Document:

EXHIBIT 4(c)
May 22, 2000

                   Company Order and Officers' Certificate
                   Floating Rate Notes, Series A, due 2001

Bankers Trust Company, as Trustee
Four Albany Street
New York, New York 10006

Attn: Corporate Trust Division

Ladies and Gentlemen:

Pursuant to Article Two of the  Indenture,  dated as of September 1, 1997 (as it
may be amended or supplemented,  the "Indenture"),  from Ohio Power Company (the
"Company") to Bankers Trust Company,  as trustee (the "Trustee"),  and the Board
Resolutions  dated October 25, 1999, a copy of which  certified by the Secretary
or an  Assistant  Secretary  of the Company is being  delivered  herewith  under
Section 2.01 of the  Indenture,  and unless  otherwise  provided in a subsequent
Company Order pursuant to Section 2.04 of the Indenture,

            1. The  Company's  Floating  Rate  Notes,  Series  A, due 2001  (the
      "Notes") are hereby  established.  The Notes shall be in substantially the
      form attached hereto as Exhibit 1.

            2. The terms and  characteristics  of the Notes  shall be as follows
      (the  numbered   clauses  set  forth  below  correspond  to  the  numbered
      subsections  of  Section  2.01 of the  Indenture,  with terms used and not
      defined  herein  having the meanings  specified in the Indenture or in the
      Notes):

            (i)  the   aggregate   principal   amount  of  Notes  which  may  be
            authenticated  and delivered under the Indenture shall be limited to
            $75,000,000,  except  as  contemplated  in  Section  2.01(i)  of the
            Indenture;

            (ii)  the  date on  which  the  principal  of the  Notes  shall be
            payable shall be May 16, 2001 ("Stated Maturity");

            (iii) interest on the Notes shall be payable on February 16, May 16,
            August 16 and November  16of each year (each,  an "Interest  Payment
            Date"),  commencing  on August 16,  2000 and shall  accrue  from and
            including the date of  authentication of the Notes to, but excluding
            August 16, 2000,  and  thereafter,  from and including each Interest
            Payment Date to, but excluding, the next succeeding Interest Payment
            Date or Stated Maturity, as the case may be; the Regular Record Date
            for the  determination of holders to whom interest is payable on any
            such  Interest  Payment  Date shall be the  fifteenth  calendar  day
            preceding the relevant Interest Payment Date; provided that interest
            payable  on  Stated  Maturity  shall be paid to the  Person  to whom
            principal shall be paid;

            (iv) the Notes will bear  interest  at a per annum  rate  ("Interest
            Rate") determined by the Calculation  Agent,  subject to the maximum
            interest rate permitted by New York or other  applicable  state law,
            as  such  law  may be  modified  by  United  States  law of  general
            application.  The  Interest  Rate for each  Interest  Period will be
            equal  to the  LIBOR  on the  Interest  Determination  Date for such
            Interest  Period  plus  .50%;  provided,  however,  that in  certain
            circumstances  described below, the Interest Rate will be determined
            without reference to the LIBOR.

                If  the   following   circumstances   exist   on  any   Interest
            Determination  Date,  the  Calculation  Agent  shall  determine  the
            Interest Rate for the Notes as follows:

                (1) In the event no Reported  Rate appears on Telerate Page 3750
                as of  approximately  11:00  a.m.  London  time  on an  Interest
                Determination  Date,  the  Calculation  Agent shall  request the
                principal  London  offices  of each of four  major  banks in the
                London interbank market selected by the Calculation Agent (after
                consultation  with the  Company) to provide a  quotation  of the
                rate (the "Rate  Quotation")  at which three  month  deposits in
                amounts of not less than  $1,000,000  are offered by it to prime
                banks in the London interbank market, as of approximately  11:00
                a.m. on such Interest Determination Date, that is representative
                of  single  transactions  at  such  time  (the   "Representative
                Amounts").  If at least two Rate  Quotations  are provided,  the
                interest rate will be the arithmetic mean of the Rate Quotations
                obtained by the Calculation Agent, plus .50%.

                (2) In the event no Reported  Rate appears on Telerate Page 3750
                as of  approximately  11:00  a.m.  London  time  on an  Interest
                Determination Date and there are fewer than two Rate Quotations,
                the  interest  rate  will be the  arithmetic  mean of the  rates
                quoted at  approximately  11:00 a.m.  New York City time on such
                Interest  Determination  Date,  by three major banks in New York
                City selected by the Calculation Agent (after  consultation with
                the  Company),  for  loans in  Representative  Amounts  in U. S.
                dollars to leading  European banks,  having an index maturity of
                three  months  for a  period  commencing  on the  second  London
                Business Day immediately  following such Interest  Determination
                Date,  plus .50%;  provided,  however,  that if fewer than three
                banks selected by the Calculation  Agent are quoting such rates,
                the interest rate for the applicable Interest Period will be the
                same  as  the  interest  rate  in  effect  for  the  immediately
                preceding Interest Period.

            (v)   the Notes shall not be redeemable prior to maturity;

            (vi)(a) the Notes shall be issued in the form of a Global Note;  (b)
            the Depositary  for such Global Note shall be The  Depository  Trust
            Company;  and  (c) the  procedures  with  respect  to  transfer  and
            exchange  of Global  Notes shall be as set forth in the form of Note
            attached hereto;

            (vii) the  title of the  Notes  shall  be  "Floating  Rate  Notes,
            Series A, due 2001";

            (viii)  the  form  of  the  Notes  shall  be as set  forth  in
                    Paragraph 1, above;

            (ix)  see item (iv) above;

            (x)   the Notes shall not be subject to a Periodic Offering;

            (xi)  not applicable;

            (xii) not applicable;

            (xiii) not applicable;

            (xiv) the Notes shall be issuable in  denominations  of $1,000 and
                  any integral multiple thereof;

            (xv)  not applicable;

            (xvi) the Notes shall not be issued as Discount Securities;

            (xvii) not applicable;

            (xviii) see item (iv) above; and

            (xix) not applicable.

            3. You are hereby  requested to authenticate  $75,000,000  aggregate
      principal amount of Floating Rate Notes,  Series A, due 2001,  executed by
      the Company and delivered to you concurrently  with this Company Order and
      Officers' Certificate, in the manner provided by the Indenture.

            4. You are hereby  requested to hold the Notes as custodian  for DTC
      in accordance with the Letter of Representations  dated May 16, 2000, from
      the Company and the Trustee to DTC.

            5. Concurrently  with this Company Order and Officers'  Certificate,
      an Opinion of Counsel  under  Sections  2.04 and 13.06 of the Indenture is
      being delivered to you.

            6.    The  undersigned  A. A. Pena and Thomas G.  Berkemeyer,  the
      Treasurer  and  Assistant  Secretary,  respectively,  of the  Company do
      hereby certify that:

            (i) we have read the relevant  portions of the Indenture,  including
            without  limitation  the conditions  precedent  provided for therein
            relating  to the  action  proposed  to be  taken by the  Trustee  as
            requested in this Company Order and Officers'  Certificate,  and the
            definitions in the Indenture relating thereto;

            (ii)  we have read the Board  Resolutions  of the  Company and the
            Opinion of Counsel referred to above;

            (iii) we have  conferred  with other  officers of the Company,  have
            examined  such  records  of the  Company  and have made  such  other
            investigation   as  we  deemed   relevant   for   purposes  of  this
            certificate;

            (iv) in our opinion,  we have made such examination or investigation
            as is  necessary  to enable us to express an informed  opinion as to
            whether or not such conditions have been complied with; and

            (v) on the basis of the  foregoing,  we are of the opinion  that all
            conditions  precedent  provided for in the Indenture relating to the
            action proposed to be taken by the Trustee as requested  herein have
            been complied with.

Kindly  acknowledge  receipt of this Company  Order and  Officers'  Certificate,
including the documents  listed herein,  and confirm the  arrangements set forth
herein by signing and returning the copy of this document attached hereto.

Very truly yours,

OHIO POWER COMPANY

By:
   --------------------------
             Treasurer

And:
    -------------------------
        Assistant Secretary

Acknowledged by Trustee:

BANKERS TRUST COMPANY

By:
    -------------------------
      Vice President================================================================================

                                CREDIT AGREEMENT

                           DATED AS OF JULY 17, 2000

                                     AMONG

                          SOUTHWESTERN ENERGY COMPANY,

                                  THE LENDERS,

                                 BANK ONE, NA,
                            AS ADMINISTRATIVE AGENT,

                                      AND

                             BANK OF AMERICA, N.A.,
                              AS SYNDICATION AGENT

                       BANC ONE CAPITAL MARKETS, INC. AND
                        BANC OF AMERICA SECURITIES LLC,
                    AS JOINT LEAD ARRANGERS AND BOOK RUNNERS

================================================================================
<PAGE>
                              TABLE OF CONTENTS
<TABLE>
<CAPTION>
         <S>   <C>                                                            <C>
                                   ARTICLE I
                                   DEFINITIONS.................................1

                                   ARTICLE II
                                   THE CREDITS ...............................12

         2.1   Commitment ....................................................12
         2.2   Required Payments; Maturity ...................................13
         2.3   Ratable Loans .................................................13
         2.4   Types of Advances .............................................13
         2.5   Commitment Fee; Voluntary Reductions in Aggregate Commitment ..13
         2.6   Minimum Amount of Each Advance ................................13
         2.7   Mandatory Reductions in Aggregate Commitment ..................13
         2.8   Prepayments ...................................................14
         2.9   Method of Selecting Types and Interest Periods for
               New Advances ..................................................14
         2.10  Conversion and Continuation of Outstanding Advances ...........15
         2.11  Changes in Interest Rate, etc .................................16
         2.12  Rates Applicable After Default ................................16
         2.13  Method of Payment .............................................16
         2.14  Noteless Agreement; Evidence of Indebtedness ..................17
         2.15  Telephonic Notices ............................................17
         2.16  Interest Payment Dates; Interest and Fee Basis ................18
         2.17  Notification of Advances, Interest Rates, Prepayments and
               Commitment Reductions .........................................18
         2.18  Lending Installations .........................................18
         2.19  Non-Receipt of Funds by the Administrative Agent ..............18
         2.20  Replacement of Lender .........................................19

                                  ARTICLE III
                             YIELD PROTECTION; TAXES..........................19

         3.1   Yield Protection ..............................................19
         3.2   Changes in Capital Adequacy Regulations .......................20
         3.3   Availability of Types of Advances .............................21
         3.4   Funding Indemnification .......................................21
         3.5   Taxes .........................................................21
         3.6   Lender Statements; Survival of Indemnity ......................23

                                       i
<PAGE>
                                   ARTICLE IV
                              CONDITIONS PRECEDENT ...........................24

         4.1   Initial Advance ...............................................24
         4.2   Each Advance ..................................................25

                                   ARTICLE V
                         REPRESENTATIONS AND WARRANTIES ......................26

         5.1   Organization ..................................................26
         5.2   Authorization and Validity ....................................26
         5.3   Financial Statements ..........................................26
         5.4   Subsidiaries ..................................................26
         5.5   ERISA .........................................................26
         5.6   Defaults ......................................................27
         5.7   Accuracy of Information .......................................27
         5.8   Regulation U ..................................................27
         5.9   No Adverse Change .............................................27
         5.10  Taxes .........................................................27
         5.11  Liens .........................................................27
         5.12  Compliance with Orders ........................................28
         5.13  Litigation ....................................................28
         5.14  Burdensome Agreements .........................................28
         5.15  No Conflict ...................................................28
         5.16  Title to Properties ...........................................28
         5.17  Public Utility Holding Company Act ............................28
         5.18  Regulatory Approval ...........................................29
         5.19  Negative Pledge ...............................................29
         5.20  Investment Company Act ........................................29
         5.21  Compliance with Laws ..........................................29

                                   ARTICLE VI
                                    COVENANTS.................................29

         6.1   Information ...................................................29
         6.2   Affirmative Covenants .........................................32
               6.2.1. Reports and Inspection .................................32
               6.2.2 Conduct of Business .....................................32
               6.2.3 Insurance ...............................................33
               6.2.4 Taxes ...................................................33
               6.2.5 Compliance with Laws ....................................33
               6.2.6 Maintenance of Properties ...............................33
         6.3   Negative Covenants ............................................33
               6.3.1 Restricted Payments .....................................34

                                       ii
<PAGE>
               6.3.2 Merger and Sale of Assets ...............................34
               6.3.3 Liens ...................................................35
         6.4   Financial Covenants ...........................................38
               6.4.1 Debt to Capitalization Ratio ............................38
               6.4.2 Fixed Charge Coverage Ratio .............................38
               6.4.3 Net Worth ...............................................38
               6.3.4 Subsidiary Indebtedness .................................38

                                  ARTICLE VII
                                    DEFAULTS..................................38

         7.1   Events of Default .............................................38
               7.1.1 Representations and Warranties ..........................38
               7.1.2 Payment Default .........................................38
               7.1.3 Breach of Certain Covenants .............................38
               7.1.4 Other Breach of this Agreement ..........................39
               7.1.5 ERISA ...................................................39
               7.1.6 Cross-Default ...........................................39
               7.1.7 Voluntary Bankruptcy, etc ...............................39
               7.1.8 Involuntary Bankruptcy, etc .............................39
               7.1.9 Judgments ...............................................40
               7.1.10 Environmental Matters ..................................40

                                  ARTICLE VIII
                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES ..............40

         8.1   Acceleration ..................................................40
         8.2   Amendments ....................................................40
         8.3   Preservation of Rights ........................................41

                                   ARTICLE IX
                               GENERAL PROVISIONS.............................41

         9.1   Survival of Representations ...................................41
         9.2   Governmental Regulation .......................................41
         9.3   Headings ......................................................42
         9.4   Entire Agreement ..............................................42
         9.5   Several Obligations; Benefits of this Agreement ...............42
         9.6   Expenses; Indemnification .....................................42
         9.7   Numbers of Documents ..........................................43
         9.8   Accounting ....................................................43
         9.9   Severability of Provisions ....................................43
         9.10  Nonliability of Lenders .......................................43
         9.11  Confidentiality ...............................................43

                                      iii
<PAGE>
         9.12  Nonreliance ...................................................44
         9.13  Disclosure ....................................................44

                                   ARTICLE X
                                   THE AGENTS ................................44

         10.1  Appointment; Nature of Relationship ...........................44
         10.2  Powers ........................................................44
         10.3  General Immunity ..............................................44
         10.4  No Responsibility for Loans, Recitals, etc ....................45
         10.5  Action on Instructions of Lenders .............................45
         10.6  Employment of Agents and Counsel ..............................45
         10.7  Reliance on Documents; Counsel ................................45
         10.8  Agents' Reimbursement and Indemnification .....................46
         10.9  Notice of Default .............................................46
         10.10 Rights as a Lender ............................................46
         10.11 Lender Credit Decision ........................................47
         10.12 Successor Agent ...............................................47
         10.13 Delegation to Affiliates ......................................48

                                   ARTICLE XI
                            SETOFF; RATABLE PAYMENTS .........................48

         11.1  Setoff ........................................................48
         11.2  Ratable Payments ..............................................48

                                  ARTICLE XII
               BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS .............48

         12.1  Successors and Assigns ........................................48
         12.2  Participations ................................................49
               12.2.1. Permitted Participants; Effect ........................49
               12.2.2. Voting Rights .........................................49
         12.3  Assignments ...................................................50
               12.3.1. Permitted Assignments .................................50
               12.3.2. Effect; Effective Date ................................50
         12.4  Dissemination of Information ..................................51
         12.5  Tax Treatment .................................................51

                                  ARTICLE XIII
                                    NOTICES ..................................51

         13.1  Notices .......................................................51
         13.2  Change of Address .............................................51

                                       iv
<PAGE>
                                  ARTICLE XIV
                                  COUNTERPARTS ...............................51

                                   ARTICLE XV
                    CHOICE OF LAW; CONSENT TO JURISDICTION;
                  WAIVER OF JURY TRIAL; MAXIMUM INTEREST RATE ................52

         15.1  CHOICE OF LAW .................................................52
         15.2  CONSENT TO JURISDICTION .......................................52
         15.3  WAIVER OF JURY TRIAL ..........................................52
         15.4  Maximum Interest Rate .........................................53
         15.5  Termination of Existing Agreements ............................53
</TABLE>
                                       v
<PAGE>
<TABLE>
<CAPTION>
     SCHEDULES
     <S>               <C>
     Schedule 1A       Commitments
     Schedule 1B       Existing Indebtedness
     Schedule 2.7(a)   Excluded Asset Sales
     Schedule 2.7(b)   Assets to be Swapped
     Schedule 5.4      Subsidiaries
     Schedule 5.13     Litigation
     Schedule 5.19     Liens
     Schedule 6.2      Insurance

     EXHIBITS
     Exhibit A         Form of Borrowing Notice
     Exhibit B         Form of Opinion of Counsel to Borrower
     Exhibit C         Form of Assignment Agreement
     Exhibit D         Form of Money Transfer Instructions
     Exhibit E         Form of Note
     Exhibit F         Form of Compliance Certificate
</TABLE>
                                       vi
<PAGE>
                                CREDIT AGREEMENT

     This  Agreement,  dated as of July 17, 2000, is among  Southwestern  Energy
Company, the Lenders,  Bank of America N.A., as Syndication Agent, and Bank One,
NA, a national  banking  association  having its  principal  office in  Chicago,
Illinois, as Administrative Agent. The parties hereto agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

     As used in this Agreement:

     "Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially  all
of the assets of any firm, corporation or limited liability company, or division
thereof,  whether  through  purchase  of  assets,  merger or  otherwise  or (ii)
directly  or  indirectly  acquires  (in one  transaction  or as the most  recent
transaction  in a series of  transactions)  at least a  majority  (in  number of
votes) of the securities of a corporation  which have ordinary  voting power for
the  election  of  directors  (other than  securities  having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the  outstanding  ownership  interests  of a  partnership  or  limited
liability company.

     "Administrative  Agent"  means Bank One in its  capacity as  administrative
agent for the Lenders pursuant to Article X, and not in its individual  capacity
as a Lender,  and any  successor  Administrative  Agent  appointed  pursuant  to
Article X.

     "Advance" means a borrowing hereunder,  (i) made by the Lenders on the same
Borrowing  Date, or (ii)  converted or continued by the Lenders on the same date
of  conversion  or  continuation,  consisting,  in either case, of the aggregate
amount of the  several  Loans of the same Type  and,  in the case of  Eurodollar
Loans and Transaction Rate Loans, for the same Interest Period.

     "Affected Lender" is defined in Section 2.20.

     "Affiliate"  of any Person  means any other Person  directly or  indirectly
controlling,  controlled by or under common  control with such Person.  A Person
shall be deemed to control another Person if the controlling  Person owns 10% or
more of any class of voting  securities  (or other  ownership  interests) of the
controlled Person or possesses,  directly or indirectly,  the power to direct or
cause the  direction of the  management  or policies of the  controlled  Person,
whether through ownership of stock, by contract or otherwise.

     "Agent" means the Administrative Agent and/or the Syndication Agent.

<PAGE>

     "Aggregate  Commitment"  means the aggregate of the  Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.

     "Agreement" means this credit  agreement,  as it may be amended or modified
and in effect from time to time.

     "Agreement  Accounting  Principles"  means  generally  accepted  accounting
principles  as in  effect  from  time to  time;  provided  that if the  Borrower
notifies the Administrative Agent that the Borrower does not want to give effect
to  any  change  in  generally  accepted   accounting   principles  (or  if  the
Administrative Agent notifies the Borrower that the Required Lenders do not want
to give effect to any such change),  then Agreement Accounting  Principles shall
mean generally  accepted  accounting  principles as in effect immediately before
the  relevant  change  in  generally  accepted   accounting   principles  became
effective, until either such notice is withdrawn or this Agreement is amended in
a manner satisfactory to the Borrower and the Required Lenders.  "Alternate Base
Rate"  means,  for any day, a rate of interest  per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of the Federal Funds  Effective
Rate for such day plus 1/2% per annum.

     "Arranger" means each of Banc One Capital Markets, Inc. and Banc of America
Securities LLC.

     "Article"  means an article of this Agreement  unless  another  document is
specifically referenced.

     "Asset  Sale"  means  any  sale,  lease,  assignment  for  value  or  other
disposition  by the Borrower or any  Subsidiary,  excluding  (a) sales and other
dispositions  in the  ordinary  course  of  business  and (b) any  sale or other
disposition of any asset listed on Schedule 2.7(a).

     "Authorized  Officer" means any of the following  officers of the Borrower,
acting singly: the Chief Executive Officer,  the President,  the Chief Financial
Officer, the Treasurer or any Executive Vice President, Senior Vice President or
Vice President.

     "Bank One" means Bank One, NA, a national  banking  association  having its
principal  office in Chicago,  Illinois,  in its  individual  capacity,  and its
successors.

     "Borrower" means Southwestern Energy Company, an Arkansas corporation,  and
its successors and assigns.

     "Borrowing Date" means a date on which an Advance is made hereunder.

     "Borrowing Notice" is defined in Section 2.9.

                                      -2-

<PAGE>

     "Business  Day" means (i) with  respect to any  borrowing,  payment or rate
selection  of  Eurodollar  Advances,  a day (other than a Saturday or Sunday) on
which banks  generally are open in Chicago,  Dallas and New York for the conduct
of substantially  all of their  commercial  lending  activities,  interbank wire
transfers  can be made on the  Fedwire  system  and  dealings  in United  States
dollars  are  carried on in the London  interbank  market and (ii) for all other
purposes,  a day (other than a Saturday or Sunday) on which banks  generally are
open in  Chicago  and  Dallas  for the  conduct  of  substantially  all of their
commercial  lending  activities  and interbank wire transfers can be made on the
Fedwire system.

     "Capitalized Lease" of a Person means any lease of Property, except oil and
gas leases,  by such Person as lessee  which would be  capitalized  on a balance
sheet  of  such  Person  prepared  in  accordance   with  Agreement   Accounting
Principles.

     "Capitalized  Lease  Obligations"  of a  Person  means  the  amount  of the
obligations  of such Person under  Capitalized  Leases which would be shown as a
liability  on a  balance  sheet  of such  Person  prepared  in  accordance  with
Agreement  Accounting  Principles.

     "Case" means the case styled as Allen Hales,  Mary Nellie Hales,  Robert G.
Jeffers,  David P. Taylor,  and Taylor Family Limited  Partnership "A" v. Seeco,
Inc., Arkansas Western Gas Company,  and Southwestern  Energy Company,  Case No.
CIV-96-327  (III), in the Circuit Court of Sebastian County,  Arkansas,  and the
appeals therefrom.

     "Code" means the Internal  Revenue  Code of 1986,  as amended,  reformed or
otherwise modified from time to time.

     "Commitment"  means, for each Lender, the obligation of such Lender to make
Loans not  exceeding  the amount set forth on Schedule 1A or as set forth in any
assignment that has become effective  pursuant to Section 12.3.2, as such amount
may be modified from time to time pursuant to the terms hereof.

     "Contingent  Obligation"  of a Person means any  agreement,  undertaking or
arrangement by which such Person  assumes,  guarantees,  endorses,  contingently
agrees to purchase or provide funds for the payment of, or otherwise  becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other  Person,  or  otherwise  assures any  creditor of such other Person
against loss,  including,  without  limitation,  any comfort  letter,  operating
agreement,  take or pay  contract,  application  for a Letter  of  Credit or the
obligations of any such Person as general partner of a partnership  with respect
to the  liabilities  of the  partnership.

     "Conversion/Continuation Notice" is defined in Section 2.10.

     "Controlled  Group" means all members of a controlled group of corporations
or  other  business  entities  and all  trades  or  businesses  (whether  or not
incorporated) under common

                                      -3-
<PAGE>
control  which,  together  with the  Borrower  or any of its  Subsidiaries,  are
treated  as  a  single  employer  under  Section  414  of  the  Code.

     "Debt to Capitalization Ratio" means the ratio of (a) Total Debt to (b) the
sum of Total Debt plus Stockholders' Equity.

     "Default" means an event described in Article VII.

     "Environmental  Laws" means any and all federal,  state,  local and foreign
statutes, laws, judicial decisions,  regulations,  ordinances, rules, judgments,
orders, decrees, plans, injunctions,  permits, concessions,  grants, franchises,
licenses,  agreements and other  governmental  restrictions  relating to (i) the
protection  of the  environment,  (ii) the  effect of the  environment  on human
health,  (iii)  emissions,  discharges or releases of pollutants,  contaminants,
hazardous substances or wastes into surface water, ground water or land, or (iv)
the manufacture,  processing,  distribution,  use, treatment, storage, disposal,
transport  or handling of  pollutants,  contaminants,  hazardous  substances  or
wastes or the clean-up or other remediation thereof.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time, and any rule or regulation issued thereunder.

     "Eurodollar  Advance" means an Advance which,  except as otherwise provided
in Section 2.12, bears interest at the applicable  Eurodollar Rate.

     "Eurodollar Base Rate" means, with respect to a Eurodollar  Advance for the
relevant Interest Period, the applicable British Bankers'  Association  Interest
Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as
of 11:00 a.m.  (London  time) two  Business  Days prior to the first day of such
Interest Period,  and having a maturity equal to such Interest Period,  provided
that,  (i) if Reuters Screen FRBD is not available to the  Administrative  Agent
for any reason,  the applicable  Eurodollar Base Rate for the relevant  Interest
Period shall instead be the applicable  British  Bankers'  Association  Interest
Settlement Rate for deposits in U.S.  dollars as reported by any other generally
recognized  financial  information  service as of 11:00 a.m.  (London  time) two
Business  Days  prior to the first day of such  Interest  Period,  and  having a
maturity  equal to such Interest  Period,  and (ii) if no such British  Bankers'
Association  Interest Settlement Rate is available to the Administrative  Agent,
the  applicable  Eurodollar  Base Rate for the  relevant  Interest  Period shall
instead be the rate  determined  by the  Administrative  Agent to be the rate at
which Bank One or one of its  Affiliate  banks offers to place  deposits in U.S.
dollars with  first-class  banks in the London interbank market at approximately
11:00  a.m.  (London  time)  two  Business  Days  prior to the first day of such
Interest Period, in the approximate  amount of the relevant  Eurodollar Loan and
having a maturity equal to such Interest Period.

     "Eurodollar  Loan"  means a Loan  which,  except as  otherwise  provided in
Section 2.12, bears interest at the applicable Eurodollar Rate.

                                      -4-
<PAGE>
     "Eurodollar  Rate"  means,  with  respect to a  Eurodollar  Advance for the
relevant Interest Period, the sum of the Eurodollar Base Rate applicable to such
Interest Period plus 1.125%.

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

     "Exhibit"  refers to an exhibit to this Agreement,  unless another document
is specifically referenced.

     "Existing  Indebtedness"  means any  Indebtedness  described in Schedule 1B
hereto  having  those  terms  existing  on the  date of this  Agreement,  but no
extension, renewal or replacement thereof.

     "Federal  Funds  Effective  Rate" means,  for any day, an interest rate per
annum equal to the  weighted  average of the rates on  overnight  Federal  funds
transactions  with  members of the Federal  Reserve  System  arranged by Federal
funds  brokers on such day, as published  for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York,  or, if such rate is not so  published  for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three   Federal  funds   brokers  of   recognized   standing   selected  by  the
Administrative  Agent in its sole  discretion.

     "Final  Maturity  Date" means July 16, 2001 or such  earlier  date when the
amount of the Aggregate Commitment has been reduced to zero.

     "Fixed Charge Coverage Ratio" means, for any period of four fiscal quarters
of the Borrower ending on the last day of a fiscal quarter, the ratio of (a) the
sum  of  (i)  the  Borrower's  consolidated  earnings  before  interest,  taxes,
depreciation  and  amortization  of  non-cash  charges,   all  determined  on  a
consolidated  basis and in accordance with Agreement  Accounting  Principles for
such period,  but  excluding,  to the extent  otherwise  included  therein,  any
non-cash gain or loss on any hedging  agreement  resulting from the requirements
of SFAS 133, plus (ii) to the extent deducted in determining  such  consolidated
earnings,  (x) any charge  resulting  from the Case and (y) any non-cash  charge
after the date hereof  resulting  from any  write-down of the Borrower's oil and
gas  properties  to the full cost ceiling  limitation  required by the full cost
method of accounting for such  properties,  to (b) the sum of (i) the Borrower's
interest  expense for such period  plus (ii) the  current  portion of  principal
payments of long-term  Indebtedness as of the last day of such period (excluding
any  portion  of  the  Private  Placement  Debt  which  is  current  due  to the
acceleration  thereof  resulting  from a  breach  of  Section  6.A or 6.B of the
Private Placement  Agreement,  which  acceleration would not be permitted by any
other provision of the Private Placement Agreement).

                                      -5-
<PAGE>
     "Floating Rate" means, for any day, a rate per annum equal to the Alternate
Base Rate for such day,  changing when and as the  Alternate  Base Rate changes.

     "Floating  Rate  Advance"  means an  Advance  which,  except  as  otherwise
provided in Section 2.12, bears interest at the Floating Rate.

     "Floating  Rate Loan" means a Loan which,  except as otherwise  provided in
Section 2.12,  bears interest at the Floating Rate.

     "Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations  representing the deferred purchase price of Property or
services, (iii) obligations, whether or not assumed, secured by Liens or payable
out of the  proceeds or  production  from  Property  now or  hereafter  owned or
acquired  by such  Person,  (iv)  obligations  which  are  evidenced  by  notes,
acceptances,  or other  instruments,  (v) obligations of such Person to purchase
accounts,  securities or other Property arising out of or in connection with the
sale of the same or substantially similar accounts, securities or Property, (vi)
Capitalized Lease Obligations,  (vii) any other obligation for borrowed money or
other  financial  accommodation  which in accordance  with Agreement  Accounting
Principles  would be shown as a liability on the  consolidated  balance sheet of
such Person,  (viii) net liabilities  under interest rate swap,  exchange or cap
agreements,  obligations or other liabilities with respect to accounts or notes,
(ix) Sale and  Leaseback  Transactions  which do not create a  liability  on the
consolidated  balance sheet of such Person, (x) other transactions which are the
functional  equivalent,  or take  the  place,  of  borrowing  but  which  do not
constitute a liability on the  consolidated  balance sheet of such Person,  (xi)
Contingent  Obligations and (xii) Mandatorily  Redeemable Stock;  provided that,
notwithstanding  any of the foregoing,  accounts payable arising in the ordinary
course of  business  payable on terms  customary  in the trade,  and  Contingent
Obligations in respect thereof, shall not constitute Indebtedness; and provided,
further, that Indebtedness shall not include accounts payable which the Borrower
is  required  to reflect  on its  balance  sheet in  accordance  with  Agreement
Accounting  Principles  to the extent  that (i) such  accounts  payable  consist
solely of contingent obligations under oil and gas hedge transactions for future
periods and (ii) as of any date of  calculation  thereof,  the volume of oil and
gas subject to such hedge transactions is not greater than 90% of the Borrower's
anticipated production from proved, producing, oil and gas reserves owned by the
Borrower  and its  Subsidiaries  as of such date over the term  covered  by such
hedge transactions.

     "Intercompany Indebtedness" means any Indebtedness of the Borrower owing to
any  Subsidiary  or of any  Subsidiary  owing to the  Borrower  or to any  other
Subsidiary;  provided that in the case of any Indebtedness  owed by the Borrower
or any Subsidiary to a Subsidiary which is not a Wholly-Owned  Subsidiary,  such
Indebtedness  shall constitute  Intercompany  Indebtedness only to the extent of
the  Borrower's  ownership  percentage  (whether  direct  or  indirect)  of  the
Subsidiary holding such Indebtedness.

     "Interest Period" means, with respect to a Eurodollar  Advance, a period of
one,  two,  three or six months  commencing  on a Business  Day  selected by the
Borrower pursuant to this

                                      -6-
<PAGE>
Agreement.  Such  Interest  Period  shall  end  on  the  day  which  corresponds
numerically to such date one, two, three or six months thereafter, provided that
if there is no such numerically corresponding day in such next, second, third or
sixth succeeding  month, such Interest Period shall end on the last Business Day
of such next,  second,  third or sixth  succeeding  month. If an Interest Period
would  otherwise end on a day which is not a Business Day, such Interest  Period
shall  end on the next  succeeding  Business  Day,  provided  that if said  next
succeeding  Business Day falls in a new calendar  month,  such  Interest  Period
shall end on the immediately preceding Business Day.

     "Investment"  of a Person means any loan,  advance (other than  commission,
travel and similar  advances  to officers  and  employees  made in the  ordinary
course of business), extension of credit (other than accounts receivable arising
in the  ordinary  course  of  business  on  terms  customary  in the  trade)  or
contribution of capital by such Person; stocks, bonds, mutual funds, partnership
interests,  notes,  debentures  or other  securities  owned by such Person;  any
deposit accounts and certificate of deposit owned by such Person; and structured
notes,  derivative  financial  instruments  and  other  similar  instruments  or
contracts owned by such Person.

     "Knowledge"  means,  with respect to the Borrower,  the actual knowledge of
(i) any Authorized Officer, (ii) any vice president of the Borrower in charge of
a principal business unit,  division or function (such as sales,  administration
or finance),  (iii) any other officer who performs a policy  making  function or
(iv) any other person who  performs  similar  policy  making  functions  for the
Borrower.

     "Lenders" means the lending  institutions  listed on the signature pages of
this  Agreement  and  their   respective   successors   and  assigns.

     "Lending   Installation"   means,   with   respect   to  a  Lender  or  the
Administrative Agent, the office, branch, subsidiary or affiliate of such Lender
or the Administrative Agent listed on its administrative questionnaire or on the
signature   pages   hereof  or   otherwise   selected  by  such  Lender  or  the
Administrative Agent pursuant to Section 2.18.

     "Letter  of  Credit"  of a  Person  means a letter  of  credit  or  similar
instrument  which is issued  upon the  application  of such Person or upon which
such Person is an account party or for which such Person is in any way liable.

     "Lien"   means  any  lien   (statutory   or   other),   mortgage,   pledge,
hypothecation,  assignment,  deposit arrangement,  encumbrance or other security
arrangement (including,  without limitation,  the interest of a vendor or lessor
under  any  conditional  sale,   Capitalized  Lease  or  other  title  retention
agreement).

     "Loan"  means,  with  respect  to a Lender,  any loan  made by such  Lender
pursuant  to Article  II (or any  conversion  or  continuation  thereof).

     "Loan  Documents"  means this  Agreement  and any Notes issued  pursuant to
Section 2.15.

                                      -7-
<PAGE>
     "Mandatorily Redeemable Stock" means, with respect to any Person, any share
of such Person's capital stock or other equity interest to the extent that it is
(a)  redeemable,  payable or required to be purchased  or  otherwise  retired or
extinguished,  or convertible  into any  Indebtedness or other liability of such
Person,  (i) at a fixed or determinable  date, whether by operation of a sinking
fund or  otherwise,  (ii) at the option of any Person  other than such Person or
(iii) upon the  occurrence  of a condition not solely within the control of such
Person,  such as a redemption  required to be made out of future earnings or (b)
convertible into Mandatorily Redeemable Stock.

     "Material  Adverse  Effect"  means a  material  adverse  effect  on (i) the
business,  Property, condition (financial or otherwise) or results of operations
of the Borrower and its Subsidiaries  taken as a whole,  (ii) the ability of the
Borrower  to perform  its  obligations  under the Loan  Documents,  or (iii) the
validity  or  enforceability  of any of the  Loan  Documents  or the  rights  or
remedies of the Agent or the Lenders thereunder.

     "Material Group of Subsidiaries"  means two or more Subsidiaries  which, if
merged as of any relevant date of determination,  would constitute a Significant
Subsidiary.

     "Multiemployer  Plan"  means a Plan  maintained  pursuant  to a  collective
bargaining  agreement  or any other  arrangement  to which the  Borrower  or any
member of the  Controlled  Group is a party to which more than one  employer  is
obligated to make contributions.

     "Net Cash  Proceeds"  means,  with respect to any Asset Sale, the aggregate
cash proceeds  (including cash proceeds  received by way of deferred  payment of
principal pursuant to a note, installment  receivable or otherwise,  but only as
and when received)  received by the Borrower or any Subsidiary  pursuant to such
Asset Sale net of (i) the direct  costs  relating to such Asset Sale  (including
sales commissions and legal, accounting and investment banking fees), (ii) taxes
paid or reasonably  estimated by the Borrower to be payable as a result  thereof
(after taking into account any  available tax credits or deductions  and any tax
sharing arrangements),  (iii) amounts required to be applied to the repayment of
any Indebtedness secured by a Lien on any asset subject to such Asset Sale, (iv)
amounts required to be applied to prepay Private  Placement Debt (without giving
effect  to  any  amendment  after  the  date  hereof  to the  Private  Placement
Agreement)  and (v) the  proceeds  of any sale of any of the  assets  listed  on
Schedule  2.7(b) to the extent that such proceeds are applied within 150 days to
acquire oil or gas producing properties.

     "Non-U.S. Lender" is defined in Section 3.5(iv).

     "Note" means any promissory note issued at the request of a Lender pursuant
to  Section  2.14 in the form of  Exhibit  E.

     "Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans,  all  accrued and unpaid  fees and all  expenses,  reimbursements,
indemnities  and other  obligations  of the  Borrower  to the  Lenders or to any
Lender,  either Agent or any indemnified party arising under the Loan Documents.

                                      -8-
<PAGE>
     "Other Taxes" is defined in Section 3.5(ii).

     "Participants" is defined in Section 12.2.1.

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

     "PBGC" means the Pension  Benefit  Guaranty  Corporation,  or any successor
thereto.

     "Person"  means any  natural  person,  corporation,  firm,  joint  venture,
partnership, limited liability company, association,  enterprise, trust or other
entity or  organization,  or any  government  or  political  subdivision  or any
agency, department or instrumentality thereof.

     "Plan" means an employee  pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum  funding  standards  under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.

     "Prime  Rate"  means a rate per annum  equal to the prime rate of  interest
announced  by Bank  One or by its  parent,  BANK ONE  CORPORATION,  which is not
necessarily  the lowest rate charged to any customer,  changing when and as said
prime rate changes.

     "Principal  Transmission Facility" means any transportation or distribution
facility,  including pipelines, of the Borrower or any Subsidiary located in the
United States of America  other than (a) any such facility  which in the opinion
of the Board of Directors of the Borrower is not of material  importance  to the
business conducted by the Borrower and its Subsidiaries taken as a whole, or (b)
any such facility in which  interests are held by the Borrower or by one or more
Subsidiaries or by the Borrower and one or more  Subsidiaries  and by others and
the aggregate interest held by the Borrower and all Subsidiaries does not exceed
50%.

     "Private Placement Agreement" means the Note Agreement dated as of December
4, 1991 among the Borrower and various investors  pursuant to which the Borrower
issued the Private Placement Debt.

     "Private  Placement  Debt" means the 9.36% Senior Notes due 2011,  Series C
issued by the Borrower.

     "Productive  Property" means any property interest owned by the Borrower or
a Subsidiary in land (including submerged land and rights in and to oil, gas and
mineral  leases)  located in the United States of America and  classified by the
Borrower or such  Subsidiary,  as the case may be, as  productive  of crude oil,
natural gas or other petroleum hydrocarbons in paying quantities;  provided that
such term shall not include any  exploration  or  production  facilities on said
land, including any drilling or producing platform.

     "Property" of a Person means any and all property,  whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.

                                      -9-
<PAGE>
     "Purchasers" is defined in Section 12.3.1.

     "Regulation D" means  Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation  or official  interpretation  of said Board of Governors  relating to
reserve requirements applicable to member banks of the Federal Reserve System.

     "Regulation U" means  Regulation U of the Board of Governors of the Federal
Reserve  System  as from  time to time in  effect  and any  successor  or  other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of  purchasing  or carrying  margin
stocks applicable to member banks of the Federal Reserve System.

     "Reportable  Event" means a reportable  event as defined in Section 4043 of
ERISA and the  regulations  issued under such  section,  with respect to a Plan,
excluding,  however,  such events as to which the PBGC has by regulation  waived
the  requirement of Section  4043(a) of ERISA that it be notified within 30 days
of the  occurrence  of such event,  provided  that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable  Event  regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.

     "Required  Lenders" means Lenders in the aggregate  having at least 66-2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the  aggregate  holding  at least  66-2/3%  of the  aggregate  unpaid
principal amount of the outstanding Advances.

     "Reserve  Requirement" means, with respect to an Interest Period, the daily
average during such Interest Period of the maximum aggregate reserve requirement
(including  all  basic,  supplemental,  marginal  and other  reserves)  which is
imposed under Regulation D on Eurocurrency liabilities.

     "Sale  and  Leaseback  Transaction"  means  any sale or other  transfer  of
Property  by any  Person  with the  intent to lease  such  Property  as  lessee.

     "Schedule" refers to a specific schedule to this Agreement,  unless another
document is specifically referenced.

     "SEC" means the Securities and Exchange Commission.

     "Section"  means a  numbered  section  of this  Agreement,  unless  another
document is specifically  referenced.

     "Significant  Subsidiary"  means,  as of any  date of  determination,  each
Subsidiary of the Borrower that meets any of the following criteria:

                                      -10-
<PAGE>
         (i) the  Borrower's and its other  Subsidiaries'  Investments in and to
     such  Subsidiary  (and  its  respective  Subsidiaries),  as  shown  in  the
     consolidated  financial  statements  of the Borrower  and its  Subsidiaries
     prepared as of the end of the fiscal  quarter ended most recently  prior to
     such date of determination,  exceed 10% of the total consolidated assets of
     the Borrower and its Subsidiaries; or

         (ii) the assets of such  Subsidiary  (and its respective  Subsidiaries)
     represent more than 10% of the consolidated  assets of the Borrower and its
     Subsidiaries  as would be shown in the  consolidated  financial  statements
     referred to in clause (i) above; or

         (iii) such Subsidiary (and its respective  Subsidiaries) is responsible
     for more than 10% of the  consolidated net sales or of the consolidated net
     income of the Borrower and its  Subsidiaries  as reflected in the financial
     statements referred to in clause (i) above;

provided  that each such  determination  of such  sales or assets  shall be made
after  deducting  all  intercompany   transactions  which,  in  accordance  with
Agreement Accounting  Principles,  would be eliminated in preparing consolidated
financial statements for the Borrower and its Subsidiaries.

     "Single  Employer  Plan"  means a Plan  maintained  by the  Borrower or any
member of the  Controlled  Group for  employees of the Borrower or any member of
the Controlled Group.

     "Stockholders'   Equity"  means  the   Borrower's   stockholders'   equity,
determined in  accordance  with  Agreement  Accounting  Principles,  but without
giving effect to (1) any non-cash  charge after the date hereof  resulting  from
any write-down of the Borrower's oil and gas properties to the full cost ceiling
limitations  required by the full cost method of accounting for such  properties
and (ii) any non-cash gain or loss on any hedging  agreement  resulting from the
requirements of SFAS 133.

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

     "Syndication  Agent"  means  Bank  of  America,  N.A.  in its  capacity  as
syndication  agent  for  the  Lenders  pursuant  to  Article  X,  and not in its
individual  capacity  as  Lender.

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

                                      -11-
<PAGE>
     "Total Debt" means all  Indebtedness of the Borrower and its  Subsidiaries,
determined on a  consolidated  basis in  accordance  with  Agreement  Accounting
Principles.

     "Transaction Rate" means, for any day, a rate per annum equal to the higher
of the rate  quoted  by the  Administrative  Agent  and the rate  quoted  by the
Syndication  Agent,  in each case for a loan to the  Borrower,  for the relevant
Transaction  Rate Interest  Period,  pursuant to procedures  agreed to among the
Borrower and the Agents.

     "Transaction  Rate  Advance"  means an Advance  which,  except as otherwise
provided in Section 2.12,  bears  interest at the applicable  Transaction  Rate.

     "Transaction  Rate  Interest  Period" means a period of not less than 1 nor
more than 180 days, commencing on a Business Day, agreed to by the Borrower, the
Administrative  Agent and the Syndication  Agent at the time of establishing the
Transaction Rate for such period.  If any Transaction Rate Interest Period would
end on a day which is not a Business Day, such  Transaction Rate Interest Period
shall end on the next succeeding Business Day.

     "Transaction Rate Loan" means a Loan which, except as otherwise provided in
Section 2.12, bears interest at a Transaction Rate.

     "Transferee" is defined in Section 12.4.

     "Type"  means,  with respect to any Advance,  its nature as a Floating Rate
Advance, a Eurodollar Advance or a Transaction Rate Advance.

     "Unmatured  Default"  means an event which but for the lapse of time or the
giving of notice, or both, would, unless cured or waived, constitute a Default.

     "Wholly-Owned  Subsidiary"  of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly,  by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more  Wholly-Owned  Subsidiaries of
such Person, or (ii) any partnership,  limited liability  company,  association,
joint venture or similar business  organization 100% of the ownership  interests
having  ordinary  voting  power  of  which  shall  at the  time be so  owned  or
controlled.

     The foregoing  definitions shall be equally applicable to both the singular
and plural forms of the defined terms.

                                   ARTICLE II

                                  THE CREDITS

     2.1  Commitment.  From and including the date of this  Agreement and to the
Final Maturity Date, each Lender severally  agrees,  on the terms and conditions
set forth in this

                                      -12-
<PAGE>
Agreement  (including  Section  4.2(iv) and (v)),  to make Loans to the Borrower
from time to time in  amounts  not to exceed  in the  aggregate  at any one time
outstanding  the  amount  of its  Commitment.  Subject  to  the  terms  of  this
Agreement,  the Borrower may borrow, repay and reborrow at any time prior to the
Final Maturity Date.

     2.2 Required  Payments;  Maturity.  Any outstanding  Advances and all other
unpaid  Obligations  shall be paid in full by the Borrower on the Final Maturity
Date or such other date required by Section 2.8 below.

     2.3 Ratable Loans.  Each Advance hereunder shall consist of Loans made from
the several  Lenders  ratably in proportion  to the ratio that their  respective
Commitments bear to the Aggregate Commitment.

     2.4  Types  of  Advances.  The  Advances  may be  Floating  Rate  Advances,
Eurodollar  Advances or  Transaction  Rate Advances,  or a combination  thereof,
selected by the Borrower in accordance with Sections 2.9 and 2.10; provided that
not more than  $20,000,000 of Transaction  Rate Advances shall be outstanding at
any time.

     2.5  Commitment  Fee;  Voluntary  Reductions in Aggregate  Commitment.  The
Borrower  agrees  to pay to the  Administrative  Agent for the  account  of each
Lender a commitment  fee at a per annum rate equal to 0.375% on the daily unused
portion of such  Lender's  Commitment  from the date hereof to and including the
Final  Maturity  Date,  payable on each Payment Date  hereafter and on the Final
Maturity Date. The Borrower may permanently  reduce the Aggregate  Commitment in
whole,  or  in  part  ratably  among  the  Lenders,  in  integral  multiples  of
$1,000,000,   upon  at  least  three   Business  Days'  written  notice  to  the
Administrative  Agent,  which  notice  shall  specify  the  amount  of any  such
reduction,  provided  that the  amount of the  Aggregate  Commitment  may not be
reduced below the aggregate  principal amount of the outstanding  Advances.  All
accrued  commitment  fees  shall  be  payable  on  the  effective  date  of  any
termination of the obligations of the Lenders to make Loans hereunder.

     2.6 Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the
minimum  amount of $750,000 (and in multiples of $50,000 if in excess  thereof),
and each  Floating  Rate Advance and  Transaction  Rate Advance  shall be in the
minimum  amount of $500,000 (and in multiples of $50,000 if in excess  thereof),
provided  that any Floating Rate Advance or  Transaction  Rate Advance may be in
the amount of the unused Aggregate Commitment.

     2.7 Mandatory Reductions in Aggregate Commitment.  (a) Within five Business
Days  after  the  receipt  by the  Borrower  or any  Subsidiary  of the Net Cash
Proceeds  of any Asset Sale,  the  Aggregate  Commitment  shall be reduced by an
amount  equal to such Net Cash  Proceeds;  provided  that (x) no such  reduction
shall  be  required  unless  the  aggregate  amount  of all  Net  Cash  Proceeds
(excluding  any Net Cash  Proceeds  previously  applied to reduce the  Aggregate
Commitment  pursuant to this Section)  received since the date of this Agreement
equals or  exceeds  $1,000,000;  and (y) the amount of Net Cash  Proceeds  to be
applied on any single

                                      -13-
<PAGE>
occasion  shall be rounded  down to an integral  multiple of $100,000  (it being
understood  that the amount of Net Cash  Proceeds in excess of any such integral
multiple  shall be  applied  on the next  date on which  Net Cash  Proceeds  are
applied).

     (b) In addition to any  reduction of the Aggregate  Commitment  pursuant to
clause (a) above,  if the  Private  Placement  has not been  repaid on or before
September 12, 2000, the Aggregate Commitment shall be reduced on such date by an
amount equal to the excess,  if any, of $25,000,000 over the aggregate amount of
all  previous  voluntary  reductions  of the  Aggregate  Commitment  pursuant to
Section 2.5.

     (c) In addition to any  reduction of the Aggregate  Commitment  pursuant to
clause (a) or (b) above,  the Aggregate  Commitment  shall be reduced to zero on
the date of the  occurrence  of a sale by the  Borrower of the capital  stock of
Arkansas  Western Gas Company,  or any sale of all or  substantially  all of the
assets, of Arkansas Western Gas Company.

     2.8  Prepayments.  (a) The Borrower  may from time to time prepay,  without
penalty or premium,  all outstanding  Floating Rate Advances or Transaction Rate
Advances,  or,  in a minimum  aggregate  amount of  $1,000,000  or any  integral
multiple of $500,000 in excess thereof,  any portion of the outstanding Floating
Rate Advances or  Transaction  Rate  Advances upon notice to the  Administrative
Agent not later than 10:00 a.m.  (Chicago time) on the date of  prepayment.  The
Borrower  may  from  time  to time  prepay,  without  penalty  or  premium,  all
outstanding Eurodollar Advances, or, in a minimum aggregate amount of $1,000,000
or any integral  multiple of  $1,000,000 in excess  thereof,  any portion of the
outstanding  Eurodollar  Advances upon three  Business Days' prior notice to the
Administrative Agent.

     (b) On any date on which the Aggregate  Commitment  is reduced  pursuant to
Section 2.7, the Borrower shall make a prepayment of Advances in the amount,  if
any, by which the aggregate principal amount of all outstanding Advances exceeds
the Aggregate  Commitment.  Any partial  prepayment  pursuant to this clause (b)
shall be applied to such  Advances as the Borrower may direct or, in the absence
of such direction,  as the Administrative  Agent may reasonably  determine as so
reduced.

     (c) Any prepayment of a Eurodollar Loan or a Transaction Rate Loan on a day
other  than the last day of an  Interest  Period  therefor  shall be  subject to
Section 3.4.

     2.9 Method of Selecting  Types and Interest  Periods for New Advances.  The
Borrower  shall select the Type of Advance  and, in the case of each  Eurodollar
Advance and Transaction  Rate Advance,  the Interest Period  applicable  thereto
from time to time. The Borrower shall give the Administrative  Agent irrevocable
notice (a "Borrowing  Notice") not later than 10:00 a.m.  (Chicago  time) on the
Borrowing  Date of each  Floating Rate Advance or  Transaction  Rate Advance and
three  Business  Days  before the  Borrowing  Date of each  Eurodollar  Advance,
specifying:

     (i) the Borrowing Date, which shall be a Business Day, of such Advance,

                                      -14-
<PAGE>
     (ii) the aggregate amount of such Advance,

     (iii) the Type of Advance selected, and

     (iv) in the case of each Eurodollar  Advance and Transaction  Rate Advance,
          the Interest Period applicable thereto.

Each Borrowing Notice for a Floating Rate Advance or a Eurodollar  Advance shall
be in writing (or by telephone promptly  confirmed in writing)  substantially in
the form of Exhibit A.

Not later than noon (Chicago  time) on each  Borrowing  Date,  each Lender shall
make  available its Loan or Loans in funds  immediately  available in Chicago to
the Administrative  Agent at its address specified pursuant to Article XIII. The
Administrative  Agent will make the funds so received from the Lenders available
to the Borrower at the Administrative Agent's aforesaid address.

     2.10  Conversion and  Continuation of Outstanding  Advances.  Floating Rate
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into  Eurodollar  Advances  pursuant to this Section
2.10 or are repaid in accordance with Section 2.8. Each  Eurodollar  Advance and
Transaction  Rate Advance shall continue as a Eurodollar  Advance or Transaction
Rate Advance,  as the case may be, until the end of the then applicable Interest
Period  therefor,  at which time such  Eurodollar  Advance or  Transaction  Rate
Advance shall be automatically converted into a Floating Rate Advance unless (x)
such Advance is or was repaid in accordance with Section 2.8 or (y) the Borrower
shall have given the Administrative Agent a  Conversion/Continuation  Notice (as
defined below) requesting that, at the end of such Interest Period, such Advance
continue as a Eurodollar  Advance or a Transaction Rate Advance,  as applicable,
for the same or another  Interest  Period.  Subject to the terms of Section 2.6,
the  Borrower  may  elect  from time to time to  convert  all or any part of any
Advance  into  an  Advance  of  another  Type.   The  Borrower  shall  give  the
Administrative Agent irrevocable notice (a "Conversion/Continuation  Notice") of
each  continuation  or  conversion  of  an  Advance  (other  than  an  automatic
continuation  or conversion as provided in this Section 2.10) not later than the
time  specified  in  Section  2.9 for the  making of the Type of  Advance  to be
continued or converted into, specifying:

     (i)   the requested date, which shall be a Business Day, of such conversion
           or continuation,

     (ii)  the aggregate amount and Type of the Advance which is to be converted
           or continued,

     (iii) in the case of  conversion  of an Advance,  the Type of Advance to be
           converted into,

     (iv)  the amount of such Advance which is to be converted or continued, and

                                      -15-
<PAGE>
     (v)   in the  case of  conversion  into or  continuation  of  a  Eurodollar
           Advance  or  a  Transaction   Rate   Advance,  the  duration  of  the
           Interest  Period applicable thereto.

Each  Conversion/Continuation  Notice given by the Borrower  shall  constitute a
representation and warranty by the Borrower that no Default or Unmatured Default
exists.

     2.11 Changes in Interest  Rate,  etc. Each Floating Rate Advance shall bear
interest on the  outstanding  principal  amount  thereof,  for each day from and
including  the date such  Advance is made or is  converted  from another Type of
Advance into a Floating Rate Advance  pursuant to Section 2.10, to but excluding
the date it is paid or is converted  into  another  Type of Advance  pursuant to
Section  2.10,  at a rate per  annum  equal to the  Floating  Rate for such day.
Changes in the rate of interest on that portion of any Advance  maintained  as a
Floating  Rate Advance will take effect  simultaneously  with each change in the
Alternate Base Rate. Each Eurodollar  Advance and Transaction Rate Advance shall
bear interest on the outstanding principal amount thereof from and including the
first day of the Interest Period  applicable  thereto to (but not including) the
last  day of  such  Interest  Period  at the  interest  rate  determined  by the
Administrative  Agent as applicable to such  Eurodollar  Advance and Transaction
Rate Advance based upon the  Borrower's  selections  under Sections 2.9 and 2.10
and otherwise in accordance  with the terms hereof.  No Interest  Period may end
after the Final Maturity Date.

     2.12  Rates  Applicable  After  Default.  Notwithstanding  anything  to the
contrary  contained in Section 2.9 or 2.10,  during the continuance of a Default
or Unmatured Default the Required Lenders may, at their option, by notice to the
Borrower  (which  notice may be revoked  at the option of the  Required  Lenders
notwithstanding  any provision of Section 8.2 requiring unanimous consent of the
Lenders to changes in interest  rates),  declare that no Advance may be made as,
converted  into or  continued  as a  Eurodollar  Advance or a  Transaction  Rate
Advance.  During the continuance of a Default the Required Lenders may, at their
option,  by notice to the Borrower (which notice may be revoked at the option of
the Required  Lenders  notwithstanding  any  provision of Section 8.2  requiring
unanimous consent of the Lenders to changes in interest rates), declare that (i)
each Eurodollar Advance and Transaction Rate Advance shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise  applicable to
such Interest Period plus 2% per annum and (ii) each Floating Rate Advance shall
bear interest at a rate per annum equal to the Floating Rate in effect from time
to time plus 2% per annum,  provided that,  during the  continuance of a Default
under  Section 7.1.6 or 7.1.7,  the interest  rates set forth in clauses (i) and
(ii) above shall be applicable to all Advances without any election or action on
the part of either Agent or any Lender.

     2.13 Method of Payment. All payments of the Obligations  hereunder shall be
made, without setoff, deduction, or counterclaim, in immediately available funds
to the  Administrative  Agent at the  Administrative  Agent's address  specified
pursuant  to  Article  XIII,  or  at  any  other  Lending  Installation  of  the
Administrative  Agent  specified in writing by the  Administrative  Agent to the
Borrower, by noon (local time) on the date when due and shall be applied ratably
by the  Administrative  Agent among the Lenders.  Each payment  delivered to the
Administrative  Agent for the account of any Lender shall be delivered  promptly
by the Administrative Agent to
                                      -16-
<PAGE>
such Lender in the same type of funds that the Administrative  Agent received at
its address  specified  pursuant to Article XIII or at any Lending  Installation
specified in a notice received by the Administrative Agent from such Lender. The
Administrative  Agent is hereby authorized to charge the account of the Borrower
maintained with Bank One for each payment of principal,  interest and fees as it
becomes due hereunder.

     2.14 Noteless  Agreement;  Evidence of Indebtedness.  (i) Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender from time to time,  including  the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.

     (ii) The Administrative Agent shall also maintain accounts in which it will
record  (a) the amount of each Loan made  hereunder,  the Type  thereof  and the
Interest  Period  with  respect  thereto,  (b) the  amount of any  principal  or
interest  due and payable or to become due and payable from the Borrower to each
Lender  hereunder  and (c) the amount of any sum received by the  Administrative
Agent hereunder from the Borrower and each Lender's share thereof.

     (iii)  The  entries  maintained  in the  accounts  maintained  pursuant  to
paragraphs (i) and (ii) above shall be prima facie evidence of the existence and
amounts of the Obligations  therein  recorded;  provided that the failure of the
Administrative  Agent or any  Lender  to  maintain  such  accounts  or any error
therein shall not in any manner  affect the  obligation of the Borrower to repay
the Obligations in accordance with their terms.

     (iv) Any Lender may request that its Loans be evidenced by a Note.  In such
event,  the Borrower  shall  prepare,  execute and deliver to such Lender a Note
payable to the order of such  Lender in a form  supplied  by the  Administrative
Agent substantially in the form of Exhibit E. Thereafter, the Loans evidenced by
such  Note  and  interest  thereon  shall  at all  times  (including  after  any
assignment pursuant to Section 12.3) be represented by one or more Notes payable
to the order of the payee  named  therein or any  assignee  pursuant  to Section
12.3, except to the extent that any such Lender or assignee subsequently returns
any such Note for  cancellation  and  requests  that such  Loans  once  again be
evidenced as described in paragraphs (i) and (ii) above.

     2.15 Telephonic Notices. The Borrower hereby authorizes the Lenders and the
Administrative Agent to extend, convert or continue Advances,  effect selections
of Types of Advances and to transfer  funds based on telephonic  notices made by
any  person or  persons  the  Administrative  Agent or any  Lender in good faith
believes to be acting on behalf of the Borrower,  it being  understood  that the
foregoing  authorization is specifically intended to allow Borrowing Notices and
Conversion/Continuation Notices to be given telephonically.  The Borrower agrees
to deliver promptly to the Administrative Agent a written confirmation,  if such
confirmation  is requested by the  Administrative  Agent or any Lender,  of each
telephonic notice signed by an Authorized Officer.  If the written  confirmation
differs in any  material  respect  from the action  taken by the  Administrative
Agent and the Lenders,  the records of the Administrative  Agent and the Lenders
shall govern absent manifest error.

                                      -17-
<PAGE>
     2.16 Interest  Payment Dates;  Interest and Fee Basis.  Interest accrued on
each Floating  Rate Advance  shall be payable on each Payment  Date,  commencing
with the first such date to occur  after the date  hereof,  on any date on which
the Floating Rate Advance is prepaid,  whether due to acceleration or otherwise,
or is converted into another Type of Advance, and at maturity.  Interest accrued
on each Eurodollar  Advance and Transaction Rate Advance shall be payable on the
last day of each applicable  Interest Period,  on any date on which such Advance
is prepaid,  whether by acceleration or otherwise,  or is converted into another
Type of Advance,  and at maturity.  Interest accrued on each Eurodollar  Advance
and Transaction  Rate Advance having an Interest Period longer than three months
shall also be payable on the last day of each  three-month  interval during such
Interest  Period.  Interest and  commitment  fees shall be calculated for actual
days elapsed on the basis of a 360-day year,  except that  interest  accruing at
the Prime Rate shall be  calculated  for actual  days  elapsed on the basis of a
365, or when appropriate 366, day year. Interest shall be payable for the day an
Advance is made but not for the day of any payment on the amount paid if payment
is received  prior to noon (local time) at the place of payment.  If any payment
of principal of or interest on an Advance shall become due on a day which is not
a Business Day, such payment shall be made on the next  succeeding  Business Day
and,  in the  case of a  principal  payment,  such  extension  of time  shall be
included in computing interest in connection with such payment.

     2.17 Notification of Advances,  Interest Rates,  Prepayments and Commitment
Reductions. Promptly after receipt thereof, the Administrative Agent will notify
each  Lender of the  contents of each  Aggregate  Commitment  reduction  notice,
Borrowing Notice,  Conversion/Continuation Notice, and repayment notice received
by it  hereunder.  The  Administrative  Agent  will  notify  each  Lender of the
interest rate applicable to each Eurodollar Advance and Transaction Rate Advance
promptly  upon  determination  of such  interest  rate and will give each Lender
prompt notice of each change in the Alternate Base Rate.

     2.18 Lending  Installations.  Each Lender may book its Loans at any Lending
Installation  selected by such  Lender and may change its  Lending  Installation
from time to time. All terms of this  Agreement  shall apply to any such Lending
Installation  and the Loans and any Notes issued  hereunder shall be deemed held
by each Lender for the  benefit of any such  Lending  Installation.  Each Lender
may,  by  written  notice  to the  Administrative  Agent  and  the  Borrower  in
accordance  with Article  XIII,  designate  replacement  or  additional  Lending
Installations  through which Loans will be made by it and for whose account Loan
payments are to be made.

     2.19 Non-Receipt of Funds by the Administrative  Agent. Unless the Borrower
or a Lender, as the case may be, notifies the Administrative  Agent prior to the
date on which it is scheduled to make payment to the Administrative Agent of (i)
in the  case of a  Lender,  the  proceeds  of a Loan or (ii) in the  case of the
Borrower,  a payment of principal,  interest or fees to the Administrative Agent
for the account of the  Lenders,  that it does not intend to make such  payment,
the  Administrative  Agent may  assume  that such  payment  has been  made.  The
Administrative Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such  Lender  or the  Borrower,  as the case may be,  has not in fact  made such
payment to the Administrative Agent,

                                      -18-
<PAGE>
the  recipient of such payment  shall,  on demand by the  Administrative  Agent,
repay to the  Administrative  Agent the amount so made  available  together with
interest thereon in respect of each day during the period commencing on the date
such amount was so made available by the Administrative Agent until the date the
Administrative  Agent  recovers  such amount at a rate per annum equal to (x) in
the case of payment by a Lender,  the Federal Funds  Effective Rate for such day
for the first three days and,  thereafter,  the interest rate  applicable to the
relevant Loan or (y) in the case of payment by the  Borrower,  the interest rate
applicable to the relevant Loan.

     2.20 Replacement of Lender. If the Borrower is required pursuant to Section
3.1, 3.2 or 3.5 to make any additional  payment to any Lender or if any Lender's
obligation to make or continue, or to convert Advances into, Eurodollar Advances
shall be suspended  pursuant to Section 3.3 (any Lender so affected an "Affected
Lender"), the Borrower may elect, if such amounts continue to be charged or such
suspension is still effective, to replace such Affected Lender as a Lender party
to this  Agreement,  provided  that no Default or Unmatured  Default  shall have
occurred  and be  continuing  at the  time of such  replacement,  and  provided,
further,  that,  concurrently with such  replacement,  (i) another bank or other
entity which is reasonably  satisfactory to the Borrower and the  Administrative
Agent shall agree,  as of such date, to purchase for cash the Advances and other
Obligations due to the Affected  Lender pursuant to an assignment  substantially
in the form of  Exhibit C and to become a Lender  for all  purposes  under  this
Agreement and to assume all  obligations of the Affected Lender to be terminated
as of such date and to comply with the  requirements  of Section 12.3 applicable
to assignments,  and (ii) the Borrower shall pay to such Affected Lender in same
day  funds on the day of such  replacement  (A) all  interest,  fees  and  other
amounts  then  accrued  but  unpaid  to such  Affected  Lender  by the  Borrower
hereunder to and including the date of termination, including without limitation
payments due to such Affected Lender under Sections 3.1, 3.2 and 3.5, and (B) an
amount, if any, equal to the payment which would have been due to such Lender on
the day of such  replacement  under  Section 3.4 had the Loans of such  Affected
Lender been prepaid on such date rather than sold to the replacement Lender.

                                  ARTICLE III

                            YIELD PROTECTION; TAXES

     3.1 Yield Protection.  (a) If, on or after the date of this Agreement,  (x)
the   adoption   of  or  any   change  in  any  law  or  any   governmental   or
quasi-governmental rule, regulation,  policy, guideline or directive (whether or
not  having  the  force of law),  or (y) any  change  in the  interpretation  or
administration  thereof by any  governmental  or  quasi-governmental  authority,
central  bank  or  comparable   agency  charged  with  the   interpretation   or
administration  thereof,  or (z) compliance by any Lender or applicable  Lending
Installation  with any request or directive  (whether or not having the force of
law) issued on or after the date hereof of any such  authority,  central bank or
comparable agency:

                                      -19-
<PAGE>
         (i)   subjects any Lender or any applicable Lending Installation to any
               Taxes,  or changes the basis of taxation of payments  (other than
               with  respect to Excluded  Taxes) to any Lender in respect of its
               Eurodollar Loans, or

         (ii)  imposes or increases or deems applicable any reserve, assessment,
               insurance charge,  special deposit or similar requirement against
               assets  of,  deposits  with  or for the  account  of,  or  credit
               extended by, any Lender or any  applicable  Lending  Installation
               (other  than  reserves  and  assessments  taken  into  account in
               determining the interest rate applicable to Eurodollar Advances),
               or

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

and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation of making or maintaining its Eurodollar Loans or
Commitment or to reduce the return received by such Lender or applicable Lending
Installation  in connection  with such  Eurodollar  Loans or  Commitment,  then,
within 15 days of demand by such Lender, the Borrower shall pay such Lender such
additional  amount or amounts as will  compensate such Lender for such increased
cost or reduction in amount  received.  A Lender shall not be entitled to demand
compensation  or be compensated  hereunder to the extent that such  compensation
relates  to any  period of time more than 60 days  prior to the date upon  which
such Lender first notified the Borrower of the occurrence of the event entitling
such  Lender to such  compensation  (unless,  and to the  extent,  that any such
compensation  so demanded  shall relate to the  retroactive  application  of any
event so notified to the Borrower).

     (b) Without  limiting clause (a) above, any Lender may require the Borrower
to pay,  contemporaneously  with each payment of interest on any Eurodollar Loan
of such Lender,  additional interest on such Eurodollar Loan at a rate per annum
determined  by such  Lender up to but not  exceeding  the  excess of (i) (A) the
applicable Eurodollar Base Rate divided by (B) one minus the Reserve Requirement
over (ii) the  applicable  Eurodollar  Base Rate.  Any Lender wishing to require
payment of such  additional  interest  (x) shall so notify the  Borrower and the
Administrative  Agent, in which case such additional  interest on the Eurodollar
Loans of such Lender  shall be payable to such Lender at the place  indicated in
such notice  with  respect to each  Interest  Period  commencing  at least three
Business  Days after the giving of such notice and (y) shall notify the Borrower
at least five Business  Days prior to each date on which  interest is payable on
any Eurodollar Loan of the amount then due it under this Section.

     3.2 Changes in Capital  Adequacy  Regulations.  If a Lender  determines the
amount of capital  required or expected to be  maintained  by such  Lender,  any
Lending Installation of such

                                      -20-
<PAGE>
Lender or any corporation  controlling such Lender is increased as a result of a
Change,  then,  within 15 days of demand by such Lender,  the Borrower shall pay
such Lender the amount  necessary to compensate for any shortfall in the rate of
return on the portion of such increased  capital which such Lender determines is
attributable  to this  Agreement,  its  Loans or its  Commitment  to make  Loans
hereunder  (after  taking  into  account  such  Lender's  policies as to capital
adequacy). "Change" means (i) any change after the date of this Agreement in the
Risk-Based  Capital  Guidelines  or (ii) any  adoption of or change in any other
law, governmental or quasi-governmental  rule,  regulation,  policy,  guideline,
interpretation,  or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital  required or expected
to be maintained by any Lender or any Lending  Installation  or any  corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement,
including  transition  rules,  and (ii) the  corresponding  capital  regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle  Committee on Banking  Regulation and  Supervisory
Practices  Entitled  "International  Convergence  of  Capital  Measurements  and
Capital  Standards,"  including  transition  rules,  and any  amendments to such
regulations adopted prior to the date of this Agreement.

     3.3 Availability of Types of Advances.  If any Lender reasonably determines
that  maintenance of its  Eurodollar  Loans at a suitable  Lending  Installation
would violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required  Lenders  reasonably  determine that
(i)  deposits  of a type  and  maturity  appropriate  to match  fund  Eurodollar
Advances are not available or (ii) the Eurodollar  Base Rate does not accurately
reflect the cost of  obtaining  funds to make or maintain  Eurodollar  Advances,
then the  Administrative  Agent shall  suspend the  availability  of  Eurodollar
Advances and require any affected  Eurodollar Advances to be repaid or converted
to Floating  Rate  Advances (on or before the date  required by such law,  rule,
regulation or directive),  subject to the payment of any funding indemnification
amounts required by Section 3.4.

     3.4 Funding  Indemnification.  If any payment of a Eurodollar  Advance or a
Transaction  Rate  Advance  occurs  on a date  which  is not the last day of the
applicable  Interest  Period,  whether  because of  acceleration,  prepayment or
otherwise,  or a Eurodollar Advance or a Transaction Rate Advance is not made on
the date  specified  by the  Borrower  for any reason  other than default by the
Lenders,  the Borrower will  indemnify each Lender for any loss or cost incurred
by it resulting therefrom,  including,  without limitation,  any loss or cost in
liquidating or employing  deposits  acquired to fund or maintain such Eurodollar
Advance or a Transaction Rate Advance.

     3.5 Taxes.  (i) All  payments by the  Borrower to or for the account of any
Lender or the  Administrative  Agent  hereunder  or under any Note shall be made
free and clear of and without  deduction for any and all Taxes.  If the Borrower
shall be  required  by law to deduct  any Taxes  from or in  respect  of any sum
payable  hereunder to any Lender or either  Agent,  (a) 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 3.5) such
Lender

                                      -21-
<PAGE>
or such Agent (as the case may be)  receives an amount equal to the sum it would
have received had no such deductions been made, (b) the Borrower shall make such
deductions,  (c) the Borrower shall pay the full amount deducted to the relevant
authority in accordance  with  applicable law and (d) the Borrower shall furnish
to the  Administrative  Agent the original copy of a receipt  evidencing payment
thereof  within 30 days  after  such  payment  is made.

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

     (iii) The Borrower  hereby  agrees to indemnify  each Agent and each Lender
for the full amount of Taxes or Other Taxes (including,  without limitation, any
Taxes or Other Taxes imposed on amounts  payable under this Section 3.5) paid by
such Agent or such Lender and any liability (including  penalties,  interest and
expenses)  arising  therefrom or with respect  thereto.  Payments due under this
indemnification  shall be made  within  30 days of the date  such  Agent or such
Lender makes demand therefor pursuant to Section 3.6.

     (iv) Each  Lender  that is not  incorporated  under the laws of the  United
States of America or a state thereof (each a "Non-U.S.  Lender")  agrees that it
will,  not less than ten  Business  Days after the date of this  Agreement,  (i)
deliver to each of the Borrower and the Administrative  Agent two duly completed
copies  of  United  States  Internal  Revenue  Service  Form W-8 BEN or W-8 ECI,
certifying in either case that such Lender is entitled to receive payments under
this  Agreement  without  deduction or  withholding of any United States federal
income  taxes,  and (ii) deliver to each of the Borrower and the  Administrative
Agent a United States Internal  Revenue Form W-8 or W-9, as the case may be, and
certify  that  it  is  entitled  to  an  exemption  from  United  States  backup
withholding tax. Each Non-U.S.  Lender further  undertakes to deliver to each of
the Borrower and the  Administrative  Agent (x) renewals or additional copies of
such form (or any  successor  form) on or before the date that such form expires
or becomes  obsolete,  and (y) after the  occurrence  of any event  requiring  a
change in the most recent  forms so delivered  by it, such  additional  forms or
amendments  thereto  as may be  reasonably  requested  by  the  Borrower  or the
Administrative  Agent.  All  forms  or  amendments  described  in the  preceding
sentence  shall certify that such Lender is entitled to receive  payments  under
this  Agreement  without  deduction or  withholding of any United States federal
income  taxes,  unless an event  (including  without  limitation  any  change in
treaty,  law or  regulation)  has  occurred  prior to the date on which any such
delivery would  otherwise be required which renders all such forms  inapplicable
or which would prevent such Lender from duly  completing and delivering any such
form or amendment  with  respect to it and such Lender  advises the Borrower and
the  Administrative  Agent that it is not capable of receiving  payments without
any deduction or withholding of United States federal income tax.

     (v) For any period during which a Non-U.S. Lender has failed to provide the
Borrower with an  appropriate  form pursuant to clause (iv),  above (unless such
failure is due to a change in treaty,  law or  regulation,  or any change in the
interpretation or administration thereof by any

                                      -22-
<PAGE>
governmental  authority,  occurring  subsequent  to the  date  on  which  a form
originally  was  required to be  provided),  such  Non-U.S.  Lender shall not be
entitled to indemnification under this Section 3.5 with respect to Taxes imposed
by the United States; provided that, should a Non-U.S. Lender which is otherwise
exempt from or subject to a reduced rate of  withholding  tax become  subject to
Taxes  because of its  failure to deliver a form  required  under  clause  (iv),
above,  the  Borrower  shall  take  such  steps as such  Non-U.S.  Lender  shall
reasonably request to assist such Non-U.S. Lender to recover such Taxes.

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

     (vii)  If the U.S.  Internal  Revenue  Service  or any  other  governmental
authority of the United States or any other country or any political subdivision
thereof asserts a claim that the Administrative  Agent did not properly withhold
tax  from  amounts  paid  to or for  the  account  of any  Lender  (because  the
appropriate  form was not delivered or properly  completed,  because such Lender
failed to notify the  Administrative  Agent of a change in  circumstances  which
rendered its exemption from withholding  ineffective,  or for any other reason),
such Lender shall indemnify the Administrative Agent fully for all amounts paid,
directly  or  indirectly,  by  the  Administrative  Agent  as  tax,  withholding
therefor,  or otherwise,  including penalties and interest,  and including taxes
imposed by any jurisdiction on amounts payable to the Administrative Agent under
this subsection, together with all costs and expenses related thereto (including
attorneys fees and time charges of attorneys for the Administrative Agent, which
attorneys may be employees of the Administrative  Agent). The obligations of the
Lenders under this Section 3.5(vii) shall survive the payment of the Obligations
and termination of this Agreement.

     3.6 Lender  Statements;  Survival of  Indemnity.  To the extent  reasonably
possible,  each Lender shall designate an alternate  Lending  Installation  with
respect to its Eurodollar  Loans to reduce any liability of the Borrower to such
Lender  under  Sections  3.1,  3.2 and 3.5 or to  avoid  the  unavailability  of
Eurodollar  Advances  under Section 3.3, so long as such  designation is not, in
the reasonable  judgment of such Lender,  disadvantageous  to such Lender.  Each
Lender shall deliver a written  statement of such Lender to the Borrower (with a
copy to the  Administrative  Agent) as to the amount due, if any,  under Section
3.1,  3.2, 3.4 or 3.5.  Such  written  statement  shall set forth in  reasonable
detail the calculations  upon which such Lender determined such amount and shall
be  rebuttable  presumptive  evidence of the amount  thereof.  Determination  of
amounts  payable under such Sections in connection  with a Eurodollar Loan shall
be  calculated  as though each Lender  funded its  Eurodollar  Loan  through the
purchase of a deposit of the type and maturity corresponding to the deposit used
as a reference in determining  the Eurodollar Base Rate applicable to such Loan,
whether in fact that is the case or not.  Determination of amounts payable under
Section  3.4 in  connection  with any  Transaction  Rate Loan may be made by the
applicable Lender on any reasonable  method.  Unless otherwise  provided herein,
the amount

                                      -23-
<PAGE>
specified  in the  written  statement  of any Lender  shall be payable on demand
after receipt by the Borrower of such written statement.  The obligations of the
Borrower  under  Sections  3.1,  3.2, 3.4 and 3.5 shall  survive  payment of the
Obligations and termination of this Agreement.

                                   ARTICLE IV

                              CONDITIONS PRECEDENT

     4.1 Initial Advance.  The Lenders shall not be required to make the initial
Advance hereunder unless (a) concurrently  with the making of such Advance,  the
Borrower shall have paid in full all principal, interest, fees and other amounts
payable under each of the Credit Agreement dated as of February 28, 1994 between
the  Borrower and Bank One (then known as The First  National  Bank of Chicago),
the Credit Agreement dated as of April 29, 1994 between the Borrower and Bank of
America,  N.A.  (then  known as  NationsBank,  N.A.)  and the  Letter  of Credit
Agreement  dated as of November 16, 1998 among the Borrower,  various  financial
institutions and Bank One, NA (then known as The First National Bank of Chicago)
and (b) the  Borrower  shall have  furnished  to the  Administrative  Agent with
sufficient copies for the Lenders:

     (i)    Copies  of the  articles  or  certificate  of  incorporation  of the
            Borrower,  together with all  amendments,  and a certificate of good
            standing, each certified by the appropriate  governmental officer in
            its jurisdiction of incorporation.

     (ii)   Copies  certified by the  Secretary  or  Assistant  Secretary of the
            Borrower, of its by-laws and of its Board of Directors'  resolutions
            and of  resolutions  or actions of any other  body  authorizing  the
            execution of the Loan Documents to which the Borrower is a party.

     (iii)  An  incumbency  certificate,  executed by the Secretary or Assistant
            Secretary of the  Borrower,  which shall  identify by name and title
            and bear the  signatures of the officers of the Borrower  authorized
            to sign the Loan  Documents to which the  Borrower is a party,  upon
            which  certificate  the Agents and the Lenders  shall be entitled to
            rely until informed of any change in writing by the Borrower.

     (iv)   Evidence,  in form and substance  satisfactory to the Administrative
            Agent,  that the Borrower has  obtained all  governmental  approvals
            necessary for it to enter into the Loan Documents.

     (v)    A certificate,  signed by an Authorized Officer, stating that on the
            initial  Borrowing  Date (x) no Default  or  Unmatured  Default  has
            occurred  and  is  continuing  and  (y)  the   representatives   and
            warranties  set forth in  Article V are true and  correct as of such
            date.

                                      -24-
<PAGE>
     (vi)   A  written  opinion  of the  Borrower's  counsel,  addressed  to the
            Lenders  in  substantially  the form of  Exhibit  B.

     (vii)  Any Notes requested by a Lender  pursuant to Section 2.14 payable to
            the order of each such requesting Lender.

     (viii) Written money transfer  instructions,  in substantially  the form of
            Exhibit D,  addressed to the  Administrative  Agent and signed by an
            Authorized Officer,  together with such other related money transfer
            authorizations  as the  Administrative  Agent  may  have  reasonably
            requested.

     (ix)   Copies,  certified as being  correct and  complete by an  Authorized
            Officer,  of  (x)  the  Private  Placement  Agreement  and  (y)  the
            Indenture  dated as of December 1, 1995,  between the  Borrower  and
            Bank One (then  known as The First  National  Bank of  Chicago),  as
            trustee, and all supplements thereto.

     (x)    Such  other  documents  as  any  Lender  or  its  counsel  may  have
            reasonably requested.

     4.2 Each  Advance.  The Lenders  shall not be required to make any Advance,
the effect of which is to increase  the  aggregate  amount of Loans  outstanding
hereunder, unless on the applicable Borrowing Date:

     (i)    There exists no Default or Unmatured Default.

     (ii)   The representations  and warranties  contained in Article V are true
            and correct as of such  Borrowing Date except to the extent any such
            representation  or warranty is stated to relate solely to an earlier
            date, in which case such  representation or warranty shall have been
            true and correct on and as of such earlier date.

     (iii)  All legal  matters  incident to the making of such Advance  shall be
            reasonably satisfactory to the Lenders and their counsel.

     (iv)   With  respect to any Advance  which causes the  aggregate  amount of
            outstanding Loans to exceed $45,000,000, Bank One shall be satisfied
            that the  letter  of  credit  issued  under  the  Letter  of  Credit
            Agreement  referred  to in  Section  4.1(a)  will  be (x)  cancelled
            without any drawing  thereunder  and (y) returned to Bank One on the
            date of the making of such Advance.

     (v)    With  respect to any Advance  which causes the  aggregate  amount of
            outstanding Loans to exceed the remainder of $155,000,000  minus all
            reductions of the Aggregate  Commitment  previously made pursuant to
            Section 2.7(a), written evidence that the Private Placement Debt has
            been (or concurrently  with the making of such Advance will be) paid
            in full.
                                      -25-
<PAGE>
Each Borrowing Notice with respect to each such Advance shall constitute a
representation  and warranty by the Borrower  that the  conditions  contained in
Sections 4.2(i) and (ii) have been satisfied.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Lenders that:

     5.1   Organization.   The  Borrower  and  each  of  its   Subsidiaries  are
corporations  duly  incorporated and validly existing and in good standing under
the laws of the states of their  incorporation and have all requisite  authority
to conduct their respective businesses in each jurisdiction in which the failure
to have such authority, singly or in the aggregate, could reasonably be expected
to have a Material  Adverse  Effect.  The Borrower and each of its  Subsidiaries
have full power and  authority to carry on their  business as now  conducted and
the  Borrower has full power and  authority to execute,  deliver and perform its
obligations under this Agreement.

     5.2 Authorization and Validity.  The execution and delivery by the Borrower
of this Agreement has been duly authorized by proper corporate proceedings. This
Agreement has been duly executed and delivered by the Borrower and  constitutes,
and when  executed and delivered by the Borrower  each Note will  constitute,  a
legal,  valid and binding  obligation of the Borrower  enforceable in accordance
with  its  terms,  except  as  enforceability  may  be  limited  by  bankruptcy,
insolvency  or similar laws  affecting  the  enforcement  of  creditors'  rights
generally.

     5.3  Financial  Statements.  The  December  31, 1999 and the March 31, 2000
consolidated   financial   statements  of  the  Borrower  and  the  Subsidiaries
heretofore  delivered to the Agents and the Lenders were  prepared in accordance
with  generally  accepted  accounting  principles  in  effect  on the date  such
statements  were prepared and fairly present the financial  position and results
of  operations  of the  Borrower  and its  Subsidiaries  at such  dates  and the
consolidated results of their operations for the periods then ended.

     5.4  Subsidiaries.  Schedule 5.4 hereto contains an accurate list of all of
the   presently   existing   Subsidiaries,   setting   forth  their   respective
jurisdictions  of incorporation  and the percentage of their respective  capital
stock  owned  by the  Borrower  or other  Subsidiaries.  All of the  issued  and
outstanding  shares  of  capital  stock  of  the  Subsidiaries  have  been  duly
authorized and issued and are fully paid and nonassessable.

     5.5  ERISA.  Each  Plan  is in  material  compliance  with,  and  has  been
administered in material  compliance  with, all applicable  provisions of ERISA,
the Code and any other applicable federal or state law, except where the failure
to so comply would not (individually or in the aggregate) reasonably be expected
to have a Material Adverse Effect, and no event or condition

                                      -26-
<PAGE>
has occurred and is  continuing  as to which the Borrower is under an obligation
to furnish a report to the  Administrative  Agent and the Lenders  under Section
6.1(d) and which would reasonably be expected (individually or in the aggregate)
to have a Material Adverse Effect.

     5.6  Defaults.  No  Default  or  Unmatured  Default  has  occurred  and  is
continuing.

     5.7 Accuracy of Information. No information, exhibit or report furnished by
the  Borrower or any  Subsidiary  to the  Administrative  Agent or any Lender in
connection  with  the  negotiation  of  this  Agreement  contains  any  material
misstatement  of fact or omitted to state a material fact  necessary to make the
statements contained therein not misleading.

     5.8  Regulation  U.  Neither the  Borrower  nor any  Subsidiary  is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of  purchasing  or carrying  Margin  Stock.  Margin Stock
constitutes  less than 25% of the  consolidated  assets of the  Borrower and its
Subsidiaries  which are subject to any limitation on sale or pledge or any other
restriction  hereunder.  No part of the  proceeds  of any Credit will be used to
purchase or carry any Margin Stock in violation of Regulation U.

     5.9 No Adverse Change.  Except for developments in the Case or as disclosed
in the Quarterly  Report on Form 10-Q of the Borrower for the  quarterly  period
ended March 31, 2000 filed with the  Securities  and Exchange  Commission or the
Forms 8-K of the Borrower filed with the  Securities and Exchange  Commission on
June 22, 2000 and June 26,  2000,  since March 31, 2000 there has been no change
in the  business,  property,  condition  (financial  or otherwise) or results of
operations  of the  Borrower  and its  Subsidiaries  which could  reasonably  be
expected to have a Material Adverse Effect.

     5.10 Taxes. The Borrower and its Subsidiaries  have filed all United States
federal tax returns and all other tax returns  which,  to the  Knowledge  of the
Borrower,  are required to be filed and have paid all taxes due pursuant to said
returns  or  material  taxes due  pursuant  to any  assessment  received  by the
Borrower  or any  Subsidiary,  except in both cases such  taxes,  if any, as are
being  contested  in good  faith  and as to which  adequate  reserves  have been
provided in  accordance  with  Agreement  Accounting  Principles.  The  charges,
accruals  and  reserves on the books of the  Borrower  and its  Subsidiaries  in
respect of any taxes or other  governmental  charges are adequate in  accordance
with Agreement Accounting Principles.

     5.11 Liens.  There are no Liens on any of the  properties  or assets of the
Borrower or any Subsidiary  except (i) Liens permitted by Section 6.3.5 and (ii)
with  respect  to  properties  and  assets  other  than  Productive  Properties,
Principal  Transmission  Facilities and the stock of any Subsidiary,  Liens that
could not,  individually  or in the aggregate,  reasonably be expected to have a
Material Adverse Effect.  All easements,  rights of way, licenses and other real
property rights required for operation of the businesses of the Borrower and its
Subsidiaries  (collectively the "Rights of Way") are owned free and clear of any
Lien,  other than Liens  permitted by this  Agreement  and Liens  already on any
parcel  of real  property  with  respect  to which  the  Rights of Way have been
granted,  which will not, in the aggregate,  at any time materially detract from
the

                                      -27-
<PAGE>
value of the Rights of Way or materially  impair the use of the Rights of Way in
the  operation of the  businesses  of the Borrower  and its  Subsidiaries.

     5.12 Compliance with Orders.  Neither the Borrower nor any Subsidiary is in
default  under  the  terms  of any  order  of any  federal  or  state  court  or
administrative  agency by which it or any of its properties may be bound, except
for  any  defaults  which  could  not,  individually  or in  the  aggregate,  be
reasonably expected to have a Material Adverse Effect.

     5.13  Litigation.  Except for the Case and as set forth in  Schedule  5.13,
there are no actions at law or in equity  pending  or, to the  Knowledge  of the
Borrower,  threatened  involving  the  likelihood  of any  judgment or liability
against the Borrower or any  Subsidiary  which could  reasonably  be expected to
have a Material Adverse Effect.  Except for the investigation arising out of the
1990 rate  increase  approved by the  Arkansas  Public  Service  Commission  and
related proceedings,  there are no proceedings of any kind or nature pending or,
to the Knowledge of the Borrower, threatened against the Borrower by any federal
or  state  board  or  other  administrative  authority  or  agency  which  could
reasonably be expected to have a Material Adverse Effect.

     5.14 Burdensome Agreements.  The Borrower is not a party to any contract or
agreement which, in the opinion of management of the Borrower,  could reasonably
be expected to have a Material Adverse Effect.

     5.15 No Conflict. The execution, delivery, and compliance with the terms of
this  Agreement  will not  conflict  with or result in the  breach of any of the
terms,  conditions or provisions of, or constitute a default under,  the charter
or bylaws of the Borrower or any Subsidiary, or any indenture, loan agreement or
other agreement or instrument to which the Borrower or any Subsidiary is a party
or by which it may be bound,  or result in creation of any Lien on any  property
of the Borrower or any  Subsidiary,  and neither the Borrower nor any Subsidiary
is in default  (after the  expiration  of any  applicable  grace  period) in the
performance,  observance or fulfillment of any of the obligations,  covenants or
conditions  contained in (i) any agreement to which it is a party, which default
could  reasonably  be expected to have a Material  Adverse  Effect,  or (ii) any
agreement or  instrument  evidencing  or governing  Indebtedness  in a principal
amount  exceeding  $5,000,000  (excluding in each case any default under Section
6.A or 6.B of the Private Placement Agreement).

     5.16 Title to Properties.  The Borrower and its Subsidiaries  have good and
marketable  title to all real properties  purported to be owned by them and good
title to all other assets  purported to be owned by them,  subject to such minor
defects as are common to  property  of the type  owned by the  Borrower  and its
Subsidiaries and Liens permitted by this Agreement and such defects and Liens in
the aggregate do not  materially  interfere with or impair the Borrower's or any
Subsidiary's business as presently conducted.

     5.17 Public Utility Holding Company Act. The Borrower and the  Subsidiaries
are exempt from registration  under the provisions of the Public Utility Holding
Company Act of 1935 pursuant to Section 3(a) thereof.

                                      -28-
<PAGE>
     5.18 Regulatory  Approval.  No consent or authorization of, filing with, or
any other act by or in respect of any Person is required in connection  with the
enforceability,  execution,  delivery, performance or validity of this Agreement
or the transactions contemplated thereby.

     5.19 Negative Pledge. Except as set forth in Schedule 5.19 hereto,  neither
the  Borrower  nor  any  Subsidiary  is  subject  to any  agreement,  indenture,
instrument,  undertaking or security (other than this Agreement)  which prohibit
the creation, incurrence or sufferance to exist of any Lien.

     5.20 Investment Company Act. The Borrower is not an "investment company" or
a Borrower  "controlled" by an "investment  company",  within the meaning of the
Investment Company Act of 1940, as amended.

     5.21  Compliance  with Laws.  The  Borrower and its  Subsidiaries  have all
franchises,  licenses and permits  necessary for the conduct of their respective
businesses,  and are in compliance with all laws,  rules,  regulations,  orders,
writs,  judgments,  injunctions,  decrees or awards to which it may be  subject,
including,  without limitation, (i) all provisions of ERISA, which, if violated,
might  result in a Lien or  charge  upon any  property  of the  Borrower  or any
Subsidiary,  and (ii) all material  provisions  of the  Occupational  Safety and
Health  Act of 1970 and the  rules and  regulations  thereunder  and  applicable
statutes,   regulations,  orders  and  restrictions  relating  to  environmental
standards or  controls,  except to the extent that failure to maintain or comply
with any of the foregoing,  singly and in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

                                   ARTICLE VI

                                   COVENANTS

     During the  term of  this  Agreement,  unless the  Required  Lenders  shall
otherwise consent in writing:

     6.1 Information. The Borrower will furnish to each Lender:

         (a) As soon as reasonably  practicable and in any event within 120 days
     after the close of each of its fiscal  years,  financial  statements of the
     Borrower for such fiscal year on a  consolidated  and  consolidating  basis
     (consolidating  statements need not be certified by such  accountants)  for
     itself and its Subsidiaries, including balance sheets as of the end of such
     period,  statements  of income and  statements  of retained  earnings,  and
     statements of cash flows, and, as to the consolidated statements,  prepared
     in accordance  with generally  accepted  accounting  principles  (except as
     expressly set forth therein) and accompanied by an unqualified (as to going
     concern or the scope of the audit) opinion of independent  certified public
     accountants  of  recognized  standing,  which opinion shall state that such
     audit was conducted in accordance with generally accepted auditing

                                      -29-
<PAGE>
     standards  and said  financial  statements  fairly  present  the  financial
     condition  and results of  operation  of the Borrower as at the end of, and
     for, such fiscal year and a certificate  of said  accountants  that, in the
     course of their examination necessary for their opinion, they have obtained
     no  knowledge of any Default or Unmatured  Default  relating to  accounting
     matters,  or if, in the opinion of such  accountants,  any such  Default or
     Unmatured  Default shall exist, said certificate shall state the nature and
     status  thereof;  provided  that  delivery  pursuant to clause (e) below of
     copies of the Annual  Report on Form 10-K of the  Borrower  for such fiscal
     year filed with the  Securities  and  Exchange  Commission  (together  with
     copies of the financial  statements  required to be included therein) shall
     be  deemed  to  satisfy  the  requirement  of this  clause  (a) to  deliver
     consolidated  financial  statements  (but not the  requirement  to  deliver
     consolidating statements or the accountants' certificate as to the presence
     or absence of any Default or Unmatured Default).

         (b) As soon as reasonably  practicable  and in any event within 60 days
     after the close of each of the first three quarterly  accounting periods of
     each of its fiscal years, for itself and its Subsidiaries, consolidated and
     consolidating  unaudited balance sheets as at the close of each such period
     and consolidated and  consolidating  statements of income and statements of
     retained  earnings  and  statements  of cash flows for the period  from the
     beginning  of such fiscal year to the end of such  quarter;  provided  that
     delivery  pursuant to clause (e) below of copies of the Quarterly Report on
     Form  10-Q of the  Borrower  for  such  quarterly  period  filed  with  the
     Securities  and  Exchange   Commission  shall  be  deemed  to  satisfy  the
     requirements  of  this  clause  (b)  to  deliver   consolidated   financial
     statements  (but not the  requirement  to deliver  the  certificate  of the
     Borrower's chief financial officer or chief accounting officer with respect
     thereto).

         (c)  Simultaneously   with  the  delivery  of  each  set  of  financial
     statements  referred to in Sections 6.1(a) and 6.1(b), a certificate of the
     chief financial officer or the chief accounting  officer of the Borrower in
     the  form  of  Exhibit  F  (i)  setting  forth  in  reasonable  detail  the
     calculations  required to establish  whether the Borrower was in compliance
     with  the  requirements  of  Section  6.4 on the  date  of  such  financial
     statements,  (ii)  stating  whether  there  exists  on  the  date  of  such
     certificate  any Default and or  Unmatured  Default  and, if any Default or
     Unmatured  Default then exists,  setting forth the details  thereof and the
     action  which  the  Borrower  is taking or  proposes  to take with  respect
     thereto, and (iii) stating that such financial statements fairly reflect in
     all material respects the financial conditions and results of operations of
     the  Borrower and its  Subsidiaries  as of the date of the delivery of such
     financial statements and for the period covered thereby.

         (d) As soon as possible and in any event within 10 Business  Days after
     the Borrower has Knowledge  that any of the events or conditions  specified
     below has  occurred  or exists  with  respect to any Plan or  Multiemployer
     Plan,  a  statement,  signed  by  the  chief  financial  officer  or  chief
     accounting officer of the Borrower,  describing said event or condition and
     the action which the Borrower or applicable member of the

                                      -30-
<PAGE>
     Controlled  Group proposes to take with respect  thereto (and a copy of any
     report  or  notice  required  to be filed  with or given to the PBGC by the
     Borrower or applicable  member of the Controlled Group with respect to such
     event or condition):

             (i) the  occurrence  of any  Reportable  Event with  respect to any
         Plan, or any waiver shall be requested under Section 412(d) of the Code
         for any Plan,

             (ii) the distribution under Section 4041(c) of ERISA of a notice of
         intent to  terminate  any Plan,  or any action taken by the Borrower or
         any member of the Controlled  Group to terminate any Plan under Section
         4041(c) of ERISA,

             (iii) the institution by PBGC of proceedings  under Section 4042 of
         ERISA for the  termination  of,  or the  appointment  of a  trustee  to
         administer,  any Plan,  or the receipt by the Borrower or any member of
         the Controlled Group of a notice from any Multiemployer  Plan that such
         action has been taken by PBGC with respect to such Multiemployer Plan,

             (iv) the complete or partial  withdrawal from a Multiemployer  Plan
         by the  Borrower  or any  member of the  Controlled  Group  that  could
         reasonably  be expected to result in  liability of the Borrower or such
         member under Section 4201 or 4204 of ERISA (including the obligation to
         satisfy secondary  liability as a result of a purchaser default) having
         a Material Adverse Effect, or the receipt by the Borrower or any member
         of the Controlled Group of notice from a Multiemployer  Plan that it is
         in  reorganization  or  insolvency  pursuant to Section 4241 or 4245 of
         ERISA or that it intends to terminate or has  terminated  under Section
         4041A of ERISA,

             (v)  the  institution  of  a  proceeding  by  a  fiduciary  of  any
         Multiemployer Plan against the Borrower or any member of the Controlled
         Group  to  enforce  Section  515  of  ERISA,  which  proceeding  is not
         dismissed  within 30 days,  or

             (vi) the adoption  of an amendment  to any  Plan that,  pursuant to
         Section 401(a)(29) of the Code or Section 307 of ERISA, would result in
         the loss of tax-exempt status of the trust of which such Plan is a part
         if the Borrower or any member of the  Controlled  Group fails to timely
         provide  security to the Plan in accordance with the provisions of said
         Sections.

         (e)  Promptly  upon the  filing  thereof,  copies  of all  registration
     statements and annual,  quarterly,  monthly or other regular  reports which
     the  Borrower  or any of its  Subsidiaries  files with the  Securities  and
     Exchange Commission.

         (f) Promptly upon the  furnishing  thereof to all  shareholders  of the
     Borrower generally,  copies of all financial statements,  reports and proxy
     statements so furnished.

                                      -31-
<PAGE>
         (g) Promptly  upon  receipt  thereof,  one copy of each  written  audit
     report   submitted  to  the  Borrower  or  any  Subsidiary  by  independent
     accountants  resulting from (i) any annual or interim audit submitted after
     the occurrence and during the continuance of a Default or Unmatured Default
     and (ii) any special  audit  submitted at any time,  in each case,  made by
     them of the books of the Borrower or any Subsidiary.

         (h) As soon as  available  and in any event not later  than April 30 of
     each calendar year, an engineering  and economic  analysis of the producing
     properties of the Borrower and its Subsidiaries  prepared by an independent
     firm of consulting  petroleum  engineers and in form,  substance and detail
     consistent with past practice.

         (i)  Promptly  and in any event  within  five  Business  Days  after an
     Authorized Officer obtains knowledge thereof, notice of the occurrence of a
     Default or Unmatured  Default,  together with the details of such event and
     the actions, if any, the Borrower has taken or intends to take with respect
     thereto.

         (j) Such other information (including nonfinancial  information) as the
     Administrative  Agent  or any  Lender  may  from  time to  time  reasonably
     request.

     6.2  Affirmative  Covenants.   The  Borrower  will,  and  will  cause  each
Subsidiary, to:

     6.2.1. Reports and Inspection.  Keep proper books and records in good order
in accordance with sound business practice and prepare its financial  statements
in accordance with Agreement Accounting Principles and permit the Administrative
Agent or any Lender, at its own expense,  by its  representatives and agents, to
inspect any of the  properties,  corporate  books and  financial  records of the
Borrower  and each  Subsidiary,  to  examine  and make  copies  of the  books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs,  finances and accounts of the Borrower and each  Subsidiary
with,  and to be advised as to the same by,  their  respective  officers at such
reasonable   times  and  intervals   during   regular   business  hours  as  the
Administrative  Agent or such Lender may  designate,  provided that such inquiry
shall be limited to the purpose of evaluating the Borrower's financial condition
or compliance with this Agreement.

     6.2.2 Conduct of Business.  Carry on and conduct its principal  business of
exploration  for,  and  production,  transportation,  distribution,  refinement,
processing,  storage,  marketing and gathering of oil and other hydrocarbons and
petroleum, and natural,  synthetic or other gas in substantially the same manner
and in substantially the same fields of enterprise as it is presently conducted;
and do all things necessary to remain duly incorporated, validly existing and in
good standing as a domestic  corporation in its  jurisdiction  of  incorporation
(unless the corporate  existence or ownership by the Borrower of any  Subsidiary
shall be discontinued as a result of a merger,  consolidation  or sale of assets
as permitted by Section  6.3.2) and maintain all requisite  authority to conduct
its business in each  jurisdiction  in which the failure to have such  authority
could reasonably be expected to have a Material Adverse Effect.

                                      -32-
<PAGE>
     6.2.3 Insurance.  Maintain insurance with reputable  insurance companies or
associations  in such forms and amounts and covering such risks as are customary
for  companies  of  established  reputation  and similar size engaged in similar
businesses  and owning and  operating  similar  properties;  provided that it is
agreed that, as of the date of this  Agreement,  the  insurance  coverage of the
Borrower and its  Subsidiaries  set forth on Schedule 6.2 hereto  satisfies  the
requirements of this Section 6.2.3.

     6.2.4 Taxes. Promptly pay and discharge all material taxes, assessments and
governmental  charges or levies imposed upon the Borrower or any Subsidiary (but
in the case of a Subsidiary,  only to the extent that such  Subsidiary's  assets
shall be sufficient for the purpose), respectively, or upon or in respect of all
or any part of the property and business of the Borrower or any Subsidiary,  and
all due and payable claims for work,  labor or materials,  which if unpaid might
become a Lien upon any  property of the Borrower or any  Subsidiary  (other than
claims  against any such  Subsidiary  in a proceeding  under any  bankruptcy  or
similar  law),  provided  that the  Borrower  or such  Subsidiary  shall  not be
required to pay any such tax, assessment,  charge, levy or claim if the validity
thereof shall concurrently be contested in good faith by appropriate proceedings
and if the  Borrower  or such  Subsidiary  shall set aside on its or their books
reserves  deemed by it or them to be required with respect thereto in accordance
with generally accepted accounting principles.

     6.2.5 Compliance with Laws.  Maintain all franchises,  licenses and permits
necessary for the conduct of its  businesses,  and comply with all laws,  rules,
regulations,  orders, writs, judgments,  injunctions, decrees or awards to which
it may be subject,  including,  without limitation, (i) all provisions of ERISA,
which,  if  violated,  might result in a Lien or charge upon any property of the
Borrower or any Subsidiary, and (ii) all material provisions of the Occupational
Safety  and  Health  Act of 1970 and the rules and  regulations  thereunder  and
applicable   statutes,   regulations,   orders  and  restrictions   relating  to
environmental  standards  or  controls,  except to the  extent  that  failure to
maintain or comply with any of the foregoing, singly and in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

     6.2.6  Maintenance  of  Properties.  Do all things  necessary  to maintain,
preserve,  protect and keep its material  properties  (whether owned in fee or a
leasehold  interest) in good repair,  working order and condition,  and make all
proper repairs,  renewals and  replacements  so that its business  carried on in
connection  therewith  may be properly  conducted at all times;  provided  that,
subject to Section 6.3.2 and all other terms of this Agreement,  nothing in this
Section shall prevent the Borrower or any of its Subsidiaries from discontinuing
the  operation  and   maintenance   of  any  of  its   properties  (x)  if  such
discontinuance is, in the judgment of the Borrower or such Subsidiary, desirable
in the conduct of its business or (y) if such  discontinuance  or disposal could
not reasonably be expected to have a Material Adverse Effect.

     6.3 Negative Covenants.  The Borrower will not, nor (where applicable) will
it permit any Subsidiary to:

                                      -33-
<PAGE>
     6.3.1  Restricted  Payments.  Declare or pay any  dividends  on its capital
stock  (other  than  dividends  payable  in its own  capital  stock) or  redeem,
repurchase  or otherwise  acquire or retire any of its capital stock at any time
outstanding or any warrants, rights or options to purchase or acquire any shares
of its capital stock or permit any Subsidiary to purchase any shares of stock of
the Borrower,  except that any  Subsidiary  may declare and pay dividends to the
Borrower or another Wholly-Owned Subsidiary.

     6.3.2  Merger and Sale of  Assets.  Merge or  consolidate  with or into any
other Person or lease, sell or otherwise  dispose of all, or substantially  all,
of its  property,  assets  (other than  inventory,  physical  assets sold in the
ordinary  course  of  business  or  obsolete,  worn out or excess  property)  or
business to any other Person except that:

     (1) the Borrower may merge or consolidate with or sell all of its assets to
any other solvent  corporation,  provided that (i) the surviving,  continuing or
resulting  corporation  (if not the Borrower)  shall (x)  expressly  assume by a
written instrument  reasonably  satisfactory to the Administrative Agent and the
Lenders  (which shall be provided with an opportunity to review and comment upon
it prior to the consummation of any transaction) the due and punctual payment of
the principal of all  Obligations  and the due performance and observance of all
covenants,  conditions  and  agreements  on the part of the Borrower  under this
Agreement, (y) deliver to the Administrative Agent and the Lenders an opinion of
counsel,  in form and substance  reasonably  satisfactory to the  Administrative
Agent and the Lenders,  to the effect that such written instrument has been duly
authorized,  executed and delivered by such  surviving,  continuing or resulting
corporation and constitutes a legal,  valid and binding  instrument  enforceable
against such surviving,  continuing or resulting  corporation in accordance with
its  terms,  and to such  further  effects as the  Administrative  Agent and the
Lenders may  reasonably  request,  and (z) have an investment  grade rating from
Moody's  Investors  Service,  Inc. and Standard & Poor's Rating Group,  (ii) the
surviving,  continuing or resulting corporation shall be a corporation organized
and existing under the laws of the United States of America or any State thereof
or  the  District  of  Columbia,   and  (iii)  immediately  after  such  merger,
consolidation or sale, no Default or Unmatured Default would exist;

     (2) any Subsidiary may merge into the Borrower or another  Subsidiary which
is a Wholly-Owned Subsidiary, and may sell, lease or otherwise dispose of any of
its  assets  to the  Borrower  or  another  Subsidiary  which is a  Wholly-Owned
Subsidiary;

     (3) any Subsidiary may merge or consolidate with any corporation other than
the Borrower or another Subsidiary,  provided that (i) the surviving, continuing
or resulting corporation shall be a Subsidiary,  and (ii) immediately after such
merger or consolidation, no Default or Unmatured Default would exist; and

     (4) the Borrower may sell, lease or otherwise dispose of all or any part of
its  assets to any  Person,  and any  Subsidiary  may sell,  lease or  otherwise
dispose of all or any part of its assets to any Person  other than the  Borrower
or another  Subsidiary,  in each case, for a consideration  which represents the
fair value at the time of such sale or other disposition,

                                      -34-
<PAGE>
provided that (x) immediately  after such sale, lease or other  disposition (and
the application of the proceeds thereof as provided in clause (y)) no Default or
Unmatured  Default  would exist and (y) to the extent  applicable,  the Net Cash
Proceeds  of such sale,  lease or other  disposition  are applied as required by
Sections  2.7 and 2.8;  and  provided,  further,  that no  sale,  lease or other
disposition  shall be permitted (unless the cash proceeds of such sale, lease or
other  disposition  will be applied to reduce the Aggregate  Commitment to zero)
if, after giving effect to such transaction,  the aggregate fair market value of
all non-cash  proceeds  received by the Borrower and its  Subsidiaries  from all
sales, leases and other dispositions after the date of this Agreement,  less all
cash proceeds which have been received from such non-cash proceeds, would exceed
$20,000,000.

     6.3.3 Liens.  Create,  incur, assume or suffer to exist any Lien on (a) any
Productive Property,  (b) any Principal  Transmission Facility or (c) any shares
of stock of any Subsidiary, except:

             (i) Liens for taxes,  assessments or governmental charges or levies
         on its  property  if the same  shall not at the time be  delinquent  or
         thereafter can be paid without penalty or, provided the Borrower or any
         Subsidiary knew or should have known of such Liens,  are being actively
         contested in good faith and by  appropriate  proceedings  and for which
         adequate  reserves shall have been set aside on its books in accordance
         with Agreement Accounting Principles,

             (ii)  Liens  imposed  by law,  such as  carriers',  warehousemen's,
         operators',  royalty,  surface  damages and mechanics'  liens and other
         similar liens arising in the ordinary  course of business  which secure
         payment  of  obligations  not more  than 60 days  past due or which are
         being contested in good faith by appropriate  proceedings and for which
         adequate  reserves shall have been set aside on its books in accordance
         with Agreement Accounting Principles,

             (iii) Liens incurred in the ordinary course of business (a) arising
         out  of  pledges  or  deposits  under  workmen's   compensation   laws,
         unemployment  insurance,  old age pensions, or other social security or
         retirement  benefits,  or  similar  legislation,   (b)  to  secure  the
         performance  of letters  of credit,  bids,  tenders,  sales  contracts,
         leases  (including  rent  security  deposits),  statutory  obligations,
         surety,  appeal and performance  bonds,  joint operating  agreements or
         other similar agreements and other similar  obligations not incurred in
         connection  with the  borrowing of money,  the obtaining of advances or
         the  payment  of  the  deferred  purchase  price  of  property  or  (c)
         consisting of deposits which secure public or statutory  obligations of
         the Borrower or any  Subsidiary,  or surety,  custom or appeal bonds to
         which the  Borrower  or any  Subsidiary  is a party,  or the payment of
         contested taxes or import duties of the Borrower or any Subsidiary,

             (iv)  utility  easements,  building  restrictions  and  such  other
         encumbrances  or  charges  against  real  property  as are of a  nature
         generally existing with respect

                                      -35-
<PAGE>
         to properties  of a similar  character and which do not in any material
         way  affect the  marketability  of the same or  interfere  with the use
         thereof in the business of the Borrower or the Subsidiaries,

             (v) Liens on drilling  equipment and  facilities in order to secure
         the financing for the construction of such equipment and facilities not
         constructed  as of the date  hereof,  provided  that such  financing is
         permitted pursuant to Section 6.4,

             (vi)  attachment,  judgment  and other  similar  Liens  arising  in
         connection  with court  proceedings;  provided  the  execution or other
         enforcement of such Liens is  effectively  stayed or the claims secured
         thereby are being  actively  contested in good faith and by appropriate
         proceedings; and provided, further, the Borrower or any Subsidiary knew
         or should have known of such Liens,

             (vii) Liens on property of a Subsidiary, provided such Liens secure
         only obligations owing to the Borrower or a Wholly-Owned Subsidiary,

             (viii)  purchase money  mortgages or other mortgages or other Liens
         on assets  of the  Borrower  or any  Subsidiary  securing  Indebtedness
         hereafter   incurred  by  the  Borrower  or  such  Subsidiary  for  the
         acquisition  of such  assets,  provided no such  mortgage or other Lien
         shall extend to any other  property  (unless  such  mortgage or Lien is
         permitted  under another  clause of this Section  6.3.3) and the amount
         thereby  secured shall not exceed the purchase price of such asset plus
         interest,  if any,  accrued thereon and shall be permitted  pursuant to
         Section 6.4,

             (ix) Liens on  property  hereafter  acquired  (including  shares of
         stock hereafter  acquired of any Person  (including any Person in which
         the Borrower or any Subsidiary  already owns an interest))  existing at
         the  time  of  acquisition  and  liens  assumed  by the  Borrower  or a
         Subsidiary  as a result of a merger  of  another  corporation  into the
         Borrower  or a  Subsidiary  or the  acquisition  by the  Borrower  or a
         Subsidiary  of the  assets  and  liabilities  of  another  corporation,
         provided  that in each case such Liens  shall not have been  created in
         anticipation of such transaction,

             (x) any right which any  municipal or  governmental  body or agency
         may have by virtue of any  franchise,  license,  contract or statute to
         purchase,  or  designate  a  purchaser  of or order  the  sale of,  any
         property of the Borrower or any  Subsidiary  upon payment of reasonable
         compensation  therefor or to terminate any franchise,  license or other
         rights or to regulate  the property and business of the Borrower or any
         Subsidiary,

             (xi)  easements or  reservations  in respect of any property of the
         Borrower or any Subsidiary for the purpose of rights-of-way and similar
         purposes,
                                      -36-
<PAGE>
         reservations,   restrictions,   covenants,   party   wall   agreements,
         conditions of record and other  encumbrances  (other than to secure the
         payment  of money)  and minor  irregularities  or  deficiencies  in the
         record and evidence of title,  which in the  reasonable  opinion of the
         Borrower (at the time of the  acquisition  of the property  affected or
         subsequently)  will not  interfere  in any material way with the proper
         operation and development of the property affected thereby,

             (xii)  Liens  existing on the date hereof and set forth on Schedule
         5.19 hereto,

             (xiii)  Liens on  property to secure all or any part of the cost of
         construction,  alteration or repair of any building, equipment or other
         improvement  on  all  or any  part  of  such  property,  including  any
         pipeline,  or to secure any Indebtedness incurred prior to, at the time
         of, or within 360 days  after,  the  completion  of such  construction,
         alteration  or repair to  provide  funds for the  payment of all or any
         part of such cost,

             (xiv) rights of lessors under oil, gas or mineral leases arising in
         the ordinary course of business,

             (xv)  any  extension,   renewal  or   replacement   (or  successive
         extensions, renewals or replacements), in whole or in part, of any Lien
         referred  to in the  foregoing  clauses;  provided  that the  principal
         amount of  Indebtedness  secured thereby shall not exceed the principal
         amount  of  Indebtedness  so  secured  at the  time of such  extension,
         renewal or replacement and such extension,  renewal or replacement Lien
         shall be limited to all or a part of the  property  which  secured  the
         Lien so  extended,  renewed  or  replaced  (plus  improvements  on such
         property),

             (xvi) Liens which may  hereafter  be attached to  undeveloped  real
         estate  not  containing  oil or gas  reserves  presently  owned  by the
         Borrower in the ordinary  course of the  Borrower's  real estate sales,
         development and rental activities,

             (xvii) Liens not otherwise  permitted by the  foregoing  clauses of
         this Section  6.3.3  securing  Indebtedness  in an aggregate  principal
         amount  which,  at the  time  of  incurrence,  does  not  exceed  5% of
         Stockholders'  Equity  as of the  end of the  most  recently  completed
         fiscal  quarter of the  Borrower as shown on the  consolidated  balance
         sheet related thereto, and

             (xviii) Liens not otherwise  permitted by the foregoing  clauses of
         this Section 6.3.3 in an aggregate  principal amount in excess of 5% of
         Stockholders'  Equity;  provided that at the time such Lien is created,
         the Obligations  will be secured pari passu with the  obligations  such
         Lien is  securing  pursuant  to  documentation  in form  and  substance
         satisfactory to the Administrative Agent

                                      -37-
<PAGE>
         and the Lenders  (drafts of which  documentation  shall be furnished to
         the  Administrative  Agent and the Lenders  sufficiently  in advance to
         provide the Administrative Agent and the Lenders with an opportunity to
         review and comment upon it prior to the granting of any such Lien).

     6.4 Financial Covenants. The Borrower will not:

     6.4.1 Debt to Capitalization Ratio. Permit the Debt to Capitalization Ratio
at any time to exceed 0.8 to 1.

     6.4.2 Fixed Charge Coverage  Ratio.  Permit the Fixed Charge Coverage Ratio
as of the last day of any fiscal  quarter of the Borrower to be less than 2.5 to
1.

     6.4.3 Net Worth.  Permit  Stockholder's  Equity at any time to be less than
$120,000,000.

     6.4.4 Subsidiary  Indebtedness.  Permit the aggregate outstanding amount of
all Indebtedness of Subsidiaries (excluding (i) Indebtedness  outstanding on the
date hereof and renewals,  extensions  and  refinancings  thereof so long as the
principal  amount  thereof  is  not  increased)  and  (ii)  Indebtedness  of any
Subsidiary to the Company or a Wholly-Owned  Subsidiary)  to exceed  $20,000,000
unless  provision has been made for all  Subsidiaries  (other than  Subsidiaries
which would not  constitute a Material Group of  Subsidiaries)  to guarantee the
Obligations  pursuant to documentation  (and related  certificates and opinions)
reasonably satisfactory to the Administrative Agent and the Syndication Agent.

                                  ARTICLE VII

                                    DEFAULTS

     7.1 Events of Default. The occurrence and continuance of any one or more of
the following events shall constitute a Default:

     7.1.1  Representations and Warranties.  Any representation or warranty made
or deemed made by or on behalf of the  Borrower to either Agent or any Lender in
this  Agreement or in any  certificate  or  instrument  delivered in  connection
herewith shall be materially false as of the date on which made.

     7.1.2 Payment Default. Nonpayment of any principal,  interest, fee or other
obligation hereunder within ten days after the same becomes due.

     7.1.3 Breach of Certain Covenants. The breach by the Borrower of (i) any of
the terms or provisions of Section  6.1(i),  6.3.1,  6.3.2 or 6.4 or (ii) any of
the terms or provisions  of Section 6.3.3 which is not remedied  within ten days
after written notice from the Administrative Agent or the Syndication Agent.

                                      -38-
<PAGE>
     7.1.4 Other Breach of this  Agreement.  The breach by the  Borrower  (other
than a breach which  constitutes a Default under Section 7.1.1,  7.1.2 or 7.1.3)
of any term or provision of this Agreement  which is not remedied within 30 days
after written notice from the Administrative Agent or the Syndication Agent.

     7.1.5 ERISA. An event or condition  specified in Section 6.1(d) shall occur
or exist with respect to any Plan or any Multiemployer  Plan and, as a result or
such event or condition,  together with all other such events or conditions then
outstanding,  the Borrower or any member or the Controlled Group shall incur, or
shall be reasonably  likely to incur, a liability to any Plan, any Multiemployer
Plan or the  PBGC  (or any  combination  of the  foregoing)  that  would  have a
Material Adverse Effect.

     7.1.6 Cross-Default.  Failure of the Borrower or any Significant Subsidiary
to pay any Indebtedness when due (after giving effect to any period of grace set
forth  in  any  agreement  under  which  such  Indebtedness  was  created  or is
governed);  or the default by the Borrower or any Significant  Subsidiary in the
performance of any other term, provision or condition contained in any agreement
under which any of their respective Indebtedness was created or is governed, the
effect  of which is to  cause,  or to  permit  the  holder  or  holders  of such
Indebtedness  to cause,  such  Indebtedness  to become  due prior to its  stated
maturity;  or any  Indebtedness  of the Borrower or any  Significant  Subsidiary
shall  become due and  payable or be  required  to be prepaid  (other  than by a
regularly  scheduled  payment) prior to the stated  maturity  thereof;  provided
that, in each case,  the  principal  amount of  Indebtedness  as to which such a
payment  default shall occur and be continuing,  or such a failure to perform or
other event causing or permitting  acceleration  shall occur and be  continuing,
exceeds  $5,000,000;  and  provided,  further,  that no payment or other default
under the Private  Placement Debt resulting  solely from a breach of Section 6.A
or 6.B of the  Private  Placement  Agreement  shall  constitute  a Default or an
Unmatured Default hereunder.

     7.1.7  Voluntary   Bankruptcy,   etc.  The  Borrower,  or  any  Significant
Subsidiary or a Material  Group of  Subsidiaries  shall (i) not pay, or admit in
writing its inability to pay, its debts  generally as they become due, (ii) make
an assignment for the benefit of creditors,  (iii) apply for, seek,  consent to,
or acquiesce in, the appointment of a receiver,  custodian,  trustee,  examiner,
liquidator or similar official for the Borrower,  such Significant Subsidiary or
such Material Group of  Subsidiaries,  (iv) institute any proceeding  seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to  adjudicate it a bankrupt or  insolvent,  or seeking  dissolution,
winding up, liquidation, reorganization,  arrangement, adjustment or composition
of it or  its  debts  under  any  law  relating  to  bankruptcy,  insolvency  or
reorganization  or  relief  of  debtors  or (v) take  any  corporate  action  to
authorize  or effect  any of the  foregoing  actions  set forth in this  Section
7.1.7.

     7.1.8  Involuntary  Bankruptcy,  etc. Without the application,  approval or
consent of the Borrower, the applicable Significant Subsidiary or the applicable
Material Group of Subsidiaries,  a receiver,  trustee,  examiner,  liquidator or
similar official shall be appointed for the Borrower, any Significant Subsidiary
or such Material Group of Subsidiaries, or a proceeding described in

                                      -39-
<PAGE>
Section  7.1.7(iv)  shall be instituted  against the Borrower,  any  Significant
Subsidiary or such Material Group of Subsidiaries and such appointment continues
undischarged or such proceeding  continues  undismissed or unstayed for a period
of 60  consecutive  days.

     7.1.9  Judgments.  The Borrower or any  Significant  Subsidiary  shall fail
within 30 days to pay, bond or otherwise  discharge any final  judgment or order
for the payment of money in excess of $2,500,000,  which is not stayed on appeal
or otherwise being appropriately contested in good faith.

     7.1.10 Environmental  Matters. The Borrower,  any Significant Subsidiary or
any  Material  Group of  Subsidiaries  shall  suffer any  adverse  determination
pertaining to the release by the  Borrower,  any  Significant  Subsidiary or any
other Person of any toxic or hazardous waste or substance into the  environment,
or any violation of any federal, state or local environmental,  health or safety
law or regulation, which, in either case, could reasonably be expected to have a
Material Adverse Effect.

                                  ARTICLE VIII

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

     8.1 Acceleration. If any Default described in Section 7.1.6 or 7.1.7 occurs
with  respect to the  Borrower,  the  obligations  of the  Lenders to make Loans
hereunder shall  automatically  terminate and the Obligations  shall immediately
become due and  payable  without  any  election  or action on the part of either
Agent or any Lender.  If any other Default occurs,  the Required Lenders (or the
Administrative  Agent with the consent of the Required Lenders) may terminate or
suspend the obligations of the Lenders to make Loans  hereunder,  or declare the
Obligations  to be due and payable,  or both,  whereupon the  Obligations  shall
become  immediately due and payable,  without  presentment,  demand,  protest or
notice of any kind, all of which the Borrower hereby expressly waives.

     If, within 30 days after acceleration of the maturity of the Obligations or
termination  of the  obligations  of the  Lenders to make Loans  hereunder  as a
result of any Default  (other than any Default as described in Section  7.1.6 or
7.1.7 with  respect to the  Borrower)  and before any judgment or decree for the
payment of the Obligations due shall have been obtained or entered, the Required
Lenders (in their sole discretion)  shall so direct,  the  Administrative  Agent
shall,  by notice to the Borrower,  rescind and annul such  acceleration  and/or
termination.

     8.2  Amendments.  Subject  to the  provisions  of this  Article  VIII,  the
Required Lenders (or the Administrative Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any  provisions to the Loan  Documents or
changing in any manner the rights of the Lenders or the  Borrower  hereunder  or
waiving any Default  hereunder;  provided  that no such  supplemental  agreement
shall, without the consent of all of the Lenders:

                                      -40-
<PAGE>
     (i)   Extend the final  maturity  of any Loan or forgive all or any portion
           of the  principal  amount  thereof,  or reduce the rate or extend the
           time of payment of interest or fees thereon.

     (ii)  Reduce  the  percentage  specified  in  the  definition  of  Required
           Lenders.

     (iii) Extend the Final  Maturity  Date,  or reduce the amount or extend the
           payment date for, the mandatory  payments required under Section 2.2,
           or  increase  the  amount  of  the  Aggregate  Commitment  or of  the
           Commitment of any Lender hereunder,  or permit the Borrower to assign
           its rights under this Agreement.

     (iv)  Amend this Section 8.2.

No amendment of any provision of this Agreement  relating to the  Administrative
Agent  shall be  effective  without  the  written  consent  of such  Agent.  The
Administrative  Agent may waive payment of the fee required under Section 12.3.2
without obtaining the consent of any other party to this Agreement.

     8.3  Preservation of Rights.  No delay or omission of the Lenders or either
Agent to exercise any right under the Loan Documents  shall impair such right or
be construed to be a waiver of any Default or an acquiescence  therein,  and the
making of a Loan  notwithstanding the existence of a Default or the inability of
the  Borrower  to  satisfy  the  conditions  precedent  to such  Loan  shall not
constitute  any waiver or  acquiescence.  Any single or partial  exercise of any
such right shall not preclude other or further  exercise thereof or the exercise
of any other right,  and no waiver,  amendment or other  variation of the terms,
conditions or provisions of the Loan Documents  whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.2, and then only
to the extent in such writing  specifically set forth. All remedies contained in
the Loan  Documents  or by law  afforded  shall be  cumulative  and all shall be
available to the Agents and the Lenders until the Obligations  have been paid in
full.

                                   ARTICLE IX

                               GENERAL PROVISIONS

     9.1 Survival of Representations.  All representations and warranties of the
Borrower  contained  in this  Agreement  shall  survive  the making of the Loans
herein contemplated.

     9.2 Governmental  Regulation.  Anything  contained in this Agreement to the
contrary  notwithstanding,  no Lender shall be obligated to extend credit to the
Borrower  in  violation  of  any  limitation  or  prohibition  provided  by  any
applicable statute or regulation.

                                      -41-
<PAGE>
     9.3 Headings. Section headings in the Loan Documents are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of the Loan Documents.

     9.4 Entire  Agreement.  The Loan Documents  embody the entire agreement and
understanding  among the Borrower,  the Agents and the Lenders and supersede all
prior  agreements  and  understandings  among the  Borrower,  the Agents and the
Lenders relating to the subject matter thereof.

     9.5  Several  Obligations;  Benefits  of  this  Agreement.  The  respective
obligations  of the  Lenders  hereunder  are several and not joint and no Lender
shall be the  partner  or agent of any other  (except to the extent to which the
Administrative Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. This Agreement shall not be construed so as to
confer any right or  benefit  upon any  Person  other  than the  parties to this
Agreement and their respective successors and assigns, provided that the parties
hereto  expressly  agree that the  Arrangers  shall  enjoy the  benefits  of the
provisions of Sections 9.6, 9.10 and 10.11 to the extent  specifically set forth
therein and shall have the right to enforce  such  provisions  on its own behalf
and in its own name to the same extent as if it were a party to this Agreement.

     9.6 Expenses; Indemnification.  (i) The Borrower shall reimburse the Agents
and the Arrangers for all reasonable  costs,  internal charges and out-of-pocket
expenses (including, subject to any limit on fees which is separately agreed to,
reasonable  attorneys'  fees and reasonable time charges of attorneys for either
Agent,  which  attorneys  may be  employees  of such  Agent) paid or incurred by
either Agent or either Arranger in connection with the preparation, negotiation,
execution,   delivery,   syndication,   review,  amendment,   modification,  and
administration of the Loan Documents.  The Borrower also agrees to reimburse the
Agents, the Arrangers and the Lenders for all reasonable costs, internal charges
and out-of-pocket  expenses (including reasonable attorneys' fees and reasonable
time charges of attorneys for the Agents,  the Arrangers and the Lenders,  which
attorneys may be employees of an Agent,  either Arranger or the Lenders) paid or
incurred by either Agent,  either  Arranger or any Lender in connection with the
collection and enforcement of the Loan Documents.

     (ii) The  Borrower  hereby  further  agrees to  indemnify  the Agents,  the
Arrangers,  each  Lender,  their  respective  affiliates,   and  each  of  their
directors,   officers  and  employees  against  all  losses,  claims,   damages,
penalties,  judgments,  liabilities and reasonable expenses (including,  without
limitation,  all  reasonable  expenses of  litigation  or  preparation  therefor
whether or not an Agent,  an  Arranger,  any Lender or any  affiliate is a party
thereto)  which any of them may pay or incur  arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated hereby or the
direct or indirect  application  or proposed  application of the proceeds of any
Loan  hereunder  except  to the  extent  that  they  are  determined  in a final
non-appealable  judgment by a court of competent  jurisdiction  to have resulted
from  the  gross   negligence  or  willful   misconduct  of  the  party  seeking
indemnification.  The  obligations  of the Borrower under this Section 9.6 shall
survive the termination of this Agreement.

                                      -42-
<PAGE>
     9.7 Numbers of Documents.  All statements,  notices, closing documents, and
requests  hereunder  shall  be  furnished  to  the  Administrative   Agent  with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.

     9.8 Accounting.  Except as provided to the contrary herein,  all accounting
terms  used  herein  shall  be  interpreted  and all  accounting  determinations
hereunder shall be made in accordance with Agreement Accounting Principles.

     9.9 Severability of Provisions.  Any provision in any Loan Document that is
held to be inoperative,  unenforceable, or invalid in any jurisdiction shall, as
to  that  jurisdiction,  be  inoperative,   unenforceable,  or  invalid  without
affecting  the  remaining  provisions  in that  jurisdiction  or the  operation,
enforceability,  or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.

     9.10 Nonliability of Lenders.  The relationship between the Borrower on the
one hand and the  Lenders  and the Agents on the other hand shall be solely that
of borrower  and lender.  None of either  Agent,  either  Arranger or any Lender
shall have any fiduciary responsibilities to the Borrower. None of either Agent,
either Arranger or any Lender  undertakes any  responsibility to the Borrower to
review or inform the Borrower of any matter in connection  with any phase of the
Borrower's  business  or  operations.  The  Borrower  agrees that none of either
Agent,  either  Arranger  or any Lender  shall have  liability  to the  Borrower
(whether  sounding in tort,  contract or otherwise)  for losses  suffered by the
Borrower  in  connection  with,  arising  out of, or in any way  related to, the
transactions   contemplated  and  the  relationship   established  by  the  Loan
Documents,  or any act,  omission or event  occurring in  connection  therewith,
unless  it is  determined  in a final  non-appealable  judgment  by a  court  of
competent  jurisdiction  that such losses resulted from the gross  negligence or
willful  misconduct of the party from which  recovery is sought.  None of either
Agent,  either  Arranger or any Lender shall have any liability with respect to,
and the Borrower hereby waives, releases and agrees not to sue for, any special,
indirect or  consequential  damages suffered by the Borrower in connection with,
arising out of, or in any way related to the Loan Documents or the  transactions
contemplated thereby.

     9.11   Confidentiality.   Each  Lender  agrees  to  hold  any  confidential
information which it may receive from the Borrower pursuant to this Agreement in
confidence,  except  for  disclosure  (i)  to  the  extent  permitted  by law or
regulation,  to its  Affiliates  and  to  other  Lenders  and  their  respective
Affiliates, (ii) to legal counsel,  accountants, and other professional advisors
to such Lender or to a Transferee,  (iii) to regulatory  officials,  (iv) to any
Person as required by law,  regulation,  or legal process,  (v) to any Person in
connection  with any legal  proceeding  to which  such  Lender is a party to the
extent required by law,  regulation or legal process,  (vi) permitted by Section
12.4, (vii) to rating agencies if required by such agencies in connection with a
rating relating to the Advances hereunder,  and (viii) to the extent required in
connection  with the exercise of any remedy or any enforcement of this Agreement
by such Lender or the Administrative Agent.

                                      -43-
<PAGE>
     9.12  Nonreliance.  Each Lender hereby represents that it is not relying on
or looking  to any margin  stock (as  defined  in  Regulation  U of the Board of
Governors of the Federal Reserve System) for the repayment of the Loans provided
for herein.

     9.13  Disclosure.  The Borrower and each Lender hereby (i)  acknowledge and
agree that Bank One and/or its Affiliates from time to time may hold investments
in, make other loans to or have other  relationships  with the  Borrower and its
Affiliates,  and (ii) waive any liability of Bank One or such  Affiliate of Bank
One to the  Borrower or any Lender,  respectively,  arising out of or  resulting
from such investments, loans or relationships other than liabilities arising out
of the gross negligence or willful misconduct of Bank One or its Affiliates.

                                   ARTICLE X

                                   THE AGENTS

     10.1  Appointment;  Nature of  Relationship.  Bank One and Bank of America,
N.A., are hereby  appointed by each of the Lenders as the  Administrative  Agent
and the  Syndication  Agent,  respectively,  hereunder and under each other Loan
Document,  and each of the Lenders  irrevocably  authorizes each Agent to act as
the  contractual  representative  of such  Lender  with the  rights  and  duties
expressly set forth herein and in the other Loan Documents. Each Agent agrees to
act as an  Agent  upon the  express  conditions  contained  in this  Article  X.
Notwithstanding  the  use  of  the  defined  term   "Administrative   Agent"  or
"Syndication  Agent," it is expressly  understood  and agreed that neither Agent
shall  have any  fiduciary  responsibilities  to any  Lender  by  reason of this
Agreement or any other Loan Document and that each Agent is merely acting as the
contractual  representative  of  the  Lenders  with  only  those  duties  as are
expressly  set forth in this  Agreement  and the other  Loan  Documents.  In its
capacity as an Agent (i) neither Agent hereby  assumes any  fiduciary  duties to
any of the Lenders, (ii) is a "representative" of the Lenders within the meaning
of Section 9-105 of the Uniform  Commercial  Code and (iii) each Agent is acting
as an  independent  contractor,  the rights  and duties of which are  limited to
those expressly set forth in this Agreement and the other Loan  Documents.  Each
of the Lenders  hereby  agrees to assert no claim  against  either  Agent on any
agency theory or any other theory of liability for breach of fiduciary duty, all
of which claims each Lender hereby waives.

     10.2 Powers.  Each Agent shall have and may exercise  such powers under the
Loan Documents as are specifically  delegated to such Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. Neither
Agent shall have any implied  duties to the Lenders,  or any  obligation  to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by such Agent.

     10.3 General Immunity.  Neither an Agent nor any of such Agent's respective
directors,  officers,  agents or employees shall be liable to the Borrower,  the
Lenders or any Lender for any action  taken or omitted to be taken by it or them
hereunder or under any other

                                      -44-
<PAGE>
Loan Document or in connection  herewith or therewith  except to the extent such
action or inaction is determined in a final  non-appealable  judgment by a court
of competent  jurisdiction  to have arisen from the gross  negligence or willful
misconduct of such Person.

     10.4 No Responsibility for Loans,  Recitals,  etc. Neither an Agent nor any
of such Agent's  directors,  officers,  agents or employees shall be responsible
for or have any duty to ascertain,  inquire  into, or verify (a) any  statement,
warranty or  representation  made in  connection  with any Loan  Document or any
borrowing  hereunder;  (b) the performance or observance of any of the covenants
or  agreements  of any  obligor  under  any Loan  Document,  including,  without
limitation,  any agreement by an obligor to furnish information directly to each
Lender;  (c) the satisfaction of any condition  specified in Article IV, except,
in the  case  of the  Administrative  Agent  receipt  of  items  required  to be
delivered  solely  to  Administrative  Agent;  (d)  the  existence  or  possible
existence of any Default or Unmatured Default; (e) the validity, enforceability,
effectiveness,  sufficiency  or  genuineness  of any Loan  Document or any other
instrument or writing  furnished in connection  therewith;  or (f) the financial
condition  of the  Borrower or of any of the  Borrower's  Subsidiaries.  Neither
Agent shall have any duty to disclose  to the  Lenders  information  that is not
required to be  furnished  by the  Borrower  to such Agent at such time,  but is
voluntarily  furnished by the Borrower to such Agent  (either in its capacity as
an Agent or in its individual capacity).

     10.5 Action on  Instructions  of Lenders.  Each Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan  Document  in  accordance  with  written  instructions  signed by the
Required Lenders (or, when expressly  required  hereunder,  all of the Lenders),
and such  instructions  and any action taken or failure to act pursuant  thereto
shall be binding on all of the  Lenders.  The Lenders  hereby  acknowledge  that
neither Agent shall be under any duty to take any discretionary action permitted
to be taken by it pursuant to the provisions of this Agreement or any other Loan
Document  unless  it shall be  requested  in  writing  to do so by the  Required
Lenders.  Each Agent shall be fully justified in failing or refusing to take any
action  hereunder  and under any other Loan  Document  unless it shall  first be
indemnified  to its  satisfaction  by the Lenders  pro rata  against any and all
liability,  cost and expense that it may incur by reason of taking or continuing
to take any such action.  The Administrative  Agent agrees,  upon the request of
any Lender at any time an Unmatured  Default exists, to give a written notice to
the Borrower of the type described in Section 7.1.3 or 7.1.4.

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

     10.7 Reliance on Documents;  Counsel.  Each Agent shall be entitled to rely
upon any  Note,  notice,  consent,  certificate,  affidavit,  letter,  telegram,
statement, paper or document

                                      -45-
<PAGE>
believed  by it to be genuine and correct and to have been signed or sent by the
proper person or persons,  and, in respect to legal matters, upon the opinion of
counsel selected by such Agent, which counsel may be employees of such Agent.

     10.8  Agents'  Reimbursement  and  Indemnification.  The  Lenders  agree to
reimburse  and indemnify  each Agent  ratably in proportion to their  respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments  immediately  prior to such  termination)  (i) for any  amounts  not
reimbursed  by the Borrower for which either Agent is entitled to  reimbursement
by the Borrower under the Loan Documents,  (ii) for any other expenses  incurred
by either Agent on behalf of the Lenders,  in connection  with the  preparation,
execution,  delivery,  administration  and  enforcement  of the  Loan  Documents
(including,  without  limitation,  for any  expenses  incurred  by an  Agent  in
connection  with any dispute  between either Agent and any Lender or between two
or more of the  Lenders)  and (iii) for any  liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
of any kind and  nature  whatsoever  which may be  imposed  on,  incurred  by or
asserted  against either Agent in any way relating to or arising out of the Loan
Documents  or any  other  document  delivered  in  connection  therewith  or the
transactions contemplated thereby (including,  without limitation,  for any such
amounts  incurred by or asserted against an Agent in connection with any dispute
between  either Agent and any Lender or between two or more of the Lenders),  or
the  enforcement  of any of the terms of the Loan Documents or of any such other
documents,  provided  that (i) no Lender shall be liable to any Agent for any of
the  foregoing  to  the  extent  any  of  the  foregoing  is  found  in a  final
non-appealable  judgment by a court of competent  jurisdiction  to have resulted
from the gross  negligence  or  willful  misconduct  of such  Agent and (ii) any
indemnification required pursuant to Section 3.5(vii) shall, notwithstanding the
provisions of this Section  10.8,  be paid by the relevant  Lender in accordance
with the provisions  thereof.  The obligations of the Lenders under this Section
10.8 shall survive payment of the Obligations and termination of this Agreement.

     10.9 Notice of Default.  Neither Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Unmatured  Default  hereunder  unless
such Agent has received  written notice from a Lender or the Borrower  referring
to this Agreement  describing such Default or Unmatured Default and stating that
such notice is a "notice of default".  In the event that either  Agent  receives
such a notice, such Agent shall give prompt notice thereof to the Lenders.

     10.10  Rights as a Lender.  In the event an Agent is a Lender,  such  Agent
shall  have the same  rights  and  powers  hereunder  and under  any other  Loan
Document  with  respect  to its  Commitment  and its Loans as any Lender and may
exercise  the same as  though  it were not an Agent,  and the term  "Lender"  or
"Lenders"  shall,  at any time when an Agent is a  Lender,  unless  the  context
otherwise indicates,  include such Agent in its individual capacity.  Each Agent
and its  respective  Affiliates  may accept  deposits  from,  lend money to, and
generally engage in any kind of trust,  debt,  equity or other  transaction,  in
addition to those  contemplated  by this  Agreement or any other Loan  Document,
with the Borrower or any of its Subsidiaries in which

                                      -46-
<PAGE>
the Borrower or such Subsidiary is not restricted  hereby from engaging with any
other Person.  Neither Agent, in its individual capacity, is obligated to remain
a Lender.

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

     10.12 Successor Agent.  Each Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, such resignation to be effective
(i) in the case of the Syndication Agent,  immediately,  and (ii) in the case of
the  Administrative  Agent, upon the appointment of a successor Agent, or, if no
successor  Agent has been  appointed,  forty-five  days after the retiring Agent
gives notice of its intention to resign. Either Agent may be removed at any time
with or without cause by written notice received by such Agent from the Required
Lenders,  such  removal to be  effective  on the date  specified by the Required
Lenders.  Upon any  resignation  or removal  of the  Administrative  Agent,  the
Required  Lenders shall have the right (with, so long as no Default or Unmatured
Default  exists,  the consent of the Borrower,  which shall not be  unreasonably
withheld) to appoint,  on behalf of the  Borrower  and the Lenders,  a successor
Administrative  Agent. If no successor  Administrative  Agent shall have been so
appointed  by the  Required  Lenders  within  thirty  days  after the  resigning
Administrative  Agent's  giving  notice of its  intention  to  resign,  then the
resigning  Administrative  Agent may appoint,  on behalf of the Borrower and the
Lenders,  a  successor   Administrative  Agent.   Notwithstanding  the  previous
sentence,  the  Administrative  Agent may at any time without the consent of any
Lender and with the consent of the Borrower,  not to be unreasonably withheld or
delayed, appoint any of its Affiliates which is a commercial bank as a successor
Administrative Agent hereunder. If the Administrative Agent has resigned or been
removed and no successor  Administrative  Agent has been appointed,  the Lenders
may  perform  all the  duties  of the  Administrative  Agent  hereunder  and the
Borrower shall make all payments in respect of the Obligations to the applicable
Lender and for all other  purposes  shall deal  directly  with the  Lenders.  No
successor  Administrative  Agent shall be deemed to be appointed hereunder until
such  Administrative  Agent has accepted  the  appointment.  Any such  successor
Administrative  Agent shall be a  commercial  bank having  capital and  retained
earnings of at least  $100,000,000.  Upon the  acceptance of any  appointment as
Administrative  Agent  hereunder  by  a  successor  Administrative  Agent,  such
successor Administrative Agent shall thereupon succeed to and become vested with
all the  rights,  powers,  privileges  and  duties of the  resigning  or removed
Administrative  Agent.  Upon the  effectiveness of the resignation or removal of
either Agent, the resigning or removed Agent shall be discharged from its duties
and obligations hereunder and under the Loan Documents.  After the effectiveness
of the  resignation  or removal of an Agent,  the  provisions  of this Article X
shall continue in effect for the benefit of such Agent in respect of any actions
taken or omitted to be

                                      -47-
<PAGE>
taken by such Agent while such Agent was acting as an Agent  hereunder and under
the  other  Loan  Documents.  In the  event  that  there is a  successor  to the
Administrative  Agent by merger, or the Administrative  Agent assigns its duties
and  obligations to an Affiliate  pursuant to this Section 10.12,  then the term
"Prime Rate" as used in this Agreement  shall mean the prime rate,  base rate or
other  analogous  rate of the new  Administrative  Agent.

     10.13  Delegation  to  Affiliates.  The Borrower and the Lenders agree that
each Agent may  delegate  any of its duties  under this  Agreement to any of its
respective  Affiliates.  Any such  Affiliate  (and such  Affiliate's  directors,
officers,  agents and employees)  which performs  duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification,  waiver
and other protective  provisions to which the Agents are entitled under Articles
IX and X.

                                   ARTICLE XI

                            SETOFF; RATABLE PAYMENTS

     11.1 Setoff.  In addition to, and without  limitation of, any rights of the
Lenders  under  applicable  law,  if the  Borrower  becomes  insolvent,  however
evidenced,  or any Default occurs,  any and all deposits  (including all account
balances,  whether  provisional  or  final  and  whether  or  not  collected  or
available) and any other Indebtedness at any time held or owing by any Lender or
any  Affiliate of any Lender to or for the credit or account of the Borrower may
be offset and  applied  toward  the  payment  of the  Obligations  owing to such
Lender, whether or not the Obligations, or any part thereof, shall then be due.

     11.2 Ratable Payments. If any Lender,  whether by setoff or otherwise,  has
payment  made to it upon its Loans  (other than  payments  received  pursuant to
Section 3.1, 3.2, 3.4 or 3.5) in a greater  proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender,  whether in connection with
setoff or  amounts  which  might be  subject  to setoff or  otherwise,  receives
collateral or other  protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in  proportion  to their  Loans.  In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made.

                                  ARTICLE XII

               BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

     12.1 Successors and Assigns. The terms and provisions of the Loan Documents
shall be binding  upon and inure to the benefit of the  Borrower and the Lenders
and their respective

                                      -48-
<PAGE>
successors and assigns, except that (i) the Borrower shall not have the right to
assign  its  rights  or  obligations  under  the  Loan  Documents  and  (ii) any
assignment  by any Lender must be made in  compliance  with  Section  12.3.  The
parties to this  Agreement  acknowledge  that clause (ii) of this  Section  12.1
relates only to absolute  assignments and does not prohibit assignments creating
security interests,  including,  without limitation, any pledge or assignment by
any Lender of all or any portion of its rights under this Agreement and any Note
to a Federal Reserve Bank; provided that no such pledge or assignment creating a
security  interest  shall  release the  transferor  Lender from its  obligations
hereunder unless and until the parties thereto have complied with the provisions
of Section 12.3.  The  Administrative  Agent may treat the Person which made any
Loan or which holds any Note as the owner thereof for all purposes hereof unless
and  until  such  Person   complies  with  Section   12.3;   provided  that  the
Administrative Agent may in its discretion (but shall not be required to) follow
instructions  from the  Person  which  made any Loan or which  holds any Note to
direct payments relating to such Loan or Note to another Person. Any assignee of
the rights to any Loan or any Note agrees by acceptance of such assignment to be
bound by all the  terms  and  provisions  of the Loan  Documents.  Any  request,
authority  or consent of any Person,  who at the time of making such  request or
giving such authority or consent is the owner of the rights to any Loan (whether
or not a Note has been  issued in evidence  thereof),  shall be  conclusive  and
binding on any  subsequent  holder or assignee of the rights to such Loan.

     12.2 Participations.

         12.2.1. Permitted Participants; Effect. Any Lender may, in the ordinary
     course of its business and in accordance  with  applicable law, at any time
     sell to one or more banks or other entities ("Participants")  participating
     interests in any Loan owing to such  Lender,  any Note held by such Lender,
     any  Commitment  of such Lender or any other  interest of such Lender under
     the  Loan  Documents.  In the  event  of  any  such  sale  by a  Lender  of
     participating  interests to a Participant,  such Lender's obligations under
     the Loan Documents shall remain unchanged,  such Lender shall remain solely
     responsible  to the  other  parties  hereto  for  the  performance  of such
     obligations, such Lender shall remain the owner of its Loans and the holder
     of any Note issued to it in evidence  thereof  for all  purposes  under the
     Loan  Documents,  all amounts  payable by the Borrower under this Agreement
     (including under Article III) shall be determined as if such Lender had not
     sold such participating  interests, and the Borrower and the 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.

         12.2.2.  Voting  Rights.  Each  Lender  shall  retain the sole right to
     approve,   without  the  consent  of  any   Participant,   any   amendment,
     modification  or waiver of any provision of the Loan  Documents  other than
     any  amendment,  modification  or  waiver  with  respect  to  any  Loan  or
     Commitment  in  which  such  Participant  has an  interest  which  forgives
     principal,  interest or fees or reduces the  interest  rate or fees payable
     with  respect to any such Loan or  Commitment,  extends the Final  Maturity
     Date, or postpones any date fixed for any  regularly  scheduled  payment of
     principal of, or interest or fees on, any such Loan or Commitment.

                                      -49-
<PAGE>
     12.3 Assignments.

         12.3.1.  Permitted Assignments.  Any Lender may, in the ordinary course
     of its business and in accordance  with  applicable law, at any time assign
     to one or more banks or other  entities  ("Purchasers")  all or any part of
     its rights and obligations under the Loan Documents.  Such assignment shall
     be  substantially  in the form of Exhibit C or in such other form as may be
     agreed  to by  the  parties  thereto.  The  consent  of the  Borrower,  the
     Administrative  Agent and the Syndication Agent (which consent shall not be
     unreasonably withheld or delayed by any such party) shall be required prior
     to an assignment  becoming  effective with respect to a Purchaser  which is
     not a Lender  or an  Affiliate  thereof;  provided  that if a  Default  has
     occurred  and is  continuing,  the  consent  of the  Borrower  shall not be
     required;  provided,  further, that no assignment shall be permitted if, as
     of the date thereof, any event or circumstance exists which would result in
     the Borrower  being  obligated to pay any greater  amount  hereunder to the
     Purchaser  than the Borrower is obligated to pay to the  assigning  Lender.
     Each such  assignment  with respect to a Purchaser which is not a Lender or
     an  Affiliate   thereof   shall  (unless  each  of  the  Borrower  and  the
     Administrative  Agent otherwise consents) be in an amount not less than the
     lesser of (i)  $5,000,000  or (ii) the  remaining  amount of the  assigning
     Lender's  Commitment  (calculated  as at the  date of such  assignment)  or
     outstanding Loans (if the applicable Commitment has been terminated).

         12.3.2. Effect; Effective Date. Upon (i) delivery to the Administrative
     Agent of an  assignment,  together  with any  consents  required by Section
     12.3.1,  and (ii) payment of a $4,000 fee to the  Administrative  Agent for
     processing such assignment (unless such fee is waived by the Administrative
     Agent),  such  assignment  shall  become  effective on the  effective  date
     specified in such assignment. The assignment shall contain a representation
     by the Purchaser to the effect that none of the consideration  used to make
     the purchase of the Commitment  and Loans under the  applicable  assignment
     agreement  constitutes  "plan  assets" as defined  under ERISA and that the
     rights and interests of the Purchaser in and under the Loan  Documents will
     not be "plan assets" under ERISA.  On and after the effective  date of such
     assignment, such Purchaser shall for all purposes be a Lender party to this
     Agreement  and any  other  Loan  Document  executed  by or on behalf of the
     Lenders and shall have all the rights and obligations of a Lender under the
     Loan Documents,  to the same extent as if it were an original party hereto,
     and no  further  consent  or  action  by the  Borrower,  the  Lenders,  the
     Administrative  Agent or the Syndication Agent shall be required to release
     the  transferor  Lender with  respect to the  percentage  of the  Aggregate
     Commitment and Loans assigned to such Purchaser.  Upon the  consummation of
     any  assignment  to a  Purchaser  pursuant  to  this  Section  12.3.2,  the
     transferor Lender, the Administrative  Agent and the Borrower shall, if the
     transferor  Lender or the Purchaser  desires that its Loans be evidenced by
     Notes, make appropriate  arrangements so that new Notes or, as appropriate,
     replacement Notes are issued to such transferor Lender and new Notes or, as
     appropriate,  replacement Notes, are issued to such Purchaser, in each case
     in principal amounts reflecting their respective  Commitments,  as adjusted
     pursuant to such assignment.

                                      -50-
<PAGE>
     12.4 Dissemination of Information.  The Borrower  authorizes each Lender to
disclose to any  Participant  or  Purchaser  or any other  Person  acquiring  an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective  Transferee  any and all  information  in such  Lender's  possession
concerning the creditworthiness of the Borrower and its Subsidiaries,  including
without limitation any information contained in any Reports;  provided that each
Transferee and prospective Transferee agrees to be bound by Section 9.11 of this
Agreement.

     12.5 Tax Treatment.  If any interest in any Loan Document is transferred to
any Transferee which is organized under the laws of any jurisdiction  other than
the United States or any State thereof,  the transferor  Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the  provisions  of Section  3.5(iv) and the  Borrower  shall not be required to
indemnify such Transferee  pursuant to Section 3.5 hereof for any Taxes withheld
as a result of the failure of the Transferee to so comply.

                                  ARTICLE XIII

                                    NOTICES

     13.1 Notices. Except as otherwise permitted by Section 2.15 with respect to
borrowing notices,  all notices,  requests and other communications to any party
hereunder  shall be in writing  (including  electronic  transmission,  facsimile
transmission  or similar  writing) and shall be given to such party:  (x) in the
case of the Borrower or an Agent,  at its address or facsimile  number set forth
on the signature pages hereof,  (y) in the case of any Lender, at its address or
facsimile  number set forth in its  administrative  questionnaire  or (z) in the
case of any party,  at such other address or facsimile  number as such party may
hereafter specify for the purpose by notice to the Administrative  Agent and the
Borrower in  accordance  with the  provisions  of this Section  13.1.  Each such
notice,  request  or  other  communication  shall be  effective  (i) if given by
facsimile  transmission,  when  transmitted to the facsimile number specified in
this Section and  confirmation  of receipt is received,  or (ii) if given by any
other  means,  when  delivered  (or,  in the  case of  electronic  transmission,
received) at the address specified in this Section; provided that notices to the
Administrative Agent under Article II shall not be effective until received.

     13.2 Change of Address.  The  Borrower,  each Agent and any Lender may each
change the  address  for service of notice upon it by a notice in writing to the
other parties hereto.

                                  ARTICLE XIV

                                  COUNTERPARTS

     This Agreement may be executed in any number of counterparts,  all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this
                                      -51-
<PAGE>
Agreement by signing any such  counterpart.  This  Agreement  shall be effective
when it has been executed by the  Borrower,  the Agents and the Lenders and each
party  has  notified  the  Administrative  Agent by  facsimile  transmission  or
telephone that it has taken such action.

                                   ARTICLE XV

                    CHOICE OF LAW; CONSENT TO JURISDICTION;
                  WAIVER OF JURY TRIAL; MAXIMUM INTEREST RATE

     15.1  CHOICE OF LAW.  THE LOAN  DOCUMENTS  (OTHER THAN THOSE  CONTAINING  A
CONTRARY  EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (INCLUDING,  WITHOUT  LIMITATION,  735 ILCS SECTION 105/5-1 ET
SEQ, BUT OTHERWISE  WITHOUT  REGARD TO THE CONFLICT OF LAWS  PROVISIONS)  OF THE
STATE OF  ILLINOIS,  BUT GIVING  EFFECT TO FEDERAL LAWS  APPLICABLE  TO NATIONAL
BANKS.

     15.2 CONSENT TO JURISDICTION.  THE BORROWER HEREBY  IRREVOCABLY  SUBMITS TO
THE  NON-EXCLUSIVE  JURISDICTION  OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY  IRREVOCABLY  AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING  MAY BE HEARD AND  DETERMINED
IN ANY SUCH COURT AND  IRREVOCABLY  WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT,  ACTION OR  PROCEEDING  BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN  INCONVENIENT  FORUM.  NOTHING HEREIN SHALL LIMIT
THE  RIGHT OF  EITHER  AGENT OR ANY  LENDER  TO BRING  PROCEEDINGS  AGAINST  THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE
BORROWER  AGAINST EITHER AGENT OR ANY LENDER OR ANY AFFILIATE OF EITHER AGENT OR
ANY LENDER INVOLVING,  DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF,  RELATED TO, OR CONNECTED  WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN CHICAGO, ILLINOIS.

     15.3 WAIVER OF JURY TRIAL. THE BORROWER,  THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY,  ANY MATTER (WHETHER SOUNDING IN TORT,  CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF,  RELATED TO, OR CONNECTED  WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

                                      -52-
<PAGE>
     15.4  Maximum  Interest  Rate.  No provision  of the Loan  Documents  shall
require  the  payment  or permit the  collection  of  interest  in excess of the
maximum  permitted by applicable law ("Maximum Rate"). If any interest in excess
of the Maximum Rate is provided for or shall be  adjudicated  to be provided for
in the Notes or otherwise in connection with this  Agreement,  the provisions of
this  Section  15.4 shall  govern and prevail and neither the  Borrower  nor the
sureties,  guarantors,  successors or assigns of the Borrower shall be obligated
to pay the excess  amount of the  interest or any other  excess sum paid for the
use, forbearance,  or detention of sums loaned. In the event either Agent or any
Lender ever  receives,  collects or applies as interest  any amount in excess of
the Maximum Rate, the amount by which such amount exceeds the Maximum Rate shall
be applied as a payment and reduction of the principal of indebtedness evidenced
by the Loans,  and, if the principal  amount of the Loans has been paid in full,
any remaining excess shall forthwith be paid to the Borrower.

     15.5 Termination of Existing Agreements. Each of the parties hereto (to the
extent  applicable)  agrees  that,  concurrently  with the making of the initial
Advance hereunder, each of the Agreements referred to in clause (a) of the first
paragraph of Section 4.1 shall be terminated  (without regard to any requirement
for notice of termination of any commitment  thereunder) and each such Agreement
shall be of no further force or effect  (except for any provision  thereof which
by its terms survives termination thereof).

                                      -53-
<PAGE>
     IN WITNESS WHEREOF, the Borrower,  the Lenders and the Agents have executed
this Agreement as of the date first above written.

                                        SOUTHWESTERN ENERGY COMPANY

                                        By:____________________________________
                                             Executive Vice President and
                                               Chief Financial Officer

                                        1083 Sain Street
                                        P.O. Box 1408
                                        Fayetteville, Arkansas 72702
                                        Attention: Greg Kerley
                                        Fax:       501-521-1147

                                      S-1
<PAGE>

                                        BANK ONE, NA,
                                        Individually and as Administrative Agent

                                        By:____________________________________
                                          Title:_______________________________

                                        1 Bank One Plaza
                                        Chicago, Illinois 60670
                                        Attention: Madeleine Pember
                                        Fax:       312-732-9727

                                      S-2
<PAGE>

                                        BANK OF AMERICA, N.A.,
                                        Individually and as Syndication Agent

                                        By:____________________________________
                                                   J. Scott Fowler
                                                  Managing Director

                                      S-3
<PAGE>
                                  SCHEDULE 1A
                                  COMMITMENTS

<TABLE>
<CAPTION>
     Lender                                         Amount of Commitment
     ------                                         --------------------
     <S>                                            <C>
     Bank One, NA                                   $ 90,000,000

     Bank of America, N.A.                          $ 90,000,000
     --------------------                           ------------

     Aggregate Commitment                           $180,000,000
</TABLE>
<PAGE>
                                  SCHEDULE 1B
                             EXISTING INDEBTEDNESS
<TABLE>
<CAPTION>
                                                                   Outstanding Principal
     Designation         Obligor   Holders as of July 10, 2000   Amount as of July 10, 2000
     -----------         -------   ---------------------------   --------------------------
<S>                      <C>       <C>                                  <C>
Private Placement Debt   Company   Various Investors                     $22,000,000

Senior Notes             Company   Bank One, NA (then known as          $125,000,000
                                   The First National  Bank of
                                   Chicago), as Trustee

Medium Term Notes        Company   Bank One, NA (then known as          $100,000,000
                                   The First National Bank of
                                   Chicago),  as Trustee

Guaranty Agreement Re:   Company   The Bank of New York, as              $45,600,000
NOARK Pipeline System              Trustee
</TABLE>
<PAGE>
                                SCHEDULE 2.7(a)
                              EXCLUDED ASSET SALES

A.W. Realty Sale
An undivided 2/3 interest in Lot1-B of Vantage  Square,  a Joint  Venture,  or a
portion  of Lot 1-B yet to be  determined.  Lot 1-B  containing  5.86  acres  is
located in the  northeast  quarter  of the  northeast  quarter  of  Section  26,
Township 17 north,  range 30 west of Washington  County,  Arkansas.  Anticipated
sales  proceeds  of   approximately   $1.2  million.

Oklahoma  E&P  Properties
Southwestern  Energy Production  Company's working interest in approximately 135
oil and gas  producing  properties  located  primarily in the Anadarko  Basin in
western  Oklahoma.  Properties  will  be  auctioned  at  the  Oil  &  Gas  Asset
Clearinghouse  Auction  scheduled  for the week of July 10,  2000 with  proceeds
expected to be between $11 million and $13 million.

<PAGE>
                                SCHEDULE 2.7(b)
                              ASSETS TO BE SWAPPED

Southwestern  Energy Production  Company's working interest in approximately 300
oil and gas producing  properties in the Anadarko Basin of Oklahoma.  Properties
represent the remaining Anadarko  properties not sold at auction during the week
of July 10, 2000.  Properties would be anticipated to be sold at a price ranging
from $20 million to $30 million.

<PAGE>
                                  SCHEDULE 5.4
                                  SUBSIDIARIES

Arkansas Western Gas Company

Southwestern Energy Production Company

Southwestern Energy Pipeline Company

SEECO, Inc.

A.W. Realty Company

Southwestern Energy Services Company

Diamond M Production Company

All  of the  above  are  100%  wholly-owned  by the  Company  and  are  Arkansas
corporations.

Arkansas Gas Gathering Company, an Arkansas corporation, is 100% wholly-owned by
SEECO, Inc.

<PAGE>
                                  SCHEDULE 5.13
                                   LITIGATION

                  Enron v. Southwestern Energy Company, et. al

In its Form 8-K filed July 2, 1996,  the  Borrower  disclosed  that this lawsuit
relating  to  overriding  royalty  interests  in  certain  Arkansas  oil and gas
properties had been filed against it and two of its  wholly-owned  subsidiaries.
The lawsuit,  which was brought by a party who was  originally  included in (but
opted out of) the Case, involves claims similar to those upon which judgment was
rendered against the Borrower and its Subsidiaries.  In September 1998,  another
party  who  opted  out  of  the  class  threatened  the  Borrower  with  similar
litigation.  While the amounts of these pending and  threatened  claims could be
significant,  management  believes,  based on its extensive  investigations  and
trial preparation,  that these claims are without merit, and that the Borrower's
ultimate liability,  if any, will not be material to its consolidated  financial
position or results of  operation.  This  matter went to a non-jury  trial as to
liability on January 10, 2000 and the Borrower is awaiting the Court's ruling.

<PAGE>
                                 SCHEDULE 5.19
                                NEGATIVE PLEDGES

     Listed  below  are  all  of  the  documents   evidencing   Indebtedness  of
Southwestern  Energy Company and its Subsidiaries  which contain  limitations on
the creation, incurrence, or assumption of Liens on any of their properties.

     9.36% Senior Notes due 2011, Series C issued by the Borrower.

     Indenture dated as of December 1, 1995,  between the Borrower and Bank One,
     NA (then known as The First National Bank of Chicago), as Trustee.

<PAGE>
                                  SCHEDULE 6.2
                                   INSURANCE

1.   Property "all risk" insurance including  earthquake coverage for buildings,
     personal property, equipment and inventory. Minimum limit of $15,000,000.

2.   Workers'  Compensation with Statutory Limits and Employer's  Liability with
     $1,000,000 per accident or occupational  disease  covering all employees in
     compliance  with the laws of the States of Arkansas,  Oklahoma,  New Mexico
     and Texas. Such policy is endorsed to provide United States  Longshoremen's
     & Harbor Workers' Compensation Act and Maritime Coverages.

3.   Comprehensive  General  Liability  Insurance  with bodily  injury and death
     limits of  $1,000,000  for injury to or death of one person and  $2,000,000
     for the  death or injury of more  than one  person  in one  occurrence  and
     property damage limits of $1,000,000 for each occurrence.

4.   Automobile Public Liability  Insurance  covering bodily injury or death and
     property  damage of at least  $1,000,000 per  occurrence,  combined  single
     limit.

5.   Control  of Well  Coverage  with  $10,000,000  combined  single  limit  for
     operator's      extra      expense/care,      custody     and      control;
     redrilling/recompletion; and seepage, pollution and containment.

6.   Umbrella Liability Insurance with minimum limits of at least $30,000,000 to
     apply in excess of the primary limits of the above stated policies.

<PAGE>
                                   EXHIBIT A

                            FORM OF BORROWING NOTICE

Reference  is made to the Credit  Agreement  dated as of July 17,  2000 (as from
time to time amended,  the "Agreement")  among Southwestern  Energy Company,  an
Arkansas corporation (the "Borrower"),  various financial institutions, and Bank
One, NA, as Administrative Agent (the "Administrative Agent"). Capitalized terms
used but not defined herein have the respective  meanings given to such terms in
the Agreement.
Pursuant to the Agreement,  the Borrower  hereby requests that an Advance in the
amount of $_________ to be made on  ____________,  ____.  The Borrower  requests
that the  Advance to be made  hereunder  shall be [a Floating  Rate  Advance] [a
Eurodollar  Advance] [a  Transaction  Rate  Advance] [and shall have an Interest
Period/Transaction  Rate  Interest  Period  of  _______________.]

     The  Borrower certifies that:

         (a) The  representations  and  warranties  of the Borrower set forth in
Article V of the  Agreement  are true and correct on and as of the date  hereof,
with the same effect as though such representations and warranties had been made
on and as of the date  hereof or, if such  representations  and  warranties  are
expressly limited to particular dates, as of such particular dates.

         (b) No Default or  Unmatured  Default  exists or will  result  from the
Borrower's  receipt and  application  of the  proceeds of the Advance  requested
hereby.

     IN WITNESS WHEREOF, this instrument is executed as of _________,  ____.

                                        SOUTHWESTERN ENERGY COMPANY

                                        By:____________________________________
                                        Name:__________________________________
                                        Title:_________________________________

<PAGE>
                                   EXHIBIT B
                                FORM OF OPINION

                                                              ___________, 2000

The Administrative Agent and the Lenders who are parties to the Credit Agreement
described below.

Gentlemen/Ladies:

     I am counsel for  Southwestern  Energy Company (the  "Borrower"),  and have
represented  the Borrower in  connection  with its  execution  and delivery of a
Credit Agreement dated as of July 17, 2000 (the "Agreement") among the Borrower,
the Lenders  named  therein,  and Bank One,  NA, as  Administrative  Agent,  and
providing  for  Advances  in  an  aggregate   principal   amount  not  exceeding
$180,000,000 at any one time  outstanding.  All  capitalized  terms used in this
opinion and not otherwise  defined herein shall have the meanings  attributed to
them in the Agreement.

     I have  examined  the  Borrower's  **[describe  constitutive  documents  of
Borrower and appropriate evidence of authority to enter into the transaction]**,
the  Loan  Documents  and  such  other  matters  of fact  and law  which we deem
necessary in order to render this opinion.  Based upon the foregoing,  it is our
opinion that:

     l. Each of the Borrower and its Subsidiaries is a corporation,  partnership
or limited liability  Borrower duly and properly  incorporated or organized,  as
the case may be,  validly  existing and (to the extent such  concept  applies to
such  entity)  in  good  standing  under  the  laws  of  its   jurisdiction   of
incorporation  or  organization  and has all requisite  authority to conduct its
business in each jurisdiction in which its business is conducted.

     2. The execution and delivery by the Borrower of the Loan Documents and the
performance  by the  Borrower  of its  obligations  thereunder  have  been  duly
authorized by proper corporate  proceedings on the part of the Borrower and will
not:

         (a)  require  any  consent of the  Borrower's  shareholders  or members
     (other than any such  consent as has already been given and remains in full
     force and effect);

         (b) violate  (i) any law,  rule,  regulation,  order,  writ,  judgment,
     injunction,  decree  or  award  binding  on  the  Borrower  or  any  of its
     Subsidiaries  or  (ii)  the  Borrower's  or any  Subsidiary's  articles  or
     certificate  of  incorporation,   partnership  agreement,   certificate  of
     partnership, articles or certificate of organization,  bylaws, or operating
     or

<PAGE>
     other management agreement,  as the case may be, or (iii) the provisions of
     any indenture,  instrument or agreement to which the Borrower or any of its
     Subsidiaries is a party or is subject, or by which it, or its Property,  is
     bound, or conflict with or constitute a default thereunder; or

         (c) result in, or require,  the creation or  imposition of any Lien in,
     of or on the Property of the Borrower or a Subsidiary pursuant to the terms
     of any indenture,  instrument or agreement binding upon the Borrower or any
     of its Subsidiaries.

     3. The Loan Documents have been duly executed and delivered by the Borrower
and constitute legal, valid and binding obligations of the Borrower  enforceable
against the  Borrower in  accordance  with their terms  except to the extent the
enforcement  thereof may be limited by  bankruptcy,  insolvency  or similar laws
affecting the enforcement of creditors' rights generally and subject also to the
availability of equitable remedies if equitable remedies are sought.

     4. Except for the litigation disclosed in Borrower's Form 8-K filed July 2,
1996  and  updated  in  the  Borrower's  most  recent  Form  10-Q,  there  is no
litigation,  arbitration,  governmental  investigation,  proceeding  or  inquiry
pending or, to the best of our knowledge after due inquiry,  threatened  against
the Borrower or any of its Subsidiaries  which, if adversely  determined,  could
reasonably be expected to have a Material Adverse Effect.

     5. No order, consent, adjudication,  approval, license,  authorization,  or
validation of, or filing,  recording or  registration  with, or exemption by, or
other action in respect of any governmental or public body or authority,  or any
subdivision  thereof,  which has not been obtained by the Borrower or any of its
Subsidiaries,  is  required  to be  obtained  by  the  Borrower  or  any  of its
Subsidiaries  in  connection  with  the  execution  and  delivery  of  the  Loan
Documents,  the borrowings  under the Agreement,  the payment and performance by
the Borrower of the Obligations,  or the legality,  validity,  binding effect or
enforceability of any of the Loan Documents.

     This  opinion  may be relied  upon by the  Agents,  the  Lenders  and their
participants, assignees and other transferees.

                                        Very truly yours,

<PAGE>
                                   EXHIBIT C

                              ASSIGNMENT AGREEMENT

     This Assignment Agreement (this "Assignment Agreement") between ___________
(the "Assignor") and _____________ (the "Assignee") is dated as of ________, ___
20___.  The parties  hereto agree as follows:

     1.  PRELIMINARY  STATEMENT.  The Assignor is a party to a Credit  Agreement
(which, as it may be amended, modified, renewed or extended from time to time is
herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached
hereto  ("Schedule 1").  Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Credit Agreement.

     2. ASSIGNMENT AND ASSUMPTION.  The Assignor hereby sells and assigns to the
Assignee,  and the Assignee hereby  purchases and assumes from the Assignor,  an
interest  in and to the  Assignor's  rights  and  obligations  under the  Credit
Agreement  and the other Loan  Documents,  such that after giving effect to such
assignment  the  Assignee  shall  have  purchased  pursuant  to this  Assignment
Agreement  the  percentage  interest  specified  in Item 3 of  Schedule 1 of all
outstanding rights and obligations under the Credit Agreement and the other Loan
Documents  relating  to the  facilities  listed  in Item 3 of  Schedule  1.  The
aggregate   Commitment  (or  Loans,  if  the  applicable   Commitment  has  been
terminated)  purchased  by the  Assignee  hereunder  is set  forth  in Item 4 of
Schedule 1.

     3. EFFECTIVE  DATE. The effective  date of this  Assignment  Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter  period agreed to by the  Administrative
Agent) after this  Assignment  Agreement,  together  with any consents  required
under the Credit  Agreement,  are delivered to the  Administrative  Agent. In no
event will the Effective  Date occur if the payments  required to be made by the
Assignee to the  Assignor  on the  Effective  Date are not made on the  proposed
Effective Date.

     4. PAYMENT  OBLIGATIONS.  In  consideration  for the sale and assignment of
Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the
amount  agreed to by the Assignor and the  Assignee.  On and after the Effective
Date,  the Assignee shall be entitled to receive from the  Administrative  Agent
all  payments  of  principal,  interest  and fees with  respect to the  interest
assigned  hereby.  The Assignee will promptly remit to the Assignor any interest
on Loans and fees  received  from the  Administrative  Agent which relate to the
portion of the  Commitment  or Loans  assigned  to the  Assignee  hereunder  for
periods prior to the Effective Date and not  previously  paid by the Assignee to
the  Assignor.  In the event that either  party  hereto  receives any payment to
which the other party hereto is entitled under this Assignment  Agreement,  then
the party  receiving  such  amount  shall  promptly  remit it to the other party
hereto.

<PAGE>
     5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of
the  recordation  fee  required  to be  paid  to  the  Administrative  Agent  in
connection with this Assignment  Agreement unless otherwise  specified in Item 6
of Schedule 1.

     6.   REPRESENTATIONS  OF  THE  ASSIGNOR;   LIMITATIONS  ON  THE  ASSIGNOR'S
LIABILITY.  The Assignor  represents  and warrants  that (i) it is the legal and
beneficial  owner of the  interest  being  assigned by it  hereunder,  (ii) such
interest  is free and clear of any adverse  claim  created by the  Assignor  and
(iii) the execution and delivery of this Assignment Agreement by the Assignor is
duly authorized.  It is understood and agreed that the assignment and assumption
hereunder are made without  recourse to the Assignor and that the Assignor makes
no other  representation  or warranty of any kind to the  Assignee.  Neither the
Assignor  nor any of its  officers,  directors,  employees,  agents or attorneys
shall  be   responsible   for  (i)  the  due  execution,   legality,   validity,
enforceability, genuineness, sufficiency or collectability of any Loan Document,
including  without  limitation,  documents  granting  the Assignor and the other
Lenders a security interest in assets of the Borrower or any guarantor, (ii) any
representation,  warranty or statement made in or in connection  with any of the
Loan  Documents,  (iii)  the  financial  condition  or  creditworthiness  of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or  provisions of any of the Loan  Documents,  (v)  inspecting  any of the
property,  books or records of the Borrower, (vi) the validity,  enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or  purporting to secure the Loans or (vii) any mistake,  error of judgment,  or
action  taken or  omitted to be taken in  connection  with the Loans or the Loan
Documents.

     7.  REPRESENTATIONS  AND  UNDERTAKINGS  OF THE  ASSIGNEE.  The Assignee (i)
confirms  that it has  received a copy of the Credit  Agreement,  together  with
copies of the  financial  statements  requested  by the  Assignee and such other
documents and  information  as it has deemed  appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement,  (ii) agrees that
it will,  independently  and without reliance upon either Agent, the Assignor or
any other Lender and based on such  documents and  information  at it shall deem
appropriate at the time,  continue to make its own credit decisions in taking or
not taking action under the Loan  Documents,  (iii)  appoints and authorizes the
Agents to take such  action as agent on its behalf and to  exercise  such powers
under the Loan  Documents as are  delegated to the Agents by the terms  thereof,
together with such powers as are reasonably  incidental  thereto,  (iv) confirms
that the execution and delivery of this Assignment  Agreement by the Assignee is
duly authorized,  (v) agrees that it will perform in accordance with their terms
all of the obligations  which by the terms of the Loan Documents are required to
be performed by it as a Lender,  (vi) agrees that its payment  instructions  and
notice  instructions  are as set forth in the  attachment  to  Schedule 1, (vii)
confirms that none of the funds,  monies,  assets or other  consideration  being
used to make the purchase and assumption  hereunder are "plan assets" as defined
under ERISA and that its rights,  benefits  and  interests in and under the Loan
Documents will not be "plan assets" under ERISA,  (viii) agrees to indemnify and
hold the Assignor  harmless against all losses,  costs and expenses  (including,
without limitation,  reasonable attorneys' fees) and liabilities incurred by the
Assignor  in  connection  with or  arising  in any  manner  from the  Assignee's
nonperformance of the obligations assumed under this Assignment Agreement, and

                                       2
<PAGE>
(ix) if  applicable,  attaches  the forms  prescribed  by the  Internal  Revenue
Service of the United States certifying that the Assignee is entitled to receive
payments under the Loan Documents without deduction or withholding of any United
States federal income taxes.

     8.  GOVERNING  LAW.  This  Assignment  Agreement  shall be  governed by the
internal law, and not the law of conflicts, of the State of Illinois.

     9. NOTICES.  Notices shall be given under this Assignment  Agreement in the
manner set forth in the Credit Agreement.  For the purpose hereof, the addresses
of the  parties  hereto  (until  notice of a change is  delivered)  shall be the
address set forth in the attachment to Schedule 1.

     10. COUNTERPARTS;  DELIVERY BY FACSIMILE.  This Assignment Agreement may be
executed in counterparts.  Transmission by facsimile of an executed  counterpart
of this  Assignment  Agreement  shall be deemed to constitute due and sufficient
delivery  of such  counterpart  and  such  facsimile  shall be  deemed  to be an
original counterpart of this Assignment Agreement.

     IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have
executed this Assignment Agreement by executing Schedule 1 hereto as of the date
first above written.

                                       3
<PAGE>
                                   SCHEDULE 1
                            to Assignment Agreement

1.   Description and Date of Credit Agreement:

     Credit  Agreement  dated  as of July 17,  2000  among  Southwestern  Energy
     Company, the lenders named therein including the Assignor, and Bank One, NA
     individually  and as  Administrative  Agent for such  lender,  as it may be
     amended from time to time.

2.   Date of Assignment Agreement:_________ , 20__

3.   Amounts (As of Date of Item 2 above):

a.   Assignee's percentage
     of  Aggregate   Commitment
     (Advances)   purchased
     under  the  Assignment
     Agreement**                  ____%

b.   Amount of
     Assignor's Commitment
     purchased
     under the Assignment
     Agreement**                  $______

4.   Assignee's Commitment (or Loans
     with respect to terminated
     Commitments) purchased
     hereunder:                             $___________________

5.   Proposed Effective Date:                ___________________

6.   Non-standard Recordation Fee
     Arrangement
                                            N/A***
                                            [Assignor/Assignee
                                            to pay 100% of fee]
                                            [Fee waived by Administrative Agent]

Accepted and Agreed:

[NAME OF ASSIGNOR]                          [NAME OF ASSIGNEE]

By:______________________                   By:_____________________
Title____________________                   Title:___________________

                                       4
<PAGE>
ACCEPTED AND CONSENTED TO****
SOUTHWESTERN ENERGY COMPANY

By:_______________________________
Title:____________________________

** Percentage taken to 10 decimal places
*** If fee is split 50-50, pick N/A as option
**** Delete if not required by Credit Agreement

ACCEPTED AND CONSENTED
TO BY BANK ONE, NA,
as Administrative Agent

By:_______________________________
Title:____________________________

ACCEPTED AND CONSENTED
TO BY BANK OF AMERICA, N.A.,
as Syndication Agent

By:_______________________________
Title:____________________________

                                       5
<PAGE>
                Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT

                        ADMINISTRATIVE INFORMATION SHEET

         Attach Assignor's Administrative Information Sheet, which must
           include notice addresses for the Assignor and the Assignee
                           (Sample form shown below)

                              ASSIGNOR INFORMATION
Contact:

Name:_____________________________     Telephone No.:__________________________
Fax No.:__________________________     Telex No.:______________________________
                                       Answerback:_____________________________

Payment Information:

Name & ABA # of Destination Bank: ______________________
Account Name & Number for Wire Transfer:_______________________________________
_______________________________________________________________________________
Other Instructions:____________________________________________________________

Address for Notices for Assignor:______________________________________________

                              ASSIGNEE INFORMATION
Credit Contact:

Name:_____________________________     Telephone No.:__________________________
Fax No.:__________________________     Telex No.:______________________________
                                       Answerback:_____________________________

Key Operations Contacts:

Booking Installation:                  Booking Installation:
Name:                                  Name:
Telephone No.:                         Telephone No.:
Fax No.:                               Fax No.:
Telex No.:                             Telex No.:
Answerback:                            Answerback:

                                       6
<PAGE>
Payment Information:

Name & ABA # of Destination Bank:

Account Name & Number for Wire Transfer:_______________________________
Other Instructions:

Address for Notices for Assignee:

                                      7
<PAGE>
     BANK ONE INFORMATION

     Assignee will be called promptly upon receipt of the signed agreement.

Initial Funding Contact:        Subsequent Operations Contact:

Name:                           Name:
Telephone No.: (312)            Telephone No.: (312)
Fax No.: (312)                  Fax No.: (312)
                                Bank One Telex No.: 190201 (Answerback: FNBC UT)

Initial Funding Standards:

Libor Fund 2 days after rates are set.

Bank One Wire Instructions:        Bank One, NA, ABA # 071000013
                                   LS2 Incoming Account # 481152860000
                                   Ref:________________

Address for Notices for Bank One : 1 Bank One Plaza, Chicago, IL 60670
                                   Attn: Agency Compliance Division,
                                   Suite IL1-0353
                                   Fax No. (312) 7322038 or (312) 7324339

                                       8
<PAGE>
                                   EXHIBIT D
                 LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION

     To Bank One, NA,
     as  Administrative  Agent  (the  "Administrative  Agent")  under the Credit
     Agreement
     Described Below.

     Re: Credit Agreement, dated as of July 17, 2000 (as the same may be amended
or modified,  the "Credit  Agreement"),  among Southwestern  Energy Company (the
"Borrower"), the Lenders named therein and the Administrative Agent. Capitalized
terms used  herein and not  otherwise  defined  herein  shall have the  meanings
assigned thereto in the Credit Agreement.

         The Administrative Agent is specifically authorized and directed to act
upon the following  standing  money  transfer  instructions  with respect to the
proceeds  of  Advances  or other  extensions  of credit  from time to time until
receipt by the  Administrative  Agent of a specific  written  revocation of such
instructions  by the  Borrower,  provided  that  the  Administrative  Agent  may
otherwise  transfer  funds as  hereafter  directed in writing by the Borrower in
accordance with Section 13.1 of the Credit  Agreement or based on any telephonic
notice made in accordance with Section 2.15 of the Credit Agreement.

     Facility Identification  Number(s)________________________________________

     Customer/Account Name: [Borrower]

     Transfer Funds To_________________________________________________________
                      _________________________________________________________

     For Account No.___________________________________________________________

     Reference/Attention To____________________________________________________

     Authorized Officer (Customer Representative)     Date________________

     ____________________________________________     _________________________
     (Please Print)                 Signature

     Bank Officer Name                                Date________________

     ____________________________________________     _________________________
     (Please Print)                 Signature

    (Deliver Completed Form to Credit Support Staff For Immediate Processing)

<PAGE>
                                   EXHIBIT E
                                      NOTE

                                                                         [Date]

         Southwestern Energy Company, an Arkansas  corporation (the "Borrower"),
promises  to pay  to  the  order  of  ____________________________________  (the
"Lender") the aggregate  unpaid principal amount of all Loans made by the Lender
to the  Borrower  pursuant  to  Article  II of  the  Agreement  (as  hereinafter
defined),  in immediately  available funds at the main office of Bank One, NA in
Chicago, Illinois, as Administrative Agent, together with interest on the unpaid
principal  amount  hereof  at the  rates  and  on the  dates  set  forth  in the
Agreement.  The  Borrower  shall pay the  principal  of and  accrued  and unpaid
interest on the Loans in full on the Final Maturity Date.

         The Lender shall,  and is hereby  authorized to, record on the schedule
attached  hereto,  or to otherwise record in accordance with its usual practice,
the date and  amount  of each  Loan and the date and  amount  of each  principal
payment hereunder.

         This Note is one of the Notes  issued  pursuant  to, and is entitled to
the benefits of, the Credit  Agreement  dated as of July 17, 2000 (which,  as it
may be amended or modified and in effect from time to time, is herein called the
"Agreement"),  among the  Borrower,  the lenders  party  thereto,  including the
Lender, and Bank One, NA, as Administrative  Agent, to which Agreement reference
is hereby made for a statement of the terms and conditions  governing this Note,
including the terms and  conditions  under which this Note may be prepaid or its
maturity  date  accelerated.  Capitalized  terms used  herein and not  otherwise
defined herein are used with the meanings attributed to them in the Agreement.

         Notwithstanding  anything to the contrary in this Note, no provision of
this Note shall  require  the  payment or permit the  collection  of interest in
excess of the maximum  permitted by  applicable  law  ("Maximum  Rate").  If any
interest in excess of the Maximum Rate is provided  for or shall be  adjudicated
to be so  provided,  in this  Note or  otherwise  in  connection  with  the loan
transaction,  the  provisions of this  paragraph  shall govern and prevail,  and
neither the Borrower nor the sureties, guarantors,  successors or assigns of the
Borrower  shall be  obligated  to pay the  excess of the  interest  or any other
excess sum paid for the use,  forbearance,  or detention of sums loaned.  If for
any reason  interest  in excess of the  Maximum  Rate  shall be deemed  charged,
required or permitted by any court of competent  jurisdiction,  the excess shall
be applied as payment and reduction of the principal of  indebtedness  evidenced
by this Note, and, if the principal  amount has been paid in full, any remaining
excess shall forthwith be paid to the Borrower.

<PAGE>
         This Note shall be construed in accordance  with the internal laws (and
not the law of conflicts) of the State of Illinois, but giving effect to Federal
laws applicable to national banks.

                                        SOUTHWESTERN ENERGY COMPANY

                                        By:____________________________________
                                        Print Name:____________________________
                                        Title:_________________________________

                                       2
<PAGE>
                  SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
                                       TO
                                      NOTE
                              DATED JULY 17, 2000

--------------------------------------------------------------------------------
:        :   Principal    :      Maturity      :  Principal  :                 :
:  Date  : Amount of Loan : of Interest Period : Amount Paid :  Unpaid Balance :
--------------------------------------------------------------------------------
:        :                :                    :             :                 :
--------------------------------------------------------------------------------
:        :                :                    :             :                 :
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:        :                :                    :             :                 :
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:        :                :                    :             :                 :
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:        :                :                    :             :                 :
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:        :                :                    :             :                 :
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:        :                :                    :             :                 :
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:        :                :                    :             :                 :
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                                       i
<PAGE>
                                   EXHIBIT F

                         FORM OF COMPLIANCE CERTIFICATE

         The undersigned,  the  _________________ of Southwestern Energy Company
(the "Borrower") hereby (a) delivers this Certificate pursuant to Section 6.1(c)
of the Credit Agreement dated as of July 17, 2000 (the "Agreement";  capitalized
terms used but not defined herein have the respective  meanings given thereto in
the Agreement) among the Borrower,  various financial institutions and Bank One,
NA, as Administrative Agent, and (b) certifies to each Lender as follows:

     1. Attached as Schedule I are the  financial  statements of the Borrower as
of and for the Fiscal Year Quarter (check one) ended _____________, ________ .

     2.  Such  financial  statements  have  been  prepared  in  accordance  with
Agreement Accounting  Principles and fairly present in all material respects the
financial  condition  of the Borrower as of the date  indicated  therein and the
results of operations for the respective periods covered thereby.

     3. Attached as Schedule II are detailed  calculations  used by the Borrower
to establish  whether the Borrower was in compliance  with the  requirements  of
Section 6.4 of the Agreement on the date of the financial statements attached as
Schedule I.

     4. Unless  otherwise  disclosed on Schedule  III,  neither a Default nor an
Unmatured  Default has occurred  which is in existence on the date hereof or, if
any Default or Unmatured  Default is disclosed on Schedule III, the Borrower has
taken or proposes to take the action to cure such Default or  Unmatured  Default
set forth on Schedule III.

     5. Except as described on Schedule IV, the  representations  and warranties
of the Borrower set forth in the Agreement are true and correct on and as of the
date hereof, with the same effect as though such  representations and warranties
had been  made on and as of the date  hereof  or,  if such  representations  and
warranties  are expressly  limited to particular  dates,  as of such  particular
dates.

     IN WITNESS  WHEREOF,  the undersigned has duly executed this Certificate as
of __________, ________.

                                        SOUTHWESTERN ENERGY COMPANY

                                        By:____________________________________
                                        Name:__________________________________
                                        Title:_________________________________

<PAGE>
                                   Schedule I

Financial Statements
(to be attached)

<PAGE>
                                  Schedule II

Compliance Calculations
(to be attached)

<PAGE>
                                  Schedule III

Defaults/Remedial Action
(to be attached)

<PAGE>
                                  Schedule IV

Qualifications to Representations and Warranties

<PAGE>

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