (b) if no such rate is so published on such next succeeding Business Day, 
then the Federal Funds Rate for such day shall be the average rate quoted to 
Administrative Agent (in its individual capacity) at approximately 10:00 a.m. 
(Dallas, Texas time) on such day received by Administrative Agent from three 
(3) Federal funds brokers of recognized national standing selected by 
Administrative Agent in its sole discretion.

                                       7
<PAGE>

      FINANCIAL HEDGE means a swap, collar, floor, cap, or other contract 
which is intended to reduce or eliminate the risk of fluctuations in interest 
rates.

      FINANCIAL STATEMENTS means balance sheets, statements of operations, 
statements of shareholders' investments, and statements of cash flows 
prepared in accordance with GAAP, which statements of operations and 
statements of cash flows shall be in comparative form to the corresponding 
period of the preceding fiscal year, and which balance sheets and statements 
of shareholders' investments shall be in comparative form to the prior fiscal 
year-end figures.

      FOREIGN SUBSIDIARY means any Subsidiary of POI which is not organized 
under the Laws of any State of the United States of America or the District 
of Columbia.

      GAAP  means generally accepted accounting principles in the United 
States of America as set forth in the opinions and pronouncements of the 
American Institute of Certified Public Accountants and the statements and 
pronouncements of the Financial Accounting Standards Board which are 
applicable from time to time.

      GOVERNMENTAL AUTHORITY means any applicable (a) local, state, 
municipal, or federal judicial, executive, or legislative instrumentality, 
(b) private arbitration board or panel presiding over binding arbitration, or 
(c) central bank.

      GUARANTORS means POI, the Subsidiary Guarantors, and any other Person 
that is required to execute a guaranty pursuant to SECTION 6.3, and GUARANTOR 
means any one of the Guarantors.

      GUARANTIES means the POI Guaranty, the Subsidiary Guaranty, and any 
other guaranty executed pursuant to SECTION 6.3, and GUARANTY means any one 
of the Guaranties.

      HAZARDOUS SUBSTANCE means (a) any substance that is designated, 
defined, or classified as a hazardous waste, hazardous material, pollutant, 
contaminant, or toxic or hazardous substance by any applicable Governmental 
Authority, including without limitation, any hazardous substance within the 
meaning of SECTION 101 of CERCLA, or (b) any other substances regulated by a 
Governmental Authority having jurisdiction over any Company with respect to 
environmental matters because of their effect or potential effect on public 
health and/or the environment, including, without limitation, (i) petroleum, 
oil, gasoline, natural gas or liquids, fuel oil, motor oil, waste oil, diesel 
fuel, jet fuel, and other petroleum hydrocarbons, (ii) regulated asbestos and 
asbestos-containing materials in any form, (iii) polychlorinated biphenyls, 
(iv) urea formaldehyde foam, (v) lead paint, and (vi) radioactive material.

      IMMATERIAL ACQUISITION means any single Acquisition involving an 
aggregate consideration (including, without limitation, cash paid, Stock 
issued, or Debt issued or assumed) in an amount that does not exceed 
$10,000,000.

      INDEMNIFIED PARTIES is defined in SECTION 12.11.

      INTEREST COVERAGE RATIO means, as of any date of determination thereof, 
THE RATIO OF (a) THE PRODUCT OF (i) Consolidated EBITDA for the most-recent 
fiscal quarter ending on or prior to the date of determination, and (ii) four 
(4), to (b) Consolidated Interest Expense for the most-recent four (4) fiscal 
quarters ending on or prior to the date of determination.

                                       8
<PAGE>

       INTEREST EXPENSE means, for any period of calculation thereof, for any 
Person (a) interest expense determined in accordance with GAAP (excluding the 
fees and other amounts payable on or before the Closing Date pursuant to 
SECTION 5.2 and the fees and expenses incurred in connection with the Senior 
Subordinated Note Indenture), MINUS (b) cash interest income received by such 
Person during such period.

      INTEREST PERIOD is defined in SECTION 3.9.

      LAWS means all applicable statutes, laws, treaties, ordinances, tariff 
requirements, rules, regulations, orders, writs, injunctions, decrees, 
judgments, opinions, or binding interpretations of any Governmental Authority.

      LC means the letter(s) of credit issued hereunder in the form agreed 
upon among Borrower, Administrative Agent, and the beneficiary thereof at the 
time of issuance thereof and participated in by Lenders pursuant to the terms 
and conditions of SECTION 2.2 hereof.

      LC AGREEMENT means a letter of credit application and agreement (in 
form and substance reasonably satisfactory to Administrative Agent) submitted 
by Borrower to Administrative Agent for an LC for Borrower's own account (and 
for the benefit of Borrower or any other Company).

      LC EXPOSURE means, at any time and without duplication, THE SUM OF (a) 
the aggregate undrawn portion of all uncancelled and unexpired LCs, PLUS (b) 
the aggregate unpaid reimbursement obligations of Borrower in respect of 
drawings of drafts under any LC; PROVIDED THAT LC Exposure shall exclude the 
aggregate undrawn portion of any uncanceled or unexpired LCs that have been 
cash collateralized or for which back-up letters of credit have been provided 
pursuant to SECTION 2.2(h).

      LC SUBFACILITY means a subfacility for the issuance of LCs (the LC 
Exposure in connection with which may never exceed $25,000,000), as described 
in and subject to the limitations of SECTION 2.2.

      LEAD ARRANGER means NationsBanc Montgomery Securities LLC, and its      
 successors and assigns.

      LENDERS means, on any date of determination, the financial institutions 
named on SCHEDULE 2.1 (as the same may be amended from time to time by 
Administrative Agent to reflect the assignments made in accordance with 
SECTION 14.13(b) of this Agreement and delivered to Borrower and the Credit 
Parties), and subject to the terms and conditions of this Agreement, their 
respective successors and assigns.

      LEVERAGE RATIO means, as of any date of determination thereof, THE 
RATIO OF (a) Consolidated Debt outstanding on such date, to (b) THE PRODUCT 
OF (i) Consolidated EBITDA for the most-recent fiscal quarter ending on or 
prior to the date of determination, and (ii) four (4).

      LIEN means, with respect to any property or assets, any lien, mortgage, 
collateral assignment, hypothecation, security interest, pledge, assignment, 
charge, conditional sale or title retention agreement, levy, execution, 
seizure, attachment, garnishment, or other encumbrance of any kind in respect 
of such property or assets.

      LIFELINE means Lifeline Systems, Inc., a Massachusetts corporation.

                                       9
<PAGE>

      LIFELINE ACQUISITION means the Acquisition of all of the issued and 
outstanding Stock of Lifeline  pursuant to that certain Agreement and Plan of 
Contribution and Merger dated as of October 18, 1998, as amended on October 
28, 1998, among POI, Protection One Acquisition Holding Corporation, P-1 
Merger Sub, Inc. (Mass.), P-1 Merger Sub, Inc. (Del.), and Lifeline.

      LITIGATION means any action by or before any Governmental Authority.

      LOAN DOCUMENTS means (a) this Agreement, any Notes, the Guaranties, the 
LCs, and the LC Agreements, (b) all agreements, documents, or instruments in 
favor of any Credit Party ever delivered pursuant to this Agreement or 
otherwise delivered in connection with all or any part of the Obligation, (c) 
any Financial Hedge between any Obligor and any Credit Party or any Affiliate 
of any Credit Party, and (d) any and all future renewals, extensions, 
restatements, reaffirmations, or amendments of, or supplements to, all or any 
part of the foregoing.

      MATERIAL ACQUISITION means any single Acquisition or series of related 
Acquisitions involving an aggregate consideration (including, without 
limitation, cash paid, Stock issued, or Debt issued or assumed) in an amount 
in excess of $125,000,000.

      MATERIAL ADVERSE EVENT means any set of one or more circumstances or 
events which, individually or collectively, could reasonably be expected to 
result in any (a) material impairment of the ability of any Obligor to 
perform any of its payment or other material obligations under the Loan 
Documents or the ability of any Credit Party to enforce any such obligations 
or any of their respective Rights under the Loan Documents, (b) material and 
adverse effect on the business, properties, condition (financial or 
otherwise), or results of operations of the Companies, taken as a whole, or 
(c) Default.

      MATERIAL COMPANIES means POI and its Material Subsidiaries, and 
MATERIAL COMPANY means any one of the Material Companies.

      MATERIAL STATE means any State of the United States of America or the 
District of Columbia in  which any Obligor is conducting business and where 
the failure to qualify to do business as a foreign corporation or other 
entity would be a Material Adverse Event.

      MATERIAL SUBSIDIARY of POI means, at any time, any of:

      (a)   Borrower;

      (b)   any Domestic Subsidiary of POI that has (or, in respect of a 
newly formed or acquired Subsidiary, would have on a pro forma basis) 
contributed at least fifteen percent (15%) of either (i) the gross revenues 
of the Companies for the immediately preceding fiscal year of the Companies, 
or (ii) the consolidated net income of the Companies for the immediately 
preceding fiscal year of the Companies, or (iii) the consolidated total 
assets of the Companies as of the last day of the immediately preceding 
fiscal year of the Companies (any Domestic Subsidiaries that do not meet the 
requirements of this CLAUSE (b) being "INDIVIDUAL IMMATERIAL SUBSIDIARIES");

      (c)   such additional Domestic Subsidiaries that are Individual Immaterial
Subsidiaries selected by Borrower and approved by Administrative Agent so that
all other Individual Immaterial Subsidiaries shall collectively contribute
fifteen percent (15%) or less of each of (i) the gross revenues of the Companies
for 

                                       10
<PAGE>

the immediately preceding fiscal year of the Companies, or (ii) the 
consolidated net income of the Companies for the immediately preceding fiscal 
year of the Companies, or (iii) the consolidated total assets of the 
Companies as of the last day of the immediately preceding fiscal year of the 
Companies.

      MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for each Lender, the 
maximum non-usurious amount and the maximum non-usurious rate of interest 
which, under applicable Law, such Lender is permitted to contract for, 
charge, take, reserve, or receive on the Obligation.

      MOODY'S means Moody's Investors Service, Inc.

      MOODY'S RATING means the most recently-announced rating from time to 
time of Moody's assigned to any class of long-term senior, unsecured debt 
securities issued by Borrower, as to which no letter of credit or guaranty or 
third-party credit support (other than from the Companies) is in place, 
regardless of whether all or any part of such Indebtedness has been issued at 
the time such rating was issued.

      MULTIEMPLOYER PLAN means a multiemployer plan as defined in SECTIONS 
3(37) or 4001(a)(3) of ERISA or SECTION 414(f) of the Code to which any 
Company or any ERISA Affiliate has any obligation or liability (contingent or 
otherwise).

      NATIONSBANK  means NationsBank, N.A., a national banking association, 
and its successors and assigns.

      NOTES means any promissory notes executed pursuant to SECTION 
3.1(a)(ii), and NOTE means any one of the Notes.

      NOTICE OF BORROWING means a notice substantially in the form of EXHIBIT 
C-1.

      NOTICE OF CONVERSION means a notice substantially in the form of 
EXHIBIT C-2.

      NOTICE OF LC means a notice substantially in the form of EXHIBIT C-3.

      OBLIGATION means all present and future indebtedness, liabilities, and 
obligations, and all renewals and extensions thereof, or any part thereof, 
now or hereafter owed to any Credit Party or any Affiliate of any Credit 
Party by any Obligor arising from, by virtue of, or pursuant to any Loan 
Document, together with all interest accruing thereon, fees, costs, and 
expenses (including, without limitation, all reasonable attorneys' fees and 
expenses incurred in the enforcement or collection thereof as provided in 
SECTION 12.10 or in any other Loan Document) payable under the Loan Documents.

      OBLIGORS means Borrower and Guarantors, and OBLIGOR means any one of 
the Obligors.

      OTHER REQUIRED GUARANTOR is defined in SECTION 6.3.

      OTHER TAXES is defined in SECTION 4.6(b).

      PARTICIPANT is defined in SECTION 14.13(e).

      PAYMENT DEFAULT means any Default described in SECTION 11.1.

                                       11
<PAGE>

      PBGC means the Pension Benefit Guaranty Corporation, or any successor 
thereof, established pursuant to ERISA.

      PERMITTED ACQUISITIONS means:

      (a)   any Dealer Acquisition;

      (b)   the Lifeline Acquisition;

      (c)   any Immaterial Acquisition, PROVIDED THAT the aggregate 
consideration with respect to such Immaterial Acquisition, when combined with 
the aggregate consideration of all other Immaterial Acquisitions during the 
twelve (12) month period prior to such Immaterial Acquisition, does not 
exceed $10,000,000;

      (d)   any Acquisition by any Company with respect to which each of the 
following requirements shall have been satisfied:

            (i)   as of the closing of any Acquisition, the Acquisition has been
      approved and recommended by the board of directors (or other equivalent
      governing body, if any) of the Person to be acquired or from which such
      assets or business are to be acquired;

            (ii)  as of the closing of any Acquisition, after giving effect to
      such Acquisition, the acquiring party must be Solvent and the Companies,
      on a consolidated basis, must be Solvent;

            (iii) as of the closing of any Acquisition, no Potential Default or
      Default shall exist or occur as a result of, and after giving effect to,
      such Acquisition;

            (iv)  as of the closing of any Acquisition, if such Acquisition is
      structured as a merger, Borrower, (or if such merger is with any
      Subsidiary of Borrower, then such Subsidiary) must be the surviving entity
      after giving effect to such merger;

            (v)   the making and performance of the related acquisition
      agreements with respect to such Acquisition, and all other agreements,
      documents, and actions required thereunder, will not violate any provision
      of any Law, except where such violation could not be a Material Adverse
      Event, and will not violate any provisions of the Constituent Documents of
      any Company, or constitute a default under any agreement by which any
      Company or its respective property may be bound, except where such default
      could not be a Material Adverse Event; and

            (vi)  if such Acquisition is a Material Acquisition,
      contemporaneously with the closing of such Material Acquisition, Borrower
      shall have delivered to Administrative Agent (A) a Permitted Acquisition
      Compliance Certificate, demonstrating pro forma compliance with the terms
      and conditions of the Loan Documents, after giving effect to the
      Acquisition, and (B) any proposed adjustments to the Budget most-recently
      delivered pursuant to the terms of this Agreement as a result of such
      Acquisition; or

      (e)   any other Acquisition for which the prior written consent of 
Required Lenders has been obtained (and Lenders agree to respond to a request 
for consent to any such Acquisition within ten (10) 

                                       12
<PAGE>

Business Days following Borrower's request for such consent; PROVIDED THAT 
the failure to provide a response to such request for consent shall be deemed 
to be a refusal to grant such consent).

      PERMITTED ACQUISITION COMPLIANCE CERTIFICATE means a certificate signed by
a Responsible Officer of Borrower, substantially in the form of EXHIBIT A-2.

      PERMITTED LIENS means Liens permitted under SECTION 10.3 as described in
such SECTION.

      PERSON means any individual, entity, or Governmental Authority.

      POI means (a) prior to the Lifeline Acquisition, Protection One, Inc., a
Delaware corporation, and (b) on and after the Lifeline Acquisition, Protection
One Acquisition Holding Corp., a Delaware corporation (whose name shall be
changed to Protection One, Inc. following the Lifeline Acquisition).

      POI GUARANTY means (a) an Unconditional Guaranty of Payment in
substantially the form of EXHIBIT D-1, executed and delivered by POI, and (b)
any amendments, modifications, supplements, restatements, ratifications, or
reaffirmations thereof made from time to time in accordance with the Loan
Documents.

      POTENTIAL DEFAULT means the occurrence of any event or existence of any
circumstance which, with the giving of notice or lapse of time or both, would
become a Default.

      PRIME RATE means, as of any date, the per annum rate of interest
established by NationsBank on such date as its prime rate, which rate may not be
the lowest rate of interest charged by NationsBank to its customers.

      PRINCIPAL DEBT means, for a Lender and at any time, the unpaid principal
balance of all outstanding Borrowings from such Lender hereunder as of such
date.

      PRO RATA or PRO RATA PART, for each Lender, means (a) for purposes of any
commitment to fund (or to purchase participations pursuant to SECTION 2.2) in
respect of the Facility or the L/C Subfacility, respectively, the percentage
stated opposite such Lender's name as set forth on SCHEDULE 2.1 or on the most
recently amended SCHEDULE 2.1, if any, prepared by Administrative Agent pursuant
to SECTION 14.13, (b) for purposes of sharing any amount or fee payable to any
Lender in respect of the Facility or the L/C Subfacility, respectively, the
proportion (whether held directly or through a participation therein pursuant to
SECTION 2.2 and determined after giving effect thereto) which the portion of the
Principal Debt or the LC Exposure, as applicable, owed to such Lender bears to
the Principal Debt or LC Exposure, as applicable, owed to all Lenders at the
time in question, and (c) for all other purposes, the proportion which the
portion of the Principal Debt owed to such Lender bears to the Principal Debt
owed to all Lenders at the time in question, or if no Principal Debt is
outstanding, then the proportion that the aggregate of such Lender's Committed
Sum bears to the Total Commitment then in effect.

      REGISTER is defined in SECTION 14.13(c).

      REGULATION D means Regulation D of the Board of Governors of the Federal
Reserve System, as amended.

                                      13

<PAGE>

      REGULATION U means Regulation U of the Board of Governors of the Federal
Reserve System, as amended.

      RELEASE means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing into the
environment (including air, groundwater, surface water, soil, other
environmental media, or natural resources).

      REPORTABLE EVENT shall have the meaning specified in SECTION 4043 of ERISA
or the regulations issued thereunder in connection with an Employee Plan,
excluding events for which the thirty (30) day notice requirement is waived
under applicable PBGC regulations other than those events described in
SECTIONS 2615.11, 2615.15 and 2615.19 of such regulations, including each such
provision as it may subsequently be renumbered.

      REPRESENTATIVES means representatives, officers, directors, employees,
attorneys, and agents.

      REQUIRED LENDERS means (a) on any date of determination prior to
termination of the Total Commitment, those Lenders (other than Defaulting
Lenders) holding more than fifty percent (50%) of the Total Commitment
(excluding the Committed Sums of any Defaulting Lenders), or (b) on any date of
determination occurring after the Total Commitment has terminated, those Lenders
holding more than fifty percent (50%) of the outstanding Total Principal Debt
(excluding the Principal Debt of any Defaulting Lenders).

      RESERVE REQUIREMENT means, at any time, the maximum rate at which reserves
(including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against, in the case of
Eurodollar Borrowings, "EUROCURRENCY LIABILITIES" (as such term is used in
Regulation D).  Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (a) any category of liabilities which includes
deposits by reference to which the Adjusted Eurodollar Rate is to be determined,
or (b) any category of extensions of credit or other assets which include
Eurodollar Borrowings.  The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement.

      RESPONSIBLE OFFICER of Borrower means its chairman, president, chief
executive officer, chief financial officer (or officer having comparable
duties), treasurer, or secretary, or any vice president, assistant treasurer, or
assistant secretary, or, for all purposes under the Loan Documents, any other
officer designated from time to time by the Board of Directors of Borrower,
which designated officer is reasonably acceptable to Administrative Agent.

      RIGHTS means rights, remedies, powers, privileges, and benefits.

      SCHEDULE means, unless specified otherwise, a schedule attached to this
Agreement, as the same may be supplemented and modified from time to time in
accordance with the terms of the Loan Documents.

      SENIOR NOTE INDENTURE means that certain Indenture for the 7-3/8 Senior
Notes due 2005 dated as of August 16, 1998, by and among the Bank of New York,
as Trustee, Borrower and POI, as the same may be amended, supplemented, or
otherwise modified from time to time.

                                      14

<PAGE>

      SENIOR NOTES means the notes issued pursuant to the Senior Note Indenture.

      SENIOR SUBORDINATED NOTE INDENTURE means that certain Indenture for the
8-1/8% Senior Subordinated Notes due 2009 dated as of December 21, 1998, by and
among Bank of New York, as Trustee, Borrower, as issuer, and the Guarantors
named therein, as the same may be amended, supplemented, or otherwise modified
from time to time.

      SOLVENT means, as to a Person, that (a) the aggregate fair market value of
such Person's assets exceeds its liabilities (whether contingent, subordinated,
unmatured, unliquidated, or otherwise), (b) such Person has sufficient cash flow
to enable it to pay its Debts as they mature, and (c) such Person does not have
unreasonably small capital to conduct such Person's businesses.

      S & P means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc., a New York corporation.

      S & P RATING means the most recently-announced rating from time to time of
S & P assigned to any class of long-term senior, unsecured debt securities
issued by Borrower, as to which no letter of credit or guaranty or third-party
credit support (other than from the Companies) is in place, regardless of
whether all or any part of such Indebtedness has been issued at the time such
rating was issued.

      STOCK means all shares, options, warrants, general or limited partnership
interests, membership interests, or other ownership interests (regardless of how
designated) of or in a corporation, partnership, limited liability company,
trust, or other entity, whether voting or nonvoting, including common stock,
preferred stock, or any other "EQUITY SECURITY" (as such term is defined in RULE
3a11-1 of the GENERAL RULES AND REGULATIONS promulgated by the Securities and
Exchange Commission under the SECURITIES EXCHANGE ACT OF 1934, as amended).

      SUBORDINATED DEBT means any Debt of any Obligor subordinated to the
Obligation, including, without limitation, Debt issued pursuant to the
Convertible Note Indenture, the Senior Subordinated Note Indenture, and the
Subordinated Note Indenture.

      SUBORDINATED NOTE INDENTURE means that certain Indenture for the 13-5/8
Senior Subordinated Discount Notes due 2005 dated as of May 17, 1995, by and
among The First National Bank of Boston, as Trustee, Borrower, as issuer, and
POI, Protection One Alarm Services, Inc., and A-Able Lock & Alarm, Inc., as
guarantors, as the same may be amended, supplemented, or otherwise modified from
time to time.

      SUBSIDIARY of any Person means (a) any entity of which an aggregate of
more than fifty percent (50%) (in number of votes) of the Stock is owned of
record or beneficially, directly or indirectly, by such Person, or (b) any
partnership (limited or general) of which such Person shall at any time be the
general partner.

      SUBSIDIARY GUARANTORS means each Material Subsidiary of POI that has
executed the Subsidiary Guaranty, and SUBSIDIARY GUARANTOR means any one of the
Subsidiary Guarantors.

      SUBSIDIARY GUARANTY means (a) an Unconditional Guaranty of Payment in
substantially the form of EXHIBIT D-2, executed and delivered by each Subsidiary
Guarantor pursuant to the requirements of 

                                      15

<PAGE>

SECTION 6.2, and (b) any amendments, modifications, supplements, 
restatements, ratifications, or reaffirmations thereof made from time to time 
in accordance with the Loan Documents.

      SYNDICATION AGENT means, collectively, First Union National Bank and its
respective permitted successors or assigns as "SYNDICATION AGENT" under this
Agreement.

      TAXES means, for any Person, taxes, assessments, duties, levies, imposts,
deductions, charges, or withholdings, or other governmental charges or levies
imposed upon such Person, its income, or any of its properties, franchises, or
assets.

      TERMINATION DATE means the EARLIER of (a) December 21, 2001, and (b) the
effective date of any other termination or cancellation of Lenders' commitments
to lend under, and in accordance with, this Agreement.

      TOTAL COMMITMENT means, on any date of determination, the sum of all
Committed Sums for all Lenders (as the same may have been reduced or canceled as
provided in the Loan Documents) then in effect.

      TOTAL PRINCIPAL DEBT means, at any time, THE SUM OF the Principal Debt of
all Lenders.

      TYPE means either a Base Rate Borrowing or a Eurodollar Borrowing, as the
context may require.

      WHOLLY-OWNED when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding Stock (except shares
required as directors' qualifying Stock) shall be owned by Borrower or one or
more of its Wholly-owned Subsidiaries.

      YEAR 2000 COMPLIANT is defined in SECTION 8.19.

      YEAR 2000 PROBLEM is defined in SECTION 8.19.

      1.2   NUMBER AND GENDER OF WORDS; OTHER REFERENCES.  Unless otherwise
specified in the Loan Documents, (a) where appropriate, the singular includes
the plural and VICE VERSA, and words of any gender include each other gender,
(b) heading and caption references may not be construed in interpreting
provisions, (c) monetary references are to currency of the United States of
America, (d) section, paragraph, annex, schedule, exhibit, and similar
references are to the particular Loan Document in which they are used, (e)
references to "TELECOPY," "FACSIMILE," "FAX," or similar terms are to facsimile
or telecopy transmissions, (f) references to "INCLUDING" mean including without
limiting the generality of any description preceding that word, (g) the rule of
construction that references to general items that follow references to specific
items are limited to the same type or character of those specific items is not
applicable in the Loan Documents, (h) references to any Person include that
Person's heirs, personal representatives, successors, trustees, receivers, and
permitted assigns, (i) references to any Law include every amendment or
supplement to it, rule and regulation adopted under it, and successor or
replacement for it, and (j) references to any Loan Document or other document
include every renewal and extension of it, amendment and supplement to it, and
replacement or substitution for it.

      1.3   ACCOUNTING PRINCIPLES.  All accounting and financial terms used in
the Loan Documents and the compliance with each financial covenant therein shall
be determined in accordance with GAAP, and, all accounting principles shall be
applied on a consistent basis so that the accounting principles in a current

                                      16

<PAGE>

period are comparable in all material respects to those applied during the
preceding comparable period.  If Borrower or any Credit Party determines that a
change in GAAP from that in effect on the date hereof has altered the treatment
of certain financial data to its detriment under this Agreement, then such party
may, by written notice to Administrative Agent not later than ten (10) days
after the effective date of such change in GAAP, request renegotiation of the
financial covenants affected by such change whereupon the Borrower and
Administrative Agent, on behalf of Lenders, shall negotiate in good faith for a
period of not more than thirty (30) days regarding amendments to any affected
covenants to make such covenants consistent with the prior covenants and GAAP,
as then in effect, and, after any such revision as shall be agreed to by
Borrower and Required Lenders, this Agreement will be construed in accordance
with GAAP as then in effect.  If Borrower and Required Lenders have not agreed
on revised covenants within thirty (30) days after delivery of such notice,
then, for purposes of this Agreement, GAAP will mean generally accepted
accounting principles on the date just prior to the date on which the change
that gave rise to the renegotiation occurred.

SECTION 2   BORROWING PROVISIONS.

      2.1   COMMITMENTS.  Subject to and in reliance upon the terms, conditions,
representations, and warranties in the Loan Documents, each Lender severally and
not jointly agrees to lend to Borrower such Lender's Pro Rata Part of one or
more Borrowings not to exceed such Lender's Committed Sum, which, may be repaid
and reborrowed from time to time in accordance with the terms and provisions of
the Loan Documents subject to the following conditions:

      (a)   each Borrowing requested by Borrower hereunder must occur on a
Business Day and no later than the Business Day immediately preceding the
Termination Date;

      (b)   each Borrowing requested by Borrower must be in an amount not less
than $5,000,000 or a greater multiple of $1,000,000;

      (c)   the Commitment Usage may not exceed the Total Commitment; and

      (d)   THE SUM OF (i) each Lender's Principal Debt PLUS (ii) such Lender's
Pro Rata Part of the LC Exposure may not exceed such Lender's Committed Sum.

      2.2   LC SUBFACILITY.

      (a    CONDITIONS.  Subject to the terms and conditions of this Agreement
and applicable Law, Administrative Agent agrees to issue LCs upon Borrower's
application therefor (denominated in Dollars) by delivering to Administrative
Agent a properly completed Notice of LC and an LC Agreement with respect thereto
no later than 10:00 a.m. Dallas, Texas time three (3) Business Days before such
LC is to be issued; PROVIDED THAT (i) on any date of determination and after
giving effect to any LC to be issued on such date, the Commitment Usage shall
never exceed the Total Commitment then in effect, (ii) on any date of
determination and after giving effect to any LC to be issued on such date, the
LC Exposure shall never exceed $25,000,000, (iii) at the time of issuance of
such LC, no Potential Default or Default shall exist, (iv) each LC requested by
Borrower must be in an amount not less than $1,000,000, and (v) each LC must
expire NO LATER than the EARLIER of the fifteenth (15th) day prior to the
Termination Date or one (1) year from its issuance; PROVIDED THAT any LC may
provide for automatic renewal for successive twelve (12) month periods (but no
renewal period may extend beyond the fifteenth (15th) day prior to the
Termination Date) unless Administrative Agent has given prior notice to the
applicable beneficiary of its election not to extend such LC.

                                      17

<PAGE>

      (b    PARTICIPATION.  Immediately upon the issuance by Administrative
Agent of any LC, Administrative Agent shall be deemed to have sold and
transferred to each other Lender, and each other such Lender shall be deemed
irrevocably and unconditionally to have purchased and received from
Administrative Agent, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Pro Rata Part, in such LC, and all
Rights of Administrative Agent in respect thereof (OTHER THAN Rights to receive
certain fees provided for in SECTION 2.2(c)).  Upon the issuance, renewal, or
extension of an LC, Administrative Agent shall provide copies of such LC to each
other Lender.

      (c    REIMBURSEMENT OBLIGATION.  In order to induce Administrative Agent
to issue and maintain LCs and Lenders to participate therein, Borrower agrees to
pay or reimburse Administrative Agent (i) on the date on which Administrative
Agent notifies Borrower of the date and amount of any draft presented under any
LC, the amount of any draft paid or to be paid by Administrative Agent, and
(ii) promptly, upon demand, the amount of any fees (in addition to the fees
described in SECTION 5) which Administrative Agent customarily charges to a
Person similarly situated in the ordinary course of its business for amending LC
Agreements, for honoring drafts, and taking similar action in connection with
letters of credit; PROVIDED THAT (A) if Borrower has not reimbursed
Administrative Agent for any drafts paid or to be paid within twenty-four
(24) hours of demand therefor by Administrative Agent, then Administrative Agent
is hereby irrevocably authorized to fund such reimbursement obligations as a
Borrowing under the Facility to the extent of availability under the Facility,
and the proceeds of such Borrowing under the Facility shall be advanced directly
to Administrative Agent in payment of Borrower's reimbursement obligation with
respect to the draft under the LC, and (B) if for any reason, funds are not
advanced pursuant to the Facility, then Borrower's reimbursement obligation
shall continue to be due and payable.  Borrower's obligations under this
SECTION 2.2(c) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim, or defense to
payment which Borrower may have at any time against Administrative Agent (except
to the extent resulting from the gross negligence or willful misconduct of
Administrative Agent) or any other Person, and shall be made in accordance with
the terms and conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances: (1) any lack of validity
or enforceability of this Agreement or any of the Loan Documents; (2) the
existence of any claim, setoff, defense, or other Right which Borrower may have
at any time against a beneficiary named in a LC, any transferee of any LC (or
any Person for whom any such transferee may be acting), any Credit Party (except
to the extent resulting from the gross negligence or willful misconduct of such
Credit Party), or any other Person, whether in connection with this Agreement,
any LC, the transactions contemplated herein, or any unrelated transactions
(including any underlying transaction between Borrower and the beneficiary named
in any such LC); (3) any draft, certificate, or any other document presented
under the LC proving to be forged, fraudulent, invalid, or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect; and
(4) the occurrence of any Potential Default or Default.  To the extent any
funding of a draft has been made by Lenders pursuant to SECTION 2.2(e) or under
the Facility, Administrative Agent shall promptly distribute any such payments
received from Borrower with respect to such draft to all Lenders funding such
draft according to their Pro Rata Part.  Interest on any amounts remaining
unpaid by Borrower (and unfunded by a Borrowing under the Facility) under this
CLAUSE at any time from and after the date such amounts become payable until
paid in full shall be payable by Borrower to Administrative Agent at the Default
Rate.  In the event any payment by Borrower received by Administrative Agent
with respect to an LC and distributed to Lenders on account of their
participations therein is thereafter set aside, avoided, or recovered from
Administrative Agent in connection with any receivership, liquidation, or
bankruptcy proceeding, each Lender which received such distribution shall, upon
demand by Administrative Agent, contribute to Administrative Agent such Lender's
ratable portion of the amount set aside, avoided, or 

                                      18

<PAGE>

recovered, together with interest at the rate required to be paid by 
Administrative Agent upon the amount required to be repaid by it.

      (d    GENERAL.  If any draft shall be presented for honor under any LC,
then Administrative Agent shall promptly notify Borrower of the date and amount
of such draft; PROVIDED THAT failure to give any such notice shall not affect
the obligations of Borrower hereunder.  Administrative Agent shall make payment
upon presentment of a draft for honor unless it appears that presentment on its
face does not comply with the terms of such LC, regardless of whether (i) any
default or potential default under any other agreement has occurred, and
(ii) the obligations under any other agreement have been performed by the
beneficiary or any other Person (and Administrative Agent shall not be liable
for any obligation of any Person thereunder).  The Credit Parties shall not be
responsible for, and Borrower's reimbursement obligations for honored drafts
shall not be affected by, any matter or event whatsoever (including, without
limitation, the validity or genuineness of documents or of any endorsements
thereof, even if such documents should in fact prove to be in any respect
invalid, fraudulent, or forged), or any dispute among any Company, the
beneficiary of any LC, or any other Person to whom any LC may be transferred, or
any claims whatsoever of any Company against any beneficiary of any LC or any
such transferee; PROVIDED THAT nothing in this Agreement shall constitute a
waiver of Borrower's Rights to assert any claim based upon the gross negligence
or wilful misconduct of any Credit Party.

      (e    OBLIGATION OF LENDERS.  If Borrower fails to reimburse
Administrative Agent as provided in SECTION 2.2(c) within twenty-four (24) hours
after receiving notice of a draft pursuant to SECTION 2.2(d), then
Administrative Agent shall promptly notify each Lender of such failure, of the
date and amount of the draft paid, and of such Lender's Pro Rata Part thereof.
Each Lender shall promptly and unconditionally make available to Administrative
Agent in immediately available funds such Lender's Pro Rata Part of such unpaid
reimbursement obligation, which funds shall be paid to Administrative Agent on
or before the close of business on the Business Day on which such notice was
given by Administrative Agent (if given at or prior to 1:00 p.m., Dallas, Texas
time) or on the next succeeding Business Day (if notice was given after
1:00 p.m., Dallas, Texas time).  All such amounts payable by any such Lender
shall include interest thereon accruing at the Federal Funds Rate from the day
the applicable draft is paid by Administrative Agent to (but not including) the
date such amount is paid by such Lender to Administrative Agent.  The
obligations of Lenders to make payments to Administrative Agent with respect to
LCs shall be irrevocable and are not subject to any qualification or exception
whatsoever (other than the gross negligence or wilful misconduct of
Administrative Agent) and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances: (i) any lack of validity or
enforceability of this Agreement or any of the Loan Documents; (ii) the
existence of any claim, setoff, defense, or other Right which Borrower may have
at any time against a beneficiary named in a LC, any transferee of any LC (or
any Person for whom any such transferee may be acting), any Credit Party, or any
other Person, whether in connection with this Agreement, any LC, the
transactions contemplated herein, or any unrelated transactions (including any
underlying transaction between Borrower and the beneficiary named in any such
LC); (iii) any draft, certificate, or any other document presented under the LC
proving to be forged, fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; and (iv) the
occurrence of any Potential Default or Default.

      (f    DELIVERY AND CANCELLATION.  Borrower acknowledges that each LC will
be deemed issued upon delivery to its beneficiary or Borrower.  If Borrower
requests any LC be delivered to Borrower rather than the beneficiary, and
Borrower subsequently cancels such LC, then Borrower agrees to return it to
Administrative Agent together with Borrower's written certification that it has
never been delivered to such 

                                      19

<PAGE>

beneficiary.  If any LC is delivered to its beneficiary pursuant to 
Borrower's instructions, then no cancellation thereof by Borrower shall be 
effective without written consent of such beneficiary to Administrative Agent 
and the return of such LC to Administrative Agent. Borrower hereby agrees 
that if Administrative Agent becomes involved in any dispute as a result of 
Borrower's cancellation of any LC, then it shall indemnify the Credit Parties 
for all losses, costs, damages, expenses, and reasonable attorneys' fees 
suffered or incurred by the Credit Parties as a direct result thereof.

      (g    DUTIES OF ADMINISTRATIVE AGENT.  Administrative Agent agrees with
each Lender that it will exercise and give the same care and attention to each
LC as it gives to its other letters of credit, and Administrative Agent's sole
liability to each Lender with respect to such LCs (OTHER THAN liability arising
from the gross negligence or willful misconduct of Administrative Agent) shall
be to distribute promptly to each Lender who has acquired a participating
interest therein such Lender's ratable portion of any payments made to
Administrative Agent by Borrower pursuant to SECTION 2.2(c).  Each Lender and
Borrower agree that, in paying any draw under any LC, Administrative Agent shall
not have any responsibility to obtain any document (OTHER THAN any documents
required by the respective LC) or to ascertain or inquire as to the validity or
accuracy of any such document or the authority of the Person delivering any such
document.  The Credit Parties and their respective Representatives shall not be
liable to any other Credit Party or any Obligor for the use which may be made of
any LC or for any acts or omissions of any beneficiary thereof in connection
therewith.  Any action, inaction, error, delay, or omission taken or suffered by
Administrative Agent or any of its Representatives under or in connection with
any LC, the draws, drafts, or documents relating thereto, or the transmission,
dispatch, or delivery of any message or advice related thereto, if in good faith
and in conformity with such Laws as Administrative Agent or any of its
Representatives may deem applicable and in accordance with the standards of care
specified in the UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS issued by
the International Chamber of Commerce, as in effect on the date of issue of such
LC, shall be binding upon Obligors and the Credit Parties and shall not place
Administrative Agent or any of its Representatives under any resulting liability
to any Credit Party or any Obligor.  Any action taken or omitted to be taken by
Administrative Agent under or in connection with any LC if taken or omitted in
the absence of gross negligence or wilful misconduct shall not create for
Administrative Agent any resulting liability to any Credit Party or any Obligor.

      (h    CASH COLLATERAL.  On the Termination Date or upon any demand from
time to time by Administrative Agent or the Required Lenders at any time while a
Default exists, Borrower shall provide to Administrative Agent, for the benefit
of Lenders, either (i) cash collateral, or (ii) back-up letters of credit
reasonably acceptable to Administrative Agent, in an aggregate amount equal to
one hundred percent (100%) of the LC Exposure existing on the date of such
demand.  Such cash (and all interest thereon) and letters of credit shall
constitute collateral for all LCs.  Any cash collateral deposited, and all
interest earned thereon, shall be held by Administrative Agent and invested and
reinvested at the expense and the written direction of Borrower, in United
States Treasury Bills with maturities of no more than ninety (90) days from the
date of investment.  In the absence of any such direction from Borrower,
Administrative Agent shall invest the funds held in the cash collateral account
(so long as the aggregate amount of such funds exceeds any relevant minimum
investment requirement) in one or more types of investments with such maturities
as Administrative Agent may specify, pending application of such funds on
account of any other Obligation, as the case may be.  All such investments shall
be made in Administrative Agent's name for the account of the Credit Parties,
subject to the ownership interest therein of Borrower.  Administrative Agent may
liquidate any investment held in the cash collateral account in order to apply
the proceeds of such investment on account of any of the Obligation if such
Obligation is then due and payable without regard to whether such 

                                      20

<PAGE>

investment has matured and without liability for any penalty or other fee 
incurred (with respect to which Borrower hereby agrees to reimburse 
Administrative Agent) as a result of such application.

      (i    INDEMNIFICATION.  IN ADDITION TO AMOUNTS PAYABLE AS ELSEWHERE
PROVIDED IN THIS AGREEMENT, BORROWER HEREBY AGREES TO PROTECT, INDEMNIFY, PAY,
AND SAVE EACH CREDIT PARTY HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, LIABILITIES, DAMAGES, OR LOSSES OF, OR OWED TO THIRD PARTIES, AND ANY
AND ALL RELATED COSTS, CHARGES, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS'
FEES), WHICH ANY CREDIT PARTY MAY INCUR OR BE SUBJECT TO AS A CONSEQUENCE,
DIRECT OR INDIRECT, OF (A) THE ISSUANCE OF ANY LC, OR (B) THE FAILURE OF
ADMINISTRATIVE AGENT TO HONOR A DRAFT UNDER SUCH LC AS A RESULT OF ANY ACT OR
OMISSION, WHETHER RIGHTFUL OR WRONGFUL, OF ANY PRESENT OR FUTURE GOVERNMENTAL
AUTHORITY; PROVIDED THAT BORROWER SHALL HAVE NO LIABILITY TO INDEMNIFY ANY
CREDIT PARTY IN RESPECT OF ANY LIABILITY ARISING OUT OF THE GROSS NEGLIGENCE OR
WILFUL MISCONDUCT OF SUCH PARTY OR ANY REPRESENTATIVES OF SUCH PARTY.  THE
PROVISIONS OF AND UNDERTAKINGS AND INDEMNIFICATIONS SET FORTH IN THIS
SECTION 2.2(i) SHALL SURVIVE THE SATISFACTION AND PAYMENT OF THE OBLIGATION AND
TERMINATION OF THIS AGREEMENT.

      (j    LC AGREEMENTS.  Although referenced in any LC, terms of any
particular agreement or other obligation to the beneficiary are not in any
manner incorporated herein.  Drafts under any LC shall be deemed part of the
Obligation.  In the event of any conflict or inconsistency between the terms of
this Agreement and any LC Agreement, the terms of this Agreement shall be
controlling.

      2.3   VOLUNTARY TERMINATION OF COMMITMENTS.  Without premium or penalty,
and upon giving not less than three (3) Business Days prior telephonic notice
(followed by written notice) to Administrative Agent, Borrower may terminate in
whole or in part the unused portion of the Total Commitment; PROVIDED THAT:
(i) each partial termination shall be in an amount of not less than $10,000,000
or a greater integral multiple of $1,000,000; (ii) the amount of the Commitment
Usage may not exceed the Total Commitment (unless Borrowings are simultaneously
paid in an amount equal to such excess); and (iii) each reduction shall be
allocated Pro Rata among Lenders in accordance with their respective Pro Rata
Parts.  Promptly after receipt of such notice of termination or reduction,
Administrative Agent shall notify each Lender of the proposed cancellation or
reduction.  Such termination or partial reduction of the Total Commitment shall
be effective on the Business Day specified in Borrower's notice (which date must
be at least three (3) Business Days after Borrower's delivery of such notice).
In the event that the Total Commitment is reduced to zero at a time when there
shall be no LC Exposure or Principal Debt, this Agreement shall be terminated to
the extent specified in SECTION 14.14, and all commitment fees and other fees
then earned and unpaid hereunder and all other amounts of the Obligation then
due and owing shall be immediately due and payable, without notice or demand by
Administrative Agent or any Lender.

      2.4   BORROWING PROCEDURE.  The following procedures apply to Borrowings:

      (a    NOTICE OF BORROWING.  Each Borrowing shall be made pursuant to a
Notice of Borrowing delivered to Administrative Agent requesting that Lenders
fund a Borrowing on a certain date (the "BORROWING DATE"), which notice
(i) shall be irrevocable and binding on Borrower, (ii) shall specify the
Borrowing Date, amount, Type, and (for a Borrowing comprised of Eurodollar
Borrowings) Interest Period, and (iii) must be received by Administrative Agent
no later than (A) 2:00 p.m. Dallas, Texas time on the third (3rd) Business Day
preceding the Borrowing Date for any Eurodollar Borrowing, and (B) 11:00 a.m.
Dallas, 

                                      21

<PAGE>

Texas time on the Borrowing Date for any Base Rate Borrowing. Administrative 
Agent shall timely notify each Lender with respect to each Notice of 
Borrowing.

      (b    FUNDING.  Each Lender shall remit its Pro Rata Part of each 
requested Borrowing to Administrative Agent's principal office in Dallas, in 
funds which are or will be available for immediate use by Administrative 
Agent by 1:00 p.m. Dallas time on the Borrowing Date therefor.  Subject to 
receipt of such funds, Administrative Agent shall (unless to its actual 
knowledge any of the conditions precedent therefor have not been satisfied by 
Borrower or waived by Required Lenders) make such funds available to Borrower 
by causing such funds to be deposited to Borrower's account as designated to 
Administrative Agent by Borrower.  Notwithstanding the foregoing, unless 
Administrative Agent shall have been notified by a Lender prior to a 
Borrowing Date that such Lender does not intend to make available to 
Administrative Agent such Lender's Pro Rata Part of the applicable Borrowing, 
Administrative Agent may assume that such Lender has made such proceeds 
available to Administrative Agent on such date, as required herein, and 
Administrative Agent may (unless to its actual knowledge any of the 
conditions precedent therefor have not been satisfied by Borrower or waived 
by Required Lenders), in reliance upon such assumption (but shall not be 
required to), make available to Borrower a corresponding amount in accordance 
with the foregoing terms, but, if such corresponding amount is not in fact 
made available to Administrative Agent by such Lender on such Borrowing Date, 
then Administrative Agent shall be entitled to recover such corresponding 
amount on demand (i) from such Lender, together with interest at the Federal 
Funds Rate during the period commencing on the date such corresponding amount 
was made available to Borrower and ending on (but excluding) the date 
Administrative Agent recovers such corresponding amount from such Lender, or 
(ii) if such Lender fails to pay such corresponding amount forthwith upon 
such demand, then from Borrower, together with interest at a rate per annum 
equal to the applicable rate for such Borrowing during the period commencing 
on such Borrowing Date and ending on (but excluding) the date Administrative 
Agent recovers such corresponding amount from Borrower.  No Lender shall be 
responsible for the failure of any other Lender to make its Pro Rata Part of 
any Borrowing.

SECTION 3   TERMS OF PAYMENT.

      3.1   LOAN ACCOUNTS AND PAYMENTS.

      (a    LOAN ACCOUNTS.

            (i)   The Obligation payable to each Lender shall be evidenced by
      one or more loan accounts or records maintained by such Lender in the
      ordinary course of business.  The loan accounts or records maintained by
      Administrative Agent and each Lender shall be conclusive evidence absent
      manifest error of the amount of the Obligation owing to each Lender.  Any
      failure to so record or any error in doing so shall not, however, limit or
      otherwise affect the obligation of Borrower hereunder to pay any amount
      owing to any Lender with respect to the Obligation.

            (ii)  Upon the request of any Lender made through Administrative
      Agent, the Principal Debt of the Obligation owing to such Lender may be
      evidenced by one or more Notes in addition to loan accounts.  Each such
      Note shall be in substantially the form of EXHIBIT B and be executed by
      Borrower and payable to the order of such Lender in the maximum original
      principal amount equal to such Lender's Committed Sum.  Each such Lender
      may endorse on the schedules annexed to its Note(s) the date, amount, and
      maturity of each Borrowing made by it and the amount of each payment of
      principal made by Borrower with respect thereto and each Lender's record
      shall be 

                                      22

<PAGE>

      conclusive absent manifest error; PROVIDED, HOWEVER, that the failure of 
      a Lender to make, or an error by a Lender in making, a notation thereon 
      with respect to any Borrowing shall not limit or otherwise affect the 
      obligations of Borrower hereunder or under any such Note to such Lender.

      (b    PAYMENTS GENERALLY.  Each payment or prepayment on the Obligation is
due and must be paid at Administrative Agent's principal office in Dallas in
funds which are or will be available for immediate use by Administrative Agent
at or before 1:00 p.m. Dallas, Texas time on the day due.  Payments made after
1:00 p.m., Dallas, Texas time shall be deemed made on the Business Day next
following.  Administrative Agent shall pay to each Lender any payment or
prepayment to which such Lender is entitled hereunder on the same day
Administrative Agent shall have received the same from Borrower; PROVIDED THAT
such payment or prepayment is received by Administrative Agent at or before
1:00 p.m. Dallas, Texas time, and otherwise at or before 1:00 p.m. Dallas, Texas
time on the Business Day next following.  If and to the extent Administrative
Agent shall not make such payments to Lenders when due as set forth in the
preceding sentence, then such unpaid amounts shall accrue interest, payable by
Administrative Agent, at the Federal Funds Rate from the due date until (but not
including) the date on which Administrative Agent makes such payments to
Lenders.

      3.2   INTEREST AND PRINCIPAL PAYMENTS.

      (a    INTEREST PAYMENTS.  Interest on each Eurodollar Borrowing shall be
due and payable as it accrues on the last day of its respective Interest Period
and on the Termination Date, as applicable; PROVIDED THAT with respect to
Eurodollar Borrowings having an Interest Period in excess of three (3) months,
Borrower shall pay interest on each three (3) month anniversary date of such
Interest Period and on the expiration of such Interest Period.  Interest on each
Base Rate Borrowing shall be due and payable as it accrues on each March 31,
June 30, September 30, and December 31, and on the Termination Date.

      (b    MANDATORY PAYMENTS.  The Total Principal Debt is due and payable on
the Termination Date.  On any date of determination, if the Commitment Usage
exceeds the Total Commitment, then Borrower shall make a mandatory prepayment of
the Principal Debt in the amount of such excess, together with (i) all accrued
and unpaid interest on the principal amount so prepaid, and (ii) any
Consequential Loss arising as a result thereof.  All mandatory prepayments
hereunder shall be applied Pro Rata.

      (c    VOLUNTARY PREPAYMENTS.  After giving Administrative Agent advance
telephonic notice (promptly followed by written notice) of the intent to prepay,
Borrower may voluntarily prepay all or any part of the Principal Debt from time
to time and at any time, in whole or in part, without premium or penalty;
PROVIDED THAT: (i) such notice must be received by Administrative Agent at or
before 1:00 p.m. Dallas, Texas time on (A) the third (3rd) Business Day
preceding the date of prepayment of a Eurodollar Borrowing, and (B) the Business
Day of a prepayment of a Base Rate Borrowing; (ii) each such partial prepayment
must be in a minimum amount of at least $5,000,000 or a greater integral
multiple of $1,000,000 thereof (if a Eurodollar Borrowing or a Base Rate
Borrowing); (iii) all accrued interest on any Eurodollar Borrowing being prepaid
must also be paid in full, to the date of such prepayment; and (iv) Borrower
shall pay any related Consequential Loss within ten (10) days after demand
therefor.  Each notice of prepayment shall specify the prepayment date and the
Type of Borrowing(s) and amount(s) of such Borrowing(s) to be prepaid and shall
constitute a binding obligation of Borrower to make a prepayment on the date
stated therein unless such notice is given in connection with the payment in
full of all Borrowings under this Agreement, the termination of the Total
Commitment, and a termination of this Agreement in which case the parties hereto

                                      23

<PAGE>

acknowledge that such payment may (subject to any Consequential Loss) occur on a
date after the date given in such notice as a result of normal delays with
respect to such payment.

      3.3   INTEREST OPTIONS.  Except where specifically otherwise provided,
Borrowings shall bear interest at a rate per annum equal to THE LESSER OF
(a) the Base Rate PLUS the Applicable Margin for Base Rate Borrowings or the
Adjusted Eurodollar Rate PLUS the Applicable Margin for Eurodollar Borrowings,
in each case as designated in accordance with the terms of this Agreement, AND
(b) the Maximum Rate.  Each change in the Base Rate or the Maximum Rate, subject
to the terms of this Agreement, will become effective, without notice to
Borrower or any other Person, upon the effective date of such change.

      3.4   QUOTATION OF RATES.  A Responsible Officer or other appropriately
designated officer of Borrower may call Administrative Agent on or before the
date on which a Notice of Borrowing is to be delivered by Borrower in order to
receive an indication of the rates then in effect, but such indicated rates
shall neither be binding upon Administrative Agent or Lenders nor affect the
rate of interest which thereafter is actually in effect when the Notice of
Borrowing is given.

      3.5   DEFAULT RATE.  To the extent permitted by Law, all past-due
Principal Debt and accrued interest thereon shall bear interest from maturity
(stated or by acceleration) at the Default Rate until paid, regardless whether
such payment is made before or after entry of a judgment; PROVIDED THAT the
Default Rate shall automatically apply in the case of SECTION 2.2(c) where the
Default Rate is specified.

      3.6   INTEREST RECAPTURE.  If the designated rate applicable to any
Borrowing exceeds the Maximum Rate, then the rate of interest on such Borrowing
shall be limited to the Maximum Rate, but any subsequent reductions in such
designated rate shall not reduce the rate of interest thereon below the Maximum
Rate until the total amount of interest accrued thereon equals the amount of
interest which would have accrued thereon if such designated rate had at all
times been in effect.  In the event that at maturity (stated or by
acceleration), or at final payment of the Total Principal Debt, the total amount
of interest paid or accrued is less than the amount of interest which would have
accrued if such designated rates had at all times been in effect, then, at such
time and to the extent permitted by Law, Borrower shall pay an amount equal to
the difference between (a) THE LESSER OF the amount of interest which would have
accrued if such designated rates had at all times been in effect AND the amount
of interest which would have accrued if the Maximum Rate had at all times been
in effect, and (b) the amount of interest actually paid or accrued on the Total
Principal Debt.

      3.7   INTEREST CALCULATIONS.

      (a    All payments of interest shall be calculated on the basis of actual
number of days (including the first (1st) day but excluding the last day)
elapsed but computed as if each calendar year consisted of 360 days in the case
of a Eurodollar Borrowing (unless such calculation would result in the interest
on the Borrowings exceeding the Maximum Rate, in which event such interest shall
be calculated on the basis of a year of 365 or 366 days, as the case may be),
and 365 or 366 days, as the case may be, in the case of a Base Rate Borrowing.
All interest rate determinations and calculations by Administrative Agent shall
be conclusive and binding absent manifest error.
      (b    The provisions of this Agreement relating to the calculation of the
Base Rate and the Adjusted Eurodollar Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate.

                                      24

<PAGE>

      3.8   MAXIMUM RATE.  Regardless of any provision contained in any Loan 
Document, no Credit Party shall ever be entitled to contract for, charge, 
take, reserve, receive, or apply, as interest on the Obligation, or any part 
thereof, any amount in excess of the Maximum Rate, and, if any Credit Party 
ever does so, then such excess shall be deemed a partial prepayment of 
principal and treated hereunder as such and any remaining excess shall be 
refunded to Borrower.  In determining if the interest paid or payable exceeds 
the Maximum Rate, Borrower and the Credit Parties shall, to the maximum 
extent permitted under applicable Law, (a) treat all Borrowings as but a 
single extension of credit (and the Credit Parties and Borrower agree that 
such is the case and that provision herein for multiple Borrowings is for 
convenience only), (b) characterize any non-principal payment as an expense, 
fee, or premium rather than as interest, (c) exclude voluntary prepayments 
and the effects thereof, and (d) amortize, prorate, allocate, and spread the 
total amount of interest throughout the entire contemplated term of the 
Obligation; PROVIDED THAT if the Obligation is paid and performed in full 
prior to the end of the full contemplated term thereof, and if the interest 
received for the actual period of existence thereof exceeds the Maximum 
Amount, then the Credit Parties shall refund such excess, and, in such event, 
the Credit Parties shall not, to the extent permitted by Law, be subject to 
any penalties provided by any Laws for contracting for, charging, taking, 
reserving, or receiving interest in excess of the Maximum Amount.

      3.9   INTEREST PERIODS.  When Borrower requests any Eurodollar 
Borrowing, Borrower may elect the interest period (each an "INTEREST PERIOD") 
applicable thereto, which shall be, at Borrower's option, one (1) month or 
two (2), three (3), or six (6) months, in each case to the extent available 
from each Lender (or other periods, if requested by Borrower and agreed to by 
each Lender); PROVIDED, HOWEVER, that: (a) the initial Interest Period for a 
Eurodollar Borrowing shall commence on the date of such Borrowing (including 
the date of any Conversion thereto), and each Interest Period occurring 
thereafter in respect of such Borrowing shall commence on the day on which 
the next preceding Interest Period applicable thereto expires; (b) if any 
Interest Period for a Eurodollar Borrowing begins on a day for which there is 
no numerically corresponding Business Day in the calendar month at the end of 
such Interest Period, then such Interest Period shall end on the next 
Business Day immediately following what otherwise would have been such 
numerically corresponding day in the calendar month at the end of such 
Interest Period (unless such date would be in a different calendar month from 
what would have been the month at the end of such Interest Period, or unless 
there is no numerically corresponding day in the calendar month at the end of 
the Interest Period; whereupon, such Interest Period shall end on the last 
Business Day in the calendar month at the end of such Interest Period); (c) 
no Interest Period may be chosen with respect to any portion of the Total 
Principal Debt which would extend beyond the Termination Date; and (d) no 
more than an aggregate of ten (10) Interest Periods shall be in effect at one 
time.

      3.10  CONVERSIONS.  Borrower may (a) Convert a Eurodollar Borrowing on 
the last day of an Interest Period to a Base Rate Borrowing, (b) Convert a 
Base Rate Borrowing at any time to a Eurodollar Borrowing, and (c) Continue a 
Eurodollar Borrowing by electing a new Interest Period, by giving a Notice of 
Conversion no later than 2:00 p.m. Dallas, Texas time on the third (3rd) 
Business Day prior to the date of Conversion or the last day of the Interest 
Period, as the case may be (in the case of a Conversion to a Eurodollar 
Borrowing or an election of a new Interest Period), and no later than 11:00 
a.m. Dallas, Texas time on the last day of the Interest Period (in the case 
of a Conversion to a Base Rate Borrowing); PROVIDED THAT the principal amount 
Converted to, or Continued as, a Eurodollar Borrowing shall be in an amount 
not less than $5,000,000 or a greater integral multiple of $1,000,000.  
Administrative Agent shall timely notify each Lender with respect to each 
Notice of Conversion.  Absent Borrower's Notice of Conversion or election of 
a new Interest Period, a Eurodollar Borrowing shall be deemed Converted to a 
Base Rate Borrowing effective as of the expiration of the Interest Period 
applicable thereto.  No Eurodollar Borrowing may be either made


                                      25

<PAGE>

or Continued as a Eurodollar Borrowing, and no Base Rate Borrowing may be 
Converted to a Eurodollar Borrowing, if (i) the interest rate for such 
Eurodollar Borrowing would exceed the Maximum Rate, or (ii) a Default exists.

      3.11  ORDER OF APPLICATION.

      (a    If no Default exists, then payments and prepayments of the 
Obligation shall be applied in the order and manner as Borrower may direct in 
writing.

      (b    If a Default exists (or if Borrower fails to give directions as 
permitted under SECTION 3.11(a)), then any payment or prepayment (including 
proceeds from the exercise of any Rights) shall be applied to the Obligation 
in the following order:  (i) to the ratable payment of all fees, expenses, 
and indemnities for which the Credit Parties have not been paid or reimbursed 
in accordance with the Loan Documents; (ii) to the ratable payment of accrued 
and unpaid interest on the Total Principal Debt; (iii) to the ratable payment 
of any reimbursement obligation with respect to any LC issued pursuant to the 
Facility which is due and payable and which remains unfunded by any Borrowing 
under the Facility; PROVIDED THAT such payments shall be allocated ratably 
among Administrative Agent and all Lenders which have funded their 
participation in such LC; (iv) to the ratable payment of the Total Principal 
Debt; (v) as a deposit with Administrative Agent, for the benefit of the 
Credit Parties, as security for, and to provide for the payment of, any LC 
Exposure as of the date of such application to the Obligation; and (vi) to 
the payment of the remaining Obligation in the order and manner Required 
Lenders deem appropriate.

      (c    Subject to the provisions of SECTION 13 and provided that 
Administrative Agent shall not in any event be bound to inquire into or to 
determine the validity, scope, or priority of any interest or entitlement of 
any Credit Party and may suspend all payments or seek appropriate relief 
(including, without limitation, instructions from Required Lenders or an 
action in the nature of interpleader) in the event of any doubt or dispute as 
to any apportionment or distribution contemplated hereby,  Administrative 
Agent shall promptly distribute such amounts to each Credit Party in 
accordance with the Agreement and the related Loan Documents.

      3.12  SHARING OF PAYMENTS, ETC.  If any Lender shall obtain any payment 
(whether voluntary, involuntary, or otherwise, including, without limitation, 
as a result of exercising its Rights under SECTION 3.13) which is in excess 
of its ratable share of any such payment, such Lender shall purchase from the 
other Lenders such participations as shall be necessary to cause such 
purchasing Lender to share the excess payment ratably with each of them; 
PROVIDED, HOWEVER, that if all or any portion of such excess payment is 
thereafter recovered from such purchasing Lender, then the purchase shall be 
rescinded and the purchase price restored to the extent of such recovery.  
Borrower agrees that any Lender so purchasing a participation from another 
Lender pursuant to this SECTION 3.12 may, to the fullest extent permitted by 
Law, exercise all of its Rights of payment (including the Right of offset) 
with respect to such participation as fully as if such Lender were the direct 
creditor of Borrower in the amount of such participation.

      3.13  OFFSET.  Upon the occurrence and during the continuance of a 
Default, each Credit Party shall be entitled to exercise (for the benefit of 
all Lenders in accordance with SECTION 3.12) the Rights of offset and/or 
banker's Lien against each and every account and other property, or any 
interest therein, which any Obligor may now or hereafter have with, or which 
is now or hereafter in the possession of, such Credit Party to the extent of 
the full amount of the Obligation; PROVIDED THAT if any Credit Party should 
exercise its Right


                                      26

<PAGE>

of offset hereunder, then such Credit Party shall thereafter promptly provide 
notice of such offset to Administrative Agent and Borrower.

      3.14  BOOKING BORROWINGS.  To the extent permitted by Law, any Lender 
may make, carry, or transfer its Borrowings at, to, or for the account of any 
of its branch offices or the office of any of its Affiliates; PROVIDED THAT 
no Affiliate shall be entitled to receive any greater payment under SECTION 4 
than the transferor Lender would have been entitled to receive with respect 
to such Borrowings.

      3.15  REPLACEMENT OF LENDERS UNDER CERTAIN CIRCUMSTANCES.  If at any 
time (a) Borrower becomes obligated to pay additional amounts described in 
SECTION 4.1(a) or SECTION 4.6 as a result of any condition described in such 
SECTIONS or any Lender ceases to make Eurodollar Borrowings pursuant to 
SECTION 4.2(b), in any such case where such condition or circumstance is not 
applicable to all Lenders, (b) any Lender becomes insolvent and its assets 
become subject to a receiver, liquidator, trustee, custodian, or other Person 
having similar powers, or (c) any Lender becomes a Defaulting Lender, then 
Borrower may, on ten (10) Business Days' prior written notice to 
Administrative Agent and such Lender, replace such Lender by causing such 
Lender to (and such Lender shall be obligated to) assign pursuant to SECTION 
14.13(b) all of its Rights and obligations under this Agreement to a Lender 
or other Eligible Assignee selected by Borrower and reasonably acceptable to 
Administrative Agent for a purchase price equal to the outstanding principal 
amount of such Lender's Principal Debt and all accrued interest and fees and 
other amounts payable hereunder (including amounts payable under SECTION 4.5 
as though such Lender was being paid instead of being purchased), PROVIDED 
THAT (i) neither Administrative Agent nor any Lender shall have any 
obligation to Borrower to find a replacement Lender or other such entity, and 
(ii) in no event shall the Lender hereby replaced be required to pay or 
surrender to such replacement Lender or other entity any of the fees received 
by such Lender hereby replaced pursuant to this Agreement.  In the case of a 
replacement of a Lender to which Borrower becomes obligated to pay additional 
amounts to such Lender prior to such Lender being replaced, the payment of 
such additional amounts shall be a condition to the replacement of such 
Lender.  Upon the satisfaction of all the foregoing conditions, such Lender 
that is being replaced shall cease to be a "LENDER" for purposes of this 
Agreement, PROVIDED THAT Borrower shall continue to be obligated to such 
Lender under SECTION 12.11 with respect to any indemnified liabilities 
arising prior to such termination.  Borrower's right to replace a Defaulting 
Lender pursuant to this SECTION 3.15 is, and shall be, in addition to, and 
not in lieu of, all other rights and remedies available to Borrower against 
such Defaulting Lender under this Agreement or under applicable Law.

SECTION 4   CHANGE IN CIRCUMSTANCES.

      4.1   INCREASED COST AND REDUCED RETURN.

      (a)   CHANGE IN LAWS.  If, after the date hereof, the adoption of any 
applicable Law, or any change in any applicable Law, or any change in the 
interpretation or administration thereof by any Governmental Authority 
charged with the interpretation or administration thereof, or compliance by 
any Lender (or its Applicable Lending Office) with any request or directive 
(whether or not having the force of law) of any such Governmental Authority:

            (i)   shall subject such Lender (or its Applicable Lending Office)
      to any tax, duty, or other charge with respect to any Eurodollar
      Borrowing, its Note (if any), or its obligation to make Eurodollar
      Borrowings, or change the basis of taxation of any amounts payable to such
      Lender (or its Applicable Lending Office) under this Agreement or its Note
      (if any) in respect of any Eurodollar


                                      27

<PAGE>

      Borrowings (other than taxes imposed on the overall gross or net income 
      of such Lender or franchise taxes imposed on such Lender, in each case 
      by the jurisdiction in which such Lender has its principal office or 
      such Applicable Lending Office);

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

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

and the result of any of the foregoing is to increase the cost to such Lender 
(or its Applicable Lending Office) of making, Converting into, Continuing, or 
maintaining any Eurodollar Borrowings or to reduce any sum received or 
receivable by such Lender (or its Applicable Lending Office) under this 
Agreement with respect to any Eurodollar Borrowings, then Borrower shall pay 
to such Lender from time to time as specified by the affected Lender such 
amount or amounts as will compensate such Lender for such increased cost or 
reduction.  If any Lender requests compensation by Borrower under this 
SECTION 4.1(a), then Borrower may, by notice to such Lender (with a copy to 
Administrative Agent), suspend the obligation of such Lender to make or 
Continue Eurodollar Borrowings, or Convert all Eurodollar Borrowings into 
Base Rate Borrowings, until the event or condition giving rise to such 
request ceases to be in effect (in which case the provisions of SECTION 4.4 
shall be applicable); PROVIDED THAT such suspension shall not affect the 
Right of such Lender to receive the compensation so requested.

      (b)   CAPITAL ADEQUACY.  If, after the date hereof, any Lender shall 
have determined that the adoption of any applicable Governmental Requirement 
regarding capital adequacy or any change therein or in the interpretation or 
administration thereof by any Governmental Authority charged with the 
interpretation or administration thereof, or any request or directive 
regarding capital adequacy (whether or not having the force of law) of any 
such Governmental Authority, has or would have the effect of reducing the 
rate of return on the capital of such Lender or any corporation controlling 
such Lender as a consequence of such Lender's obligations hereunder to a 
level below that which such Lender or such corporation could have achieved 
but for such adoption, change, request, or directive (taking into 
consideration its policies with respect to capital adequacy), then from time 
to time upon demand Borrower shall pay to such Lender such additional amount 
or amounts as will compensate such Lender for such reduction.

      (c)   NOTICE.  Each Lender shall promptly notify Borrower and 
Administrative Agent of any event of which it has knowledge, occurring after 
the date hereof, which will entitle such Lender to compensation pursuant to 
this SECTION 4.1 and will designate a different Applicable Lending Office if 
such designation will avoid the need for, or reduce the amount of, such 
compensation and will not, in the judgment of such Lender, be otherwise 
materially disadvantageous to it.  Any Lender claiming compensation under 
this SECTION 4.1 shall furnish to Borrower and Administrative Agent a 
certificate setting forth the additional amount or amounts to be paid to it 
hereunder and shall include in reasonable detail the basis for the demand for 
additional compensation, which certificate shall be conclusive in the absence 
of manifest error.  In determining such amount, such Lender may use any 
reasonable averaging and attribution methods.  Although no Lender shall have 
any liability to any Credit Party or any Company for its failure to give the 
notice


                                      28

<PAGE>

required by this SECTION 4.1(c), Borrower shall not be obligated to pay to 
any Credit Party any amounts under this SECTION 4.1 that arise, accrue, or 
are imposed more than one hundred and eighty (180) days before any such 
notice to the extent it is applicable to those amounts.

      4.2   LIMITATION ON TYPES OF BORROWINGS.  If on or prior to the first 
(1st) day of any Interest Period for any Eurodollar Borrowing:

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

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

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

      4.3   ILLEGALITY.  Notwithstanding any other provision of this 
Agreement, in the event that it becomes unlawful for any Lender or its 
Applicable Lending Office to make, maintain, or fund Eurodollar Borrowings 
hereunder, then such Lender shall promptly notify Administrative Agent and 
Borrower thereof and such Lender's obligation to make or Continue Eurodollar 
Borrowings and to Convert Base Rate Borrowings into Eurodollar Borrowings 
shall be suspended until such time as such Lender may again make, maintain, 
and fund Eurodollar Borrowings (in which case the provisions of SECTION 4.4 
shall be applicable).

      4.4   TREATMENT OF AFFECTED LOANS.  If the obligation of any Lender to 
make or Continue Eurodollar Borrowings or to Convert Base Rate Borrowings 
into Eurodollar Borrowings shall be suspended pursuant to SECTIONS 4.1, 4.2, 
or 4.3, then such Lender's Eurodollar Borrowings shall be automatically 
Converted into Base Rate Borrowings on the last day(s) of the then current 
Interest Period(s) for all Eurodollar Borrowings (or, in the case of a 
Conversion required by SECTION 4.3, on such earlier date as such Lender may 
specify to Borrower with a copy to Administrative Agent) and, unless and 
until such Lender gives notice as provided below that the circumstances 
specified in SECTIONS 4.1, 4.2, or 4.3 that gave rise to such Conversion no 
longer exist:

      (a)   to the extent that such Lender's Eurodollar Borrowings have been 
so Converted, all payments and prepayments of principal that would otherwise 
be applied to such Lender's Eurodollar Borrowings shall be applied instead to 
its Base Rate Borrowings; and

      (b)   all Borrowings that would otherwise be made or Continued by such 
Lender as Eurodollar Borrowings shall be made or Continued instead as Base 
Rate Borrowings, and all Borrowings of such Lender that would otherwise be 
Converted into Eurodollar Borrowings shall be Converted instead into (or 
shall remain as) Base Rate Borrowings.


                                      29

<PAGE>

If such Lender gives notice to Borrower (with a copy to Administrative Agent) 
that the circumstances specified in SECTIONS 4.1, 4.2, or 4.3 that gave rise 
to the Conversion of such Lender's Eurodollar Borrowings pursuant to this 
SECTION 4.4 no longer exist (which such Lender agrees to do promptly upon 
such circumstances ceasing to exist) at a time when Eurodollar Borrowings 
made by other Lenders are outstanding, then such Lender's Base Rate 
Borrowings shall be automatically Converted, on the first (1st) day(s) of the 
next succeeding Interest Period(s) for such outstanding Eurodollar 
Borrowings, to the extent necessary so that, after giving effect thereto, all 
Eurodollar Borrowings held by Lenders are held Pro Rata (as to principal 
amounts, Types, and Interest Periods).

      4.5   COMPENSATION.  Upon the request of any Lender, Borrower shall pay 
to such Lender such amount or amounts as shall be sufficient (in the 
reasonable opinion of such Lender) to compensate it for any loss, cost, or 
expense (herein called a "CONSEQUENTIAL LOSS") incurred by it as a result of:

      (a)   any payment, prepayment, or Conversion of a Eurodollar Borrowing 
for any reason (including, without limitation, the acceleration of the 
Obligation pursuant to SECTION 12.1) on a date other than the last day of  
the Interest Period for such Borrowing; or

      (b)   any failure by Borrower for any reason (including, without 
limitation, the failure of any condition precedent specified in SECTION 7.2 
to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar 
Borrowing on the date for such borrowing, Conversion, Continuation, or 
prepayment specified in the relevant Borrowing Notice.

      4.6   TAXES.

      (a)   Any and all payments by Borrower to or for the account of any 
Credit Party hereunder or under any other Loan Document shall be made free 
and clear of and without deduction for any and all present or future Taxes 
arising after the date hereof, EXCLUDING, in the case of each Credit Party, 
Taxes based on or measured by its gross or net income, and franchise taxes 
imposed on it, by the jurisdiction under the laws of which such Credit Party 
(or its Applicable Lending Office) is organized or any political subdivision 
thereof (such income and franchise Taxes being "EXCLUDED TAXES").  If 
Borrower shall be required by law to deduct any Taxes (other than Excluded 
Taxes) from or in respect of any sum payable under this Agreement or any 
other Loan Document to any Credit Party, then (i) the sum payable shall be 
increased as necessary so that after making all required deductions 
(including deductions applicable to additional sums payable under this 
SECTION 4.6) such Credit Party receives an amount equal to the sum it would 
have received had no such deductions been made, (ii) Borrower shall make such 
deductions, (iii) Borrower shall pay the full amount deducted to the relevant 
taxation authority or other authority in accordance with all Laws, and (iv) 
Borrower shall, upon the request of Administrative Agent, furnish to 
Administrative Agent, at its address referred to in SECTION 14.3, the 
original or a certified copy of a receipt evidencing payment thereof.

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

      (c)   Borrower agrees to indemnify each Credit Party for the full 
amount of Taxes (other than Excluded Taxes) and Other Taxes (including, 
without limitation, any Taxes (other than Excluded Taxes) or Other Taxes 
imposed or asserted by any jurisdiction on amounts payable under this SECTION 
4.6) paid by such


                                      30

<PAGE>

Credit Party (as the case may be) and any liability (including penalties, 
interest, and expenses) arising therefrom or with respect thereto.  If any 
Credit Party receives a refund in respect of any Taxes or Other Taxes in 
which it has been indemnified by Borrower pursuant to this SECTION 4.6, then 
such Credit Party shall promptly notify Borrower of such refund and shall 
promptly, upon receipt, repay such refund to Borrower.

      (d)   Each Lender organized under the laws of a jurisdiction outside 
the United States, on or prior to the date of its execution and delivery of 
this Agreement in the case of each Lender listed on the signature pages 
hereof and on or prior to the date on which it becomes a Lender in the case 
of each other Lender, and from time to time thereafter if requested in 
writing by Borrower or Administrative Agent (but only so long as such Lender 
remains lawfully able to do so), shall provide Borrower and Administrative 
Agent with (i) INTERNAL REVENUE SERVICE FORM 1001 or 4224, as appropriate, or 
any successor form prescribed by the Internal Revenue Service, certifying 
that such Lender is entitled to benefits under an income tax treaty to which 
the United States is a party which reduces the rate of withholding tax on 
payments of interest or certifying that the income receivable pursuant to 
this Agreement is effectively connected with the conduct of a trade or 
business in the United States, (ii) INTERNAL REVENUE SERVICE FORM W-8 or W-9, 
as appropriate, or any successor form prescribed by the Internal Revenue 
Service, and (iii) any other form or certificate required by any taxing 
authority (including any certificate required by SECTIONS 871(h) and 881(c) 
of the Code), certifying that such Lender is entitled to an exemption from or 
a reduced rate of tax on payments pursuant to this Agreement or any of the 
other Loan Documents.

      (e)   For any period with respect to which a Lender has failed to 
provide Borrower and Administrative Agent with the appropriate form pursuant 
to SECTION 4.6(d) (unless such failure is due to a change in Law occurring 
subsequent to the date on which a form originally was required to be 
provided), such Lender shall not be entitled to indemnification under 
SECTIONS 4.6(a) or (b) with respect to Taxes imposed by the United States; 
PROVIDED, HOWEVER, that should a Lender, which is otherwise exempt from or 
subject to a reduced rate of withholding tax, become subject to Taxes (other 
than Excluded Taxes) because of its failure to deliver a form required 
hereunder, Borrower shall take such steps as such Lender shall reasonably 
request to assist such Lender to recover such Taxes.

      (f)   If Borrower is required to pay additional amounts to or for the 
account of any Lender pursuant to this SECTION 4.6, then such Lender will 
agree to use reasonable efforts to change the jurisdiction of its Applicable 
Lending Office so as to eliminate or reduce any such additional payment which 
may thereafter accrue if such change, in the judgment of such Lender, is not 
otherwise disadvantageous to such Lender.

      (g)   Without prejudice to the survival of any other agreement of 
Borrower hereunder, the agreements and obligations of Borrower contained in 
this SECTION 4.6 shall survive the termination of the Total Commitment and 
the payment in full of the Obligation.

SECTION 5   FEES.

      5.1   TREATMENT OF FEES.  Except as otherwise provided by Law, the fees 
described in this SECTION 5: (a) do not constitute compensation for the use, 
detention, or forbearance of money; (b) are in addition to, and not in lieu 
of, interest and expenses otherwise described in this Agreement; (c) shall be 
payable in accordance with SECTION 3.1; (d) shall be non-refundable; (e) 
shall, to the fullest extent permitted by Law, bear interest, if not paid 
when due, at the Default Rate; and (f) shall be calculated on the basis of 


                                      31

<PAGE>

actual number of days (including the first day but excluding the last day) 
elapsed, but computed as if each calendar year consisted of 365 or 366 days, 
as the case may be.

      5.2   FEES OF ADMINISTRATIVE AGENT.  Borrower shall pay to 
Administrative Agent the fees specified in the letter agreement between 
Administrative Agent and Borrower, which fees shall be for the account of 
Administrative Agent and for the account of the Credit Parties as shall be 
agreed between Administrative Agent and each other Credit Party.

      5.3   LC FEES.  Borrower shall pay to Administrative Agent, for the 
ratable benefit of Lenders, in accordance with their respective Pro Rata 
Parts, a fee for each LC, payable in installments in arrears, so long as such 
LC remains outstanding.  Such installments shall be paid for the period from 
and including the date of issuance of the applicable LC to but excluding the 
next quarterly payment date (as hereinafter specified), and thereafter for 
the period from and including such quarterly payment date to but excluding 
the next quarterly payment date or (if earlier) the expiry date of such LC.  
Such installments shall be paid on each March 31, June 30, September 30, and 
December 31.  Each such installment shall be in an amount equal to THE 
PRODUCT OF (a) the Applicable Margin for Eurodollar Borrowings in effect on 
the date of payment of such fee (and applied on a per annum basis) TIMES (b) 
the face amount of such LC, and pro rated (in accordance with SECTION 5.1(f)) 
for the period for which such installment is due.

      5.4   LC ISSUANCE AND FRONTING FEES.  Borrower shall pay Administrative 
Agent, as the issuer of LCs and for the individual account of Administrative 
Agent, an LC issuance and fronting fee for each LC, payable in installments 
in arrears, so long as such LC remains outstanding.  Such installments shall 
be paid for the period from and including the date of issuance of the 
applicable LC, to but excluding the next quarterly payment date (as 
hereinafter specified), and thereafter for the period from and including such 
quarterly payment date to but excluding the next quarterly payment date or 
(if earlier) the expiry date of such LC.  Such installments shall be paid on 
each March 31, June 30, September 30, and December 31.  Each such installment 
shall be in an amount equal to THE PRODUCT OF (a) 0.125% per annum TIMES (b) 
the face amount of such LC, and pro rated (in accordance with SECTION 5.1(f)) 
for the period for which such installment is due.  In addition, Borrower 
shall pay to Administrative Agent, for its individual account, standard 
administrative charges for LC amendments provided for in SECTION 2.2(c).

      5.5   COMMITMENT FEES.  Following the Closing Date, Borrower shall pay 
to Administrative Agent, for the ratable account of Lenders, a commitment 
fee, payable in installments in arrears, on each March 31, June 30, September 
30, and December 31 and on the Termination Date, commencing December 31, 
1998.  Each installment shall be, in an amount equal to the Applicable Margin 
for Commitment Fees TIMES the amount by which (a) the average daily Total 
Commitment exceeds (b) the average daily Commitment Usage, in each case 
during the period from and including the last payment date to and excluding 
the payment date for such installment; PROVIDED THAT each such installment 
shall be calculated in accordance with SECTION 5.1(f).

SECTION 6.  GUARANTIES.

      6.1   POI GUARANTY.  As an inducement to the Credit Parties to enter 
into this Agreement, Borrower shall cause POI to unconditionally guarantee in 
favor of the Credit Parties the full payment and performance of the 
Obligation pursuant to the POI Guaranty.


                                      32

<PAGE>

      6.2   SUBSIDIARY GUARANTY.  As an inducement to the Credit Parties to 
enter into this Agreement, Borrower shall cause each Material Subsidiary to 
unconditionally guarantee in favor of the Credit Parties the full payment and 
performance of the Obligation pursuant to the Subsidiary Guaranty or an 
addendum thereto in the form attached to the Subsidiary Guaranty; PROVIDED 
THAT upon the sale or dissolution of any Material Subsidiary otherwise 
permitted by this Agreement and the other Loan Documents, Administrative 
Agent shall, at the request of Borrower and so long as no Default exists or 
would result therefrom, release such Material Subsidiary from the Subsidiary 
Guaranty.

      6.3   OTHER GUARANTIES.  As an inducement to the Credit Parties to 
enter into this Agreement, Borrower shall cause each Other Required Guarantor 
to unconditionally guarantee in favor of the Credit Parties the full payment 
and performance of the Obligation pursuant to a guaranty in form and 
substance reasonably acceptable to Administrative Agent.  "OTHER REQUIRED 
GUARANTOR" means, as of any date, any Person (other than POI or a Subsidiary 
Guarantor) that is an Affiliate of any Company that has, as of such date, 
guaranteed the payment or performance of any Debt of POI, Borrower, or any 
other Company exceeding $25,000,000 individually or in the aggregate.

SECTION 7   CONDITIONS PRECEDENT.

      7.1   CONDITIONS PRECEDENT TO CLOSING.  This Agreement shall not become 
effective, and Lenders shall not be obligated to advance any Borrowing or 
issue any LC, unless the following conditions precedent are satisfied on or 
before the Closing Date:

      (a)   BORROWER DOCUMENTS.  Borrower shall deliver or cause to be 
delivered to Administrative Agent the following, each, unless otherwise 
noted, dated as of the Closing Date:

            (i)   certified copies of its Constituent Documents, together with a
      good standing certificate from the Secretary of State of the state of its
      incorporation and each other Material State and, to the extent generally
      available, a certificate or other evidence of good standing as to payment
      of any applicable franchise or similar taxes from the appropriate taxing
      authority of each of such states, each dated a recent date or brought down
      to a recent date prior to the Closing Date;

            (ii)  an officer's certificate of Borrower certifying (A) its 
      Constituent Documents, (B) resolutions of its Board of Directors 
      approving and authorizing the execution, delivery, and performance of 
      this Agreement and the other Loan Documents, certified as of the Closing 
      Date as being in full force and effect without modification or amendment, 
      and (C) signatures and incumbency of its officers executing this 
      Agreement and the other Loan Documents;

            (iii) executed originals of this Agreement, any Notes requested 
      by any Lenders pursuant to SECTION 3.1(a)(ii), and the other Loan 
      Documents to be executed by Borrower; and
            (iv)  Uniform Commercial Code searches as Administrative Agent 
      may reasonably request covering Borrower, as debtor, and showing no Liens 
      on any of Borrower's assets (other than Permitted Liens).

      (b)   POI DOCUMENTS.  Borrower shall deliver or cause to be delivered 
to Administrative Agent the following, each, unless otherwise noted, dated as 
of the Closing Date:


                                      33

<PAGE>

            (i)   certified copies of POI's Constituent Documents, together with
      a good standing certificate from the Secretary of State of the state of
      its incorporation and each other Material State and, to the extent
      generally available, a certificate or other evidence of good standing as
      to payment of any applicable franchise or similar taxes from the
      appropriate taxing authority of each of such states, each dated a recent
      date or brought down to a recent date prior to the Closing Date;

            (ii)  an officer's certificate of POI certifying (A) its Constituent
      Documents, (B) resolutions of its Board of Directors approving and
      authorizing the execution, delivery, and performance of the Loan Documents
      to be executed by POI, certified as of the Closing Date as being in full
      force and effect without modification or amendment, and (C) signatures and
      incumbency of its officers executing the Loan Documents to be executed by
      POI; and

            (iii) executed originals of the POI Guaranty and the other Loan
      Documents to be executed by POI.

      (c)   SUBSIDIARIES DOCUMENTS.  Borrower shall deliver or cause to be 
delivered to Administrative Agent the following with respect to each 
Subsidiary Guarantor, each, unless otherwise noted, dated as of the Closing 
Date:

            (i)   certified copies of its Constituent Documents, together with a
      good standing certificate from the Secretary of State of the state of its
      incorporation and each other Material State and, to the extent generally
      available, a certificate or other evidence of good standing as to the
      payment of any applicable franchise or other similar taxes from the
      appropriate taxing authority of each of such states, each dated a recent
      date or brought down to a recent date prior to the Closing Date;

            (ii)  an officer's certificate of each Subsidiary Guarantor
      certifying (A) its Constituent Documents, (B) resolutions of its Board of
      Directors approving and authorizing the execution, delivery, and
      performance of the Loan Documents to which it is a party, certified as of
      the Closing Date as being in full force and effect without modification or
      amendment, and (C) signatures and incumbency of its officers executing the
      Loan Documents to which it is a party; and

            (iii) executed originals of the Loan Documents to which it is a
      party.

      (d)   OPINIONS OF COUNSEL FOR THE COMPANIES.  The Credit Parties and 
their respective counsel shall have received originally executed copies of a 
favorable written opinion of counsel for the Companies, in form and substance 
reasonably satisfactory to Administrative Agent and its counsel, dated as of 
the Closing Date, and setting forth substantially the matters in the opinions 
designated in EXHIBIT E and as to such other matters as Administrative Agent, 
acting on behalf of the Credit Parties, may reasonably request, including, 
without limitation, an opinion that the Debt incurred under this Agreement 
and the related Loan Documents (i) has been incurred or entered into in 
compliance with the requirements of the Senior Notes and all Subordinated 
Debt, and (ii) constitutes "SENIOR INDEBTEDNESS" and "GUARANTOR SENIOR 
INDEBTEDNESS" under the terms of all Subordinated Debt.

      (e)   FEES.  Borrower shall have paid to Administrative Agent, for 
distribution (as appropriate) to the Credit Parties, the fees payable on the 
Closing Date referred to in SECTION 5.2.


                                      34

<PAGE>

      (f)   NO MATERIAL ADVERSE EVENT.  No Material Adverse Event has 
occurred since September 30, 1998.

      7.2   CONDITIONS TO ALL BORROWINGS.  The obligations of Lenders to make 
all Borrowings (including the initial Borrowing) and Administrative Agent to 
issue all LCs (including the initial LC) are subject to the following 
conditions precedent:

      (a)   NOTICE OF BORROWING; NOTICE OF LC.  Administrative Agent shall 
have received, (i) in the case of a Borrowing, in accordance with the 
provisions of SECTIONS 2.1 and 2.4, an originally executed Notice of 
Borrowing, and (b) in the case of an LC, in accordance with SECTION 2.2, a 
Notice of LC.

      (b)   REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS.  As of 
the date of such Borrowing or the issuance of such LC, the representations 
and warranties in Loan Documents are true, correct, and complete in all 
material respects (unless they speak to a specific date or are based on facts 
which have changed by transactions expressly contemplated or permitted by 
this Agreement).

      (c)   NO DEFAULT.  No Potential Default, Default, or Material Adverse 
Event exits or would be caused by the making of such Borrowing or the 
issuance of such LC.

      (d)   NO INJUNCTION OR RESTRAINING ORDER.  No order, judgment, or 
decree of any Governmental Authority shall purport to enjoin or restrain (i) 
any Lender from making the Borrowing to be made by it, or (ii) Administrative 
Agent from issuing such LC.

Each condition precedent in this Agreement is material to the transactions 
contemplated in this Agreement, and time is of the essence in respect of each 
thereof.  Subject to the prior approval of Required Lenders, Lenders may fund 
any Borrowing and Administrative Agent may issue any LC, without all 
conditions being satisfied, but, to the extent permitted by Law, the same 
shall not be deemed to be a waiver of the requirement that each such 
condition precedent be satisfied as a prerequisite for any subsequent funding 
or issuance, unless Required Lenders specifically waive each such item in 
writing.

SECTION 8   REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants to
the Credit Parties as follows:

      8.1   PURPOSE OF CREDIT FACILITY.  Borrower will use (or will loan such 
proceeds to the Companies to so use) all proceeds of Borrowings for general 
working capital and other lawful corporate purposes (including Permitted 
Acquisitions).  No Company is engaged principally, or as one of its important 
activities, in the business of extending credit for the purpose of purchasing 
or carrying any "MARGIN STOCK" within the meaning of REGULATION U.  No part 
of the proceeds of any Borrowing will be used, directly or indirectly, for a 
purpose which violates any Law, including, without limitation, the provisions 
of REGULATIONS T, U, or X (as enacted by the Board of Governors of the 
Federal Reserve System, as amended).  "MARGIN STOCK" (as defined in 
Regulation U) constitutes less than twenty-five percent (25%) of those assets 
of the Companies that are subject to any limitation on sale, pledge, or 
similar restrictions hereunder.

      8.2   EXISTENCE, GOOD STANDING, AUTHORITY, AND AUTHORIZATIONS.  Each 
Company is duly organized, validly existing, and in good standing under the 
Laws of its jurisdiction of organization (such jurisdictions as of the 
Closing Date being identified on SCHEDULE 8.2).  Each Company is duly 
qualified to transact business and is in good standing in each jurisdiction 
where the nature and extent of its business and


                                      35

<PAGE>

properties require the same except to the extent that the failure to so 
qualify could not be a Material Adverse Event.  Each Company possesses all 
the Authorizations, franchises, permits, licenses, certificates of 
compliance, and approvals and grants of authority necessary or required in 
the conduct of its respective business(es), and the same are valid, binding, 
enforceable, and subsisting without any defaults thereunder or enforceable 
adverse limitations thereon and are not subject to any proceedings or claims 
opposing the issuance, development, or use thereof or contesting the validity 
thereof, except to the extent that the failure to have such Authorizations, 
franchise, permit, license, or certificates of compliance, approvals, and 
grants of authority, failure to maintain the validity thereof, or where such 
default pursuant to the terms thereof, could not be a Material Adverse Event. 
 No Authorization, consent, approval, waiver, license, or formal exemptions 
from, nor any filing, declaration, or registration with, any Governmental 
Authority (federal, state, or local), or non-governmental entity, under the 
terms of contracts or otherwise, is required by reason of or in connection 
with the execution and performance of the Loan Documents by each Obligor 
except for (a) Authorizations, consents, approvals, waivers, and licenses 
that have been obtained, or (b) consents under immaterial contractual 
obligations in which the failure to obtain such consents could not be a 
Material Adverse Event.

      8.3   SUBSIDIARIES; CAPITAL STOCK.  The Companies have no Subsidiaries 
except (a) Subsidiaries as of the Closing Date disclosed on SCHEDULE 8.3, and 
(b) Subsidiaries formed or acquired after the Closing Date as a result of 
transactions permitted by the Loan Documents.  All of the outstanding Stock 
of each Subsidiary is duly authorized, validly issued, fully paid, and 
nonassessable and, as of the Closing Date, are owned of record and 
beneficially as set forth on SCHEDULE 8.3, free and clear of any Liens, 
restrictions, claims, or Rights of another Person, other than Permitted 
Liens.  Except as set forth in SCHEDULE 8.3, as of the Closing Date, no 
Company has outstanding any warrant, option, or other Right of any Person to 
acquire any of its Stock.

      8.4   AUTHORIZATION AND CONTRAVENTION.  The execution and delivery by 
each Obligor of each Loan Document to which it is a party and the performance 
by such Obligor of its obligations thereunder (a) are within the corporate 
power of such Obligor, (b) have been duly authorized by all necessary 
corporate action on the part of such Obligor, (c) require no action by or in 
respect of, or filing with, any Governmental Authority, which action or 
filing has not been taken or made on or prior to the Closing Date (or if 
later, the date of execution and delivery of such Loan Document), (d) will 
not violate any provision of the Constituent Documents of any Company, (e) 
will not violate any provision of Law applicable to any Company, other than 
such violations which individually or collectively could not be a Material 
Adverse Event, (f) will not violate any material written or oral agreements, 
contracts, commitments, or understandings to which any Company is a party, 
other than such violations which could not be a Material Adverse Event, or 
(g) will not result in the creation or imposition of any Lien on any material 
asset of any Company.

      8.5   BINDING EFFECT.  Upon execution and delivery by all parties 
thereto, each Loan Document will constitute a legal, valid, and binding 
obligation of each Obligor that is a party thereto, enforceable against each 
such Obligor in accordance with its terms, except as enforceability may be 
limited by applicable Debtor Relief Laws and general principles of equity.

      8.6   FINANCIAL STATEMENTS.  The Current Financials were prepared in 
accordance with GAAP (except as disclosed therein) and present fairly, in all 
material respects, the consolidated financial condition, results of 
operations, and cash flows of the Companies as of and for the portion of the 
fiscal year ending on the date or dates thereof (subject only to normal 
year-end audit adjustments).  There were no material liabilities, direct or 
indirect, fixed or contingent, of the Companies as of the date or dates of 
the Current


                                      36

<PAGE>

Financials which are required under GAAP to be reflected therein or in the 
notes thereto, and are not so reflected.  Except for transactions directly 
related to, or specifically contemplated by, the Loan Documents, there have 
been no material changes in the consolidated financial condition of the 
Companies from that shown in the Current Financials after such date which 
could be a Material Adverse Event, nor has any Company incurred any liability 
(including, without limitation, any liability under any Environmental Law), 
direct or indirect, fixed or contingent, after such date which could be a 
Material Adverse Event.

      8.7   LITIGATION, CLAIMS, INVESTIGATIONS.  Except as disclosed in 
Borrower's FORM 10-KS and FORM 10-QS filed with the Securities and Exchange 
Commission as of the date hereof, no Company is subject to, or aware of the 
threat of, any Litigation which could reasonably be expected to be determined 
adversely to any Company, and, if so adversely determined, could 
(individually or collectively with other Litigation) be a Material Adverse 
Event.  There are no outstanding orders or judgments for the payment of money 
in excess of $25,000,000 (individually or collectively) and not paid or 
covered by insurance or indemnified in a manner reasonably acceptable to 
Administrative Agent,  or any warrant of attachment, sequestration, or 
similar proceeding against the assets of any Company having a value 
(individually or collectively) of $25,000,000 or more which is not either (a) 
stayed on appeal, or (b) being contested in good faith by appropriate 
proceedings diligently conducted, and against which reserves or other 
provisions required by GAAP have been made. Except as disclosed in Borrower's 
FORM 10-KS and FORM 10-QS filed with the Securities and Exchange Commission 
as of the date hereof, there are no formal complaints, suits, claims, 
investigations, or proceedings initiated at or by any Governmental Authority 
pending or, to Borrower's knowledge, threatened by or against any Company 
which, if adversely determined, could be a Material Adverse Event, nor any 
judgments, decrees, or orders of any Governmental Authority outstanding 
against any Company that could be a Material Adverse Event.

      8.8   TAXES.  All Tax returns of each Company required to be filed have 
been filed (or extensions have been granted) prior to delinquency, except for 
any such returns for which the failure to so file could not be a Material 
Adverse Event, and all Taxes imposed upon each Company which are due and 
payable have been paid prior to delinquency, other than Taxes (a) that are 
being contested in good faith by appropriate proceedings diligently 
conducted, and against which reserves or other provisions required by GAAP 
have been made, or (b) for which nonpayment thereof could not be a Material 
Adverse Event.

      8.9   ENVIRONMENTAL MATTERS.  No Company (a) knows of any environmental 
condition or circumstance, such as the presence or Release of any Hazardous 
Substance, on any property presently or previously owned or leased by any 
Company that could be a Material Adverse Event, (b) knows of any violation by 
any Company of any Environmental Law, except for such violations that could 
not be a Material Adverse Event, or (c) knows that any Company is under any 
obligation to remedy any violation of any Environmental Law, except for such 
obligations that could not be a Material Adverse Event.

      8.10  EMPLOYEE BENEFIT PLANS.  (a) No Employee Plan has incurred an 
accumulated funding deficiency, as defined in SECTION 302 of ERISA and 
SECTION 412 of the Code, (b) neither Borrower nor any ERISA Affiliate has 
incurred material liability which is currently due and remains unpaid beyond 
the due date thereof under TITLE IV of ERISA to the PBGC or to an Employee 
Plan in connection with any such Employee Plan, (c) neither Borrower nor any 
ERISA Affiliate has withdrawn in whole or in part from participation in a 
Multiemployer Plan as to which there is any material unsatisfied liability 
(whether or not assessed), (d) Borrower has not engaged in any "PROHIBITED 
TRANSACTION" (as defined in SECTION 406 of ERISA or SECTION 4975 of the Code) 
which could be a Material Adverse Event, and (e) no Reportable Event has 
occurred which is likely to result in the termination of an Employee Plan.

                                      37
<PAGE>

      8.11  PROPERTIES; LIENS.  Each Company has good and indefeasible title 
with respect to all its material real property and good and sufficient title 
with respect to all its material personal property reflected on the Current 
Financials, except for property that (a) that is obsolete, or (b) has been 
disposed of in the ordinary course of business or as otherwise permitted by 
the Loan Documents.  Except for Permitted Liens, there is no Lien on any 
material property of any Company.

      8.12  GOVERNMENT REGULATIONS.  No Company is subject to regulation 
under the INVESTMENT COMPANY ACT OF 1940, as amended, the PUBLIC UTILITY 
HOLDING COMPANY ACT OF 1935, as amended, or any other Law (other than 
REGULATIONS T, U, and X of the Board of Governors of the Federal Reserve 
System) which regulates the incurrence of Debt.

      8.13  MATERIAL AGREEMENTS.  No Company is a party to any agreement, 
contract, or instrument or is subject to any corporate restriction that is or 
could be a Material Adverse Event.

      8.14  LABOR MATTERS.  There are no actual or, to Borrower's knowledge, 
threatened strikes, labor disputes, slow downs, walkouts, or other concerted 
interruptions of operations by the employees of any Company that could be a 
Material Adverse Event.  Hours worked by and payment made to employees of the 
Companies have not been in violation of the FAIR LABOR STANDARDS ACT or any 
other applicable Law dealing with such matters, other than any such 
violations which could not, individually or collectively, be a Material 
Adverse Event.  All payments due from any Company on account of employee 
health and welfare insurance have been paid or accrued as a liability on its 
books, other than any such non-payment which could not, individually or 
collectively, be a Material Adverse Event.

      8.15  SOLVENCY.  At the time of each Borrowing hereunder, each Company 
is (and after giving effect to the transactions contemplated by the Loan 
Documents, will be) Solvent.

      8.16  INTELLECTUAL PROPERTY.  Each Company owns or has sufficient and 
legally enforceable rights to use all material licenses, patents, patent 
applications, copyrights, service marks, trademarks, trademark applications, 
and trade names necessary to continue to conduct its businesses as heretofore 
conducted by it, now conducted by it, and now proposed to be conducted by it 
other than those in which the failure to obtain or to apply for could not be 
a Material Adverse Event.  Each Company is conducting its business without 
infringement or claim of infringement of any license, patent, copyright, 
service mark, trademark, trade name, trade secret, or other intellectual 
property right of others, other than any such infringements or claims which, 
if successfully asserted against and determined adversely to any Company, 
could not, individually or collectively, be a Material Adverse Event.

      8.17  COMPLIANCE WITH LAWS.  No Company is in violation of any Laws, 
other than such violations which could not, individually or collectively, be 
a Material Adverse Event.  No Company has received notice alleging any 
non-compliance with any Laws, except for such non-compliance which no longer 
exists or which could not be a Material Adverse Event.

      8.18  FULL DISCLOSURE.  There is no material fact or condition relating 
to the Loan Documents or the financial condition, business, or property of 
any Company which could be a Material Adverse Event and which has not been 
related, in writing, to Administrative Agent.  All written information 
heretofore furnished by any Company to any Credit Party in connection with 
the Loan Documents was, and all such information hereafter furnished by any 
Company to any Credit Party will be, true and accurate in all material 
respects, 

                                      38
<PAGE>

or in the case of projections, based on reasonable estimates and assumptions 
on the date as of which such information is dated or certified.

      8.19  YEAR 2000 COMPLIANCE.  Except to the extent that the failure to 
do any of the following could not reasonably be expected to be a Material 
Adverse Event, Borrower has (a) initiated a review and assessment of all 
areas within each Company's business and operations (including those affected 
by suppliers and vendors) that could be adversely affected by the "YEAR 2000 
PROBLEM" (that is, the risk that computer applications used by any Company 
(or its suppliers and vendors) may be unable to recognize and perform 
properly date-sensitive functions involving certain dates prior to and any 
date after December 31, 1999), (b) developed a plan and timeline for 
addressing the Year 2000 Problem on a timely basis, and (c) to date, 
implemented that plan in accordance with that timetable.  Borrower reasonably 
believes that all computer applications (including those of its suppliers and 
vendors) that are material to its or any of each Company's business and 
operations will on a timely basis be able to perform properly date-sensitive 
functions for all dates before and after January 1, 2000 (that is, be "YEAR 
2000 COMPLIANT"), except to the extent that a failure to do so could not 
reasonably be expected to be a Material Adverse Event.

      8.20  SENIOR DEBT.  The Obligation (and each Borrowing comprising the 
Obligation) constitutes "SENIOR INDEBTEDNESS" and "GUARANTOR SENIOR 
INDEBTEDNESS" under the terms of the Convertible Note Indenture, the Senior 
Subordinated Note Indenture, and the Subordinated Note Indenture. 

      SECTION 9   AFFIRMATIVE COVENANTS.  Borrower covenants and agrees to 
perform, observe, and comply with each of the following covenants, from the 
Closing Date until the payment in full of the Obligation and the termination 
or cancellation of all outstanding LCs, if any:

      9.1   USE OF PROCEEDS.  Borrower shall use the proceeds of Borrowings 
only for the purposes set forth in SECTION 8.1.

      9.2   BOOKS AND RECORDS.  Borrower shall, and shall cause each other 
Company to, maintain books, records, and accounts necessary to prepare all 
Financial Statements in accordance with GAAP.

      9.3   ITEMS TO BE FURNISHED.  Borrower shall cause the following to be 
furnished to Administrative Agent (with sufficient copies for each Lender):

      (a)   ANNUAL FINANCIAL STATEMENTS.  Promptly after preparation, and no 
later than one hundred and twenty (120) days after the last day of each 
fiscal year of POI, Financial Statements showing the consolidated financial 
condition and results of operations for the Companies, as of, and for the 
year ended on, such day, each accompanied by:
            (i)   the opinion of a firm of nationally-recognized independent
      certified public accountants, based on an audit using generally accepted
      auditing standards, that such Financial Statements were prepared in
      accordance with GAAP and present fairly the consolidated financial
      condition and results of operations of the Companies without a "GOING
      CONCERN" or like qualification; and

            (ii)  a Compliance Certificate.

      (b)   PERIODIC FINANCIAL STATEMENTS.  Promptly after preparation, and 
no later than sixty (60) days after the last day of each fiscal quarter of 
the Companies, Financial Statements showing the consolidated financial 
condition and results of operations calculated for the Companies for such 
fiscal quarter and for the 

                                      39
<PAGE>

period from the beginning of the then-current fiscal year to, such last day, 
accompanied by a Compliance Certificate with respect to such Financial 
Statements.

      (c)   BUDGET.  On or prior to March 31 of each fiscal year of the 
Companies, the consolidated financial budget for the Companies for such 
fiscal year.

      (d)   NOTICES OF LITIGATION, DEFAULTS, ETC.  Notice, promptly after 
Borrower knows or has reason to know of (i) the existence and status of any 
Litigation which could, if adversely determined, reasonably be expected to be 
a Material Adverse Event, or of any order or judgment for the payment of 
money which (individually or collectively) is in excess of $25,000,000, or 
any warrant of attachment, sequestration, or similar proceeding against the 
assets of any Company having a value (individually or collectively) of 
$25,000,000 and not covered by insurance or indemnified in a manner 
reasonably acceptable to Administrative Agent, (ii) any material change in 
any material fact or circumstance represented or warranted in any Loan 
Document, (iii) a Potential Default or Default specifying the nature thereof 
and what action Borrower or any other Company has taken, is taking, or 
proposes to take with respect thereto, (iv) the receipt by any Company of 
notice of any violation or alleged violation of any Environmental Law, which 
violation or alleged violation could individually or collectively with other 
such violations or allegations, be a Material Adverse Event, or (v) (A) the 
occurrence of a Reportable Event that, alone or together with any other 
Reportable Event, could reasonably be expected to result in liability of any 
Company to the PBGC in an aggregate amount exceeding $25,000,000; (B) any 
expressed statement in writing on the part of the PBGC of its intention to 
terminate any Employee Plan or Plans; (C) Borrower's or an ERISA Affiliate's 
becoming obligated to file with the PBGC a notice of failure to make a 
required installment or other payment with respect to an Employee Plan; or 
(D) the receipt by Borrower or an ERISA Affiliate from the sponsor of a 
Multiemployer Plan of either a notice concerning the imposition of withdrawal 
liability in an aggregate amount exceeding $25,000,000 or of the impending 
termination or reorganization of such Multiemployer Plan.

      (e)   SEC FILINGS.  Promptly after the filing thereof, a true, correct, 
and complete copy of each FORM 10-K, FORM 10-Q, and FORM 8-K filed by or on 
behalf of any Company with the Securities and Exchange Commission.

      (f)   CHANGE IN RATINGS.  Promptly upon the receipt of notice thereof, 
and in any event within five (5) Business Days after any change in the 
Moody's Rating or the S & P Rating, notice of such change.

      (g)   OTHER INFORMATION.  Promptly upon request therefor by any Credit 
Party, such information (not otherwise required to be furnished under the 
Loan Documents) respecting the business affairs, assets, and liabilities of 
the Companies, and such opinions, certifications, and documents, in addition 
to those mentioned in this Agreement, as reasonably requested (other than 
privileged and confidential communications between any Company and its legal 
advisors).

      9.4   INSPECTIONS.  Borrower shall, and shall cause each other Company 
to, upon reasonable prior notice and during normal business hours, allow 
Administrative Agent (or its Representatives) to inspect any of their 
properties, to review reports, files, and other records and, if reasonably 
requested, to make and take away copies thereof, to conduct tests or 
investigations, and to discuss any of their affairs, conditions, and finances 
with other directors, officers, employees, other representatives, and 
independent accountants of the Companies, from time to time, during normal 
business hours; PROVIDED THAT Administrative Agent shall notify 

                                      40
<PAGE>

such Company and Borrower prior to any contacts with such accountants and 
give such Company and Borrower the reasonable opportunity to participate in 
such discussions.

      9.5   TAXES.  Borrower shall, and shall cause each other Company to (a) 
promptly pay when due any and all Taxes other than Taxes (i) the 
applicability, amount, or validity of which is being contested in good faith 
by appropriate proceedings diligently conducted, and against which reserves 
or other provisions required by GAAP have been made, and in respect of which 
levy and execution of any lien securing same have been and continue to be 
stayed, and (ii) in which the failure to so pay could not be a Material 
Adverse Event, and (b) notify Administrative Agent immediately if the 
Internal Revenue Service or any other taxing authority commences or notifies 
any Company of its intention to commence an audit or investigation with 
respect to any taxes of any kind due or alleged to be due from any Company.

      9.6   MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS.  Except as 
otherwise permitted by SECTION 10.11, Borrower shall, and shall cause each 
other Company to, at all times: (a) maintain its existence and good standing 
in the jurisdiction of its organization and its authority to transact 
business in all other jurisdictions where the failure to so maintain its 
authority to transact business could be a Material Adverse Event; (b) 
maintain all licenses, permits, and franchises necessary for its business 
where the failure to so maintain could be a Material Adverse Event; (c) keep 
all of its material assets which are useful in and necessary to its business 
in good working order and condition (ordinary wear and tear excepted) and 
make all necessary repairs thereto and replacements thereof; and (d) do all 
things necessary to obtain, renew, extend, and continue in effect all 
Authorizations which may at any time and from time to time be necessary for 
the Companies to operate their businesses in compliance with applicable Law, 
where the failure to so renew, extend, or continue in effect could be a 
Material Adverse Event.

      9.7   INSURANCE.  Borrower shall, and shall cause each other Company 
to, maintain with financially sound, responsible, and reputable insurance 
companies or associations insurance concerning its properties and businesses 
against casualties and contingencies and of types and in amounts (and with 
co-insurance and deductibles) as is customary in the case of similar 
businesses.  At Administrative Agent's request, Borrower shall, and shall 
cause each Company to, promptly deliver to Administrative Agent evidence of 
insurance for each policy of insurance and evidence of payment of all 
premiums.

      9.8   PRESERVATION AND PROTECTION OF RIGHTS.  Borrower shall, and shall 
cause each other Company to,  perform such acts and duly authorize, execute, 
acknowledge, deliver, file, and record any additional agreements, documents, 
instruments, and certificates as Administrative Agent or Required Lenders may 
reasonably deem necessary or appropriate in order to preserve and protect the 
Rights of the Credit Parties under any Loan Document.

      9.9   ENVIRONMENTAL LAWS.  Borrower shall, and shall cause each other 
Company to (a) conduct its business so as to comply in all material respects 
with all applicable Environmental Laws and shall promptly take corrective 
action to remedy any material non-compliance with any Environmental Law, and 
(b) promptly investigate and remediate any known Release or threatened 
Release of any Hazardous Substance on any property owned by any Company or at 
any facility operated by any Company to the extent and degree necessary to 
comply in all material respects with all applicable Environmental Laws.

      9.10  YEAR 2000 COMPLIANCE.  Borrower shall promptly notify Administrative
Agent in the event Borrower discovers or determines that any computer
application (including those of its suppliers and vendors) that is material to
any Company's business and operations will not be Year 2000 Compliant on a
timely basis, 

                                      41
<PAGE>

except to the extent that such failure to be Year 2000 Compliant could not 
reasonably be expected to be a Material Adverse Event.

      9.11  COMPLIANCE WITH LAWS.  Borrower shall, and shall cause each other 
Company to, comply with the provisions of any Laws applicable to it, or any 
material written or oral agreement, contract, commitment, or understanding to 
which it is a party, if such non-compliance alone, or when aggregated with 
all other such violations, could reasonably be expected to be a Material 
Adverse Event.

      9.12  AFTER-ACQUIRED SUBSIDIARIES.  Borrower shall, and shall cause 
each other Company to, cause each Material Subsidiary acquired or formed 
after the Closing Date (an "AFTER-ACQUIRED SUBSIDIARY") to execute and 
deliver to Administrative Agent, within thirty (30) days following the 
acquisition or formation thereof, counterpart signature pages to the 
Subsidiary Guaranty and to provide to Administrative Agent (a) certified 
copies of such After-Acquired Subsidiary's Constituent Documents, together 
with a good standing certificate, from the Secretary of State of the state of 
its incorporation, and (b) an officer's certificate of such After-Acquired 
Subsidiary certifying (i) its Constituent Documents, (ii) resolutions of its 
Board of Directors approving and authorizing the execution, delivery, and 
performance of the Loan Documents to be executed by such After-Acquired 
Subsidiary, and (iii) signatures and incumbency of its officers executing the 
Loan Documents to be executed by such After-Acquired Subsidiary.

      9.13  OTHER REQUIRED GUARANTORS.  Borrower shall cause each Other 
Required Guarantor to execute and deliver to Administrative Agent, within 
thirty (30) days after the execution of any guaranty required by SECTION 6.3, 
(a) certified copies of such Other Required Guarantor's Constituent 
Documents, together with a good standing certificate, from the Secretary of 
State of the state of its incorporation, and (b) an officer's certificate of 
such Other Required Guarantor certifying (i) its Constituent Documents, (ii) 
resolutions of its Board of Directors approving and authorizing the 
execution, delivery, and performance of the Loan Documents to be executed by 
such Other Required Guarantor, and (iii) signatures and incumbency of its 
officers executing the Loan Documents to be executed by such Other Required 
Guarantor.

SECTION 10  NEGATIVE COVENANTS.  Borrower covenants and agrees to perform, 
observe, and comply with each of the following covenants, from the Closing 
Date until the payment in full of the Obligation and the termination or 
cancellation of all LCs, if any:

      10.1  EMPLOYEE BENEFIT PLANS.  Borrower shall not, and shall not permit 
any ERISA Affiliate to, directly or indirectly, engage in any "PROHIBITED 
TRANSACTION" (as defined in SECTION 406 of ERISA or SECTION 4975 of the 
Code), and the Companies, and their respective ERISA Affiliates shall not, 
directly or indirectly, (a) incur any "ACCUMULATED FUNDING DEFICIENCY" as 
such term is defined in SECTION 302 of ERISA with respect to any Employee 
Plan, (b) permit any Employee Plan to be subject to involuntary termination 
proceedings pursuant to TITLE IV of ERISA, or (c) fully or partially withdraw 
from any Multiemployer Plan, if such prohibited transaction, accumulated 
funding deficiency, termination proceeding, or withdrawal could reasonably be 
expected to be a Material Adverse Event.

      10.2  DEBT OF FOREIGN SUBSIDIARIES.  Borrower shall not permit any 
Foreign Subsidiary to, directly or indirectly, create, incur, guarantee, 
assume, or suffer to exist any Debt or any direct, indirect, fixed, or 
contingent liability for any Debt other than (a) Debt payable to any Company, 
(b) Capital Leases of C.E.T., S.A. existing on Closing Date and any 
refinancings, renewals, or extensions thereof (without any increase in the 
principal amount thereof), and (c) in addition to the Debt permitted by 
CLAUSES (a) and (b) 

                                      42
<PAGE>

above, other Debt in an aggregate principal amount for all Foreign 
Subsidiaries not to exceed $25,000,000 at any time outstanding.

      10.3  LIENS.  Borrower shall not, and shall not permit any other 
Company to, directly or indirectly, create, incur, or suffer or permit to be 
created or incurred or to exist any Lien upon any of its assets, except the 
following ("PERMITTED LIENS"):

            (i)    pledges or deposits made to secure payment of worker's
      compensation, or to participate in any fund in connection with worker's
      compensation, unemployment insurance, pensions, or other social security
      programs;

            (ii)   pledges or deposits made to secure performance of bids,
      tenders, insurance or other contracts (other than for the repayment of
      borrowed money), or leases, or to secure statutory obligations, surety or
      appeal bonds, or indemnity, performance, or other similar bonds as all
      such Liens arise in the ordinary course of business of the Companies;

            (iii)  encumbrances consisting of zoning restrictions, easements,
      rights-of-way, covenants, minor exceptions to title, or other restrictions
      on the use of real property, none of which impair in any material respect
      the use of such property by the Person in question in the operation of its
      business, and none of which is violated by existing or proposed structures
      or land use (where such violation could be a Material Adverse Event);

            (iv)   Liens of landlords or of mortgagees of landlords on fixtures
      and movable property located on premises leased in the ordinary course of
      business;

            (v)    claims and Liens for Taxes (A) that are not due and payable,
      or (B) in which the applicability, amount, or validity of which is being
      contested in good faith by appropriate proceedings diligently conducted,
      and against which reserves or other provisions required by GAAP have been
      made and levy and execution thereon have been stayed and continue to be
      stayed;

            (vi)   claims and Liens of mechanics, materialmen, warehousemen,
      carriers, landlords, or other like Liens in which (A) the amounts due
      thereunder are not overdue for a period of more than thirty (30) days, or
      (B) the applicability, amount, or validity of which is being contested in
      good faith by appropriate proceedings diligently conducted, and against
      which reserves or other provisions required by GAAP have been made and
      levy and execution thereon have been stayed and continue to be stayed;

            (vii)  Liens in existence on the date hereof listed on
      SCHEDULE 10.3, securing Debt existing as of the Closing Date and any
      refinancings, renewals, or extensions thereof (without any increase in the
      principal amount thereof);

            (viii) Liens on assets acquired pursuant to a Permitted Acquisition
      securing Debt of any Company assumed in connection with such Permitted
      Acquisition not to exceed fifteen percent (15%) of the aggregate
      consideration for such Permitted Acquisition;

            (ix)   any interest or title of a lessor under any lease entered
      into by any Company in the ordinary course of its business and covering
      only the assets so leased;

                                      43
<PAGE>

            (x)    any obligations or duties affecting any of the properties of
      any Company to any municipality or public authority with respect to any
      franchise, grant, license, or permit which do not materially impair the
      use of such property for the purposes for which it is held;

            (xi)   liens imposed by operation of law with respect to any
      judgments or orders not constituting a Default;

            (xii)  Liens arising from precautionary Uniform Commercial Code
      financing statement filings with respect to operating leases entered into
      by any Company in the ordinary course of business;

            (xiii) licenses, leases, or subleases permitted hereunder granted to
      others not interfering in any material respect with the business of any
      Company;

            (xiv)  Liens in favor of banking institutions arising by operation
      of law encumbering deposits (including the right of setoff) held by such
      banking institution incurred in the ordinary course of business and which
      are within the general parameters customary in the banking industry; and

            (xv)   Liens not otherwise permitted by this SECTION 10.3 PROVIDED
      THAT the aggregate outstanding principal amount of the obligations secured
      thereby does not exceed $25,000,000 in the aggregate at any time
      outstanding.

      10.4  TRANSACTIONS WITH AFFILIATES.  Borrower shall not, and shall not 
permit any other Company to, enter into any transaction with any of its 
Affiliates, other than transactions upon fair and reasonable terms not 
materially less favorable than such Company could obtain or could become 
entitled to in an arm's-length transaction with a Person that was not its 
Affiliate; PROVIDED, HOWEVER, that the Companies shall be entitled to make 
the following payments and/or enter into the following transactions:

      (a)   the payment of reasonable and customary fees and reimbursement of 
expenses payable to directors of any Company;

      (b)   the employment arrangements with respect to the procurement of 
services of directors, officers, and employees in the ordinary course of 
business and the payment of reasonable fees in connection therewith;

      (c)   the transactions, agreements, and arrangements described on 
SCHEDULE 10.4; and

      (d)   any other transaction between Affiliates otherwise expressly 
permitted by this Agreement.

      10.5  COMPLIANCE WITH DOCUMENTS.  Borrower shall not, and shall not 
permit any other Company to, (a) violate the provisions of its Constituent 
Documents, or (b) modify, repeal, replace, or amend any provision of its 
Constituent Documents, in each case where such action could be a Material 
Adverse Event.

      10.6  FISCAL YEAR AND ACCOUNTING METHODS.  Borrower shall not, and 
shall not permit any other Company to, change its fiscal year for book 
accounting purposes; PROVIDED THAT POI and Borrower may 

                                      44
<PAGE>

change their respective fiscal year with the prior written consent of 
Administrative Agent, such consent not to be unreasonably withheld.

      10.7  NEW BUSINESS.  Borrower shall not, and shall not permit any other 
Company (other than Subsidiaries of POI that in the aggregate contribute five 
percent (5%) or less of the consolidated total assets of the Companies as of 
the last day of the immediately preceding fiscal year of the Companies) to, 
directly or indirectly, permit or suffer to exist any material change in the 
type of businesses in which it is engaged from the businesses of the 
Companies as conducted on the Closing Date or reasonable extensions thereof.

      10.8  LOANS, ADVANCES, AND INVESTMENTS.  Borrower shall not, and shall 
not permit any other Company to, make any loan, advance, extension of credit, 
or capital contribution to, make any investment in, or purchase or commit to 
purchase any Stock or evidences of Debt of, or interests in, any other 
Person, other than: (a) readily marketable, direct, full faith and credit 
obligations of the United States of America, or obligations guaranteed by the 
full faith and credit of the United States of America, maturing within not 
more than one year from the date of acquisition; (b) short term certificates 
of deposit and time deposits, which mature within one year from the date of 
issuance and which are fully insured by the Federal Deposit Insurance 
Corporation; (c) commercial paper maturing in 365 days or less from the date 
of issuance and rated either "P-1" by Moody's, or "A-1" by S & P; (d) debt 
instruments of a domestic issuer which mature in one (1) year or less and 
which are rated "A" or better by Moody's or S&P on the date of acquisition of 
such investment; (e) demand deposit accounts which are maintained in the 
ordinary course of business; (f) Permitted Acquisitions; (g) trade accounts 
receivable which are for goods furnished or services rendered in the ordinary 
course of business and are payable in accordance with customary trade terms; 
(h) investments by the Companies in Domestic Subsidiaries as of the Closing 
Date and formed in accordance with the terms of this Agreement; (i) loans and 
advances by the Companies to their respective directors, officers, and 
employees in an aggregate principal amount not to exceed $2,500,000 in the 
aggregate at any time outstanding; (j) loans, advances, or investments 
existing on the Closing Date and listed on SCHEDULE 10.8, and extensions, 
renewals, modifications, restatements, or replacements thereof; (k) 
investments consisting of Debt of any Company to any other Company; (l) 
promissory notes and other similar non-cash consideration received by any 
Company in connection with the dispositions permitted by SECTION 10.11; (m) 
investments in Financial Hedge Agreements; (n) investments received in 
connection with the bankruptcy or reorganization or suppliers and customers 
in settlement of delinquent obligations of, and other disputes with, 
customers and suppliers arising in the ordinary course of business; (o) 
investments of (i) the Companies (other than Foreign Subsidiaries) in Foreign 
Subsidiaries in an aggregate amount not to exceed at any one time outstanding 
fifteen percent (15%) of the consolidated total assets of the Companies 
determined in accordance with GAAP for the most recent fiscal year (without 
regard to any write down or write up thereof), and (ii) Foreign Subsidiaries 
in other Foreign Subsidiaries; and (p) in addition to the foregoing, other 
investments by the Companies in an aggregate amount not exceeding five 
percent (5%) of the consolidated total assets of the Companies determined in 
accordance with GAAP for the most recent fiscal year (without regard to any 
write down or write up thereof).

      10.9  DISTRIBUTIONS AND SUBORDINATED DEBT PAYMENTS.

      (a)   DISTRIBUTIONS.  Borrower shall not, and shall not permit any 
other Company to, directly or indirectly declare, make, or pay any 
Distributions, other than (i) Distributions declared, made, or paid by any 
Company wholly in the form of its capital Stock, and (ii) Distributions by 
any Company to Borrower or Lifeline, (iii) so long as no Default exists or 
would result from the payment thereof, Distributions by any Company to POI 
and Distributions by POI to the holders of its Stock, in each case in an 
aggregate amount 

                                      45
<PAGE>


during any fiscal year of the Companies not to exceed the SUM of (A) 
twenty-five percent (25%) of the consolidated net income of the Companies for 
the immediately preceding fiscal year of the Companies, PLUS (B) an amount 
for the purpose of making Distributions to the holders of POI's Stock equal 
to the net proceeds from the issuance of POI's Stock, (iv) Distributions in 
the form of Common Stock of POI issued in connection with the conversion of 
the Convertible Notes, and (v) Distributions from any Subsidiary of POI to 
POI the proceeds of which:
            (A)    shall be applied by POI directly to pay out-of- pocket
      expenses, for administrative, legal, and accounting services provided by
      third parties that are reasonable and customary and incurred in the
      ordinary course of business for such professional services, or to pay
      franchise fees and similar costs;

            (B)    will be used to repurchase the Stock of POI (x) from
      directors, employees, or members of the management of any Company, at a
      price not in excess of the fair market value of such Stock, in an
      aggregate amount not in excess of $10,000,000 (net of the proceeds
      received by POI as a result of any resales of any such Stock), or (y) in
      order to fulfill the obligations of any Company under an employee Stock
      purchase plan or similar plan covering employees of any Company as from
      time to time in effect;

            (C)    will be used to pay taxes of the Companies as part of a
      consolidated, combined, or unitary tax filing group or of the separate
      operations of POI; or

            (D)    will be used to make investments in, or loans to, any
      Subsidiary of POI otherwise permitted pursuant to this Agreement.

      (b)   SUBORDINATED DEBT.  Borrower shall not, and shall not permit any 
other Company to, make any payment on any Subordinated Debt (i) when it 
violates the subordination provisions thereof, PROVIDED THAT so long as no 
Default exists Borrower may (A) redeem, defease, or repurchase Subordinated 
Debt with the proceeds of issuance of Stock of POI or Borrower, and (B) 
refinance Subordinated Debt with the proceeds of other Subordinated Debt, or 
(ii) with the proceeds of any Debt that is not Subordinated Debt if the 
Leverage Ratio is, as of the most recent date of determination hereunder, 
greater than 4.5 to 1.0.

      10.10 RESTRICTIONS ON COMPANIES.  Borrower shall not, and shall not 
permit any other Company to, enter into or permit to exist any material 
arrangement or agreement (other than the Loan Documents and, solely with 
respect to Foreign Subsidiaries, the agreements evidencing the Debt permitted 
by SECTION 10.2) which directly or indirectly prohibits any Subsidiary of 
Borrower from (i) declaring, making, or paying, directly or indirectly, any 
Distribution to Borrower, (ii) paying any Debt owed to Borrower, (iii) making 
loans, advances, or investments to Borrower, or (iv) transferring any of its 
property or assets to Borrower.

      10.11 SALE OF ASSETS.  Borrower shall not, and shall not permit any 
other Company to, sell, assign, transfer, or otherwise dispose of any of its 
assets, other than (a) sales of inventory and equipment leases (including, 
without limitation, equipment leases originated or acquired by C.E.T., S.A. 
or its Subsidiaries) in the ordinary course of business, (b) the sale, 
discount, or transfer of delinquent accounts receivable in the ordinary 
course of business for purposes of collection, (c) sales of immaterial assets 
for consideration not less than the fair market value thereof, (d) 
dispositions of obsolete assets and assets no longer useful in the respective 
businesses of the Companies, (e) transfers resulting from any casualty or 
condemnation of property of assets, (f) licenses or sublicenses of 
intellectual property and general intangibles and licenses, leases, or 
subleases of other property in each case in the ordinary course of business 
and that do not materially interfere 

                                      46
<PAGE>

with the business of any Company, (g) dispositions permitted by SECTION 
10.12, and (h) other asset sales during any fiscal year of the Companies in 
an aggregate amount not exceeding ten percent (10%) of the consolidated total 
assets of the Companies determined in accordance with GAAP for the most 
recent fiscal year (without regard to any write down or write up thereof).

      10.12 MERGERS AND DISSOLUTIONS; SALE OF CAPITAL STOCK.  Borrower shall 
not, and shall not permit any other Company to, directly or indirectly, merge 
or consolidate with any other Person, other than (a) as a result of a 
Permitted Acquisition, (b) mergers or consolidations involving Borrower if 
Borrower is the surviving entity, and (c) mergers among Wholly-owned 
Companies; PROVIDED THAT in any merger involving Borrower (including a 
Permitted Acquisition effected as a merger), Borrower must be the surviving 
entity, and, in any merger involving any other Company (including a Permitted 
Acquisition effected as a merger), a Company must be the surviving entity.  
Borrower shall not, and shall not permit any other Company to, liquidate, 
wind up, or dissolve (or suffer any liquidation or dissolution), other than 
liquidations, wind ups, or dissolutions incident to mergers permitted under 
this SECTION 10.12.

      10.13 FINANCIAL COVENANTS.  As calculated on a consolidated basis for 
the Companies:

      (a)   LEVERAGE RATIO.  Borrower shall not permit the Leverage Ratio, as 
of the last day of any fiscal quarter of the Companies during the following 
periods, to be greater than the ratio set forth opposite such period below:

<TABLE>
<CAPTION>
         --------------------------------------------------------------
                 PERIOD                                   RATIO
         --------------------------------------------------------------
         <S>                                       <C>
          Closing Date through                         5.0 to 1.0
            December 30, 1999
         --------------------------------------------------------------
          December 31, 1999 and                        4.5 to 1.0
               thereafter
         --------------------------------------------------------------
</TABLE>

      (b)   INTEREST COVERAGE.  Borrower shall not permit the Interest 
Coverage Ratio, as of the last day of any fiscal quarter of the Companies, to 
be less than 2.75 to 1.0.

SECTION 11  DEFAULT.  The term "DEFAULT" means the occurrence of any one or 
more of the following events:

      11.1  PAYMENT OF OBLIGATION.

      (a)   The failure or refusal of Borrower to pay any of the Obligation 
(other than principal) when it becomes due and payable under the Loan 
Documents and such failure shall continue for five (5) days after such 
payment became due.

      (b)   The failure or refusal of Borrower to pay any principal of the 
Obligation when it becomes due and payable under the Loan Documents

      11.2  COVENANTS.

                                       47
<PAGE>

      (a)   The failure or refusal of Borrower (and, if applicable, any other 
Material Company) to punctually and properly perform, observe, and comply 
with any covenant, agreement, or condition contained in any SECTION 9.3 or 
SECTION 10.

      (b)   The failure or refusal of Borrower (and, if applicable, any other 
Material Company) to punctually and properly perform, observe, and comply 
with any covenant, agreement, or condition contained in any Loan Document 
(other than the covenants to pay the Obligation and the covenants in (a) 
preceding) and, if such failure is capable of being cured within the 
appropriate time, then such failure shall continue for thirty (30) days after 
the earlier to occur of the date (i) any Responsible Officer knows of, or 
(ii) Borrower receives notice from Administrative Agent of, such failure or 
refusal.

      11.3  DEBTOR RELIEF.  Any Material Company (a) shall not be Solvent, 
(b) fails to pay its Debts generally as they become due, (c) voluntarily 
seeks, consents to, or acquiesces in the benefit of any Debtor Relief Law, 
other than as a creditor or claimant, or (d) becomes a party to or is made 
the subject of any proceeding provided for by any Debtor Relief Law, other 
than as a creditor or claimant, that could suspend or otherwise adversely 
affect the Rights of any Credit Party granted in the Loan Documents (UNLESS, 
in the event such proceeding is involuntary, the petition instituting same is 
dismissed within sixty (60) days after its filing).

      11.4  JUDGMENTS AND ATTACHMENTS.  Any Material Company fails, within 
sixty (60) days after entry, to pay, bond, or otherwise discharge any 
judgment or order for the payment of money in excess of $25,000,000 
(individually or collectively) and not paid or covered by insurance or 
indemnified in a manner reasonably acceptable to Administrative Agent, or any 
warrant of attachment, sequestration, or similar proceeding against any 
Material Company's assets having a value (individually or collectively) of 
$25,000,000 which is not stayed on appeal.

      11.5  MISREPRESENTATION.  Any representation or warranty made by any 
Company contained in any Loan Document shall at any time prove to have been 
incorrect in any material respect when made.

      11.6  CHANGE OF CONTROL.

      (a)   POI shall cease to own, directly or indirectly, one hundred 
percent (100%) of the voting control (directly or indirectly) of Borrower; or

      (b)   Western Resources, Inc. shall cease to own, directly or 
indirectly, more than fifty percent (50%) of the voting control (directly or 
indirectly) of POI.

      11.7  DEFAULT UNDER OTHER DEBT AND AGREEMENTS.

      (a)   The occurrence of any "DEFAULT" or "EVENT OF DEFAULT" or other 
breach which remains uncured after the expiration of any period of grace, 
notice, or right to cure, if any, or unwaived on any date of determination 
under or with respect to the Senior Notes or any Subordinated Debt; or

      (b)   The trustee with respect to, or any holder of, the Senior Notes 
or any Subordinated Debt shall effectively declare all or any portion of such 
Debt or obligation thereunder due and payable prior to the stated maturity 
thereof; or

                                       48
<PAGE>

      (c)   Any Material Company fails to pay when due (after lapse of any 
applicable grace periods) any Debt of such Material Company (other than the 
Obligation) in excess (individually or collectively) of $25,000,000.

      11.8  EMPLOYEE BENEFIT PLANS.

      (a)   A "REPORTABLE EVENT" or "REPORTABLE EVENTS," or a failure to make 
a required installment or other payment (within the meaning of SECTION 
412(n)(1) of the Code), shall have occurred with respect to any Employee Plan 
or Employee Plans that is reasonably expected to result in liability of 
Borrower to the PBGC or to a Plan in an aggregate amount exceeding 
$25,000,000; or

      (b)   Borrower or any ERISA Affiliate has provided to any affected 
party a sixty (60) day notice of intent to terminate an Employee Plan 
pursuant to a distress termination in accordance with SECTION 4041(c) of 
ERISA if the liability reasonably expected to be incurred as a result of such 
termination will exceed $25,000,000; or

      (c)   A trustee shall be appointed by a United States district court to 
administer any Employee Plan; or

      (d)   the PBGC shall institute proceedings (including giving notice of 
intent thereof) to terminate any Employee Plan; or

      (e)   (i) Borrower or any ERISA Affiliate shall have been notified by 
the sponsor of a Multiemployer Plan that it has incurred withdrawal liability 
(within the meaning of SECTION 4201 of ERISA) to such Multiemployer Plan, 
(ii) Borrower or such ERISA Affiliate does not have reasonable grounds for 
contesting such withdrawal liability or is not contesting such withdrawal 
liability in a timely and appropriate manner and (iii) the amount of such 
withdrawal liability specified in such notice, when aggregated with all other 
amounts required to be paid to Multiemployer Plans in connection with 
withdrawal liabilities (determined as of the date or dates of such 
notification), exceeds $25,000,000; or

      (f)   Borrower or any ERISA Affiliate shall have been notified by the 
sponsor of a Multiemployer Plan that such Multiemployer Plan is in 
reorganization or is being terminated, within the meaning of TITLE IV of 
ERISA, if solely as a result of such reorganization or termination the 
aggregate annual contributions of Borrower and its ERISA Affiliates to all 
Multiemployer Plans that are then in reorganization or have been or are being 
terminated have been or will be increased over the amounts required to be 
contributed to such Multiemployer Plans for their most recently completed 
plan years by an amount exceeding $25,000,000.

      11.9  VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS.  Any Loan Document 
shall, at any time after its execution and delivery and for any reason, cease 
to be in full force and effect in any material respect or be declared to be 
null and void (other than in accordance with the terms hereof or thereof) 
and, if such invalidity is capable of being cured without materially 
disadvantaging any Credit Party, Borrower fails to cure such invalidity 
within thirty (30) days after Borrower receives written notice from 
Administrative Agent of such invalidity, or the validity or enforceability 
thereof shall be contested by any Company party thereto or any Company shall 
deny in writing that it has any or any further liability or obligations under 
any Loan Document to which it is a party.

                                       49
<PAGE>

      11.10 ENVIRONMENTAL LIABILITY.  If any event or condition shall occur 
or exist with respect to any activity or substance regulated under the 
Environmental Law and as a result of such event or condition, any Company 
shall have incurred or in the opinion of the banks be reasonably likely to 
incur a liability in excess of $25,000,000 liability during any consecutive 
twelve (12) month period. 

SECTION 12  RIGHTS AND REMEDIES.

      12.1  REMEDIES UPON DEFAULT.

      (a)   If a Default exists under SECTION 11.3(c) or 11.3(d), then the 
commitment to extend credit hereunder shall automatically terminate and the 
entire unpaid balance of the Obligation shall automatically become due and 
payable without any action or notice of any kind whatsoever and Borrower 
shall be required to provide cash collateral in an amount equal to one 
hundred percent (100%) of the LC Exposure then existing in accordance with 
SECTION 2.2(h).

      (b)   If any Default exists, then Administrative Agent may with the 
consent of Required Lenders (and, subject to the terms of SECTION 13, shall 
upon the request of Required Lenders) do any one or more of the following: 
(i) if the maturity of the Obligation has not already been accelerated under 
SECTION 12.1(a), then declare the entire unpaid balance of the Obligation, or 
any part thereof, immediately due and payable, whereupon it shall be due and 
payable; (ii) terminate the commitments of Lenders to extend credit 
hereunder; (iii) reduce any claim to judgment; (iv) to the extent permitted 
by Law, exercise (or request each Lender to, and each Lender shall be 
entitled to, exercise) the Rights of offset or banker's Lien against the 
interest of any Company in and to every account and other property of any 
Company which are in the possession of any Credit Party to the extent of the 
full amount of the Obligation (to the extent permitted by Law, Borrower being 
deemed directly obligated to each Credit Party in the full amount of the 
Obligation for such purposes); PROVIDED, HOWEVER, such Credit Party shall 
thereafter promptly notify Borrower and Administrative after any such offset 
and the application made by such Lender; (v) if the maturity of the 
Obligation has not already been accelerated under SECTION 12.1(a), then 
demand Borrower to provide cash collateral in an amount equal to one hundred 
percent (100%) of the LC Exposure then existing in accordance with SECTION 
2.2(h); and (vi) exercise any and all other legal or equitable Rights 
afforded by the Loan Documents, the Laws of the State of Texas, or any other 
applicable jurisdiction as Administrative Agent shall deem appropriate, or 
otherwise, including, but not limited to, the Right to bring suit or other 
proceedings before any Governmental Authority either for specific performance 
of any covenant or condition contained in any of the Loan Documents or in aid 
of the exercise of any Right granted to any Credit Party in any of the Loan 
Documents.

      12.2  COMPANY WAIVERS.  To the extent permitted by Law, the Companies 
and Guarantors hereby waive presentment and demand for payment, protest, 
notice of intention to accelerate, notice of acceleration, and notice of 
protest and nonpayment, and agree that their respective liability with 
respect to the Obligation (or any part thereof) shall not be affected by any 
renewal or extension in the time of payment of the Obligation (or any part 
thereof), by any indulgence, or by any release or change in any security for 
the payment of the Obligation (or any part thereof).

      12.3  PERFORMANCE BY ADMINISTRATIVE AGENT.  If any covenant, duty, or
agreement of any Company is not performed in accordance with the terms of the
Loan Documents, while a Default exists, then Administrative Agent may, at its
option (but subject to the approval of Required Lenders), perform or attempt to
perform such covenant, duty, or agreement on behalf of such Company.  In such
event, any amount expended by Administrative Agent in such performance or
attempted performance shall be payable by the Obligors, jointly and severally,
to Administrative Agent on demand, shall become part of the Obligation, and

                                       50
<PAGE>

shall bear interest at the Default Rate from the date of such expenditure by 
Administrative Agent until paid.  Notwithstanding the foregoing, it is 
expressly understood that Administrative Agent does not assume, and shall 
never have, except by its express written consent, any liability or 
responsibility for the performance of any covenant, duty, or agreement of any 
Company.

      12.4  DELEGATION OF DUTIES AND RIGHTS.  The Credit Parties may perform 
any of their duties or exercise any of their Rights under the Loan Documents 
by or through their respective Representatives.

      12.5  NOT IN CONTROL.  Nothing in any Loan Document shall, or shall be 
deemed to (a) give any Credit Party the Right to exercise control over the 
assets (including real property), affairs, or management of any Company, (b) 
preclude or interfere with compliance by any Company with any Law, or (c) 
require any act or omission by any Company that may be harmful to Persons or 
property.  Any "MATERIAL ADVERSE EVENT" or other materiality qualifier in any 
representation, warranty, covenant, or other provision of any Loan Document 
is included for credit documentation purposes only and shall not, and shall 
not be deemed to, mean that any Credit Party acquiesces in any non-compliance 
by any Company with any Law or document, or that any Credit Party does not 
expect any Company to promptly, diligently, and continuously carry out all 
appropriate removal, remediation, and termination activities required or 
appropriate in accordance with all Environmental Laws.   The Credit Parties 
have no fiduciary relationship with or fiduciary duty to any Company arising 
out of or in connection with the Loan Documents, and the relationship between 
the Credit Parties, on the one hand, and the Companies, on the other hand, in 
connection with the Loan Documents is solely that of debtor and creditor. The 
power of the Credit Parties under the Loan Documents is limited to the Rights 
provided in the Loan Documents, which Rights exist solely to assure payment 
and performance of the Obligation and may be exercised in a manner calculated 
by the Credit Parties in their respective good faith business judgment.

      12.6  COURSE OF DEALING.  The acceptance by any Credit Party at any 
time and from time to time of partial payment on the Obligation shall not be 
deemed to be a waiver of any Default then existing.  No waiver by any Credit 
Party of any Default shall be deemed to be a waiver of any other 
then-existing or subsequent Default.  No delay or omission by any Credit 
Party in exercising any Right under the Loan Documents shall impair such 
Right or be construed as a waiver thereof or any acquiescence therein, nor 
shall any single or partial exercise of any such Right preclude other or 
further exercise thereof, or the exercise of any other Right under the Loan 
Documents or otherwise.

      12.7  CUMULATIVE RIGHTS.  All Rights available to the Credit Parties 
under the Loan Documents are cumulative of and in addition to all other 
Rights granted to the Credit Parties at law or in equity, whether or not the 
Obligation is due and payable and whether or not the Credit Parties have 
instituted any suit for collection, foreclosure, or other action in 
connection with the Loan Documents.

      12.8  APPLICATION OF PROCEEDS.  Any and all proceeds ever received by 
any Credit Party from the exercise of any Rights pertaining to the Obligation 
shall be applied to the Obligation in the order and manner set forth in 
SECTION 3.11.

      12.9  CERTAIN PROCEEDINGS.  Borrower will promptly execute and deliver, 
or cause the execution and delivery of, all applications, certificates, 
instruments, registration statements, and all other documents and papers any 
Credit Party may reasonably request in connection with the obtaining of any 
consent, approval, registration, qualification, permit, license, or 
Authorization of any Governmental Authority or other Person necessary or 
appropriate for the effective exercise of any Rights under the Loan 
Documents. Because 

                                       51
<PAGE>

Borrower agrees that the Credit Parties' remedies at Law for failure of 
Borrower to comply with the provisions of this SECTION 12.9 would be 
inadequate and that such failure would not be adequately compensable in 
damages, Borrower agrees that the covenants of this SECTION 12.9 may be 
specifically enforced.

      12.10 EXPENDITURES BY LENDERS.  Borrower shall promptly pay within 
fifteen (15) Business Days after request therefor (a) all reasonable costs, 
fees, and expenses paid or incurred by Administrative Agent and Lead 
Arranger, incident to any Loan Document (including, but not limited to, the 
reasonable fees and expenses of counsel to Administrative Agent and Lead 
Arranger in connection with the negotiation, preparation, delivery, 
execution, coordination, and administration of the Loan Documents and any 
related amendment, waiver, or consent), and (b) all reasonable costs and 
expenses of each Credit Party incurred by such Credit Party in connection 
with the enforcement of the obligations of any Obligor arising under the Loan 
Documents (including, without limitation, costs and expenses incurred in 
connection with any workout or bankruptcy) or the exercise of any Rights 
arising under the Loan Documents (including, but not limited to, reasonable 
attorneys' fees including court costs and other costs of collection), all of 
which shall be a part of the Obligation and shall bear interest at the 
Default Rate from the date due until the date repaid.

      12.11 INDEMNIFICATION.  BORROWER SHALL, AND SHALL CAUSE EACH OTHER 
COMPANY TO, INDEMNIFY AND HOLD HARMLESS EACH CREDIT PARTY AND EACH OF THEIR 
RESPECTIVE AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, 
AGENTS, ATTORNEYS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND 
AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES 
SUBJECT TO THE LIMITATIONS, IF ANY, SET FORTH IN SECTION 12.10 (INCLUDING, 
WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY BE INCURRED BY OR 
ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT 
OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN 
CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION 
OF DEFENSE IN CONNECTION THEREWITH) THE LOAN DOCUMENTS, ANY OF THE 
TRANSACTIONS CONTEMPLATED HEREIN, OR THE ACTUAL OR PROPOSED USE OF THE 
PROCEEDS OF THE BORROWINGS (INCLUDING ANY OF THE FOREGOING ARISING FROM THE 
ORDINARY NEGLIGENCE OF ANY INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH 
CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL, 
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED 
FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  NO 
INDEMNIFIED PARTY MAY SEEK INDEMNIFICATION HEREUNDER FOR LIABILITIES OR 
EXPENSES OWED TO ANY COMPANY, TO THE EXTENT SUCH LIABILITIES OR EXPENSES 
ARISE OUT OF SUCH INDEMNIFIED PARTY'S BREACH OF THIS AGREEMENT AS DETERMINED 
IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION.  IN 
THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE 
INDEMNITY IN THIS SECTION 12.11 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE 
WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY 
BORROWER, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR 
ANY OTHER PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO. 
BORROWER AND EACH OTHER COMPANY AGREE NOT TO ASSERT ANY CLAIM AGAINST ANY 
INDEMNIFIED PARTY ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, 
CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO 
THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, OR THE 
ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE BORROWINGS.  WITHOUT PREJUDICE 
TO THE SURVIVAL OF ANY OTHER AGREEMENT OF BORROWER HEREUNDER, THE AGREEMENTS 
AND OBLIGATIONS OF BORROWER CONTAINED IN THIS SECTION 12.11 SHALL SURVIVE THE 
PAYMENT IN FULL OF THE BORROWINGS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS 
AGREEMENT.  

                                       52
<PAGE>

NOTWITHSTANDING THE FOREGOING, BORROWER SHALL HAVE NO OBLIGATION HEREUNDER TO 
ANY INDEMNIFIED PARTY WITH RESPECT TO ANY AND ALL CLAIMS, DAMAGES, LOSSES, 
LIABILITIES, COSTS, AND EXPENSES THAT ARE ATTRIBUTABLE TO ANY HAZARDOUS 
MATERIALS THAT ARE FIRST USED, MANUFACTURED, EMITTED, GENERATED, TREATED, 
LOCATED, RELEASED, STORED, OR DISPOSED OF ON ANY REAL PROPERTY OWNED, 
OPERATED, OR LEASED BY A COMPANY AND ANY VIOLATION OF ENVIRONMENTAL LAWS, 
WHICH IN EITHER CASE, FIRST OCCUR ON OR WITH RESPECT TO SUCH REAL PROPERTY 
AFTER THE PROPERTY IS TRANSFERRED TO ANY OF THE INDEMNIFIED PARTIES OR THEIR 
SUCCESSORS BY FORECLOSURE SALE, DEED IN LIEU OF FORECLOSURE, OR SIMILAR 
TRANSFER, EXCEPT TO THE EXTENT SUCH MANUFACTURE, EMISSION, RELEASE, 
GENERATION, TREATMENT, STORAGE, RELEASE, OR DISPOSAL OR VIOLATION IS ACTUALLY 
CAUSED BY A COMPANY.

SECTION 13  AGREEMENT AMONG LENDERS.

      13.1  ADMINISTRATIVE AGENT.

      (a)   APPOINTMENT.  Each Lender hereby appoints NationsBank (and 
NationsBank hereby accepts such appointment) as its nominee and agent, in its 
name and on its behalf:  (i) to act as nominee for and on behalf of such 
Lender in and under all Loan Documents; (ii) to arrange the means whereby the 
funds of Lenders are to be made available to Borrower under the Loan 
Documents; (iii) to take such action as may be requested by any Lender under 
the Loan Documents (when such Lender is entitled to make such request under 
the Loan Documents and after such requesting Lender has obtained the 
concurrence of such other Lenders as may be required under the Loan 
Documents); (iv) to receive all documents and items to be furnished to 
Lenders under the Loan Documents; (v) to timely distribute, and 
Administrative Agent agrees to so distribute, to each Lender all material 
information, requests, documents, and items received from any Company under 
the Loan Documents; (vi) to promptly distribute to each Lender its ratable 
part of each payment or prepayment (whether voluntary, as proceeds of 
collateral upon or after foreclosure, as proceeds of insurance thereon, or 
otherwise) in accordance with the terms of the Loan Documents; (vii) to 
deliver to the appropriate Persons requests, demands, approvals, and consents 
received from Lenders; and (viii) to execute, on behalf of Lenders, such 
releases or other documents or instruments as are permitted by the Loan 
Documents or as directed by Lenders from time to time; PROVIDED, HOWEVER, 
Administrative Agent shall not be required to take any action which exposes 
Administrative Agent to personal liability or which is contrary to the Loan 
Documents or applicable Law.

      (b)   SUCCESSOR AGENT.  Administrative Agent may resign at any time as
Administrative Agent under the Loan Documents by giving written notice thereof
to Lenders and may be removed as Administrative Agent under the Loan Documents
at any time with cause by Required Lenders.  Should the initial or any successor
Administrative Agent ever cease to be a party hereto or should the initial or
any successor Administrative Agent ever resign or be removed as Administrative
Agent, then Required Lenders shall elect the successor Administrative Agent from
among Lenders (other than the resigning Administrative Agent) which successor
Administrative Agent shall, unless a Payment Default exists, be reasonably
acceptable to Borrower.  If no successor Administrative Agent shall have been so
appointed by Required Lenders, within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation or Required Lenders'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of Lenders, appoint a successor Administrative Agent, which
shall be a commercial bank having a combined capital and surplus of at least
$1,000,000,000 and which successor Administrative Agent shall, unless a Payment
Default exists, be reasonably acceptable to Borrower.  Upon the acceptance of
any appointment as Administrative Agent under the Loan Documents by a successor
Administrative Agent, such 

                                       53
<PAGE>

successor Administrative Agent shall thereupon succeed to and become vested 
with all the Rights of the retiring Administrative Agent, and the retiring 
Administrative Agent shall be discharged from its duties and obligations of 
Administrative Agent under the Loan Documents (PROVIDED, HOWEVER, that when 
used in connection with LCs issued and outstanding prior to the appointment 
of the successor Administrative Agent, "ADMINISTRATIVE AGENT" shall continue 
to refer solely to the bank that issued the outstanding LC; PROVIDED FURTHER 
that any LCs issued or renewed after the appointment of any successor 
Administrative Agent shall be issued by such successor Administrative Agent), 
and each Lender shall execute such documents as any Lender may reasonably 
request to reflect such change in and under the Loan Documents. After any 
retiring Administrative Agent's resignation or removal as Administrative 
Agent under the Loan Documents, the provisions of this SECTION 13 shall inure 
to its benefit as to any actions taken or omitted to be taken by it while it 
was Administrative Agent under the Loan Documents.

      (c)   RIGHTS AS LENDER.  Administrative Agent, in its capacity as a 
Lender, shall have the same Rights under the Loan Documents as any other 
Lender and may exercise the same as though it were not acting as 
Administrative Agent; the term "LENDER" shall, unless the context otherwise 
indicates, include Administrative Agent; and any resignation, or removal of 
by Administrative Agent hereunder shall not impair or otherwise affect any 
Rights which it has or may have in its capacity as an individual Lender.  
Each Lender and Borrower agree that Administrative Agent is not a fiduciary 
for Lenders or for Borrower but simply is acting in the capacity described 
herein to alleviate administrative burdens for both Borrower and Lenders, 
that Administrative Agent has no duties or responsibilities to Lenders or 
Borrower except those expressly set forth herein, and that Administrative 
Agent in its capacity as a Lender has all Rights of any other Lender.

      (d)   OTHER ACTIVITIES.  Administrative Agent and its Affiliates may 
now or hereafter be engaged in one or more loan, letter of credit, leasing, 
or other financing transactions with any Company, act as trustee or 
depositary for any Company, or otherwise be engaged in other transactions 
with any Company (collectively, the "OTHER ACTIVITIES") not the subject of 
the Loan Documents. Without limiting the Rights of Lenders specifically set 
forth in the Loan Documents, Administrative Agent and its Affiliates shall 
not be responsible to account to Lenders for such other activities, and no 
Lender shall have any interest in any other activities, any present or future 
guaranties by or for the account of any Company which are not contemplated or 
included in the Loan Documents, any present or future offset exercised by 
Administrative Agent and its Affiliates in respect of such other activities, 
any present or future property taken as security for any such other 
activities, or any property now or hereafter in the possession or control of 
Administrative Agent or its Affiliates which may be or become security for 
the obligations of any Company arising under the Loan Documents by reason of 
the general description of indebtedness secured or of property contained in 
any other agreements, documents or instruments related to any such other 
activities; provided that if any payments in respect of such guaranties or 
such property or the proceeds thereof shall be applied to reduction of the 
obligations of any Obligor arising under the Loan Documents, then each Lender 
shall be entitled to share in such application ratably.

      13.2  EXPENSES.  Upon demand by Administrative Agent, each Lender shall 
pay its Pro Rata Part of any reasonable expenses (including, without 
limitation, court costs, reasonable attorneys' fees, and other costs of 
collection) incurred by Administrative Agent in connection with any of the 
Loan Documents if and to the extent Administrative Agent does not receive 
reimbursement therefor from other sources within 60 days after incurred 
(other than expenses incurred as a result of Administrative Agent's gross 
negligence or willful misconduct); PROVIDED THAT each Lender shall be 
entitled to receive its Pro Rata Part of any reimbursement for such expenses, 
or part thereof, which Administrative Agent subsequently receives from such 
other sources.

                                       54
<PAGE>

      13.3  PROPORTIONATE ABSORPTION OF LOSSES.  Except as otherwise provided 
in the Loan Documents, nothing in the Loan Documents shall be deemed to give 
any Lender any advantage over any other Lender insofar as the Obligation 
arising under the Loan Documents is concerned, or to relieve any Lender from 
absorbing its Pro Rata Part of any losses sustained with respect to the 
Obligation (except to the extent such losses result from unilateral actions 
or inactions of any Lender that are not made in accordance with the terms and 
provisions of the Loan Documents).

      13.4  DELEGATION OF DUTIES; RELIANCE.  Administrative Agent may perform 
any of its duties or exercise any of its Rights under the Loan Documents by 
or through its Representatives.  Administrative Agent and its Representatives 
shall (a) be entitled to rely upon (and shall be protected in relying upon) 
any writing, resolution, notice, consent, certificate, affidavit, letter, 
cablegram, telecopy, telegram, telex or teletype message, statement, order, 
or other documents or conversation believed by it or them to be genuine and 
correct and to have been signed or made by the proper Person and, with 
respect to legal matters, upon opinion of counsel selected by Administrative 
Agent, (b) be entitled to deem and treat each Lender as the owner and holder 
of the Principal Debt owed to such Lender for all purposes until, subject to 
SECTION 14.13, written notice of the assignment or transfer thereof shall 
have been given to and received by Administrative Agent (and any request, 
authorization, consent, or approval of any Lender shall be conclusive and 
binding on each subsequent holder, assignee, or transferee of the Principal 
Debt owed to such Lender or portion thereof until such notice is given and 
received), (c) not be deemed to have notice of the occurrence of a Potential 
Default or Default unless a responsible officer of Administrative Agent, who 
handles matters associated with the Loan Documents and transactions 
thereunder, has received written notice from a Lender or Borrower and stating 
that such notice is a "NOTICE OF DEFAULT," and (d) be entitled to consult 
with legal counsel (including counsel for Borrower), independent accountants, 
and other experts selected by Administrative Agent and shall not be liable 
for any action taken or omitted to be taken in good faith by it in accordance 
with the advice of such counsel, accountants or experts.

      13.5  LIMITATION OF LIABILITY.

      (a)   EXCULPATION.  No Agent nor any of its Representatives shall be 
liable for any action taken or omitted to be taken by it or them under the 
Loan Documents in good faith and reasonably believed by it or them to be 
within the discretion or power conferred upon it or them by the Loan 
Documents or be responsible for the consequences of any error of judgment, 
except for fraud, gross negligence, or willful misconduct; and no Agent nor 
any of its Representatives has a fiduciary relationship with any Lender by 
virtue of the Loan Documents (PROVIDED THAT nothing herein shall negate the 
obligation of Administrative Agent to account for funds received by it for 
the account of any Lender).

      (b)   INDEMNITY.  Unless indemnified to its satisfaction against loss, 
cost, liability, and expense, no Agent shall be compelled to do any act under 
the Loan Documents or to take any action toward the execution or enforcement 
of the powers thereby created or to prosecute or defend any suit in respect 
of the Loan Documents.  If any Agent requests instructions from Lenders or 
Required Lenders, as the case may be, with respect to any act or action 
(including, but not limited to, any failure to act) in connection with any 
Loan Document, such Agent shall be entitled (but shall not be required) to 
refrain (without incurring any liability to any Person by so refraining) from 
such act or action unless and until it has received such instructions.  
Except where action of Required Lenders or all Lenders is required in the 
Loan Documents, each Agent may act hereunder in its own discretion without 
requesting instructions. In no event, however, shall any Agent or any of its 
Representatives be required to take any action which it or they determine 
could incur for it or them 

                                       55
<PAGE>

criminal or onerous civil liability.  Without limiting the generality of the 
foregoing, no Lender shall have any right of action against any Agent as a 
result of such Agent's acting or refraining from acting hereunder in 
accordance with the instructions of Required Lenders (or all Lenders if 
required in the Loan Documents).

      (c)   RELIANCE.  No Agent shall be responsible in any manner to any 
Lender or any Participant for, and each Lender represents and warrants that 
it has not relied upon any Agent in respect of, (i) the creditworthiness of 
any Company and the risks involved to such Lender, (ii) the effectiveness, 
enforceability, genuineness, validity, or the due execution of any Loan 
Document, (iii) any representation, warranty, document, certificate, report, 
or statement made therein or furnished thereunder or in connection therewith, 
(iv) the existence, priority, or perfection of any Lien, if any, now or 
hereafter granted or purported to be granted under any Loan Document, or (v) 
observation of or compliance with any of the terms, covenants, or conditions 
of any Loan Document on the part of any Company.  EACH LENDER AGREES TO 
INDEMNIFY EACH AGENT AND ITS RESPECTIVE REPRESENTATIVES AND HOLD THEM 
HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S PRO RATA PART OF) ANY 
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, 
JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES, AND REASONABLE DISBURSEMENTS OF 
ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, ASSERTED AGAINST, OR 
INCURRED BY THEM IN ANY WAY RELATING TO OR ARISING OUT OF THE LOAN DOCUMENTS 
OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THE LOAN DOCUMENTS (INCLUDING 
ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF ADMINISTRATIVE AGENT OR 
ITS REPRESENTATIVES), TO THE EXTENT ANY AGENT AND ITS RESPECTIVE 
REPRESENTATIVES ARE NOT REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY (PROVIDED 
THAT NO AGENT NOR ANY OF ITS REPRESENTATIVES SHALL NOT HAVE THE RIGHT TO BE 
INDEMNIFIED HEREUNDER FOR ITS OR THEIR OWN FRAUD, GROSS NEGLIGENCE, OR 
WILLFUL MISCONDUCT).

      13.6  DEFAULT.  Upon the occurrence and continuance of a Default, 
Lenders agree to promptly confer in order that Required Lenders or Lenders, 
as the case may be, may agree upon a course of action for the enforcement of 
the Rights of Lenders; and Administrative Agent shall be entitled to refrain 
from taking any action (without incurring any liability to any Person for so 
refraining) unless and until Administrative Agent shall have received 
instructions from Required Lenders.  All rights of action under this 
Agreement and the other Loan Documents and all rights to any collateral, if 
any, hereunder may be enforced by Administrative Agent and any suit or 
proceeding instituted by Administrative Agent in furtherance of such 
enforcement shall be brought in their respective names as Administrative 
Agent without the necessity of joining as plaintiffs or defendants any other 
Credit Party, and the recovery of any judgment shall be for the benefit of 
the Credit Parties subject to the expenses of Administrative Agent. In 
actions with respect to any property of any Company, Administrative Agent is 
acting for the ratable benefit of each Credit Party.  Any and all agreements 
to subordinate (whether made heretofore or hereafter) other indebtedness or 
obligations of any Company to the Obligation shall be construed as being for 
the ratable benefit of each Credit Party.

      13.7  LIMITATION OF LIABILITY.  To the extent permitted by Law, (a) no 
Agent (acting in its respective agent capacity) shall incur any liability to 
any other Credit Party or Participant except for acts or omissions resulting 
from its own fraud, gross negligence or wilful misconduct, and (b) no Credit 
Party shall incur any liability to any other Person for any act or omission 
of any other Credit Party or any Participant.

      13.8  RELATIONSHIP OF LENDERS.  Nothing herein shall be construed as 
creating a partnership or joint venture among the Credit Parties.

      13.9  BENEFITS OF AGREEMENT.  Except for the representations and 
covenants in SECTIONS 13.1(a), 13.1(b), and 13.1(d) in favor of Borrower, 
none of the provisions of this SECTION 13 shall inure to the benefit 

                                       56
<PAGE>

of any Company or any other Person other than the Credit Parties; 
consequently, no Company or any other Person shall be entitled to rely upon, 
or to raise as a defense, in any manner whatsoever, the failure of any Credit 
Party to comply with such provisions.

      13.10 AGENTS.  No Lender identified in this Agreement as "SYNDICATION 
AGENT" or "LEAD ARRANGER" shall have any rights, powers, obligations, 
liabilities, responsibilities, or duties under this Agreement other than 
those applicable to all Lenders as such.  Without limiting the foregoing, no 
Lender so identified as a "SYNDICATION AGENT" or "LEAD ARRANGER" shall have 
or be deemed to have any fiduciary relationship with any other Credit Party.

      13.11 OBLIGATIONS SEVERAL.  The obligations of Lenders hereunder are 
several, and each Lender hereunder shall not be responsible for the 
obligations of the other Lenders hereunder, nor will the failure of one 
Lender to perform any of its obligations hereunder relieve the other Lenders 
from the performance of their respective obligations hereunder.

SECTION 14  MISCELLANEOUS.

      14.1  HEADINGS.  The headings, captions, and arrangements used in any 
of the Loan Documents are, unless specified otherwise, for convenience only 
and shall not be deemed to limit, amplify, or modify the terms of the Loan 
Documents, nor affect the meaning thereof.

      14.2  NONBUSINESS DAYS.  In any case where any payment or action is due 
under any Loan Document on a day which is not a Business Day, such payment or 
action may be delayed until the next-succeeding Business Day, but interest 
and fees shall continue to accrue in respect of any payment to which it is 
applicable until such payment is in fact made; PROVIDED THAT if, in the case 
of any such payment in respect of a Eurodollar Borrowing, the next-succeeding 
Business Day is in the next calendar month, then such payment shall be made 
on the next-preceding Business Day.

      14.3  COMMUNICATIONS.  Unless specifically otherwise provided, whenever 
any Loan Document requires or permits any consent, approval, notice, request, 
or demand from one party to another, such communication must be in writing 
(which may be by telex or telecopy) to be effective and shall be deemed to 
have been given (a) if by telex, when transmitted to the telex number, if 
any, for such party, and the appropriate answer back is received, (b) if by 
telecopy, when transmitted to the telecopy number for such party (and all 
such communications sent by telecopy shall be confirmed promptly thereafter 
by personal delivery or mailing in accordance with the provisions of this 
SECTION 14.3; PROVIDED THAT any requirement in this parenthetical shall not 
affect the date on which such telecopy shall be deemed to have been 
delivered), (c) if by mail, on the third (3rd) Business Day after it is 
enclosed in an envelope, properly addressed to such party, properly stamped, 
sealed, and deposited in the appropriate official postal service, or (d) if 
by any other means, when actually delivered to such party.  Until changed by 
notice pursuant hereto, the address (and telex and telecopy numbers, if any) 
for Borrower and each Credit Party is set forth on SCHEDULE 2.1.

      14.4  FORM AND NUMBER OF DOCUMENTS.  Each agreement, document, 
instrument, or other writing to be furnished under any provision of this 
Agreement must be in form and substance and in such number of counterparts as 
may be reasonably satisfactory to Administrative Agent and its counsel.

      14.5  CONFIDENTIALITY.  Each Credit Party agrees to keep confidential any
information furnished or made available to it by Borrower pursuant to this
Agreement in accordance with its customary procedures 

                                       57
<PAGE>

for handling confidential information of this nature in accordance with safe 
and sound banking or investment banking practices; PROVIDED THAT nothing 
herein shall prevent any Credit Party from disclosing such information (a) to 
any other Credit Party or any Affiliate of any Credit Party, or any officer, 
director, employee, agent, or advisor of any Credit Party or Affiliate of any 
Credit Party (PROVIDED THAT any such Affiliate shall be deemed to agree to 
and shall be bound by the provisions of this SECTION 14.5), (b) to any other 
Person if reasonably incidental to the administration of the credit facility 
provided herein, (c) as required by any Law, (d) upon the order of any court 
or administrative agency, (e) upon the request or demand of any regulatory 
agency or authority, (f) that is or becomes available to the public or that 
is or becomes available to any Credit Party other than as a result of a 
disclosure by any Credit Party prohibited by this Agreement, (g) in 
connection with any litigation to which such Credit Party or any of its 
Affiliates may be a party, (h) to the extent necessary in connection with the 
exercise of any remedy under this Agreement or any other Loan Document, and 
(i) subject to provisions substantially similar to those contained in this 
SECTION 14.5, to any actual or proposed Participant or assignee.

      14.6  SURVIVAL.  All covenants, agreements, undertakings, 
representations, and warranties made in any of the Loan Documents shall 
survive all closings under the Loan Documents and, except as otherwise 
indicated, shall not be affected by any investigation made by any party.  
Unless otherwise specifically stated, all rights of, and provisions relating 
to, reimbursement and indemnification of any Credit Party shall survive 
termination of this Agreement and payment in full of the Obligation.

      14.7  GOVERNING LAW.  THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED 
STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF THE PARTIES TO THE 
LOAN DOCUMENTS AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND 
INTERPRETATION OF THE LOAN DOCUMENTS.

      14.8  INVALID PROVISIONS.  If any provision in any Loan Document is 
held to be illegal, invalid, or unenforceable, then such provision shall be 
fully severable; the appropriate Loan Document shall be construed and 
enforced as if such provision had never comprised a part thereof; and the 
remaining provisions thereof shall remain in full force and effect and shall 
not be affected by such provision or by its severance therefrom.  Each Credit 
Party and each Company party to such Loan Document agree to negotiate, in 
good faith, the terms of a replacement provision as similar to the severed 
provision as may be possible and be legal, valid, and enforceable.

      14.9  ENTIRETY.  THE RIGHTS AND OBLIGATIONS OF THE COMPANIES AND THE 
CREDIT PARTIES SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, 
AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES ARE 
SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.  THIS AGREEMENT (AS AMENDED IN 
WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY 
ANY COMPANY AND/OR ANY CREDIT PARTY (TOGETHER WITH ALL COMMITMENT LETTERS AND 
FEE LETTERS AS THEY RELATED TO THE PAYMENT OF FEES AFTER THE CLOSING DATE) 
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED 
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN 
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

      14.10 JURISDICTION; VENUE; SERVICE OF PROCESS; JURY TRIAL.  EACH PARTY
HERETO, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY
(A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN DALLAS, TEXAS, AND 

                                       58
<PAGE>


AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL 
PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE 
OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY TEXAS LAW, (B) IRREVOCABLY 
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY 
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF 
OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATION BROUGHT IN ANY 
SUCH COURT, (C) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN 
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (D) IRREVOCABLY 
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN 
ANY SUCH LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, 
RETURN RECEIPT REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS SET FORTH HEREIN, 
(E) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY PARTY HERETO 
ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE OBLIGATION 
SHALL BE BROUGHT IN ONE OF THE AFOREMENTIONED COURTS, AND (F) IRREVOCABLY 
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RESPECTIVE RIGHTS TO A 
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY 
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.  The scope of each of 
the foregoing waivers is intended to be all-encompassing of any and all 
disputes that may be filed in any court and that relate to the subject matter 
of this transaction, including, without limitation, contract claims, tort 
claims, breach of duty claims, and all other common law and statutory claims. 
The Companies and each other party to this Agreement acknowledge that this 
waiver is a material inducement to the agreement of each party hereto to 
enter into a business relationship, that each has already relied on this 
waiver in entering into this Agreement, and each will continue to rely on 
each of such waivers in related future dealings.  The Companies and each 
other party to this Agreement warrant and represent that they have reviewed 
these waivers with their legal counsel, and that they knowingly and 
voluntarily agree to each such waiver following consultation with legal 
counsel.  THE WAIVERS IN THIS SECTION 14.10 ARE IRREVOCABLE, MEANING THAT 
THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THESE WAIVERS SHALL 
APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS, AND REPLACEMENTS TO OR OF 
THIS OR ANY OTHER LOAN DOCUMENT.  In the event of Litigation, this Agreement 
may be filed as a written consent to a trial by the court.

      14.11 AMENDMENTS, CONSENTS, CONFLICTS, AND WAIVERS.

      (a)   Except as otherwise specifically provided, (i) this Agreement may 
only be amended, modified or waived by an instrument in writing executed 
jointly by Borrower and Required Lenders, and, in the case of any matter 
affecting Administrative Agent (except removal of Administrative Agent as 
provided in SECTION 13) by Administrative Agent, and may only be supplemented 
by documents delivered or to be delivered in accordance with the express 
terms hereof, and (ii) the other Loan Documents may only be the subject of an 
amendment, modification, or waiver if Borrower and Required Lenders, and, in 
the case of any matter affecting Administrative Agent (except as set forth 
above), Administrative Agent, have approved same.

      (b)   Any amendment to or consent or waiver under this Agreement or any
Loan Document which purports to accomplish any of the following must be by an
instrument in writing executed by Borrower and executed (or approved, as the
case may be) by each Lender affected thereby, and, in the case of any matter
affecting Administrative Agent, by Administrative Agent: (i) extends the due
date or reduces the amount of any scheduled payment of the Obligation or any
scheduled reduction of the Total Commitment beyond the date specified in the
Loan Documents; (ii) reduces the interest rate or decreases the amount of
interest, fees, or other sums payable to the Credit Parties hereunder (except
such reductions as are contemplated by this 

                                       59
<PAGE>

Agreement and reductions in the interest rate as a result of the waiver of 
the payment of interest at the Default Rate); (iii) changes the definition of 
"APPLICABLE MARGIN" (other than changes having the effect of increasing such 
Applicable Margin) or "TOTAL COMMITMENT;" or (iv) changes this CLAUSE (b).  
Without the consent of such Lender, no Lender's "COMMITTED SUM" may be 
increased.

      (c)   Any amendment to or consent or waiver under this Agreement or any 
Loan Document which purports to accomplish any of the following must be by an 
instrument in writing executed by Borrower and executed (or approved, as the 
case may be) by each Lender, and, in the case of any matter affecting 
Administrative Agent, by Administrative Agent: (i) changes the definition of 
"PRO RATA," "PRO RATA PART," "REQUIRED LENDERS," or "TERMINATION DATE;" (ii) 
except as otherwise permitted by any Loan Document, waives compliance with, 
amends, or releases (in whole or in part) any Guaranty or releases (in whole 
or in part) or waives the requirement to provide any Guaranty or any 
collateral, if any, for the Obligation except to the extent expressly 
permitted herein or in any other Loan Document; (iii) changes this CLAUSE (c) 
or any other matter specifically requiring the consent of all Lenders 
hereunder; or (iv) subordinates any of the Obligation to any other Debt of 
the Companies. Without the consent of such Lender, no Lender's "COMMITTED 
SUM" may be increased.

      (d)   Any conflict or ambiguity between the terms and provisions herein 
and terms and provisions in any other Loan Document shall be controlled by 
the terms and provisions herein.

      (e)   No course of dealing nor any failure or delay by any Credit Party 
or any of its Representatives with respect to exercising any Right of any 
Credit Party hereunder shall operate as a waiver thereof.  A waiver must be 
in writing and signed by Administrative Agent and Required Lenders (or by all 
Lenders, if required hereunder) to be effective, and such waiver will be 
effective only in the specific instance and for the specific purpose for 
which it is given.

      (f)   Notwithstanding the foregoing, any increase in the interest rate 
or amount of interest, fees, or other sums payable to the Credit Parties may 
be agreed to by Administrative Agent and Borrower without the prior written 
consent of any Lender.

      14.12 MULTIPLE COUNTERPARTS.  This Agreement may be executed in a 
number of identical counterparts, each of which shall be deemed an original 
for all purposes and all of which constitute, collectively, one agreement; 
but, in making proof of this Agreement, it shall not be necessary to produce 
or account for more than one such counterpart.  It is not necessary that each 
Lender execute the same counterpart so long as identical counterparts are 
executed by Borrower, each Lender, and Administrative Agent.  This Agreement 
shall become effective when counterparts hereof shall have been executed and 
delivered to Administrative Agent by each Lender, Administrative Agent, and 
Borrower, or, when Administrative Agent shall have received telecopied, 
telexed, or other evidence satisfactory to it that such party has executed 
and is delivering to Administrative Agent a counterpart hereof.

      14.13 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS.

      (a)   This Agreement shall be binding upon, and inure to the benefit of
the parties hereto and their respective successors and assigns, except that
(i) Borrower may not, directly or indirectly, assign or transfer, or attempt to
assign or transfer, any of its Rights, duties or obligations under any Loan
Documents without the express written consent of all Lenders, and (ii) except as
permitted under this SECTION 14.13, no Lender 

                                       60
<PAGE>

may transfer, pledge, assign, sell any participation in, or otherwise 
encumber its portion of the Obligation.

      (b)   Each Lender may assign to one or more Eligible Assignees all or a 
portion of its Rights and obligations under this Agreement and the other Loan 
Documents (including, without limitation, all or a portion of its Borrowings 
and its Notes, if any); PROVIDED, HOWEVER, that:

            (i)    each such assignment shall be to an Eligible Assignee;

            (ii)   except in the case of an assignment to another Lender or an
      assignment of all of a Lender's Rights and obligations under this
      Agreement and the other Loan Documents, any such partial assignment shall
      be in an amount at least equal to $5,000,000, but, in no event less than
      $1,000,000;

            (iii)  each such assignment by a Lender shall be of a constant, and
      not varying, percentage of all of its Rights and obligations under this
      Agreement;

            (iv)   the parties to such assignment shall execute and deliver to
      Administrative Agent for its acceptance (such acceptance not to be
      unreasonably withheld) an Assignment and Acceptance Agreement in the form
      of EXHIBIT F hereto, together with any Notes subject to such assignment
      and a processing fee of $3,500.

Upon execution, delivery, and acceptance of such Assignment and Acceptance 
Agreement, the assignee thereunder shall be a party hereto and, to the extent 
of such assignment, have the obligations, Rights, and benefits of a Lender 
under the Loan Documents and the assigning Lender shall, to the extent of 
such assignment, relinquish its rights and be released from its obligations 
under the Loan Documents.  Upon the consummation of any assignment pursuant 
to this SECTION, but only upon the request of the assignor or assignee made 
through Administrative Agent, Borrower shall issue appropriate Notes upon 
request to the assignor and the assignee, reflecting such Assignment and 
Acceptance.  If the assignee is not incorporated under the laws of the United 
States of America or a state thereof, then it shall deliver to Borrower and 
Administrative Agent certification as to exemption from deduction or 
withholding of Taxes in accordance with SECTION 4.6(d).

      (c)   Administrative Agent shall maintain at its address referred to in 
SECTION 14.3 a copy of each Assignment and Acceptance Agreement delivered to 
and accepted by it and a register for the recordation of the names and 
addresses of Lenders and the Commitment, and principal amount of the 
Borrowings owing to, each Lender from time to time (the "REGISTER").  The 
entries in the Register shall be conclusive and binding for all purposes, 
absent manifest error, and Borrower, Administrative Agent and Lenders may 
treat each Person whose name is recorded in the Register as a Lender 
hereunder for all purposes of the Loan Documents.  The Register shall be 
available for inspection by Borrower or any Lender at any reasonable time and 
from time to time upon reasonable prior notice.  Upon the consummation of any 
assignment in accordance with this SECTION 14.13, SCHEDULE 2.1 shall 
automatically be deemed amended (to the extent required) by Administrative 
Agent to reflect the name, address, and respective Committed Sums of the 
assignor and assignee.

      (d)   Upon its receipt of an Assignment and Acceptance Agreement executed
by the parties thereto, together with any Notes, if any, subject to such
assignment and payment of the processing fee, 

                                       61
<PAGE>

Administrative Agent shall, if such Assignment and Acceptance has been 
completed and is in substantially the form of EXHIBIT F hereto, (i) accept 
such Assignment and Acceptance Agreement, (ii) record the information 
contained therein in the Register, and (iii) give prompt notice thereof to 
the parties thereto.

      (e)   Subject to the provisions of this SECTION and in accordance with 
applicable Law, any Lender may, in the ordinary course of its commercial 
banking business and in accordance with applicable Law, at any time sell to 
one or more Persons (each a "PARTICIPANT") participating interests in its 
portion of the Obligation.  In the event of any such sale to a Participant, 
(i) such Lender shall remain a "LENDER" under this Agreement and the 
Participant shall not constitute a "LENDER" hereunder, (ii) such Lender's 
obligations under this Agreement shall remain unchanged, (iii) such Lender 
shall remain solely responsible for the performance thereof, (iv) such Lender 
shall remain the holder of its share of the Principal Debt for all purposes 
under this Agreement, (v) Borrower and Administrative Agent shall continue to 
deal solely and directly with such Lender in connection with such Lender's 
Rights and obligations under the Loan Documents, and (vi) such Lender shall 
be solely responsible for any withholding taxes or any filing or reporting 
requirements relating to such participation and shall hold Borrower and 
Administrative Agent and their respective successors, permitted assigns, 
officers, directors, employees, agents, and representatives harmless against 
the same.  Participants shall have no Rights under the Loan Documents, other 
than certain voting Rights as provided below.  Subject to the following, each 
Lender shall be entitled to obtain (on behalf of its Participants) the 
benefits of SECTION 4 with respect to all participations in its part of the 
Obligation outstanding from time to time so long as Borrower shall not be 
obligated to pay any amount in excess of the amount that would be due to such 
Lender under SECTION 4 calculated as though no participations have been made. 
No Lender shall sell any participating interest under which the Participant 
shall have any Rights to approve any amendment, modification, or waiver of 
any Loan Document, except to the extent such amendment, modification, or 
waiver extends the due date for payment of any amount in respect of principal 
(other than mandatory prepayments), interest, or fees due under the Loan 
Documents, reduces the interest rate or the amount of principal or fees 
applicable to the Obligation (except such reductions as are contemplated by 
this Agreement), or releases any material Guaranty or all or any substantial 
portion of any collateral, if any, for the Obligation under the Loan 
Documents (except such releases as are contemplated by this Agreement); 
PROVIDED THAT in those cases where a Participant is entitled to the benefits 
of SECTION 4 or a Lender grants Rights to its Participants to approve 
amendments to or waivers of the Loan Documents respecting the matters 
previously described in this sentence, such Lender must include a voting 
mechanism in the relevant participation agreement or agreements, as the case 
may be, whereby a majority of such Lender's portion of the Obligation 
(whether held by such Lender or Participant) shall control the vote for all 
of such Lender's portion of the Obligation.  Except in the case of the sale 
of a participating interest to another Lender, the relevant participation 
agreement shall not permit the Participant to transfer, pledge, assign, sell 
participations in, or otherwise encumber its portion of the Obligation, 
unless the consent of the transferring Lender (which consent will not be 
unreasonably withheld) has been obtained.

      (f)   Notwithstanding any other provision set forth in this Agreement, 
any Lender may at any time assign and pledge all or any portion of its 
Borrowings and any Notes to any Federal Reserve Bank as collateral security 
pursuant to REGULATION A and any Operating Circular issued by such Federal 
Reserve Bank.  No such assignment shall release the assigning Lender from its 
obligations hereunder.

      (g)   Any Lender may furnish any information concerning the Companies 
in the possession of such Lender from time to time to Eligible Assignees and 
Participants (including prospective Eligible Assignees and Participants).

                                       62
<PAGE>

      14.14 DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN 
CIRCUMSTANCES.  The obligations of each Company under the Loan Documents 
shall remain in full force and effect until termination of the Total 
Commitment and payment in full of the Principal Debt and of all interest, 
fees, and other amounts of the Obligation then due and owing, (and 
termination of all outstanding LCs with any Lender, if any, UNLESS such 
Lender shall otherwise consent) EXCEPT that the indemnification and payment 
obligations set forth in SECTIONS 4, 12, and 14, and any other provisions 
under the Loan Documents expressly intended to survive by the terms hereof or 
by the terms of the applicable Loan Documents, shall survive such 
termination.  If at any time any payment of the Obligation is rescinded or 
must be otherwise restored or returned upon the insolvency, bankruptcy, or 
reorganization of any Company or otherwise, then the obligations of each 
Company under the Loan Documents with respect to such payment shall be 
reinstated as though such payment had been due but not made at such time.

      14.15 DESIGNATED SENIOR INDEBTEDNESS.  Borrower hereby designates the 
Obligation (and all Borrowings comprising the Obligation) as "DESIGNATED 
SENIOR INDEBTEDNESS" for purposes of the Senior Subordinated Note Indenture.

                       [REMAINDER OF PAGE INTENTIONALLY BLANK.
                               SIGNATURE PAGES FOLLOW.]

                                       63

<PAGE>


                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN

EXECUTED as of the day and year first above written.

                                       PROTECTION ONE ALARM MONITORING INC., a
                                       Delaware corporation, as Borrower


                                       By: /s/ Montgomery W. Cornell
                                          ----------------------------------
                                          Name: Montgomery W. Cornell
                                          Title: Chief Financial Officer and
                                                 Secretary

<PAGE>


                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       NATIONSBANK, N.A.,
                                       as Adminstrative Agent and a Lender


                                       By: Curtis L. Anderson
                                          ----------------------------------
                                          Name: Curtis L. Anderson
                                          Title: Senior Vice President

<PAGE>

                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       FIRST UNION NATIONAL BANK,
                                       as Syndication Agent and a Lender


                                       By: /s/ Michael J. Kolosowsky
                                          ----------------------------------
                                          Name: Michael J. Kolosowsky
                                          Title: Vice President


<PAGE>

                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       TORONTO DOMINION (TEXAS), INC.,
                                       as Documentation Agent and a Lender


                                       By: /s/ Sonja R. Jordan
                                          ----------------------------------
                                          Name: Sonja R. Jordan
                                          Title: Vice President

<PAGE>

                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       CHASE MANHATTAN BANK,
                                       as a Lender


                                       By: /s/ Paul V. Farrell
                                          ----------------------------------
                                          Name: Paul V. Farrell
                                          Title: Vice President

<PAGE>

                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       THE FIRST NATIONAL BANK OF CHICAGO,
                                       as a Lender


                                       By: /s/ George A. Schanz
                                          ----------------------------------
                                          Name: George A. Schanz
                                          Title: First Vice President
<PAGE>

                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       GUARANTY FEDERAL BANK, F.S.B.,
                                       as a Lender


                                       By: /s/ Robert S. Hays
                                          ----------------------------------
                                          Name: Robert S. Hays
                                          Title: Vice President
<PAGE>

                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       MERITA BANK PLC,
                                       as a Lender


                                       By: /s/ Charles J. Lansdown
                                          ----------------------------------
                                          Name: Charles J. Lansdown
                                          Title: Vice President


                                       By: /s/ Frank Maffei
                                          ----------------------------------
                                          Name: Frank Maffei
                                          Title: Vice President


<PAGE>

                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       MORGAN STANLEY SENIOR FUNDING, INC.,
                                       as a Lender


                                       By: /s/ Michael Hart
                                          ----------------------------------
                                          Name: Michael Hart
                                          Title: Principal
<PAGE>

                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       UBS AG, STAMFORD BRANCH,
                                       as a Lender


                                       By: /s/ Paul R. Morrison
                                          ----------------------------------
                                          Name: Paul R. Morrison
                                          Title: Director


                                       By: /s/ Andrew N. Taylor
                                          ----------------------------------
                                          Name: Andrew N. Taylor
                                          Title: Associate Director

<PAGE>

                  SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT
                                     AMONG 
               PROTECTION ONE ALARM MONITORING, INC., AS BORROWER,
                   NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT,
                     THE SYNDICATION AGENT DEFINED THEREIN,
                    THE DOCUMENTATION AGENT DEFINED THEREIN,
                                      AND 
                           THE LENDERS NAMED HEREIN


                                       WESTDEUTSCHE LANDESBANK GIROZENTRALE,
                                       NEW YORK BRANCH,
                                       as a Lender


                                       By: /s/ Duncan M. Robertson
                                          ----------------------------------
                                          Name: Duncan M. Robertson
                                          Title: Vice President


                                       By: /s/ Lisa Walker
                                          ----------------------------------
                                          Name: Lisa Walker
                                          Title: Vice President