Document:

<PAGE>
                                                            Exhibit 10.1

                                CREDIT AGREEMENT

                                   dated as of
                                 March 29, 2002

                                      among

                            MAVERICK TUBE CORPORATION
                               MAVERICK TUBE, L.P.
                                MAVERICK GP, INC.
                       PRECISION TUBE HOLDING CORPORATION
                         MAVERICK INVESTMENT CORPORATION
                                PRECISION GP, LLC
                         PRECISION TUBE TECHNOLOGY, L.P.
                               as the US Borrowers

                                       and

                              PRUDENTIAL STEEL LTD.
                           MAVERICK TUBE (CANADA) INC.
                      MAVERICK EXCHANGECO (NOVA SCOTIA) ULC
                          PRECISION TUBE CANADA LIMITED
                            as the Canadian Borrowers

                                       and

                      JPMORGAN CHASE BANK, Individually and
                  as Issuing Bank and as Administrative Agent,

                                       and

                         CIT BUSINESS CREDIT CANADA INC.
     Individually and as Issuing Bank and as Canadian Administrative Agent,

                                       and

             GENERAL ELECTRIC CAPITAL CORPORATION, Individually and
                             as Documentation Agent

                                       and

                             FINANCIAL INSTITUTIONS,
                         NOW OR HEREAFTER PARTIES HERETO
                                   as Lenders

                       Domestic Revolving Credit Facility
                Multi-Currency Canadian Revolving Credit Facility
                               Term Loan Facility

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page No.
<S>               <C>                                                                                     <C>

                                                               ARTICLE 1
                                                       DEFINITIONS; CONSTRUCTION
Section 1.1       Definitions.....................................................................................
Section 1.2       Accounting Terms and Determinations............................................................
Section 1.3       Other Definitional Terms.......................................................................

                                                               ARTICLE 2
                                                       AMOUNT AND TERMS OF LOANS
Section 2.1       Loans and Commitments..........................................................................
Section 2.2       Borrowing Requests.............................................................................
Section 2.3       Letters of Credit..............................................................................
Section 2.4       Disbursement of Funds..........................................................................
Section 2.5       Notes and Maturity.............................................................................
Section 2.6       Interest.......................................................................................
Section 2.7       Interest Periods...............................................................................
Section 2.8       Bankers' Acceptances...........................................................................
Section 2.9       Repayment of Loans.............................................................................
Section 2.10      Voluntary Termination or Reduction of Revolving Credit Commitments.............................
Section 2.11      Mandatory Prepayments; Voluntary Prepayments; Order of Application.............................
Section 2.12      Continuation and Conversion Options............................................................
Section 2.13      Fees...........................................................................................
Section 2.14      Payments, etc..................................................................................
Section 2.15      Interest Rate Not Ascertainable, etc...........................................................
Section 2.16      Illegality.....................................................................................
Section 2.17      Increased Costs................................................................................
Section 2.18      Change of Lending Office.......................................................................
Section 2.19      Funding Losses.................................................................................
Section 2.20      Sharing of Payments, etc.......................................................................
Section 2.21      Taxes..........................................................................................
Section 2.22      Pro Rata Treatment.............................................................................
Section 2.23      Replacement of Lenders.........................................................................
Section 2.24      Advances of Revolving Credit Loans to Satisfy Lender Indebtedness..............................
Section 2.25      Joint and Several Liability of US Borrowers; Rights of Contribution among US
                  Borrowers......................................................................................
Section 2.26      Participations in US Swingline Loans...........................................................
Section 2.27      Sharing Events.................................................................................

                                                               ARTICLE 3
                                                       CONDITIONS TO BORROWINGS
Section 3.1       Closing........................................................................................
Section 3.2       Conditions Precedent to All Loans and Letters of Credit........................................
Section 3.3       Post Closing Conditions........................................................................

                                                               ARTICLE 4
                                                               SECURITY
Section 4.1       Security Granted by US Credit Parties..........................................................
Section 4.2       Security Granted by Canadian Credit Parties....................................................
Section 4.3       Establishment of US Lockbox....................................................................
Section 4.4       Establishment of Canadian Lockbox..............................................................
</TABLE>

                                       i
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<TABLE>
<S>               <C>                                                                                          <C>
Section 4.5       Establishment of US Blocked Account............................................................
Section 4.6       Establishment of Canadian Blocked Account......................................................
Section 4.7       Application of Proceeds of US Blocked Account..................................................
Section 4.8       Application of Proceeds of Canadian Blocked Account............................................

                                                               ARTICLE 5
                                                    REPRESENTATIONS AND WARRANTIES
Section 5.1       Corporate Existence............................................................................
Section 5.2       Corporate Power and Authorization..............................................................
Section 5.3       Binding Obligations............................................................................
Section 5.4       No Legal Bar or Resultant Lien.................................................................
Section 5.5       No Consent.....................................................................................
Section 5.6       Financial Information..........................................................................
Section 5.7       Litigation.....................................................................................
Section 5.8       Use of Proceeds................................................................................
Section 5.9       US Employee Benefits...........................................................................
Section 5.10      Canadian Employee Benefits.....................................................................
Section 5.11      Taxes; Governmental Charges....................................................................
Section 5.12      Titles, etc....................................................................................
Section 5.13      Defaults.......................................................................................
Section 5.14      Casualties; Taking of Properties...............................................................
Section 5.15      Compliance with the Law........................................................................
Section 5.16      No Material Misstatements......................................................................
Section 5.17      Investment Company Act.........................................................................
Section 5.18      Public Utility Holding Company Act.............................................................
Section 5.19      Capital Structure..............................................................................
Section 5.20      Insurance......................................................................................
Section 5.21      Environmental Matters..........................................................................
Section 5.22      Solvency.......................................................................................
Section 5.23      Employee Matters...............................................................................
Section 5.24      Real Property..................................................................................
Section 5.25      Perfection Certificate;  Schedules to other Financing Documents................................
Section 5.26      Existing Indebtedness..........................................................................
Section 5.27      Purchase  Documents............................................................................
Section 5.28      Representations With Respect to Certain Credit Parties.........................................
Section 5.29      Accounts.......................................................................................

                                                               ARTICLE 6
                                                         AFFIRMATIVE COVENANTS
Section 6.1       Maintenance and Compliance, etc................................................................
Section 6.2       Payment of Taxes and Claims, etc...............................................................
Section 6.3       Further Assurances.............................................................................
Section 6.4       Performance of Obligations.....................................................................
Section 6.5       Insurance......................................................................................
Section 6.6       Accounts and Records...........................................................................
Section 6.7       Right of Inspection............................................................................
Section 6.8       Operation and Maintenance of Property..........................................................
Section 6.9       New Subsidiaries; Additional Liens.............................................................
Section 6.10      Reporting Covenants............................................................................
</TABLE>

                                       ii
<PAGE>

<TABLE>

                                                               ARTICLE 7
                                                          NEGATIVE COVENANTS
<S>               <C>                                                                                           <C>
Section 7.1       Financial Covenants...........................................................................
Section 7.2       Indebtedness..................................................................................
Section 7.3       Liens.........................................................................................
Section 7.4       Mergers, Sales, etc...........................................................................
Section 7.5       Dividends, etc................................................................................
Section 7.6       Investments, Loans, etc.......................................................................
Section 7.7       Sales and Leasebacks; Synthetic Leases........................................................
Section 7.8       Nature of Business............................................................................
Section 7.9       ERISA Compliance..............................................................................
Section 7.10      Sale or Discount of Receivables...............................................................
Section 7.11      Negative Pledge Agreements....................................................................
Section 7.12      Transactions with Affiliates..................................................................
Section 7.13      Unconditional Purchase Obligations............................................................
Section 7.14      Equity........................................................................................
Section 7.15      Capital Expenditures..........................................................................
Section 7.16      Intercompany Transactions.....................................................................
Section 7.17      Acquisitions; Creation of Subsidiaries........................................................
Section 7.18      Accounts......................................................................................
Section 7.19      Modifications to Indebtedness Agreements......................................................
Section 7.20      Fiscal Year...................................................................................
Section 7.21      Modification of Purchase Documents............................................................
Section 7.22      Negative Covenants With Respect to Certain Credit Parties.....................................

                                                               ARTICLE 8
                                                           EVENTS OF DEFAULT
Section 8.1       Payments......................................................................................
Section 8.2       Covenants Without Notice......................................................................
Section 8.3       Other Covenants...............................................................................
Section 8.4       Other Financing Document Obligations..........................................................
Section 8.5       Representations...............................................................................
Section 8.6       Non-Payments of Other Indebtedness............................................................
Section 8.7       Defaults Under Other Agreements...............................................................
Section 8.8       Bankruptcy Under US Law.......................................................................
Section 8.9       Bankruptcy Under Canadian Law.................................................................
Section 8.10      Money Judgment................................................................................
Section 8.11      Discontinuance of Business....................................................................
Section 8.12      Financing Documents...........................................................................
Section 8.13      Change of Control.............................................................................

                                                               ARTICLE 9
                                                                AGENTS
Section 9.1       Appointment of Agents.........................................................................
Section 9.2       Limitation of Duties of Agents................................................................
Section 9.3       Lack of Reliance on the Agents................................................................
Section 9.4       Certain Rights of the Agents..................................................................
Section 9.5       Reliance by Agents............................................................................
Section 9.6       Indemnification of Agents.....................................................................
Section 9.7       Agents in their Individual Capacity...........................................................
Section 9.8       May Treat Lender as Owner.....................................................................
Section 9.9       Successor Agent...............................................................................
</TABLE>

                                      iii
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<TABLE>
<S>               <C>                                                                                         <C>
Section 9.10      Documentation Agent...........................................................................

                                                              ARTICLE 10
                                                             MISCELLANEOUS
Section 10.1      Notices.......................................................................................
Section 10.2      Amendments and Waivers........................................................................
Section 10.3      No Waiver; Remedies Cumulative................................................................
Section 10.4      Payment of Expenses, Indemnities, etc.........................................................
Section 10.5      Right of Setoff...............................................................................
Section 10.6      Benefit of Agreement..........................................................................
Section 10.7      Successors and Assigns; Participations and Assignments........................................
Section 10.8      Governing Law; Submission to Jurisdiction; etc................................................
Section 10.9      Independent Nature of Lenders' Rights.........................................................
Section 10.10     Invalidity....................................................................................
Section 10.11     Renewal, Extension or Rearrangement...........................................................
Section 10.12     Confidentiality...............................................................................
Section 10.13     Interest......................................................................................
Section 10.14     Entire Agreement..............................................................................
Section 10.15     Attachments...................................................................................
Section 10.16     Counterparts..................................................................................
Section 10.17     Survival of Indemnities.......................................................................
Section 10.18     Headings Descriptive..........................................................................
Section 10.19     Satisfaction Requirement......................................................................
Section 10.20     Exculpation Provisions........................................................................
Section 10.22     No Financial Assistance by Canadian Credit Parties............................................
Section 10.23     Missouri Law Provision........................................................................
</TABLE>

SCHEDULES
Schedule 1.3 Projections
Schedule 3.3 Post-Closing Matters
Schedule 5.7 Litigation
Schedule 5.15 Compliance with Laws
Schedule 5.19 Capital Structure
Schedule 5.20 Insurance
Schedule 5.21 Environmental Matters
Schedule 5.23 Employee Matters
Schedule 5.24 Real Property Locations
Schedule 5.26 Indebtedness
Schedule 7.2 Permitted Indebtedness
Schedule 7.3 Permitted Liens
Schedule 7.6 Permitted Investments
Schedule 7.8 Nature of Business

EXHIBITS
Exhibit A-1     Form of US Borrowing Base Report
Exhibit A-2     Form of Canadian Borrowing Base Report
Exhibit B-1     Form of Borrowing Request (US Revolving Credit Loan)
Exhibit B-2     Form of Borrowing Request (Canadian Revolving Credit Loans)
Exhibit B-3     Form of Borrowing Request (US Letters of Credit)
Exhibit B-4     Form of Borrowing Request (Canadian Letters of Credit)

                                       iv
<PAGE>
Exhibit B-5     Form of Borrowing Request (US Swingline Loans)
Exhibit C-1     Form of Mortgage
Exhibit C-2     Form of Assignment of Rents
Exhibit D       Form of Canadian Revolving Credit Note
Exhibit E       Form of Canadian Security Agreement
Exhibit F       Form of Guaranty and Security Agreement
Exhibit G       Form of Perfection Certificate Update
Exhibit H       Form of Term Lender Joinder Agreement
Exhibit I       Form of Term Note
Exhibit J       Form of US Real Estate Mortgage
Exhibit K       Form of US Revolving Credit Note
Exhibit L       Form of US Swingline Note
Exhibit M       Form of B/A Equivalent Note
Exhibit N       Form of Borrower Joinder Agreement
Exhibit O       Form of Compliance Certificate
Exhibit P       Form of Weekly Collateral Report
Exhibit Q       Form of Inventory Designation Report
Exhibit R       Form of Assignment and Acceptance
Exhibit S       Form of Restricted Account Agreement

                                       v

<PAGE>
                              LIST OF DEFINED TERMS
                              ---------------------

                                                                     Page No.
                                                                     --------

$......................................................................
[Intentionally Deleted]................................................
ABR....................................................................
ABR Loan...............................................................
Acceptance Fee.........................................................
Account Party..........................................................
Acquisition............................................................
Acquisition Transactions...............................................
Adjusted Interest Expense..............................................
Administrative Agent...................................................
Advance Notice.........................................................
Affiliate..............................................................
Agent..................................................................
Aggregate Canadian Revolving Credit Exposure...........................
Aggregate Revolving Credit Exposure....................................
Aggregate US Revolving Credit Exposure.................................
Agreement..............................................................
Applicable Commitment Fee Percentage...................................
applicable law.........................................................
Applicable Margin......................................................
Applicable Percentage..................................................
Application............................................................
Assessment Rate........................................................
Assignment and Acceptance..............................................
Availability Reserves..................................................
B/A....................................................................
B/A Cover..............................................................
B/A Equivalent Note....................................................
B/A Loan...............................................................
Bailee.................................................................
Bailee's Letter........................................................
Bankruptcy Code........................................................
Base CD Rate...........................................................
Beneficially Own.......................................................
Board..................................................................
Borrower...............................................................
Borrower" and "Borrowers...............................................
Borrowers..............................................................
Borrowing..............................................................
Borrowing Base Report..................................................
Borrowing Request......................................................
Business Day...........................................................
C$.....................................................................
C$ Denominated Loan....................................................
Canadian Administrative Agent..........................................
Canadian Blocked Account...............................................
Canadian Borrower......................................................
Canadian Borrowers.....................................................

                                       vi
<PAGE>
Canadian Borrowing Base................................................
Canadian Credit Party..................................................
Canadian Equipment Component...........................................
Canadian Excess Availability...........................................
Canadian Excess Cash Flow Amount.......................................
Canadian Fee Letter....................................................
Canadian Guaranty and Security Agreement...............................
Canadian Included-in-Transit Limit.....................................
Canadian Inventory Limit...............................................
Canadian Lender........................................................
Canadian Lender Indebtedness...........................................
Canadian Letter of Credit..............................................
Canadian Letter of Credit Liabilities..................................
Canadian Letters of Credit.............................................
Canadian Loans.........................................................
Canadian Lockbox.......................................................
Canadian Lockbox Bank..................................................
Canadian Maximum Available Amount......................................
Canadian Prime Rate....................................................
Canadian Prime Rate Loans..............................................
Canadian Priority Claims Reserve.......................................
Canadian Real Estate Mortgage..........................................
Canadian Revolving Credit Commitment...................................
Canadian Revolving Credit Commitments..................................
Canadian Revolving Credit Exposure.....................................
Canadian Revolving Credit Loan.........................................
Canadian Revolving Credit Note.........................................
Canadian Revolving Credit Percentage...................................
Canadian WIP Limit.....................................................
Capital Expenditures...................................................
Capital Lease Obligations..............................................
Cash Management Affiliate..............................................
Cash Management Agreement..............................................
Cash Management Reserves...............................................
CDOR Rate..............................................................
CERCLA.................................................................
Change of Control......................................................
Closing Date...........................................................
Code...................................................................
Coiled.................................................................
Collateral.............................................................
Combined Revolving Credit Commitment...................................
Commitment.............................................................
Company................................................................
Contract Period........................................................
Credit Parties.........................................................
Credit Party...........................................................
Credit Percentage......................................................
Current Information....................................................
Dated Assets...........................................................
Dated Liabilities......................................................

                                      vii
<PAGE>
Default....................................................................
Dilution...................................................................
Dilution Percentage........................................................
Disbursement Account.......................................................
Discount Proceeds..........................................................
Discount Rate..............................................................
disposal...................................................................
disposed...................................................................
Disposition................................................................
Documentary Letter of Credit...............................................
Documentation Agent.......................................................
Dollar.....................................................................
Dollar Denominated Loans...................................................
Dollar Equivalent..........................................................
EBITDA.....................................................................
Eligible Account...........................................................
Eligible Account Advance Percentage........................................
Eligible Bailee Inventory..................................................
Eligible Bill and Hold Accounts............................................
Eligible Included-In-Transit Inventory.....................................
Eligible Inventory.........................................................
Eligible Inventory Advance Percentage......................................
Environmental Laws.........................................................
Equity.....................................................................
ERISA......................................................................
ERISA Affiliate............................................................
ERISA Termination Event....................................................
Eurodollar Loan............................................................
Eurodollar Rate............................................................
Event of Default...........................................................
Excess Availability........................................................
Excess Cash Flow...........................................................
Excess Net Cash Proceeds...................................................
Exchangeco.................................................................
Excluded Taxes.............................................................
Existing Indebtedness......................................................
Federal Funds Effective Rate...............................................
Fee Letter.................................................................
Financial Statements.......................................................
Financing Documents........................................................
Financing Parties..........................................................
Fiscal Quarter.............................................................
Fiscal Year................................................................
Fixed Charge Coverage Ratio................................................
Foreign Lender.............................................................
Funded Indebtedness........................................................
Funds Flow from Operations.................................................
GAAP.......................................................................
Governmental Authority.....................................................
Governmental Requirement...................................................
GP Inc.....................................................................

                                      viii
<PAGE>
GP LLC.....................................................................
Group......................................................................
Guaranty and Security Agreement............................................
hazardous substance........................................................
herein.....................................................................
hereof.....................................................................
hereunder..................................................................
Highest Lawful Rate........................................................
Holding....................................................................
Imbalance Lender...........................................................
Included-In-Transit Inventory..............................................
Included-in-Transit Limit..................................................
Indebtedness...............................................................
Indemnified Taxes..........................................................
Information................................................................
Initial Reserve............................................................
Interest Expense...........................................................
Interest Period............................................................
Inventory Limit............................................................
Investment.................................................................
Issuing Bank...............................................................
JPMorgan...................................................................
JPMorgan Canada............................................................
Judgment Currency..........................................................
L/C Cover..................................................................
Landlord Consent and Subordination Agreement...............................
Landlord Waiver Agreement..................................................
LaSalle Account............................................................
laws applicable to any Financing Party.....................................
Lender.....................................................................
Lender Indebtedness........................................................
Lenders....................................................................
Lending Office.............................................................
Letter of Credit Liabilities...............................................
Letters of Credit..........................................................
Lien.......................................................................
Loan.......................................................................
Lockbox....................................................................
Lockbox Agreement..........................................................
Longview Account...........................................................
Margin Stock...............................................................
Material Adverse Effect....................................................
Maturity Date..............................................................
Maverick International.....................................................
Minimum Excess Availability................................................
Mortgaged Real Property....................................................
Net Cash Proceeds..........................................................
New Subsidiary.............................................................
Non Financed Capital Expenditures..........................................
Notes......................................................................
Obligated Party............................................................

                                       ix
<PAGE>
oil........................................................................
OPA........................................................................
Other Taxes................................................................
Overadvance................................................................
Participant................................................................
Payment Office.............................................................
PBGC.......................................................................
Perfection Certificate Update..............................................
Perfection Certificates....................................................
Permitted Borrowing Base Adjustments.......................................
Permitted Liens............................................................
Person.....................................................................
Plan.......................................................................
Precision..................................................................
Precision Canada...........................................................
Precision International....................................................
Precision Scotland.........................................................
Precision Transactions.....................................................
Prime Rate.................................................................
Processing Reserves........................................................
Projections................................................................
Property...................................................................
Prudential.................................................................
PTTI.......................................................................
Purchase Agreement.........................................................
Purchase Documents.........................................................
Quarterly Dates............................................................
RCRA.......................................................................
Real Estate Mortgage.......................................................
Real Property..............................................................
Register...................................................................
Regulation D...............................................................
Regulations U and X........................................................
Reimbursement Obligations..................................................
Related Affiliate..........................................................
Related Person.............................................................
release....................................................................
Required Lenders...........................................................
Required Revolving Lenders.................................................
Required Term Lenders......................................................
Responsible Officer........................................................
Restated Account...........................................................
Restricted Account Agreement...............................................
Revolving Credit Commitments...............................................
Revolving Credit Exposure..................................................
Revolving Credit Loan......................................................
Revolving Credit Notes.....................................................
Revolving Lenders..........................................................
Rolling Period.............................................................
Secured Affiliate..........................................................
Security Instruments.......................................................

                                       x
<PAGE>
Sellers....................................................................
Settlement Date............................................................
Sharing Event..............................................................
solid waste................................................................
Solvent....................................................................
Southwest Account..........................................................
Spot Exchange Rate.........................................................
Standby Letter of Credit...................................................
Statutory Reserves.........................................................
Stock Repurchase...........................................................
Storage/Handling Reserves..................................................
subject Borrower...........................................................
Subsidiary.................................................................
Swap Agreement.............................................................
Swap Reserves..............................................................
Tax Benefit................................................................
Taxes......................................................................
Temporary Lockbox Institutions.............................................
Term.......................................................................
Term Commitment............................................................
Term Lender................................................................
Term Loans.................................................................
Term Note..................................................................
Term Percentage............................................................
threatened release.........................................................
Three-Month Secondary CD Rate..............................................
Transactions...............................................................
Transferee.................................................................
Tri-Party Agreement........................................................
Tube.......................................................................
Tube Canada................................................................
Type.......................................................................
UCC........................................................................
UCP........................................................................
Unrelated Person...........................................................
US Base Rate...............................................................
US Blocked Account.........................................................
US Borrower................................................................
US Borrowers...............................................................
US Borrowing Base..........................................................
US Credit Party............................................................
US Equipment Component.....................................................
US Excess Cash Flow Amount.................................................
US Funding Amount..........................................................
US Included-in-Transit Limit...............................................
US Inventory Limit.........................................................
US Lender..................................................................
US Lender Indebtedness.....................................................
US Letter of Credit Liabilities............................................
US Letters of Credit.......................................................
US Loans...................................................................

                                       xi
<PAGE>
US Lockbox.................................................................
US Maximum Available Amount................................................
US Real Estate Mortgage....................................................
US Revolving Credit Commitment.............................................
US Revolving Credit Commitments............................................
US Revolving Credit Exposure...............................................
US Revolving Credit Loan...................................................
US Revolving Credit Note...................................................
US Revolving Credit Percentage.............................................
US Revolving Lender........................................................
US Swingline Availability..................................................
US Swingline Commitment....................................................
US Swingline Exposure......................................................
US Swingline Lender........................................................
US Swingline Loan..........................................................
US Swingline Loans.........................................................
US Swingline Note..........................................................
US WIP Limit...............................................................
Voting Stock...............................................................
WIP Limit..................................................................

                                      xii
<PAGE>
                                CREDIT AGREEMENT

         THIS CREDIT AGREEMENT (this "AGREEMENT") is made and entered into as of
the 29th day of March, 2002, among Maverick Tube Corporation, a Delaware
corporation (the "COMPANY"), Maverick Investment Corporation, a Delaware
corporation ("INVESTMENT"), Maverick Tube, L.P., a Delaware limited partnership
("TUBE"), Precision Tube Holding Corporation, a Delaware corporation
("HOLDING"), Maverick GP, Inc., a Delaware corporation ("GP INC."), Precision
GP, LLC, a Delaware limited liability company ("GP LLC"), Precision Tube
Technology, L.P., a Delaware limited partnership ("PRECISION" and collectively
with the Company, Investment, Tube, Holding, GP Inc. and GP LLC, the "US
BORROWERS" and individually, a "US BORROWER"), Prudential Steel Ltd., an Alberta
corporation ("PRUDENTIAL"), Maverick Exchangeco (Nova Scotia) ULC, a Nova Scotia
unlimited liability company ("EXCHANGECO"), Maverick Tube (Canada) Inc., an
Alberta corporation ("TUBE CANADA"), Precision Tube Canada Limited, an Alberta
corporation ("PRECISION CANADA" and collectively with Prudential, Exchangeco and
Tube Canada, the "Canadian Borrowers" and individually, a "CANADIAN BORROWER")
(the US Borrowers and the Canadian Borrowers are together referred to herein as
the "BORROWERS" and individually, a "BORROWER"), JPMorgan Chase Bank,
individually as Lender and Issuing Bank and as the Administrative Agent, CIT
Business Credit Canada Inc., individually as Lender and as the Canadian
Administrative Agent and as Issuing Bank, General Electric Capital Corporation,
as Documentation Agent, each additional Issuing Bank hereunder from time to
time, and each of the lenders that is a signatory hereto or which hereafter
becomes a party hereto as provided in Section 10.7 including, without
limitation, the US Swingline Lender (as defined below) (individually, a "LENDER"
and, collectively, the "LENDERS").

                                    RECITALS:

         Pursuant to that certain Stock Purchase Agreement (the "PURCHASE
AGREEMENT") dated as of February 12, 2002 by and among the Company, Holding and
the stockholders of Holding (such stockholders are referred to herein as
"SELLERS"), the Company agreed to (a) make certain capital contributions to
Holding to pay in full certain outstanding indebtedness of Holding, and (b)
purchase all of the issued and outstanding capital stock of Holding of every
class (collectively, the "ACQUISITION").

         Immediately following the Acquisition, (a) Texas Coiled Tubing Property
Company, a Texas corporation and a wholly-owned subsidiary of PTTI (as defined
below) ("COILED") will merge with and into Precision Tube Technology, Inc., a
Texas corporation and wholly owned subsidiary of Holding ("PTTI"), (b) Holding
will form GP LLC and contribute five percent (5%) of the issued and outstanding
stock of PTTI to GP LLC, and (c) PTTI will convert from a Texas corporation to a
Texas limited partnership of which Holding will be a ninety-five percent (95%)
limited partner and GP LLC will be a five percent (5%) general partner
(collectively, the "PRECISION TRANSACTIONS" and together with the Acquisition,
the "ACQUISITION TRANSACTIONS").

         Borrowers have requested that Lenders make certain Revolving Credit
Loans (as herein defined) and Term Loans (as herein defined) to Borrowers and
that the Issuing Banks (as herein defined) issue certain Letters of Credit (as
herein defined) for the account of Borrowers including, without limitation, to
finance the Acquisition.

         Pursuant to the terms of this Agreement, the Revolving Lenders have
agreed to make Revolving Credit Loans to Borrowers and the Issuing Banks have
agreed to issue such Letters of Credit, and pursuant to one or more Term Lender
Joinder Agreements (as herein defined) which may hereafter be executed in
connection with this Agreement, one or more Term Lenders (as herein defined) may
be added as Term Lenders party to this Agreement and may make and hold Term
Loans hereunder (it being acknowledged that no Lender has agreed to make Term
Loans as of the date hereof).

                                       1
<PAGE>

         Proceeds of the Revolving Credit Loans and Term Loans will be used
solely (a) to finance a portion of the purchase price of the Acquisition, (b) to
refinance certain existing indebtedness of the Borrowers, (c) to pay fees and
expenses related to the Acquisition, (d) to support working capital requirements
of the Borrowers, and (e) for general corporate purposes of Borrowers.

                                   AGREEMENTS:

         In consideration of the mutual covenants and agreements herein
contained, the Borrowers, the Administrative Agent, the Canadian Administrative
Agent, the Issuing Banks and the Lenders agree as follows:

                                   ARTICLE 1
                            DEFINITIONS; CONSTRUCTION

          SECTION 1.1    DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined). Reference to any party in a
Financing Document shall mean that party and its successors and assigns.

                  "ABR" shall have the meaning provided in Section 2.6(a).

                  "ABR LOAN" shall mean a Revolving Credit Loan, Term Loan or US
Swingline Loan bearing interest at the rate provided in Section 2.6(a).

                  "ACCEPTANCE FEE" shall mean a fee payable in C$ by the
Canadian Borrowers to a C$ Lender with respect to the acceptance or purchase of
a B/A by such Canadian Lender, calculated on the face amount of such B/A at a
rate per annum equal to the Applicable Margin with respect to B/A Loans on the
basis of the number of days in the applicable Contract Period (inclusive of the
first day and exclusive of the last day) and a year of 365 days (it being agreed
that the Applicable Margin in respect of a B/A Equivalent Note is equivalent to
the Applicable Margin otherwise applicable to a B/A having the same face amount
and Contract Period as the subject B/A Equivalent Note).

                  "ACCOUNT PARTY" shall have the meaning assigned to such term
in Section 2.3(d).

                  "ACQUISITION" shall have the meaning set forth in the recitals
hereto.

                  "ACQUISITION TRANSACTIONS" shall have the meaning set forth in
the recitals hereto.

                  "ADJUSTED INTEREST EXPENSE" shall mean, as to the Company and
its Subsidiaries on a consolidated basis and for any period, Interest Expense
less any non cash Interest Expense.

                  "ADMINISTRATIVE AGENT" shall mean JPMorgan Chase Bank, acting
in the manner and to the extent described in Article 9, and any successor to
JPMorgan Chase Bank acting in such manner.

                  "ADVANCE NOTICE" shall mean written or telecopy notice (with
telephonic confirmation in the case of telecopy notice), which in each case
shall be irrevocable, from the applicable Borrowers to be received by the
Administrative Agent (or Canadian Administrative Agent (with a copy to
Administrative Agent) in the case of any Borrowing, conversion, continuation or
prepayment of Canadian Loans) before 1:00 pm. (New York, New York time) (or
12:00 p.m. (noon) New York, New York time in the case of any Borrowing of ABR
Loans or B/A Loans and 11:00 a.m. New York, New York time in the case of any
Borrowing of Canadian Prime Rate Loans), by the number of Business Days in
advance of any

                                       2
<PAGE>
Borrowing, conversion, continuation or prepayment of any Loan or Loans pursuant
to this Agreement as respectively indicated below:

                           (a)      Eurodollar Loans - 3 Business Days;

                           (b)      ABR Loans - Same Business Day;

                           (c)      Canadian Prime Rate Loans equal to or less
                                    than C$10,000,000 - Same Business Day;

                           (d)      Canadian Prime Rate Loans greater than
                                    C$10,000,000 -- One Business Day; and

                           (e)      B/A Loans - One Business Day.

                  For the purpose of determining the applicable period of
Advance Notice in the case of the conversion from one Type of Loan into another,
the Loans into which there is to be a conversion shall control. The
Administrative Agent, the Canadian Administrative Agent, each Issuing Bank and
each Lender are entitled to rely upon and act upon telecopy notice made or
purportedly made by Borrowers, and the Borrowers hereby waive the right to
dispute the authenticity and validity of any such transaction once the
Administrative Agent, the Canadian Administrative Agent or any Lender has
advanced funds or any Issuing Bank has issued Letters of Credit, absent manifest
error.

                  "AFFILIATE" shall mean (a) any Person controlling, controlled
by or under common control with any other Person, (b) with respect to any
Person, any other Person who is an officer, director, managing member, partner,
trustee or beneficiary of such Person, and (c) any Person who is a spouse,
sibling, parent, grandparent, child or grandchild of a Person described in
clauses (a) or (b) preceding. For purposes of this definition, "CONTROL"
(including "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to either (a) vote 10% or more
of the Voting Stock of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.

                  "AGENT" shall mean any of Administrative Agent or
Documentation Agent.

                  "AGGREGATE CANADIAN REVOLVING CREDIT EXPOSURE" shall mean the
sum of all of the Canadian Lenders' Canadian Revolving Credit Exposures.

                  "AGGREGATE REVOLVING CREDIT EXPOSURE" shall mean the sum of
all of the Revolving Lenders' Revolving Credit Exposures.

                  "AGGREGATE US REVOLVING CREDIT EXPOSURE" shall mean the sum of
all of the US Lenders' US Revolving Credit Exposures.

                  "AGREEMENT" shall mean this Credit Agreement, as further
amended, modified or supplemented from time to time.

                  "APPLICABLE COMMITMENT FEE PERCENTAGE" shall mean, on any day,
the applicable per annum percentage set forth at the appropriate intersection in
the table shown below, based on the Minimum Excess Availability for the most
recently ended Fiscal Quarter:

                                       3
<PAGE>
<TABLE>
<CAPTION>
            MINIMUM EXCESS AVAILABILITY                 APPLICABLE COMMITMENT FEE PERCENTAGE
            ---------------------------                 ------------------------------------
<S>                                                     <C>
         Less than or equal to $20,000,000                            0.5000%

Greater than $20,000,000 but less than or equal to                    0.5000%
                    $50,000,000

Greater than $50,000,000 but less than or equal to                    0.4375%
                    $80,000,000

             Greater than $80,000,000                                 0.3750%
</TABLE>

Each change in the Applicable Commitment Fee Percentage shall be effective as of
the first day of the third month of each applicable Fiscal Quarter based on the
Minimum Excess Availability during the immediately preceding Fiscal Quarter.
Notwithstanding the foregoing, for the period from the Closing Date through
March 1, 2003, the Applicable Commitment Fee Percentage will be 0.5000%.

                  "APPLICABLE MARGIN" shall mean, on any day and with respect to
any Loan other than Term Loans, the applicable per annum percentage set forth at
the appropriate intersection in the table shown below, based on the Minimum
Excess Availability for the most recently ended Fiscal Quarter.

<TABLE>
<CAPTION>
                                                                                       CANADIAN
                                                                                       PRIME RATE
                           EURODOLLAR              B/A LOAN          ABR LOAN              LOAN
      MINIMUM              APPLICABLE             APPLICABLE        APPLICABLE          APPLICABLE
       EXCESS                MARGIN                 MARGIN            MARGIN              MARGIN
   AVAILABILITY            PERCENTAGE             PERCENTAGE        PERCENTAGE          PERCENTAGE
   ------------            ----------             ----------        ----------          ----------
<S>                    <C>                   <C>                 <C>                 <C>
Less than or equal           3.00%                 3.00%               1.00%               1.75%
  to $20,000,000

Greater than                 2.75%                 2.75%               0.75%               1.50%
  $20,000,000 but
less than or equal
  to $50,000,000

   Greater than              2.50%                 2.50%               0.50%               1.25%
  $50,000,000 but
less than or equal
  to $80,000,000

   Greater than              2.25%                 2.25%               0.25%               1.00%
    $80,000,000
</TABLE>

Each change in the Applicable Margin shall be effective as of the first day of
the third month of each applicable Fiscal Quarter based on the Minimum Excess
Availability for the immediately preceding Fiscal Quarter. Notwithstanding the
foregoing, for the period from the Closing Date through March 1, 2003, the
initial Eurodollar Loan Applicable Margin and B/A Loan Applicable Margin (other
than with respect to Term Loans) will be 2.75%, the initial ABR Loan Applicable
Margin shall be 0.75% and the initial Canadian Prime Rate Loan Applicable Margin
shall be 1.50%. The Applicable Margin with respect to Term Loans shall be as set
forth in the Term Lender Joinder Agreement.

                  "APPLICABLE PERCENTAGE" shall mean, (a) with respect to any US
Revolving Lender, such US Revolving Lender's US Revolving Credit Percentage, (b)
with respect to any Term Lender, such

                                       4
<PAGE>

Term Lender's Term Loan Percentage, and (c) with respect to any Canadian Lender,
such Canadian Lender's Canadian Revolving Credit Percentage, as applicable.

                  "APPLICATION" shall mean an "Application and Agreement for
Letters of Credit," or similar instruments or agreements, entered into between a
Borrower and an Issuing Bank in connection with any Letter of Credit.

                  "ASSESSMENT RATE" shall mean, for any day, the annual
assessment rate in effect on such day that is payable by a member of the Bank
Insurance Fund classified as "well-capitalized" and within supervisory subgroup
"B" (or a comparable successor risk classification) within the meaning of 12
C.F.R. Part 327 (or any successor provision) to the Federal Deposit Insurance
Corporation for insurance by such corporation of time deposits made in dollars
at the offices of such member in the United States; provided that if, as a
result of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined in good faith by the Administrative
Agent to be representative of the cost of such insurance to the Lenders.

                  "ASSIGNMENT AND ACCEPTANCE" shall have the meaning provided in
Section 10.7.

                  "AVAILABILITY RESERVES" shall mean, as of any date of
determination, such amounts as Administrative Agent may from time to time
establish and revise in its sole but reasonable discretion reducing the US
Borrowing Base and/or Canadian Borrowing Base which would otherwise be available
to Borrowers under the lending formulas provided for herein: (a) to reflect
general eligibility criteria, events, conditions, contingencies or risks which,
as determined by Administrative Agent in its reasonable discretion, do or may
affect either (i) any component of the US Borrowing Base or Canadian Borrowing
Base or their value, (ii) the assets, business or prospects of any Credit Party,
or (iii) the security interests and other rights of Administrative Agent and
Canadian Administrative Agent in the Collateral (including the enforceability,
perfection and priority thereof), or (b) to reflect Administrative Agent's
customary practice or its belief that any collateral report or financial
information furnished by or on behalf of any Borrower to any Agent or any Lender
is or may have been incomplete, inaccurate or misleading in any material
respect, or (c) in respect of any state of facts which Administrative Agent
determines constitutes a Default or Event of Default. Without limiting the
foregoing, Administrative Agent may establish and/or increase Availability
Reserves in respect of (x) liabilities of any Credit Party under any Cash
Management Agreements, Swap Agreement or any other swap, cap, floor, collar,
futures contract or option designed to hedge against fluctuations in commodity
prices, securities prices or other financial market conditions, (y) statutory
claims, deemed trusts or inventory subject to rights of suppliers under Section
81.1 of Bankruptcy and Insolvency Act (Canada), or (z) employee related
liabilities. Without limiting the foregoing, the Initial Reserve will be
established as an Availability Reserve with respect to the US Borrowing Base
from the Closing Date until April 1, 2003.

                  "B/A" shall mean a non-interest bearing bill of exchange
denominated in C$, drawn by the Canadian Borrowers and accepted by a Canadian
Lender in accordance with this Agreement, provided that with respect to a
Canadian Lender that is not a chartered bank under the Bank Act (Canada) or that
has notified the Administrative Agent that it is otherwise unable to accept such
bills of exchange, it shall mean a B/A Equivalent Note.

                  "B/A COVER" when required by this Agreement for B/A Loans,
shall be effected by paying to Canadian Administrative Agent, in immediately
available funds, to be collaterally assigned as security pursuant to the
Financing Documents, an amount equal to the aggregate amount of all outstanding
B/A Loans. Such amount shall be retained by the Canadian Administrative Agent
and

                                       5
<PAGE>

applied to repay the principal of each B/A Loan upon the maturity thereof until
all such B/A Loans have been fully satisfied.

                  "B/A EQUIVALENT NOTE" shall have the meaning given such term
in Section 2.8(g) hereto.

                  "B/A LOAN" shall mean a Borrowing comprised of B/As.

                  "BAILEE" shall mean any Person who is in possession of any
inventory of any Borrower on behalf of such Borrower.

                  "BAILEE'S LETTER" shall mean a letter in form and substance
acceptable to Administrative Agent executed by any Person who is in possession
of inventory on behalf of any Borrower pursuant to which such Person
acknowledges Administrative Agent's Lien or Canadian Administrative Agent's
Lien, as applicable, with respect thereto.

                  "BANKRUPTCY CODE" shall have the meaning provided in Section
8.8.

                  "BASE CD RATE" shall mean the sum of (a) the Three-Month
Secondary CD Rate multiplied by the Statutory Reserve Rate plus (b) the
Assessment Rate.

                  "BLOCKED ACCOUNT" shall mean one or more demand deposit
accounts established by the Canadian Borrowers with the Canadian Lockbox Bank
and the US Borrowers with Administrative Agent which (a) the applicable
Borrowers and Administrative Agent or Canadian Lockbox Bank, as applicable,
jointly designate as a "Blocked Account," (b) into which all cash receipts of
the applicable Borrowers from whatever source (including, without limitation,
all currency, checks and drafts representing proceeds of the Collateral and
further including any of the foregoing received in the Lockbox) shall be
deposited pursuant to Section 4.3 and Section 4.4 hereof and pursuant to the
Security Documents, and (c) which are subject to the provisions of Section 4.5
and Section 4.6 hereof.

                  "BOARD" shall mean the Board of Governors of the Federal
Reserve System of the United States.

                  "BORROWER" AND "BORROWERS" shall have the meanings set forth
in the initial paragraph hereof.

                  "BORROWING" shall mean a borrowing pursuant to a Borrowing
Request, a borrowing pursuant to Section 2.2(c) or a continuation or a
conversion pursuant to Section 2.12 consisting, in each case, of the same Type
of Loans having, in the case of Eurodollar Loans or B/A Loans, the same Interest
Period or Contract Period (except as otherwise provided in Section 2.15 and
Section 2.16) and made previously or being made concurrently by all of the
Lenders.

                  "BORROWING BASE REPORT" shall mean the report of each of the
US Borrowers and the Canadian Borrowers concerning the amount of the US
Borrowing Base or the Canadian Borrowing Base, as applicable, to be delivered
pursuant to Section 6.10, substantially in the form attached as Exhibit A-1 or
A-2 (depending on which Borrowing Base is being computed).

                  "BORROWING REQUEST" shall mean a request for a Borrowing
pursuant to Section 2.2, substantially in the form attached as Exhibit B-1
through B-5 hereof (depending on the type of Loan with respect to which such
Borrowing Request is being submitted).

                                       6
<PAGE>

                  "BUSINESS DAY" shall mean any day excluding Saturday, Sunday
and any other day on which banks are required or authorized to close in Dallas,
Texas or New York, New York and, if the applicable Business Day relates to
Eurodollar Loans, on which trading is carried on by and between banks in Dollar
deposits in the Eurodollar market and, if the applicable Business Day relates to
Canadian Revolving Credit Loans, including B/A Loans, or the Dollar Equivalent
of any amount denominated in C$, shall also exclude any other day on which banks
are required or authorized to close in Toronto, Ontario Canada.

                  "C$" shall mean lawful money of Canada.

                  "C$ DENOMINATED LOAN" shall mean Canadian Revolving Credit
Loans which are denominated in C$.

                  "CANADIAN ADMINISTRATIVE AGENT" shall mean CIT Business Credit
Canada Inc., acting in the manner and to the extent described in Article 9 and
any successor to CIT Business Credit Canada Inc. acting in such capacity.

                  "CANADIAN BLOCKED ACCOUNT" means a Blocked Account established
by the Canadian Borrowers with Canadian Lockbox Bank.

                  "CANADIAN BORROWERS" shall have the meaning set forth in the
initial paragraph hereof.

                  "CANADIAN BORROWING BASE" shall mean, only with respect to the
Canadian Borrowers, the amount equal to the sum of:

                  (a)      the Eligible Account Advance Percentage of the
Canadian Borrowers' Eligible Accounts, plus

                  (b)      the lesser of (i) the sum of (A) the Eligible
Inventory Advance Percentage of the Canadian Borrowers' Eligible Inventory
(other than work in process) and Eligible Bailee Inventory (other than work in
process) plus, (B) the lesser of (1) the Eligible Inventory Advance Percentage
of the Canadian Borrowers' Eligible Inventory consisting of work in process and
Eligible Bailee Inventory consisting of work in process, and (2) Canadian WIP
Limit, plus (C) the lesser of (1) the Eligible Inventory Advance Percentage of
the Canadian Borrowers' Eligible Included-In-Transit Inventory and (2) Canadian
Included-in-Transit Limit, or (ii) the Canadian Inventory Limit, plus

                  (c)      the Canadian Equipment Component in effect as of the
date for which the Canadian Borrowing Base is being calculated;

provided, that, in no event will the component of the Canadian Borrowing Base
determined pursuant to clause (b) exceed 60% of the total Canadian Borrowing
Base (but solely for purposes of this calculation, the Canadian Equipment
Component shall remain constant at the amount in effect as the Closing Date
without giving effect to any subsequent reductions in the Canadian Equipment
Component pursuant to the definition of such term). The Canadian Borrowing Base
in effect under this Agreement at any time shall be the Canadian Borrowing Base
reflected on the most recent Canadian Borrowing Base Report delivered to
Canadian Administrative Agent and Administrative Agent pursuant to Section
6.10(g) hereof, subject to (a) the right of Canadian Administrative Agent,
Administrative Agent or Required Lenders to contest any components thereof or
the calculation thereof, and (b) immediate adjustment as result of (i)
establishment of Availability Reserves, (ii) reductions in advance rates
permitted herein, (iii) scheduled reductions in the Canadian Equipment
Component, (iv) more frequent reporting of certain

                                       7
<PAGE>
components of the Canadian Borrowing Base to the extent required in accordance
with Section 6.10(g), and (v) any changes in eligibility standards required by
Administrative Agent.

                  "CANADIAN CREDIT PARTY" shall mean the Canadian Borrowers and
each other Credit Party which is formed or organized under the federal laws of
Canada or under the laws of any province or territory in Canada.

                  "CANADIAN EQUIPMENT COMPONENT" shall mean $10,000,000 on the
Closing Date; provided that the Canadian Equipment Component shall be reduced
(a) by $151,515 on the first day of each month commencing with October 1, 2002
and continuing on the first day of each month thereafter throughout the term of
this Agreement, and (b) on April 1 of each calendar year commencing April 1,
2003, by the Canadian Excess Cash Flow Amount for the Fiscal Year most recently
ended.

                  "CANADIAN EXCESS AVAILABILITY" shall mean, as of any date, the
remainder of (a) the Canadian Borrowing Base as of such date, less (b) the
aggregate outstanding balance of the Canadian Lender Indebtedness as of such
date.

                  "CANADIAN EXCESS CASH FLOW AMOUNT" shall mean, with respect to
any Fiscal Year, the lesser of (a) $1,666,500 and (b) 40% of the Excess Cash
Flow of the Canadian Borrowers for such Fiscal Year. The Canadian Excess Cash
Flow Amount shall be determined for any Fiscal Year by the Administrative Agent
following the delivery of the Company's audited consolidated financial
statements for such Fiscal Year pursuant to Section 6.10(a) hereof; provided,
that, if the Company shall fail to deliver its audited consolidated financial
statements for any Fiscal Year on or before the date required pursuant to
Section 6.10(a) hereof, $1,666,500 shall be the Canadian Excess Cash Flow Amount
for such Fiscal Year.

                  "CANADIAN FEE LETTER" shall mean the letter agreement dated
March 28, 2002, regarding fees executed by CIT Business Credit Canada, Inc. and
accepted by Canadian Borrowers.

                  "CANADIAN INCLUDED-IN-TRANSIT LIMIT" shall mean the amount of
the Included-in-Transit Limit which the Canadian Borrowers designate as the
"Canadian Included-in-Transit Limit" on the Canadian Borrowing Base Report from
which the Canadian Borrowing Base is being calculated; provided, that, for any
date on which the Borrowing Bases are being reported, in no event shall the sum
of the Canadian Included-in-Transit Limit and the US Included-in-Transit Limit
ever exceed the Included-in-Transit Limit.

                  "CANADIAN INVENTORY LIMIT" shall mean the amount of the
Inventory Limit which the Canadian Borrowers designate as the "Canadian
Inventory Limit" on the Canadian Borrowing Base Report from which the Canadian
Borrowing Base is being calculated; provided, that, in no event shall the sum of
the Canadian Inventory Limit and the US Inventory Limit ever exceed the
Inventory Limit.

                  "CANADIAN LENDER" shall mean a Lender with a Canadian
Revolving Credit Commitment.

                  "CANADIAN LENDER INDEBTEDNESS" shall mean any and all amounts
owing or to be owing by any Canadian Credit Party to the Administrative Agent,
the Canadian Administrative Agent, the Issuing Banks or the Lenders with respect
to or in connection with the Canadian Loans, any Canadian Letter of Credit
Liabilities, the Notes, any Swap Agreement between any of the Canadian Borrowers
and JPMorgan or any of its Secured Affiliates, any Cash Management Agreement
between any of the Canadian Borrowers and a Canadian Lender or its Cash
Management Affiliate, this Agreement, or any other Financing Document and, as to
Swap Agreements with JPMorgan or any of its Secured Affiliates or any Cash
Management Agreement with any Lender or any Lender or its Cash Management
Affiliate, any

                                       8
<PAGE>
and all amounts owing or to be owing by any Canadian Credit Party thereunder to
JPMorgan or any of its Secured Affiliates or Cash Management Affiliate,
respectively.

                  "CANADIAN LETTER OF CREDIT" shall have the meaning set forth
in Section 2.3(b).

                  "CANADIAN LETTERS OF CREDIT" shall mean all Letters of Credit
issued under the Canadian Revolving Credit Commitments.

                  "CANADIAN LETTER OF CREDIT LIABILITIES" shall mean, at any
time and in respect of any Canadian Letter of Credit, the Dollar Equivalent at
such time of the sum of (a) the amount available for drawings under such
Canadian Letter of Credit as of the date of determination plus (b) the aggregate
unpaid amount of all Reimbursement Obligations due and payable as of the date of
determination in respect of previous drawings made under such Canadian Letter of
Credit.

                  "CANADIAN LOANS" shall mean the Canadian Revolving Credit
Loans.

                  "CANADIAN LOCKBOX" shall mean any lock box to be established
and operated pursuant to Section 4.4 hereof and the Canadian Lockbox Agreement.

                  "CANADIAN LOCKBOX AGREEMENT" shall mean an agreement between
the Canadian Borrowers and the Canadian Lockbox Bank governing the Canadian
Lockbox.

                  "CANADIAN LOCKBOX BANK" shall mean Royal Bank of Canada or any
other financial institution designated by Canadian Administrative Agent and
approved by the Administrative Agent to act as the Canadian Lockbox Bank and
consented to in writing by the Canadian Borrowers which consent shall not be
unreasonably withheld and which has entered into the Canadian Lockbox Agreement.

                  "CANADIAN MAXIMUM AVAILABLE AMOUNT" shall mean, at any date,
an amount equal to the lesser of (a) the Aggregate Canadian Revolving Credit
Commitments as of such date, and (b) the remainder of (i) the Canadian Borrowing
Base as of such date, minus (ii) the sum of (A) the Availability Reserves with
respect to the Canadian Borrowing Base as of such date, plus (B) Canadian
Priority Claims Reserve as of the day the Canadian Borrowing Base is calculated,
plus (C) the portion of the Swap Reserves, the Cash Management Reserves, the
Processing Reserves and Storage/Handling Reserves applicable to the Canadian
Borrowers as of the last day of the month for which the Canadian Borrowing Base
is being calculated.

                  "CANADIAN PRIME RATE" shall mean on any day, the annual rate
of interest (rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to
the greater of: (a) the annual rate of interest announced from time to time by
JPMorgan Canada as its prime rate in effect at its principal office in Toronto,
Ontario Canada on such day being the reference rate used by JPMorgan Canada for
determining interest rates on C$ denominated commercial loans to its customers
in Canada; and (b) the annual rate of interest equal to the sum of (i) the CDOR
Rate in effect on such day, and (ii) 1%.

                  "CANADIAN PRIME RATE LOANS" shall mean C$ Denominated Loans
which bear interest at a rate based upon the Canadian Prime Rate.

                  "CANADIAN PRIORITY CLAIMS RESERVE" shall mean, as of the last
day of each month, the aggregate amount of all claims that Governmental
Authorities have against the Canadian Borrowers on such date, which if asserted
could have priority over the Canadian Lender Indebtedness pursuant to applicable
Canadian federal, provincial or territorial laws and shall include, without
limitation, claims with respect to accrued salaries and wages, accrued vacation
payable, Revenue Canada employment

                                       9
<PAGE>

taxes, employment post-retirement health and dental insurance, goods and
services, taxes and provincial sales taxes.

                  "CANADIAN REAL ESTATE MORTGAGE" shall mean a Mortgage and an
Assignment of Rents substantially in the form of Exhibits C-1 and C-2 and in
each case with such changes thereto as Canadian Administrative Agent shall deem
necessary or appropriate to comply with provincial and local Governmental
Requirements.

                  "CANADIAN REVOLVING CREDIT COMMITMENT" shall have the meaning
assigned to such term in Section 2.1(d).

                  "CANADIAN REVOLVING CREDIT EXPOSURE" shall mean, at any time
and as to each Canadian Lender, the Dollar Equivalent sum of (a) the aggregate
principal amount of the Canadian Revolving Credit Loans made by such Canadian
Lender outstanding as of such date plus (b) the accrued and unpaid interest on
the Canadian Revolving Credit Loans made by such Canadian Lender outstanding as
of such date plus (c) such Canadian Lender's Canadian Revolving Credit
Percentage of the aggregate amount of all Canadian Letter of Credit Liabilities
as of such date.

                  "CANADIAN REVOLVING CREDIT LOAN" shall have the meaning
provided in Section 2.1(a).

                  "CANADIAN REVOLVING CREDIT NOTE" shall mean a promissory note
of the Canadian Borrowers described in Section 2.5(b) payable to any Canadian
Lender and being substantially in the form of Exhibit D, evidencing the
aggregate Indebtedness of the Canadian Borrowers to such Canadian Lender
resulting from Canadian Revolving Credit Loans made by such Lender.

                  "CANADIAN REVOLVING CREDIT PERCENTAGE" shall mean as to any
Canadian Lender, the percentage of the aggregate Canadian Revolving Credit
Commitments constituted by its Canadian Revolving Credit Commitment (or, if the
Canadian Revolving Credit Commitments have terminated or expired, the percentage
which such Lender's Canadian Revolving Credit Exposure at such time constitutes
of the Aggregate Canadian Revolving Credit Exposure at such time).

                  "CANADIAN SECURITY AGREEMENT" shall mean any and all Security
Agreements executed by a Canadian Credit Party, substantially in the form of
Exhibit E, as amended, modified, renewed, supplemented or restated from time to
time.

                  "CANADIAN WIP LIMIT" shall mean the amount of the WIP Limit
which the Canadian Borrowers designate as the "Canadian WIP Limit" on the
Canadian Borrowing Base Report from which the Canadian Borrowing Base is being
calculated; provided, that, in no event shall the sum of the Canadian WIP Limit
and the US WIP Limit ever exceed the WIP Limit.

                  "CAPITAL EXPENDITURES" shall mean, as to any Person for any
period, all expenditures (whether paid in cash or accrued as a liability,
including the portion of Capital Lease Obligations originally incurred during
such period that are capitalized on the consolidated balance sheet of the
Company) by such Person and its Subsidiaries during such period, that, in
conformity with GAAP, are included in "capital expenditures," "additions to
property, plant or equipment" or comparable items in the consolidated financial
statements of such Person, but excluding expenditures for the restoration,
repair or replacement of any fixed or capital asset that was destroyed or
damaged, in whole or in part, in an amount equal to any insurance proceeds
received in connection with such destruction or damage.

                  "CAPITAL LEASE OBLIGATIONS" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real

                                       10
<PAGE>
and/or personal property which obligations are required to be classified and
accounted for as a liability for a capital lease on a balance sheet of such
Person and, for purposes of this Agreement, the amount of such obligations shall
be the capitalized amount thereof.

                  "CASH MANAGEMENT AFFILIATE" shall mean any Affiliate of any
Lender that has entered into a Cash Management Agreement with a Credit Party
with the obligations of such Credit Party thereunder being secured by one or
more Security Instruments.

                  "CASH MANAGEMENT AGREEMENT" shall mean any document,
instrument, agreement, arrangements or transactions with respect to cash
management services and includes, without limitation, any of the foregoing
related to deposit accounts, overdraft protection or automated clearing house
transactions.

                  "CASH MANAGEMENT RESERVES" shall mean, an amount (reflected in
Dollars) calculated as of the last day of each month and separately for the US
Borrowers and the Canadian Borrowers, equal to such Borrowers' liability under
the Cash Management Agreements to which such Borrowers are a party and any
exposure of the Lenders or Cash Management Affiliates with respect to such Cash
Management Agreements and the services performed thereunder on behalf of such
Borrowers.

                  "CDOR RATE" shall mean on any date, the annual rate of
interest which is the rate based on an average rate applicable to Canadian B/As
for a term of 30 days appearing on the "Reuters Screen CDOR Page" (as defined in
the International Swaps and Derivatives Association, Inc. definitions, as
modified and amended from time to time) at approximately 10:00 a.m. (Toronto,
Ontario Canada time), on such date, or if such date is not a Business Day, then
on the immediately preceding Business Day, provided that, if such rate does not
appear on the Reuters Screen CDOR Page as contemplated, then the CDOR Rate on
any date shall be calculated as the rate for the term referred to above
applicable to Canadian B/As quoted by JPMorgan Canada as of 10:00 a.m. (Toronto,
Ontario Canada time) on such date or, if such date is not a Business Day, then
on the immediately preceding Business Day.

                  "CHANGE OF CONTROL" shall be deemed to occur at any time when
any of the following occurs: (a) any Unrelated Person or any Unrelated Persons,
acting together, which would constitute a Group together with any Affiliates or
Related Persons thereof (in each case also constituting Unrelated Persons) shall
at any time either (1) Beneficially Own more than 30% of the aggregate voting
power of all classes of Voting Stock of the Company, or (2) succeed in having a
sufficient number of its or their nominees elected to the Board of Directors of
the Company such that such nominees, when added to any existing director
remaining on the Board of Directors of the Company after such election who is an
Affiliate or Related Person of such Person or Group, shall constitute a majority
of the Board of Directors of the Company, or (b) the Company ceasing to directly
or indirectly own 100% of the issued and outstanding Equity of each other Credit
Party on a fully diluted basis. As used herein (1) "BENEFICIALLY OWN" means
"beneficially own" as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended, or any successor provision thereto; provided, however, that,
for purposes of this definition, a Person shall not be deemed to Beneficially
Own securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates until such tendered
securities are accepted for purchase or exchange; (2) "GROUP" means a "group"
for purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended; (3) "UNRELATED PERSON" means at any time any Person other than the
Company; and (4) "RELATED PERSON" of any Person means any other Person owning
(A) 10% or more of the outstanding common stock of such Person or (B) 10% or
more of the Voting Stock of such Person.

                  "CLOSING DATE" shall mean the "as of" date of this Agreement
set forth in the first paragraph hereof.

                                       11
<PAGE>
                  "CODE" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute.

                  "COILED" shall have the meaning set forth in the recitals
hereto.

                  "COLLATERAL" shall mean the Credit Parties' Properties
described in and subject to the Liens, privileges, priorities and security
interests purported to be created by any Security Instrument.

                  "COMBINED REVOLVING CREDIT COMMITMENT" shall mean, for any
Revolving Lender, the aggregate amount of such Revolving Lender's US and
Canadian Revolving Credit Commitments, and for purposes of this definition, a
Revolving Lender and its Related Affiliate shall be deemed to be one and the
same Revolving Lender.

                  "COMMITMENT" means any US Revolving Credit Commitment, US
Swingline Commitment, Term Commitment or Canadian Revolving Credit Commitment,
and "COMMITMENTS" means all such Commitments collectively.

                  "COMPANY" shall have the meaning set forth in the initial
paragraph hereof.

                  "CONTRACT PERIOD" shall mean the term of a B/A selected by the
Canadian Borrowers in accordance with Section 2.8 or Section 2.12 commencing on
the date of such Borrowing or any rollover date, as applicable, of such B/A
(which shall be a Business Day) and expiring on a Business Day which shall be
either one month, two months, three months, or with the consent of the Canadian
Lenders, six months later; provided that no Contract Period shall extend beyond
the Maturity Date. Notwithstanding the foregoing, whenever the last day of any
Contract Period would otherwise occur on a day which is not a Business Day, the
last day of such Contract Period shall occur on the next succeeding Business Day
and such extension of time shall in such case be included in computing the
Acceptance Fee in respect of the relevant B/A.

                  "CREDIT PARTIES" shall mean the Company, and each of its
Subsidiaries collectively, and "CREDIT PARTY" shall mean any such Person
individually.

                  "CREDIT PERCENTAGE" means, for each Lender, the percentage
obtained by dividing (a) the sum of the Revolving Credit Exposure of such Lender
and the outstanding principal balance of any Term Loans held by such Lender, by
(b) the sum of the Aggregate Revolving Credit Exposure, plus the aggregate
outstanding principal balance of all Term Loans.

                  "CURRENT INFORMATION" shall mean, as of any day, the financial
statements and other related information for any applicable period most recently
required to be delivered to the Administrative Agent pursuant to Section
6.10(a), Section 6.10(b), and Section 6.10(c).

                  "DATED ASSETS" has the meaning assigned to such term in
Section 2.25(c) hereof.

                  "DATED LIABILITIES" has the meaning assigned to such term in
Section 2.25(c) hereof.

                  "DEFAULT" shall mean an Event of Default or any condition or
event which, with notice or lapse of time or both, would constitute an Event of
Default.

                  "DILUTION" shall mean a reduction as determined by
Administrative Agent in the value of accounts caused by returns, allowances,
discounts, credits, and/or any other offsets asserted by customers or granted by
Borrowers having the effect of reducing the collections of accounts.

                                       12
<PAGE>
                  "DILUTION PERCENTAGE" shall mean, with respect to either the
US Borrowers or the Canadian Borrowers, the ratio as reasonably determined by
Administrative Agent of Dilution to the total sales of such Borrowers.

                  "DISBURSEMENT ACCOUNT" has the meaning assigned to such term
in Section 2.4(a).

                  "DISCOUNT PROCEEDS" shall mean for any B/A, an amount (rounded
to the nearest whole cent, and with one-half of one cent being rounded upwards)
calculated on the applicable date of the Borrowing of which such B/A is a part
or any rollover date for such Borrowing by multiplying: (a) the face amount of
the B/A; by (b) the quotient of one divided by the sum of one plus the product
of: (1) the Discount Rate (expressed as a decimal) applicable to such B/A, and
(2) a fraction, the numerator of which is the Contract Period of the B/A and the
denominator of which is 365, with the such quotient being rounded up or down to
the fifth decimal place, and .000005 being rounded up.

                  "DISCOUNT RATE" shall mean the percentage discount rate
(expressed to two decimal places and rounded upward, if necessary, to the
nearest 0.01%) quoted by JPMorgan Canada as the percentage discount rate at
which JPMorgan Canada would, in accordance with its normal practices, at or
about 10:00 a.m., Toronto, Ontario Canada time, on such date, be prepared to
purchase bankers' acceptances accepted by JPMorgan Canada having a face amount
and term comparable to the face amount and term of such B/A.

                  "DISPOSITION" shall mean the sale by the applicable US
Borrower of either of the following: (a) the Real Property located in Longview,
Washington and described on Schedule 5.24 hereto, and (b) the Real Property
located in Hickman, Arkansas described on Schedule 5.24 hereto, to the extent
subject to a purchase option pursuant to Article 22 of that certain Lease
Agreement dated January 10, 2001 between the Company and Commercial Resins
Company, Inc.

                  "DOCUMENTARY LETTER OF CREDIT" shall mean a letter of credit
issued pursuant to this Credit Agreement that supports payment or performance
for a single identified purchase or exchange of products in the ordinary course
of business of the Borrowers.

                  "DOCUMENTATION AGENT" shall mean General Electric Capital
Corporation, acting in the manner and to the extent described in Article 9, and
any successor to General Electric Capital Corporation acting in such manner

                  "DOLLAR" and the sign "$," without the letter "C" before it,
shall mean lawful money of the United States of America.

                  "DOLLAR DENOMINATED LOANS" shall mean US Revolving Credit
Loans and any Canadian Revolving Credit Loans which are denominated in Dollars
and Dollars Denominated Loans shall include all Term Loans.

                  "DOLLAR EQUIVALENT" shall mean, on any date of determination,
with respect to any amount expressed in C$, the amount of Dollars that may be
purchased with such amount of C$ at the Spot Exchange Rate on such date.

                  "EBITDA" shall mean, as to the Company for any period, without
duplication, the amount equal to the following calculated for the Company and
its wholly owned consolidated Subsidiaries on a consolidated basis; net income
determined in accordance with GAAP, plus to the extent deducted from net income,
Interest Expense, depreciation, amortization, other non-cash expenses, and

                                       13
<PAGE>
income and franchise tax expenses; provided, that, extraordinary gains or losses
for any such period, including but not limited to gains or losses on the
disposition of assets, shall not be included in EBITDA.

                  "ELIGIBLE ACCOUNT" shall mean at any time with respect to any
Person the invoice amount, net of all goods and services, harmonized and sales
taxes, (which shall be the Dollar Equivalent at such time of any amount
denominated in C$) owing on each account (which shall mean (a) any "account" as
such term is defined in Section 9-102(a)(2) of the UCC and (b) any "chattel
paper" as such term is defined in Section 9-102(a)(11) of the UCC) of such
Person (net of any credit balance, returns, trade discounts, unapplied cash,
unbilled amounts or retention or finance charges) which meet such standards of
eligibility as Administrative Agent shall establish from time to time in its
sole reasonable discretion; provided that no account shall be deemed an Eligible
Account unless each of the following statements is accurate and complete (and
the Person by including such account in any computation of the applicable
Borrowing Base shall be deemed to represent and warrant to the Administrative
Agent, each Issuing Bank and the Lenders the accuracy and completeness of such
statements; provided, that such Person will not be deemed to have represented or
warranted to Administrative Agent's general satisfaction with the credit
standing of any obligor (as provided in clause (12) hereof) or with letters of
credit or export/input insurance (as provided in clause (13) hereof)):

                  (1)      Said account is a binding and valid obligation of the
obligor thereon in full force and effect;

                  (2)      Said account is evidenced by an invoice;

                  (3)      Said account is genuine as appearing on its face or
as represented in the books and records of the Person;

                  (4)      Said account is free from claims regarding
rescission, cancellation or avoidance, whether by operation of law or otherwise;

                  (5)      Payment of said account is less than 90 days past the
original invoice date thereof, other than accounts of up to three (3) obligors
owed to the Canadian Borrowers that have been extended 60 day terms by a
Canadian Borrower so long as payment of said accounts of such obligors are less
than 120 days past the original invoice date thereof;

                  (6)      Said account is net of concessions, offset,
deduction, contras, chargebacks or understandings with the obligor thereon that
in any way could reasonably be expected to adversely affect the payment of, or
the amount of, said account;

                  (7)      The Administrative Agent, or the Canadian
Administrative Agent, as the case may be, on behalf of the applicable Lenders,
the Cash Management Affiliates and the Secured Affiliates, has a first-priority
perfected Lien covering said account and said account is, and at all times will
be, free and clear of all other Liens other than Permitted Liens;

                  (8)      The obligor on said account is not (a) an Affiliate
of any of the Borrowers, or (b) an employee of any of the Borrowers;

                  (9)      Said account arose in the ordinary course of business
of the Person;

                  (10)     Said account is not payable by an obligor who is more
than 90 days past the original invoice date thereof with regard to 50% or more
of the total aggregate accounts owed to the Person by such obligor and all of
its Affiliates;

                                       14
<PAGE>
                  (11)     All consents, licenses, approvals or authorizations
of, or registrations or declarations with, any Governmental Authority required
to be obtained, effected or given in connection with the execution, delivery and
performance of said account by each party obligated thereunder have been duly
obtained, effected or given and are in full force and effect;

                  (12)     The obligor on said account is not the subject of any
bankruptcy or insolvency proceeding, has not had a trustee or receiver appointed
for all or a substantial part of its property, has not made an assignment for
the benefit of creditors, admitted its inability to pay its debts as they mature
or suspended its business, and the Administrative Agent, in its reasonable
discretion, is otherwise satisfied with the credit standing of such obligor;

                  (13)     The obligor of said account is organized and existing
under the laws of the United States of America or a State thereof or the federal
laws of Canada, a province or territory thereof, or if the obligor is not so
organized and existing, said account is covered under letters of credit or
export/import insurance reasonably satisfactory to Administrative Agent;

                  (14)     The obligor of said account is not a state,
commonwealth, provincial, federal, foreign, territorial, or other court or
governmental department, commission, board, bureau, agency or instrumentality
other than the federal government of the United States of America, the federal
government of Canada or the government of any province or territory of Canada or
political subdivision thereof, and then only to the extent that such Person has
complied in all respects with the relevant provisions of the Federal Assignment
of Claims Act of 1940 (for a US Borrower) or the Financial Administration Act
(Canada) or similar provincial or territorial legislation or municipal ordinance
of similar purpose (for a Canadian Borrower);

                  (15)     In the case of the sale of goods, the subject goods
have been sold and shipped or delivered to an obligor on a true sale basis on
open account, or subject to contract, and not on consignment, on approval, on a
"sale or return" basis, or on a "bill and hold" or "pre-sale" basis or subject
to any other repurchase or return agreement, no material part of the subject
goods has been returned, rejected, lost or damaged, and said account is not
evidenced by chattel paper or an instrument of any kind;

                  (16)     Each of the representations and warranties set forth
herein and in the Security Instruments with respect to said account is true and
correct on such date; and

                  (17)     The obligor of said account is not an individual or
individual proprietorship which does not transact with the Borrower in the
ordinary course of business of the Borrower;

provided that, if any Eligible Account, when added to all other accounts that
are obligations of the same obligor and its Affiliates, results in a total sum
that exceeds 20% of the total balance then due on all Eligible Accounts owed to
the Borrowers (without giving effect to any reduction in Eligible Accounts
pursuant to this proviso), unless the accounts of such obligors or group of
Affiliated obligors are insured pursuant to credit insurance acceptable to
Administrative Agent which has been assigned to Administrative Agent or Canadian
Administrative Agent (as applicable), the amount of said accounts in excess of
20% of such total balance then due shall be excluded from Eligible Accounts of
the Borrowers to whom said accounts are owed; provided, that, if said accounts
of such obligor (or group of Affiliated obligors) are owed to both the US
Borrowers and Canadian Borrowers, such excess amount shall be excluded from the
Eligible Accounts of the Canadian Borrowers and the US Borrowers in the same
proportion as all amounts from such obligor are owed to the Canadian Borrowers
and the US Borrowers.

                  "ELIGIBLE ACCOUNT ADVANCE PERCENTAGE" shall mean 85%;
provided, that, Administrative Agent may, in its sole discretion lower such
percentage to such lesser percentage as it

                                       15
<PAGE>
deems appropriate in its sole discretion at any time the applicable Borrowers'
Dilution Percentage exceeds five percent (5%).

                  "ELIGIBLE BAILEE INVENTORY" shall mean all "inventory" (as
such term is defined in Section 9-102(a)(48) of the UCC) of the Borrowers which
would be "Eligible Inventory" but for the requirement set forth in clause (2) of
the definition of Eligible Inventory because such inventory is located on Real
Property that is not owned or leased by the Borrowers, and with respect to which
the Administrative Agent shall have received a Bailee's Letter in a form and
substance satisfactory to the Administrative Agent in its sole discretion.

                  "ELIGIBLE BILL AND HOLD ACCOUNTS" shall mean any "account" as
such term is defined in Section 9-102(a)(2) of the UCC and (b) any "chattel
paper" as such term is defined in Section 9-102(a)(11) of the UCC) of any US
Borrower which would be an "Eligible Account" but for the requirement set forth
in clause (15) of the definition of Eligible Account because it is a "bill and
hold" account, and with respect to which, (i) such account is less than 60 days
from its original invoice date and (ii) the Administrative Agent shall have
received an agreement from the obligor thereof confirming its unconditional
obligation to pay such "bill and hold" accounts in form and substance
satisfactory to the Administrative Agent in its sole discretion.

                  "ELIGIBLE INCLUDED-IN-TRANSIT INVENTORY" shall mean
Included-In-Transit Inventory which would be "Eligible Inventory" but for the
requirement set forth in clause (2) of the definition of Eligible Inventory.

                  "ELIGIBLE INVENTORY" shall mean, at any time with respect to
any Person, all "inventory" (as such term is defined in Section 9-102(a)(48) of
the UCC) of such Person valued in Dollars on a lower of cost (on a FIFO basis
and excluding any component of cost representing intercompany profit in the case
of inventory acquired from an Affiliate) or market basis in accordance with GAAP
(with detailed calculations of lower of cost or market to occur on at least a
quarterly basis (until such time as Excess Availability is less than $20,000,000
at which time such calculations will be required on a monthly basis until Excess
Availability has exceeded $20,000,000 for ninety (90) consecutive days) for
which each of the following statements is accurate and complete (and such Person
by including such inventory in any computation of the applicable Borrowing Base
shall be deemed to represent and warrant to the Administrative Agent, each
Issuing Bank and each Lender the accuracy and completeness of such statements
(subject to Permitted Borrowing Base Adjustments)):

                  (1)      Said inventory is in good condition, meets all
standards imposed by any Governmental Authority having regulatory authority over
it or its use and/or sale and is not obsolete and is either currently usable or
currently salable in the normal course of business of such Person;

                  (2)      Said inventory is either (i) inventory the payment
for which has been provided for by the issuance of a Documentary Letter of
Credit hereunder, or (ii) is in possession of such Person and (1) located on
Real Property owned or leased by such Person and described in Schedule 5.24
hereto, and (2) within the United States or Canada; provided, that, if said
inventory is located on Real Property leased by such Person, the landlord of
such Real Property shall have executed a Landlord Waiver Agreement;

                  (3)      Each of the representations and warranties set forth
in the Security Instruments with respect to said inventory is true and correct
on such date;

                  (4)      The Administrative Agent or the Canadian
Administrative Agent, as the case may be, on behalf of the applicable Lenders,
has a first-priority perfected Lien covering said inventory,

                                       16
<PAGE>
other than Permitted Liens, and said inventory is, and at all times will be,
free and clear of all Liens except for Permitted Liens;

                  (5)      Said inventory does not include goods that are not
owned by such Person, that are held by such Person pursuant to a consignment
agreement or which have been sold by such Person on a bill and hold basis to the
extent such inventory has been paid for or has given rise to an Eligible Bill
and Hold Account;

                  (6)      Said inventory is not subject to repossession under
the Bankruptcy and Insolvency Act (Canada) except to the extent the applicable
vendor has entered into an agreement with Canadian Administrative Agent waiving
its right to repossession, which agreement shall be acceptable to Canadian
Administrative Agent; and

                  (7)      Said inventory does not consist of spools, store room
materials, supplies or parts. Standards of eligibility for inventory may be
fixed and revised prospectively from time to time solely by the Administrative
Agent in its sole reasonable judgment.

                  "ELIGIBLE INVENTORY ADVANCE PERCENTAGE" shall mean (a) for
Eligible Inventory, Eligible Included-in-Transit Inventory and Eligible Bailee
Inventory consisting of steel coil raw material, 60%, and (b) for all other
Eligible Inventory, Eligible Included-in-Transit Inventory and Eligible Bailee
Inventory, 50%; provided that the percentage in effect pursuant to this clause
(b) shall reduce by 0.5% on the first day of each month commencing on July 1,
2002 and continuing until it reaches 45%; provided, further, the Eligible
Inventory Advance Percentages in effect pursuant to clause (a) and (b) preceding
are subject to reduction by Administrative Agent in its reasonable discretion
based on the results of inventory appraisals provided to the Agents and Lenders
from time to time pursuant to Section 6.10(o) hereof.

                  "ENVIRONMENTAL LAWS" shall mean any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any Governmental
Authority pertaining to health or the environment in effect in any and all
jurisdictions in which any Credit Party is conducting or at any time has
conducted business, or where any Property of any Credit Party is located, or
where any hazardous substances generated by or disposed of by any of the Credit
Parties are located, including but not limited to the Oil Pollution Act of 1990
("OPA"), the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, and other environmental conservation or protection
laws. The term "OIL" shall have the meaning specified in OPA; the terms
"HAZARDOUS SUBSTANCE," "RELEASE" and "THREATENED RELEASE" have the meanings
specified in CERCLA, and the terms "SOLID WASTE" and "DISPOSAL" (or "DISPOSED")
have the meanings specified in RCRA; provided, however, in the event either
CERCLA or RCRA is amended so as to change the meaning of any term defined
thereby, such changed meaning shall apply subsequent to the effective date of
such amendment, and provided, further, that, to the extent the laws of the state
in which any Property of any Credit Party is located establish a meaning for
"oil," "hazardous substance," "release," "solid waste" or "disposal" which is
broader than that specified in either OPA, CERCLA or RCRA, such broader meaning
shall apply.

                  "EQUITY" shall mean shares of capital stock or a partnership,
profits, capital or member interest, or options, warrants or any other right to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital or member interest of any Credit Party and shall expressly include all
"stock appreciation rights", "phantom stock" "profit participations" and other
similar interests.

                                       17
<PAGE>
                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute.

                  "ERISA AFFILIATE" shall mean each trade or business (whether
or not incorporated) which together with any Borrower would be deemed to be a
"single employer" within the meaning of Section 4001(b)(1) of ERISA or
Subsections 414(b), (c), (m) or (o) of the Code.

                  "ERISA TERMINATION EVENT" shall mean (a) a "Reportable Event"
described in Section 4043 of ERISA and the regulations issued thereunder (other
than a "Reportable Event" not subject to the provision for 30-day notice to the
PBGC pursuant to regulations under Section 4043 of ERISA, (b) the withdrawal of
any Credit Party or any ERISA Affiliate from a Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c)
the filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041(c) of ERISA, (d) the institution
of proceedings to terminate a Plan by the PBGC, or (e) any other event or
condition which could reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.

                  "EURODOLLAR LOAN" shall mean a US Revolving Credit Loan, a
Canadian Revolving Credit Loan or a Term Loan that is a Dollar Denominated Loan
bearing interest at the rate provided in Section 2.6(b).

                  "EURODOLLAR RATE" shall mean, with respect to any Borrowing of
Eurodollar Loans for any Interest Period, the product of (a) (1) the interest
rate per annum shown on page 3750 of the Dow Jones & Company Telerate screen or
any successor page as the composite offered rate for London interbank deposits
with a period comparable to the Interest Period for such Eurodollar Loan, as
shown under the heading "USD" at 11:00 A.M. (London time) two Business Days
prior to the first day of such Interest Period or (2) if the rate in clause (1)
of this definition is not shown for any particular day, the average interest
rate per annum (rounded upwards, if necessary, to the next 1/16th of 1%) offered
to the Administrative Agent in the interbank Eurodollar market for Dollar
deposits of amounts in funds comparable to the principal amount of the
Eurodollar Loan to which such Eurodollar Rate is to be applicable with
maturities comparable to the Interest Period for which such Eurodollar Rate will
apply as of approximately 10:00 a.m. (New York, New York time) two Business Days
prior to the commencement of such Interest Period, times (b) Statutory Reserves,
if any.

                  "EVENT OF DEFAULT" shall have the meaning provided in Article
8.

                  "EXCESS AVAILABILITY" shall mean, as of any date, the sum of
(a) the Canadian Excess Availability as of such date and (b) the US Excess
Availability as of such date.

                  "EXCESS CASH FLOW" shall mean, as to either the US Borrowers
or the Canadian Borrowers, (a) Funds Flow from Operations for the US Borrowers
or the Canadian Borrowers, as applicable, for any Fiscal Year, minus (b) for
each such Fiscal Year and for the US Borrowers or the Canadian Borrowers, as
applicable, the sum of (x) the sum of each of the following, to the extent
actually paid: (1) the principal portion of scheduled payments under Capital
Lease Obligations, (2) Non-Financed Capital Expenditures, plus (y) all scheduled
reductions in the Canadian Equipment Component and the US Equipment Component
occurring during such period.

                  "EXCESS NET CASH PROCEEDS" shall mean, with respect to any
Disposition, the amount by which Net Cash Proceeds received by the applicable US
Borrower in such Disposition exceeds (i) in the case of the Longview, Washington
Real Property, $3,250,000 and (ii) in the case of the Hickman, Arkansas Real
Property, $550,000.

                                       18
<PAGE>

                  "EXCHANGECO" shall have the meaning set forth in the initial
paragraph hereof.

                  "EXCLUDED TAXES" shall mean, with respect to the
Administrative Agent, any Lender, any Issuing Bank or any other recipient of any
payment to be made by or on account of any obligation of any Borrower hereunder,
(a) income or franchise taxes imposed on (or measured by) its net income by the
United States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Company is located, and (c) in
the case of a Foreign Lender any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender's failure to comply with Section 2.21(f), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrowers with respect to such withholding tax
pursuant to Section 2.21(a). Notwithstanding the foregoing, "Excluded Taxes"
shall not include withholding taxes attributable to any amount payable by any US
Credit Party in respect of Canadian Lender Indebtedness pursuant to the Guaranty
and Security Agreement or any other Financing Document.

                  "EXISTING INDEBTEDNESS" shall mean all Funded Indebtedness of
the Credit Parties on the Closing Date, but excluding Loans and Letter of Credit
Liabilities.

                  "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the
per annum rate 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, as published for such day (or, if such day is not a
Business Day, for the next 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 for such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

                  "FEE LETTER" shall mean the letter agreement dated February 6,
2002, regarding fees, executed by JPMorgan and accepted and agreed to by the
Company as of February 6, 2002.

                  "FINANCIAL STATEMENTS" shall mean (a) the audited consolidated
financial statements of the Company for the Fiscal Years ended December 31,
1999, 2000, and 2001, and the unaudited consolidated financial statements of the
Company for the months ended January 31, 2002 and February 28, 2002, and (b) the
audited consolidated financial statement of Holding for its fiscal years ending
March 31, 2000 and 2001 and the unaudited consolidated financial statements of
Holding for the nine months ended December 31, 2001.

                  "FINANCING DOCUMENTS" shall mean this Agreement, the Notes,
the Security Instruments, the Applications, Borrowing Requests, Borrowing Base
Reports, the Cash Collateral Account Agreements, the Canadian Fee Letter, the
Fee Letter, and the other documents, instruments or agreements described in
Section 3.1 and Section 3.2, together with any other document, instrument or
agreement (other than participation, agency or similar agreements among the
Lenders or between any Lender and any other bank or creditor with respect to any
indebtedness or obligations of the Company or its Subsidiaries hereunder or
thereunder) now or hereafter entered into in connection with the Loans, the
Lender Indebtedness or the Collateral, as such documents, instruments or
agreements may be amended, modified or supplemented from time to time.

                  "FISCAL QUARTER" shall mean the fiscal quarter of the Company
and each of the Borrowers, ending on the last day of each March, June, September
and December of each year.

                                       19
<PAGE>
                  "FISCAL YEAR" shall mean the fiscal year of the Company and
each of the Borrowers, ending on the last day of December of each year.

                  "FIXED CHARGE COVERAGE RATIO" shall mean, as to the Company
and its Subsidiaries on a consolidated basis, determined for any period, the
ratio of (a) EBITDA for such period minus the sum of (1) Non Financed Capital
Expenditures made during such period, plus (2) cash taxes paid during such
period, plus (3) cash distributions or dividends actually paid during such
period by the Company to its stockholders and all amounts paid by the Company to
repurchase Equity from its stockholders during such period, to (b) the sum of
(1) scheduled principal payments on Funded Indebtedness during such period
(including scheduled reductions in the Canadian Equipment Component and the US
Equipment Component assuming that such reduction commenced on April 1, 2002),
plus (2) Adjusted Interest Expense for such period.

                  "FOREIGN LENDER" shall mean, as to the US Borrowers, any US
Lender that is organized under the laws of a jurisdiction other than that in
which the US Borrowers are located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.

                  "FUNDED INDEBTEDNESS" shall mean, as to any Person, without
duplication, all Indebtedness for borrowed money, all obligations evidenced by
bonds, debentures, notes, or other similar instruments, all Capital Lease
Obligations, and all guaranties of Funded Indebtedness of other Persons.

                  "FUNDS FLOW FROM OPERATIONS" shall mean, as to the Company for
any period, without duplication, the amount equal to net income for the Company
and its Subsidiaries determined on a consolidated basis in accordance with GAAP,
plus to the extent deducted from net income, depreciation, amortization,
non-cash Interest Expense and any other non-cash expense; provided, however,
that the results of operations of all Affiliates of the Company (other than
wholly owned Subsidiaries of the Company) shall only be included in Funds Flow
from Operations to the extent the Company or one of its wholly owned
Subsidiaries actually receives cash distributions or dividends in respect of its
ownership interest in such Affiliate during the period for which Funds Flow from
Operations is being calculated.

                  "GAAP" shall mean generally accepted accounting principles in
effect in the United States as applied in accordance with Section 1.2 as of the
date hereof consistently applied.

                  "GOVERNMENTAL AUTHORITY" shall mean any (domestic or foreign)
federal, state, province, territory, county, city, municipal or other political
subdivision or government, department, commission, board, bureau, court, agency
or any other instrumentality of any of them, which exercises jurisdiction over
any Credit Party or any Property (including, but not limited to, the use and/or
sale thereof) of any Credit Party or any Plan.

                  "GOVERNMENTAL REQUIREMENT" shall mean any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other direction or requirement
(including but not limited to any of the foregoing which relate to Environmental
Laws, energy regulations and occupational, safety and health standards or
controls) of any Governmental Authority.

                  "GP INC." shall have the meaning set forth in the initial
paragraph hereto.

                  "GP LLC" shall have the meaning set forth in the initial
paragraph hereto.

                                       20
<PAGE>
                  "GUARANTY AND SECURITY AGREEMENT" shall mean any and all
Guaranty and Security Agreements executed by any US Credit Party, substantially
in the form of Exhibit F, as amended, modified, renewed, supplemented or
restated from time to time.

                  "HIGHEST LAWFUL RATE" shall mean, with respect to each Lender,
the maximum non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the Notes or
on other Lender Indebtedness, as the case may be, owed to it under the law of
any jurisdiction whose laws may be mandatorily applicable to such Lender
notwithstanding other provisions of this Agreement, or law of the United States
of America, Canada, or any other jurisdiction applicable to such Lender and the
Transactions, which would permit such Lender to contract for, charge, take,
reserve or receive a greater amount of interest than under such jurisdiction's
law.

                  "HOLDING" shall have the meaning set forth in the initial
paragraph hereto.

                  "IMBALANCE LENDER" shall mean any Lender with a Canadian
Revolving Credit Percentage which is not the same as its US Revolving Credit
Percentage, and for purposes of this definition, a Revolving Lender and its
Related Affiliate shall be deemed to be one and the same Revolving Lender.

                  "INCLUDED-IN-TRANSIT INVENTORY" means inventory which (a) has
been placed with a common carrier for shipment to a Borrower, (b) has been
inspected and approved by a Borrower or an agent of a Borrower, (c) is the
subject of a bill of lading or other document of title, all counterparts which,
to the extent Administrative Agent or Canadian Administrative Agent has
requested, are in the possession of Administrative Agent or Canadian
Administrative Agent, as applicable, vesting title to such inventory in a
Borrower, and (d) has been insured pursuant to one or more policies of insurance
meeting the requirements of Section 6.5 hereof.

                  "INCLUDED-IN-TRANSIT LIMIT" shall mean $15,000,000.

                  "INDEBTEDNESS" of any Person shall mean:

                  (a)      all obligations of such Person for borrowed money and
obligations evidenced by bonds, debentures, notes or other similar instruments;

                  (b)      all obligations of such Person (whether contingent or
otherwise) in respect of bankers' acceptances, letters of credit, surety or
other bonds and similar instruments;

                  (c)      all obligations of such Person to pay the deferred
purchase price of Property or services (other than for borrowed money);

                  (d)      all Capital Lease Obligations in respect of which
such Person is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations such Person otherwise assures a
creditor against loss;

                  (e)      all guaranties (direct or indirect), and other
contingent obligations of such Person in respect of, or obligations to purchase
or otherwise acquire or to assure payment of, Indebtedness or other obligations
of other Persons;

                  (f)      Indebtedness of others secured by any Lien upon
Property owned by such Person, whether or not assumed;

                                       21
<PAGE>
                  (g)      all obligations or undertakings of such Person to
maintain or cause to be maintained the financial position or financial covenants
of other Persons;

                  (h)      obligations to deliver goods or services in
consideration of advance payments, excluding such obligations incurred in the
ordinary course of business as conducted by the Borrowers as of the Closing
Date;

                  (i)      the net amount of obligations of such Person under
agreements of the types described in the definition of Swap Agreements; and

                  (j)      any "synthetic lease", "tax retained operating lease"
or similar lease financing arrangements under which the tenant is treated as the
owner of property for tax purposes but such lease is treated as an operating
lease in accordance with GAAP.

                  "INDEMNIFIED TAXES" shall mean Taxes other than Excluded
Taxes.

                  "INTEREST EXPENSE" shall mean, as to any Person for any
period, without duplication, total interest expenses, whether paid or accrued as
liabilities (including the interest component of Capital Lease Obligations),
with respect to all outstanding Indebtedness, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to any
financing or letters of credit and net costs under any Swap Agreement to the
extent that such costs are included within interest expense in the Company's
financial statements prepared in accordance with GAAP.

                  "INTEREST PERIOD" shall mean, with respect to each Borrowing
of Eurodollar Loans, an interest period complying with the terms and provisions
of Section 2.7.

                  "INITIAL RESERVE" shall mean an Availability Reserve in the
amount of $5,000,000 established with respect to the US Borrowing Base and which
shall expire on the first anniversary of the Closing Date.

                  "INVENTORY LIMIT" shall mean $80,000,000.

                  "INVESTMENT" shall have the meaning set forth in the initial
paragraph hereof.

                  "ISSUING BANK" shall mean (a) for each US Letter of Credit,
JPMorgan, as the issuing bank for such US Letter of Credit and (b) for each
Canadian Letter of Credit, JPMorgan Canada (or any other Lender designated by
the Canadian Borrowers and approved in writing by the Canadian Administrative
Agent such approval not to be unreasonably withheld), as the issuing bank for
such Canadian Letter of Credit.

                  "JPMORGAN" shall mean JPMorgan Chase Bank, in its individual
capacity or as an Issuing Bank, as the case may be, and not as Administrative
Agent.

                  "JPMORGAN CANADA" shall mean JPMorgan Chase Bank, Toronto
Branch.

                  "LANDLORD CONSENT AND SUBORDINATION AGREEMENT" shall mean an
agreement executed and delivered by each landlord of Real Property leased by any
Credit Party and subject to a Real Estate Mortgage pursuant to which such
landlord (a) consents to the execution and delivery of a Real Estate Mortgage by
such Credit Party in favor of Administrative Agent or the Canadian
Administrative Agent, as applicable with respect to the leased Real Property,
and (b) subordinates all of its Liens to the Liens of Administrative Agent or
the Canadian Administrative Agent, as applicable, in the Property of such Credit
Party located on the leased Real Property.

                                       22
<PAGE>

                  "LANDLORD WAIVER AGREEMENT" shall mean an agreement executed
and delivered by each landlord of Real Property leased by any Borrower pursuant
to which such landlord subordinates or waives all of its Liens to the Liens of
Administrative Agent or Canadian Administrative Agent (as applicable) in the
Property of such Borrower located on the leased Real Property.

                  "LASALLE ACCOUNT" shall mean account number 2365595 maintained
by Precision with LaSalle Bank, N.A.

                  "L/C COVER" when required by this Agreement for Letter of
Credit Liabilities of an Account Party, shall be effected by paying to the
Administrative Agent in the case of US Letter of Credit Liabilities or Canadian
Administrative Agent in the case of Canadian Letter of Credit Liabilities in
immediately available funds, to be held by the Administrative Agent or Canadian
Administrative Agent, as applicable, in a collateral account maintained by the
Administrative Agent or the Canadian Administrative Agent, as applicable, and
which accounts may be Blocked Accounts maintained with Administrative Agent or
Canadian Administrative Agent, as applicable, and collaterally assigned as
security pursuant to the Financing Documents, an amount equal to the maximum
amount of each applicable Letter of Credit issued for the account of such
account party which is available for drawing at any time. Such amount shall be
retained by the Administrative Agent or Canadian Administrative Agent, as
applicable, in such collateral account until such time as the applicable Letter
of Credit shall have expired and the Reimbursement Obligations, if any, with
respect thereto shall have been fully satisfied.

                  "LENDER" shall have the meaning set forth in the opening
paragraph hereof but shall include any Term Lender hereafter made a party to
this Agreement pursuant to a Term Lender Joinder Agreement.

                  "LENDER INDEBTEDNESS" shall mean any and all amounts owing or
to be owing by any Credit Party to the Administrative Agent, the Canadian
Administrative Agent, the Issuing Banks or the Lenders with respect to or in
connection with the Loans, any Overadvance Loans, any Letter of Credit
Liabilities, the Notes, any Swap Agreement between a Credit Party and JPMorgan
or one of its Secured Affiliates, any Cash Management Agreement between a Credit
Party and any Lender or one of its Cash Management Affiliates, this Agreement,
or any other Financing Document and, as to Swap Agreements and Cash Management
Agreements, any and all amounts owing or to be owing by any Credit Party
thereunder to JPMorgan or any of its Secured Affiliates or any Lender or its
Cash Management Affiliates, as applicable.

                  "LENDING OFFICE" shall mean for each Lender the office
specified opposite such Lender's name on the signature pages hereof, or in the
Assignment and Acceptance pursuant to which it became a Lender, with respect to
each Type of Loan, or such other office as such Lender may designate in writing
from time to time to the Company and the Administrative Agent with respect to
such Type of Loan; provided that Lending Offices for Canadian Lenders shall be
in Canada and for US Lenders shall be in the United States.

                  "LETTERS OF CREDIT" shall mean Canadian Letters of Credit and
US Letters of Credit, collectively.

                  "LETTER OF CREDIT LIABILITIES" shall mean the US Letter of
Credit Liabilities and Canadian Letter of Credit Liabilities, collectively.

                  "LIEN" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on contract, constitutional, common, or
statutory law, and including but not limited to the lien or security interest
arising from a

                                       23
<PAGE>
mortgage, encumbrance, pledge, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes. The term
"Lien" shall include reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, liens and other statutory,
constitutional, or common law rights of landlords, leases and other title
exceptions and encumbrances affecting Property. For the purposes of this
Agreement, any Borrower shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, financing lease
or other arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes.

                  "LOAN" shall mean a Revolving Credit Loan, a Term Loan or a US
Swingline Loan and "Loans" shall mean the Revolving Credit Loans, Term Loans and
the US Swingline Loans or one or more of them as provided herein.

                  "LOCKBOX" shall mean any lockbox to be established and
operated pursuant to Section 4.3 hereof and the Lockbox Agreement.

                  "LOCKBOX AGREEMENT" shall mean one or more lockbox agreements,
tri-party agreements, or similar documents to be entered into between Borrowers
(or any of them) and Administrative Agent or Canadian Lockbox Bank on
Administrative Agent's or Canadian Lockbox Bank's standard form (with such
modifications thereto as Administrative Agent, Canadian Administrative Agent or
Canadian Lockbox Bank shall reasonably require) setting forth certain terms
applicable to the establishment and operation of the applicable Lockbox.

                  "LONGVIEW ACCOUNT" shall mean account number 153505804539
maintained by Tube at U.S. Bank National Association.

                  "MATURITY DATE" shall mean March 28, 2006.

                  "MARGIN STOCK" shall have the meaning provided in Regulations
U and X.

                  "MATERIAL ADVERSE EFFECT" shall mean any material and adverse
effect on (a) the business, operations, assets, liabilities, condition
(financial or otherwise), prospects, or results of operations of (i) the US
Borrowers taken as a whole, or (ii) the Canadian Borrowers taken as a whole, (b)
the validity or enforceability of any of the Financing Documents or the rights
and remedies of the Administrative Agent, the Canadian Administrative Agent or
the Lenders thereunder, or (c) the perfection or priority of any Liens securing
the Canadian Lender Indebtedness or the Lender Indebtedness.

                  "MAVERICK INTERNATIONAL" shall mean Maverick Tube
International, Inc., a Barbados foreign sales corporation.

                  "MINIMUM EXCESS AVAILABILITY" shall mean, for any period, the
lowest amount of Excess Availability at the opening of business on any Business
Day in such period; provided, that for purposes of determining Minimum Excess
Availability, the Initial Reserve shall be disregarded.

                  "MORTGAGED REAL PROPERTY" shall mean the Real Property of the
Borrowers described on Part I of Schedule 5.24 hereto and all other Real
Property which may hereafter be mortgaged to Administrative Agent or Canadian
pursuant to a Real Estate Mortgage.

                  "NET CASH PROCEEDS" shall mean the remainder of (a) the gross
proceeds received by any US Borrower from any Disposition less (b) commissions,
broker's fees, legal and other professional fees

                                       24
<PAGE>
and expenses and other usual and customary transaction costs, in each case only
to the extent paid or payable by a US Borrower in cash and related to such
Disposition.

                  "NEW SUBSIDIARY" has the meaning assigned to such term in
Section 6.9 hereof.

                  "NON FINANCED CAPITAL EXPENDITURES" shall mean Capital
Expenditures made by any Credit Party which are not financed pursuant to the
incurrence of Indebtedness, the issuance of Equity or receipt of an equity
contribution, a Capitalized Lease Obligation or a Loan.

                  "NOTES" shall mean the Revolving Credit Notes, the Term Notes
and the US Swingline Note.

                  "OBLIGATED PARTY" shall mean any Borrower and any other Person
who is a Party to a Financing Document for purposes of guaranteeing or securing
the Lender Indebtedness or any part thereof; provided, that, Obligated Parties
do not include any Bailee, suppliers, landlords or account debtors of any
Borrower that have executed Bailee Letters, Landlord Consents and Subordination
Agreements, Landlord Waiver Agreements, bill-and-hold agreements or waivers of
repossession rights under Bankruptcy and Insolvency Act (Canada).

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

                  "OVERADVANCE" shall have the meaning assigned such term in
Section 2.11(a) hereof.

                  "PAYMENT OFFICE" shall mean (a) with respect to US Loans, the
Administrative Agent's office located at 395 North Service, 3rd Floor, Melville,
New York 11749 (or such other office or individual as the Administrative Agent
may hereafter designate in writing to the other parties hereto), and (b) with
respect to Canadian Loans, the Canadian Administrative Agent's office located at
207 Queens Quay, Suite 200, Toronto, Ontario Canada M5J1A7.

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

                  "PERFECTION CERTIFICATES" shall mean that certain Perfection
Certificate dated March 28, 2002, executed by each Borrower and addressed to
Administrative Agent.

                  "PERFECTION CERTIFICATE UPDATE" shall mean a Certificate from
a Responsible Officer of the Company in the form of Exhibit G hereto to be
delivered to Administrative Agent monthly pursuant to Section 6.10(g) hereof and
setting forth all changes that would be required to be made to the Perfection
Certificates (as updated pursuant to any prior Perfection Certificate Updates)
to cause the Perfection Certificates to be accurate and complete if reissued as
of the last day of the month immediately preceding the month in which the
Perfection Certificate is required to be delivered pursuant to Section 6.10(g)
hereof.

                  "PERMITTED BORROWING BASE ADJUSTMENTS" means adjustments to
the Canadian Borrowing Base or US Borrowing Base reflected on any Borrowing Base
Report delivered pursuant to Section 6.10(g) (a) made within ten (10) days after
delivery of such Borrowing Base Report, (b) solely to eliminate any intercompany
profit reflected in the cost of inventory acquired by any Borrower from an
Affiliate, and (c) which does not result in a reduction in the US Borrowing Base
and Canadian Borrowing Base (considered in the aggregate) of greater than
$500,000.

                                       25
<PAGE>
                  "PERMITTED LIENS" shall have the meaning assigned in Section
7.3 hereof.

                  "PERSON" shall mean any individual, partnership (including,
but not limited to, Tube) firm, corporation (including, but not limited to, all
Borrowers (other than Tube)), limited liability companies, association, joint
venture, trust or other entity, or any government or political subdivision or
agency, department or instrumentality thereof; provided, however, for the
purpose of the definition of "Change of Control," "Person" shall mean a "person"
or group of persons within the meaning of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended.

                  "PLAN" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA (including, but not limited to, an employee
pension benefit plan, such as a foreign plan, which is not subject to the
provisions of ERISA), which (a) is currently or hereafter sponsored, maintained
or contributed to by any Credit Party or an ERISA Affiliate, or (b) was at any
time during the six preceding Fiscal Years sponsored, maintained or contributed
to by any Credit Party or an ERISA Affiliate.

                  "PRECISION" shall have the meaning set forth in the initial
paragraph hereof.

                  "PRECISION CANADA" shall have the meaning set forth in the
initial paragraph hereof.

                  "PRECISION INTERNATIONAL" shall mean Precision Tube Technology
International, Inc., a United States Virgin Islands foreign sales corporation.

                  "PRECISION SCOTLAND" shall mean Precision Tube Technology,
Ltd., a Scottish limited liability company.

                  "PRECISION TRANSACTIONS" shall have the meaning set forth in
the recitals hereto.

                  "PRIME RATE" shall mean the rate which the Administrative
Agent announces from time to time as its prime rate, effective as of the date
announced as the effective date of any change in such prime rate. Without notice
to the Company or any other Person, the Prime Rate shall change automatically
from time to time as and in the amount by which such prime rate shall fluctuate.
The Prime Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer. The Administrative Agent may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.

                  "PROCESSING RESERVES" shall mean the aggregate of all amounts
due from any Borrower to a Bailee at the end of each month in respect of any
processing of such Borrower's inventory performed by such Bailee. The Processing
Reserves shall be calculated separately for the US Borrowers and the Canadian
Borrowers and shall be the Dollar Equivalent of any amounts otherwise expressed
in Canadian Dollars.

                  "PROJECTIONS" shall mean the projections of the results of
operations and financial condition of the Company and its consolidated
Subsidiaries for Fiscal Year ending on December 31, 2002, a copy of which have
been provided to the Administrative Agent and the Lenders and is attached hereto
as Schedule 1.3.

                  "PROPERTY" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.

                  "PRUDENTIAL" shall have the meaning set forth in the initial
paragraph hereof.

                                       26
<PAGE>
                  "PTTI" shall have the meaning set forth in the recitals
hereto.

                  "PURCHASE AGREEMENT" shall have the meaning set forth in the
recitals hereto.

                  "PURCHASE DOCUMENTS" shall have the meaning set forth in
Section 5.27 hereto.

                  "QUARTERLY DATES" shall mean the first day of each April,
July, October and January in each year.

                  "REAL ESTATE MORTGAGE" shall mean a Canadian Real Estate
Mortgage or a US Real Estate Mortgage, as the case may be.

                  "REAL PROPERTY" shall mean any right, title or interest in and
to real property, including any fee interest, leasehold interest, easement, or
license and any other right to use or occupy real property, including any right
arising by contract.

                  "REGISTER" shall have the meaning assigned in Section 10.7(c).

                  "REGULATION D", "REGULATIONS U AND X" shall mean,
respectively, Regulation D under the Securities Act of 1933, as amended or
modified from time to time, and Regulation U and Regulation X of the Board of
Governors of the Federal Reserve System, as such regulations are from time to
time in effect and any successor regulations thereto.

                  "REIMBURSEMENT OBLIGATIONS" shall mean, at any date, the
obligation of the Canadian Borrowers then outstanding in respect of Canadian
Letters of Credit and the obligation of the US Borrowers then outstanding in
respect of US Letters of Credit, to reimburse the Administrative Agent or
Canadian Administrative Agent, as applicable, for the account of the Issuing
Bank for the amount paid by the Issuing Bank in respect of any drawings under
such Letters of Credit.

                  "RELATED AFFILIATE" shall mean (a) with respect to any US
Lender, such Lender's Affiliate which is a Canadian Lender hereunder if any, and
(b) with respect to any Canadian Lender, such Lender's Affiliate which is a US
Lender hereunder if any.

                  "REQUIRED LENDERS" shall mean: (a) at any time that no Term
Loans are outstanding, Required Revolving Lenders; (b) at any time that Term
Loans are outstanding but no Revolving Loans Commitments are in effect and no
Revolving Credit Exposure is outstanding, Required Term Lenders, and (c) at all
other times (i) that the Revolving Commitments remain in effect, Lenders with
aggregate Revolving Credit Commitments and Lenders holding Term Loans in an
aggregate amount equal to or in excess of 66 2/3% of the sum of all Revolving
Commitments plus the aggregate principal amount of Term Loans then outstanding,
and (ii) after the Revolving Commitments have terminated, Lenders having
Revolving Credit Exposure and Lenders holding Term Loans in an aggregate amount
equal to or in excess of 66 2/3% of the sum of the Aggregate Revolving Credit
Exposure plus the aggregate principal amount of Term Loans then outstanding.

                  "REQUIRED REVOLVING LENDERS" shall mean Lenders having 66 2/3%
or more of the combined aggregate amount at such time of the Revolving Credit
Commitments, until terminated, and thereafter, Lenders having 66 2/3% or more of
the Aggregate Revolving Credit Exposure.

                  "REQUIRED TERM LENDERS" shall mean Term Lenders holding 66
2/3% or more of the aggregate principal balance of Term Loans then outstanding.

                                       27
<PAGE>
                  "RESPONSIBLE OFFICER" shall mean, with respect to any
corporation, the chairman of the board, the president, any vice president, the
chief executive officer or the chief operating officer, or any equivalent
officer (regardless of his or her title), and, in respect of financial or
accounting matters, the chief financial officer, the vice president of finance,
the treasurer, the controller, or any equivalent officer (regardless of his or
her title). Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of all Borrowers.

                  "RESTRICTED ACCOUNT AGREEMENT" shall mean a letter agreement
in substantially the form of Exhibit S hereto to be entered into between the
Administrative Agent and the applicable depository banks with respect to the
Longview Account, LaSalle Account and Southwest Account.

                  "REVOLVING CREDIT COMMITMENTS" shall mean collectively, the US
Revolving Credit Commitments and Canadian Revolving Credit Commitments.

                  "REVOLVING CREDIT EXPOSURE" shall mean, at any time for each
Revolving Lender, the sum of such Lender's US Revolving Credit Exposure and
Canadian Revolving Credit Exposure at such time.

                  "REVOLVING CREDIT LOAN" shall mean, collectively, the US
Revolving Credit Loans and Canadian Revolving Credit Loans.

                  "REVOLVING CREDIT NOTES" shall mean, collectively, the US
Revolving Credit Notes and Canadian Revolving Credit Notes.

                  "REVOLVING LENDERS" shall mean, collectively, the US Revolving
Lenders and the Canadian Lenders.

                  "ROLLING PERIOD" shall mean any period of four consecutive
Fiscal Quarters.

                  "SECURED AFFILIATE" shall mean any Affiliate of JPMorgan that
has entered into a Swap Agreement with any Credit Party with the obligations of
such Credit Party thereunder being secured by one or more Security Instruments.

                  "SECURITY INSTRUMENTS" shall mean any and all agreements or
instruments now or hereafter executed and delivered by any Credit Party or any
other Person as security for the payment or performance of the Lender
Indebtedness or Canadian Lender Indebtedness, as any of the foregoing may be
amended, modified or supplemented.

                  "SELLERS" shall have the meaning set forth in the recitals
hereof.

                  "SETTLEMENT DATE" shall mean the date, weekly, and more
frequently, at the discretion of the Canadian Administrative Agent, upon the
occurrence of an Event of Default or a continuing decline or increase of the
Canadian Revolving Credit Loans, that the Canadian Administrative Agent and the
Canadian Lenders shall settle amongst themselves so that (a) the Canadian
Administrative Agent shall not have, as the agent for the Canadian Lenders, any
money at risk, and (b) on such Settlement Date the Canadian Lenders shall have
their respective Canadian Revolving Credit Percentage of the Aggregate Canadian
Revolving Credit Exposure; provided that each Settlement Date for a Canadian
Lender shall be a Business Day on which such Canadian Lender and its bank are
open for business, as applicable; provided, further, each Canadian Lender shall
have at least one Business Day's notice of a Settlement Date and the amount owed
by such Canadian Lender on that date.

                                       28
<PAGE>

                  "SHARING EVENT" means (a) the occurrence of an Event of
Default with respect any Borrower pursuant to Section 8.8 or 8.9, (b) and the
acceleration of the Loans pursuant to Article 8, or (c) the termination of the
Commitments pursuant to Article 8.

                  "SOLVENT" shall mean with respect to any Person on a
particular date, the condition that, on such date, (a) the fair value of the
property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liabilities of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
an unreasonably small amount of capital.

                  "SOUTHWEST ACCOUNT" shall mean account number 27839 maintained
by Precision with Southwest Bank of Texas, N.A.

                  "SPOT EXCHANGE RATE" shall mean, on any day, the spot rate at
which Dollars are offered on such day by JPMorgan Canada in Toronto, Ontario
Canada for C$ at approximately 11:00 a.m. (Toronto, Ontario Canada time).

                  "STANDBY LETTER OF CREDIT" shall mean a letter of credit that
(a) is used in lieu or in support of performance guarantees or performance,
surety or other similar bonds (but expressly excluding stay and appeal bonds)
arising in the ordinary course of business, (b) is used in lieu or in support of
stay or appeal bonds, (c) supports the payment of insurance premiums for
reasonably necessary casualty insurance carried by any of the Borrowers, or (d)
supports payment or performance for identified purchases or exchanges of
products or services in the ordinary course of business.

                  "STATUTORY RESERVES" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum applicable reserve
percentages, including any marginal, special, emergency or supplemental reserves
(expressed as a decimal) established by the Board and any other banking
authority to which the Lenders are subject for Eurocurrency Liabilities (as
defined in Regulation D) or any other category of deposits or liabilities by
reference to which the Eurodollar Rate is determined. Such reserve percentages
shall include those imposed pursuant to Regulation D. Eurodollar Loans shall be
deemed to constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.

                  "STORAGE/HANDLING RESERVES" shall mean an amount, calculated
as of the last day of each month and calculated separately for the US Borrowers
and the Canadian Borrowers, equal to the aggregate of all amounts for storage,
handling and other services (other than amounts for processing work) charged by
each Bailee to such Borrowers for the three month period then ended; provided,
however, such amounts charged by Bailees who are no longer Bailees at end of the
period for which Storage/Handling Reserves are being calculated shall be
excluded in calculating Storage/Handling Reserves for such period; provided,
further, if a Bailee at the end of any period for which Storage/Handling
Reserves are being calculated has not been a Bailee for all of such period, all
such amounts paid to such Bailee shall be included in the Storage/Handling
Reserves on a pro forma basis as if such Bailee had been a Bailee since the
beginning of such period.

                                       29
<PAGE>

                  "SUBSIDIARY" of any Person shall mean a corporation, limited
liability company, partnership or other entity of which a majority of the
outstanding shares of stock of each class having ordinary voting power or other
equity interests is owned by such Person, by one or more Subsidiaries of such
Person, or by such Person and one or more of its Subsidiaries.

                  "SWAP AGREEMENT" shall mean any interest rate, currency or
commodity swap, cap, floor, collar, forward agreement, futures contract or other
protection agreement or option with respect to any such transaction, designed to
hedge against fluctuations in interest rates, currency exchange rates or
commodity prices.

                  "SWAP RESERVES" shall mean, an amount (reflected in Dollars)
calculated as of the last day of each month and separately for the US Borrowers
and the Canadian Borrowers, equal to such Borrowers' net liability under the
Swap Agreements to which such Borrowers are a party, calculated in accordance
with GAAP, with such calculation subject to review and approval by the
Administrative Agent.

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

                  "TEMPORARY LOCKBOX INSTITUTIONS" shall mean Harris Trust and
Savings Bank and LaSalle Bank, N.A. and Southwest Bank of Texas, N.A.

                  "TERM COMMITMENT" shall have the meaning set forth in Section
2.1(a)(ii).

                  "TERM LENDER" shall mean a Lender which holds Term Loans in
its capacity as such.

                  "TERM LENDER JOINDER AGREEMENT" means a Term Lender Joinder
Agreement substantially in the form of Exhibit H attached hereto to be executed
by a Term Lender, the US Borrowers and Administrative Agent, pursuant to which
such Term Lender (a) becomes a party to this Agreement as Term Lender, and (b)
evidences such Term Lender's Term Commitment.

                  "TERM LOANS" shall mean term loans made by Term Lenders
pursuant to Section 2.1(a)(2) hereof and pursuant to such Term Lenders' Term
Lender Joinder Agreements.

                  "TERM NOTE" shall mean a promissory note of the US Borrowers
described in Section 2.5(d) payable to any Term Lender and being substantially
in the form of Exhibit I, evidencing the Term Loans held by such Term Lender.

                  "TERM PERCENTAGE" shall mean as to any Term Lender, the
percentage which the outstanding principal balance of the Term Loans held by
such Term Lender at such time constitutes of the aggregate outstanding principal
balance of Term Loans at such time.

                  "THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 12:00 noon, New York City time, on
such day (or, if such day is not

                                       30
<PAGE>
a Business Day, on the next preceding Business Day) by the Administrative Agent
from three negotiable certificate of deposit dealers of recognized standing
selected by it.

                  "TRANSACTIONS" shall mean the transactions provided for in and
contemplated by this Agreement and the other Financing Documents.

                  "TRI-PARTY AGREEMENT" means a Tri-Party Agreement among the
applicable Borrower, the Administrative Agent and a Temporary Lockbox
Institution pursuant to which, among other things, such Temporary Lockbox
Institution agrees to forward on a daily basis to the Administrative Agent all
such Borrower's funds in the lockbox maintained with such Temporary Lockbox
Institution.

                  "TUBE" shall have the meaning set forth in the initial
paragraph hereof.

                  "TUBE CANADA" shall have the meaning set forth in the initial
paragraph hereof.

                  "TYPE" of Loan shall mean an ABR Loan, a Eurodollar Loan, a
Canadian Prime Rate Loan, or a B/A Loan and shall also refer to a C$ Denominated
Loan or a Dollar Denominated Loan.

                  "UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the State of New York or, where applicable as to specific
Credit Party or Collateral, any other relevant state. In addition, "UCC" shall
mean with respect to the Canadian Credit Parties or any Property of the Canadian
Credit Parties subject thereto, the Personal Property Security Act or similar
legislation as from time to time in effect in the Province of Alberta or, where
applicable as to any specific Canadian Credit Party or Collateral, any other
relevant province or territory.

                  "US BASE RATE" shall mean the rate of interest for Dollar
denominated loans publicly announced by JPMorgan Canada from time to time as its
US Base Rate in effect at its principal office in Toronto, Ontario for
commercial loans made in Canada.

                  "US BLOCKED ACCOUNT" means a Blocked Account established by
the US Borrowers with Administrative Agent.

                  "US BORROWERS" shall have the meaning set forth in the initial
paragraph hereof.

                  "US BORROWING BASE" shall mean, only with respect to the US
Borrowers, the amount equal to the sum of:

                  (a)      the Eligible Account Advance Percentage of the US
Borrowers' Eligible Accounts, plus

                  (b)      the lesser of (i) the sum of (A) the Eligible
Inventory Advance Percentage of the US Borrowers' Eligible Inventory (other than
work in process) and Eligible Bailee Inventory (other than work in process),
plus (B) the lesser of (1) the Eligible Inventory Advance Percentage of the US
Borrowers' Eligible Inventory consisting of work in process and Eligible Bailee
Inventory consisting of work in process and (2) US WIP Limit, plus (C) the
lesser of (i) the Eligible Inventory Advance Percentage of the US Borrowers'
Eligible Included-In-Transit Inventory and (2) US Included-In-Transit Limit, or
(ii) the US Inventory Limit, plus

                  (c)      the US Equipment Component in effect as of the date
for which the US Borrowing Base is being calculated; plus

                                       31
<PAGE>

                  (d)      the lesser of (i) the Eligible Account Advance
Percentage of US Borrowers' Eligible Bill and Hold Accounts and (ii)
$10,000,000.

provided, that, in no event will the component of the US Borrowing Base
determined pursuant to clause (b) exceed 60% of the total US Borrowing Base (but
solely for purposes of this calculation, the US Equipment Component shall remain
constant at the amount in effect on the Closing Date without giving effect to
any subsequent reductions in the US Equipment Component pursuant to the
definition of such term). The US Borrowing Base in effect under this Agreement
at any time shall be the US Borrowing Base reflected on the most recent US
Borrowing Base Report delivered to Administrative Agent and Canadian
Administrative Agent pursuant to Section 6.10(g) hereof subject to (a) the right
of Administrative Agent, Canadian Administrative Agent or Required Lenders to
contest any components thereof or the calculation thereof, and (b) immediate
adjustment as result of (i) establishment of Availability Reserves, (ii)
reductions in advance rates permitted hereunder, (iii) scheduled reductions in
the US Equipment Component, (iv) more frequent reporting of certain components
of the US Borrowing Base to the extent required in accordance with Section
6.10(g), (v) any changes in eligibility standards required by Administrative
Agent, and (vi) the occurrence of any Disposition.

                  "US CREDIT PARTY" shall mean the US Borrowers and any other
Credit Party which is organized or formed under the laws of any state of the
United States or any political subdivision thereof.

                  "US EQUIPMENT COMPONENT" shall mean $20,000,000 on the Closing
Date; provided that the US Equipment Component shall be reduced (a) by $303,030
on the first day of each month commencing with October 1, 2002 and continuing on
the first day of each month thereafter throughout the term of this Agreement,
(b) on April 1 of each calendar year commencing April 1, 2003, by the US Excess
Cash Flow Amount for the Fiscal Year most recently ended, and (c) on the date of
any Disposition, by the amount of the Excess Net Cash Proceeds received by the
US Borrowers in such Disposition.

                  "US EXCESS AVAILABILITY" shall mean, as of any date, the
remainder of (a) the US Borrowing Base as of such date, less (b) the aggregate
outstanding balance of the US Lender Indebtedness as of such date.

                  "US EXCESS CASH FLOW AMOUNT" shall mean, with respect to any
Fiscal Year, the lesser of (a) $3,333,500 and (b) 40% of the Excess Cash Flow of
the US Borrowers for such Fiscal Year. The US Excess Cash Flow Amount shall be
determined for any Fiscal Year by the Administrative Agent following the
delivery of the Company's audited consolidated financial statements for such
Fiscal Year pursuant to Section 6.10(a) hereof; provided, that, if the Company
shall fail to deliver its audited consolidated financial statements for any
Fiscal Year on or before the date required pursuant to Section 6.10(a) hereof,
$3,333,500 shall be the US Excess Cash Flow Amount for such Fiscal Year.

                  "US FUNDING AMOUNT" shall have the meaning set forth in
Section 2.2(c).

                  "US INCLUDED-IN-TRANSIT LIMIT" shall mean the amount of the
Included-in-Transit Limit which the US Borrowers designate as the "US
Included-in-Transit Limit" on the US Borrowing Base Report from which the US
Borrowing Base is being calculated; provided, that, for any date on which the
Borrowing Bases are being reported, in no event shall the sum of the US
Included-in-Transit Limit and the Canadian Included-in-Transit Limit ever exceed
the Included-in-Transit Limit.

                  "US INVENTORY LIMIT" shall mean the amount of the Inventory
Limit which the US Borrowers designate as the "US Inventory Limit" on the US
Borrowing Base Report from which the US

                                       32
<PAGE>
Borrowing Base is being calculated; provided, that, in no event shall the sum of
the Canadian Inventory Limit and the US Inventory Limit ever exceed the
Inventory Limit.

                  "US LENDER" shall mean a US Revolving Lender or a Term Lender
and "US LENDERS" means all US Revolving Lenders and Term Lenders, collectively.

                  "US LENDER INDEBTEDNESS" shall mean any and all amounts owing
or to be owing by any US Credit Party to the Administrative Agent, the Canadian
Administrative Agent, the Issuing Banks or the Lenders with respect to or in
connection with the US Loans, any US Letter of Credit Liabilities, the US
Revolving Credit Notes and Term Notes, any Swap Agreement between any of the US
Borrowers and JPMorgan or any Secured Affiliate thereof, any Cash Management
Agreement between any of the US Borrowers and Lender or its Cash Management
Affiliate, this Agreement, or any other Financing Document and, as to Swap
Agreements or any Cash Management Agreement, any and all amounts owing or to be
owing by any US Credit Party thereunder to any JPMorgan or any of its Secured
Affiliates or any Lender or its Cash Management Affiliate, respectively.

                  "US LETTERS OF CREDIT" shall have the meaning assigned to such
term under Section 2.3(a).

                  "US LETTER OF CREDIT LIABILITIES" shall mean, at any time and
in respect of any US Letter of Credit, the sum of (a) the amount available for
drawings under such US Letter of Credit as of the date of determination plus (b)
the aggregate unpaid amount of all Reimbursement Obligations due and payable as
of the date of determination in respect of previous drawings made under such US
Letter of Credit.

                  "US LOCKBOX" shall mean any lockbox to be established and
operated pursuant to Section 4.3 hereof and the US Lockbox Agreement.

                  "US LOCKBOX AGREEMENT" shall mean an agreement between the US
Borrowers and the Administrative Agent governing the US Lockbox.

                  "US LOANS" shall mean the US Revolving Credit Loans, the Term
Loans and the US Swingline Loans.

                  "US MAXIMUM AVAILABLE AMOUNT" shall mean, at any date, an
amount equal to the the lesser of (a) the aggregate US Revolving Credit
Commitments as of such date, and (b) the remainder of (i) the US Borrowing Base
as of such date, minus (ii) the sum of (A) the Availability Reserves with
respect to the US Borrowing Base as of such date, plus (B) the portion of the
Swap Reserves, the Cash Management Reserves, Processing Reserves and
Storage/Handling Reserves applicable to the US Borrowers as of the last day of
the month for which the US Borrowing Base is being calculated.

                  "US REAL ESTATE MORTGAGE" shall mean a Mortgage, Deed of
Trust, Security Agreement, Assignment and Financing Statement substantially in
the form of Exhibit J and in each case with such changes thereto as
Administrative Agent shall deem necessary or appropriate to comply with state
and local Governmental Requirements.

                  "US REVOLVING CREDIT COMMITMENT" shall have the meaning
assigned to such term in Section 2.1(c).

                  "US REVOLVING CREDIT EXPOSURE" shall mean, at any time and as
to each US Revolving Lender, the sum of (a) the aggregate principal amount of US
Revolving Credit Loans made by such US Revolving Lender outstanding as of such
date plus (b) the accrued and unpaid interest on US Revolving

                                       33
<PAGE>
Credit Loans made by such US Revolving Lender outstanding as of such date plus
(c) such US Revolving Lender's US Revolving Credit Percentage of the aggregate
amount of all US Letter of Credit Liabilities as of such date plus (d) such US
Revolving Lender's US Revolving Credit Percentage of the US Swingline Exposure
as of such date.

                  "US REVOLVING CREDIT LOAN" shall have the meaning provided in
Section 2.1(a); the US Revolving Credit Loans shall not include any US Letter of
Credit Liabilities.

                  "US REVOLVING CREDIT NOTE" shall mean a promissory note of the
US Borrowers described in Section 2.5(a) payable to any US Revolving Lender and
being substantially in the form of Exhibit K, evidencing the aggregate
Indebtedness of the US Borrowers to such US Revolving Lender resulting from US
Revolving Credit Loans made by such US Lender.

                  "US REVOLVING CREDIT PERCENTAGE" shall mean as to any US
Revolving Lender, the percentage of the aggregate US Revolving Credit
Commitments constituted by its US Revolving Credit Commitment (or, if the US
Revolving Credit Commitments have terminated or expired, the percentage which
such US Revolving Lender's Revolving Credit Exposure at such time constitutes of
the Aggregate US Revolving Credit Exposure at such time).

                  "US REVOLVING LENDER" shall mean a Lender with a US Revolving
Credit Commitment.

                  "US SWINGLINE AVAILABILITY" shall mean, on any date, an amount
equal to the remainder of (a) the US Swingline Commitment minus (b) the US
Swingline Exposure on such date.

                  "US SWINGLINE COMMITMENT" shall have the meaning assigned to
such term in Section 2.1(e).

                  "US SWINGLINE EXPOSURE" shall mean, at any time, the aggregate
principal amount of all US Swingline Loans made to the US Borrowers outstanding
at such time.

                  "US SWINGLINE LENDER" shall mean JPMorgan, in its capacity as
lender of US Swingline Loans hereunder.

                  "US SWINGLINE LOANS" shall have the meaning assigned to such
term in Section 2.1(a).

                  "US SWINGLINE NOTE" shall mean a promissory note of the US
Borrowers described in Section 2.5(c) payable to the US Swingline Lender and
being substantially in the form of Exhibit L, evidencing the aggregate
Indebtedness of the US Borrowers to the US Swingline Lender resulting from US
Swingline Loans made by the US Swingline Lender.

                  "US WIP LIMIT" shall mean the amount of the WIP Limit which
the US Borrowers designate as the "US WIP Limit" on the US Borrowing Base Report
from which the US Borrowing Base is being calculated; provided, that, in no
event shall the sum of the Canadian WIP Limit and the US WIP Limit ever exceed
the WIP Limit.

                  "VOTING STOCK" of any Person shall mean Equity of such Person
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.

                  "WIP LIMIT" shall mean $7,500,000.

                                       34
<PAGE>

         Section 1.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP
applied on a basis consistent with the Financial Statements.

         Section 1.3 OTHER DEFINITIONAL TERMS. The words "HEREOF," "HEREIN" and
"HEREUNDER" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, schedule, exhibit and like references are to
this Agreement unless otherwise specified.

                                   ARTICLE 2
                            AMOUNT AND TERMS OF LOANS

         Section 2.1 LOANS AND COMMITMENTS.

                  (a) LOANS.

                           (1)     Subject to the terms and conditions and
         relying on the representations and warranties contained herein, (A) on
         any Business Day from and after the Closing Date, but prior to the
         Maturity Date, each US Revolving Lender severally agrees to make
         revolving credit loans in Dollars (each a "US REVOLVING CREDIT LOAN")
         to the US Borrowers, (B) on any Business Day from and after the Closing
         Date, but prior to the Maturity Date, each Canadian Lender severally
         agrees to make revolving credit loans in either Dollars or C$ and
         including by means of B/As (each a "CANADIAN REVOLVING CREDIT LOAN") to
         the Canadian Borrowers, and (C) on any Business Day from and after the
         Closing Date, but prior to the Maturity Date, the US Swingline Lender
         agrees to make revolving swingline loans in Dollars (each a "US
         SWINGLINE LOAN") to the US Borrowers.

                           (2)     From and after the date of this Agreement but
         prior to the Maturity Date, at the request of the US Borrowers and
         subject to the approval of Administrative Agent and Required Revolving
         Lenders, one or more Persons may agree to become a party to this
         Agreement as a Term Lender hereunder and make Dollar Denominated term
         loans ("TERM LOANS") to the US Borrowers hereunder. Any such agreement
         shall be evidenced by the execution and delivery by the US Borrowers,
         such Term Lender(s) and Administrative Agent of a Term Lender Joinder
         Agreement setting forth (A) the commitment of such Term Lender(s) to
         make Term Loans, including the amount thereof (for each Term Lender,
         its "TERM COMMITMENT"), (B) the Applicable Margin applicable to Term
         Loans held by such Term Lender (which may be a floating margin in
         accordance with a pricing grid), and (C) the date on which the proceeds
         of such Term Loans are to be made available to US Borrowers. Upon the
         execution and delivery of any Term Lender Joinder Agreement, US
         Borrowers shall issue to each Term Lender party thereto Term Notes to
         evidence the Term Loans made by such Term Lender pursuant to its Term
         Commitment.

                                       35
<PAGE>

                  (b) TYPES OF LOANS. (1) The Dollar Denominated Loans made
pursuant hereto shall, at the option of the US Borrowers or the Canadian
Borrowers, as applicable, be either ABR Loans or Eurodollar Loans and may be
continued or converted pursuant to Section 2.12; provided, that, all Term Loans
shall be ABR Loans, (2) the C$ Denominated Loans made pursuant hereto shall, at
the option of the Canadian Borrowers, be either Canadian Prime Rate Loans or B/A
Loans and may be continued or converted pursuant to Section 2.12, and (3) the
Dollar Denominated US Swingline Loans made pursuant hereto shall be ABR Loans;
provided that, except as otherwise specifically provided herein, all Loans made
pursuant to the same Borrowing shall be of the same Type.

                  (c) US REVOLVING CREDIT COMMITMENTS. Each US Revolving
Lender's US Revolving Credit Exposure shall not exceed at any one time the
amount set forth opposite such US Revolving Lender's name on Annex I under the
caption "US Revolving Credit Commitment" (as the same may be reduced pursuant to
Section 2.10 or otherwise from time to time modified pursuant to Section 10.7),
its "US REVOLVING CREDIT COMMITMENT," and collectively for all US Revolving
Lenders, the "US REVOLVING CREDIT COMMITMENTS"; the term "US Revolving Credit
Commitments" includes the requirements of the US Revolving Lenders to purchase
participations in the US Swingline Loans pursuant to Section 2.26 hereof;
provided, however that the Aggregate US Revolving Credit Exposure at any one
time outstanding shall not exceed the US Maximum Available Amount in effect at
such time. Within the foregoing limits and subject to the conditions set forth
in Article 3, the US Borrowers may obtain Borrowings of US Revolving Credit
Loans, repay or prepay such US Revolving Credit Loans, and reborrow such US
Revolving Credit Loans.

                  (d) CANADIAN REVOLVING CREDIT COMMITMENTS. Subject to Section
2.9(i) hereof, the Dollar Equivalent of each Canadian Lender's Canadian
Revolving Credit Exposure shall not exceed at any one time the amount set forth
opposite such Canadian Lender's name on Annex I under the caption "Canadian
Revolving Credit Commitment" (as the same may be reduced pursuant to Section
2.10 or otherwise from time to time modified pursuant to Section 10.7, its
"CANADIAN REVOLVING CREDIT COMMITMENT," and collectively for all Canadian
Lenders, the "CANADIAN REVOLVING CREDIT COMMITMENTS"; provided, however, that
the Dollar Equivalent of the Aggregate Canadian Revolving Credit Exposure at any
one time outstanding shall not exceed the Canadian Maximum Available Amount in
effect at such time. Within the foregoing limits and subject to the conditions
set forth in Article 3, the Canadian Borrowers may obtain Borrowings of Canadian
Revolving Credit Loans, repay or prepay such Canadian Revolving Credit Loans,
and reborrow such Canadian Revolving Credit Loans.

                  (e) US SWINGLINE LOANS. The US Swingline Lender's US Swingline
Exposure shall not exceed at any one time the amount set forth opposite the US
Swingline Lender's name on Annex I under the caption "US Swingline Loan
Commitment" (the "US SWINGLINE COMMITMENT"); provided, however, the Aggregate US
Revolving Credit Exposure at any one time outstanding shall not exceed the US
Maximum Available Amount in effect at such time. Within the foregoing limits set
forth in Article 3, the US Borrowers may obtain Borrowings of US Swingline
Loans, repay or prepay such US Swingline Loans, and reborrow such US Swingline
Loans.

                  (f) AMOUNTS OF BORROWINGS, ETC. The aggregate principal amount
of each Borrowing (1) of Eurodollar Loans shall be (A) in an amount sufficient
to cause each Lender's share thereof to be not less than $500,000, and (B) in an
integral multiple of $100,000, (2) of US Revolving Credit Loans which are ABR
Loans shall be in minimum amount of $1,000,000 and shall be in an integral
multiple of $100,000 (other than Borrowings of the US Funding Amount, which
shall be in the amount required for the US Funding Amount), (3) of Canadian
Revolving Credit Loans which are ABR Loans shall be not less than $100,000 and
shall be in an integral multiple of $50,000 (other than Borrowings of the
Canadian Funding Amount, which shall be in the amount required for the Canadian
Funding Amount), (4) of Canadian Prime Rate Loans shall be not less than
C$100,000 and shall be in an integral multiple of

                                       36
<PAGE>
C$50,000, (5) of B/A Loans shall be not less than C$500,000 and shall be in an
integral multiple of C$100,000, and (6) of US Swingline Loans shall be in any
amount. Borrowings of more than one Type may be outstanding at the same time;
provided, however, that the Borrowers shall not be entitled to request any
Borrowing that, if made, would result in an aggregate of more than five separate
Borrowings of Eurodollar Loans or five separate B/A Loans being outstanding at
(i) any one time. For purposes of the foregoing, Borrowings having different
Interest Periods or Contract Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.

         Section 2.2 BORROWING REQUESTS.

                  (a) BORROWING REQUESTS. Whenever any of the Borrowers desires
to make a Borrowing hereunder, they shall give Advance Notice to Administrative
Agent (in the case of any Borrowing of US Revolving Credit Loans or US Swingline
Loans) or Canadian Administrative Agent (with a simultaneous copy to
Administrative Agent (in the case of any Borrowing of Canadian Loans)) in the
form of a Borrowing Request, specifying, subject to the provisions hereof, (1)
the aggregate principal amount of the Loan to be made pursuant to such
Borrowing, (2) whether such Loan is a US Revolving Credit Loan, Canadian
Revolving Credit Loan, or US Swingline Loan, (3) in the case of a Canadian
Revolving Credit Loan, whether such Loan is to be a Dollar Denominated Loan or a
C$ Denominated Loan, (4) the date of Borrowing (which shall be a Business Day),
(5) whether the Dollar Denominated Loans being made pursuant to such Borrowing
are to be ABR Loans or Eurodollar Loans, (6) whether the C$ Dollar Denominated
Loans being made pursuant thereto are to be Canadian Prime Rate Loans or B/A
Loans, and (7) in the case of Eurodollar Loans or B/A Loans, the Interest Period
or Contract Period, respectively, to be applicable thereto.

                  (b) NOTICE BY ADMINISTRATIVE AGENT. Subject to Section 2.9(i)
with respect to Canadian Revolving Credit Loans, the Administrative Agent or the
Canadian Administrative Agent (as applicable) shall promptly give the Canadian
Administrative Agent and each applicable Lender telecopy or telephonic notice
(and, in the case of telephonic notices, confirmed by telecopy or otherwise in
writing) of the proposed Borrowing (other than Borrowings of US Swingline Loans
in which case notice shall only be given the US Swingline Lender), of such
Lender's Applicable Percentage thereof and of the other matters covered by the
Advance Notice. The Borrowers hereby waive the right to dispute the
Administrative Agent's record of the terms of such telephonic notice, absent
manifest error.

                  (c) AUTOMATIC FUNDING TO US DISBURSEMENT ACCOUNTS.
Notwithstanding Section 2.2(a) and Section 2.2(b), on each Business Day, the US
Borrowers will be deemed to have requested pursuant to a Borrowing Request a
Borrowing to be made on such day in an amount (the "US FUNDING AMOUNT") equal to
the amount of all checks, drafts and other items submitted for payment from the
US Borrowers' Disbursement Account on such Business Day. Such Borrowing shall be
a Borrowing of US Swingline Loans to the extent of the remaining US Swingline
Availability and, thereafter, such Borrowings shall be US Revolving Credit Loans
which shall be ABR Loans. Subject to the satisfaction of the conditions
precedent set forth in Article 3, the US Funding Amount shall be deposited into
the US Borrower's Disbursement Account.

         Section 2.3 LETTERS OF CREDIT.

                  (a) ISSUANCE OF US LETTERS OF CREDIT. Subject to the terms and
conditions hereof, the US Borrowers shall have the right, in addition to US
Revolving Credit Loans provided for in Section 2.1, to utilize the US Revolving
Credit Commitments from time to time prior to the Maturity Date by obtaining the
issuance of either Documentary Letters of Credit or Standby Letters of Credit
for the accounts of any of the US Borrowers by an Issuing Bank if the US
Borrowers shall so request in the notice referred to in Section 2.3(d)(1) (such
letters of credit being collectively referred to as the "US

                                       37
<PAGE>
LETTERS OF CREDIT"); provided, however, that the Aggregate US Revolving Credit
Exposure at any one time outstanding shall not exceed the US Maximum Available
Amount in effect at such time and the aggregate of all US Letter of Credit
Liabilities and Canadian Letter of Credit Liabilities at any one time
outstanding shall not exceed $10,000,000. US Letters of Credit shall be
denominated in Dollars and may be issued to support the obligations of the US
Borrowers only. Upon the date of the issuance of a US Letter of Credit, the
applicable Issuing Bank shall be deemed, without further action by any party
hereto, to have sold to each US Revolving Lender, and each US Revolving Lender
shall be deemed, without further action by any party hereto, to have purchased
from such Issuing Bank, a participation, to the extent of such applicable
Lender's US Revolving Credit Percentage, in such US Letter of Credit and the
related US Letter of Credit Liabilities.

                  (b) ISSUANCE OF CANADIAN LETTERS OF CREDIT. Subject to the
terms and conditions hereof, the Canadian Borrowers shall have the right, in
addition to Canadian Revolving Credit Loans provided for in Section 2.1, to
utilize the Canadian Revolving Credit Commitments from time to time prior to the
Maturity Date by obtaining the issuance of either Documentary Letters of Credit
or Standby Letters of Credit for the account of any of the Canadian Borrowers by
an Issuing Bank if the Canadian Borrowers shall so request in the notice
referred to in Section 2.3(d)(1) (such letters of credit being collectively
referred to as the "CANADIAN LETTERS OF CREDIT"); provided, however, that, the
Dollar Equivalent of the Aggregate Canadian Revolving Credit Exposure at any one
time outstanding shall not exceed the Canadian Maximum Available Amount in
effect at such time and the Dollar Equivalent of the aggregate of all Canadian
Letter of Credit Liabilities and US Letter of Credit Liabilities at any one time
outstanding shall not exceed $10,000,000. Canadian Letters of Credit shall be
denominated in Dollars or C$ as the Canadian Borrowers shall elect and may be
issued to support the obligations of the Canadian Borrowers only. Upon the date
of the issuance of a Canadian Letter of Credit, the applicable Issuing Bank
shall be deemed, without further action by any party hereto, to have sold to
each Canadian Lender, and each Canadian Lender shall be deemed, without further
action by any party hereto, to have purchased from such Issuing Bank, a
participation, to the extent of such applicable Lender's Canadian Revolving
Credit Percentage, in such Canadian Letter of Credit and the related Canadian
Letter of Credit Liabilities.

                  (c) CERTAIN LIMITATION ON LETTERS OF CREDIT. No Letter of
Credit issued pursuant to this Agreement shall have an expiry date beyond the
earlier of one year after the date of issuance or sixty (60) days prior to the
Maturity Date. Any Letter of Credit may give the beneficiary thereof the right
to draw upon the Letter of Credit upon its expiry date to the extent not
extended. No Letter of Credit shall be issued within sixty (60) days of the
Maturity Date.

                  (d) ADDITIONAL LETTER OF CREDIT PROVISIONS. The following
additional provisions shall apply to each Letter of Credit:

                           (1) Any of the Borrowers which desires an Issuing
         Bank to issue a Letter of Credit for its account (an "ACCOUNT PARTY")
         shall give the Administrative Agent (or the Canadian Administrative
         Agent in the event such Letter of Credit is a Canadian Letter of
         Credit) and the Issuing Bank at least five (5) Business Days' prior
         notice in the form of a Borrowing Request (effective upon receipt), or
         in each case, such shorter period as may be agreed to by the
         Administrative Agent (or the Canadian Administrative Agent, as
         applicable) and such Issuing Bank, specifying the date such Letter of
         Credit is to be issued (which shall be a Business Day) and describing:
         (A) the face amount of the Letter of Credit and, in the case of any
         Canadian Letter of Credit, the type of currency (Dollars or C$) in
         which such Letter of Credit is to be denominated, (B) the expiration
         date of the Letter of Credit, (C) the name and address of the
         beneficiary, (D) information concerning the transaction proposed to be
         supported by such Letter of Credit as the Administrative Agent (or the
         Canadian Administrative Agent, as applicable) or such Issuing Bank may
         reasonably request, (E) such other information and documents relating
         to

                                       38
<PAGE>
         the Letter of Credit as the Administrative Agent (or the Canadian
         Administrative Agent, as applicable) or such Issuing Bank may
         reasonably request, and (F) a precise description of documents and the
         verbatim text of any certificate to be presented by the beneficiary,
         which, if presented prior to the expiry date of the Letter of Credit,
         would require such Issuing Bank to make payment under the Letter of
         Credit; provided that such Issuing Bank, in its reasonable judgment,
         may require reasonable changes in such documents and certificates; and
         provided further that such Issuing Bank shall not be required to issue
         any Letter of Credit that on its terms requires payment thereunder
         prior to the next Business Day following receipt by such Issuing Bank
         of such documents and certificates. Each such notice shall be
         accompanied by the applicable Issuing Bank's Application and by a
         certificate executed by a Responsible Officer setting forth
         calculations evidencing availability for such Letter of Credit pursuant
         to Section 2.3(d)(2) and stating that all conditions precedent to such
         issuance have been satisfied. Each Letter of Credit shall, to the
         extent not inconsistent with the express terms hereof or the applicable
         Application, be subject to the Uniform Customs and Practice for
         Documentary Credits (1993 Revision), International Chamber of Commerce
         Publication No. 500 (together with any subsequent revisions thereof
         approved by a Congress of the International Chamber of Commerce, the
         "UCP"), and shall, as to matters not governed by the UCP, be governed
         by, and construed and interpreted in accordance with, the laws of the
         State of New York.

                  (2) No US Letter of Credit or Canadian Letter of Credit may be
         issued if after giving effect thereto the Aggregate US Revolving Credit
         Exposure or the Aggregate Canadian Revolving Credit Exposure would
         exceed the US Maximum Available Amount or the Canadian Maximum
         Available Amount, respectively. On each day during the period
         commencing with the issuance of any Letter of Credit and until such
         Letter of Credit shall have expired or have been terminated, the US or
         Canadian Revolving Credit Commitment (as applicable) of each Lender
         shall be deemed to be utilized for all purposes hereof in an amount
         equal to such Lender's Revolving Credit Percentage of the amount of the
         Letter of Credit Liabilities related to such Letter of Credit.

                  (3) Upon receipt from the beneficiary of any Letter of Credit
         of any demand for payment thereunder, the Issuing Bank shall promptly
         notify the Account Party for whose account such Letter of Credit was
         issued and the Administrative Agent (or the Canadian Administrative
         Agent if such Letter of Credit is a Canadian Letter of Credit) of such
         demand (provided that the failure of an the Issuing Bank to give such
         notice shall not affect the Reimbursement Obligations of the Account
         Party hereunder) and the Account Party shall immediately, and in any
         event no later than 10:00 a.m. (New York, New York time) on the date of
         such drawing, reimburse the Administrative Agent (or the Canadian
         Administrative Agent, as applicable) for the account of the applicable
         Issuing Bank for any amount paid by the Issuing Bank upon any drawing
         under such Letter of Credit, without presentment, demand, protest or
         other formalities of any kind in an amount, in same day funds, equal to
         the amount of such drawing. Unless prior to 10:00 a.m. (New York, New
         York time) on the date of such drawing, the Account Party shall have
         either notified the Issuing Bank and the Administrative Agent (or the
         Canadian Administrative Agent, as applicable) that the Account Party
         intends to reimburse the Administrative Agent (or the Canadian
         Administrative Agent, as applicable) for the account of the applicable
         Issuing Bank for the amount of such drawing with funds other than the
         proceeds of Loans or delivered to the Administrative Agent (or the
         Canadian Administrative Agent, as applicable) a Borrowing Request for
         Loans in an amount equal to such drawing, the Account Party will be
         deemed to have given a Borrowing Request to the Administrative Agent
         (or the Canadian Administrative Agent, as applicable) requesting that
         the Lenders make Revolving Credit Loans on the date on which such
         drawing is honored in an amount equal to the amount of such drawing.
         Any Loans made pursuant to the preceding sentence shall be (A) US
         Revolving Credit Loans which are ABR

                                       39
<PAGE>
         Loans if the underlying Letter of Credit was a US Letter of Credit, (B)
         Canadian Revolving Credit Loans if the underlying Letter of Credit was
         a Canadian Letter of Credit, and (C) (i) Dollar Denominated Loans and
         ABR Loans if the underlying Letter of Credit was denominated in
         Dollars, and (ii) C$ Denominated Loans and Canadian Prime Rate Loans if
         the underlying Letter of Credit was denominated in C$. The obligation
         of Lenders to make Revolving Credit Loans pursuant to this Section 2.3
         (but not the participation obligations of the Lenders pursuant to
         Section 2.3(d)(4) below) shall be subject to a) the satisfaction of the
         conditions in Article 3 and b) the existence of availability of the US
         Maximum Available Amount or Canadian Maximum Available Amount (as
         applicable) pursuant to Section 2.1(c) or Section 2.1(d) hereof (after
         giving effect to repayment of the applicable Reimbursement Obligations
         with the proceeds of the proposed Revolving Credit Loans). Subject to
         the preceding sentence, if so requested by the Administrative Agent (or
         the Canadian Administrative Agent, as applicable), each of the US
         Revolving Lenders or Canadian Lenders (as applicable) shall, on the
         date of such drawing, make such Revolving Credit Loans in an amount
         equal to such Lender's Revolving Credit Percentage of such drawing or
         the full amount of the unused US or Maximum Available Amount pursuant
         to Section 2.1(c) or Section 2.1(d) as applicable, the proceeds of
         which shall be applied directly by the Administrative Agent (or the
         Canadian Administrative Agent, as applicable) to reimburse the
         applicable Issuing Bank to the extent of such proceeds.

                  (4) If the appropriate Account Party fails to reimburse the
         applicable Issuing Bank as provided in Section 2.3(d)(3) above for any
         reason, including, but not limited to, failure to satisfy the
         conditions in Article 3 or insufficient availability under the Maximum
         Available Amount pursuant to Section 2.1(c) or Section 2.1(d) such
         Issuing Bank shall promptly notify the Administrative Agent (or the
         Canadian Administrative Agent, as applicable) and the Administrative
         Agent (or the Canadian Administrative Agent, as applicable) shall
         notify each US Revolving Lender or Canadian Lender (as applicable) of
         the unreimbursed amount of such drawing and of such Lender's respective
         participation therein based on such Lender's US or Canadian Revolving
         Credit Percentage (as applicable). Each such Lender will pay to the
         Administrative Agent (or the Canadian Administrative Agent, as
         applicable) for the account of the applicable Issuing Bank on the date
         of such notice an amount equal to such Lender's US or Canadian
         Revolving Credit Percentage (as applicable) of such unreimbursed
         drawing (or, if such notice is made after 1:00 p.m. (New York, New York
         time) on such date, on the next succeeding Business Day). If any Lender
         fails to make available to such Issuing Bank the amount of such
         Lender's participation in such Letter of Credit as provided in this
         Section 2.3(d)(4), such Issuing Bank shall be entitled to recover such
         amount on demand from such Lender together with interest at the Federal
         Funds Effective Rate for one Business Day and thereafter at the ABR.
         Nothing in this Section 2.3(d)(4) shall be deemed to prejudice the
         right of any Lender to recover from such Issuing Bank any amounts made
         available by such Lender to such Issuing Bank pursuant to this Section
         2.3(d)(4) if it is determined by a court of competent jurisdiction that
         the payment with respect to a Letter of Credit by such Issuing Bank was
         wrongful and such wrongful payment was the result of gross negligence
         or willful misconduct on the part of such Issuing Bank. The applicable
         Issuing Bank shall pay to the Administrative Agent (or the Canadian
         Administrative Agent, as applicable) and the Administrative Agent (or
         the Canadian Administrative Agent, as applicable) shall pay to each
         Lender such Lender's US or Canadian Revolving Credit Percentage (as
         applicable) of all amounts received from the Account Party for payment,
         in whole or in part, of the Reimbursement Obligation in respect of any
         Letter of Credit, but only to the extent such Lender has made payment
         to such Issuing Bank in respect of such Letter of Credit pursuant to
         this Section 2.3(d)(4).

                  (5) The issuance by the applicable Issuing Bank of each Letter
         of Credit shall, in addition to the conditions precedent set forth in
         Article 3, be subject to the conditions precedent

                                       40
<PAGE>
         that such Letter of Credit shall be in the form and contain such terms
         as shall be reasonably satisfactory to such Issuing Bank, and that the
         Account Party shall have executed and delivered such other instruments
         and agreements relating to the Letter of Credit as such Issuing Bank
         shall have reasonably requested and that are not inconsistent with the
         terms of this Agreement including the applicable Issuing Bank's
         Application therefor. In the event of a conflict between the terms of
         this Agreement and the terms of any Application, the terms of this
         Agreement shall control.

                  (6) As between any Account Party and any Issuing Bank, the
         Account Party assumes all risks of the acts and omissions of or misuse
         of the Letters of Credit issued by such Issuing Bank by the respective
         beneficiaries of such Letters of Credit. In furtherance and not in
         limitation of the foregoing, such Issuing Bank shall not be
         responsible: (A) for the form, validity, sufficiency, accuracy,
         genuineness or legal effect of any document submitted by any Person in
         connection with the application for or issuance of such Letters of
         Credit, even if it should in fact prove to be in any or all respects
         invalid, insufficient, inaccurate, fraudulent or forged; (B) for the
         validity or sufficiency of any instrument transferring or assigning or
         purporting to transfer or assign any such Letter of Credit or the
         rights or benefits thereunder or proceeds thereof, in whole or in part,
         which may prove to be invalid or ineffective for any reason; (C) for
         errors, omissions, interruptions or delays in transmission or delivery
         of any messages, by mail, cable, telegraph, telex or otherwise, whether
         or not they are in cipher; (D) for errors in interpretation of
         technical terms; (E) for any loss or delay in the transmission or
         otherwise of any document required in order to make a drawing under any
         such Letter of Credit or of the proceeds thereof; (F) for the
         misapplication by the beneficiary of any such Letter of Credit of the
         proceeds of any drawing under such Letter of Credit; and (G) for any
         consequences arising from causes beyond the control of such Issuing
         Bank, including, without limitation, the actions of any governmental
         authority. None of the above shall affect, impair, or prevent the
         vesting of any of such Issuing Bank's rights or powers hereunder.
         Notwithstanding anything to the contrary contained in this Section
         2.3(d)(6), no Account Party shall assume any risk, and shall have no
         obligation to indemnify any Issuing Bank, in respect of any liability
         incurred by such Issuing Bank arising primarily out of the gross
         negligence or willful misconduct of such Issuing Bank, as finally
         determined by a court of competent jurisdiction.

                  (7) Each Issuing Bank will send to the applicable Account
         Party and the Administrative Agent (or the Canadian Administrative
         Agent, as applicable) immediately upon issuance of any Letter of
         Credit, or an amendment thereto, a true and complete copy of such
         Letter of Credit, or such amendment thereto. Upon issuance of any
         Letter of Credit or an amendment thereto, the Administrative Agent (or
         the Canadian Administrative Agent, as applicable) shall promptly notify
         each Lender of the terms of such Letter of Credit or amendment thereto,
         and of such Lender's US or Canadian Revolving Credit Percentage (as
         applicable) of the amount of such Letter of Credit or amendment
         thereto, and the Administrative Agent (or the Canadian Administrative
         Agent, as applicable) shall provide to each Lender a copy of such
         Letter of Credit or such amendment thereto. Upon cancellation or
         termination of any Letter of Credit, the applicable Issuing Bank shall
         promptly notify the Administrative Agent (or the Canadian
         Administrative Agent, as applicable) and the applicable Account Party,
         and the Administrative Agent (or the Canadian Administrative Agent, as
         applicable) will then promptly notify each Lender, of such cancellation
         or termination.

                  (8) The obligation of each Account Party to reimburse each
         Issuing Bank for Reimbursement Obligations with regard to the Letters
         of Credit issued by such Issuing Bank for such Account Party and the
         obligations of the US Revolving Lenders and Canadian Lenders under
         Section 2.3(d)(4) shall be unconditional and irrevocable and shall be
         paid strictly in

                                       41
<PAGE>
         accordance with the terms of this Agreement and under all circumstances
         including, without limitation, the following circumstances:

                           (A) any lack of validity or enforceability of any
                  Letter of Credit;

                           (B) the existence of any claim, set-off, defense or
                  other right that any of the Borrowers may have at any time
                  against a beneficiary or any transferee of any Letter of
                  Credit (or any Persons for whom any such transferee may be
                  acting), any Lender or any other Person, whether in connection
                  with this Agreement, the transactions contemplated herein or
                  any unrelated transaction (including any underlying
                  transaction between the Account Party and the beneficiary for
                  which the Letter of Credit was procured) other than a defense
                  based on the gross negligence (as opposed to ordinary
                  negligence) or willful misconduct of such Issuing Bank, as
                  determined by a court of competent jurisdiction;

                           (C) any draft, demand, certificate or any other
                  document presented under any Letter of Credit is proved to be
                  forged, fraudulent, invalid or insufficient in any respect or
                  any statement therein is untrue or inaccurate in any respect;

                           (D) any adverse change in the condition (financial or
                  otherwise) of any Credit Party;

                           (E) any breach of this Agreement or any other
                  Financing Document by any of the Borrowers, Administrative
                  Agent, Canadian Administrative Agent or any Lender (other than
                  the applicable Issuing Bank);

                           (F) any other circumstance or happening whatsoever
                  which is similar to any of the foregoing; provided that such
                  other occurrence or happening is not the result of the gross
                  negligence (as opposed to ordinary negligence) or willful
                  misconduct of such Issuing Bank, as determined by a court of
                  competent jurisdiction; or

                           (G) the fact that a Default shall have occurred and
                  be continuing.

Section 2.4 DISBURSEMENT OF FUNDS.

         (a) AVAILABILITY. Subject to Section 2.2(c), and, with respect to
Canadian Lenders, Section 2.9(i), no later than 11:00 a.m. (or, in the case of
ABR Loans or Canadian Prime Rate Loans, 1:00 p.m.) (New York, New York time) on
the date of each Borrowing (other than Borrowings consisting of US Swingline
Loans), each US Revolving Lender (in the case of any Borrowing of US Revolving
Credit Loans) and each Canadian Lender (in the case of any Borrowing of Canadian
Loans) will make available to the Administrative Agent (or the Canadian
Administrative Agent, in the case of a Borrowing of Canadian Loans) such
Lender's Applicable Percentage of the principal amount of the Borrowing
requested to be made on such date reduced by the principal amount of Revolving
Credit Loans (if any) of such Lender maturing on such date (provided, that no
Borrowing comprised of Canadian Revolving Credit Loans shall be reduced in
respect of US Loans maturing on such date) in immediately available funds at the
Payment Office (unless such Borrowing is to be made under the Canadian Revolving
Credit Facility and the Canadian Borrowers have requested a Borrowing in C$, in
which case such funds shall be C$). The Administrative Agent (or the Canadian
Administrative Agent, in the case of a Borrowing of Canadian Loans) will make
available to the applicable Borrowers at the Payment Office of such Agent the
aggregate of the amounts (if any) so made available by the Lenders by either
(1)depositing such amounts, in immediately available funds, to the account of
such Borrower at the Administrative Agent or Canadian

                                       42
<PAGE>
Administrative Agent (as applicable) designated by the applicable Borrowers for
such purpose (for each of the Borrowers, its "DISBURSEMENT ACCOUNT"), or (2)
disbursing such amounts in accordance with such other lawful instructions of
such Borrowers as such Borrowers shall specify in the applicable Borrowing
Request. To the extent that any Loans mature or Reimbursement Obligations are
due and owing on the date of a requested Borrowing of Revolving Credit Loans,
the Lenders shall apply the proceeds of the Revolving Credit Loans then being
made, to the extent thereof, to the repayment of such maturing Loans or
Reimbursement Obligations, such Loans or Reimbursement Obligations and
repayments intended to be a contemporaneous exchange (provided, that the
proceeds of any Borrowing comprised of Canadian Revolving Credit Loans shall not
be applied to pay US Revolving Credit Loans maturing on such date). In respect
of US Swingline Loans, the US Swingline Lender will make available to the
applicable US Borrowers (or, in the case of a US Swingline Loan made to pay
Reimbursement Obligations of such US Borrowers, by remittance to the applicable
Issuing Bank) the proceeds of such US Swingline Loan in accordance with this
Section 2.4(a) on or before 3:00 p.m. (New York, New York time) on the date
requested for such Borrowing or as provided in Section 2.2(c).

         (b) FUNDS TO THE ADMINISTRATIVE AGENT OR CANADIAN ADMINISTRATIVE AGENT.
Unless the Administrative Agent or Canadian Administrative Agent shall have been
notified by any Lender prior to the date of a Borrowing (other than a Borrowing
consisting of US Swingline Loans) that such Lender does not intend to make
available to the Administrative Agent or Canadian Administrative Agent (as
applicable) such Lender's US Revolving Commitment Percentage and Canadian
Revolving Commitment Percentage of the Borrowing to be made on such date,
subject to Section 2.9(i) with respect to Canadian Revolving Credit Loans, the
Administrative Agent or Canadian Administrative Agent (as applicable) may assume
that such Lender has made such amount available to the Administrative Agent or
Canadian Administrative Agent (as applicable) on such date, and the
Administrative Agent or Canadian Administrative Agent (as applicable) may make
available to or for the account of the applicable Borrowers a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent or Canadian Administrative Agent (as applicable) by such
Lender on the date of a Borrowing, the Administrative Agent or Canadian
Administrative Agent (as applicable) shall be entitled to recover such
corresponding amount on demand from such Lender together with interest at such
Agent's cost of funds (as determined by such Agent). If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's or Canadian
Administrative Agent's (as applicable) demand therefor, the Administrative Agent
or Canadian Administrative Agent (as applicable) shall promptly notify the
applicable Borrowers and the applicable Borrowers shall immediately pay such
corresponding amount to the Administrative Agent or Canadian Administrative
Agent (as applicable) together with interest at the rate specified for the
Borrowing which includes such amount paid. Nothing in this Section 2.4 shall be
deemed to relieve any Lender from its obligation to fulfill its Revolving Loan
Commitments hereunder or to prejudice any rights which the Borrowers may have
against any Lender as a result of any default by such Lender hereunder.

         (c) LENDERS' RESPONSIBILITIES. No Lender shall be responsible for any
default by any other Lender in its obligation to make Loans hereunder, and each
Lender shall be obligated to make only such Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to fulfill its
Commitment hereunder.

              Section 2.5 NOTES AND MATURITY.

                  (a) US REVOLVING CREDIT NOTES. The US Borrowers' obligations
to pay the principal of, and interest on, the US Revolving Credit Loans made by
each US Lender shall be further evidenced by the US Borrowers issuance,
execution and delivery of a US Revolving Credit Note payable to the order of
each such US Lender in the amount of such US Lender's US Revolving Credit
Commitment and shall be

                                       43
<PAGE>
dated as of the date of issuance of such US Revolving Credit Note. The principal
amount of each US Revolving Credit Note shall be payable on or before the
Maturity Date.

                  (b) CANADIAN REVOLVING CREDIT NOTES. The Canadian Borrowers'
obligations to pay the principal of, and interest on, the Canadian Revolving
Credit Loans made by each Canadian Lender shall be further evidenced by the
Canadian Borrowers issuance, execution and delivery of a Canadian Revolving
Credit Note payable to the order of each such Canadian Lender in the amount of
such Canadian Lender's Canadian Revolving Credit Commitment and shall be dated
as of the date of issuance of such Canadian Revolving Credit Note. The principal
amount of each Canadian Revolving Credit Note shall be payable on or before
Maturity Date.

                  (c) US SWINGLINE NOTES. The US Borrowers' obligations to pay
the principal of, and interest on, the US Swingline Loans made by the US
Swingline Lender shall be further evidenced by the US Borrowers issuance,
execution and delivery of a US Swingline Note payable to the order of the US
Swingline Lender in the amount of the US Swingline Commitment and shall be dated
as of the date of issuance of such US Swingline Note. All US Swingline Loans
shall mature on the last Business Day of the month in which such US Swingline
Loans are borrowed; provided, however, in the event such US Swingline Loans are
borrowed on the last Business Day of any month, such US Swingline Loans shall
mature on the first Business Day of the next succeeding month; provided,
further, that the principal amount of the US Swingline Note and all outstanding
US Swingline Loans shall be payable on or before the Maturity Date.

                  (d) TERM NOTES. The US Borrowers' obligations to pay the
principal of, and interest on, the Term Loans made by each Term Lender shall be
further evidenced by the US Borrowers issuance, execution and delivery of a Term
Note payable to the order of each such Term Lender in the amount of such Term
Lender's Term Commitment and shall be dated as of the date of issuance of such
Term Note. The principal amount of each Term Note shall be payable on or before
the Maturity Date. Any part of the Term Loans which are repaid may not be
re-borrowed.

         Section 2.6 INTEREST.  In all cases subject to Section 10.13:

                  (a) ABR LOANS. Subject to Section 2.6(d), each of the
Borrowers agrees to pay interest in respect of the unpaid principal amount of
each ABR Loan made to such Borrowers from the date thereof until payment in full
thereof at a rate per annum which shall be, for any day, equal to the sum of the
Applicable Margin plus the ABR in effect on such day, but in no event to exceed
the Highest Lawful Rate; provided, that, the rate of interest in effect pursuant
to this Section 2.6(a) with respect to the Term Loans shall be subject to such
maximum and minimum interest rates as may be specified in the Term Lender
Joinder Agreement pertaining to such Term Loans (to the extent such maximum and
minimum interest rates are set forth therein). The term "ABR" shall mean, for
any day (1) for any US Loan and US Swingline Loan which is an ABR Loan, the
highest of (A) the Prime Rate in effect on such day, (B) one-half of one percent
(1/2%) plus the Federal Funds Effective Rate in effect for such day (rounded
upwards, if necessary, to the nearest 1/16th of 1%), and (C) one percent (1%)
plus the Base CD Rate (rounded upwards, if necessary, to the nearest 1/16th of
1%), but in no event to exceed the Highest Lawful Rate, and (2) for any Canadian
Loan which is an ABR Loan the highest of (A) the US Base Rate in effect on such
day, or (B) one half of one percent (1/2%) plus the Federal Funds Effective
Rate in effect for such day (rounded upwards in necessary, to the nearest 1/16th
of 1%), but in no event to exceed the Highest Lawful Rate. For purposes of this
Agreement, any change in the ABR due to a change in the Federal Funds Effective
Rate, the Prime Rate, the US Base Rate or the Base CD Rate shall be effective as
of the opening of business on the effective date of such change in the Federal
Funds Effective Rate, the Prime Rate, the US Base Rate or the Base CD Rate, as
the case may be.

                                       44
<PAGE>

                  (b) EURODOLLAR LOANS. Subject to Section 2.6(d), each of the
Borrowers agrees to pay interest in respect of the unpaid principal amount of
each Eurodollar Loan made to such Borrowers from the date thereof until payment
in full thereof at a rate per annum which shall be the sum of the relevant
Applicable Margin plus the Eurodollar Rate, but in no event to exceed the
Highest Lawful Rate.

                  (c) CANADIAN PRIME RATE LOANS. Subject to Section 2.6(d), the
Canadian Borrowers agree to pay interest in respect of the unpaid principal
amount of each Canadian Prime Rate Loan from the date thereof until payment in
full thereof at a rate per annum which shall be, for any day, equal to the sum
of the Applicable Margin plus the Canadian Prime Rate in effect on such day, but
in no event to exceed the Highest Lawful Rate.

                  (d) DEFAULT INTEREST. After the occurrence and during the
continuance of any Default or Event of Default, the US Borrowers shall, on
demand from time to time, pay interest, to the extent permitted by law, on the
outstanding US Lender Indebtedness, and the Canadian Borrowers shall, on demand
from time to time, pay interest, to the extent permitted by law, on the Canadian
Lender Indebtedness (after as well as before judgment) at a rate per annum equal
to (1) in the case of any Eurodollar Loan, the rate that would be applicable
under Section 2.6(b) to such Eurodollar Loan, plus 2% per annum, (2) in the case
of any Canadian Prime Rate Loan, the rate that would be applicable under Section
2.6(c) to such Canadian Prime Rate Loan, plus 2% per annum, and (3) in the case
of any other amount, the rate that would be applicable under Section 2.6(a) to
an ABR Loan, plus 2% per annum, but in no event to exceed the Highest Lawful
Rate.

                  (e) INTEREST PAYMENT DATES. Interest on each ABR Loan,
Eurodollar Loan and Canadian Prime Rate Loan shall accrue from and including the
date of such Loan to but excluding the date of payment in full thereof. Interest
on each Eurodollar Loan shall be payable on the last Business Day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each day which occurs at three month intervals of the
initial date of such Interest Period (unless such day is not a Business Day in
which event such payment shall be made on the next succeeding Business Day), and
on any prepayment (on the amount prepaid), at maturity (whether by acceleration
or otherwise) and, after maturity, on demand. Interest on each ABR Loan and
Canadian Prime Rate Loan shall be payable on the first Business Day of each
calendar month, commencing on the first of such days to occur after such Loan is
made, at maturity (whether by acceleration or otherwise) and, after maturity, on
demand.

                  (f) NOTICE BY THE ADMINISTRATIVE AGENT. The Administrative
Agent or the Canadian Administrative Agent, upon determining the Eurodollar Rate
for any Interest Period and the Discount Rate for any Contract Period, shall
promptly notify by telecopy or telephone (in the case of telephonic notices,
confirmed by telecopy or otherwise in writing) or in writing to the Borrowers
and the Lenders.

         Section 2.7 INTEREST PERIODS. In connection with each Borrowing of
Eurodollar Loans, the applicable Borrowers shall elect an Interest Period to be
applicable to such Borrowing, which Interest Period shall begin on and include,
as the case may be, the date selected by such Borrowers pursuant to Section
2.2(a), the conversion date or the date of expiration of the then current
Interest Period applicable thereto, and end on but exclude the date which is
either one, two, three or six months thereafter, as selected by such Borrowers;
provided, that, the US Borrowers shall be permitted to obtain a 15-day Interest
Period once during the term of this Agreement; provided further:

                  (a) BUSINESS DAYS. If any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest Period shall expire
on the next succeeding Business Day, provided, further, that if any Interest
Period (other than in respect of a Borrowing of Eurodollar Loans the Interest
Period of which is expiring pursuant to Section 2.16(b) hereof) would otherwise
expire on a day which is not a

                                       45
<PAGE>

Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next preceding
Business Day;

                  (b) MONTH END. Any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to Section 2.7(c) below, end on the last Business Day of a
calendar month;

                  (c) PAYMENT LIMITATIONS. No Interest Period shall extend
beyond any date that any principal payment or prepayment is scheduled to be due
unless the aggregate principal amount of Borrowings which are Borrowings of ABR
Loans or which are Borrowings of Eurodollar Loans which have Interest Periods
which will expire on or before such date, less the aggregate amount of any other
principal payments or prepayments due during such Interest Period, is equal to
or in excess of the amount of such principal payment or prepayment; and

                  (d) MATURITY DATES. No Interest Period shall extend beyond the
Maturity Date.

         Section 2.8 BANKERS' ACCEPTANCES.

                  (a) Subject to the terms and conditions of this Agreement, the
Canadian Borrowers may request Borrowings of Canadian Revolving Credit Loans by
presenting drafts for acceptance and purchase as B/As by the Canadian Lenders.

                  (b) To facilitate availment of B/A Borrowings, the Canadian
Borrowers hereby appoint each Canadian Lender as their attorney to sign and
endorse on their behalf, in handwriting or by facsimile or mechanical signature
as and when deemed necessary by such Canadian Lender, blank forms of B/As in the
form requested by such Canadian Lender. In this respect, it is each Canadian
Lender's responsibility to maintain an adequate supply of blank forms of B/As
for acceptance under this Agreement. The Canadian Borrowers recognize and agree
that all B/As signed and/or endorsed on its behalf by a Canadian Lender shall
jointly and severally bind the Canadian Borrowers as fully and effectually as if
signed in the handwriting of and duly issued by the proper signing officers of
each Canadian Borrower. Each Canadian Lender is hereby authorized to issue such
B/As endorsed in blank in such face amounts as may be determined by such
Canadian Lender, provided that the aggregate amount thereof is equal to the
aggregate amount of B/As required to be accepted and purchased by such Canadian
Lender. No Canadian Lender or any Affiliate thereof shall be liable for any
damage, loss or other claim arising by reason of any loss or improper use of any
such instrument except the gross negligence or willful misconduct of such
Canadian Lender or its Affiliate, as applicable, or its officers, employees,
agents or representatives. Each Canadian Lender shall maintain a record with
respect to B/As (1) received by it in blank hereunder, (2) voided by it for any
reason, (3) accepted and purchased by it hereunder and (4) canceled at their
respective maturities. Each Canadian Lender further agrees to retain such
records in the manner and for the statutory periods provided in the various
provincial or federal statutes and regulations which apply to such Canadian
Lender. Each Canadian Lender agrees to provide a copy of such records to the
Canadian Borrowers at the Canadian Borrowers' expense upon request. On request
by or on behalf of the Canadian Borrowers, a Canadian Lender shall cancel all
forms of B/As which have been pre-signed or pre-endorsed on behalf of the
Canadian Borrowers and which are held by such Canadian Lender and are not
required to be issued in accordance with the Canadian Borrowers' irrevocable
notice. The Canadian Borrowers agree that, at the request of the Canadian
Administrative Agent, they shall deliver to the Canadian Administrative Agent a
"depository note" which complies with the requirements of the Depository Bills
and Notes Act (Canada) and consents to the deposit of any such depository note
in the book-based clearance system maintained by the Canadian Depository for
Securities.

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<PAGE>
                  (c) Drafts of the Canadian Borrowers to be accepted as B/As
hereunder shall be signed as set forth in this Section 2.8. Notwithstanding that
any person whose signature appears on any B/A may no longer be an authorized
signatory for any Canadian Lender or the Canadian Borrowers at the date of
issuance of a B/A, such signature shall nevertheless be valid and sufficient for
all purposes as if such authority had remained in force at the time of such
issuance and any such B/A so signed shall be binding on the Canadian Borrowers.

                  (d) Promptly following receipt of a Borrowing Request or
notice of rollover pursuant to this Section 2.8 or Section 2.12 by way of B/As,
the Canadian Administrative Agent shall so advise the Canadian Lenders and shall
advise each Canadian Lender of the aggregate face amount of the B/As to be
accepted by it and the applicable Contract Period (which shall be identical for
all Canadian Lenders). The aggregate face amount of the B/As to be accepted by
the Canadian Lenders in respect of any Borrowing or rollover of B/A Loans shall
be not less than C$500,000 and shall be in an integral multiple of C$100,000.

                  (e) Upon acceptance of a B/A by a Canadian Lender, such
Canadian Lender shall purchase, or arrange the purchase of, such B/A from the
Canadian Borrowers at the Discount Rate for such Canadian Lender applicable to
such B/A accepted by it and provide to Canadian Administrative Agent the
Discount Proceeds for the account of the Canadian Borrowers in which event an
Acceptance Fee shall be payable by the Canadian Borrowers to such Canadian
Lender in respect of such B/A and shall be set off against the Discount Proceeds
payable by such Canadian Lender under this Section 2.8(e).

                  (f) Each Canadian Lender may at any time and from time to time
hold, sell, rediscount or otherwise dispose of any or all B/As accepted and
purchased by it.

                  (g) If a Canadian Lender is not a chartered bank under the
Bank Act (Canada) or if a Canadian Lender notifies the Administrative Agent in
writing that it is otherwise unable or unwilling to accept B/As, such Canadian
Lender will, instead of accepting and purchasing B/As, purchase from the
Canadian Borrowers a non-interest bearing note denominated in C$ (a "B/A
EQUIVALENT NOTE"), in the form of Exhibit M, issued by the Canadian Borrowers in
the amount and for the same term as the draft which such Canadian Lender would
otherwise have been required to accept and purchase hereunder. Each such
Canadian Lender will provide to the Canadian Administrative Agent the Discount
Proceeds of such B/A Equivalent Loan for the account of any Canadian Borrower.
Each such B/A Equivalent Loan will bear interest at the same rate which would
result if such Canadian Lender had accepted (and been paid an Acceptance Fee)
and purchased (on a discounted basis) a B/A for the relevant Contract Period (it
being the intention of the parties that each such B/A Equivalent Loan shall have
the same economic consequences for the Canadian Lenders and any Canadian
Borrower as the B/A which such B/A Equivalent Loan replaces). All such interest
shall be paid in advance on the date such B/A Loan is made, and will be deducted
from the principal amount of such B/A Equivalent Loan in the same manner in
which the Discount Proceeds of a B/A would be deducted from the face amount of
the B/A. Subject to repayment requirements, on the last day of the relevant
Contract Period for such B/A Equivalent Loan, any Canadian Borrower shall be
entitled to convert each such B/A Equivalent Loan into another type of Loan, or
to roll over each such B/A Equivalent Loan into another B/A Equivalent Loan, all
in accordance with the applicable provisions of this Agreement.

                  (h) The Canadian Borrowers waive presentment for payment and
any other defense to payment of any amounts due to a Canadian Lender in respect
of a B/A accepted and purchased by it pursuant to this Agreement which might
exist solely by reason of such B/A being held, at the maturity thereof, by such
Canadian Lender in its own right and the Canadian Borrowers agree not to claim
any days of grace if such Canadian Lender as holder sues the Canadian Borrowers
on the B/A for payment of the amount payable by the Canadian Borrowers
thereunder. On the specified maturity date of a B/A, or

                                       47
<PAGE>

such earlier date as may be required or permitted pursuant to the provisions of
this Agreement, the Canadian Borrowers shall jointly and severally pay, through
the Canadian Administrative Agent, the Canadian Lender that has accepted and
purchased such B/A the full face amount of such B/A and after such payment, the
Canadian Borrowers shall have no further liability in respect of such B/A and
such Canadian Lender shall be entitled to all benefits of, and be responsible
for all payments due to third parties under, such B/A.

                  (i) If a Canadian Lender grants a participation in a portion
of its rights under this Agreement to a participant under Section 10.6, then in
respect of any B/A Borrowing, a portion thereof may, at the option of such
Canadian Lender, be by way of B/A accepted by such participant. In such event,
the Canadian Borrowers shall upon request of the Canadian Administrative Agent
or the Canadian Lender granting the participation execute and deliver a form of
B/A indemnity in favor of such participant for delivery to such participant.

                  (j) Notwithstanding anything herein to the contrary, no B/A
may be prepaid prior to the maturity date thereof, except as provided in Article
8.

         Section 2.9 REPAYMENT OF LOANS.

                  (a) The US Borrowers hereby unconditionally, jointly and
severally promise to pay to the Administrative Agent for the account of each US
Revolving Lender, (1) the then unpaid principal amount of each US Revolving
Credit Loan of such Lender on the Maturity Date (or such earlier date on which
the Revolving Credit Loans become due and payable pursuant to Article 8); and
(2) the amounts specified in Section 2.11 on the dates specified in Section
2.11. The US Borrowers hereby unconditionally, jointly and severally promise to
pay to Administrative Agent for the account of each Term Lender the then unpaid
principal amount of each Term Loan on the Maturity Date (or on such earlier date
on which the Term Loans come due and payable pursuant to Article 8). The US
Borrowers hereby unconditionally, jointly and severally promise to pay to the US
Swingline Lender the then-unpaid principal amount of each US Swingline Loan on
the date on which such US Swingline Loan becomes due and payable as provided in
Section 2.5(c) hereof (or such earlier date on which such US Swingline Loans
become due and payable pursuant to Article 8). The US Borrowers hereby further
agree to jointly and severally pay interest on the unpaid principal amount of
the Loans and the US Swingline Loans made to the US Borrowers, from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in Section 2.6.

                  (b) The Canadian Borrowers hereby jointly, severally and
unconditionally promise to pay to the Canadian Administrative Agent for the
account of each Canadian Lender, (1) the then unpaid principal amount of each
Canadian Revolving Credit Loan of such Lender on the Maturity Date (or such
earlier date on which the Revolving Credit Loans become due and payable pursuant
to Article 8); and (2) the amounts specified in Section 2.11 on the dates
specified in Section 2.11. The Canadian Borrowers hereby further jointly and
severally agree to pay interest on the unpaid principal amount of the Loans made
to the Canadian Borrowers from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 2.6.

                  (c) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrowers to such
Lender resulting from each Loan of such Lender from time to time, including,
without limitation, the amounts of principal and interest payable and paid to
such Lender from time to time under this Agreement.

                  (d) The Administrative Agent shall maintain the Register
pursuant to Section 10.7(c), and a subaccount therein for each US Lender, in
which shall be recorded (1) the amount of each US Loan

                                       48
<PAGE>

made hereunder, the Type thereof and each Interest Period, if any, applicable
thereto, (2) the amount of any principal or interest due and payable or to
become due and payable from the US Borrowers to each US Lender hereunder, and
(3) both the amount of any sum received by the Administrative Agent hereunder
from the US Borrowers and each US Lender's Applicable Percentage thereof. The
Administrative Agent shall maintain a separate register with respect to the US
Swingline Loans which Register shall contain the same information as the
Register with respect to the US Loans.

                  (e) The Canadian Administrative Agent shall maintain the
Register pursuant to Section 10.7(c), and a subaccount therein for each Canadian
Lender, in which shall be recorded (1) the amount of each Canadian Loan made
hereunder, the Type thereof and each Interest Period or Contract Period, if any,
applicable thereto, (2) the amount of any principal or interest due and payable
or to become due and payable from the Canadian Borrowers to each Canadian Lender
hereunder, and (3) both the amount of any sum received by the Canadian
Administrative Agent hereunder from the Borrowers and each Canadian Lender's
Applicable Percentage thereof.

                  (f) The entries made in the Registers and the accounts of each
Lender maintained pursuant to Section 2.9(d) and Section 2.9(e) shall, absent
manifest error, to the extent permitted by applicable law, be prima facie
evidence of the existence and amounts of the obligations of the Borrowers
therein recorded; provided, however, that the failure of any Lender or Agent to
maintain a Register or any such account, or any error therein, shall not in any
manner affect the obligations of each Borrower to repay (with applicable
interest) the Loans made to such Borrower by such Lender in accordance with the
terms of this Agreement.

                  (g) The US Administrative Agent shall render to the US
Borrowers each month a statement of the US Borrowers' account setting forth the
following information for the period from the date of the most recent preceding
statement: the aggregate principal amount of new US Revolving Credit Loans and
US Swingline Loans made to the US Borrowers, the aggregate amount of new
Reimbursement Obligations which have not been reimbursed, the aggregate face
amount of new US Letters of Credit issued for the accounts of the US Borrowers,
the amount of remittances and payments actually collected and applied by the US
Administrative Agent to reduce the outstanding principal balance of the US
Swingline Loans, US Revolving Credit Loans and Term Loans, to reimburse
Reimbursement Obligations and establish L/C Cover during such period and the
outstanding principal balances of the US Swingline Loans, US Revolving Credit
Loans and Term Loans, and the aggregate US Letter of Credit Liabilities
outstanding at the end of such period. Such statement shall be deemed to be
correct and accepted by and be binding upon the US Borrowers unless the US
Administrative Agent receives a written statement of the US Borrowers'
exceptions to such account statement within twenty (20) days after such
statement was rendered to the US Borrowers.

                  (h) The Canadian Administrative Agent shall render to the
Canadian Borrowers each month a statement of the Canadian Borrowers' account
setting forth the following information for the period from the date of the most
recent preceding statement: the aggregate principal amount of new Canadian
Revolving Credit Loans made to the Canadian Borrowers, the aggregate amount of
new Reimbursement Obligations which have not been reimbursed, the aggregate face
amount of new Canadian Letters of Credit issued for the accounts of the Canadian
Borrowers, the amount of remittances and payments actually collected and applied
by the Canadian Administrative Agent to reduce the outstanding principal balance
of the Canadian Revolving Credit Loans, to reimburse Reimbursement Obligations
during such period and establish L/C Cover and the outstanding principal
balances of the Canadian Revolving Credit Loans and the aggregate Canadian
Letter of Credit Liabilities outstanding at the end of such period. Such
statement shall be deemed to be correct and accepted by and be binding upon the
Canadian Borrowers unless the Canadian Administrative Agent receives a written
statement of the

                                       49
<PAGE>

Canadian Borrowers' exceptions to such account statement within twenty (20) days
after such statement was rendered to the Canadian Borrowers.

                  (i) The Canadian Administrative Agent shall on any Settlement
Date, and upon notice given by the Canadian Administrative Agent no later than
12:00 noon Toronto, Canada time, request each Canadian Lender to make and each
Canadian Lender hereby agrees to make, a Canadian Revolving Credit Loan in an
amount equal to such Canadian Lender's Canadian Revolving Credit Percentage of
the aggregate amount of the Canadian Revolving Credit Loans made by the Canadian
Administrative Agent from the preceding Settlement Date to the date of such
notice. Each Canadian Lender's obligation to make the Canadian Revolving Credit
Loans referred to in this Section 2.9(i) and to make the settlements pursuant to
this Section 2.9(i) shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defence or other
right which any such Canadian Lender or the Canadian Borrowers may have against
the Canadian Administrative Agent, any Canadian Borrower, any Canadian Lender or
any other Person for any reason whatsoever; (ii) any adverse change in the
condition (financial or otherwise) of the Canadian Borrowers; or (iii) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. Without limiting the liability and obligation of each Canadian
Lender to make such advances, the Canadian Borrowers authorize the Canadian
Administrative Agent to charge the Canadian Borrower's account to the extent
amounts received from the Canadian Lenders are not sufficient to repay in full
the amount of any such deficiency. On the Settlement Date, the Canadian
Administrative Agent and the Canadian Lenders shall each remit to the other, in
immediately available funds, all amounts necessary so as to ensure that, as of
the Settlement Date, the Canadian Lenders shall have their respective Canadian
Revolving Credit Percentage of all outstanding Canadian Revolving Credit
Exposure. The Canadian Lenders acknowledge and agree that the Canadian Revolving
Credit Exposure of the Canadian Administrative Agent may exceed the amount of
its Canadian Revolving Credit Commitment (the "Canadian Administrative Agent
Overline") solely as a result of the Canadian Administrative Agent making
advances on behalf of the other Canadian Lenders pending settlement pursuant to
this Section 2.9(i), but that such Canadian Administrative Agent Overline shall
in no way affect, limit or modify in any respect the other Canadian Lenders'
obligations to settle with the Canadian Administrative Agent provided in this
Section 2.9(i). The Canadian Administrative Agent shall, after receipt of any
interest and fees earned under this Agreement, promptly remit to the Canadian
Lenders their pro rata portion (based on their respective Canadian Revolving
Credit Commitments) of any (i) fees they are entitled to receive, and (ii)
interest computed at the rate and as provided for in Section 2.6 of this
Agreement on all outstanding amounts advanced by the Canadian Lenders on each
Settlement Date, prior to adjustment for such settlement, which fees and
interest are subsequent to the last remittance by the Canadian Administrative
Agent to the Canadian Lenders of such interest amounts, provided, however, that
the Canadian Lenders (other than the Canadian Administrative Agent in its role
as the agent for and on behalf of the Canadian Lenders) shall not share in any
of the fees provided for in the Canadian Fee Letter. The Canadian Administrative
Agent shall not be permitted to make any B/A Loans or Eurodollar Loans on behalf
of the other Canadian Lenders.

                  (j) The US Borrowers agree, that solely for purposes of
computing the charges under this Agreement (including interest), all items of
payment shall be deemed applied by the Administrative Agent one Business Day
after receipt by the Administrative Agent of funds which have been finally
credited to the US Loans whether such funds are received directly from the US
Borrowers or from the US Blocked Account.

                  (k) The Canadian Borrowers agree, that for purposes of
computing the interest charges under this Agreement (including interest), all
items of payment shall be deemed applied by the Canadian Administrative Agent
one Business Day after receipt by the Canadian Administrative Agent of funds
which have been finally credited to the Canadian Loans, whether such funds are
received directly from the Canadian Borrowers or from Canadian Lockbox Bank or
from the Canadian Blocked Account.

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<PAGE>

         Section 2.10. VOLUNTARY TERMINATION OR REDUCTION OF REVOLVING CREDIT
COMMITMENTS. Each of the Borrowers may, upon at least five Business Days' notice
to the Administrative Agent and Canadian Administrative Agent, terminate
entirely at any time, or partially reduce from time to time by an aggregate
amount of $1,000,000 or any larger multiple of $100,000, the unused portions of
the US Revolving Credit Commitment or Canadian Revolving Credit Commitments,
provided that any such reduction shall apply proportionately to the US Revolving
Credit Commitment or Canadian Revolving Credit Commitment, as applicable, of
each Lender. The US Swingline Commitment may not be partially terminated by the
US Borrowers and may only be entirely terminated by the US Borrowers in
connection with the entire termination of the Commitments. If the US Revolving
Credit Commitments or Canadian Revolving Credit Commitments are terminated in
their entirety, in addition to the termination fee described in Section 2.13(e)
hereof, all accrued commitment fees with respect thereto shall be payable on the
effective date of such termination. Upon termination of the US Revolving Credit
Commitments and Canadian Revolving Credit Commitments in full, the commitments
of the US Swingline Lender to make US Swingline Loans shall terminate as well.

         Section 2.11 MANDATORY PREPAYMENTS; VOLUNTARY PREPAYMENTS; ORDER OF
APPLICATION.

                  (a) MANDATORY PREPAYMENTS OF US REVOLVING LOANS. Subject to
the last sentence of this Section 2.11(a), if at any time the Aggregate US
Revolving Credit Exposure is in excess of the US Maximum Available Amount, the
US Borrowers shall immediately jointly and severally pay to the Administrative
Agent, for the account of the US Revolving Lenders, the amount of such excess to
be applied (1) as a prepayment of the US Revolving Credit Loans and
Reimbursement Obligations with respect to US Letters of Credit, and (2) after
payment in full of the US Revolving Credit Loans and Reimbursement Obligations,
as L/C Cover for the US Letter of Credit Liabilities in an amount of such
remaining excess; provided, however, to the extent any mandatory prepayment
under this Section 2.11(a) is required as result of a reduction in the US
Borrowing Base resulting from any (i) establishment of additional, or
modification of existing, eligibility standards for any component of the US
Borrowing Base, (ii) reduction of the advance rate for any component of the US
Borrowing Base, or (iii) establishment of Availability Reserves against the US
Borrowing Base, then such required mandatory prepayment shall be due and payable
within three (3) Business Days of the date on which such US Borrowing Base
reductions are effective. Each US Revolving Lender acknowledges and agrees that
notwithstanding anything to the contrary set forth in this Agreement, the
Administrative Agent, in its sole discretion, may, for the account and credit
risk of the US Revolving Credit Lenders, (a) make or permit to remain
outstanding US Swingline Loans, and/or (b) cause each US Revolving Lenders to
make, or permit to remain outstanding US Revolving Credit Loans, or issue, or
permit to remain outstanding, US Letters of Credit, which in any case results in
the Aggregate US Revolving Credit Exposure exceeding the US Maximum Available
Amount (collectively "OVERADVANCES"); provided, however, (a) no Overadvance may
cause the Aggregate US Revolving Credit Exposure to exceed the total US
Revolving Credit Commitments of all US Revolving Lenders, (b) the aggregate
amount of all Overadvances outstanding at any time shall be not exceed
$5,000,000, (c) no Overadvance shall be outstanding for more than 30 consecutive
days and (d) there can only be one Overadvance during any 180-day period.

                  (b) MANDATORY PREPAYMENT OF CANADIAN REVOLVING LOANS. If at
any time the Dollar Equivalent of the Aggregate Canadian Revolving Credit
Exposure is in excess of the Canadian Maximum Available Amount, the Canadian
Borrowers shall immediately jointly and severally pay to the Canadian
Administrative Agent, for the account of the Canadian Lenders, the amount of
such excess to be applied (1) as a prepayment of the Canadian Revolving Credit
Loans (other than B/A Loans) and Reimbursement Obligations with respect to
Canadian Letters of Credit, (2) after payment in full of the Canadian Revolving
Credit Loans (other than B/A Loans) and Reimbursement Obligations, as B/A Cover
for B/A Loans, and (3) after B/A Cover has been effected for all outstanding B/A
Loans, as L/C Cover for the Canadian Letter of Credit Liabilities in an amount
of such remaining excess; provided, however, to the

                                       51
<PAGE>
extent any mandatory prepayment under this Section 2.11(b) is required as result
of a reduction in the Canadian Borrowing Base resulting from any (i)
establishment of additional, or modification of existing, eligibility standards
for any component of the Canadian Borrowing Base, (ii) reduction of the advance
rate for any component of the Canadian Borrowing Base, or (iii) establishment of
Availability Reserves against the Canadian Borrowing Base, then such required
mandatory prepayment shall be due and payable within three (3) Business Days of
the date on which such Canadian Borrowing Base reductions are effective.

                  (c) APPLICATION OF PROCEEDS FROM US BLOCKED ACCOUNT. On or
before 11:00 a.m. (New York, New York time) on each Business Day, Administrative
Agent shall disburse to the appropriate Agent or Lenders for application in
accordance with Section 2.11(f) and Section 2.11(h), all amounts then on deposit
in the US Blocked Account which Administrative Agent shall have determined
constitute "collected funds" in accordance with the policies of Administrative
Agent then in effect.

                  (d) APPLICATION OF PROCEEDS FROM CANADIAN BLOCKED ACCOUNT.
Subject to Section 2.9(i), on or before 11:00 a.m. (New York, New York time) on
each Business Day, Canadian Administrative Agent shall disburse (or cause
Canadian Lockbox Bank to disburse) to the appropriate Agent or Lenders for
application in accordance with Section 2.11(g) and Section 2.11(i) hereof all
amounts then on deposit in the Canadian Blocked Account which Canadian
Administrative Agent shall have determined constitute "collected funds" in
accordance with the policies of Canadian Administrative Agent then in effect.

                  (e) VOLUNTARY PREPAYMENTS. Subject to Section 2.11(j) hereof,
each of the Borrowers may, at their option, at any time and from time to time,
prepay the Loans (other than B/A Loans) and the Reimbursement Obligations, in
whole or in part, without premium or penalty except for breakage costs with
respect to Eurodollar Loans as provided in Section 2.19 and the fees set forth
in Section 2.13(e), in the event of a prepayment in full of the Revolving Loans
and termination of the Revolving Commitments, upon giving, in the case of any
Eurodollar Loan, five Business Days' prior written notice to the Administrative
Agent, and, in the case of any ABR Loan or Canadian Prime Rate Loan, prior
written notice on the same Business Day to the Administrative Agent (in the case
of prepayment of US Loans) or Canadian Administrative Agent (in the case of a
prepayment of Canadian Loans). Such notice shall specify (1) in the case of any
prepayment of Loans, the date and amount of prepayment and whether the
prepayment is (i) of US Revolving Credit Loans, Canadian Revolving Credit Loans,
US Swingline Loans and (subject to the limitations on prepayment of the Term
Loans set forth herein) the Term Loans, or a combination thereof and (ii) of
Eurodollar Loans, ABR Loans or Canadian Prime Rate Loans, or a combination
thereof, and, in each case if a combination thereof, the principal amount
allocable to each; and ii) in the case of any prepayment of Reimbursement
Obligations, the date and amount of prepayment, the identity of the applicable
Letter of Credit or Letters of Credit and the amount allocable to each of such
Reimbursement Obligations. Upon receipt of such notice, the Administrative Agent
or Canadian Administrative Agent (as applicable) shall promptly notify each
Lender of the contents thereof and of such Lender's Applicable Percentage of
such prepayment. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with (if
a Eurodollar Loan is prepaid other than at the end of the Interest Period
applicable thereto) any amounts payable pursuant to Section 2.19. Each
prepayment of US Revolving Credit Loans and Term Loans which are ABR Loans may
be in any amount; each prepayment of Canadian Revolving Credit Loans which are
ABR Loans shall be in a minimum principal amount of $100,000 and shall be in an
integral multiple of $50,000, each prepayment of Canadian Prime Rate Loans shall
be in the minimum principal amount of C$100,000 and in integral multiple of
$50,000; each prepayment of Eurodollar Loans shall be in the minimum principal
amount of $500,000 and in integral multiples of $100,000 or, in the case of any
of ABR Loans, Eurodollar Loans, or Canadian Prime Rate Loans, the aggregate
principal balance outstanding on such Loans.

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<PAGE>

                  (f) ORDER OF PAYMENTS PRIOR TO DEFAULT (US BORROWERS). Subject
to Section 2.11(j) hereof, unless an Event of Default has occurred and is
continuing, (1) any voluntary prepayments of the US Loans made pursuant to
Section 2.11(e) above shall be applied to the US Loans specified to be prepaid
in the notice of prepayment delivered by the US Borrowers pursuant to Section
2.11(e), (2) any other payments by any of the US Borrowers (including, without
limitation, any application of the proceeds of Collateral of the US Borrowers)
in respect of the Lender Indebtedness, including, without limitation, amounts
applied pursuant to Section 2.11(c), shall be applied to the Lender Indebtedness
in the following order (i) first, to the payment in full of all costs, expenses
and other charges (but not fees) of Administrative Agent then due and payable by
Borrowers under the Financing Documents, (ii) second, to the payment in full of
all costs, expenses and other charges (but not fees) of US Revolving Lenders
payable by Borrowers under the Financing Agreements and all indemnities payable
by Borrowers under the Financing Agreements then due to any US Revolving Lender,
(iii) third, to the payment in full of all fees payable by the Borrowers to the
Administrative Agent in its capacity as such, (iv) fourth, to the payment in
full of all interest then due and payable in respect of the US Swingline Loans,
(v) fifth, to the payment in full of all interest then due and payable in
respect of the US Revolving Credit Loans, (vi) sixth, to the payment in full of
all fees then due and payable to the US Revolving Lenders pursuant to Section
2.13(a) hereof, (vii) seventh, to the payment in full of all principal then due
and payable under Section 2.11(a) above (for application first to the US
Swingline Loans to the extent necessary to pay the US Swingline Loans in full,
and then to the Revolving Loans), (viii) eighth, to the payment of any interest
then due and payable in respect of the Term Loans, (ix) ninth, to the payment of
principal of the US Swingline Loans, (x) tenth, to the payment of principal of
the US Revolving Credit Loans, (xi) eleventh, to any other Lender Indebtedness
to the extent then due and payable, and (xii) twelfth, after giving effect to
the payment in full of all amounts due and payable pursuant to clauses (i)
through (xiii) preceding, to the US Borrowers by depositing the net amount
thereof in the Disbursement Account for the US Borrowers.

                  (g) ORDER OF PAYMENTS PRIOR TO DEFAULT (CANADIAN BORROWERS).
Unless an Event of Default has occurred and is continuing, (1) any voluntary
prepayments of the Canadian Loans made pursuant to Section 2.11(e) above shall
be applied to the Canadian Loans specified to be prepaid in the notice of
prepayment delivered by the Canadian Borrowers pursuant to Section 2.11(e), (2)
any other payments by any of the Canadian Borrowers (including, without
limitation, any application of the proceeds of Collateral of the Canadian
Borrowers) in respect of the Canadian Lender Indebtedness, including, without
limitation, amounts applied pursuant to Section 2.11(d), shall be applied to the
Canadian Lender Indebtedness in the following order (i) first, to the payment in
full of all costs, expenses and other charges (but not fees) of the Canadian
Administrative Agent then due and payable by Canadian Borrowers under the
Financing Documents, (ii) second, to the payment in full of all costs, expenses
and other charges (but not fees) of Canadian Lenders payable by Canadian
Borrowers under the Financing Agreements and all indemnities payable by Canadian
Borrowers under the Financing Agreements then due to any Lender, (iii) third, to
the payment in full of all fees payable by the Canadian Borrowers to the
Canadian Administrative Agent in its capacity as such, (iv) fourth, to the
payment in full of all interest then due and payable in respect of the Canadian
Revolving Credit Loans, (v) fifth, to the payment in full of all fees then due
and payable to the Canadian Lenders pursuant to Section 2.13(b) hereof, (vi)
sixth, to the payment in full of all principal then due and payable under
Section 2.11(b) above, (vii) seventh, to the re-payment of principal of the
Canadian Revolving Credit Loans, (viii) eighth, to any other Canadian Lender
Indebtedness to the extent then due and payable, and (ix) ninth, after giving
effect to the payment in full of all amounts due and payable pursuant to clauses
(i) through (viii) preceding, to the Canadian Borrowers by depositing the net
amount thereof in the Disbursement Account for the Canadian Borrowers.

                  (h) ORDER OF PAYMENTS DURING DEFAULT (US BORROWERS). During
the existence of any Event of Default, any payments in respect of the Lender
Indebtedness by or for the account of any of the

                                       53
<PAGE>
 US Borrowers or in respect of any of the proceeds of Collateral of the US
Borrowers, including, without limitation, amounts applied pursuant to Section
2.11(c), shall be applied to the Lender Indebtedness (1) first, to the payment
in full of all costs, expenses and other charges (but not fees) of
Administrative Agent or Canadian Administrative Agent incurred in connection
with the collection and enforcement of the Lender Indebtedness and for the
protection, preservation or sale, disposition or other realization upon the
Collateral, including all expenses, liabilities and advances incurred or made by
or on behalf of Administrative Agent or Canadian Administrative Agent in their
capacity as such, including attorneys' fees and legal expenses, (2) then to the
remaining Lender Indebtedness (including to establish L/C Cover for all
outstanding Letters of Credit) in such order as Administrative Agent shall
determine in its sole discretion, but expressly excluding any portion of the
Term Loans (including principal and accrued interest thereon) or other amounts
owing to Term Lenders in their capacity as such, including, without limitation,
expenses, fees, indemnity obligations and other amounts owing to the Term
Lenders, provided, that, any Lender Indebtedness consisting of amounts owed by
any Credit Party in respect of any Swap Agreement or Cash Management Agreement
that are in excess of the Swap Reserves and Cash Management Reserves,
respectively, (set forth in the most recent US Borrowing Base Report (or
Availability Reserves established with respect to such liabilities) shall only
be paid after payment in full of all other Lender Indebtedness to be paid
pursuant to the clause (2), and (3) third, after giving effect to the payment in
full of all amounts required pursuant to clauses (1) and (2) preceding, to the
repayment of the Term Loans (including principal and accrued interest thereon)
and other amounts owing to Term Lenders in their capacity as such, including,
without limitation, expenses, fees, indemnity obligations and other amounts
owing to the Term Lenders.

                  (i) ORDER OF PAYMENT DURING DEFAULT (CANADIAN BORROWERS).
During the existence of any Event of Default, any payments in respect of the
Lender Indebtedness by or for the account of any of the Canadian Borrowers or in
respect of any of the proceeds of Collateral of the Canadian Borrowers,
including, without limitation, amounts applied pursuant to Section 2.11(d) shall
be applied to the Canadian Lender Indebtedness (1) first, to the payment in full
of all costs, expenses and other charges (but not fees) of the Canadian
Administrative Agent incurred in connection with the collection and enforcement
of the Canadian Lender Indebtedness and for the protection, preservation or
sale, disposition or other realization upon the Collateral provided by Canadian
Borrowers, including all expenses, liabilities and advances incurred or made by
or on behalf of Canadian Administrative Agent in its capacity as such, including
attorneys' fees and legal expenses, and (2) then to the remaining Canadian
Lender Indebtedness (including to establish L/C Cover for all outstanding
Canadian Letters of Credit) in such order as Canadian Administrative Agent shall
determine in its sole discretion provided, that, any Canadian Lender
Indebtedness consisting of amounts owed by any Credit Party in respect of any
Swap Agreement or Cash Management Agreement that are in excess of the Swap
Reserves and Cash Management Reserves, respectively, (set forth in the most
recent Canadian Borrowing Base Report (or Availability Reserves established
with respect to such liabilities) shall only be paid in full after payment in
full of all other Canadian Lender Indebtedness to be paid pursuant to this
clause (2).

                  (j) RESTRICTIONS ON PAYMENT OF TERM LOANS. Except as expressly
provided in this clause (j) no payment of the Term Loans and no other payment to
the Term Lenders in their capacity as such, including, without limitation, any
payment of expenses, fees, indemnity obligations and other amounts owing to the
Term Lenders, shall be made at any time that any other Lender Indebtedness is
outstanding hereunder or any Revolving Commitment remains in effect.
Notwithstanding the foregoing, so long as no Default has occurred which is
continuing, US Borrowers shall be permitted to (1) pay regularly scheduled
payments of interest on the Term Loans when due, and (2) prepay the Term Loans
in whole or in part; provided, that no prepayment of Term Loans shall be
permitted pursuant to this clause (2) (i) unless US Borrowers shall have
provided each Agent and Lender with written notice of their intention to make
such prepayment not less than 10 Business Days prior to the effective date of
such prepayment setting forth the amount to be prepaid and the scheduled date
for prepayment (which shall not be accelerated), (ii) unless US Excess
Availability has been equal to or greater than $40,000,000 for each day during
the thirty (30) day period prior to the date of such prepayment assuming that
such repayment occurred on the first day of such period, and (iii) unless US
Excess Availability will be equal to or greater than $40,000,000 after giving
effect to such prepayment. In the event any Term Lender shall receive any
payment or prepayment of any type which it is prohibited from receiving pursuant
to this Section 2.11(j), it shall hold such payment in trust and promptly (and
in all events within one Business Days following demand by Administrative Agent
therefore) deliver the same over to Administrative Agent for application to the
Lender Indebtedness in the order provided by this Section 2.11.

         Section 2.12 CONTINUATION AND CONVERSION OPTIONS.

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<PAGE>
                  (a) CONTINUATION. The Borrowers may elect to continue all or
any part of any Borrowing of Eurodollar Loans beyond the expiration of the then
current Interest Period relating thereto by giving Advance Notice (which shall
be irrevocable to the Administrative Agent or Canadian Administrative Agent)
(with a simultaneous copy to Administrative Agent) (as applicable) of such
election, specifying the Eurodollar Loans or portion thereof to be continued and
the Interest Period therefor. In the absence of such a timely and proper
election with regard to Eurodollar Loans, the Borrowers shall be deemed to have
elected to convert such Eurodollar Loans to ABR Loans pursuant to Section
2.12(d).

                  (b) AMOUNT OF CONTINUATIONS. All or part of any Eurodollar
Loans may be continued as provided herein, provided that any continuation of
such Loans shall not be (as to each Borrowing of such Loans as continued for an
applicable Interest Period) less than $500,000 for each Lender and shall be in
an integral multiple of $100,000.

                  (c) CONTINUATION OR CONVERSION UPON DEFAULT. If no Default
shall have occurred and be continuing, each Eurodollar Loan may be continued or
converted as provided in this Section. If a Default shall have occurred and be
continuing, the Borrowers shall not have the option to elect to continue any
such Eurodollar Loan pursuant to Section 2.12(a) or to convert ABR Loans to
Eurodollar Loans pursuant to Section 2.12(e).

                  (d) CONVERSION TO ABR. The Borrowers may elect to convert any
Eurodollar Loan on the last day of the then current Interest Period relating
thereto to an ABR Loan by giving Advance Notice to the Administrative Agent of
such election.

                  (e) CONVERSION TO EURODOLLAR RATE. The Borrowers may elect to
convert any ABR Loan at any time or from time to time to a Eurodollar Loan by
giving Advance Notice (which shall be irrevocable to the Administrative Agent of
such election, specifying each Interest Period therefor.

                  (f) AMOUNTS OF CONVERSIONS. All or any part of the outstanding
Loans may be converted as provided herein, provided that any conversion of such
Loans to a Eurodollar Loan shall result in a Borrowing of Eurodollar Loans in an
amount not less than $500,000 for each Lender and in an integral multiple of
$100,000.

                  (g) ROLLOVER OF B/A LOANS. With respect to each B/A Borrowing,
at or before 12:00 p.m. (noon), Toronto time, three Business Days before the
maturity date of such B/As, the Canadian Borrowers shall notify in writing the
Canadian Administrative Agent, if the Canadian Borrowers intend to issue B/As on
such maturity date to provide for the payment of such maturing B/As. If the
Canadian Borrowers fail to notify the Canadian Administrative Agent of their
intention to issue B/As on such maturity the Canadian Borrowers shall provide
payment to the Canadian Administrative Agent for the account of the Canadian
Lenders of an amount equal to the aggregate face amount of such B/As on the
maturity date of such B/As. If the Canadian Borrowers fail to make such payment,
such maturing B/As shall be deemed to have been converted on their maturity date
into a Canadian Prime Rate Loan in an aggregate principal amount equal to the
aggregate face amounts of such B/As and the Canadian Borrowers shall on demand
jointly and severally pay any losses, costs or penalties that may have been
incurred by the Canadian Administrative Agent or any Canadian Lender due to the
failure of the Canadian Borrowers to make such payment. No B/A may be rolled
over when any Default has occurred and is continuing and the Canadian
Administrative Agent has or the Canadian Lenders have determined in its or their
sole discretion that such conversion is not appropriate.

                  (h) CONVERSION INTO B/A LOANS. Subject to the provisions of
this Agreement, the Canadian Borrowers may, prior to the Maturity Date,
effective on any Business Day, convert in whole or

                                       55
<PAGE>
part, Canadian Prime Rate Loans into B/As or vice versa (but only on the last
day of a Contract Period in the case of conversions of B/As) upon giving to the
Canadian Administrative Agent Advance Notice, provided that: (1) no Canadian
Prime Rate Loan may be converted into a B/A when any Default has occurred and is
continuing and the Canadian Administrative Agent has or the Canadian Lenders
have determined in its or their sole reasonable discretion that such conversion
is not appropriate; and (2) each conversion pursuant to this paragraph shall be
not be less than C$500,000 and shall in an integral multiple of C$100,000. In
the case of conversions of Canadian Prime Rate Loans into B/As, the Canadian
Borrowers shall jointly and severally pay to the Administrative Agent, for the
account of the Canadian Lender accepting such B/A, on the date of such
conversion an amount equal to (A) the difference between the principal amount of
the converted Canadian Prime Rate Loan less the Discount Proceeds plus (B) the
Acceptance Fee to which such Canadian Lender is entitled upon acceptance of such
B/A. If the Canadian Borrowers shall not have delivered a Borrowing Request in
accordance with this Section 2.12(h) prior to the maturity date then in effect
for any B/A Borrowing requesting that such Borrowing be refinanced with another
B/A Borrowing or converted to a Canadian Prime Borrowing, then the Canadian
Borrowers shall (unless the Canadian Borrowers have notified the Administrative
Agent, before 11:00 a.m., Toronto time, not less than one Business Day prior to
such maturity date, that such Borrowing is to be repaid on such maturity date)
be deemed to have delivered a Borrowing Request requesting that such Borrowing
be refinanced with a new Borrowing of the same amount, and such new Borrowing
shall be a Canadian Prime Borrowing.

         Section 2.13 FEES.

                  (a) US REVOLVING CREDIT COMMITMENTS. The US Borrowers shall
jointly and severally pay to the Administrative Agent for the account of and
distribution to each US Revolving Lender in accordance with its US Revolving
Credit Percentage a commitment fee for the period commencing on the Closing
Date, to and including the Maturity Date (or such earlier date as the US
Revolving Credit Commitments shall have been terminated entirely) computed at a
rate per annum equal to the Applicable Commitment Fee Percentage on the average
daily excess amount of the US Revolving Credit Commitments over the US Revolving
Credit Exposure. The commitment fees on the US Revolving Credit Commitments
earned from and after the Closing Date shall be payable in arrears on the
Quarterly Date, commencing on July 1, 2002.

                  (b) CANADIAN REVOLVING CREDIT COMMITMENTS. The Canadian
Borrowers shall jointly and severally pay to the Canadian Administrative Agent
for the account of and distribution to each Canadian Lender in accordance with
its Canadian Revolving Credit Percentage a commitment fee for the period
commencing on the Closing Date, to and including the Maturity Date (or such
earlier date as the Canadian Revolving Credit Commitments shall have been
terminated entirely) computed at a rate per annum equal to the Applicable
Commitment Fee Percentage on the average daily excess amount of the Canadian
Revolving Credit Commitments over the Canadian Revolving Credit Exposure. The
commitment fees on the Canadian Revolving Credit Commitments earned from and
after the Closing Date shall be payable in arrears on the Quarterly Date,
commencing on July 1, 2002.

                  (c) US LETTERS OF CREDIT.

                           (1) As consideration for acting as the Issuing Bank
         with respect to any US Letter of Credit, the US Borrowers will jointly
         and severally pay to the applicable Issuing Bank a fee computed at a
         rate per annum equal to 0.25% on the daily average amount available for
         drawing on the applicable Letter of Credit, payable in arrears on the
         last Business Day of each calendar month. The US Borrowers shall
         jointly and severally pay to the applicable Issuing Bank, with respect
         to any issuance, amendment, transfer, or cancellation prior to
         expiration of any US Letter of Credit and for each drawing made
         thereunder, documentary and processing charges

                                       56
<PAGE>

         in accordance with such Issuing Bank's standard schedule for such
         charges in effect at the time of, and payable at the time of, such
         issuance, amendment, transfer, cancellation or drawing, as the case may
         be. All fees payable pursuant to this Section 2.13(c)(1) shall be
         retained by the applicable Issuing Bank.

                           (2) The US Borrowers will jointly and severally pay
         to the Administrative Agent for the account of and pro rata
         distribution to each US Revolving Lender a fee on the daily average
         amount available for drawings under each US Letter of Credit, in each
         case for the period from and including the date of issuance of such US
         Letter of Credit to and excluding the date of expiration or termination
         thereof computed at a per annum rate for each day equal to the
         Applicable Margin for US Revolving Credit Loans that are Eurodollar
         Loans in effect on such day. Such fees shall be payable in arrears on
         the first day of each month.

                  (d) CANADIAN LETTERS OF CREDIT.

                           (1) As consideration for acting as the Issuing Bank
         with respect to any Canadian Letter of Credit, the Canadian Borrowers
         will pay to the applicable Issuing Bank a fee computed at a rate per
         annum equal to 0.25% on the daily average amount available for drawing
         on the applicable Letter of Credit, payable in arrears on the last
         Business Day of each calendar month. The Canadian Borrowers shall
         jointly and severally pay to the applicable Issuing Bank, with respect
         to any issuance, amendment, transfer, or cancellation prior to
         expiration of any Canadian Letter of Credit and for each drawing made
         thereunder, documentary and processing charges in accordance with such
         Issuing Bank's standard schedule for such charges in effect at the time
         of, and payable at the time of, such issuance, amendment, transfer,
         cancellation or drawing, as the case may be. All fees payable pursuant
         to this Section 2.13(d)(1) shall be retained by the applicable Issuing
         Bank.

                           (2) The Canadian Borrowers will jointly and severally
         pay to the Canadian Administrative Agent for the account of and pro
         rata distribution to each Canadian Lender a fee on the daily average
         amount available for drawings under each Canadian Letter of Credit, in
         each case for the period from and including the date of issuance of
         such Canadian Letter of Credit to and excluding the date of expiration
         or termination thereof computed at a per annum rate for each day equal
         to the Applicable Margin for Canadian Revolving Credit Loans that are
         Eurodollar Loans in effect on such day. Such fees shall be payable in
         arrears on the first day of each month.

                  (e) TERMINATION FEE. In the event all Revolving Commitments
are terminated in their entirety on or before March 28, 2004 (including, without
limitation, a termination pursuant to Article 8 hereof), (1) the Canadian
Borrowers shall pay to Canadian Administrative Agent for distribution to the
Canadian Lenders in accordance with their respective Applicable Percentages, a
termination fee in the amount of $275,000, and (2) the US Borrowers shall pay to
the Administrative Agent for distribution to the US Revolving Lenders in
accordance with their respective Applicable Percentages a termination fee in the
amount of $475,000. The termination fees provided for herein shall be due and
payable on the effective date of such termination.

                  (f) FEE LETTERS. The US Borrowers shall jointly and severally
pay to the Administrative Agent such fees as are set forth in the Fee Letter, as
the same has been or may be hereafter amended or supplemented, on the dates and
in the manner specified therein, and the Canadian Borrower shall jointly and
severally pay to the Canadian Administrative Agent such fees as are set forth in
the Canadian Fee Letter as the same has been or may hereafter be amended or
supplemented, on the dates and in the manner set forth therein.

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<PAGE>
         Section 2.14 PAYMENTS, ETC.

                  (a) WITHOUT SETOFF, ETC. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent (if such payment is made on or in respect of US Loans or US
Commitments) or to Canadian Administrative Agent (if such payment is made on or
in respect of Canadian Loans or Canadian Commitments) for the account of the
appropriate Lenders without defense, set-off or counterclaim not later than
11:00 a.m. New York, New York time on the date when due and shall be made in
Dollars (unless such payment is a payment of principal or interest on C$
Denominated Loans or Reimbursement Obligations with respect to Canadian Letters
of Credit denominated in C$, in which case such payments shall be in C$) in
immediately available funds at the Payment Office of the appropriate Agent. The
Administrative Agent or the Canadian Administrative Agent will promptly
thereafter distribute funds in the form received relating to the payment of
principal or interest or commitment fees ratably to the appropriate Lenders for
the account of their respective Lending Offices, and funds in the form received
relating to the payment of any other amount payable to any Lender to such Lender
for the account of its applicable Lending Office.

                  (b) NON-BUSINESS DAYS. Whenever any payment to be made
hereunder or under any Note shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day (except as otherwise provided in Section 2.7 hereof) and, with
respect to payments of principal, interest thereon shall be payable at the
applicable rate during such extension.

                  (c) COMPUTATIONS. All computations of interest shall be made
on the basis of a year of 360 days (unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365 or 366 days, as the case may be) for the actual number of days (including
the first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Administrative Agent or
Canadian Administrative Agent of an interest rate or fee hereunder shall, except
for manifest error, be final, conclusive and binding for all purposes, provided
that such determination shall be made in good faith in a manner generally
consistent with the Administrative Agent's or the Canadian Administrative
Agent's standard practice. If the Administrative Agent or Canadian
Administrative Agent and the Borrowers determine that manifest error exists,
said parties shall correct such error by way of an adjustment to the next
payment due hereunder. For the purposes of the Interest Act (Canada) and
disclosure thereunder, whenever any interest or any fee to be paid hereunder or
in connection herewith is to be calculated on the basis of any period of time
that is less than a calendar year, the yearly rate of interest to which the rate
used in such calculation is equivalent is the rate so used multiplied by the
actual number of days in the calendar year in which the same is to be
ascertained and divided by 360. The rates of interest under this Agreement are
nominal rates, and not effective rates or yields. The principle of deemed
reinvestment of interest does not apply to any interest calculation under this
Agreement.

         Section 2.15 INTEREST RATE NOT ASCERTAINABLE, ETC. In the event that
the Administrative Agent shall have determined (which determination shall be
reasonably exercised and shall, absent manifest error, be final, conclusive and
binding upon all parties) that on any date for determining the Eurodollar Rate
for any Interest Period, by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market, or any Lender's position in
such market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate, then, and in any such event, the Administrative Agent shall
forthwith give notice (by telephone confirmed in writing) to the Borrowers and
to the Lenders of such determination. Until the Administrative Agent notifies
the Borrowers that the circumstances giving rise to the suspension described
herein no longer exist, the obligations of the Lenders to make Eurodollar Loans
shall be immediately suspended; any Borrowing of Eurodollar Loans that is
requested (by continuation,

                                       58
<PAGE>

conversion or otherwise) shall instead be made as a Borrowing of ABR Loans, and
any outstanding Eurodollar Loan shall be converted, on the last day of the then
current Interest Period applicable thereto, to a ABR Loan.

         Section 2.16 ILLEGALITY.

                  (a) DETERMINATIONS OF ILLEGALITY OF EURODOLLAR LOAN. In the
event that any Lender shall have determined (which determination shall be
reasonably exercised and shall, absent manifest error, be final, conclusive and
binding upon all parties) at any time that the making or continuance of any
Eurodollar Loan has become unlawful as a result of compliance by such Lender in
good faith with any applicable law, governmental rule, regulation, guideline or
order (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful), then, in any such event, the Lender shall
give prompt notice (by telephone confirmed in writing) to the Borrowers and to
the Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to the other Lenders).

                  (b) EURODOLLAR LOANS SUSPENDED. Upon the giving of the notice
to the Borrowers referred to in Section 2.16(a) above, (1) the Borrowers' right
to request (by continuation, conversion or otherwise) and such Lender's
obligation to make Eurodollar Loans shall be immediately suspended, and
thereafter, any requested Borrowing of Eurodollar Loans shall, as to such Lender
only, be deemed to be a request for a ABR Loan, and (2) if the affected
Eurodollar Loan or Loans are then outstanding, the Borrowers shall immediately,
or if permitted by applicable law, no later than the date permitted thereby,
upon at least one Business Day's written notice to the Administrative Agent and
the affected Lender, convert each such Eurodollar Loan into a ABR Loan, provided
that if more than one Lender is affected at any time, then all affected Lenders
must be treated the same pursuant to this subsection.

                  (c) DETERMINATIONS OF ILLEGALITY OF DOLLAR DENOMINATED LOANS.
In the event that any Canadian Lender shall have determined (which determination
shall be reasonably exercised and shall, absent manifest error, be final,
conclusive and binding upon all parties) at any time that the making or
continuance of any Dollar Denominated Loan has become unlawful as a result of
compliance by such Canadian Lender in good faith with any applicable law,
governmental rule, regulation, guideline or order (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful),
then, in any such event, the Canadian Lender shall give prompt notice (by
telephone confirmed in writing) to the Canadian Borrowers and to the Canadian
Administrative Agent of such determination (which notice the Canadian
Administrative Agent shall promptly transmit to the other Canadian Lenders).

                  (d) DOLLAR DENOMINATED LOAN SUSPENDED. Upon the giving of the
notice to the Canadian Borrowers referred to in Section 2.16(c) above, (1) the
Canadian Borrowers' right to request (by continuation, conversion or otherwise)
and such Canadian Lender's obligation to make Dollar Denominated Loans shall be
immediately suspended, and thereafter, any requested Borrowing of Dollar
Denominated Loans shall, as to such Canadian Lender only, be deemed to be a
request for a Canadian Revolving Credit Loan, and (2) if the affected Dollar
Denominated Loan or Loans are then outstanding, the Canadian Borrowers shall
immediately, or if permitted by applicable law, no later than the date permitted
thereby, upon at least one Business Day's written notice to the Canadian
Administrative Agent and the affected Canadian Lender, convert each such Dollar
Denominated Loan which is a Eurodollar Loan into a B/A Loan and convert each
such Dollar Denominated Loan which is a ABR Loan into a Canadian Prime Rate
Loan, provided that if more than one Lender is affected at any time, then all
affected Lenders must be treated the same pursuant to this subsection.

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         Section 2.17 INCREASED COSTS.

                  (a) EURODOLLAR REGULATIONS, ETC. If, by reason of (x) the
introduction of or any change after the date hereof (including, but not limited
to, any change by way of imposition or increase of reserve requirements) in or
in the interpretation of any law or regulation, or (y) the compliance with any
guideline or request issued after the date hereof by any central bank or other
governmental authority or quasi-governmental authority exercising control over
banks or financial institutions generally (whether or not having the force of
law):

                           (1) any Lender (or its applicable Lending Office)
         shall be subject to any tax, duty or other charge with respect to its
         Eurodollar Loans or its obligation to make Eurodollar Loans, or shall
         change the basis of taxation of payments to any Lender of the principal
         of or interest on its Eurodollar Loans or its obligation to make
         Eurodollar Loans (except for changes in the rate of tax on the overall
         net income or gross receipts of such Lender or its applicable Lending
         Office imposed by the jurisdiction in which such Lender's principal
         executive office or applicable Lending Office is located); or

                           (2) any reserve (including, but not limited to, any
         imposed by the Board of Governors of the Federal Reserve System, but
         excluding any such reserve requirement that is reflected in the
         Eurodollar Rate), special deposit or similar requirement against assets
         of, deposits with or for the account of, or credit extended by, any
         Lender or its applicable Lending Office shall be imposed or deemed
         applicable or any other condition affecting its Eurodollar Loans or its
         obligations to make Eurodollar Loans shall be imposed on any Lender or
         its applicable Lending Office or the interbank Eurodollar market or the
         secondary certificate of deposit market;

and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Loans (except
to the extent already included in the determination of the applicable Eurodollar
Rate) or there shall be a reduction in the amount received or receivable by such
Lender or its applicable Lending Office, then the applicable Borrowers shall
from time to time, upon written notice from and demand by such Lender (with a
copy of such notice and demand to the Administrative Agent), pay to such Lender
on demand additional amounts determined by such Lender in a reasonable manner to
be sufficient to indemnify such Lender against such increased cost; provided
that, the Borrowers shall not be required to compensate any Lender pursuant to
this Section 2.17(a) for any amounts incurred more than six months prior to the
date that such Lender notifies such Borrowers of such Lender's intention to
claim compensation therefor; and provided further that (A) if the circumstances
giving rise to such claim have a retroactive effect, then such six-month period
shall be extended to include the period of such retroactive effect, and (B) the
limitation set forth in this proviso shall not apply to amounts already included
in the determination of the applicable Eurodollar Rate. A certificate as to the
amount of such increased cost and the calculation thereof, submitted to the
Borrowers and the Administrative Agent by such Lender, shall, except for
manifest error, be final, conclusive and binding for all purposes.

                  (b) COSTS. If any Lender shall advise the Administrative Agent
or Canadian Administrative Agent that at any time, because of the circumstances
described in clauses (x) or (y) in Section 2.17(a) or any other circumstances
affecting such Lender or the interbank Eurodollar market or such Lender's
position in such market, the Eurodollar Rate, as determined in good faith by the
Administrative Agent or Canadian Administrative Agent, will not adequately and
fairly reflect the cost to such Lender of funding its Eurodollar Loans, then,
and in any such event:

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                           (1) the Administrative Agent or Canadian
         Administrative Agent shall forthwith give notice (by telephone
         confirmed in writing) to the Borrowers and to the Lenders of such
         advice;

                           (2) the Borrowers' right to request a Borrowing of
         Eurodollar Loans from such Lender and such Lender's obligation to make
         Eurodollar Loans shall be immediately suspended, any such Borrowing of
         Eurodollar Loans that is requested (by continuation, conversion or
         otherwise) shall, as to such Lender only, be deemed to be a request for
         a ABR Loan, and any such outstanding Eurodollar Loan from such Lender
         shall be converted, on the last day of the then current Interest Period
         applicable thereto, to a ABR Loan.

                  (c) CAPITAL ADEQUACY. If by reason of (1) the introduction of
or any change after the date hereof (including, but not limited to, any change
by way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (2) the compliance with any
guideline or request issued by any central bank or other governmental authority
or quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law), affects or
would affect the amount of capital required to be maintained by any Lender or
any corporation controlling such Lender, and the amount of such capital is
increased by or based upon the existence of such Lender's Loans or such Lender's
commitment to lend hereunder and other commitments of this type or of the
Letters of Credit (or similar contingent obligations), then, upon written
request therefor by such Lender (with a copy of such request to the
Administrative Agent), the applicable Borrowers shall pay to such Lender, from
time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender for the increased cost of such additional capital in
light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of such
Lender's Loans or such Lender's commitment to lend hereunder or to the issuance
or maintenance of the Letters of Credit and such Lender is generally charging
such costs to other similarly situated borrowers under similar credit
facilities; provided that, the Borrowers shall not be required to compensate any
Lender pursuant to this Section 2.17(c) for any amounts incurred more than six
months prior to the date that such Lender notifies such Borrowers of such
Lender's intention to claim compensation therefor; and provided further that, if
the circumstances giving rise to such claim have a retroactive effect, then such
six-month period shall be extended to include the period of such retroactive
effect. A certificate as to such amounts and the calculation thereof, submitted
to the Borrowers and the Administrative Agent by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.

                  (d) ISSUING BANK. The rights and benefits of the Lenders under
this Section 2.17 shall also apply to any Issuing Bank in its capacity as such.

         Section 2.18 CHANGE OF LENDING OFFICE. Each Lender agrees that it will
use reasonable efforts to designate an alternate Lending Office with respect to
any of its Eurodollar Loans affected by the matters or circumstances described
in Section 2.15, Section 2.16 or Section 2.17 to reduce the liability of the
Borrowers or avoid the results provided thereunder, so long as such designation
is not disadvantageous to such Lender as determined by such Lender in its sole
discretion; provided that such Lender shall have no obligation to so designate
an alternate Lending Office located in the United States.

         Section 2.19 FUNDING LOSSES. Each of the Borrowers shall compensate
each Lender, upon its written request (which request shall set forth the basis
for requesting such amounts and shall, absent manifest error, be final,
conclusive and binding upon all of the parties hereto), for all losses, expenses
and liabilities (including, but not limited to, any interest paid by such Lender
to lenders of funds borrowed by it to make or carry its Eurodollar Loans or B/A
Loans to such Borrowers to the extent not recovered by the Lender in connection
with the re-employment of such funds) ("losses"), which the Lender may sustain:
(a) if for any reason (other than a default by such Lender) a Borrowing of
Eurodollar Loans or

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B/A Loans does not occur on the date specified therefor in a Borrowing Request
(whether or not withdrawn), including, but not limited to a failure by the
applicable Borrowers to fulfill on the date of any Borrowing of Eurodollar Loans
or B/A Loans the conditions set forth in Article 3, or to convert, continue any
Eurodollar Loan or B/A Loan hereunder after irrevocable notice of such
conversion or continuation has been given pursuant to Section 2.12; (b) if any
payment, prepayment or conversion of any of its Eurodollar Loans or B/A Loans
required or permitted by any other provision of this Agreement or otherwise, or
any assignment of a Eurodollar Loan or B/A Loan pursuant to Section 2.23, in
each case is made or deemed made on a date which is not the last day of the
Interest Period applicable thereto; or (c) if, for any reason, either of the
Borrowers defaults in their obligation to repay its Eurodollar Loans or B/A
Loans or roll over or interest accrued thereon as and when due and payable (at
the due date thereof, whether at scheduled maturity, by acceleration,
irrevocable notice of prepayment or otherwise). Notwithstanding the foregoing,
the Canadian Borrowers shall not be required to compensate any US Lender in
respect of losses arising with respect to US Loans.

         Section 2.20 SHARING OF PAYMENTS, ETC.

                  (a) (i) If any US Revolving Lender shall obtain any payment or
reduction (including, but not limited to, any amounts received as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Code) of
any obligations of the US Borrowers hereunder (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) in excess of its
ratable share of payments or reductions on account of such obligations obtained
by all the US Revolving Lenders, such US Revolving Lender shall forthwith (1)
notify each of the other US Revolving Lenders and the Administrative Agent of
such receipt, and (2) purchase from the other US Revolving Lenders such
participations in the affected obligations as shall be necessary to cause such
purchasing US Revolving Lender to share the excess payment or reduction, net of
costs incurred in connection therewith, ratably with each of them, provided that
if all or any portion of such excess payment or reduction is thereafter
recovered from such purchasing US Revolving Lender or additional costs are
incurred, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery or such additional costs, but without interest. The US
Borrowers agree that any US Revolving Lender so purchasing a participation from
another US Revolving Lender pursuant to this Section may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such US Revolving
Lender were the direct creditor of the US Borrowers in the amount of such
participation.

                      (ii) If any Term Lender shall obtain any payment or
reduction (including, but not limited to, any amounts received as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Code) of
any obligations of the US Borrowers hereunder (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) in excess of its
ratable share of payments or reductions on account of such obligations obtained
by all the Term Lenders, such Term Lender shall forthwith (1) notify each of the
other Term Lenders and the Administrative Agent of such receipt, and (2)
purchase from the other Term Lenders such participations in the affected
obligations as shall be necessary to cause such purchasing Term Lender to share
the excess payment or reduction, net of costs incurred in connection therewith,
ratably with each of them, provided that if all or any portion of such excess
payment or reduction is thereafter recovered from such purchasing Term Lender or
additional costs are incurred, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery or such additional costs, but
without interest. The US Borrowers agree that any Term Lender so purchasing a
participation from another Term Lender pursuant to this Section may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Term Lender were the direct creditor of the US Borrowers in the amount of such
participation.

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                  (b) If any Canadian Lender shall obtain any payment or
reduction of any obligation of the Canadian Borrowers hereunder (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its ratable share of payments or reductions on account
of such obligations obtained by all the Canadian Lenders, such Canadian Lender
shall forthwith (1) notify each of the other Canadian Lenders and the Canadian
Administrative Agent of such receipt, and (2) purchase from the other Canadian
Lenders such Participations in the affected obligations as shall be necessary to
cause such purchasing Canadian Lender to share the excess payment or reduction,
net of costs incurred in connection therewith, ratably with each of them,
provided that if all or any portion of such excess payment or reduction is
thereafter recovered from such purchasing Canadian Lender or additional costs
are incurred, the purchase shall be rescinded and the purchase price restored to
the extent of such recovery or such additional costs, but without interest. The
Canadian Borrowers agree that any Canadian Lender so purchasing a participation
from another Canadian Lender pursuant to this Section may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Canadian Lender
were the direct creditor of the Canadian Borrowers in the amount of such
participation.

         Section 2.21 TAXES.

                  (a) PAYMENTS FREE AND CLEAR. Any and all payments by or on
account of any obligation of any of the Borrowers hereunder shall be made free
and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if any of the Borrowers shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (1) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.21) the Administrative Agent, the Canadian Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (2) the applicable Borrowers
shall make such deductions, and (3) such Borrowers shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.

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

                  (c) INDEMNIFICATION. Each of the Borrowers shall indemnify the
Administrative Agent, the Canadian Administrative Agent, each Lender and each
Issuing Bank, upon written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, the Canadian
Administrative Agent, such Lender or such Issuing Bank, as the case may be, on
or with respect to any payment by or on account of any obligation of such
Borrowers hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 2.21) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
applicable Borrowers by US Revolving Lender or an Issuing Bank, or by the
Administrative Agent or the Canadian Administrative Agent, as applicable, on its
own behalf or on behalf of US Revolving Lender or an Issuing Bank, shall be
conclusive absent manifest error. Notwithstanding the foregoing, the Canadian
Borrowers shall not be required to indemnify any US Lender in respect of any
Indemnified Taxes or Other Taxes arising with respect to US Loans.

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

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reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

                  (e) SURVIVAL. Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations contained in this
Section 2.21 shall survive the payment in full of principal and interest
hereunder.

                  (f) LENDER REPRESENTATIONS AND AGREEMENTS. Any Foreign Lender
that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which any Borrower is located, or any treaty to which
such jurisdiction is a party, with respect to payments under this Agreement
shall deliver to the US Borrowers (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 or reasonably requested by
the US Borrowers as will permit such payments to be made without withholding or
at a reduced rate.

                  (g) Refunds. If any Borrower pays any additional amount under
this Section 2.21 to a Lender and such Lender determines in its sole discretion
that it has actually received or realized in connection therewith any refund or
any reduction of, or credit against, its Tax liabilities in or with respect to
the taxable year in which the additional amount is paid (a "TAX BENEFIT"), such
Lender shall pay to such Borrower an amount that the Lender shall, in its sole
discretion, determine is equal to the net benefit, after tax, which was obtained
by the Lender in such year as a consequence of such Tax Benefit; provided,
however, that (i) any Lender may determine, in its sole discretion consistent
with the policies of such Lender, whether to seek a Tax Benefit; (ii) any Taxes
that are imposed on a Lender as a result of a disallowance or reduction
(including through the expiration of any tax credit carryover or carryback of
such Lender that otherwise would not have expired) of any Tax Benefit with
respect to which such Lender has made a payment to such Borrower pursuant to
this Section 2.21 shall be treated as a tax for which such Borrower is obligated
to indemnify such Lender pursuant to this Section 2.21 without any exclusions or
defenses; and (iii) nothing in this Section 2.21(g) shall require the Lender to
disclose any confidential information to any Borrower (including, without
limitation, its tax returns).

         Section 2.22 PRO RATA TREATMENT. Subject to Section 2.4(b) each
Borrowing of US Revolving Credit Loans shall be made, each payment on account of
any commitment fee in respect of the US Revolving Credit Commitments hereunder
shall be allocated by the Administrative Agent, and any reduction of the US
Revolving Credit Commitments of the US Revolving Lenders shall be allocated by
the Administrative Agent, pro rata according to the relevant US Revolving Credit
Percentages of the US Revolving Lenders. Subject to Section 2.4(b), each payment
(including each prepayment) on account of principal of and interest on any US
Revolving Credit Loans shall be allocated by the Administrative Agent pro rata
according to the respective outstanding principal amounts of such US Revolving
Credit Loans then held by the US Revolving Lenders. Subject to Section 2.4(b),
each payment (including each prepayment) on account of principal of and interest
on any Term Loans shall be allocated by the Administrative Agent pro rata
according to the respective outstanding principal amounts of such Term Loans
then held by the Term Lenders. Subject to Section 2.4(b), each Borrowing of
Canadian Revolving Credit Loans shall be made, each payment on account of any
commitment fee in respect of the Canadian Revolving Credit Commitments hereunder
shall be allocated by the Canadian Administrative Agent, and any reduction of
the Canadian Revolving Credit Commitments of the Canadian Lenders shall be
allocated by the Canadian Administrative Agent, pro rata according to the
relevant Canadian Revolving Credit Percentages of the Canadian Lenders. Subject
to Section 2.4(b), each payment (including each prepayment) on account of
principal of and interest on any Canadian Revolving Credit Loans shall be
allocated by the Canadian Administrative Agent pro rata according to the
respective outstanding principal amounts of such Canadian Revolving Credit Loans
then held by the Canadian Lenders.

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         Section 2.23 REPLACEMENT OF LENDERS. If any Lender does not make a
Eurodollar Loan pursuant to Section 2.16, seeks indemnification for increased
costs pursuant to Section 2.17, fails to designate an alternate Lending Office
pursuant to Section 2.18, or is owed or reasonably anticipates being owed
additional amounts pursuant to Section 2.21, the Borrowers shall have the right,
if no Default then exists, to replace such Lender with another bank or financial
institution with the consent of the Administrative Agent and Canadian
Administrative Agent, which consent shall not be unreasonably withheld, provided
that (a) the obligations of the Borrowers owing hereunder or under any other
Financing Document to the Lender being replaced (including such increased costs)
that are not being assigned to the replacement lender shall be paid in full to
the Lender being replaced concurrently with such replacement lender, (b) the
replacement lender shall execute an Assignment and Acceptance pursuant to which
it shall become a party hereto as provided in Section 10.7, and (c) upon
compliance with the provisions for assignment provided in Section 10.7 and the
payment of amounts referred to in clause (a), the replacement lender shall
constitute a "Lender" hereunder and the Lender being so replaced shall no longer
constitute a "Lender" hereunder.

         Section 2.24 ADVANCES OF REVOLVING CREDIT LOANS TO SATISFY LENDER
INDEBTEDNESS. Each of the Borrowers and each Lender hereby agree with
Administrative Agent, the Canadian Administrative Agent and each other Lender
that, on each date on which any payment of interest, fees, principal or other
amounts are due and owing hereunder or under any of the other Financing
Documents, Administrative Agent or the Canadian Administrative Agent may, in its
sole discretion, but without any obligation to do so and subject to all other
terms of this Agreement (other than any request for delivery of a Borrowing
Request hereunder) cause a Borrowing of (a) US Swingline Loans to the extent of
the remaining US Swingline Availability, and thereafter such Borrowings shall be
US Revolving Credit Loans which shall be ABR Loans or (b) Dollar Denominated
Canadian Revolving Credit Loans which shall be ABR Loans to be made on such date
in an amount sufficient to satisfy in full all such payments of interest, fees
or other amounts which are then due hereunder, and, subject to Section 2.9(i)
with respect to Canadian Lenders, Administrative Agent or Canadian
Administrative Agent shall disburse the proceeds of such Borrowing to each other
Agent and Lender to satisfy all such obligations and liabilities which are then
due and Administrative Agent or Canadian Administrative Agent shall give
Borrowers prompt notice of any such Advances. Notwithstanding the foregoing,
neither Administrative Agent or Canadian Administrative Agent shall be permitted
to cause a Borrowing of Canadian Revolving Credit Loans to satisfy any Lender
Indebtedness which is not Canadian Lender Indebtedness.

         Section 2.25 JOINT AND SEVERAL LIABILITY OF US BORROWERS; RIGHTS OF
CONTRIBUTION AMONG US BORROWERS.

                  (a) Each US Borrower states and acknowledges that: (1)
pursuant to this Agreement, the US Borrowers desire to utilize their borrowing
potential on a consolidated basis to the same extent possible if they were
merged into a single corporate entity; (2) each US Borrower has determined that
it will benefit specifically and materially from the advances of credit
contemplated by this Agreement; (3) it is both a condition precedent to the
obligations of the Administrative Agent, the Canadian Administrative Agent and
Lenders hereunder and a desire of each US Borrower that each US Borrower execute
and deliver to Lender this Agreement; and (4) each US Borrower has requested and
bargained for the structure and terms of and security for the advances
contemplated by this Agreement.

                  (b) Each US Borrower hereby irrevocably and unconditionally:
(i) agrees that it is jointly and severally liable to the Administrative Agent
and Lenders for the full and prompt payment and performance of the obligations
of each Borrower under this Agreement and each other Financing Document that may
specify that a particular Borrower is responsible for a given payment or
performance; (ii) agrees to fully and promptly perform all of its obligations
hereunder with respect to each advance of credit hereunder as if such advance
had been made directly to it; and (iii) agrees as a primary obligation to

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indemnify Administrative Agent, the Canadian Administrative Agent and each
Lender, on demand for and against any loss incurred by Administrative Agent, the
Canadian Administrative or any Lender as a result of any of the obligations of
any Borrower (the "SUBJECT BORROWER") being or becoming void, voidable,
unenforceable or ineffective for any reason whatsoever, whether or not known to
the subject Borrower or any Person, the amount of such loss being the amount
which Administrative Agent, the Canadian Administrative Agent or Lender would
otherwise have been entitled to recover from the Borrower.

                  (c) It is the intent of each US Borrower that the
indebtedness, obligations and liabilities hereunder of no one of them be subject
to challenge on any basis related to any federal or state law dealing with
fraudulent conveyances or any other law related to transfers for less than fair
or reasonably equivalent value. Accordingly, as of the date hereof, the
liability of each US Borrower under this Section 2.25 together with all of its
other liabilities to all persons as of the date hereof and as of any other date
on which a transfer is deemed to occur by virtue of this Agreement, calculated
in amount sufficient to pay its probable net liabilities on its existing
indebtedness as the same become absolute and matured ("DATED LIABILITIES") is
and is to be, less than the amount of the aggregate of a fair valuation of its
property as of such corresponding date ("DATED Assets"). To this end, each US
Borrower under this Section 2.25(i) grants to and recognizes in each other US
Borrower ratably, rights of subrogation and contribution in the amount, if any,
by which the Dated Assets of such US Borrower, but for the aggregate rights of
subrogation and contribution in its favor recognized herein, would exceed the
Dated Liabilities of such US Borrower or, as the case may be, (1) acknowledges
receipt of and recognizes its right to subrogation and contribution ratably from
the other US Borrowers in the amount, if any, by which the Dated Liabilities of
such US Borrower, but for the aggregate of subrogation and contribution in its
favor recognized herein, would exceed the Dated Assets of such US Borrower under
this Section 2.25. In recognizing the value of the Dated Assets and the Dated
Liabilities, it is understood that each US Borrower will recognize, to at least
the same extent of their aggregate recognition of liabilities hereunder, their
rights to subrogation and contribution hereunder. It is a material objective of
this Section 2.25 that each US Borrower recognizes rights to subrogation and
contribution rather than be deemed to be insolvent (or in contemplation thereof)
by reason of an arbitrary interpretation of its joint and several obligations
hereunder.

                  (d) Each US Borrower agrees and acknowledges that the present
structure of the credit facilities detailed in this Agreement is based in part
upon the financial and other information presently known to Administrative
Agent, the Canadian Administrative Agent and Lenders regarding each Borrower,
the corporate structure of the Borrowers, and the present financial condition of
each Borrower. Upon or after the occurrence of an Event of Default under Section
8.1 or Section 8.2 and so long as it is continuing, each US Borrower hereby
agrees that Required Lenders shall have the right, in their sole credit
judgment, to require that any or all of the following changes be made to these
credit facilities: (1) further restrict loans and advances between the
Borrowers, (2) establish separate lockbox and Blocked Accounts for each US
Borrower, (3) separate the US Swingline Loans and US Revolving Credit Loans into
separate revolving credit loans to each of the US Borrowers as shall be
determined by Required Lenders, and (4) establish such other procedures as shall
be reasonably deemed by Required Lenders to be useful in tracking where Loans
are made under this Agreement and the source of payments received by Lenders on
such Loans.

         Section 2.26 PARTICIPATIONS IN US SWINGLINE LOANS. The US Swingline
Lender may by written notice given to the Administrative Agent not later than
10:00 a.m. (New York, New York time), on any Business Day require the US
Revolving Lenders to acquire participations within one (1) Business Day in all
or a portion of the US Swingline Loans outstanding. Such notice to the
Administrative Agent shall specify the aggregate amount of US Swingline Loans in
which US Revolving Lenders will participate. Promptly upon receipt of such
notice, the Administrative Agent will give notice thereof to

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each US Revolving Lender, specifying in such notice such US Revolving Lender's
Revolving Credit Percentage of such US Swingline Loan or Loans. Each US
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above in this paragraph, to pay to the Administrative Agent,
for account of the US Swingline Lender, such US Revolving Lender's US Revolving
Credit Percentage of such US Swingline Loan or Loans. Each US Revolving Lender
acknowledges and agrees that its obligation to acquire participations in US
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or Event of Default or reduction or termination of
the Aggregate US Revolving Credit Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
US Revolving Lender shall comply with its obligation under this paragraph by
wire transfer of immediately available funds, in the same manner as provided in
Section 2.4(a) with respect to Loans made by such US Revolving Lender (and
Section 2.4(a) shall apply, mutatis mutandis, to the payment obligations of the
US Revolving Lenders), and the Administrative Agent shall promptly pay to the US
Swingline Lender the amounts so received by it from the US Revolving Lenders.
The Administrative Agent shall notify the US Borrowers of any participations in
any US Swingline Loan acquired pursuant to this paragraph, and thereafter
payments in respect of such US Swingline Loan shall be made to the
Administrative Agent and not to the US Swingline Lender. Any amounts received by
the US Swingline Lender from the US Borrower (or other party on behalf of the US
Borrower) in respect of a US Swingline Loan after receipt by the US Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the US Lenders that shall have made their payments pursuant to this paragraph
and to the US Swingline Lender, as their interests may appear. The purchase of
participations in a US Swingline Loan pursuant to this paragraph shall not
relieve the US Borrowers of any default in the payment thereof.

         Section 2.27 SHARING EVENTS

                  (a) CONVERSION OF EURODOLLAR AND CANADIAN DOLLAR LOANS. Upon
the occurrence of a Sharing Event, automatically (and without the taking of any
action) (i) all then outstanding Loans denominated in Canadian Dollars and all
Eurodollar Loans shall be automatically converted into ABR Loans denominated in
Dollars (in the case of such Loans denominated in Canadian Dollars in an amount
equal to the Dollar Equivalent of the aggregate principal amount of the Loans on
the date such Sharing Event first occurred), which Loans denominated in Dollars
(A) shall thereafter be deemed to be ABR Loans and (B) unless the Sharing Event
resulted solely from a termination of the Commitments, shall be immediately due
and payable on the date such Sharing Event has occurred, and (ii) unless the
Sharing Event resulted solely from a termination of the Commitments, all accrued
and unpaid interest and other amounts owing with respect to such Loans shall be
immediately due and payable in Dollars, taking the Dollar Equivalent of such
accrued and unpaid interest and other amounts.

                  (b) PURCHASE AND SALE OF PARTICIPATIONS. Upon the occurrence
of a Sharing Event, and after giving effect to any automatic conversion pursuant
to Section 2.27(a), each Imbalance Lender shall (and hereby unconditionally and
irrevocably agrees to) purchase and sell (in each case in Dollars) undivided
participating interests in all Revolving Credit Loans outstanding to, and any
unpaid L/C Reimbursement Obligations with respect to any of Letter of Credit
owing by, the Borrowers in such amounts so that each such Imbalance Lender
ceases to be an Imbalance Lender (although if because of fluctuations in
currency exchange rates any Imbalance Lender would be required to purchase
participations under this Section 2.27 that would cause such Lender's Revolving
Credit Exposure (including participations therein purchased pursuant to this
Section 2.27) to exceed such Revolving Lender's Combined Revolving Credit
Commitment (immediately prior to giving effect to any termination thereof), then
such excess participations shall not be sold and the related credit exposure
shall be retained

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 by the Revolving Lenders holding the same ratably in accordance with their
Applicable Percentage for Loans of that type (US Revolving Credit Loans or
Canadian Revolving Credit Loans (as applicable)). Upon any such occurrence, the
Administrative Agent shall notify each Revolving Lender and shall specify the
amount of Dollars required from such Revolving Lender in order to effect the
purchases and sales by the various Revolving Lenders of participating interests
in the amounts required above (together with accrued interest with respect to
the period from the last interest payment date through the date of the Sharing
Event plus any additional amounts payable by the Borrowers pursuant to Section
2.21 in respect of such accrued but unpaid interest); provided, in the event
that a Sharing Event shall have occurred, each Imbalance Lender shall be deemed
to have purchased and sold, as applicable, automatically and without request,
such participating interests. Promptly upon receipt of such request, each
Imbalance Lender shall deliver to the Administrative Agent (in immediately
available funds in Dollars) the net amounts as specified by the Administrative
Agent. The Administrative Agent shall promptly deliver the amounts so received
to the various Revolving Lenders in such amounts as are needed to effect the
purchases and sales of participations as provided above. Promptly following
receipt thereof, each Lender which has sold participations in any of its
Revolving Loans (through the Administrative Agent) will deliver to each Lender
(through the Administrative Agent) which has so purchased a participating
interest a participation certificate dated the date of receipt of such funds and
in such amount. It is understood that the amount of funds delivered by each
Revolving Lender shall be calculated on a net basis, giving effect to both the
sales and purchases of participations by the various Lenders as required above.

                  (c) TERMINATION OF COMMITMENTS; ACCELERATION. Upon the
occurrence of a Sharing Event (i) no further Loans shall be made and (b) the
Revolving Credit Commitments of the Revolving Lenders shall be automatically
terminated. Notwithstanding anything to the contrary contained above, the
failure of any Revolving Lender to purchase its participating interest in any
Loans upon the occurrence of a Sharing Event shall not relieve any other
Revolving Lender of its obligation hereunder to purchase its participating
interests in a timely manner, but no Revolving Lender shall be responsible for
the failure of any other Revolving Lender to purchase the participating interest
to be purchased by such other Lender on any date.

                  (d) FUNDING OBLIGATION. If any amount required to be paid by
any Lender pursuant to Section 2.27(b) is not paid to the Administrative Agent
within one Business Day following the date upon which such Revolving Lender
receives notice from the Administrative Agent of the amount of its
participations required to be purchased pursuant to said Section 2.27(b), such
Revolving Lender shall also pay to the Administrative Agent on demand an amount
equal to the product of (i) the amount so required to be paid by such Revolving
Lender for the purchase of its participations times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date of
request for payment to the date on which such payment is immediately available
to the Administrative Agent times (iii) a fraction the numerator of which is the
number of days that elapsed during such period and the denominator of which is
360. If any such amount required to be paid by any Revolving Lender pursuant to
Section 2.27(b) is not in fact made available to the Administrative Agent within
three Business Days following the date upon which such Revolving Lender receives
notice from the Administrative Agent as to the amount of participations required
to be purchased by it, the Administrative Agent shall be entitled to recover
from such Revolving Lender on demand, such amount with interest thereon
calculated from (and including) such third Business Day at the rate per annum
applicable to ABR Loans hereunder. Any such amount set forth in a certificate of
the Administrative Agent submitted to any Revolving Lender with respect to any
amounts payable by any Revolving Lender pursuant to this Section 2.27 shall be
paid to the Administrative Agent for the account of the relevant Revolving
Lenders; provided that, if the Administrative Agent (in its sole discretion) has
elected to fund on behalf of such Revolving Lender the amounts owing to such
Revolving Lenders, then the amounts shall be paid to the Administrative Agent
for its own account.

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                  (e) DISTRIBUTION OF PAYMENTS. Whenever, at any time after any
Revolving Lender sells a participation pursuant to this Section 2.27, such
selling Revolving Lender receives any payment on account thereof, such selling
Revolving Lender will distribute to the Administrative Agent, for the account of
the purchasing Revolving Lenders participating therein, such Revolving Lenders'
participating interests in such amounts (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such
participations were outstanding) in like funds as received; provided, however,
that in the event that such payment received by any selling Revolving Lenders
are required to be returned, the purchasing Revolving Lenders who received
previous distributions in respect of their participating interests therein will
return to the respective selling Revolving Lenders any portion thereof
previously so distributed to them in like funds as such payment is required to
be returned by the respective Revolving Lenders.

                  (f) UNCONDITIONAL OBLIGATION. Each Imbalance Lender's
obligation to purchase participating interests pursuant to this Section 2.27
shall be absolute and unconditional and shall not be affected by any
circumstance including, without limitation, (a) any setoff, counterclaim,
recoupment, defense or other right which such Revolving Lender may have against
any other Revolving Lender, the Borrower or any other Person for any reason
whatsoever, (b) the occurrence or continuance of an Event of Default, (c) any
adverse change in the condition (financial or otherwise) of the Borrowers or any
other Person, (d) any breach of this Agreement or any other Financing Document
by the Borrowers, any other Obligated Party or any Revolving Lender or any other
Person, or (e) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.

                  (g) YIELD PROTECTION. Notwithstanding anything to the contrary
contained elsewhere in this Agreement, upon any purchase of participations as
required above, each Revolving Lender which has purchased such participations
shall be entitled to receive from the relevant Borrowers any increased costs and
indemnities directly from such Borrowers to the same extent as if it were the
direct Revolving Lender as opposed to a participant therein. The Borrowers
acknowledge and agree that, upon the occurrence of a Sharing Event and after
giving effect to the requirements of this Section 2.27, increased Taxes may be
owing by relevant Borrowers pursuant to Section 2.21, which Taxes shall be paid
(to the extent provided in Section 2.21) by such Borrowers, without any claim
that the increased Taxes are not payable because same resulted from the
participations effected as otherwise required by this Section 2.27. The
Borrowers also acknowledge and agree that, upon the occurrence of a Sharing
Event and after giving effect to the requirements of this Section 2.27, the
Borrowers may be liable for losses under Section 2.19 as a result of the
conversion of Eurodollar Loans or B/A Loan on a date which is not the last day
of the Interest Period or Contract Period applicable thereto.

                                   ARTICLE 3
                            CONDITIONS TO BORROWINGS

         Section 3.1 CLOSING. The obligation of each Lender to make its initial
Loan and each Issuing Bank to issue its Letter of Credit hereunder is subject to
(x) receipt by the Administrative Agent or Canadian Administrative Agent, as
applicable, of the following items which are to be delivered, in form and
substance satisfactory to each Lender, with a copy (except for the Notes and
this Agreement) for each Lender and (y) the satisfaction of the following
conditions prior to or substantially simultaneously with the making of such
initial Loan and the issuance of such initial Letter of Credit:

                  (a) US REVOLVING CREDIT NOTES. A duly completed and executed
US Revolving Credit Note for each US Lender and in each case dated as of the
Closing Date, and payable to the order of such US Lender.

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                  (b) CANADIAN REVOLVING CREDIT NOTES. A duly completed and
executed Canadian Revolving Credit Note for each Canadian Lender and in each
case dated as of the Closing Date, and payable to the order of such Canadian
Lender.

                  (c) US SWINGLINE NOTE. A duly completed and executed US
Swingline Note dated as of the Closing Date and payable to the order of the US
Swingline Lender.

                  (d) RESOLUTIONS AND INCUMBENCY CERTIFICATES.

                           (1) certified copies of the resolutions of the Board
         of Directors of each Credit Party dated as of the Closing Date and
         approving, as appropriate, the Loans, the Notes, this Agreement and the
         other Financing Documents, and all other documents, if any, to which
         each Credit Party is a party and evidencing corporate authorization
         with respect to such documents;

                           (2) a certificate of the Secretary or an Assistant
         Secretary of each Credit Party dated as of the Closing Date and
         certifying (A) the name, title and true signature of each officer of
         such Person authorized to execute the Notes, this Agreement,
         Applications and the other Financing Documents to which it is a party,
         (B) the name, title and true signature of each officer of such Person
         authorized to provide the certifications required pursuant to this
         Agreement including, but not limited to, certifications required
         pursuant to Section 6.10, Borrowing Requests, and Borrowing Base
         Reports, and (C) that attached hereto is a true and complete copy of
         the certificate of incorporation certified by the appropriate
         Governmental Authority of the jurisdiction of incorporation or
         organization of each Credit Party and the bylaws of each Credit Party,
         each as amended to date, recent good standing certificates and/or
         certificates of existence for each Credit Party and certificates of
         foreign qualification for each Credit Party in such jurisdictions as
         Administrative Agent shall require; and

                           (3) certain letter agreements certifying to the names
         and signatures of officers of the Borrowers authorized to issue
         Borrowing Requests, issue Borrowing Base Reports, initiate wire
         transfers and take other actions with respect to the credit facilities
         contemplated hereby.

                  (e) OPINIONS OF COUNSEL.

                           (1) An opinion of Gallop, Johnson & Neuman, P.C.,
         counsel to each Credit Party dated as of the Closing Date addressed to
         the Administrative Agent, the Issuing Banks and the Lenders and
         covering such matters as the Administrative Agent, the Issuing Banks or
         the Lenders may reasonably request;

                           (2) An opinion of Bennett Jones LLP, Canadian counsel
         to the Canadian Borrowers dated as of the Closing Date addressed to the
         Administrative Agent, the Issuing Banks and the Lenders and covering
         such matters as the Administrative Agent, the Issuing Banks or the
         Lenders may reasonably request; and

                           (3) An opinions of counsel to the US Credit Parties
         in Arkansas, Texas and Washington dated as of the Closing Date
         addressed to the Administrative Agent, the Issuing Banks and the
         Lenders and covering such matters as the Administrative Agent, the
         Issuing Banks or the Lenders may reasonably request.

                           (4) A letter from Arnold & Porter, counsel to
         Holdings and Sellers, authorizing each Agent and Lender to rely on the
         opinion of Arnold & Porter delivered pursuant to the Purchase
         Agreement.

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<PAGE>

                  (f) THE SECURITY INSTRUMENTS.

                           (1) a Guaranty and Security Agreement, dated as of
         the Closing Date and duly executed by each of the US Borrowers (A)
         guaranteeing the repayment of the Canadian Lender Indebtedness by each
         such US Borrower and (B) granting to the Administrative Agent a first
         priority security interest in all of the personal property of each US
         Borrower, as security for the Lender Indebtedness;

                           (2) a Canadian Security Agreement, dated as of the
         Closing Date and duly executed by each Canadian Borrower granting to
         the Canadian Administrative Agent a first priority security interest in
         all of the personal property of each Canadian Credit Party, as security
         for the Canadian Lender Indebtedness;

                           (3) completed UCC-1 financing statements necessary to
         perfect the security interests created by the Guaranty and Security
         Agreements and the Real Estate Mortgages;

                           (4) in addition to the UCC-1 financing statement
         required by clause (5) preceding, such other documents, instruments and
         agreements as Administrative Agent or Canadian Administrative Agent
         shall reasonably request to fully evidence and perfect the Liens
         created by the Security Instruments;

                           (5) [Intentionally Deleted]

                           (6) a Lockbox Agreement duly executed by the US
         Borrowers and establishing the US Lockbox;

                           (7) a Lockbox Agreement duly executed by the Canadian
         Borrowers, the Canadian Administrative Agent and establishing the
         Canadian Lockbox and the Canadian Blocked Account;

                           (8) Real Estate Mortgages dated as of the Closing
         Date and duly executed by Tube, Precision Canada and Prudential
         granting to Administrative Agent or Canadian Administrative Agent, as
         applicable, a first priority perfected lien in and to all Mortgaged
         Real Property owned by Tube, Precision Canada and Prudential as of the
         Closing Date subject to Permitted Liens;

                           (9) Landlord Consent and Subordination Agreements
         duly executed and delivered by each landlord of Mortgaged Real Property
         leasehold interests in such real property constitutes Mortgaged Real
         Property;

                           (10) Landlord Waiver Agreements duly executed and
         delivered by each landlord of Real Property leased by any Borrower
         (other than Mortgaged Real Property), in form and substance
         satisfactory to the Administrative Agent;

                           (11) original stock certificates and duly executed
         corresponding stock powers to perfect the Administrative Agent's or
         Canadian Administrative Agent's security in the equity pledged by the
         Guaranty and Security Agreements and the Canadian Security Agreements;
         and

                           (12) all Property in which the Administrative Agent
         or Canadian Administrative Agent shall, at such time, be entitled to
         have a Lien pursuant to this Agreement or any other Financing Document
         shall have been physically delivered to the possession of the

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         Administrative Agent or Canadian Administrative Agent to the extent
         that such possession is necessary for the purpose of perfecting the
         Administrative Agent's or the Canadian Administrative Agent's Lien in
         such Collateral.

                  (g) THE CONSUMMATION OF THE ACQUISITION TRANSACTIONS. The
Company shall have completed the Acquisition for the purchase price and on the
other terms and conditions set forth in the Purchase Agreement, and the assets
of Holdings and its Subsidiaries shall be free and clear of all Liens, claims
and encumbrances other than Permitted Liens.

                  (h) INSURANCE. Copies of all insurance binders together with a
certificate of insurance coverage, dated as of the Closing Date evidencing that
the Borrowers maintain insurance in accordance with Section 6.5 hereof.

                  (i) FINANCIAL STATEMENTS AND PROJECTIONS. The financial
condition of the Borrowers reflected in the Financial Statements and the other
financial information and Projections of the Borrowers shall not be changed as
of the Closing Date in such a way as cause or result in a Material Adverse
Effect (after giving effect to the Acquisition Transactions).

                  (j) SELLER CONSENT. A consent executed by each Seller party to
the Purchase Agreement pursuant to which each Seller consents to the assignment
of the rights of the Company under the Purchase Agreement to Administrative
Agent and Canadian Administrative Agent for the benefit of Lenders and
acknowledges that each Lender, the Administrative Agent and Canadian
Administrative Agent are third party beneficiaries of all obligations and
liabilities of such Sellers under such Purchase Agreement, or if the
Administrative Agent reasonably requires, an agreement among the Company, each
Seller, the Canadian Administrative Agent and the Administrative Agent to the
same effect.

                  (k) BORROWING BASE REPORT. A Borrowing Base Report prepared as
of February 28, 2002 and setting forth the US Borrowing Base and Canadian
Borrowing Base to be in effect under this Agreement on the Closing Date and,
after giving effect to the consummation of the transactions contemplated herein,
including the Acquisition Transactions and the initial Loans hereunder, (1) the
US Excess Availability shall not be less than $15,000,000 and (2) the Canadian
Excess Availability shall not be less than $5,000,000; provided, that, in
calculating the US Excess Availability for purposes of this condition, the
Initial Reserve shall be disregarded. It is understood that this condition
contemplates that all Existing Indebtedness not permitted to remain outstanding
under Section 7.2 has been prepaid, and debts and obligations are current, and
that all accounts payable are being handled in the normal course of the
Borrowers' business consistent with its past practices.

                  (l) CERTIFICATE OF CHIEF FINANCIAL OFFICER. A certificate of
the Chief Financial Officer of each of the Borrowers dated as of the Closing
Date and certifying, before and after giving effect to the Acquisition
Transaction and before and after the making of the initial Loans and the
issuance of the initial Letter of Credit, that (1) each Borrower is Solvent, (2)
no Default then, or thereafter would, exist, (3) each of the conditions to
Closing have been satisfied, and (4) each representation and warranty of the
Borrowers contained herein is true and correct in all material respects.

                  (m) CORPORATE STRUCTURE. Each Lender shall be satisfied in its
sole judgment with the corporate, capital, legal and management structure and
tax liabilities of each Borrower and the flow of funds among the Borrowers
including without limitation those necessary for the consummation of the
Acquisition.

                  (n) LIEN SEARCHES. Lien searches reflecting no prior Liens on
the Collateral other than Permitted Liens.

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<PAGE>

                  (o) REAL ESTATE APPRAISALS. The Administrative Agent shall
have received fair market value appraisals for all owned real estate by
appraisers satisfactory to the Administrative Agent which reflect appraised
values of not less than $28,000,000 and which are otherwise acceptable to the
Administrative Agent.

                  (p) FEES AND EXPENSES. Payment and/or reimbursement of (1)
Administrative Agent's and Canadian Administrative Agent's counsel's fees and
expenses incurred through the Closing Date, to the extent invoiced, and (2) any
fees or expenses required to be paid pursuant to the Fee Letter.

                  (q) DOCUMENTATION. Administrative Agent shall have received
such other documents as Administrative Agent (or any Lender acting through
Administrative Agent) may reasonably request, all in form and substance
reasonably satisfactory to the Administrative Agent.

                  (r) REPAYMENT OF INDEBTEDNESS. All Existing Indebtedness of
the Credit Parties other than the Indebtedness permitted pursuant to Section 7.2
shall have been paid in full and all Liens securing payment of such Indebtedness
shall have been canceled or released.

                  (s) ENVIRONMENTAL REVIEW. Administrative Agent and its counsel
shall have completed a review of environmental conditions and environmental
compliance with respect to the Borrowers' operations and Properties and the
results of such review shall be satisfactory to Administrative Agent.

                  (t) SURVEYS. Surveys in form and substance acceptable to
Administrative Agent with respect to all Mortgaged Real Property.

                  (u) TITLE COMMITMENT. A Commitment for a Mortgagee's Policy of
Title Insurance in form and substance satisfactory to Administrative Agent with
respect to the Mortgaged Real Property, together with evidence satisfactory to
Administrative Agent that Mortgagees's Policies of Title Insurance will be
issued pursuant to each such commitment and all premiums therefore have been
paid; provided, however, with respect to any Mortgaged Real Property located in
Canada, opinion of counsel with respect to the applicable Borrower's title in
the Mortgaged Real Property in form and substance acceptable to the
Administrative Agent and the Canadian Administrative Agent may be delivered
instead of title insurance.

                  (v) BAILEE'S LETTERS. Bailee's Letters duly executed and
delivered by any Person who is in possession of inventory on behalf of any
Borrower

                  (w) CASH MANAGEMENT ARRANGEMENTS. The Administrative Agent and
the Canadian Administrative shall be satisfied in their sole discretion with all
aspects of the Borrowers' cash management arrangements. Without limiting the
foregoing, each Temporary Lockbox Institution shall have executed and delivered
to the Administrative Agent, a Tri-Party Agreement in form and substance
acceptable to the Administrative Agent in its sole discretion.

         Section 3.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT.
The obligation of each Lender to make each Loan hereunder (including the initial
Loan) and the obligation of each Issuing Bank to issue each Letter of Credit
(including the initial Letter of Credit) is subject to fulfillment of the
following conditions immediately prior to or contemporaneously with each such
Loan or issuance:

                  (a) REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained herein and in the other Financing Documents executed and
delivered on or after the Closing Date shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of such Loan (unless such representation and
warranty is expressly limited to an earlier date).

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<PAGE>

                  (b) NO DEFAULT. There shall not exist a Default or Event of
Default hereunder.

                  (c) MAXIMUM AVAILABLE AMOUNT. The Aggregate US Revolving
Credit Exposure and the Aggregate Canadian Revolving Credit Exposure, after
giving effect to such proposed Loan or Letter of Credit shall not exceed the US
Maximum Available Amount and Canadian Maximum Available Amount, respectively,
then in effect.

                  (d) BORROWING REQUESTS. Except in the case of any Borrowing
pursuant to Section 2.2(c), the applicable Borrowers shall have provided Advance
Notice of the requested Borrowing by completion, execution and delivery of a
Borrowing Request.

         Section 3.3 POST CLOSING CONDITIONS. Borrowers shall deliver, or cause
to be delivered to the appropriate Agent, each document, instrument or
agreement, and take each action, or cause to be taken, each action set forth on
Schedule 3.3 hereto, in each case on or prior to the date specified on such
Schedule.

                                   ARTICLE 4
                                    SECURITY

         Section 4.1 SECURITY GRANTED BY US CREDIT PARTIES. The Lender
Indebtedness shall be secured by perfected, first priority Liens in and
encumbering all assets of each US Credit Party, whether now owned or hereafter
acquired and wherever located; provided, that, only 65% of the Voting Stock of
any Person that is organized under the laws of a jurisdiction other than the
United States of America, a State thereof or the District of Columbia, shall be
pledged to secure the US Lender Indebtedness. In furtherance of the foregoing,
the US Borrowers hereby agree to execute and deliver (and to cause each other US
Credit Party and any other appropriate Person to execute and deliver) to
Administrative Agent for the benefit of US Lenders, promptly upon request by
Administrative Agent, such Security Documents and other documents, instruments,
agreements and certificates, as Administrative Agent shall deem necessary or
appropriate in its sole discretion to create, evidence and perfect the Liens
contemplated by this Section 4.1.

         Section 4.2 SECURITY GRANTED BY CANADIAN CREDIT PARTIES. The Canadian
Lender Indebtedness shall be secured by perfected, first priority Liens in and
encumbering all assets of each Canadian Credit Party, whether now owned or
hereafter acquired and wherever located. In furtherance of the foregoing, the
Canadian Borrowers hereby agree to execute and deliver (and to cause each other
Canadian Credit Party and any other appropriate Person to execute and deliver)
to Canadian Administrative Agent for the benefit of Canadian Lenders, promptly
upon request by Canadian Administrative Agent, such Security Documents and other
documents, instruments, agreements and certificates, as Canadian Administrative
Agent shall deem necessary or appropriate in its sole discretion to create,
evidence and perfect the Liens contemplated by this Section 4.2.

         Section 4.3 ESTABLISHMENT OF US LOCKBOX. Each US Credit Party shall
enter into the Lockbox Agreement with Administrative Agent pursuant to which
each US Credit Party will establish a US Lockbox to be operated by
Administrative Agent. At all times from and after the Closing Date, each US
Credit Party shall direct all account debtors with respect to such US Credit
Party's accounts and all other Persons obligated to make payments of any type to
any US Credit Party in respect of the Collateral to direct such payments to the
US Lockbox. All invoices issued by any US Credit Party after the Closing Date
shall contain a notation requiring the accounts evidenced by such invoice to be
paid to the US Lockbox. Administrative Agent shall have sole and exclusive
access to the US Lockbox. All monies, checks and other drafts received in the US
Lockbox shall be endorsed in accordance with the Lockbox Agreement and deposited
by Administrative Agent each Business Day in the US Blocked Account.

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         Section 4.4 ESTABLISHMENT OF CANADIAN LOCKBOX. Each Canadian Credit
Party shall enter into the Lockbox Agreement with Canadian Administrative Agent
and Canadian Lockbox Bank pursuant to which each Canadian Credit Party will
establish a Canadian Lockbox to be operated by the Canadian Lockbox Bank. At all
times from and after the Closing Date, each Canadian Credit Party after the
Closing Date shall direct all account debtors with respect to such Canadian
Credit Party's accounts and all other Persons obligated to make payments of any
type to any Canadian Credit Party to direct such payments to the Canadian
Lockbox. All invoices issued by any Canadian Credit Party shall contain a
notation requiring the Accounts evidenced by such invoice to be paid to the
Canadian Lockbox. Canadian Lockbox Bank, for the benefit of Canadian
Administrative Agent, shall have sole and exclusive access to the Canadian
Lockbox. All monies, checks and other drafts received in the Canadian Lockbox
shall be endorsed in accordance with the Lockbox Agreement and deposited by
Canadian Lockbox Bank each Business Day in the Canadian Blocked Account.

         Section 4.5 ESTABLISHMENT OF US BLOCKED ACCOUNT. From and after the
Closing Date, so long as this Agreement is in effect or any Lender Indebtedness
shall be outstanding, the US Borrowers agree that all funds received by any US
Credit Party from any source, shall be deposited in the US Blocked Account not
later than one Business Day following the date of receipt. Such deposit shall be
made in the exact form received subject only to any necessary endorsements. The
US Borrowers hereby acknowledge and agree (a) that none of them nor the other
Credit Parties have any power of withdrawal over the funds in the US Blocked
Account, (b) that each US Credit Party has granted a Lien on and pledged to
Administrative Agent as additional collateral security for the US Lender
Indebtedness, in the US Blocked Account and all funds on deposit therein and
"control" has been established with respect to such US Blocked Account as
defined in Section 9.104 of the UCC, (c) no US Credit Party may unilaterally
terminate the US Blocked Account, and (d) the US Blocked Account and all funds
on deposit therein shall be subject to the absolute dominion and control of
Administrative Agent. Each of US Borrowers and the Administrative Agent agree
that the US Blocked Account is a "deposit account" within the meaning of
9-102(a)(29) of the UCC and that for purposes of Section 9-304 of this UCC, the
State of New York shall be the jurisdiction of the Administrative Agent.

         Section 4.6 ESTABLISHMENT OF CANADIAN BLOCKED ACCOUNT. From and after
the Closing Date, so long as this Agreement is in effect or any Canadian Lender
Indebtedness shall be outstanding, the Canadian Borrowers agree that all funds
received by any Canadian Credit Party from any source (including without
limitation items of payment and other amounts deposited in the Canadian Lockbox)
shall be deposited in the Canadian Blocked Account not later than one Business
Day following the date of receipt. The Canadian Borrowers hereby acknowledge and
agree (a) that none of them nor the other Credit Parties have any power of
withdrawal over the funds in the Canadian Blocked Account, (b) that each
Canadian Credit Party has granted a Lien on and pledged to Canadian
Administrative Agent as additional collateral security for the Canadian Lender
Indebtedness, the Canadian Blocked Account and all funds on deposit therein, (c)
no Canadian Credit Party may unilaterally terminate the Canadian Blocked
Account, and (d) the Canadian Blocked Account and all funds on deposit therein
shall be subject to the absolute dominion and control of Canadian Administrative
Agent.

         Section 4.7 APPLICATION OF PROCEEDS OF US BLOCKED ACCOUNT. All funds
received by Administrative Agent in the US Blocked Account shall be applied to
the Lender Indebtedness in the manner set forth in Section 2.11(c) herein.

         Section 4.8 APPLICATION OF PROCEEDS OF CANADIAN BLOCKED ACCOUNT. All
funds received by Canadian Administrative Agent from the Canadian Blocked
Account or otherwise from the Canadian Lockbox Bank shall be applied to the
Canadian Lender Indebtedness in the manner set forth in Section 2.11(d) herein.

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                                   ARTICLE 5
                         REPRESENTATIONS AND WARRANTIES

         In order to induce the Agents and Lenders to enter into this Agreement,
each Borrower hereby represents and warrants to each Agent and each Lender that
each statement set forth in this Article 5 is true and correct on the date
hereof and will be true and correct on the date each Borrowing and each Letter
of Credit is requested hereunder and on the date each Borrowing is disbursed and
each Letter of Credit is issued hereunder; provided, that, each Canadian
Borrower is only making such representations and warranties in regard to itself
and each other Canadian Borrower and only to the Canadian Administrative Agent
on behalf of Canadian Lenders; provided, that, the breach of any representations
and warranties which pertain to the US Borrowers in any material respect (even
though not made by the Canadian Borrowers) will give rise to an Event of Default
and will result in Canadian Administrative Agent, Administrative Agent and
Canadian Lenders having the right to exercise all rights and remedies applicable
upon an Event of Default, including, without limitation, rights and remedies
with respect to the Canadian Borrowers and their assets. Except to the extent
expressly provided otherwise herein, to the extent such representations and
warranties are made prior to the consummation of the Acquisition Transactions,
such representations and warranties shall be deemed to be made as if the
Acquisition Transactions had occurred immediately prior to giving effect
thereto. Each such representation and warranty shall survive the execution and
delivery of this Agreement and any Borrowing or issuance of any Letter of Credit
hereunder and shall not be qualified or limited by any investigation undertaken
by any Agent or any Lender or any actual or constructive knowledge any Agent or
any Lender may have or be charged with indicating that any such representation
or warranty is inaccurate or incomplete in any respect.

         Section 5.1 CORPORATE EXISTENCE. Each Credit Party is duly organized,
legally existing and in good standing under the laws of the jurisdictions in
which it is organized and is duly qualified to transact business and in good
standing in all jurisdictions wherein the Property owned or the business
transacted by it makes such qualification necessary, except where the failure to
be so qualified could not reasonably be expected to have a Material Adverse
Effect.

         Section 5.2 CORPORATE POWER AND AUTHORIZATION. Each Borrower is
authorized and empowered to create and issue the Notes; each Obligated Party is
duly authorized and empowered to execute, deliver and perform the Financing
Documents, including this Agreement, to which it is a party; and all corporate,
partnership or other action on any Obligated Party's part requisite for the due
creation and issuance of the Notes and for the due execution, delivery and
performance of the Financing Documents, including this Agreement, to which the
Obligated Parties (or any of them) are parties has been duly and effectively
taken.

         Section 5.3 BINDING OBLIGATIONS. This Agreement does, and the Notes and
other Financing Documents to which any Obligated Party is a party will, when
issued and delivered under this Agreement, constitute legal, valid and binding
obligations of each Obligated Party that is a party thereto, and will be
enforceable in accordance with their respective terms (except that enforcement
may be subject to any applicable bankruptcy, insolvency or similar laws
generally affecting the enforcement of creditors' rights and subject to the
availability of equitable remedies).

         Section 5.4 NO LEGAL BAR OR RESULTANT LIEN. The execution, delivery and
performance of the Notes and the other Financing Documents, including this
Agreement, to which the Obligated Parties (or any of them) are parties do not
and will not violate or create a default under any provisions of the articles or
certificate of incorporation, bylaws, partnership agreement or other
organizational documents of any Obligated Party, or any contract, agreement,
instrument or Governmental Requirement to which any

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Obligated Party is subject which violation or default could have a Material
Adverse Effect, or result in the creation or imposition of any Lien upon any
Properties of any Obligated Party.

         Section 5.5 NO CONSENT. Each Obligated Party's execution, delivery and
performance of the Notes and the other Financing Documents, including this
Agreement, to which such Obligated Party (or any of them) is a party, and the
consummation of the Acquisition Transaction do not require notice to or filing
or registration with, or the authorization, consent or approval of or other
action by any other Person, including, but not limited to, any Governmental
Authority, except those obtained or made or where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

         Section 5.6 FINANCIAL INFORMATION.

                  (a) FINANCIAL STATEMENTS. The Financial Statements and the
Current Financials were prepared in accordance with GAAP and fairly present the
consolidated financial condition and results of operations of each of the
Company and Holding as of the dates and for the periods reflected therein.

                  (b) [INTENTIONALLY DELETED]

                  (c) PRO-FORMA CONSOLIDATING BALANCE SHEETS. The pro forma
consolidating balance sheets of each of Tube, PTTI, and Prudential as of
February 28, 2002 fairly present in conformity with GAAP the consolidating
financial condition of Tube, PTTI, and Prudential as of such date adjusted to
give effect to the Acquisition Transactions and the incurrence of the Lender
Indebtedness to be incurred on the Closing Date (and allocating such Lender
Indebtedness among each of PTTI, Tube, and Prudential as set forth in such pro
forma consolidating balance sheets).

                  (d) PROJECTIONS. The Projections set forth the Company's
reasonable best estimate as of the date hereof of the Company's consolidated
financial condition and results of operations as of the dates and for the
periods covered thereby. The Projections were prepared in good faith in
accordance with sound financial planning practices on the basis of the
assumptions stated therein, which assumptions were believed by the Company to be
reasonable at the time made and which the Company continues to believe are
reasonable on the date hereof.

                  (e) NO MATERIAL ADVERSE EFFECT. Since December 31, 2001, there
has been no event, condition or occurrence that has had or could reasonably be
expected to have a Material Adverse Effect.

         Section 5.7 LITIGATION. There is no action, suit, claim, grievance or
proceeding, or any governmental investigation or any arbitration proceeding, in
each case pending (including any unsatisfied settlement, judgment decree or
order) or, to the knowledge of any Borrower, threatened against any Credit Party
or any Property of any Credit Party before any court or arbitrator or any
Governmental Authority, or pursuant to any collective bargaining agreement,
which (a) challenges the validity of this Agreement, any Note, any Application,
any Security Instrument or any of the other Financing Documents or (b) could
reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, except as set forth in Schedule 5.7, there is no material action, suit or
proceeding, or any governmental investigation or any arbitration, in each case
pending or, to the knowledge of the Company or any Borrower, threatened against
any Credit Party or any Property thereof before any court or arbitrator or any
Governmental Authority.

         Section 5.8 USE OF PROCEEDS. The Borrowers will use the proceeds of the
Loans only for the purposes specified in the Recitals to this Agreement. The
Letters of Credit will be used only for the purposes provided in Section 2.3. No
Credit Party is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate,

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of buying or carrying Margin Stock (within the meaning of Regulation U or X) and
no part of the proceeds of any Loan hereunder will be used to buy or carry any
Margin Stock in violation of Regulation U or X. No Credit Party nor any Person
acting on behalf of any Credit Party has taken or will take any action which
could reasonably be expected to cause the Notes or any of the Financing
Documents, including this Agreement, to violate Regulations U or X or any other
regulation of the Board, in each case as now in effect or as the same may
hereinafter be in effect.

         Section 5.9 US EMPLOYEE BENEFITS.

                  (a) (1) Each US Credit Party and each ERISA Affiliate have
complied in all material respects with all applicable laws regarding each Plan;
(A) each Plan is, and has been, maintained and administered in substantial
compliance with its terms, applicable collective bargaining agreements, and all
applicable laws; and (B) no act, omission or transaction has occurred which
could result in an imposition on any US Credit Party or any ERISA Affiliate
(whether directly or indirectly) of (C) either a civil penalty assessed pursuant
to Subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed pursuant
to Chapter 43 of Subtitle D of the Code or (D) breach of fiduciary duty
liability damages under Section 409 of ERISA which could reasonably be expected
to have a Material Adverse Effect.

                  (b) There exists no outstanding liability of any US Credit
Party or any ERISA Affiliate with respect to any Plan that has been terminated.
No material liability to the PBGC (other than for the payment of current
premiums which are not past due) by any US Credit Party or any ERISA Affiliate
has been or is expected by any US Credit Party or any ERISA Affiliate to be
incurred with respect to any Plan. No ERISA Termination Event with respect to
any Plan has occurred or is reasonably expected to occur.

                  (c) Full payment when due has been made of all amounts which
any US Credit Party or any ERISA Affiliate is required under the terms of each
Plan or applicable law to have paid as contributions to such Plan (excluding any
nonpayment involving an amount that is not material), and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any Plan.

                  (d) The actuarial present value of the benefit liabilities
(computed on an accumulated benefit obligation basis in accordance with GAAP)
under all Plans in the aggregate that are subject to Title IV of ERISA does not,
as of the end of the most recently ended fiscal year of such Plans, exceed the
current value of the assets of all Plans in the aggregate that are allocable to
such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in Section 4041 of ERISA.

                  (e) Neither any US Credit Party nor any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time sponsored, maintained
or contributed to, any "multiemployer plan" (as defined in Section 3(37) or
4001(a)(3) of ERISA).

                  (f) Neither any US Credit Party nor any ERISA Affiliate is
required to provide security to a Plan pursuant to Section 401(a)(29) of the
Code.

         Section 5.10 CANADIAN EMPLOYEE BENEFITS.

                  (a) Except as could not reasonably be expected to have a
Material Adverse Effect (1) each Canadian Credit Party has complied in all
material respects with all applicable laws regarding each Plan (including, where
applicable, the Employment Pension Plans Act (Alberta) and the Income Tax Act
(Canada)); or (2) each Plan is, and has been, maintained and administered in
substantial compliance with

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its terms, applicable collective bargaining agreements, and all applicable laws
(including, where applicable, the Employment Pension Plans Act (Alberta) and the
Income Tax Act (Canada)).

                  (b) There exists no material outstanding liability of any
Canadian Credit Party with respect to any Plan that has been terminated.

                  (c) Except for the funding deficiency in the Prudential Steel,
Ltd. Hourly Plan which deficiency was $2,158,000 at December 31, 2001, full
payment when due has been made of all amounts which any Canadian Credit Party is
required under the terms of each Plan or applicable law to have paid as
contributions to such Plan (excluding any nonpayment involving an amount that is
not material), and no accumulated funding deficiency, whether or not waived,
resulting from the action or inaction of any Canadian Credit Party exists with
respect to any Plan.

                  (d) Each Plan relating to a Canadian Credit Party is fully
funded, on a going concern basis, in accordance with its terms and regulatory
requirements as outlined by the Employment Pension Plans Act (Alberta),
administrative requirements of the Superintendent of Pensions of Alberta and the
most recent actuarial report filed with the Superintendent of Pensions of
Alberta in respect of such Plan, as and to the extent applicable, except to the
extent any failure to do so could not reasonably be expected to have a Material
Adverse Effect.

                  (e) No Canadian Credit Party sponsors, maintains or
contributes to, or has at any time sponsored, maintained or contributed to any
"specified multi-employer plan" (as defined in the Employment Pension Plans Act
(Alberta).

         Section 5.11 TAXES; GOVERNMENTAL CHARGES. Each Credit Party has filed
all tax returns and reports required to be filed and has paid all taxes,
assessments, fees and other governmental charges levied upon any of them or upon
any of their respective Properties or income which are due and payable after all
available extension periods, including interest and penalties or have except to
the extent being diligently contested in good faith by appropriate proceedings
and with respect to which such Credit Party has provided adequate reserves for
the payment thereof if required in accordance with GAAP.

         Section 5.12 TITLES, ETC. Each Credit Party has good and indefeasible
title to its respective Properties, and with respect to leased Properties, good
and indefeasible title to the leasehold estate with respect thereto, pursuant to
valid and enforceable leases, free and clear of all Liens except Liens otherwise
permitted or contemplated by this Agreement or the other Financing Documents.

         Section 5.13 DEFAULTS. No Credit Party is in default nor has any event
or circumstance occurred which, but for the passage of time or the giving of
notice, or both, would constitute a default (in any respect that could
individually or in the aggregate, have a Material Adverse Effect) under any loan
or credit agreement, indenture, mortgage, deed of trust, security agreement or
other instrument or agreement evidencing or pertaining to any Indebtedness of
any Credit Party, or under any agreement or instrument to which any Credit Party
is a party or by which any Credit Party is bound. No Default hereunder has
occurred and is continuing.

         Section 5.14 CASUALTIES; TAKING OF PROPERTIES. Neither the business nor
the Properties of any Credit Party has been affected in a manner that has or
could have a Material Adverse Effect as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by any domestic or foreign government or any
agency thereof, riot, activities of armed forces or acts of God or of any public
enemy.

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         Section 5.15 COMPLIANCE WITH THE LAW. Except as set forth in Schedule
5.15, no Credit Party:

                  (a) is in violation of any Governmental Requirement; or

                  (b) has failed to obtain any license, permit, right-of-way,
franchise or other right or governmental authorization necessary to the
ownership of any of their respective Properties or the conduct of their
respective business;

which violation or failure could, individually or in the aggregate, have (in the
event that such a violation or failure were asserted by any Person through
appropriate action) a Material Adverse Effect.

         Section 5.16 NO MATERIAL MISSTATEMENTS. No written information,
exhibit, schedule or report prepared by or on behalf of any Borrower and
furnished to the Administrative Agent or the Lenders by or at the direction of
any Borrower in connection with the negotiation of this Agreement contained any
material misstatement of fact or, when such statement is considered with all
other written statements furnished to the Lenders in that connection, omitted to
state a material fact or any fact necessary to make the statement contained
therein not misleading; provided, that, except as provided in Section 5.6(d) no
representation or warranty is made with respect to the Projections.

         Section 5.17 INVESTMENT COMPANY ACT. No Borrower is an "investment
company" or a company "controlled" by an "investment company" that is
incorporated in or organized under the laws of the United States or any "State,"
as those terms are defined in the Investment Company Act of 1940, as amended.
The execution and delivery by the Obligated Parties of this Agreement and the
other Financing Documents to which they respectively are parties and their
respective performance of the obligations provided for therein, will not result
in a violation of the Investment Company Act of 1940, as amended.

         Section 5.18 PUBLIC UTILITY HOLDING COMPANY ACT. No Borrower is a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.

         Section 5.19 CAPITAL STRUCTURE. Schedule 5.19 hereto accurately
reflects, as of the date hereof (a) the jurisdiction of incorporation or
organization of each Credit Party, (b) each jurisdiction in which each Credit
Party is qualified to transact business as a foreign corporation, foreign
partnership or foreign limited liability company, (c) the authorized, issued and
outstanding Equity of each Credit Party, including the names of (and number of
shares or other Equity interest held by) the record and beneficial owners of
such securities (other than with respect to the Company). Except as set forth in
Schedule 5.19 hereto, there are no outstanding shareholders agreements, voting
agreements or other agreements of any nature which in any way restrict or effect
the transfer, pledge or voting of any of the Equity securities of any Credit
Party or subject any of such securities to any put, call, redemption obligation
or similar right or obligation of any nature.

         Section 5.20 INSURANCE. All policies of fire, liability, workmen's
compensation, casualty, flood, business interruption and other forms of
insurance owned or held by each Credit Party are sufficient for compliance with
all requirements of law and of all agreements to which each Credit Party is a
party; are valid, outstanding and enforceable policies; provide adequate
insurance coverage in at least such amounts and against at least such risks (but
including in any event public liability) as are usually insured against in the
same general area by companies engaged in the same or a similar business for the
assets and operations of the Credit Parties; and will not in any way be affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Agreement. All such policies are in full force and

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effect, all premiums with respect thereto have been paid in accordance with
their respective terms, and no notice of cancellation or termination has been
received with respect to any such policy. Except as provided on Schedule 5.20
hereto, no Credit Party maintains any formalized self-insurance program with
respect to its assets or operations or risks with respect thereto. The
certificate of insurance delivered to the Lenders pursuant to Section 3.1(f)
contains an accurate and complete description of all policies of insurance owned
or held by each Credit Party on the Closing Date.

         Section 5.21 ENVIRONMENTAL MATTERS.

                  (a) ENVIRONMENTAL LAWS, ETC. Except as disclosed on Schedule
5.21 hereto, neither any Property of any Credit Party nor the operations
conducted thereon violate any applicable order of any court or Governmental
Authority or Environmental Laws, which violation could reasonably be expected to
have a Material Adverse Effect or which could reasonably be expected to result
in remedial obligations having a Material Adverse Effect assuming disclosure to
the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to the relevant Property.

                  (b) NO LITIGATION. Except as disclosed on Schedule 5.21
hereto, no Property of any Credit Party nor the operations currently conducted
thereon or by any prior owner or operator of such Property or operation, are
subject to any existing, pending or, to the knowledge of the Company and each
Borrower, threatened action, suit, investigation, inquiry or proceeding by or
before any court or Governmental Authority or to any remedial obligations under
Environmental Laws.

                  (c) NOTICES, PERMITS, ETC. Except as disclosed on Schedule
5.21 hereto, all notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed by any Credit Party in connection with the
operation or use of any and all Property of the Credit Parties, including but
not limited to past or present treatment, storage, disposal or release of a
hazardous substance or solid waste into the environment, have been duly obtained
or filed except for those notices, permits, licenses or authorizations the
failure of which to obtain could not reasonably be expected to have a Material
Adverse Effect assuming disclosure to the applicable Governmental Authority of
all relevant facts, conditions and circumstances, if any, pertaining to such
operations or use.

                  (d) HAZARDOUS SUBSTANCES CARRIERS. Except as disclosed on
Schedule 5.21 hereto, all hazardous substances or solid waste generated at any
and all Property of any Credit Party have in the past been transported, treated
and disposed of only by carriers maintaining valid permits under RCRA (or
comparable legislative provisions in Canada for Canadian Borrowers) and any
other Environmental Law, and only at treatment, storage and disposal facilities
maintaining valid permits under RCRA and any other Environmental Law, which
carriers and facilities have been and are operating in compliance with such
permits.

                  (e) HAZARDOUS SUBSTANCES DISPOSAL. Each Credit Party has taken
all reasonable steps necessary to determine and has determined that no hazardous
substances or solid waste has been disposed of or otherwise released and there
has been no threatened release of any hazardous substances on or to any Property
of any Credit Party except in compliance with Environmental Laws.

                  (f) NO CONTINGENT LIABILITY. The Credit Parties have no
contingent liability in connection with any release or threatened release of any
hazardous substance or solid waste into the environment other than such
contingent liabilities at any one time and from time to time which could not
reasonably be expected to exceed $1,000,000.

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         Section 5.22 SOLVENCY. Each Credit Party is Solvent, both before and
after giving affect to the Acquisition Transactions and the incurrence of all
Lender Indebtedness to be incurred in connection therewith.

         Section 5.23 EMPLOYEE MATTERS. Except as disclosed on Schedule 5.23, no
Credit Party, nor any of their respective employees, is subject to any
collective bargaining agreement. There are no strikes, slowdowns, work
stoppages, union organizing campaigns or representation petitions, unfair labor
practices or labor disputes pending or, to the best knowledge of the Borrowers,
threatened against any Credit Party, or their respective employees, which could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. As of the Closing Date, except as set forth in Schedule
5.23, no employees are subject to an employment contract or other arrangement
obligating a Credit Party to pay an employee an amount in excess of such
employee's regular salary, wages or benefits (whether or not such payment is
based on a contingent event including but not limited to termination of
employment or change of control of a Credit Party).

         Section 5.24 REAL PROPERTY. Schedule 5.24 hereto accurately reflects,
as of the date hereof, all Real Property in which any Credit Party holds any
right, title or interest including any leasehold interest. Schedule 5.24 further
accurately reflects, in respect of each parcel of Real Property described
thereon, the name of the Credit Party which is the owner and holder of record
title thereto, the nature of the interest of the Credit Parties therein (fee,
leasehold or other), and, in the case of any leasehold interest described
therein, the name of the landlord under such lease and a description of such
lease, including all amendments thereto. No Credit Party is in monetary default
or in default of any other material obligation under any such Lease, and, to
each Borrower's knowledge, no landlord under any such lease is in default of any
material obligation of such landlord thereunder. No Credit Party has received
any written notice alleging any default or any written notice of actual or
threatened termination or cancellation of any such lease.

         Section 5.25 PERFECTION CERTIFICATE; SCHEDULES TO OTHER FINANCING
DOCUMENTS. All information in each Perfection Certificate and all information
set forth in all disclosure schedules to each of the other Financing Documents
is true, correct and complete.

         Section 5.26 EXISTING INDEBTEDNESS. Schedule 5.26 hereto contains an
accurate and complete list and description of all Existing Indebtedness of the
Credit Parties on the Closing Date prior to giving effect to the repayment of
any such Indebtedness to be repaid on the Closing Date, and including, with
respect to each such item of Existing Indebtedness: (a) the current lender or
holder of such Indebtedness, (b) the principal amount of such Indebtedness on
the Closing Date, (c) a description of the material loan agreements, promissory
notes and other documents evidencing, governing or otherwise pertaining to such
Indebtedness, and (d) a description of all property which stands as security for
such Indebtedness.

         Section 5.27 PURCHASE DOCUMENTS. Borrowers have provided to the
Administrative Agent a true and correct copy of the Purchase Agreement and all
other material documents, instruments and agreements entered into by and between
or among any Credit Party and the Sellers related to the Acquisition, including
all amendments and modifications thereto (whether characterized as an amendment,
modification, waiver, consent or similar document) (collectively, the "PURCHASE
DOCUMENTS"). No material rights or obligations of any party to any of the
Purchase Documents have been waived and no party to any of the Purchase
Documents is in default of its obligations or in breach of any representations
or warranties made thereunder. Each of the Purchase Documents is a valid,
binding and enforceable obligation of each party thereto in accordance with its
terms and is in full force and effect. Each representation and warranty made by
each party in the Purchase Documents is true and correct on the date hereof and
will be true and correct on the Closing Date.

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         Section 5.28 REPRESENTATIONS WITH RESPECT TO CERTAIN CREDIT PARTIES.
None of Precision International, Maverick International or Exchangeco (a)
conducts any business or operations, (b) owns, leases, licenses or otherwise has
the right to use any Property (other than Exchangeco's ownership of all of the
issued and outstanding Equity of Tube Canada), (c) has any liabilities or
obligations to any Person, or (d) has any employees.

         Section 5.29 ACCOUNTS. Other than the accounts specifically permitted
by Section 7.18 hereof, none of the Borrowers maintains any account with any
bank or other depository institution into which any cash or cash equivalents are
deposited or cash or cash equivalents or maintained.

                                   ARTICLE 6
                              AFFIRMATIVE COVENANTS

         So long as any Lender has any Commitment hereunder or any Loan remains
unpaid or any Revolving Credit Exposure remains outstanding, each Borrower will
at all times comply with the following covenants; provided, that,
notwithstanding anything to the contrary set forth in any Section of this
Article 6, no Canadian Borrower will be obligated to cause anyone other than
other Canadian Borrowers to comply with the covenants of this Article 6 or be
obligated in regard to any such covenants to the extent they do not relate to
the Canadian Borrowers or any of them; provided, that the non-performance of
such covenants with respect to the US Borrowers (even though the Canadian
Borrowers are not obligated to ensure compliance with such covenants) will,
subject to Article 8, give rise to Events of Default and will result in Canadian
Administrative Agent, Administrative Agent and Canadian Lenders having the right
to exercise all rights and remedies applicable upon an Event of Default,
including, without limitation, rights and remedies with respect to the Canadian
Borrowers and their assets.

         Section 6.1 MAINTENANCE AND COMPLIANCE, ETC. Each Borrower will and
will cause each other Credit Party to (a) observe and comply with all
Governmental Requirements, except where failure to do so could not reasonably be
expected to have a Material Adverse Effect, and (b) preserve and maintain its
corporate existence. Notwithstanding the foregoing, the Precision Transactions
shall be expressly permitted hereunder.

         Section 6.2 PAYMENT OF TAXES AND CLAIMS, ETC. Each Borrower will pay,
and cause each other Credit Party to pay, (a) all material taxes, assessments
and governmental charges imposed upon it or upon its Property, and (b) all
material claims (including, but not limited to, claims for labor, materials,
supplies or services) which could reasonably be expected, if unpaid, to become a
Lien upon its Property, unless, in each case, the validity or amount thereof is
being contested in good faith by appropriate action or proceedings and the
Borrowers have made adequate reserves for the payment thereof if required in
accordance with GAAP.

         Section 6.3 FURTHER ASSURANCES. Each Borrower will and will cause each
other Obligated Party to cure promptly any defects in the creation and issuance
of the Notes, and the execution and delivery of the Financing Documents,
including this Agreement. Each Borrower at its expense will, as promptly as
practical, execute and deliver to the Administrative Agent or the applicable
Issuing Bank upon request all such other and further documents, agreements and
instruments (or cause any of the other Obligated Parties to take such action) in
compliance with or performance of the covenants and agreements of the Borrowers
in the Financing Documents, including this Agreement, or to further evidence and
more fully describe the Collateral, or to correct any omissions in the Financing
Documents, or more fully to state the security obligations set out herein or in
any of the Financing Documents, or to perfect, protect or preserve

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any Liens created pursuant to any of the Financing Documents, or to make any
recordings, to file any notices, or obtain any consents, all as may be necessary
or appropriate in connection therewith.

         Section 6.4 PERFORMANCE OF OBLIGATIONS. Each Borrower will pay or cause
to be paid, the Notes with respect to which it is a maker or guarantor according
to the reading, tenor and effect thereof; and each Borrower will do and perform
every act and discharge all of the obligations provided to be performed and
discharged by it under the Financing Documents, including this Agreement, at the
time or times and in the manner specified, and cause each other Credit Party to
take such action with respect to their obligations to be performed and
discharged under the Financing Documents to which they respectively are parties.

         Section 6.5 INSURANCE. Each Borrower will and will cause each of the
other Credit Parties to maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to their respective
Properties and business against such liabilities, casualties, risks and
contingencies and in such types (including business interruption insurance,
marine insurance insuring all Included-In-Transit Inventory, and flood
insurance) and amounts as Administrative Agent shall require and as shall be
required in accordance with any Governmental Requirement. Each Borrower will
obtain endorsements to the policies naming the Administrative Agent or Canadian
Administrative Agent, as applicable, as a loss payee and as an additional
insured, as applicable, and containing provisions that such policies will not be
canceled without 30 days prior written notice having been given by the insurance
company to the Administrative Agent or Canadian Administrative Agent, as
applicable.

         Section 6.6 ACCOUNTS AND RECORDS. Each Borrower will keep and will
cause each of the other Credit Parties to keep proper books of record and
account in accordance with GAAP.

         Section 6.7 RIGHT OF INSPECTION. Each Borrower will permit and will
cause each of the other Credit Parties to permit any officer, employee or agent
of the Administrative Agent or any Lender to visit and inspect any of the
Properties of the Credit Parties, examine any Credit Party's books of record and
accounts, take copies and extracts therefrom, and discuss the affairs, finances
and accounts of the Credit Parties with any Credit Party's executive officers,
accountants and auditors, as often and all at such reasonable times during
normal business hours and upon reasonable advance notice all as may be
reasonably requested by the Administrative Agent or the Required Lenders;
provided, that, such inspection rights shall not be limited or conditioned by
reasonable prior notice or reasonable times during the existence of a Default or
Event of Default without limiting the foregoing, the Borrowers agree to hold a
meeting with all Lenders at least once a year to discuss the business and
affairs of the Borrowers.

         Section 6.8 OPERATION AND MAINTENANCE OF PROPERTY. Each Borrower will,
and will cause each other Credit Party to, operate its Properties or cause its
Properties to be operated and maintained (a) in accordance with prudent industry
practice in all material respects and in compliance in all material respects
with the terms and provisions of all applicable leases, contracts and agreements
and (b) in compliance with all applicable laws of the jurisdiction in which such
Properties may be situated, and all applicable laws, rules and regulations of
every other Governmental Authority from time to time constituted to regulate the
ownership and operation of such Properties, except where the noncompliance
therewith could not reasonably be expected to cause or result in a Material
Adverse Effect.

         Section 6.9 NEW SUBSIDIARIES; ADDITIONAL LIENS.

                  (a) If at any time after the Closing Date, any Borrower
creates or acquires (subject to Section 7.6, Section 7.16, and Section 7.17) any
one or more Subsidiaries (a "NEW SUBSIDIARY") each Borrower shall cause such New
Subsidiary to execute and deliver, at the time of such Subsidiary's creation or
acquisition, to (1) the Administrative Agent a Borrower Joinder Agreement (a
"Borrower Joinder Agreement") in the form of Exhibit N, attached hereto pursuant
to which such Subsidiary

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<PAGE>
becomes a party to this Credit Agreement and a U.S. or Canadian Borrower
hereunder as applicable, (2) the Administrative Agent, if such New Subsidiary is
a US Credit Party, for the benefit of Administrative Agent, the Lenders and the
Issuing Banks, (i) an Addendum to the Guaranty and Security Agreement in the
manner contemplated by Section 8.13 of the Guaranty and Security Agreement, and
(ii) other appropriate Security Instruments covering such New Subsidiary's
Property as security for the Lender Indebtedness, in form and substance
acceptable to the Administrative Agent, and (3) Canadian Administrative Agent,
if such New Subsidiary is a Canadian Credit Party, for the benefit of Canadian
Administrative Agent, the Lenders and the Issuing Banks, (i) an Addendum to the
Canadian Security Agreement in the manner contemplated by Section 7.13 of the
Canadian Security Agreement, and (ii) other appropriate Security Instruments
covering such New Subsidiary's Property as security for the Canadian Lender
Indebtedness, in form and substance acceptable to the Canadian Administrative
Agent.

                  (b) In connection with the execution and delivery of any
Borrower Joinder Agreement, Addendum or Security Document pursuant to this
Section 6.9, the Borrowers shall, or shall cause the relevant New Subsidiary to,
deliver to the Administrative Agent or the Canadian Administrative Agent, as
applicable, for the benefit of Lenders, resolutions, member or partner consents,
certificates, legal opinions and such other related documents as shall be
reasonably requested by the Administrative Agent and Canadian Administrative
Agent and consistent with the relevant forms and types thereof delivered on the
Closing Date or as shall be otherwise reasonably acceptable to the Required
Lenders. Each Security Instrument delivered pursuant to this Section 6.9 shall
be deemed to be a Security Instrument from and after the date of execution
thereof.

         Section 6.10 REPORTING COVENANTS. So long as any Lender has any
Commitment hereunder or any Loan remains unpaid or any Revolving Credit Exposure
remains outstanding, the Company and the Borrowers will furnish the following to
each of the Lenders:

                  (a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event within 90 days after the end of each Fiscal Year, consolidating and
consolidated balance sheets of the Company and its Subsidiaries as at the end of
such year and the related consolidating and consolidated statements of income,
retained earnings and cash flows of the Company and its Subsidiaries for such
Fiscal Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all in reasonable detail and accompanied by the
unqualified report thereon of independent public accountants of recognized
national standing, which report shall state that such consolidated financial
statements present fairly the consolidated financial condition as at the end of
such Fiscal Year, and the consolidated results of operations and cash flows for
such Fiscal Year, of the Company and its Subsidiaries in accordance with GAAP,
applied on a consistent basis; provided, that, the consolidating balance sheets
and consolidating statements of income, retained earnings and cash flow of the
Company and its Subsidiaries are not required to be audited.

                  (b) MONTHLY FINANCIAL STATEMENTS. As soon as available and in
any event within 30 days after the end of each calendar month of the Company,
consolidating and consolidated balance sheet of the Company and its Subsidiaries
as at the end of such month and the related consolidating and consolidated
statements of income, retained earnings and cash flows of the Company and its
Subsidiaries for such calendar month and for the portion of the Company's Fiscal
Year ended at the end of such month, setting forth in each case in comparative
form the figures for the corresponding month and the corresponding portion of
the Company's previous Fiscal Year, all in reasonable detail and certified by a
Responsible Officer that such financial statements are complete and correct and
fairly present the consolidated financial condition as at the end of such
calendar month, and the consolidating and consolidated results of operations and
cash flows for such calendar month and such portion of the Company's Fiscal
Year, of the Company and its Subsidiaries in accordance with GAAP (subject to
normal, year-end adjustments and the absence of footnotes).

                                       85
<PAGE>

                  (c) NO DEFAULT/COMPLIANCE CERTIFICATE. Together with the
financial statements required pursuant to Section 6.10(a) and Section 6.10(b)
above, a certificate of the Company, which shall be substantially in the form of
Exhibit O hereto and signed by a Responsible Officer (1) stating that a review
of such financial statements during the period covered thereby and of the
activities of the Company and its Subsidiaries has been made under such
Responsible Officer's supervision with a view to determining whether the Company
and its Subsidiaries have fulfilled in all material respects all of their
obligations under this Agreement, the other Financing Documents, and the Notes;
(2) stating that the Company and its Subsidiaries have fulfilled in all material
respects their obligations under such instruments and that all representations
made in this Agreement continue to be true and correct in all material respects
(or specifying the nature of any change), or if there shall be a Default or
Event of Default, specifying the nature and status thereof and the Company's
proposed response thereto; (3) demonstrating in reasonable detail compliance
(including, but not limited to, showing all material calculations) as at the end
of such Fiscal Year or such Fiscal Quarter with Section 7.1(a), Section 7.2(f),
Section 7.2(g), Section 7.2(h), and Section 7.15; (4) containing or accompanied
by such financial or other details, information and material as the
Administrative Agent may reasonably request to evidence such compliance; and (5)
stating that no event has occurred or condition exists that has had or
reasonably could be expected to have a Material Adverse Effect.

                  (d) MANAGEMENT LETTERS. Together with the financial statements
required pursuant to Section 6.10(a) above, copies of each management letter, if
any, issued to the Company by such accountants promptly following consideration
or review by the Board of Directors of the Company, or any committee thereof
(together with any response thereto prepared by the Company).

                  (e) TITLE INFORMATION. Within a reasonable time after a
request by the Administrative Agent, additional title information in form and
substance acceptable to the Required Lenders as is reasonably necessary covering
the Collateral so that the Lenders shall have received, together with the title
information previously received by the Lenders, satisfactory title information
covering all of the Collateral.

                  (f) EVENTS OR CIRCUMSTANCES WITH RESPECT TO COLLATERAL.
Promptly after the occurrence of any event or circumstance concerning or
changing any of the Collateral that could have a Material Adverse Effect, notice
of such event or circumstance in reasonable detail.

                  (g) BORROWING BASE REPORTS; PERFECTION CERTIFICATE UPDATE. As
soon as available, and in any event on or before the 20th day of each calendar
month (or the next succeeding Business Day if such day is not a Business Day),
(1) a Canadian Borrowing Base Report and a US Borrowing Base Report, dated and
reflecting the US Borrowing Base and US Maximum Available Amount and the
Canadian Borrowing Base and Canadian Maximum Available Amount as of the close of
business on the last Business Day of the preceding calendar month (subject to
Borrower's rights to make Permitted Borrowing Base Adjustments), (2) a
Perfection Certificate Update prepared as of the close of business on the last
Business Day of the preceding calendar month, (3) an accounts receivable aging,
payables aging and inventory aging prepared as of the close of business on the
last Business Day of the preceding calendar month, and (4) a summary of all Swap
Agreements to which any Borrower is subject as of the last Business Day of the
preceding calendar month, in form, substance and detail acceptable to the
Administrative Agent; provided, however, (x) at any time that Excess
Availability shall be below $30,000,000, the Administrative Agent, in its
discretion, may require the delivery of reports setting forth the Eligible
Accounts and Eligible Bill and Hold Accounts components of the US Borrowing Base
and Canadian Borrowing Base more frequently than monthly (including daily) in
which event the US Borrowing Base and Canadian Borrowing Base (as applicable)
would be adjusted immediately upon delivery of such reports based on the
Eligible Accounts and Eligible Bill and Hold Accounts reflected in such reports,
and (y) at any time that Excess Availability shall be below $15,000,000, the
Administrative

                                       86
<PAGE>
Agent, in its discretion, may require the delivery of reports setting forth the
Eligible Inventory, Eligible Included-in-Transit Inventory, Eligible WIP
Inventory, and Eligible Bailee Inventory on a weekly basis, in which event the
Eligible Inventory, Eligible Included-in-Transit Inventory, Eligible WIP
Inventory, and Eligible Bailee Inventory, components of the US Borrowing Base
and Canadian Borrowing Base (as applicable) would be adjusted immediately upon
delivery of such reports. In the event more frequent reporting of the accounts
and inventory components of the US Borrowing Base and the Canadian Borrowing
Base is required pursuant to this Section 6.10(g), such reports shall be in the
form of the Interim Account Reports attached hereto as Exhibits P-1 and P-2, as
applicable, and the Inventory Designation Reports attached hereto as Exhibits
Q-1 and Q-2, as applicable.

                  (h) NOTICE OF CERTAIN EVENTS. Promptly after any Borrower
learns of the receipt or occurrence of any of the following, a certificate of
the Borrowers, signed by a Responsible Officer specifying (1) any official
notice of any violation, possible violation, non-compliance or possible
non-compliance, or claim made by any Governmental Authority pertaining to all or
any part of the Properties of any Credit Party which could reasonably be
expected to have a Material Adverse Effect; (2) any event which constitutes a
Default or Event of Default, together with a detailed statement specifying the
nature thereof and the steps being taken to cure such Default or Event of
Default; (3) the receipt of any notice from, or the taking of any other action
by, the holder of any promissory note, debenture or other evidence of
Indebtedness in excess of $1,000,000 of any Credit Party with respect to a
claimed default, together with a detailed statement specifying the notice given
or other action taken by such holder and the nature of the claimed default and
what action the Borrowers are taking or propose to take with respect thereto;
(4) any default or noncompliance of any party to any of the Financing Documents
with any of the terms and conditions thereof or any notice of termination or
other proceedings or actions which could reasonably be expected to adversely
affect any of the Financing Documents; (5) the creation, dissolution, merger or
acquisition of any Credit Party; (6) any event or condition not previously
disclosed to Administrative Agent, which violates any Environmental Law or which
could reasonably be expected to have a Material Adverse Effect; (7) any material
amendment to, termination of, or default under any material contract or any
execution of, or material amendment to, termination of, or material default
under, any material collective bargaining agreement; or (8) any event or
condition which may reasonably be expected to have a Material Adverse Effect.

                  (i) SHAREHOLDER COMMUNICATIONS, FILINGS. Promptly upon the
mailing, filing, or making thereof, copies of all registration statements,
periodic reports and other documents (excluding the related exhibits except to
the extent expressly requested by the Administrative Agent) filed by any Credit
Party with the Securities and Exchange Commission (or any successor thereto) or
any national or Canadian regional securities exchange or provincial securities
commission.

                  (j) LITIGATION. Promptly after the occurrence thereof, notice
of the institution of or any material adverse development in any action, suit,
claim, grievance or proceeding or any governmental investigation or any
arbitration, before any arbitrator or any Governmental Authority, or pursuant to
any collective bargaining agreement against any Credit Party or any material
Property of any thereof, in which the amount involved is material and is not
covered by insurance or which, if adversely determined, would have a Material
Adverse Effect.

                  (k) ERISA. Promptly after (1) any Credit Party obtaining
knowledge of the occurrence thereof, notice that an ERISA Termination Event or a
"prohibited transaction," as such term is defined in Section 406 of ERISA or
Section 4975 of the Code, with respect to any Plan has occurred (for which there
is no exemption), which such notice shall specify the nature thereof, the
Borrowers' proposed response thereto (and, if applicable, the proposed response
thereto of any Subsidiary of the Borrowers and of any ERISA Affiliate) and,
where known, any action taken or proposed by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto, (2) any Credit Party's
obtaining

                                       87
<PAGE>

knowledge thereof, copies of any notice of the PBGC's intention to terminate or
to have a trustee appointed to administer any Plan, and (3) the filing thereof
with any Governmental Authority copies of each annual and other report
(including applicable schedules) with respect to each Plan or any trust created
thereunder (if requested by the Administrative Agent).

                  (l) BORROWING BASE AUDIT. Two times during any Fiscal Year, as
of a date to be designated by the Administrative Agent, but at the cost of the
Borrowers, a report of a collateral field examiner approved by the
Administrative Agent in writing and reasonably acceptable to the Borrowers
(which may be the Administrative Agent or an affiliate thereof) with respect to
the Eligible Accounts, Eligible Included-In-Transit Inventory, Eligible Bailee
Inventory and Eligible Inventory components for each of the Borrowers included
in the US Borrowing Base and the Canadian Borrowing Base and such other matters
regarding the Credit Parties or the Collateral as Administrative Agent or
Canadian Administrative Agent shall reasonably require, and after the occurrence
and during the continuance of a Default or if Excess Availability shall fall
below $15,000,000, the Administrative Agent shall have the option to receive at
the cost of the Borrowers such additional reports as the Administrative Agent or
the Required Lenders shall reasonably request.

                  (m) ANNUAL BUDGET. As soon as available and in any event not
later than 30 days prior to the end of each Fiscal Year, a budget of the Company
and its Subsidiaries on a consolidating and consolidated basis for the
succeeding Fiscal Year (prepared on a quarterly basis), reviewed by the Board of
Directors of the Company, setting forth in reasonable detail, the projected
revenues and expenses of the Company for such Fiscal Years.

                  (n) EXCESS CASH FLOW CERTIFICATE. Not later than March 31, of
each year, beginning March 31, 2003 the Company's calculation of its
consolidated US Excess Cash Flow and Canadian Excess Cash Flow for the Fiscal
Year ending the immediately preceding December 31.

                  (o) INVENTORY APPRAISALS. Once during any Fiscal Year, the
Administrative Agent may require, at the cost of the Borrowers, an appraisal of
the Borrower's inventory in scope and detail and prepared by an independent
appraisal firm acceptable to Administrative Agent; provided, that after the
occurrence and during the continuance of a Default, the Administrative Agent
shall have the option to receive at the cost of the Borrowers such additional
inventory appraisals as the Administrative Agent or the Required Lenders shall
reasonably request. If an Event of Default exists, the Administrative Agent
shall require an inventory appraisal if the most recently conducted inventory
appraisal is more than one year old.

                  (p) OTHER INFORMATION. With reasonable promptness, such other
information about the business and affairs and financial condition of any Credit
Party as Administrative Agent may reasonably request from time to time,
including, without limitation, monthly accounts receivable aging and
reconciliation, accounts payable aging and reconciliation, sales reports and
inventory designations.

                                   ARTICLE 7
                               NEGATIVE COVENANTS

         Notwithstanding anything to the contrary set forth in any Section of
this Article 7, no Canadian Borrower will be obligated to cause anyone other
than other Canadian Borrowers to comply with the covenants of this Article 7 or
be obligated in regard to any such covenants to the extent they do not relate to
the Canadian Borrowers or any of them; provided, that the non-performance of
such covenants with respect to the US Borrowers (even though the Canadian
Borrowers are not obligated to ensure compliance with such covenants) will,
subject to Article 8, give rise to Events of Default and will result in Canadian
Administrative Agent, Administrative Agent and Canadian Lenders having the right
to exercise all rights

                                       88
<PAGE>
and remedies applicable upon an Event of Default, including, without limitation,
rights and remedies with respect to the Canadian Borrowers and their assets. So
long as any Lender has any Commitment hereunder or any Loan remains unpaid or
any Revolving Credit Exposure remains outstanding, neither the Company nor the
Borrowers will:

         Section 7.1 FINANCIAL COVENANTS. Permit the Fixed Charge Coverage Ratio
for any period of to be less than the ratio for the period indicated below:

<TABLE>
<CAPTION>
                           Period                               Ratio
                           ------                               -----
<S>                                                           <C>
                  Three months ending June 30, 2002           1.10 to 1.00
                  Six months ending September 30, 2002        1.10 to 1.00
                  Nine months ending December 31, 2002        1.10 to 1.00
                  Twelve months ending March 31, 2003         1.10 to 1.00
                  Each Rolling Period ending during the
                  period beginning with the Rolling Period
                  ending June 30, 2003 and continuing
                  through and including the Rolling Period
                  ending March 31, 2004                       1.15 to 1.00
                  Each Rolling Period ending thereafter       1.25 to 1.00
</TABLE>

provided, however, Borrowers' obligation to comply with this Section 7.1 shall
be suspended for any period for which the Fixed Charge Coverage Ratio is to be
tested to the extent that Excess Availability (for this purpose calculated with
out giving effect to the Initial Reserve) at all times during the final Fiscal
Quarter in such period was never less than $30,000,000.

         Section 7.2 INDEBTEDNESS. Create, incur, assume or suffer to exist, any
Indebtedness, other than:

                  (a) the Lender Indebtedness;

                  (b) Indebtedness outstanding on the date hereof which is set
forth on Schedule 7.2 but expressly excluding any refinancings, refundings,
renewals or extensions thereof;

                  (c) trade or accounts payable (for the deferred purchase price
of Property or services) from time to time incurred in the ordinary course of
business and guaranties by the US Borrowers given in the ordinary course of
business of any such obligations incurred or accrued by any other US Borrower
and guaranties by the Canadian Borrowers given in the ordinary course of
business of any such obligations incurred or accrued by any other Canadian
Borrowers ;

                  (d) obligations for current taxes, assessments and other
governmental charges and taxes, assessments or other governmental charges which
are not yet due or are being contested in good faith by appropriate action or
proceeding promptly initiated and diligently conducted, if reserves required
pursuant to Section 6.2 hereof have been established with respect thereto;

                  (e) Indebtedness owing pursuant to Swap Agreements entered
into in the ordinary course of business for the purpose of hedging against risks
actually incurred by Borrower with respect to interest rates, $/C$ exchange
rates and commodity prices;

                  (f) in addition to the Indebtedness permitted by Section
7.2(b) above, Indebtedness in respect of Capital Lease Obligations and purchase
money Indebtedness in an aggregate amount not in excess of $4,000,000
outstanding at any time;

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<PAGE>

                  (g) advances made by any US Borrower to any other US Borrower
and by Canadian Borrowers to any other Canadian Borrower;

                  (h) other unsecured Indebtedness in an aggregate amount not in
excess of $1,000,000 outstanding at any time.

         Section 7.3 LIENS. Create, incur, assume or suffer to exist, any Lien
on any of its Property now owned or hereafter acquired to secure any
Indebtedness of any Credit Party or any other Person, other than (collectively,
the "PERMITTED LIENS"):

                  (a) Liens existing on the date hereof and set forth on
Schedule 7.3;

                  (b) Liens securing the Lender Indebtedness;

                  (c) Liens for taxes, assessments or other governmental charges
or levies not yet due or which are being contested in good faith by appropriate
action or proceedings and with respect to which reserves required by Section 6.2
hereof are maintained;

                  (d) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen, repairmen, workmen, and other Liens
imposed by law created in the ordinary course of business for amounts which are
not past due for more than 30 days or which are being contested in good faith by
appropriate action or proceedings and with respect to which reserves required by
Section 6.2 are maintained;

                  (e) Liens incurred or deposits or pledges made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, old age or other similar
obligations, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money) but not exceeding an aggregate amount
outstanding at any time of $1,000,000;

                  (f) minor irregularities in title, easements, rights-of-way,
restrictions, servitudes, permits, reservations, exceptions, conditions,
covenants and other similar charges or encumbrances not materially interfering
with the occupation, use and enjoyment by any Borrower of any of their
respective Properties in the normal course of business or materially impairing
the value thereof ;

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

                  (h) Liens securing Indebtedness permitted by Section 7.2(f)
provided that (1) such Liens relate only to the Property being leased or
acquired, (2) the creation of such Lien or the incurrence of the Indebtedness
secured by such Lien does not violate this Agreement or any of the other
Financing Documents and (3) the principal amount of the Indebtedness being
secured does not exceed 80% of the total purchase price of the Property being
leased or acquired, and

                  (i) exceptions, qualifications and reservations in respect of
title to Real Property under applicable federal, state, provincial, territorial,
municipal and local statutes, regulations, laws, by-laws and ordinances but only
to the extent of the general application of such matters and not arising as a
result of the failure of Borrowers to comply with such matters.

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<PAGE>

provided, however, that the foregoing list of Permitted Liens is not intended
to, and shall not be construed as, subordinating or postponing, or as an
agreement to subordinate or postpone, any Lien created by any of the Financing
Documents to any such permitted Lien.

         Section 7.4 MERGERS, SALES, ETC. Merge into or with or consolidate or
amalgamate with, or permit any other Credit Party to merge into or with or
consolidate or amalgamate with, any other Person, or sell, lease or otherwise
dispose of, or permit any other Credit Party to sell, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or any part
of its Property to any other Person. Notwithstanding the foregoing limitation
(a) the Credit Parties may sell inventory in the ordinary course of business,
(b) any Credit Party may sell, redeem or trade cash equivalent investments
permitted under Section 7.6 hereof, (c) any US Borrower shall be permitted to
consolidate or merge with any other US Borrower (provided, that, in the case of
any merger involving the Company, the Company shall be the surviving entity),
(d) any Canadian Borrower shall be permitted to consolidate, amalgamate or merge
with any other Canadian Borrower, (e) any Borrower shall be permitted to sell,
assign or convey all or any part of its Property to any US Borrower, (f) any
Canadian Borrower shall be permitted to sell, assign or convey all or any part
of its Property to any other Canadian Borrower, (g) the Precision Transactions
shall be expressly permitted hereunder, (h) the Borrowers may sell assets not
material to the operations and business of the Borrowers so long as the
aggregate sale price for all assets sold in any Fiscal Year does not exceed
$1,000,000, and (i) the US Borrowers may enter into a Lay Down Real Estate Lease
with Stone & Webster Construction, Inc., a Louisiana corporation for
approximately five acres and certain improvements of the US Borrowers' Longview,
Washington facility.

         Section 7.5 DIVIDENDS, ETC. Declare or pay any dividend on its Equity,
make any payment to purchase, redeem, retire or otherwise acquire any of its
Equity now or hereafter outstanding, return any capital to its stockholders,
partners or members, make any distribution of its assets, Equity, obligations or
securities to its stockholders, partners or members (an "equity distribution"),
except (a) that any Credit Party may make equity distributions to any US
Borrower, (b) any Canadian Borrower may make equity distributions to other
Canadian Borrowers, (c) the Company may purchase, redeem, retire or otherwise
acquire its outstanding Equity (a "STOCK REPURCHASE") so long as (1) Excess
Availability was not less than $40,000,000 at any time during the thirty (30)
day period ending on the date of such Stock Repurchase assuming that such Stock
Repurchase occurred on the first day of such period, (2)Excess Availability will
be not less than $40,000,000 immediately after giving effect to such Stock
Repurchase, (3) no Default exists or will exist after giving effect to such
Stock Repurchase, (4) the aggregate amount paid for all such Stock Repurchases
does not exceed (i) $5,000,000 in any period of twelve consecutive months, or
(ii) $10,000,000 during the term of this Agreement, and (d) the Company may pay
dividends on its outstanding Equity so long as (i) Excess Availability was not
less than $40,000,000 at any time during the thirty (30) day period ending on
the date such dividends are paid assuming that such dividends were paid in the
first day of such period, (ii) Excess Availability will be not less than
$40,000,000 immediately after giving effect to the payment of such dividends,
(iii) no Default exists or will exist after giving effect to the payment of such
dividend, (iv) the aggregate amount of all dividends paid does not exceed (1)
$5,000,000 in any period of twelve consecutive months, or (2) $10,000,000 during
the term of this Agreement.

         Section 7.6 INVESTMENTS, LOANS, ETC. Make, permit or hold any loans to
or investments in any Person, or permit any other Credit Party to make, permit
or hold any loans to or investments in any Person, other than:

                  (a) investments, loans or advances, the material details of
which have been set forth on Schedule 7.6;

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

                  (c) investments in certificates of deposit of maturities less
than one year, issued by commercial banks in the United States having capital
and surplus in excess of $500,000,000 and having short-term credit ratings of at
least A1 and P1 by Standard & Poor's Ratings Group and Moody's Investors
Service, Inc., respectively;

                  (d) investments in commercial paper of maturities of not more
than 180 days rated the highest credit rating obtainable from Standard & Poor's
Ratings Group and Moody's Investors Service, Inc.;

                  (e) investments in securities that are obligations of the
United States government purchased by any Credit Party under fully
collateralized repurchase agreements pursuant to which arrangements are made
with selling financial institutions (being a financial institution having
unimpaired capital and surplus of not less than $5,000,000,000 and with
short-term credit ratings of at least A1 and P1 by Standard & Poor's Ratings
Group and Moody's Investors Service, Inc., respectively) for such financial
institutions to repurchase such securities within 30 days from the date of
purchase by any Credit Party, and other similar short-term investments made in
connection with any Credit Party's cash management practices;

                  (f) investments in money market mutual funds having assets in
excess of $2,000,000,000;

                  (g) investments and loans by any US Borrower to or in any
other US Borrower and investments and loans by any Canadian Borrower to or in
any Canadian Borrower;

                  (h) (1) investments in direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
Government of Canada or of any Canadian province (or by any agency thereof to
the extent such obligations are backed by the full faith and credit of the
Government of Canada or of such Canadian province), in each case maturing within
one year from the date of acquisition thereof; (2) investments in commercial
paper maturing within 180 days from the date of acquisition thereof and having,
at such date of acquisition, the highest credit rating obtainable from CBRS
Inc., Dominion Bond Rating Service, Moody's Investor Service, Inc. or Standard
and Poor's Corporation; (3) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of Canada or of any Canadian province which has a
combined capital surplus and undivided profits of not less than C$250,000,000;
and (4) investments in fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (1) above and entered
into with a financial institution satisfying the criteria described in clause
(3) above; and

                  (i) other investments not to exceed an aggregate of $1,000,000
of investments made during the term of this Agreement.

         Notwithstanding the foregoing, investments of the type described in
clauses (b), (c), (d), (e), (f) and (h) shall not be permitted to be made or
maintained (1) by any Canadian Borrower at any time that Canadian Loans are
outstanding hereunder, or (2) by US Borrowers at any time that US Revolving
Loans are outstanding hereunder.

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<PAGE>

         Section 7.7 SALES AND LEASEBACKS. Enter into, any arrangement, directly
or indirectly, with any Person whereby any Credit Party shall sell or transfer
any Property, whether now owned or hereafter acquired, and whereby any Credit
Party shall then or thereafter rent or lease as lessee such Property or any part
thereof or other Property which a Credit Party intends to use for substantially
the same purpose or purposes as the Property sold or transferred.

         Section 7.8 NATURE OF BUSINESS. Engage in, or permit any other Credit
Party to engage in, any business other than the businesses in which they are
engaged as of the Closing Date or that are directly related thereto, which
businesses in which the Company and each Borrower are currently involved are
described in Schedule 7.8 hereto.

         Section 7.9 ERISA COMPLIANCE.

                  (a) Engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which any US Credit Party or any ERISA Affiliate
could be subjected to either a civil penalty assessed pursuant to Sections
502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the
Code which could reasonably be expected to have a Material Adverse Effect;

                  (b) Terminate, or permit any other US Credit Party or any
ERISA Affiliate to terminate, any Plan in a manner, or take any other action
with respect to any Plan, which could reasonably be expected to result in any
material liability of any US Credit Party or any ERISA Affiliate to the PBGC or
any other Governmental Authority;

                  (c) Fail to make, or permit any other US Credit Party or any
ERISA Affiliate to fail to make, full payment when due of all amounts which,
under the provisions of any Plan, agreement relating thereto or applicable law,
any US Credit Party or any ERISA Affiliate is required to pay as contributions
thereto;

                  (d) Permit to exist, or allow any other US Credit Party or any
ERISA Affiliate to permit to exist, any accumulated funding deficiency within
the meaning of Section 302 of ERISA or Section 412 of the Code, whether or not
waived, with respect to any Plan; (e) Contribute to or assume an obligation to
contribute to, or permit any US Credit Party or any ERISA Affiliate to
contribute to or assume an obligation to contribute to, any "multiemployer plan"
as such term is defined in Section 3(37) or 4001(a)(3) of ERISA;

                  (f) Acquire, or permit any other US Credit Party or any ERISA
Affiliate to acquire, an interest in any Person that causes such Person to
become an ERISA Affiliate with respect to any US Credit Party or with respect to
any ERISA Affiliate of any US Credit Party if such Person sponsors, maintains or
contributes to, or at any time preceding such acquisition has sponsored,
maintained, or contributed to, any "multiemployer plan" as such term is defined
in Section 3(37) or 4001(a)(3) of ERISA;

                  (g) Fail to pay, or cause to be paid, to the PBGC in a timely
manner, and without incurring any late payment or underpayment charge or
penalty, all premiums required pursuant to Sections 4006 and 4007 of ERISA;

                  (h) Amend, or permit any other US Credit Party or any ERISA
Affiliate to amend, a Plan resulting in an increase in current liability such
that any US Credit Party or any ERISA Affiliate is required to provide security
to such Plan under Section 401(a)(29) of the Code;

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                  (i) Incur, or permit any other US Credit Party or any ERISA
Affiliate to incur, a material liability to or on account of a Plan under
Sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; or

                  (j) Permit, or allow any other US Credit Party or any ERISA
Affiliate to permit, the actuarial present value of the benefit liabilities
(computed on an accumulated benefit obligation basis in accordance with GAAP)
under all Plans in the aggregate to exceed the current value of the assets of
all Plans in the aggregate that are allocable to such benefit liabilities.

                  (k) CANADIAN PLAN COMPLIANCE. As regards to any Canadian
Party:

                           (1) Terminate, or permit to terminate, any Plan in a
         manner, or take any other action with respect to any Plan, which could
         reasonably be expected to result in any material liability of such
         Canadian Credit Party to any Governmental Authority;

                           (2) Fail to make, or permit any other Canadian Credit
         Party to fail to make, full payment when due of all amounts which,
         under the provisions of any Plan, agreement relating thereto or
         applicable law, such Canadian Credit Party is required to pay as
         contributions thereto, except where the failure to make such payments
         could not reasonably be expected to have Material Adverse Effect;

                           (3) Permit to exist, or allow any other Canadian
         Credit Party to permit to exist, any accumulated funding deficiency,
         whether or not waived, with respect to any Plan in an amount which
         could reasonably be expected to cause a Material Adverse Effect;

                           (4) Contribute to or assume an obligation to
         contribute to, or permit any other Canadian Credit Party to contribute
         to or assume an obligation to contribute to, any "specified
         multi-employer plan" as such term is defined in the Employment Pensions
         Plans Act (Alberta);

                           (5) Acquire, or permit any other Canadian Credit
         Party to acquire, an interest in any Person if such Person sponsors,
         maintains or contributes to, or at any time preceding such acquisition
         has sponsored, maintained, or contributed to any "specified
         multi-employer plan" as such term is defined in the Employment Pension
         Plans Act (Alberta);

                           (6) Permit, or allow any other Canadian Credit Party
         to permit, the actuarial present value of the benefit liabilities
         (computed on an accumulated benefit obligation basis in accordance with
         GAAP) under all Plans in the aggregate to exceed the current value of
         the assets of all Plans in the aggregate that are allocable to such
         benefit liabilities, in each case only to the extent such liabilities
         and assets relate to benefits to be paid to employees of such Canadian
         Credit Party, by an amount that could reasonably be expected to cause a
         Material Adverse Effect.

         Section 7.10 SALE OR DISCOUNT OF RECEIVABLES. Sell, or allow any other
Credit Party to sell, with or without recourse, for discount or otherwise, any
notes or accounts receivable.

         Section 7.11 NEGATIVE PLEDGE AGREEMENTS. Create, incur, assume or
suffer to exist, any contract, agreement or understanding which in any way
prohibits or restricts the granting, conveying, creation or imposition of any
Lien on any Property of any Credit Party, or which requires the consent of or
notice to other Persons in connection therewith, other than (a) this Agreement
and the other Financing Documents and (b) any agreements governing any purchase
money Liens or Capital Lease Obligations otherwise permitted hereby provided
that any such prohibition or limitation is only effective against the Property
financed thereby.

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         Section 7.12 TRANSACTIONS WITH AFFILIATES. Except to the extent
otherwise specifically permitted herein, enter into any transaction or series of
transactions, with Affiliates of any Credit Party which involve an outflow of
money or other Property from any Credit Party to an Affiliate of any Credit
Party, including but not limited to repayment of Indebtedness, management fees,
compensation, salaries, asset purchase payments or any other type of fees or
payments similar in nature except for those which are in the ordinary course of
business of the Credit Parties and are on fair and reasonable terms no less
favorable than would be obtained in a comparable arm's length transaction with a
Person not an Affiliate.

         Section 7.13 UNCONDITIONAL PURCHASE OBLIGATIONS. Enter into or be a
party to, or permit any other Credit Party to enter into or be a party to, any
material contract for the purchase of materials, supplies or other property or
services, if such contract requires that payment be made by it regardless of
whether or not delivery is ever made of such materials, supplies or other
property or services.

         Section 7.14 EQUITY. Authorize or issue, or permit any other Credit
Party to authorize or issue (a) Equity to any Person other than (1) issuances of
Equity of the Company if no Change of Control results therefrom, and (2)
issuance by any other Credit Party to any of the Borrowers, or (b) any preferred
stock or other equity securities providing for the payment of dividends or other
distributions on a current basis or a mandatory redemption right existing with
regard thereto.

         Section 7.15 CAPITAL EXPENDITURES. Make Capital Expenditures in any
Fiscal Year in excess of $25,000,000 in the aggregate for all Borrowers;
provided that no Capital Expenditures shall be made (and no Borrower shall enter
into any commitment to make any Capital Expenditure) if, before or after giving
effect to the making of such Capital Expenditure (or entering into such
Commitment), a Default exists or would result therefrom.

         Section 7.16 INTERCOMPANY TRANSACTIONS. Create or otherwise cause or
permit to exist or become effective, except as may be expressly permitted or
required by the Financing Documents, any consensual encumbrance or restriction
of any kind on the ability of any Credit Party to (a) pay dividends or make any
other distribution in respect of such Credit Party's Equity or with respect to
any other interest or participation in, or measured by, its profits, (b) pay any
indebtedness owed any Credit Party, (c) make any loan or advance to any Credit
Party, or (d) sell, lease or transfer any of its Property to any Credit Party.

         Section 7.17 ACQUISITIONS; CREATION OF SUBSIDIARIES. Create or acquire
any Subsidiary or any asset or operating division of any other Person other than
the purchase of inventory in the ordinary course of business and the purchase of
capital assets expressly permitted hereunder.

         Section 7.18 ACCOUNTS. The Borrowers will not maintain accounts with
any bank or other depository institution or otherwise maintain cash or cash
equivalents other than (a) as permitted by Section 7.6 hereof, (b) the
Disbursement Accounts and Blocked Accounts maintained with Administrative Agent
and Canadian Lockbox Bank, (c) a payroll account maintained by Tube at a local
bank in Hickman, Arkansas for the purpose of funding payroll at Tube's Hickman,
Arkansas facility, (d) payroll accounts maintained with Canadian Lockbox Bank
and Administrative Agent for the limited purpose of funding payroll, (e) lockbox
accounts at the Temporary Lockbox Institutions provided that such lockbox
accounts shall be closed as soon as reasonably practical following the Closing
Date, but not later than September 30, 2002 and provided, further, that such
Temporary Lockbox Institutions shall have entered into Tri-Party Agreements with
Administrative Agent, (f) the Longview Account provided that such account shall
be closed as soon as practical following the Closing Date but not later than
July 31, 2002; provided further the Borrowers shall not be permitted to maintain
more than $750,000 in the Longview Account unless the depository institution
with respect to such account has executed and delivered to Administrative Agent
a Restricted Account Agreement, and (g) the Southwest Account and the LaSalle

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Account provided that each such account shall be closed as soon as practical
following the Closing Date but not later than May 31, 2002; provided, further,
the Borrowers shall not be permitted to maintain more than $750,000 in the
Southwest Account or $300,000 in the LaSalle Account unless the depository
institution with respect to such account has executed and delivered to
Administrative Agent a Restricted Account Agreement. In no event will Borrowers
maintain in any payroll account permitted pursuant to this Section 7.18 funds in
an amount in excess of the aggregate payroll for one pay period for the
employees of such Borrowers paid from such accounts.

         Section 7.19 MODIFICATIONS TO INDEBTEDNESS AGREEMENTS.

                  (a) Amend, modify, or waive any covenant contained then in any
instrument, document or agreement governing the Indebtedness of the Credit
Parties set forth on Schedule 7.2 hereto or any other Indebtedness permitted by
Section 7.2 hereof if the effect of such amendment, modification, or waiver
would be to make the terms of such Indebtedness materially more onerous to any
Credit Party;

                  (b) Amend, modify, or waive any provision of any instrument,
document or agreement governing the Indebtedness of the Credit Parties set forth
on Schedule 7.2 hereto or any other Indebtedness permitted by Section 7.2 hereof
if the effect of such amendment, modification or waiver (1) subjects any Credit
Party to any additional material obligation, (2) increases the principal
thereunder, or (3) accelerates the date fixed for any payment of principal or
interest on such Indebtedness.

                  (c) Make any voluntary prepayment of, or optionally redeem, or
make any payment in defeasance of, any part of the Indebtedness of the Credit
Parties set forth on Schedule 7.2 hereto or any other Indebtedness permitted by
Section 7.2 hereof.

         Section 7.20 FISCAL YEAR. Change its Fiscal Year.

         Section 7.21 MODIFICATION OF PURCHASE DOCUMENTS. Amend, modify or waive
any provision of any of the Purchase Documents.

         Section 7.22 NEGATIVE COVENANTS WITH RESPECT TO CERTAIN CREDIT PARTIES.
Permit, allow or cause any of Precision International, Maverick International or
Exchangeco to (a) conduct any business or operations, (b) own, lease, license or
otherwise have the right to use any Property (other than Exchangeco's ownership
of all of the issued and outstanding Equity of Tube Canada), (c) incur any
liabilities or obligations to any Person, or (d) employ any employees.

                                   ARTICLE 8
                                EVENTS OF DEFAULT

         Upon the occurrence and during the continuance of any of the following
specified events (each an "EVENT OF DEFAULT"):

         Section 8.1 PAYMENTS.

                  (a) Any of the Borrowers shall fail to pay when due
(including, but not limited to, any mandatory prepayment required pursuant to
Section 2.11) any principal of any Loan or any Note, or any Reimbursement
Obligation or any fee or any other amount payable hereunder or under the Fee
Letter or any other Financing Document; or

                  (b) any of the Borrowers shall fail to pay when due any
interest on any Loan or any Note and such failure to pay shall continue
unremedied for a period of three days.

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         Section 8.2 COVENANTS WITHOUT NOTICE. Any of the Borrowers shall fail
to observe or perform any covenant or agreement contained in Article 4, Section
6.1, Section 6.5, Section 6.7, Section 6.10 or Article 7.

         Section 8.3 OTHER COVENANTS. Any Borrower shall fail to observe or
perform any covenant or agreement contained in this Agreement, other than those
referred to in Section 8.1 or Section 8.2 and, if capable of being remedied,
such failure shall remain unremedied for 20 days after the earlier of (a) any
Credit Party's obtaining knowledge thereof, or (b) written notice thereof shall
have been given to the Company or any Borrower by any Lender, any Issuing Bank,
Canadian Administrative Agent or Administrative Agent.

         Section 8.4 OTHER FINANCING DOCUMENT OBLIGATIONS. Default is made in
the due observance or performance by any Borrower or any other Obligated Party
of any of the covenants or agreements contained in any Financing Document other
than this Agreement, and such default continues unremedied beyond the expiration
of any applicable grace period which may be expressly allowed under such
Financing Document.

         Section 8.5 REPRESENTATIONS. Any representation, warranty or statement
made or deemed to be made by any Borrower or any other Obligated Party or any of
any Borrower's or any other Obligated Party's officers herein or in any other
Financing Document, or in any certificate, request or other document furnished
pursuant to or under this Agreement or any other Financing Document, shall have
been incorrect in any material respect as of the date when made or deemed to be
made.

         Section 8.6 NON-PAYMENTS OF OTHER INDEBTEDNESS. Any Credit Party shall
fail to make any payment or payments of principal of or interest on any
Indebtedness of such Credit Party which Indebtedness is in an aggregate amount
of $1,000,000 or greater after giving effect to any applicable grace period.

         Section 8.7 DEFAULTS UNDER OTHER AGREEMENTS. Any Credit Party shall
fail to observe or perform any covenant or agreement contained in any
agreement(s) or instrument(s) relating to Indebtedness of any Credit Party of
$1,000,000 or more in the aggregate within any applicable grace period, or any
other event shall occur, if the effect of such failure or other event is to
accelerate, or to permit the holder of such Indebtedness or any other Person to
accelerate, the maturity of $1,000,000 or more in the aggregate of such
Indebtedness; or $1,000,000 or more in the aggregate of any such Indebtedness
shall be, or if as a result of such failure or other event may be, required to
be prepaid (other than prepayments resulting from excess cash flow) in whole or
in part prior to its stated maturity.

         Section 8.8 BANKRUPTCY UNDER US LAW. Any Obligated Party (which for the
purposes of this Section 8.8 shall not include any Canadian Borrower) shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy" as now or hereafter in effect, or any successor
thereto (the "BANKRUPTCY Code"); or an involuntary case is commenced against any
Obligated Party shall commence and the petition is not controverted within ten
days, or is not stayed or dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or any substantial part of the property of any Obligated
Party; or any Obligated Party commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to any Obligated Party or there is commenced
against any Obligated Party any such proceeding which remains unstayed or
undismissed for a period of 60 days; or any Obligated Party is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or any Obligated Party suffers any appointment of
any custodian or the like for it or any substantial part of its Property to
continue undischarged or unstayed for a period

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of 60 days; or any Obligated Party makes a general assignment for the benefit of
creditors; or any Obligated Party shall fail to pay, or shall state in writing
that it is unable to pay, or shall be unable to pay, its debts generally as they
become due; or any Obligated Party shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing; or any
corporate action is taken by any Obligated Party for the purpose of effecting
any of the foregoing.

         Section 8.9 BANKRUPTCY UNDER CANADIAN LAW.

                  (a) Any Canadian Borrower (1) becomes insolvent, or generally
does not or becomes unable to pay its debts or meet its liabilities as the same
become due, or admits in writing its inability to pay its debts generally, or
declares any general moratorium on its indebtedness, or proposes a compromise or
arrangement between it and any class of its creditors; (2) commits an act of
bankruptcy under the Bankruptcy and Insolvency Act (Canada), or makes an
assignment of its property for the general benefit of its creditors under such
Act, or makes a proposal (or files a notice of its intention to do so) under
such Act; (3) institutes any proceeding seeking to adjudicate it an insolvent,
or seeking liquidation, dissolution, winding-up, reorganization, compromise,
arrangement, adjustment, protection, moratorium, relief, stay of proceedings of
creditors generally (or any class of creditors), or composition of it or its
debts or any other relief, under any federal, provincial or foreign Law now or
hereafter in effect relating to bankruptcy, winding-up, insolvency,
reorganization, receivership, plans of arrangement or relief or protection of
debtors (including the Bankruptcy and Insolvency Act (Canada), the Companies'
Creditors Arrangement Act (Canada) and any applicable corporations legislation)
or at common law or in equity, or files an answer admitting the material
allegations of a petition filed against it in any such proceeding; (4) applies
for the appointment of, or the taking of possession by, a receiver, interim
receiver, receiver/manager, sequestrator, conservator, custodian, administrator,
trustee, liquidator or other similar official for it or any substantial part of
its property; or (5) threatens to do any of the foregoing, or takes any action,
corporate or otherwise, to approve, effect, consent to or authorize any of the
actions described in this Section 8.9, or otherwise acts in furtherance thereof
or fails to act in a timely and appropriate manner in defense thereof.

                  (b) Any petition is filed, application made or other
proceeding instituted against or in respect of any Canadian Borrower: (1)
seeking to adjudicate it an insolvent; (2) seeking a receiving order against it
under the Bankruptcy and Insolvency Act (Canada); (3) seeking liquidation,
dissolution, winding-up, reorganization, compromise, arrangement, adjustment,
protection, moratorium, relief, stay of proceedings of creditors generally (or
any class of creditors), or composition of it or its debts or any other relief
under any federal, provincial or foreign Law now or hereafter in effect relating
to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of
arrangement or relief or protection of debtors (including the Bankruptcy and
Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada) and
any applicable corporations legislation) or at common law or in equity; or (4)
seeking the entry of an order for relief or the appointment of, or the taking of
possession by, a receiver, interim receiver, receiver/manager, sequestrator,
conservator, custodian, administrator, trustee, liquidator or other similar
official for it or any substantial part of its property; and in any case
describe in clause (b)(1) through (4) such petition, application or proceeding
continues undismissed, or unstayed and in effect, for a period of 60 days after
the institution thereof, provided that if an order, decree or judgment is
granted or entered (whether or not entered or subject to appeal) against any
Canadian Borrower thereunder in the interim, such 60-day period will cease to
apply, and provided further that if the Canadian Borrower files an answer
admitting the material allegations of a petition filed against it in any such
proceeding, such 60-day period will cease to apply.

         Section 8.10 MONEY JUDGMENT. Judgments or orders for the payment of
money involving in the aggregate at any time a liability (net of any insurance
proceeds or indemnity payments actually received in respect thereof prior to or
within 30 days from the entry thereof, or to be received in respect

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thereof in the event any appeal thereof shall be unsuccessful) of more than
$1,000,000, (or the Dollar Equivalent thereof) or that would otherwise have a
Material Adverse Effect shall be rendered against any Obligated Party and such
judgment or order shall continue unsatisfied in accordance with the terms of
such judgment or order (in the case of a money judgment) and in effect for a
period of 30 days during which execution shall not be effectively stayed or
deferred (whether by action of a court, by agreement or otherwise).

         Section 8.11 DISCONTINUANCE OF BUSINESS. Except as permitted by Section
7.4, any Credit Party shall cease to be principally engaged in the businesses
and operations in which such Credit Party was principally engaged on the Closing
Date.

         Section 8.12 FINANCING DOCUMENTS. Any Material Provision of any of the
Financing Documents after delivery thereof shall for any reason, except to the
extent permitted by the terms thereof, cease to be in full force and effect and
valid, binding and enforceable (except as enforceability may be limited as
stated in Section 5.3) in accordance with its terms, or, in the case of any of
the Security Instruments, cease to create a valid and perfected Lien of the
priority contemplated thereby on any of the collateral purported to be covered
thereby, or any Obligated Party shall so state in writing. As used in this
Section 8.12, "MATERIAL PROVISION" shall mean (a) with respect to this
Agreement, or the Notes, any material term, covenant, or agreement set forth
therein, and (b) with respect to any other Financing Document, any provision if
the validity and enforceability thereof is necessary for such Financing Document
to accomplish its stated, or clearly intended, purpose or otherwise necessary in
order for any Lender to enforce any material right or remedy under any Financing
Document.

         Section 8.13 CHANGE OF CONTROL. The occurrence of a Change of Control.

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, Administrative Agent, upon the written or telex
request of the Required Lenders, shall, by written notice to the Borrowers, take
any or all of the following actions, without prejudice to the rights of
Administrative Agent, the Canadian Administrative Agent any Lender or the holder
of any Note, to enforce its claims against any Credit Party: (a) declare the
Revolving Credit Commitment, the US Swingline Commitment, and other lending
obligations, if any, terminated, whereupon the Revolving Credit Commitment and
other lending obligations, if any, of each Lender shall terminate immediately;
or (b) declare the entire principal amount of and all accrued interest on all
Lender Indebtedness then outstanding to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest, notice of
protest or dishonor, notice of acceleration, notice of intent to accelerate or
other notice of any kind, all of which are hereby expressly waived by each
Credit Party, and thereupon take such action as it may deem desirable under and
pursuant to the Financing Documents; provided, that, if an Event of Default
specified in Section 8.8 or Section 8.9 shall occur, the result which would
occur upon the giving of written notice by Administrative Agent to the
Borrowers, as specified in clauses (a) and (b) above, shall occur automatically
without the giving of any such notice; or (c) if any US Letter of Credit shall
then be outstanding, demand L/C Cover which the US Borrowers shall immediately
pay to the Administrative Agent for deposit in a cash collateral account
maintained by the Administrative Agent; (d) if any Canadian Letter of Credit
shall then be outstanding, demand L/C Cover which the Canadian Borrowers shall
immediately jointly and severally pay to the Canadian Administrative Agent for
deposit in a cash collateral account maintained by the Canadian Administrative
Agent, or (e) if any B/A shall be outstanding, demand B/A Cover which Canadian
Borrowers shall immediately jointly and severally pay to the Canadian
Administrative Agent for deposit in a cash collateral account maintained by the
Canadian Administrative Agent.

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                                   ARTICLE 9
                                     AGENTS

         Section 9.1 APPOINTMENT OF AGENTS. Each Lender (and each Secured
Affiliate by and through its affiliated Lender) and each Issuing Bank hereby
designates JPMorgan Chase Bank as Administrative Agent, CIT Business Credit
Canada Inc. as Canadian Administrative Agent and General Electric Capital
Corporation as Documentation Agent as herein specified and as specified in the
other Financing Documents. Each Lender (and each Secured Affiliate and Cash
Management Affiliate by and through its affiliated Lender) and each Issuing Bank
hereby irrevocably authorizes each such Agent to take such action on its behalf
under the provisions of this Agreement, the Notes, and the other Financing
Documents and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of such Agent by the
terms hereof and thereof and such other powers as are reasonably incidental
thereto. Such Agent may perform any of its duties hereunder by or through its
agents or employees.

         Section 9.2 LIMITATION OF DUTIES OF AGENTS. No Agent shall have any
duties or responsibilities except those expressly set forth in this Agreement
and as specified in the other Financing Documents. Neither any Agent nor any of
their respective officers, directors, employees or agents shall be liable for
any action taken or omitted by it as such hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The duties
of each Agent shall be mechanical and administrative in nature; no Agent shall
have by reason of this Agreement a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon any Agent any obligations in respect of
this Agreement except as expressly set forth herein.

         Section 9.3 LACK OF RELIANCE ON THE AGENTS.

                  (a) INDEPENDENT INVESTIGATION. Independently and without
reliance upon any Agent, each Lender, to the extent it deems appropriate, has
made and shall continue to make (1) its own independent investigation of the
financial condition and affairs of the Credit Parties in connection with the
taking or not taking of any action in connection herewith, and (2) its own
appraisal of the creditworthiness of the Credit Parties, and, except as
expressly provided in this Agreement, and the other Financing Documents, no
Agent shall have any responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the consummation of the transactions
contemplated herein or at any time or times thereafter.

                  (b) AGENTS NOT RESPONSIBLE. No Agent shall be responsible to
any Lender or any Issuing Bank for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectability, priority or sufficiency
of this Agreement, the Notes, the Letters of Credit or the other Financing
Documents or the financial condition of any Obligated Party or be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Notes or the other
Financing Documents, or the financial condition of any Obligated Party, or the
existence or possible existence of any Default or Event of Default.

         Section 9.4 CERTAIN RIGHTS OF THE AGENTS. If any Agent shall request
instructions from the Required Lenders with respect to any act or action
(including the failure to act) in connection with this Agreement, the Notes and
the other Financing Documents, such Agent shall be entitled to refrain from such
act or taking such action unless and until such Agent shall have received
instructions from the Required Lenders; and no Agent shall incur such liability
to any Person by reason of so refraining.

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Without limiting the foregoing, no Lender shall have any right of action
whatsoever against any Agent as a result of such Agent acting or refraining from
acting under this Agreement, the Notes and the other Financing Documents in
accordance with the instructions of the Required Lenders, or to the extent
required by Section 10.2, all of the Lenders.

         Section 9.5 RELIANCE BY AGENTS. Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other documentary teletransmission or telephone
message believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person. Each Agent may consult with legal counsel
(including counsel for any Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.

         Section 9.6 INDEMNIFICATION OF AGENTS. To the extent any Agent is not
reimbursed and indemnified by the Borrowers, each Lender will reimburse and
indemnify each Agent in accordance with its Credit Percentage for and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including reasonable counsel fees and
disbursements) or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against such Agent in performing its duties
hereunder, in any way relating to or arising out of this Agreement and by reason
of the ordinary negligence of such Agent; provided that no Lender shall be
liable to such Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from, as to such Agent, such Agent's gross negligence or willful
misconduct.

         Section 9.7 AGENTS IN THEIR INDIVIDUAL CAPACITY. With respect to its
obligations under this Agreement, the Loans made by it and the Notes issued to
it, each Agent shall have the same rights and powers hereunder as any other
Lender or holder of a Note and may exercise the same as though it were not
performing the duties, if any, specified herein; and the terms "Lenders",
"Required Revolving Lenders", "Required Term Lenders", "Required Lenders,"
"holders of Notes" or any similar terms shall, unless the context clearly
otherwise indicates, include each Agent in its individual capacity. Each Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with any Credit Party or
any Affiliate of any Credit Party as if it were not performing the duties, if
any, specified herein, and may accept fees and other consideration from any
Credit Party for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.

         Section 9.8 MAY TREAT LENDER AS OWNER. Each Borrower, each Agent and
each Issuing Bank may deem and treat each Lender as the owner of such Lender's
Notes for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent. 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 a Note shall be
conclusive and binding on any subsequent owner, transferee or assignee of such
Note or any promissory note or notes issued in exchange therefor.

         Section 9.9 SUCCESSOR AGENT.

                (a) RESIGNATION. Each Agent may resign at any time by giving
written notice thereof to the Lenders, the Issuing Banks and the Borrowers and
may be removed at any time with or without cause by the Required Lenders. Upon
any such resignation or removal, the Required Lenders shall have the right, upon
five days' notice to the Borrowers, to appoint a successor Agent (to act in the
same capacity as the resigning or removed Agent), subject to the prior written
approval of the Borrowers, such approval not to be unreasonably withheld and not
to be required during the existence of a Default or Event of Default.

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If no successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or the Required Lenders' removal of the retiring
Agent, then, upon five days' notice to the Borrowers, the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent (subject to approval of the
Borrowers, such approval not to be unreasonably withheld and not to be required
during the existence of a Default or Event of Default), which (1) if the
resigning or removed Agent was the Administrative Agent shall be a bank which
maintains an office in the United States, or a commercial bank organized under
the laws of the United States of America or of any State thereof, or any
Affiliate of such bank, having a combined capital and surplus of at least
$250,000,000, and (2) the resigning or removed Agent was the Canadian
Administrative Agent, shall be an entity that is not a non-resident of Canada
for purposes of the Income Tax Act (Canada).

                  (b) RIGHTS, POWERS, ETC. Upon the acceptance of any
appointment as an Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was the Agent under this Agreement.

         Section 9.10 DOCUMENTATION AGENT. Notwithstanding anything contained in
this Article 9 or any other Financing Document to the contrary, the
Documentation Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement or any other Financing Document
other than those applicable to all Lenders as such.

                                   ARTICLE 10
                                  MISCELLANEOUS

         Section 10.1 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including, telecopy or similar
teletransmission or writing) and shall be given to such party at its address or
telecopy number set forth on the signature pages hereof or such other address or
telecopy number as such party may hereafter specify by notice to the Canadian
Administrative Agent, Administrative Agent and the Company. Each such notice,
request or other communication shall be effective (a) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid, or (b) if given by any other means (including,
but not limited to, by air courier), when delivered at the address specified on
the signature pages hereto; provided that notices to the Administrative Agent or
Canadian Administrative Agent shall not be effective until actually and
physically received. Any notice to be given to any Borrower or to all Borrowers
pursuant to this Agreement or any of the other Financing Documents may be given
to the Company or to any other Borrower, and if given to the Company or to any
Borrower in the manner set forth in this Section 10.1, such notice shall be
deemed to be effective notice to all Borrowers for purposes of this Agreement.

         Section 10.2 AMENDMENTS AND WAIVERS. Neither this Agreement nor any
other Financing Document, nor any terms hereof or thereof, may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.2. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent, shall, from time to time, (x) enter
into with the Borrowers, written amendments, supplements or modifications hereto
and to the other Financing Documents for the purpose of adding any provisions to
this Agreement or to the other Financing Documents or changing in any manner the
rights or obligations of the Lenders or the Borrowers hereunder or thereunder or
(y) waive at the Borrowers' request, on such terms and conditions as the
Required Lenders or the Administrative Agent, as the case may be, may specify in
such instrument, any of the requirements of this Agreement or the other
Financing Documents or any Default and its

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consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall:

                  (a) reduce the amount or extend the scheduled date of maturity
of any Loan or any Reimbursement Obligation or of any scheduled installment
thereof or reduce the stated rate of any interest or fee payable hereunder or
extend the date of any payment thereof or modify any provision that provides for
the ratable sharing by the Lenders (or any sub-set of Lenders) of any payment or
prepayment of Lender Indebtedness to provide for a non-ratable sharing thereof
or increase the amount or extend the expiration date of any Lender's Revolving
Credit Commitment or Term Commitment or amend, modify or waive any provision of
Section 2.11(f), (g), (h) or (i) or Section 2.20, in each case without the prior
written consent of each Lender directly affected thereby;

                  (b) (i) change the currency in which any Loan or Reimbursement
Obligation is payable or amend, modify or waive any provision of this Section
10.2 or reduce the percentage specified in the definition of Required Lenders,
in each case without the written consent of all of the Lenders, (ii) reduce the
percentage specified in the definition of Required Revolving Lenders without the
written consent of all Revolving Lenders, or (iii) reduce the percentage
specified in the definition of Required Term Lenders without the written consent
of all Term Lenders;

                  (c) release any part of the Collateral, without the written
consent of all of the Lenders, except as expressly permitted hereby, provided
that the Administrative Agent or the Canadian Administrative Agent, as
applicable, shall release (without consent from the Lenders) any Collateral
sold, transferred or otherwise disposed of as permitted by Section 7.4;

                  (d) amend, modify or waive any provision of Article 9 without
the written consent of the Agent directly affected thereby;

                  (e) amend, modify or waive (1) any Letter of Credit Liability
without the written consent of the applicable Issuing Bank or (2) any Letter of
Credit without the consent of each Lender if such Letter of Credit, after giving
effect to such amendment, modification or waiver, would no longer satisfy the
requirements hereof if such Letter of Credit was being issued ab initio at such
time, provided that in all cases other than clauses (1) or (2), only the consent
of the applicable Issuing Bank shall be required to amend, modify or waive any
Letter of Credit;

                  (f) amend the definitions of US Borrowing Base, Eligible
Account Advance Percentage, Eligible Account, Eligible Inventory, Eligible
Inventory Advance Percentage, Eligible Included-In-Transit Inventory, Eligible
Bailee Inventory, US Equipment Component, US Excess Cash Flow Amount, Excess
Cash Flow, Eligible Bill and Hold Accounts, Inventory Limit, WIP Limit,
Included-in-Transit Limit and the advance rates specified in the definition of
US Borrowing Base or the other definitions set forth in this Section 10.2(f)
(other than to the extent already permitted to be reduced at the discretion of
the Administrative Agent) without the written consent of the Administrative
Agent and all of the US Revolving Lenders;

                  (g) amend the definitions of Canadian Borrowing Base, Eligible
Account Advance Percentage, Eligible Account, Eligible Inventory, Eligible
Inventory Advance Percentage, Eligible Included-In-Transit Inventory, Eligible
Bailee Inventory, Canadian Equipment Component, Canadian Excess Cash Flow
Amount, Excess Cash Flow, Inventory Limit, WIP Limit, Included-in-Transit Limit
and the advance rates specified in the definition of Canadian Borrowing Base or
the other definitions set forth in this Section 10.2(g) (other than to the
extent already permitted to be reduced at the discretion of the Administrative
Agent) without the written consent of all of the Administrative Agent, the
Canadian Administrative Agent and all Canadian Lenders; or

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                  (h) amend Section 2.26 without the consent of the US Swingline
Lender.

                  (i) neither Administrative Agent nor Canadian Administrative
Agent will foreclose upon, acquire via deed in lieu of foreclosure take
possession or operate, (a) the Borrowers' Real Property located in Calgary,
Alberta or Conroe, Texas unless and until the Phase II environmental site
assessments required by Schedule 3.3 hereof have been completed and reports have
been issued thereon and all Lenders have confirmed in writing that no
remediation is required by such Lender or that any remediation has been
completed to the satisfaction of all Lenders, or (b) the Borrowers' Real
Property located in Harris County, Texas or Mississippi County, Arkansas unless
Administrative Agent has obtained a Phase II environmental site assessment
thereon and reports have been issued thereon and all Lenders have confirmed in
writing that no remediation is required or that any remediation, has been
completed to the satisfaction of all Lenders.

                  Any waiver and any amendment, supplement or modification
pursuant to this Section 10.2 shall apply to each of the Lenders and shall be
binding upon each Borrower, the Lenders, the Administrative Agent and all future
holders of the Loans. In the case of any waiver, the Borrowers, the Lenders and
the Administrative Agent shall be restored to their former position and rights
hereunder and under the other Financing Documents, and any Default waived shall
be deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default, or impair any right consequent thereon.

         Section 10.3 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of any Borrower, any Agent, any Issuing Bank or any Lender or any holder of
any Note in exercising any right or remedy under this Agreement or any other
Financing Document and no course of dealing between any Borrower and any Agent,
any Issuing Bank or any Lender or any holder of any Note shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or remedy
under the Notes, this Agreement or any other Financing Document preclude any
other or further exercise thereof or the exercise of any other right or remedy
under the Notes, this Agreement or any other Financing Document. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which any Borrower, any Agent, any Issuing Bank or any Lender
would otherwise have. No notice to or demand on any Borrower not required under
the Notes, this Agreement or any other Financing Document in any case shall
entitle any Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of any Agent, any
Issuing Bank or the Lenders to any other or further action in any circumstances
without notice or demand.

         Section 10.4 PAYMENT OF EXPENSES, INDEMNITIES, ETC. Subject to Section
10.22 herein, each Borrower agrees to (and shall be jointly and severally liable
for):

                  (a) EXPENSES. Whether or not the transactions hereby
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of each Agent, and each Issuing Bank in the administration (both before
and after the execution hereof and including advice of counsel for each Agent as
to the rights and duties of such Agent and the Lenders with respect thereto) of,
and in connection with the preparation, execution and delivery of, recording or
filing of, preservation of rights under, enforcement of, interpretation of, and,
after a Default, refinancing, renegotiation or restructuring of, this Agreement,
the Notes, and the other Financing Documents and any amendment, waiver or
consent relating thereto (including, but not limited to, the reasonable fees and
disbursements, for such purposes, of counsel for each Agent and, after Default,
for any of the Lenders) and promptly reimburse such Agent for all amounts
expended, advanced, or incurred by such Agent or the Lenders to satisfy any
obligation of any Borrower under this Agreement or any other Financing Document;

                  (b) INDEMNIFICATION. INDEMNIFY EACH AGENT, EACH ISSUING BANK
AND EACH LENDER, EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES, AGENTS AND AFFILIATES FROM, HOLD EACH OF THEM HARMLESS AGAINST,
AND PROMPTLY UPON DEMAND PAY OR REIMBURSE EACH OF THEM FOR, ANY AND ALL ACTIONS,
SUITS, PROCEEDINGS (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES),
CLAIMS, COSTS, LOSSES, LIABILITIES, DAMAGES OR EXPENSES OF ANY KIND OR NATURE
WHATSOEVER WHICH MAY BE INCURRED BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM
(WHETHER OR NOT ANY OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF,
ARISING OUT OF OR IN ANY WAY RELATED TO (1) ANY ACTUAL OR PROPOSED USE BY ANY
BORROWER OF THE PROCEEDS OF ANY OF THE LOANS; OR (2) ANY OTHER ASPECT OF THIS
AGREEMENT, THE NOTES, AND THE FINANCING DOCUMENTS, INCLUDING

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BUT NOT LIMITED TO THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL (INCLUDING
ALLOCATED COSTS OF INTERNAL COUNSEL) AND ALL OTHER EXPENSES INCURRED IN
CONNECTION WITH INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY SUCH ACTION,
SUIT, PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES) OR
CLAIM, AND INCLUDING ALL ACTIONS, SUITS, PROCEEDINGS (INCLUDING ANY
INVESTIGATIONS, LITIGATION OR INQUIRIES), CLAIMS, COSTS, LOSSES, LIABILITIES,
DAMAGES OR EXPENSES ARISING BY REASON OF ORDINARY NEGLIGENCE OF EACH AGENT, EACH
ISSUING BANK AND EACH LENDER, EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, REPRESENTATIVES, AGENTS AND AFFILIATES; PROVIDED, HOWEVER, THE
PROVISIONS OF THIS SECTION 10.4(B) SHALL NOT APPLY TO ANY ACTION, SUITS,
PROCEEDINGS, CLAIMS, COSTS, LOSSES, LIABILITIES, DAMAGES, OR EXPENSES TO THE
EXTENT, BUT ONLY TO THE EXTENT, CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE PARTY SEEKING INDEMNIFICATION;

                  (c) ENVIRONMENTAL INDEMNIFICATION. INDEMNIFY AND HOLD HARMLESS
FROM TIME TO TIME EACH AGENT, THE ISSUING BANKS AND THE LENDERS, EACH PERSON
CLAIMING BY, THROUGH, UNDER OR ON ACCOUNT OF ANY OF THE FOREGOING AND THE
RESPECTIVE DIRECTORS, OFFICERS, COUNSEL, EMPLOYEES, AGENTS, AFFILIATES,
SUCCESSORS AND ASSIGNS OF EACH OF THE FOREGOING FROM AND AGAINST ANY AND ALL
LOSSES, CLAIMS, COST RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS,
DAMAGES AND LIABILITIES (WHICH RELATE TO OR ARISE AS A RESULT OF THE LOANS, THE
LETTERS OF CREDIT OR ANY FINANCING DOCUMENT) TO WHICH ANY SUCH PERSON MAY BECOME
SUBJECT AND INCLUDING ANY AND ALL LOSSES, CLAIMS, COST RECOVERY ACTIONS,
ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND LIABILITIES (WHICH RELATE TO
OR ARISE AS A RESULT OF THE LOANS, THE LETTERS OF CREDIT OR ANY FINANCING
DOCUMENT) ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF EACH AGENT, THE
ISSUING BANKS AND THE LENDERS, EACH PERSON CLAIMING BY, THROUGH, UNDER OR ON
ACCOUNT OF ANY OF THE FOREGOING AND THE RESPECTIVE DIRECTORS, OFFICERS, COUNSEL,
EMPLOYEES, AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS OF EACH OF THE FOREGOING
(1) UNDER ANY ENVIRONMENTAL LAW APPLICABLE TO ANY BORROWER OR ANY OF THEIR
RESPECTIVE PROPERTIES, INCLUDING WITHOUT LIMITATION, THE TREATMENT OR DISPOSAL
OF HAZARDOUS SUBSTANCES ON ANY OF THEIR RESPECTIVE PROPERTIES, (2) AS A RESULT
OF THE BREACH OR NON-COMPLIANCE BY ANY CREDIT PARTY WITH ANY ENVIRONMENTAL LAW
APPLICABLE TO ANY CREDIT PARTY, (3) DUE TO PAST OWNERSHIP BY ANY CREDIT PARTY OF
ANY OF THEIR RESPECTIVE PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR RESPECTIVE
PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR RESPECTIVE PROPERTIES WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (4)
THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS
SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY ANY CREDIT PARTY,
OR (5) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH
THIS AGREEMENT, THE NOTES OR ANY OTHER FINANCING DOCUMENT; PROVIDED, HOWEVER, NO
INDEMNITY SHALL BE AFFORDED UNDER THIS SECTION 10.4(C) IN RESPECT OF ANY
PROPERTY FOR ANY OCCURRENCE ARISING PRIMARILY FROM THE ACTS OR OMISSIONS OF AN
AGENT OR ANY LENDER DURING THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR
ASSIGNS SHALL HAVE OBTAINED ACTUAL PHYSICAL POSSESSION OF SUCH PROPERTY (WHETHER
BY FORECLOSURE

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OR DEED IN LIEU OF FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE); AND

                  (d) ENVIRONMENTAL WAIVER. WITHOUT LIMITING THE FOREGOING
PROVISIONS, EACH BORROWER HEREBY DOES WAIVE, RELEASE AND COVENANT NOT TO BRING
AGAINST ANY OF THE PERSONS INDEMNIFIED IN THIS SECTION 10.4 ANY DEMAND, CLAIM,
COST RECOVERY ACTION OR LAWSUIT THEY MAY NOW OR HEREAFTER HAVE OR ACCRUE (WHICH
RELATE TO OR ARISE AS A RESULT OF THE LOANS, THE LETTERS OF CREDIT OR ANY
FINANCING DOCUMENT) ARISING FROM (1) ANY ENVIRONMENTAL LAW NOW OR HEREAFTER
ENACTED (INCLUDING THOSE APPLICABLE TO ANY BORROWER UNLESS THE ACTS OR OMISSIONS
OF ANY SUCH PERSON OR THEIR RESPECTIVE SUCCESSORS AND ASSIGNS ARE THE PRIMARY
CAUSE OF THE CIRCUMSTANCES GIVING RISE TO SUCH DEMAND, COST RECOVERY ACTION OR
LAWSUIT, (2) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF
HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY ANY
CREDIT PARTY, OR (3) THE BREACH OR NON-COMPLIANCE BY ANY CREDIT PARTY WITH ANY
ENVIRONMENTAL LAW OR ENVIRONMENTAL COVENANT APPLICABLE TO ANY BORROWER, UNLESS
THE ACTS OR OMISSIONS OF SUCH PERSON, ITS SUCCESSORS AND ASSIGNS ARE THE PRIMARY
CAUSE OF THE CIRCUMSTANCES GIVING RISE TO SUCH DEMAND, CLAIM, COST RECOVERY
ACTION OR LAWSUIT.

If and to the extent that the obligations of the Borrowers under this Section
10.4 are unenforceable for any reason, each Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law. Each Borrower's obligations under this
Section 10.4 shall survive any termination of this Agreement and the payment of
the Notes. Notwithstanding the foregoing, in no event shall any Canadian
Borrower be required to pay any costs and expenses or indemnify any Person
pursuant to this Section 10.4 other than Canadian Administrative Agent, any
Issuing Bank with respect to Canadian Letters of Credit or Canadian Lenders each
acting in its capacity as such (and the officers, directors, employees,
representatives, agents and affiliates of such Persons acting in such
capacities).

         Section 10.5 RIGHT OF SETOFF. In addition to and not in limitation of
all rights of offset that any Lender or any Issuing Bank may have under
applicable law, each Lender or other holder of a Note, or any other Lender
Indebtedness shall, upon the occurrence of any Event of Default and at any time
during the continuance thereof and whether or not such Lender, such Issuing Bank
or such holder has made any demand or Borrower's obligations are matured, have
the right at any time and from time to time, without notice to any Borrower (any
such notice being expressly waived by each Borrower) to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by any Lender or any
Issuing Bank to or for the credit or the account of the applicable Borrower
against any and all of the Lender Indebtedness owing to such Lender or such
Issuing Bank by such Borrower then outstanding, subject to the provisions of
Section 2.11(f), (g), (h) and (i); provided, that no Lender shall exercise any
right of offset with respect to any deposit of any Canadian Borrower to satisfy
any Lender Indebtedness which is not Canadian Lender Indebtedness.

         Section 10.6 BENEFIT OF AGREEMENT. The Notes, this Agreement and the
other Financing Documents shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto,
provided that no Borrower may assign or transfer any of its interest hereunder
or thereunder without the prior written consent of each Lender.

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         Section 10.7 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.

                  (a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of any Issuing Bank that
issues any Letter of Credit), except that no Borrower may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by any Borrower
without such consent shall be null and void). Except as otherwise expressly
provided herein, nothing in this Agreement shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby any legal or equitable right, remedy or claim under or by
reason of this Agreement.

                  (b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it) by executing,
and causing the assignee thereof to execute, an assignment and acceptance in the
form attached hereto as Exhibit R ("ASSIGNMENT AND ACCEPTANCE"); provided that
(1) except in the case of an assignment to a Lender or an Affiliate of a Lender
(other than an assignment by a Canadian Lender to a Lender or an Affiliate which
is not a resident of Canada for purposes of the Income Tax Act (Canada)), each
of the Borrowers and the Administrative Agent (and, in the case of an assignment
of all or a portion of a Revolving Commitment or any Lender's obligations in
respect of its Revolving Credit Exposure, any Issuing Bank which has outstanding
a Letter of Credit) must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld), (2) except in the case of an
assignment of the entire remaining amount of an assigning Revolving Lender's and
its Related Affiliate's Revolving Commitments, the aggregate amount of the
Revolving Commitments assigned to an assignee and its Related Affiliates, and
the aggregate amount of the Revolving Commitments retained by the assignor and
its Related Affiliates after giving effect to such assignment, shall be not less
than $5,000,000 (provided that if the Revolving Commitments have expired or
terminated, such limits shall apply to the amount of Revolving Credit Exposure
assigned and retained), (3) except in the case of an assignment of the entire
interest of a Term Lender in the Term Loans held by it, the aggregate principal
amount of Term Loans assigned by such Term Lender and the aggregate principal
amount of Term Loans retained by such Term Lender after giving affect to such
assignment, shall not be less than $5,000,000, (4) no US Revolving Lender shall
assign all or any part of its US Revolving Commitment or US Revolving Loans
unless such Lender (and its Related Affiliate if applicable) assigns the same
percentage of its Canadian Revolving Commitment and Canadian Revolving Loans to
the same assignee (or Related Affiliate of the same assignee), (5) no Canadian
Lender shall assign all or any part of its Canadian Revolving Commitment or
Canadian Revolving Loans unless such Lender (and its Related Affiliate if
applicable) assigns the same percentage of its US Revolving Commitment and US
Revolving Loans to the same assignee (or Related Affiliate of the same
assignee), (6) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500, (7) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire; and
provided further that any consent of the Borrowers otherwise required under this
paragraph shall not be required if an Event of Default has occurred and is
continuing, and (8) so long as JPMorgan Chase Bank shall remain Administrative
Agent hereunder, it and its Related Affiliates shall hold aggregate Revolving
Credit Commitments (prior to the termination thereof and aggregate Revolving
Credit Exposure after giving effect to such termination) which is not less than
the aggregate Revolving Credit Commitments (or aggregate Revolving Credit
Exposure as applicable) held by General Electric Capital Corporation and its
Affiliates (without giving effect to any increase in any such commitments or
exposure by General Electric Capital Corporation and its Affiliates after the
Closing Date). Subject to acceptance and recording thereof pursuant to Section
10.7(d), from and after the effective date specified in each Assignment and
Acceptance the assignee thereunder shall be a party hereto and, to the extent of

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the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 2.17,
Section 2.19, Section 2.21 and Section 10.4). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with this
Section 10.7(b). Notwithstanding the foregoing, the US Swingline Lender shall
not be permitted to make a partial assignment of the US Swingline Commitment.
Notwithstanding anything contained in this Agreement to the contrary, no
assignee of a Canadian Lender shall be permitted to seek any indemnification
for, or the payment of, any Indemnified Taxes or Other Taxes described in
Section 2.21 hereof or any penalties, interest and reasonable expenses arising
therefrom or with respect thereto from any Canadian Borrower, unless amounts
payable to the Lender from which the assignee received its assignment (the
"assignor") would have also been subject to, or such assignor would have also
been required to pay, such Indemnified Taxes or Other Taxes; provided, however,
the limitation contained in this sentence shall not apply to any assignees who
are assigned their interests hereunder during the existence of a Default or
Event of Default.

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

                  (d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in Section
10.7(b) and any written consent to such assignment required by Section 10.7(b),
the Administrative Agent shall accept such Assignment and Acceptance and record
the information contained therein in the Register. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.

                  (e) Any Lender may, without the consent of any Borrower, the
Administrative Agent or any Issuing Bank, sell participations to one or more
banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans and Reimbursement Obligations owing to it); provided
that (1) such Lender's obligations under this Agreement shall remain unchanged,
(2) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (3) each Borrower, Administrative Agent,
the Canadian Administrative Agent, the Issuing Banks and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (4) any Canadian Lender
that intends to sell a participation to a Person which is not a resident of
Canada for purposes of the Income Tax Act (Canada) shall give prior written
notice thereof to the Canadian Borrowers. Any agreement or instrument pursuant
to which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in Section 10.2(a) or Section 10.2(b) that

                                      108
<PAGE>

affects such Participant, no US Revolving Lender shall sell any participation in
its US Revolving Credit Commitments or US Revolving Loans unless such Lender (or
its Related Affiliate) sells a participation interest of an equal percentage of
its Canadian Revolving Commitment and Canadian Revolving Loans to the same
Participant or a Related Affiliate of such Participant, and no Canadian Lender
shall sell any participation in its Canadian Revolving Credit Commitments or
Canadian Revolving Loans unless such Lender (or its Related Affiliate) sells an
equal percentage of its US Revolving Commitment and US Revolving Loans to the
same Participant or a Related Affiliate of such Participant. Subject to this
Section 10.7(e), each Borrower agrees that each Participant shall be entitled to
the benefits of Section 2.17, Section 2.19 and Section 2.21 to the same extent
as, but not to any greater extent than the Lender from which it acquired the
participation. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.5 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.20 as though it were a
Lender.

                  (f) A Participant shall not be entitled to receive any greater
payment under Section 2.19 or Section 2.21 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrowers' prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.21
unless the Borrowers are notified of the participation sold to such Participant
and such Participant agrees, for the benefit of each Borrower, to comply with
Section 2.21(f) as though it were a Lender.

                  (g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section 10.7 shall not apply to
any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

                  (h) Each Borrower authorizes each Lender to disclose to any
participant or Assignee (each, a "TRANSFEREE") and any prospective Transferee
any and all information in such Lender's possession concerning the Borrowers and
their Affiliates which has been delivered to such Lender by or on behalf of any
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of any Borrower in connection with such Lender's credit
evaluation of the Borrowers and their Affiliates prior to becoming a party to
this Agreement. No assignment or participation made or purported to be made to
any Transferee shall be effective without the prior written consent of the
Borrowers if it would require it to make any filing with any Governmental
Authority or qualify any Loan or Note under the laws of any jurisdiction, and
the Company shall be entitled to request and receive such information and
assurances as it may reasonably request from any Lender or any Transferee to
determine whether any such filing or qualification is required or whether any
assignment or participation is otherwise in accordance with applicable law.

         Section 10.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; ETC.

                  (a) GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder and under the Notes shall be construed in
accordance with and be governed by the laws of the State of New York and, to the
extent controlling, laws of the United States of America.

                  (b) SUBMISSION TO JURISDICTION. Any legal action or proceeding
with respect to this Agreement, the Notes or the other Financing Documents may
be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Agreement, each Borrower hereby accepts for itself and in respect of its
Property,

                                      109
<PAGE>
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
Borrower hereby irrevocably waives any objection, including, but not limited to,
any objection to the laying of venue or based on the grounds of Forum Non
Conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions.

                  (c) WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT ALLOWED BY
APPLICABLE LAW, EACH OF THE BORROWERS, THE AGENTS, THE ISSUING BANKS AND THE
LENDERS (i) IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO ANY FINANCING DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN; (ii) IRREVOCABLY WAIVE ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFY THAT NO
PARTY HERETO NOR ANY REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (iv)
ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
FINANCING DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BASED
UPON, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN
THIS SECTION.

                  (d) WAIVER OF CONSEQUENTIAL DAMAGES. To the maximum extent
allowed by applicable law, each Borrower, each Agent, the Issuing Banks and the
Lenders (1) irrevocably waive any right each may have to claim or recover in any
such litigation any special, exemplary, punitive or consequential damages, or
damages other than, or in addition to, actual damages; (2) certifies that no
party hereto nor any representative or counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in
the event of litigation, seek to enforce the foregoing waiver; and (3)
acknowledges that it has been induced to enter into this Agreement, the other
Financing Documents and the transactions contemplated hereby and thereby based
upon, among other things, the mutual waivers and certifications contained in
this Section 10.8.

                  (e) DESIGNATION OF PROCESS AGENT. Each Borrower hereby
irrevocably designates CT Corporation System, with an office on the date hereof
at 350 North St. Paul Street, Dallas, Texas 75201, as the designee, appointee
and process agent of such Borrower to receive, for and on behalf of such
Borrower, service of process in such respective jurisdictions in any legal
action or proceeding with respect to this Agreement, the Notes, or the other
Financing Documents. It is understood that a copy of such process served on such
Agent will be promptly forwarded by mail to such Borrower at its address set
forth opposite its signature below, but the failure of any Borrower to receive
such copy shall not affect in any way the service of such process. Each Borrower
further irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Company at its
said address, such service to become effective 30 days after such mailing.

                  (f) SERVICE OF PROCESS. Nothing herein shall affect the right
of Administrative Agent or any Lender or any holder of a Note to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against any Borrower in any other jurisdiction.

                  (g) "JUDGMENT CURRENCY".

                           (i) If, for the purpose of obtaining or enforcing any
         judgment against any Borrowers or any Credit Party in any court in any
         jurisdiction, it becomes necessary to convert

                                      110
<PAGE>

         into any other currency (such other currency being hereinafter in this
         Section 10.8(g) referred to as the "Judgment Currency") an amount due
         under any Financing Document in any currency (the "Obligation
         Currency") other than the Judgment Currency, the conversion shall be
         made at the rate of exchange prevailing on the Business Day immediately
         preceding (i) the date of actual payment of the amount due, in the case
         of any proceeding in the courts of any jurisdiction that will give
         effect to such conversion being made on such date, or (ii) the date on
         which the judgment is given, in the case of any proceeding in the
         courts of any other jurisdiction (the applicable date as of which such
         conversion is made pursuant to this Section 10.8(g) being hereinafter
         in this Section 10.8(g) referred to as the "Judgment Conversion Date").

                           (ii) If, in the case of any proceeding in the court
         of any jurisdiction referred to in Section 10.8(g)(i), there is a
         change in the rate of exchange prevailing between the Judgment
         Conversion Date and the date of actual receipt for value of the amount
         due, the applicable Borrower or Credit Party shall pay such additional
         amount (if any, but in any event not lesser amount) as may be necessary
         to ensure that the amount actually received in the Judgment Currency,
         when converted at the rate of exchange prevailing on the date of
         payment, will produce the amount of the Obligation Currency which could
         have been purchased with the amount of the Judgment Currency stipulated
         in the judgment or judicial order at the rate of exchange prevailing on
         the Judgment Conversion Date. Any amount due from a Borrower or Credit
         Party under Section 10.8(g)(ii) shall be due as a separate debt and
         shall not be affected by judgment being obtained for any other amounts
         due under or in respect of any of the Loan Documents.

                           (iii) The term "rate of exchange" in this Section
         10.8(g) means the rate of exchange at which the Administrative Agent
         would, on the relevant date at or about 12:00 noon (New York time), be
         prepared to sell the Obligation Currency against the Judgment Currency.

         Section 10.9 INDEPENDENT NATURE OF LENDERS' RIGHTS. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt,
and each Lender shall be entitled to protect and enforce its rights arising out
of this Agreement, and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.

         Section 10.10 INVALIDITY. In the event that any one or more of the
provisions contained in the Notes, this Agreement or in any other Financing
Document shall, for any reason, be held invalid, illegal or unenforceable in any
respect, (a) each Borrower agrees that such invalidity, illegality or
unenforceability shall not affect any other provision of the Notes, this
Agreement or any other Financing Document and (b) each Borrower and
Administrative Agent (acting on behalf and at the direction of the Lenders) and
Canadian Administrative Agent (acting on behalf and at the direction of the
Canadian Lenders) will negotiate in good faith to amend such provision so as to
be legal, valid, and enforceable.

         Section 10.11 RENEWAL, EXTENSION OR REARRANGEMENT. All provisions of
this Agreement and of any other Financing Documents relating to the Notes or
other Lender Indebtedness shall apply with equal force and effect to each and
all promissory notes hereafter executed which in whole or in part represent a
renewal, extension for any period, increase or rearrangement of any part of the
Lender Indebtedness originally represented by the Notes, or of any part of such
other Lender Indebtedness.

         Section 10.12 CONFIDENTIALITY. Administrative Agent, the Canadian
Administrative Agent, the Issuing Banks and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any

                                      111
<PAGE>

regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section 10.12, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the
Borrowers or (h) to the extent such Information (1) becomes publicly available
other than as a result of a breach of this Section 10.12 or (2) becomes
available to the Administrative Agent, the Canadian Administrative Agent, any
Issuing Bank or any Lender on a non-confidential basis from a source other than
a Borrower. For the purposes of this Section 10.12, "INFORMATION" means all
information received from any Borrower relating to a Borrower or its business,
other than any such information that is available to the Administrative Agent,
the Canadian Administrative Agent, any Issuing Bank or any Lender on a
non-confidential basis prior to disclosure by a Borrower. Any Person required to
maintain the confidentiality of Information as provided in this Section 10.12
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Each Borrower acknowledges that the Administrative Agent or Canadian
Administrative Agent may be providing debt financing, equity capital or other
services (including financial advisory services) to other companies in respect
of which a Credit Party may have conflicting interests regarding the
transactions contemplated by this Agreement or the other Financing Documents.
The Administrative Agent and Canadian Administrative Agent will not use
confidential information obtained from any Credit Party by virtue of the
transaction contemplated by this Agreement or the other Financing Documents or
their other relationships with the Borrower in connection with the performance
by the Administrative Agent and Canadian Administrative Agent of services for
other companies, and the Administrative Agent and Canadian Administrative Agent
will not furnish any such information to other companies. Each Borrower also
acknowledges that the Administrative Agent and Canadian Administrative Agent has
no obligation to use in connection with the transactions contemplated by this
Agreement or the other Financing Documents, or to furnish to any Credit Party,
confidential information obtained from other companies.

         Section 10.13 INTEREST. It is the intention of the parties hereto to
conform strictly to usury laws applicable to each Agent, the Issuing Banks and
the Lenders (collectively, the "FINANCING PARTIES") and the Transactions.
Accordingly, if the Transactions would be usurious as to any Financing Party
under laws applicable to it, then, notwithstanding anything to the contrary in
the Notes, this Agreement or in any other Financing Document or agreement
entered into in connection with the Transactions or as security for the Notes,
it is agreed as follows: (a) the aggregate of all consideration which
constitutes interest under law applicable to any Financing Party that is
contracted for, taken, reserved, charged or received by such Financing Party
under the Notes, this Agreement or under any of such other Financing Documents
or agreements or otherwise in connection with the Transactions shall under no
circumstances exceed the maximum amount allowed by such applicable law, (b) in
the event that the maturity of the Notes is accelerated for any reason, or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest under law applicable to any Financing Party may never
include more than the maximum amount allowed by such applicable law, and (c)
excess interest, if any, provided for in this Agreement or otherwise in
connection with the Transactions shall be canceled automatically by such
Financing Party and, if theretofore paid, shall be credited by such Financing
Party on the principal amount of the Borrower's Indebtedness to such Financing
Party (or, to the extent that the principal amount of the Borrower's
Indebtedness to such Financing Party shall have been or would thereby be paid in
full, refunded by such Financing Party to the Borrowers). The right to
accelerate the maturity of the Notes does not include the right to accelerate
any interest which has not otherwise accrued on the date of such acceleration,
and the Financing Parties do not intend to collect any unearned interest in the
event of acceleration. All sums paid or agreed to be paid to the Financing
Parties for the use, forbearance or detention of sums included in the Lender
Indebtedness shall, to the extent permitted by law applicable to

                                      112
<PAGE>
such Financing Party, be amortized, prorated, allocated and spread throughout
the full term of the Notes until payment in full so that the rate or amount of
interest on account of the Lender Indebtedness does not exceed the applicable
usury ceiling, if any. As used in this Section 10.13, the terms "APPLICABLE LAW"
or "LAWS APPLICABLE TO ANY FINANCING PARTY" shall mean the law of any
jurisdiction whose laws may be mandatorily applicable notwithstanding other
provisions of this Agreement, or law of the United States of America or Canada
applicable to any Financing Party and the Transactions which would permit such
Financing Party to contract for, charge, take, reserve or receive a greater
amount of interest than under such jurisdiction's law.

         Section 10.14 ENTIRE AGREEMENT. The Notes, this Agreement and the other
Financing Documents embody the entire agreement and understanding between the
Administrative Agent, the Canadian Administrative Agent, the Issuing Banks or
the Lenders and the other respective parties hereto and thereto and supersede
all prior agreements and understandings between such parties relating to the
subject matter hereof and thereof and may not be contradicted by evidence of
prior, contemporaneous agreements of the parties. There are no unwritten oral
agreements between the parties.

         Section 10.15 ATTACHMENTS. The exhibits, schedules and annexes attached
to this Agreement are incorporated herein and shall be considered a part of this
Agreement for the purposes stated herein, except that in the event of any
conflict between any of the provisions of such exhibits and the provisions of
this Agreement, the provisions of this Agreement shall prevail.

         Section 10.16 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original
but all of which shall together constitute one and the same instrument.

         Section 10.17 SURVIVAL OF INDEMNITIES. Borrowers' obligations under
Section 2.17, Section 2.19, Section 2.21 and Section 10.4 shall survive the
payment in full of the Loans and the Letter of Credit Liabilities.

         Section 10.18 HEADINGS DESCRIPTIVE. The headings of the several
sections and subsections of this Agreement, and the table of contents, are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.

         Section 10.19 SATISFACTION REQUIREMENT. If any agreement, certificate,
instrument or other writing, or any action taken or to be taken, is by the terms
of this Agreement required to be satisfactory to any party, the determination of
such satisfaction shall be made by such party in its sole and exclusive judgment
exercised reasonably and in good faith.

         Section 10.20 EXCULPATION PROVISIONS. Each of the parties hereto
specifically agrees that it has a duty to read this Agreement and the other
Financing Documents and agrees that it is charged with notice and knowledge of
the terms of this Agreement and the other Financing Documents; that it has in
fact read this Agreement and is fully informed and has full notice and knowledge
of the terms, conditions and effects of this Agreement; that it has been
represented by legal counsel of its choice throughout the negotiations preceding
its execution of this Agreement and the other Financing Documents; and has
received the advice of its attorneys in entering into this Agreement and the
other Financing Documents; and that it recognizes that certain of the terms of
this Agreement and the other Financing Documents result in one party assuming
the liability inherent in some aspects of the transaction and relieving the
other party of its responsibility for such liability. Each party hereto agrees
and covenants that it will not contest the validity or enforceability of any
exculpatory provision of this Agreement and the other Financing Documents on the
basis that the party had no notice or knowledge of such provision or that the
provision is not "conspicuous."

                                      113
<PAGE>

         Section 10.21 SECURED AFFILIATE; CASH MANAGEMENT AFFILIATE. For
purposes of this Agreement and all other Financing Documents (other than
applicable Swap Agreements and Cash Management Agreements), if a Secured
Affiliate or Cash Management Affiliate of a Lender has entered into one or more
Swap Agreements or Cash Management Agreements with any Credit Party, then to the
extent that such Secured Affiliate or Cash Management Affiliate has rights
against or is owed obligations by (or if the affiliated Lender, rather than the
Secured Affiliate or Cash Management Affiliate, were the counter-party to the
applicable Swap Agreement or the other party to the applicable Cash Management
Agreement, such rights or obligations that such Lender has) the Borrowers
hereunder or under any other Financing Document (other than applicable Swap
Agreements and Cash Management Agreements), such affiliated Lender shall be the
agent and attorney-in-fact for such Secured Affiliate or Cash Management
Affiliate with regard to any such rights and obligations, or deemed rights and
obligations, as if such Lender were the counter-party to the applicable Swap
Agreement or the other party to the applicable Cash Management Agreement
including, but not limited to, the following: (a) all distributions or payments
in respect of Collateral owing to such Secured Affiliate or Cash Management
Affiliate shall be distributed or paid to such Lender, (b) all representations,
statements or disclaimers made herein or in any Financing Document by or to such
Lender shall be deemed to have been made by or to such Secured Affiliate or Cash
Management Affiliate, (c) all obligations incurred by such Lender that would
have been incurred by the Secured Affiliate or Cash Management Affiliate if it
were a party hereto (including, but not limited to, obligations under Section
9.6) shall be the obligations of such Lender, and such Lender, as the agent and
attorney-in-fact of its Secured Affiliate or Cash Management Affiliate, will
make any and all payments owing to the Administrative Agent with respect to such
obligations or deemed obligations of its Secured Affiliate or Cash Management
Affiliate. Each such Lender represents, warrants and covenants to and with the
Administrative Agent and the Canadian Administrative Agent that such Lender has,
or at all applicable times will have, full power and authority to act as Agent
and attorney-in-fact for its Secured Affiliates or Cash Management Affiliates.
Under no circumstance shall any Secured Affiliate or Cash Management Affiliate
have any voting rights hereunder and the voting rights of any affiliated Lender
shall not be increased by virtue of the obligations owing to any such Secured
Affiliate or Cash Management Affiliate.

         Section 10.22 NO FINANCIAL ASSISTANCE BY CANADIAN CREDIT PARTIES.
Notwithstanding any provision of this Agreement or any of the other Financing
Documents to the contrary (including, without limitation, Section 10.4 and
Section 10.21 of this Agreement) no Canadian Credit Party will have any
liability hereunder or thereunder for, nor shall any of the assets of any such
Canadian Credit Party (including proceeds of any Collateral owned by any such
Canadian Credit Party) be applied against or issued to satisfy or offset, any
indebtedness, obligations or liabilities (actual or contingent) of any Person
which is not indebtedness, an obligation, or a liability of a Canadian Borrower;
provided, that, nothing contained herein shall limit or impair the rights of any
Agent, any Lender or any Secured Affiliate or the liability or obligation of any
Canadian Credit Party with respect to the Canadian Lender Indebtedness,
including, without limitation, any Swap Agreements or Cash Management Agreements
entered into with any Canadian Credit Party.

         Section 10.23 MISSOURI LAW PROVISION. ORAL AGREEMENT OR COMMITMENTS TO
LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT
THE BORROWERS AND THE LENDERS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH
IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS
WE MAY LATER AGREE IN WRITING TO MODIFY IT.

                                      114
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

                                      115
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION, AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

US BORROWERS:                          MAVERICK TUBE CORPORATION

                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                       MAVERICK INVESTMENT CORPORATION

                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                       MAVERICK TUBE L.P.

                                       By:  Maverick G.P., Inc., its
                                            General Partner

                                            By:
                                                --------------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                   -----------------------------

                                       PRECISION TUBE HOLDING CORPORATION

                                       By:
                                           ------------------------------------
                                       Name:
                                             ----------------------------------
                                       Title:
                                              ---------------------------------

                                       MAVERICK GP, INC.

                                       By:
                                           ------------------------------------
                                       Name:
                                             ----------------------------------
                                       Title:
                                              ---------------------------------

                                 Signature Page
<PAGE>
                                       PRECISION GP, LLC

                                       By:
                                           ------------------------------------
                                       Name:
                                             ----------------------------------
                                       Title:
                                              ---------------------------------

                                       PRECISION TUBE TECHNOLOGY, L.P.

                                       By:  Precision GP, LLC, general partner

                                            By:
                                                -------------------------------
                                            Name:
                                                  -----------------------------
                                            Title:
                                                   ----------------------------

                                 Signature Page

<PAGE>
CANADIAN BORROWERS:                    PRUDENTIAL STEEL LTD.

                                       By:
                                           ------------------------------------
                                       Name:
                                             ----------------------------------
                                       Title:
                                              ---------------------------------

                                       MAVERICK TUBE (CANADA) INC.

                                       By:
                                           ------------------------------------
                                       Name:
                                             ----------------------------------
                                       Title:
                                              ---------------------------------

                                       MAVERICK EXCHANGECO (NOVA SCOTIA) ULC

                                       By:
                                           ------------------------------------
                                       Name:
                                             ----------------------------------
                                       Title:
                                              ---------------------------------

                                       PRECISION TUBE CANADA LIMITED

                                       By:
                                           ------------------------------------
                                       Name:
                                             ----------------------------------
                                       Title:
                                              ---------------------------------

                                       Address for notice for all Borrowers:

                                       Maverick Tube Corporation
                                       16401 Swingley Ridge Road, Suite 700
                                       Chesterfield, Missouri 63017
                                       Attn:
                                            -----------------------------------
                                       Fax:
                                           ------------------------------------
                                       Phone:
                                             ----------------------------------

                                 Signature Page

<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                                        JPMORGAN CHASE BANK, individually, as an
                                        Issuing Bank, as Administrative Agent,
                                        as US Swingline Lender and a US
                                        Revolving Lender

                                        By:
                                            -----------------------------------
                                        Name:
                                              ---------------------------------
                                        Title:
                                               --------------------------------

                                        Address:   2200 Ross Avenue, 4th Floor
                                                   Dallas, Texas 75201
                                        Attention: Chris Capriotti
                                        Telephone: 214-965-2035
                                        Telecopy:  214-965-4731

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                                         JPMORGAN CHASE BANK, TORONTO
                                         BRANCH, as Canadian Lender

                                         By:
                                             ----------------------------------
                                         Name:
                                               --------------------------------
                                         Title:
                                                -------------------------------

                                         Address:

                                         Attention:
                                         Telephone:
                                         Telecopy:

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                                   CIT BUSINESS CREDIT CANADA INC.,
                                   individually, as Canadian Administrative
                                   Agent, Issuing Bank and as a Canadian
                                   Lender

                                   By:
                                      -------------------------------------
                                   Name:
                                        -----------------------------------
                                   Title:
                                         ----------------------------------

                                   Address:   207 Queens Quay West, Suite 200
                                              Toronto, Ontario Canada  M5J1A7
                                   Attention: Donald Roger
                                   Telephone: 416-507-5056
                                   Telecopy:  416-507-5100

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                         GENERAL ELECTRIC CAPITAL CORPORATION, as
                         Documentation Agent and as US Revolving
                         Lender

                         By:
                             ------------------------------------
                         Name:
                               ----------------------------------
                         Title:
                                ---------------------------------

                         Address:        16479 Dallas Parkway, 3rd Floor
                                         Addison, Texas  75001-2512
                         Attention:      Phillip R. Webb
                         Telephone:      972-713-2573
                         Telecopy:       972-713-2598

                         with a copy to:

                         Address:        General Electric Capital Corporation
                                         201 High Ridge Road
                                         Stamford, Connecticut  06927-5100
                         Attention:      Region Counsel - Commercial Finance
                         Telephone:      203-357-4379
                         Telecopy:       203-316-7822

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                            GENERAL ELECTRIC CAPITAL CANADA INC.,
                            as Canadian Lender

                            By:
                                -----------------------------------
                            Name:
                                  ---------------------------------
                            Title:
                                   --------------------------------

                            Address:        GE Capital Commercial Finance, Inc.
                                            16479 Dallas Parkway, 3rd Floor
                                            Addison, Texas  75001-2512
                            Attention:      Phillip R. Webb
                            Telephone:      972-713-2573
                            Telecopy:       972-713-2598

                            with a copy to:

                            Address:        GE Capital Commercial Finance, Inc.
                                            201 High Ridge Road
                                            Stamford, Connecticut  06927-5100
                            Attention:      Region Counsel - Commercial Finance
                            Telephone:      203-357-4379
                            Telecopy:       203-316-7822

                                 Signature Page
<PAGE>

                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH __, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                 JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                                      THE CIT GROUP/BUSINESS CREDIT, INC., as US
                                      Revolving Lender

                                      By:
                                         --------------------------------------
                                      Name:
                                           ------------------------------------
                                      Title:
                                            -----------------------------------

                                      Address:

                                      Attention:
                                      Telephone:
                                      Telecopy:

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                                      U.S. BANK NATIONAL ASSOCIATION, as US
                                      Revolving Lender

                                      By:
                                         --------------------------------------
                                      Name:
                                           ------------------------------------
                                      Title:
                                            -----------------------------------

                                      Address:        7th and Washington
                                                      St. Louis, Missouri  63101
                                      Attention:      Thomas F. Visconti
                                      Telephone:      314-418-1318
                                      Telecopy:       314-418-8555

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                                 FLEET CAPITAL CANADA CORPORATION, as
                                 Canadian Lender

                                 By:
                                     ------------------------------------------
                                 Name:
                                       ----------------------------------------
                                 Title:
                                        ---------------------------------------

                                 Address:        20800 Swenson Drive, Suite 350
                                                 Waukesha, Wisconsin  53186
                                 Attention:      Edward M. Bartkowski
                                 Telephone:      262-798-4812
                                 Telecopy:       262-798-4882

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                                FLEET CAPITAL CORPORATION, as US
                                Revolving Lender

                                By:
                                   ---------------------------------------------
                                Name:
                                     -------------------------------------------
                                Title:
                                      ------------------------------------------

                                Address:        20800 Swenson Drive, Suite 350
                                                Waukesha, Wisconsin  53186
                                Attention:      Edward M. Bartkowski
                                Telephone:      262-798-4812
                                Telecopy:       262-798-4882

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                                RBC CENTURA BANK, as US Revolving Lender

                                By:
                                   ---------------------------------------------
                                Name:
                                     -------------------------------------------
                                Title:
                                      ------------------------------------------

                                Address:        200 Providence Road, Suite 300
                                                Charlotte, North Carolina  28207
                                Attention:      E. Mark Stubblefield
                                Telephone:      704-686-1112
                                Telecopy:       704-686-1499

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                                ROYAL BANK OF CANADA, as Canadian Lender

                                By:
                                   -------------------------------------
                                Name:
                                     -----------------------------------
                                Title:
                                      ----------------------------------

                                Address:        11th Floor, 335 8th Avenue SW
                                                Calgary, Alberta  T2P1C9
                                Attention:      Roger Straathof
                                Telephone:      403-292-3896
                                Telecopy:       403-292-3154

                                 Signature Page
<PAGE>
                                 SIGNATURE PAGE
                                       TO
                                CREDIT AGREEMENT
                              DATED MARCH ___, 2002
                                  BY AND AMONG
    MAVERICK TUBE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
                  JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT,
       CIT BUSINESS CREDIT CANADA INC., AS CANADIAN ADMINISTRATIVE AGENT,
          GENERAL ELECTRIC CAPITAL CORPORATION AS DOCUMENTATION AGENT,
             AND FINANCIAL INSTITUTIONS PARTIES THERETO, AS LENDERS

                            CITIZENS BUSINESS CREDIT, a division of
                            Citizens Leasing Corporation, as US Revolving Lender

                            By:
                               -------------------------------------------------
                            Name:
                                 -----------------------------------------------
                            Title:
                                  ----------------------------------------------

                            Address:        100 Galeria Parkway, Suite 1665
                                            Atlanta, Georgia  30339
                            Attention:      Levi Schatz
                            Telephone:      770-850-4899
                            Telecopy:       770-850-4895

                                 Signature Page
<PAGE>
                                     ANNEX I

<TABLE>
<CAPTION>
             LENDER                      US REVOLVING          CANADIAN       US SWINGLINE LOAN
                                            CREDIT         REVOLVING CREDIT       COMMITMENT
                                          COMMITMENT          COMMITMENT

<S>                                   <C>                  <C>                <C>
JPMorgan Chase Bank                   $    7,733,640.00                  0       $10,000,000.00

JPMorgan Chase Bank,                                  0     $21,266,360.00                    0
Toronto Branch

General Electric Capital              $   17,733,240.00                  0                    0
Corporation

General Electric Capital Canada                       0     $10,266,760.00                    0
Inc.

The CIT Group/Business Credit,        $   17,733,240.00                  0                    0
Inc.

CIT Business Credit Canada Inc.                       0     $10,266,760.00                    0

US Bank National Association          $   14,500,000.00                  0                    0

Fleet Capital Corporation             $   11,399,940.00                  0                    0

Fleet Capital Canada Corp.                            0      $6,600,060.00                    0

RBC Centura Bank                      $   11,399,940.00                  0                    0

Royal Bank of Canada                                   0     $6,600,060.00                    0

Citizens Business Credit, a           $   14,500,000.00                  0                    0
division of Citizens Leasing
Corporation

Total                                 $   95,000,000.00     $55,000,000.00       $10,000,000.00
</TABLE>

                                  Annex Page-1
<PAGE>
                          Description of Schedules and
                       Similar Attachments in Accordance
                            of the Credit Agreement
                             with Item 601(b)(2) of
                                 Regulation S-K

<PAGE>

SCHEDULES
Schedule 1.3 Projections
Schedule 3.3 Post-Closing Matters
Schedule 5.7 Litigation
Schedule 5.15 Compliance with Laws
Schedule 5.19 Capital Structure
Schedule 5.20 Insurance
Schedule 5.21 Environmental Matters
Schedule 5.23 Employee Matters
Schedule 5.24 Real Property Locations
Schedule 5.26 Indebtedness
Schedule 7.2 Permitted Indebtedness
Schedule 7.3 Permitted Liens
Schedule 7.6 Permitted Investments
Schedule 7.8 Nature of Business

EXHIBITS
Exhibit A-1     Form of US Borrowing Base Report
Exhibit A-2     Form of Canadian Borrowing Base Report
Exhibit B-1     Form of Borrowing Request (US Revolving Credit Loan)
Exhibit B-2     Form of Borrowing Request (Canadian Revolving Credit Loans)
Exhibit B-3     Form of Borrowing Request (US Letters of Credit)
Exhibit B-4     Form of Borrowing Request (Canadian Letters of Credit)
Exhibit B-5     Form of Borrowing Request (US Swingline Loans)
Exhibit C-1     Form of Mortgage
Exhibit C-2     Form of Assignment of Rents
Exhibit D       Form of Canadian Revolving Credit Note
Exhibit E       Form of Canadian Security Agreement
Exhibit F       Form of Guaranty and Security Agreement
Exhibit G       Form of Perfection Certificate Update
Exhibit H       Form of Term Lender Joinder Agreement
Exhibit I       Form of Term Note
Exhibit J       Form of US Real Estate Mortgage
Exhibit K       Form of US Revolving Credit Note
Exhibit L       Form of US Swingline Note
Exhibit M       Form of B/A Equivalent Note
Exhibit N       Form of Borrower Joinder Agreement
Exhibit O       Form of Compliance Certificate
Exhibit P       Form of Weekly Collateral Report
Exhibit Q       Form of Inventory Designation Report
Exhibit R       Form of Assignment and Acceptance
Exhibit S       Form of Restricted Account Agreement<PAGE>
                                                                    EXHIBIT 10.1

                           SECOND AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                       FELCOR LODGING LIMITED PARTNERSHIP

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
ARTICLE I         ORGANIZATIONAL MATTERS..........................................................................2
         1.1      Formation.......................................................................................2
         1.2      Name............................................................................................2
         1.3      Registered Office; Principal Office.............................................................2
         1.4      Power of Attorney...............................................................................2
         1.5      Term............................................................................................3

ARTICLE II        DEFINITIONS.....................................................................................3
         "Additional Limited Partner".............................................................................3
         "Adjusted Capital Account"...............................................................................3
         "Adjusted Property"......................................................................................4
         "Affiliate"..............................................................................................4
         "Agreed Allocation"......................................................................................4
         "Agreed Value"...........................................................................................4
         "Agreement"..............................................................................................4
         "Assignee"...............................................................................................4
         "Book-Tax Disparity".....................................................................................4
         "Capital Account"........................................................................................4
         "Capital Contribution"...................................................................................4
         "Carrying Value".........................................................................................4
         "Cash Amount"............................................................................................4
         "Cause"  ................................................................................................5
         "Certificate"............................................................................................5
         "Certificate of Designation".............................................................................5
         "Certificate of Limited Partnership".....................................................................5
         "Class B, Series II Unit"................................................................................5
         "Class B Unit"...........................................................................................5
         "Closing Date"...........................................................................................5
         "Code"   ................................................................................................5
         "Common Unit"............................................................................................6
         "Company"................................................................................................6
         "Consolidated"...........................................................................................5
         "Contributed Property"...................................................................................6
         "Contributing Partner"...................................................................................6
         "Delaware Act"...........................................................................................6
         "Departing Partner"......................................................................................6
         "Economic Risk of Loss"..................................................................................6
         "Event of Withdrawal"....................................................................................6
         "Excess Balance".........................................................................................6
         "Exchange Act"...........................................................................................6
         "Fiscal Year"............................................................................................6
         "General Partner"........................................................................................6
         "General Partner Equity Value"...........................................................................6
         "Indebtedness"...........................................................................................6
         "Indemnitee".............................................................................................6
         "Initial Hotels".........................................................................................6
         "Initial Limited Partners"...............................................................................6
         "Limited Partner"........................................................................................7
         "Limited Partner Equity Value"...........................................................................7
         "Limited Partner Interest"...............................................................................7
</Table>

                                       -i-

<PAGE>

<Table>
<Caption>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         "Liquidation Preference".................................................................................7
         "Liquidator".............................................................................................7
         "Majority"...............................................................................................7
         "Merger Agreement".......................................................................................7
         "Minimum Gain Attributable to Partner Nonrecourse Debt"..................................................7
         "National Securities Exchange"...........................................................................7
         "Net Agreed Value".......................................................................................7
         "Net Income".............................................................................................7
         "Net Loss"...............................................................................................7
         "Nonrecourse Built-in Gain"..............................................................................7
         "Nonrecourse Deductions".................................................................................8
         "Nonrecourse Liability"..................................................................................8
         "Notice of Redemption"...................................................................................8
         "Offering"...............................................................................................8
         "Opinion of Counsel".....................................................................................8
         "Organizational Limited Partner".........................................................................8
         "Outstanding"............................................................................................8
         "Partner"................................................................................................8
         "Partner Nonrecourse Debt"...............................................................................8
         "Partner Nonrecourse Deductions".........................................................................8
         "Partnership"............................................................................................8
         "Partnership Assets".....................................................................................8
         "Partnership Inception"..................................................................................8
         "Partnership Interest"...................................................................................8
         "Partnership Minimum Gain"...............................................................................8
         "Partnership Securities".................................................................................8
         "Partnership Unit".......................................................................................8
         "Partnership Year".......................................................................................8
         "Percentage Interest"....................................................................................8
         "Person" ................................................................................................9
         "Plan of Merger".........................................................................................9
         "Preferred Units"........................................................................................9
         "Prospectus".............................................................................................9
         "Public Offering Price"..................................................................................9
         "Recapture Income".......................................................................................9
         "Recaptured Credits".....................................................................................9
         "Record Date"............................................................................................9
         "Record Holder"..........................................................................................9
         "Redeeming Partner"......................................................................................9
         "Redemption Amount"......................................................................................9
         "Redemption Right".......................................................................................9
         "Registration Statement".................................................................................9
         "Regulatory Allocations".................................................................................9
         "REIT"   ................................................................................................9
         "REIT Share".............................................................................................9
         "REIT Shares Amount"....................................................................................10
         "Residual Gain" or "Residual Loss"......................................................................10
         "Securities Act"........................................................................................10
         "Series A Convertible Preferred Unit"...................................................................10
         "Series B Redeemable Preferred Unit"....................................................................10
         "Special Units".........................................................................................10
         "Specified Redemption Date".............................................................................10
         "Substituted Limited Partner"...........................................................................10
</Table>

                                      -ii-

<PAGE>

<Table>
<Caption>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         "Surviving Business Entity".............................................................................10
         "Target Balance"........................................................................................10
         "Transfer Agent"........................................................................................10
         "Transfer Application"..................................................................................10
         "Treasury Regulations"..................................................................................10
         "Underwriter"...........................................................................................11
         "Underwriting Agreement"................................................................................11
         "Unrealized Gain".......................................................................................11
         "Unrealized Loss".......................................................................................11

ARTICLE III       PURPOSE........................................................................................11
         3.1      Purpose and Business...........................................................................11
         3.2      Powers.........................................................................................12

ARTICLE IV        CAPITAL CONTRIBUTIONS..........................................................................11
         4.1      Initial Contributions..........................................................................11
         4.2      Return of Initial Contributions................................................................12
         4.3      Capital Contributions by the Partners..........................................................12
         4.4      Limited Preemptive Rights......................................................................12
         4.5      Capital Accounts...............................................................................12
         4.6      Issuance of Additional Partnership Units and Other Securities..................................14
         4.7      Adjustment to Percentage Interests and Outstanding Partnership Units...........................15
         4.8      Interest.......................................................................................16
         4.9      No Withdrawal..................................................................................16
         4.10     Loans from Partners............................................................................16

ARTICLE V         ALLOCATIONS AND DISTRIBUTIONS..................................................................16
         5.1      Allocations for Capital Account Purposes.......................................................16
         5.2      Allocations for Tax Purposes...................................................................18
         5.3      Distribution of Cash...........................................................................19
         5.4      REIT Distribution Requirements.................................................................20

ARTICLE VI        MANAGEMENT AND OPERATION OF BUSINESS...........................................................20
         6.1      Management.....................................................................................20
         6.2      Certificate of Limited Partnership.............................................................21
         6.3      Restrictions on General Partner's Authority....................................................21
         6.4      Reimbursement of the General Partner...........................................................21
         6.5      Outside Activities.............................................................................22
         6.6      Loans to and from the General Partner; Contracts with Affiliates...............................23
         6.7      Indemnification................................................................................23
         6.8      Liability of Indemnitees.......................................................................24
         6.9      Resolution of Conflicts of Interest............................................................24
         6.10     Liability of the General Partner...............................................................25
         6.11     Other Matters Concerning the General Partner...................................................25
         6.12     Title to Partnership Assets....................................................................26
         6.13     Reliance by Third Parties......................................................................26

ARTICLE VII       RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.....................................................26
         7.1      Limitation of Liability........................................................................26
         7.2      Management of Business.........................................................................26
         7.3      Return of Capital..............................................................................27
         7.4      Rights of Limited Partners Relating to the Partnership.........................................27
         7.5      Redemption Right...............................................................................27
</Table>

                                      -iii-

<PAGE>

<Table>
<Caption>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         7.6      Outside Activities of Limited Partners.........................................................28

ARTICLE VIII      BOOKS, RECORDS, ACCOUNTING AND REPORTS.........................................................29
         8.1      Records and Accounting.........................................................................29
         8.2      Fiscal Year....................................................................................29

ARTICLE IX        TAX MATTERS....................................................................................29
         9.1      Preparation of Tax Returns.....................................................................29
         9.2      Tax Elections..................................................................................29
         9.3      Tax Controversies..............................................................................29
         9.4      Organizational Expenses........................................................................29
         9.5      Withholding....................................................................................29
         9.6      Opinions of Counsel............................................................................30

ARTICLE X         TRANSFER OF INTERESTS..........................................................................30
         10.1     Transfer.......................................................................................30
         10.2     Transfer of General Partner's Partnership Interest.............................................30
         10.3     Transfer of Partnership Units..................................................................31
         10.4     Restrictions on Transfers......................................................................31

ARTICLE XI        ADMISSION OF PARTNERS..........................................................................31
         11.1     Admission of Substituted Limited Partners......................................................31
         11.2     Admission of Successor General Partner.........................................................32
         11.3     Amendment of Agreement and Certificate of Limited Partnership..................................32
         11.4     Admission of Additional Limited Partners.......................................................32

ARTICLE XII       WITHDRAWAL OF PARTNERS.........................................................................32
         12.1     Withdrawal of the General Partner..............................................................32
         12.2     Interest of Departing Partner and Successor General Partner....................................33
         12.3     Reimbursement of Departing Partner.............................................................33
         12.4     Withdrawal of Limited Partner..................................................................33

ARTICLE XIII      PARTNERSHIP UNIT CERTIFICATE...................................................................34
         13.1     Partnership Unit Certificates..................................................................34
         13.2     Registration, Registration of Transfer and Exchange............................................34
         13.3     Mutilated, Destroyed, Lost or Stolen Certificates..............................................34
         13.4     Record Holder..................................................................................35

ARTICLE XIV       DISSOLUTION AND LIQUIDATION....................................................................35
         14.1     Dissolution....................................................................................35
         14.2     Continuation of the Business of the Partnership after Dissolution..............................35
         14.3     Liquidation....................................................................................36
         14.4     Distributions in Kind..........................................................................37
         14.5     Cancellation of Certificate of Limited Partnership.............................................37
         14.6     Reasonable Time for Winding Up.................................................................37
         14.7     Return of Capital..............................................................................37
         14.8     No Capital Account Restoration Obligation......................................................37
         14.9     Waiver of Partition............................................................................37

ARTICLE XV        AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE......................................37
         15.1     Amendments to be Adopted Solely by General Partner.............................................37
         15.2     Amendment Procedures...........................................................................38
         15.3     Amendment Requirements.........................................................................38
</Table>

                                      -iv-

<PAGE>

<Table>
<Caption>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         15.4     Meetings of, or Actions by, the Partners.......................................................39

ARTICLE XVI       MERGER.........................................................................................39
         16.1     Authority......................................................................................39
         16.2     Procedure for Merger or Consolidation..........................................................39
         16.3     Approval of Merger or Consolidation by the Partners............................................40
         16.4     Certificate of Merger..........................................................................40
         16.5     Effect of Merger...............................................................................40

ARTICLE XVII      GENERAL PROVISIONS.............................................................................41
         17.1     Addresses and Notices..........................................................................41
         17.2     Titles and Captions............................................................................41
         17.3     Pronouns and Plurals...........................................................................41
         17.4     Further Action.................................................................................41
         17.5     Binding Effect.................................................................................41
         17.6     Integration....................................................................................41
         17.7     Creditors......................................................................................41
         17.8     Waiver.........................................................................................42
         17.9     Counterparts...................................................................................42
         17.10    Applicable Law.................................................................................42
         17.11    Invalidity of Provisions.......................................................................42
</Table>

                                   ATTACHMENTS

Exhibit A      -  Names, Addresses, Partnership Units of Partners
Exhibit B      -  Notice of Exercise of Redemption Right

Addendum No. 1 -  Designation of Class B Units
  Annex No. 2 to Addendum No. 1 - Designation of Class B Units, Series II
Addendum No. 2 -  Designation of Series A Cumulative Convertible Preferred Units
Addendum No. 3 -  Designation of Series B Cumulative Redeemable Preferred Units

                                       -v-

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                      SECOND AMENDED AND RESTATED AGREEMENT
                            OF LIMITED PARTNERSHIP OF
                       FELCOR LODGING LIMITED PARTNERSHIP

                                    RECITALS

         FelCor Lodging Limited Partnership (the "Partnership"), which was
formerly known as FelCor Suites Limited Partnership, was formed as a limited
partnership under the laws of the State of Delaware by filing a Certificate of
Limited Partnership with the Secretary of State of the State of Delaware on May
23, 1994. The Partnership was originally governed by an Agreement of Limited
Partnership of FelCor Suites Limited Partnership dated May 20, 1994 (the
"Original Agreement"). The parties to the Original Agreement were FelCor Suite
Hotels, Inc., a Delaware corporation (the "Original General Partner"), and
Thomas J. Corcoran, Jr. (the "Organizational Limited Partner").

         The Original General Partner, the Organizational Limited Partner and
seven additional parties (the "Initial Limited Partners") entered into an
Amended and Restated Agreement of Limited Partnership of FelCor Suites Limited
Partnership dated as of July 25, 1994 (the "First Restated Partnership
Agreement") to (i) admit the Initial Limited Partners to the Partnership, (ii)
provide for the withdrawal of the Organizational Limited Partner and (iii) amend
and restate the Original Agreement in its entirety.

         The First Restated Partnership Agreement was amended by (i) the First
Amendment dated as of November 17, 1995 to admit an Additional Limited Partner
(as defined below), (ii) the Second Amendment dated as of January 9, 1996 to add
an Addendum No. 1 to authorize the issuance of a class of Partnership Units (as
defined below) designated as the "Class B Units," (iii) the Third Amendment
dated as of January 10, 1996 to admit an Additional Limited Partner and to
authorize the issuance of a series of Class B Units designated as the "Class B
Units, Series I" by adding Annex No. 1 to Addendum No. 1, (iv) the Fourth
Amendment dated as of January 10, 1996 to admit an Additional Limited Partner
and to authorize the issuance of a series of Class B Units designated as the
"Class B Units, Series II" by adding an Annex No. 2 to Addendum No. 1, (v) the
Fifth Amendment dated as of April 30, 1996 to add an Addendum No. 2 to the First
Restated Partnership Agreement to authorize the issuance of a class of
Partnership Units designated as the "Series A Cumulative Convertible Preferred
Units," (vi) the Sixth Amendment dated as of September 16, 1996 to admit an
Additional Limited Partner, (vii) the Seventh Amendment dated as of May 16, 1997
to admit an Additional Limited Partner, (viii) the Eighth Amendment dated as of
February 6, 1998 to admit an Additional Limited Partner, (ix) the Ninth
Amendment dated as of May 6, 1998 to add an Addendum No. 3 to authorize the
issuance of a class of Partnership Units designated as the "Series B Cumulative
Redeemable Preferred Units," (x) the Tenth Amendment dated as of June 22, 1998
to admit an Additional Limited Partner, (xi) the Eleventh Amendment dated as of
July 28, 1998 to change the name of the Partnership to "FelCor Lodging Limited
Partnership," (xii) the Twelfth Amendment dated as of December 29, 1998 to add a
new subsection (d) to Section 10.2 and amend Sections 4.6(c), 4.7 and 7.5(e) of
the First Restated Partnership Agreement, (xiii) the Thirteenth Amendment dated
as of December 31, 1998 to admit a Substituted Limited Partner, (xiv) the
Fourteenth Amendment dated as of March 1, 1999 to admit an Additional Limited
Partner, (xv) the Fifteenth Amendment dated as of October 15, 1999 to admit an
Additional Limited Partner, (xvi) the Sixteenth Amendment dated as of February
27, 2000 to admit an Additional Limited Partner, and (xvii) the Seventeenth
Amendment dated as of November 1, 2000 to admit an Additional Limited Partner.

         Effective June 23, 1995, the Original General Partner was merged with
and into FelCor Suite Hotels, Inc., a Maryland corporation, which changed its
name on July 27, 1998 to "FelCor Lodging Trust Incorporated." By virtue of such
merger, FelCor Lodging Trust Incorporated (the "General Partner") became the
successor general partner of the Partnership and continued the business of the
Partnership without dissolution in accordance with the terms of the First
Restated Partnership Agreement. By Assignment and Assumption of Partnership
Interest dated as of December 31, 1998, the General Partner assigned various
Partnership Units to FelCor Nevada Holdings, L.L.C., a Nevada limited liability
company ("FelCor LP").

         The General Partner desires, pursuant to the authority granted to it
under the First Restated Partnership Agreement, as amended, to amend and restate
the First Restated Partnership Agreement to reflect (i) the deletion of the
prior authorization contained in Annex No. 1 to Addendum No. 1 for the Class B,
Series I Units, none of which are currently outstanding, (ii) all prior
amendments in the text of this Second Amended and Restated Partnership
Agreement, (iii) changes in applicable tax laws and regulations, (iv) changes
necessary to conform the allocations and distributions

<PAGE>

required by Article V with the allocations and distributions required as a
result of the applicable Certificate of Designation, and (v) other
non-substantive clarifications to the First Restated Partnership Agreement.

         NOW, THEREFORE, in consideration of the foregoing, of mutual covenants
among the parties hereto, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend and restate the First Restated Partnership Agreement, as amended,
to read in its entirety as follows:

                                    ARTICLE I

                             ORGANIZATIONAL MATTERS

         1.1 Formation. The General Partner and the Organizational Limited
Partner have formed the Partnership as a limited partnership pursuant to the
provisions of the Delaware Act. Except as expressly provided to the contrary in
this Agreement, the rights and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be governed
by the Delaware Act. The Partnership Interest of each Partner shall be personal
property for all purposes.

         1.2 Name. The name of the Partnership shall be "FelCor Lodging Limited
Partnership". The Partnership's business may be conducted under any other name
or names deemed necessary or appropriate by the General Partner, including,
without limitation, the name of the General Partner or any Affiliate thereof.
The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the purposes of
complying with the laws of any jurisdiction that so requires. The General
Partner in its sole discretion may change the name of the Partnership at any
time and from time to time and shall notify the Limited Partners of such change
in the next regular communication to the Limited Partners.

         1.3 Registered Office; Principal Office. Unless and until changed by
the General Partner, the registered office of the Partnership in the State of
Delaware shall be located at 1013 Centre Road, New Castle County, Wilmington,
Delaware 19805, and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office shall be the
Corporation Service Company. The principal office of the Partnership and the
address of the General Partner shall be 545 East John Carpenter Freeway, Suite
1300, Irving, Texas 75062, or such other place as the General Partner may from
time to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.

         1.4 Power of Attorney.

                  (a) Each Limited Partner and each Assignee hereby constitutes
and appoints each of the General Partner and, if a Liquidator shall have been
selected pursuant to Section 14.3, the Liquidator severally (and any successor
to either thereof by merger, transfer, assignment, election or otherwise) and
each of their authorized officers and attorneys-in-fact, with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in its name, place and stead, to:

                      (i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (A) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate of Limited Partnership and all amendments or restatements thereof)
that the General Partner or the Liquidator deems necessary or appropriate to
form, qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property; (B) all certificates,
documents and other instruments that the General Partner or the Liquidator deems
necessary or appropriate to reflect, in accordance with its terms, any
amendment, change, modification or restatement of this Agreement; (C) all
certificates, documents and other instruments (including, without limitation,
conveyances and a certificate of cancellation) that the General Partner or the
Liquidator deems necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement; (D) all
certificates, documents and other instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to, or other events
described in, Article X, XI, XII or XIV or the Capital Contribution of any
Partner; (E) all certificates, documents and other instruments relating to the
determinations of the rights, preferences and privileges of any class or series
of Partnership Units or other Partnership Securities issued

                                       2
<PAGE>

pursuant to Section 4.6; (F) all certificates, documents and other instruments
(including, without limitation, agreements and a certificate of merger) relating
to a merger or consolidation of the Partnership pursuant to Article XVI; and (G)
any documents necessary or advisable to convey any property contributed to the
Partnership, to the Partnership.

                      (ii) execute, swear to, acknowledge, deliver, file and
record all ballots, consents, approvals, waivers, certificates and other
instruments necessary or appropriate, in the sole discretion of the General
Partner or the Liquidator, to make, evidence, give, confirm or ratify any vote,
consent, approval, agreement or other action that is made or given by the
Partners hereunder or is consistent with the terms of this Agreement or is
necessary or appropriate, in the sole discretion of the General Partner or the
Liquidator, to effectuate the terms or intent of this Agreement; provided, that
when the approval or consent of the Limited Partners is required by any
provision of this Agreement, the General Partner or the Liquidator may exercise
the power of attorney made in this Section 1.4(a)(ii) only after the necessary
vote, consent or approval of the Limited Partners.

Nothing contained in this Section 1.4 shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XV, or
as may be otherwise expressly provided for in this Agreement.

                  (b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the subsequent death, incompetency, disability, incapacity,
dissolution, bankruptcy or termination of any Limited Partner or Assignee and
the transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Interest and shall extend to such Limited Partner's or Assignee's
heirs, successors and assigns. Each such Limited Partner or Assignee hereby
agrees to be bound by any representation made by the General Partner or the
Liquidator acting in good faith pursuant to such power of attorney; and each
such Limited Partner or Assignee hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the General Partner or
the Liquidator taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen days after receipt of the General Partner's or the
Liquidator's request therefor, such further designations, powers of attorney and
other instruments as the General Partner or the Liquidator deems necessary to
effectuate this Agreement and the purposes of the Partnership.

         1.5 Term. The Partnership commenced upon the filing of the Certificate
of Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the close of Partnership business on December 31, 2044, or until
the earlier termination of the Partnership in accordance with the provisions of
Article XIV or as otherwise required by law.

                                   ARTICLE II

                                   DEFINITIONS

         The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.

         "Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 11.4 and who is shown as such on the
books and records of the Partnership.

         "Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each taxable year of the Partnership, (a)
increased by any amounts that such Partner is obligated to restore under the
standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed
obligated to restore under Treasury Regulation Sections 1.704-2(g)(1) and
1.704-2(i)(5)), and (b) decreased by (i) the amount of all losses and deductions
that, as of the end of such taxable year, are reasonably expected to be
allocated to such Partner in subsequent years under Sections 704(e)(2) and
706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii)
the amount of all distributions that, as of the end of such taxable year, are
reasonably expected to be made to such Partner in subsequent years in accordance
with the terms of this Agreement or otherwise to the extent they exceed
offsetting increases to such Partner's Capital Account that are reasonably
expected to occur during (or prior to) the year in which such distributions are
reasonably expected to be made (other than increases as a result of a minimum
gain chargeback pursuant to Section

                                       3
<PAGE>

5. 1(d) or 5.1(e)). The foregoing definition of Adjusted Capital Account is
intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

         "Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.5(d)(i) or 4.5(d)(ii).

         "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

         "Agreed Allocation" means any allocation made pursuant to Section
5.1(a), (b), or (c).

         "Agreed Value" of any Contributed Property means the fair market value
of such Property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt. For purposes of this Agreement, the Agreed Value of a Contributing
Partner's non-cash Capital Contribution shall be based on the value of the
Partnership Units received by the Contributing Partner in exchange for such
Capital Contribution or in connection with the merger of a partnership of which
such person is a partner with and into the Partnership. Except as otherwise
expressly agreed by the Partnership and a Contributing Partner, the value of
Common Units or Special Units received by the Contributing Partner shall equal
the number of Common Units or Special Units multiplied by the Public Offering
Price or, if the contribution is made after the initial public offering of the
Company's common stock, the value of a share of the Company's common stock
calculated in accordance with the second and third sentences of the definition
of "Cash Amount." Except as otherwise expressly agreed by the Partnership and a
contributing Partner, the value of Preferred Units shall be determined by the
General Partner using such reasonable method as it may adopt.

         "Agreement" means this Second Amended and Restated Agreement of Limited
Partnership of FelCor Lodging Limited Partnership, as it may be further amended,
modified, supplemented or restated from time to time.

         "Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement and who has executed
and delivered a Transfer Application as required by this Agreement but who has
not become a Substituted Limited Partner.

         "Book-Tax Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 4.5 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.

         "Capital Account" means the capital account maintained for any Partner
pursuant to Section 4.5.

         "Capital Contribution" means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Partner contributes to the
Partnership pursuant to Section 4.1, 4.3, 4.4, 4.6(c) or 12.3.

         "Carrying Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' Capital
Accounts, and (b) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
time in accordance with Sections 4.5(d)(i) and 4.5(d)(ii) and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the General
Partner.

         "Cash Amount" means an amount of cash per Partnership Unit equal to the
value of the REIT Shares Amount on the date of receipt by the General Partner of
a Notice of Redemption. The value of the REIT Shares Amount shall be the average
of the market price for each of the ten consecutive trading days immediately
preceding the date of such

                                       4
<PAGE>

valuation. The market price for each such trading day shall be: (i) if the REIT
Shares are listed or admitted to trading on any securities exchange or automatic
inter-dealer quotation system, the closing price, regular way, on such day, or
if no such sale takes place on such day, the average of the closing bid and
asked prices on such day, (ii) if the REIT Shares are not listed or admitted to
trading on any securities exchange or automatic inter-dealer quotation system,
the last reported sale price on such day or, if no sale takes place on such day,
the average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or (iii) if the
REIT Shares are not listed or admitted to trading on any securities exchange or
automatic inter-dealer quotation system, and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than 10 days prior to the date in question) for
which prices have been so reported; provided that if there are no bid and asked
prices reported during the ten days prior to the date in question, the value of
the REIT Shares shall be determined by the General Partner acting in good faith
on the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate. In the event the REIT Shares Amount includes
rights that a holder of REIT Shares would be entitled to receive, then the value
of such rights shall be determined by the General Partner acting in good faith
on the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.

         "Cause" means that a court of competent jurisdiction has entered a
final, non-appealable judgment finding the General Partner liable for actual
fraud, gross negligence or willful or wanton misconduct in its capacity as
general partner of the Partnership.

         "Certificate" means a certificate issued by the Partnership evidencing
ownership of one or more Partnership Interests.

         "Certificate of Designation" means an addendum attached hereto which
creates and provides for the issuance of a class of Partnership Units and fixes
the designations, preferences and relative participating, optional or other
special rights, powers and duties of such Partnership Units.

         "Certificate of Limited Partnership" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of Delaware as
referenced in Section 6.2, as such Certificate may be amended or restated from
time to time.

         "Class B, Series II Unit" means a Partnership Unit issued or authorized
to be issued by the Partnership pursuant to Addendum No. 1 to this Agreement and
Annex No. 2 to such Addendum, which designates the "Class B, Series II Units."

         "Class B Unit" means a Partnership Unit issued or authorized to be
issued by the Partnership pursuant to Addendum No. 1 to this Agreement, which
designates the "Class B Units."

         "Closing Date" means the date on which the transactions contemplated by
the Underwriting Agreement are consummated.

         "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.

         "Common Unit" means a Partnership Unit that has no preferential or
special rights or privileges and excludes the Preferred Units and Special Units.

         "Company" means FelCor Lodging Trust Incorporated, a Maryland
corporation, as successor to FelCor Suite Hotels, Inc., a Delaware corporation,
or its successors.

         "Consolidated" means as reported in the consolidated financial
statements of the Partnership and its subsidiaries (if any) prepared in
accordance with generally accepted accounting principles consistently applied.

                                       5
<PAGE>

         "Contributed Property" means each property or other asset, in such form
as may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.5(d), such property shall no longer constitute a
Contributed Property for purposes of Section 5.1, but shall be deemed an
Adjusted Property for such purposes.

         "Contributing Partner" means each Partner contributing a Contributed
Property.

         "Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, 6 Del. C. Section 17-101, et. seq., as amended, supplemented or restated
from time to time, and any successor to such statute.

         "Departing Partner" means a former General Partner, from and after the
effective date of any withdrawal of the General Partner pursuant to Section
12.1.

         "Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).

         "Event of Withdrawal" has the meaning assigned to such term in Section
12.1.

         "Excess Balance" means for any Partner holding only Common Units and
Special Units, the amount, if any, by which the Partner's positive Capital
Account balance exceeds zero, and for any Partner holding both Common Units,
Special Units and Preferred Units, the amount, if any, by which its positive
Capital Account balance exceeds the sum of the positive balance of the
Liquidation Preference of its Preferred Units.

         "Exchange Act" means the Securities Exchange Act of 1934 as amended,
supplemented or restated from time to time, and any successor to such statute.

         "Fiscal Year" means the twelve-month period ending December 31 of each
year; provided that the last Fiscal Year shall be the period beginning on
January 1 of the calendar year in which the final liquidation and termination of
the Partnership is completed and ending on the date such final liquidation and
termination is completed.

         "General Partner" means the Company, and its successors, as general
partner of the Partnership.

         "General Partner Equity Value" means, as of any date of determination,
the fair market value of the General Partner's Partnership Interest, as a
general partner, as determined by the General Partner using whatever reasonable
method of valuation it may adopt.

         "Indebtedness" means the consolidated liabilities of the Partnership
for borrowed money (including all notes payable and drafts accepted representing
extensions of credit) and all obligations evidenced by bonds, debentures, notes
or other similar instruments on which interest charges are customarily paid,
including obligations under capital leases.

         "Indemnitee" means the General Partner, any Departing Partner, any
Person who is or was an Affiliate of the General Partner or any Departing
Partner, any Person who is or was an officer, director, employee, partner, agent
or trustee of the General Partner or any Departing Partner or any such
Affiliate, or any Person who is or was serving at the request of the General
Partner or any Departing Partner or any such Affiliate as a director, officer,
employee, partner, agent or trustee of another Person.

         "Initial Hotels" means the following six (6) hotels: (1) Embassy Suites
(Dallas-Park Central), 13131 North Central Expressway, Dallas, Texas; (2)
Embassy Suites (Jacksonville-Baymeadows), 9300 Baymeadows Road, Jacksonville,
Florida; (3) Embassy Suites (Orlando-North), 225 East Altamonte Drive, Altamonte
Springs, Florida; (4) Embassy Suites (Orlando-South), 8978 International Drive,
Orlando, Florida; (5) Embassy Suites (Nashville-Airport), 10 Century Boulevard,
Nashville, Tennessee; and (6) Embassy Suites (Tulsa-I-44), 3322 S. 79th East
Avenue, Tulsa, Oklahoma.

         "Initial Limited Partners" means the initial Limited Partners set forth
on Exhibit A admitted to the Partnership in accordance with Section 4.3(b).

                                       6
<PAGE>

         "Limited Partner" means any Person named as a Limited Partner on
Exhibit A attached hereto, and any Person who becomes a Substituted or
Additional Limited Partner, in such Person's capacity as a Limited Partner in
the Partnership.

         "Limited Partner Equity Value" means, as of any date of determination,
the fair market value of a Limited Partner's Partnership Interest, as determined
by the General Partner using whatever reasonable method of valuation it may
adopt.

         "Limited Partner Interest" means the ownership interest of a Limited
Partner in the Partnership at any particular time.

         "Liquidation Preference" means the amount, if any, required to be
distributed to a holder of a Preferred Unit in the event of any liquidation,
dissolution or winding up of the Partnership, whether voluntary or involuntary,
if and to the extent such Preferred Unit has a preferential right to such
distributions under the terms of the applicable Certificate of Designation.

         "Liquidator" means the General Partner or other Person approved
pursuant to Section 14.3 who performs the functions described therein.

         "Majority" means Partners having among them fifty-one percent (51%) or
more of the Outstanding Partnership Units.

         "Merger Agreement" has the meaning assigned to such term in Section
16.1.

         "Minimum Gain Attributable to Partner Nonrecourse Debt" means that
amount determined in accordance with the principles of Treasury Regulation
Section 1.704-2(i)(3).

         "National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.

         "Net Agreed Value" means, (a) in the case of any Contributed Property
the Agreed Value of such property reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
at the time such property is distributed (adjusted as provided in Section
4.5(d)(ii)), reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution as determined under Section 752 of the Code.

         "Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Section 4.5(b) and shall not include any items specially allocated under
Sections 5.1(d) through 5.1(l). Once an item of income, gain, loss or deduction
that has been included in the initial computation of Net Income is subjected to
a Regulatory Allocation, the applicable Net Income or Net Loss shall be
recomputed without regard to such item.

         "Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Section 4.5(b) and shall not include any items specially allocated under
Sections 5.1(d) through 5.1(l). Once an item of income, gain, loss or deduction
that has been included in the initial computation of Net Loss is subjected to a
Regulatory Allocation, the applicable Net Income or Net Loss shall be recomputed
without regard to such item.

         "Nonrecourse Built-in Gain" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Sections 5.2(b)(i)(A),
5.2(b)(ii)(A) or 5.2(b)(iii) if such properties were disposed of in a taxable
transaction in full satisfaction of such liabilities and for no other
consideration.

                                       7
<PAGE>

         "Nonrecourse Deductions" means any and all items of loss, deduction or
expenditure (including any expenditure described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury Regulation Section
1.704-2(b)(1), are attributable to a Nonrecourse Liability.

         "Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(3).

         "Notice of Redemption" means the Notice of Exercise of Redemption Right
substantially in the form attached as Exhibit B hereto.

         "Offering" means the offer and sale by the General Partner and the
purchase by the Underwriters (as defined in the Prospectus) of the common stock
of the General Partner for sale to the public pursuant to the Registration
Statement.

         "Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner) acceptable to the
General Partner.

         "Organizational Limited Partner" means Thomas J. Corcoran, Jr., in his
capacity as the organizational limited partner of the Partnership pursuant to
this Agreement.

         "Outstanding" means, with respect to Partnership Units or other
Partnership Securities, as the case may be, all Partnership Units or other
Partnership Securities that are issued by the Partnership and reflected as
outstanding on the Partnership's books and records as of the date of
determination.

         "Partner" means the General Partner, Limited Partners and Assignees
thereof, if applicable.

         "Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).

         "Partner Nonrecourse Deductions" means any and all items of loss,
deduction or expenditure (including any expenditure described in Section
705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury
Regulation Section 1.704-2(i)(2), are attributable to a Partner Nonrecourse
Debt.

         "Partnership" means FelCor Lodging Limited Partnership, a Delaware
limited partnership established pursuant to this Agreement, formerly known as
FelCor Suites Limited Partnership, and any successor thereto.

         "Partnership Assets" means all assets of the Partnership whether
tangible or intangible and whether real, personal or mixed.

         "Partnership Inception" means the Closing Date.

         "Partnership Interest" means the interest of a Partner in the
Partnership.

         "Partnership Minimum Gain" means the amount determined pursuant to the
provisions of Treasury Regulation Section 1.704-2(d).

         "Partnership Securities" means Partnership Units and any other
securities issued by the Partnership.

         "Partnership Unit" means a Partnership Interest of a Partner or
Assignee in the Partnership representing a fractional part of the Partnership
Interests of all Partners and Assignees and includes Common Units, Special Units
and Preferred Units.

         "Partnership Year" means the Fiscal Year of the Partnership.

         "Percentage Interest" means the percentage ownership interest in the
Partnership of each Partner, as determined by dividing the total number of
Common Units, Special Units and Preferred Units (other than Preferred Units
having a Liquidation Preference) held by a Partner by the total number of Common
Units, Special Units and Preferred Units

                                       8
<PAGE>

(other than Preferred Units having a Liquidation Preference) then outstanding.
No Partner shall have any Percentage Interest attributable to any Preferred
Units having a Liquidation Preference.

         "Person" means an individual or a corporation, partnership, joint
venture, trust, limited liability company, unincorporated organization,
association or other entity.

         "Plan of Merger" means the Agreement and Plan of Merger dated May 20,
1994 by and among FelCor Suites Limited Partnership, Suites DJON Limited
Partnership, Suites DJON Nashville Limited Partnership and Suites Oklahoma
Limited Partnership.

         "Preferred Units" means any class or series of Partnership Units that
is designated as having preferential rights with respect to distributions by the
Partnership as provided in the applicable Certificate of Designation, and
includes without limitation the Series A Convertible Preferred Units and the
Series B Redeemable Preferred Units.

         "Prospectus" means the final prospectus contained in the Registration
Statement delivered to purchasers of the General Partner's common stock in the
Offering.

         "Public Offering Price" shall mean the price set forth in the
Prospectus.

         "Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.

         "Recaptured Credits" means credits previously taken against federal
income tax liability which are required to be recaptured upon the disposition of
any property by the Partnership prior to the end of such property's useful life
used in determining the amount of the credit relating thereto.

         "Record Date" means the date established by the General Partner for
determining (a) the identity of Limited Partners (or Assignees, if applicable)
entitled to notice of, or to vote at any meeting of Limited Partners or entitled
to vote by ballot or give approval of Partnership action in writing without a
meeting or entitled to exercise rights in respect of any lawful action of
Limited Partners, or (b) the identity of Record Holders entitled to receive any
report or distribution.

         "Record Holder" means the Person in whose name a Partnership Unit is
registered on the books of the Transfer Agent as of the opening of business on a
particular Business Day.

         "Redeeming Partner" has the meaning provided in Section 7.5(a) hereof.

         "Redemption Amount" means either the Cash Amount or the REIT Shares
Amount.

         "Redemption Right" has the meaning provided in Section 7.5(a) hereof.

         "Registration Statement" means the Registration Statement on Form S-11
(Registration No. 33-79214), as it has been and as it may be amended or
supplemented from time to time, filed by the General Partner with the Securities
and Exchange Commission under the Securities Act to register the offering and
sale of common stock of the General Partner in the Offering.

         "Regulatory Allocations" shall have the meaning assigned in Section
5.1(l).

         "REIT" means a real estate investment trust under Sections 856 through
860 of the Code.

         "REIT Share" means a share of the common stock of the General Partner
or any option, warrant or right to purchase or subscribe for such shares.

                                       9
<PAGE>

         "REIT Shares Amount" shall mean a number of REIT Shares equal to the
number of Partnership Units offered for redemption by a Redeeming Partner;
provided that in the event the General Partner issues to all holders of REIT
Shares rights, options, warrants or convertible or exchangeable securities
entitling the shareholders to subscribe for or purchase REIT Shares, or any
other securities or property (collectively, the "rights"), then the REIT Shares
Amount shall also include such rights as a holder of that number of REIT Shares
would have been entitled to receive as of the Record Date for the issuance of
such rights.

         "Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 5.2(b)(i)(A) or 5.2(b)(ii)(A), to eliminate Book-Tax
Disparities.

         "Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time, and any successor to such statute.

         "Series A Convertible Preferred Unit" means a Partnership Unit issued
or authorized to be issued by the Partnership pursuant to Addendum No. 2 to this
Agreement, which designates the "Series A Cumulative Convertible Preferred
Units."

         "Series B Redeemable Preferred Unit" means a Partnership Unit issued or
authorized to be issued by the Partnership pursuant to Addendum No. 3 to this
Agreement, which designates the "Series B Cumulative Redeemable Preferred
Units."

         "Special Units" means any class or series of Partnership Units that is
designated as having preferential or special rights, powers or duties, other
than with respect to distributions by the Partnership, and includes, without
limitation, the Class B Units and Class B, Series II Units.

         "Specified Redemption Date" means the first business day of the month
that is at least 10 business days after the receipt by the General Partner of
the Notice of Redemption.

         "Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.1 in place or and with
all the rights of the Limited Partner and who is shown as the Limited Partner on
the books and records of the Partnership.

         "Surviving Business Entity" has the meaning assigned to such term in
Section 16.2(b).

         "Target Balance" means with respect to a Partner the sum of (i) an
amount that bears the same ratio to the aggregate Capital Account balances (as
determined immediately after the conversion of the Partner's Preferred Units to
Common Units or redemption of Preferred Units into Common Units (as the case may
be) under the applicable Certificate of Designation and reduced by an amount
equal to the aggregate Liquidation Preference of all issued and outstanding
Preferred Units that have a Liquidation Preference and that are not being
converted or redeemed) of all Partners as the Partner's total number of Common
Units, Special Units and Preferred Units that have a Percentage Interest
(determined immediately after the conversion or redemption) bears to the
aggregate number of Common Units, Special Units and Preferred Units that have a
Percentage Interest owned by all Partners (determined immediately after the
conversion or redemption), plus (ii) the Liquidation Preference of the Partner's
total Preferred Units that have a Liquidation Preference and that are not being
converted or redeemed.

         "Transfer Agent" means Sun Trust Bank, Atlanta, Georgia or such bank,
trust company or other Person (including, without limitation, the General
Partner or one of its Affiliates) as shall be appointed from time to time by the
Partnership to act as registrar and transfer agent for the Partnership Units.

         "Transfer Application" means an application and agreement for transfer
of Partnership Units in the form set forth on the back of a Partnership Unit
Certificate or in a form substantially to the same effect in a separate
instrument.

         "Treasury Regulations" means the existing, temporary and proposed
income tax regulations under the Code, as amended from time to time.

                                       10
<PAGE>

         "Underwriter" means each Person named as an underwriter in the
Underwriting Agreement who purchases common stock of the General Partner
pursuant thereto.

         "Underwriting Agreement" means the Underwriting Agreement dated July
21, 1994, among the Partnership, the Company, Morgan Keegan & Company, Inc. and
Montgomery Securities providing for the purchase of the common stock of the
General Partner to be offered in the Offering by such Underwriters.

         "Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the fair
market value of such property as of such date over (b) the Carrying Value of
such property as of such date (prior to any adjustment to be made pursuant to
Section 4.5(d) as of such date). In determining such Unrealized Gain, the
aggregate cash amount and fair market value of all Partnership assets (including
cash or cash equivalents) shall be determined by the General Partner using such
reasonable method of valuation as it may adopt; provided, however, that the
General Partner, in arriving at such valuation, must take fully into account the
aggregate Limited Partner Equity Value and the General Partner Equity Value at
such time. The General Partner shall allocate such aggregate value among the
Partnership Assets (in such manner as it determines in its sole discretion to be
reasonable) to arrive at a fair market value for individual properties.

         "Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (a) the Carrying
Value of such property as of such date (prior to any adjustment to be made
pursuant to Section 4.5(d) as of such date) over (b) the fair market value of
such property as of such date. In determining such Unrealized Loss, the
aggregate cash amount and fair market value of all Partnership assets (including
cash or cash equivalents) shall be determined by the General Partner using such
reasonable method of valuation as it may adopt; provided, however, that the
General Partner, in arriving at such valuation, must take fully into account the
aggregate Limited Partner Equity Value and the General Partner Equity Value at
such time. The General Partner shall allocate such aggregate value among the
Partnership Assets (in such manner as it determines in its sole discretion to be
reasonable) to arrive at a fair market value for individual properties.

                                   ARTICLE III

                                     PURPOSE

         3.1 Purpose and Business. The purpose and nature of the business to be
conducted by the Partnership shall be (i) to engage directly in, or to enter
into any partnership, joint venture or similar arrangement to engage in, any
business activity that may be lawfully conducted by a limited partnership
organized pursuant to the Delaware Act and, in connection therewith, to exercise
all of the rights and powers conferred upon the Partnership pursuant to the
agreements relating to such business activity; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to qualify as a REIT, unless the General Partner
takes affirmative action not to qualify as a REIT or to otherwise revoke its
election to be taxed as a REIT, and (ii) to do anything necessary or appropriate
to the foregoing.

         3.2 Powers. The Partnership shall be empowered to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described in Section 3.1 and for the protection and benefit of the Partnership.

                                   ARTICLE IV

             CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP UNITS

         4.1 Initial Contributions. To form the Partnership under the Delaware
Act, the General Partner made an initial Capital Contribution to the Partnership
in the amount of $99 for a 99% general partner interest in the Partnership and
was admitted as the general partner of the Partnership, and the Organizational
Limited Partner made a Capital Contribution to the Partnership in the amount of
$1 for a 1% interest in the Partnership and was admitted as the Organizational
Limited Partner of the Partnership.

                                       11
<PAGE>

         4.2 Return of Initial Contributions. As of the Closing Date, after
giving effect to (i) the transactions contemplated by Section 4.3 and (ii) the
admission to the Partnership of the Initial Limited Partners in accordance with
this Agreement, the interest in the Partnership of the Organizational Limited
Partner was terminated, the $99 Capital Contribution by the General Partner and
the $1 Capital Contribution by the Organizational Limited Partner as initial
Capital Contributions were refunded and the interest of the Organizational
Limited Partner as a limited partner of the Partnership was terminated and
withdrawn. Ninety-nine percent of any interest or other profit that may have
resulted from the investment or other use of such initial Capital Contributions
was allocated and distributed to the General Partner, and the balance thereof
was allocated and distributed to the Organizational Limited Partner.

         4.3 Capital Contributions by the Partners.

                  (a) On the Closing Date, the General Partner contributed to
the Partnership the net proceeds from the sale of common stock in the Offering
in exchange for 4,075,000 Partnership Units representing an approximately 70.6%
general partner interest in the Partnership, after giving effect to the
withdrawal of the Organizational Limited Partner as a limited partner of the
Partnership.

                  (b) On the Closing Date, the Initial Limited Partners
contributed to the Partnership, through the Plan of Merger, the Initial Hotels.

                  (c) The number and class or series of Partnership Units held
by each Partner are set forth opposite the name of such Partner on Exhibit A.

                  (d) Except as otherwise provided in this Agreement, the
Partners shall have no right or obligation to make any Additional Capital
Contributions or loans to the Partnership. The General Partner may contribute
additional capital to the Partnership, from time to time, and receive an
additional Partnership Interest in respect thereof, in the manner contemplated
in Section 4.6 hereof.

         4.4 Limited Preemptive Rights. Except as provided for herein, no Person
shall have any preemptive, preferential or other similar right with respect to
(a) additional Capital Contributions; (b) issuance or sale of any class or
series of Partnership Units or other Partnership Securities, whether unissued,
held in the treasury or hereafter created; (c) issuance of any obligations,
evidences of indebtedness or other securities of the Partnership convertible
into or exchangeable for, or carrying or accompanied by any rights to receive,
purchase or subscribe to, any such Partnership Units or other Partnership
Securities; (d) issuance of any right or subscription to or right to receive, or
any warrant or option for the purchase of any such Partnership Units or other
Partnership Securities; or (e) issuance or sale of any other securities that may
be issued or sold by the Partnership.

         4.5 Capital Accounts.

                  (a) The Partnership shall maintain for each Partner a separate
Capital Account in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the Net Agreed
Value of all Capital Contributions made by such Partner to the Partnership
pursuant to this Agreement and (ii) all items of Partnership income and gain
(including, without limitation, income and gain exempt from tax) computed in
accordance with Section 4.5(b) and allocated to such Partner pursuant to Section
5.1 and decreased by (x) the amount of cash or Net Agreed Value of all
distributions of cash or property made to such Partner pursuant to this
Agreement and (y) all items of Partnership deduction and loss computed in
accordance with Section 4.5(b) and allocated to such Partner pursuant to Section
5.1.

                  (b) For purposes of computing the amount of any item of
income, gain, loss or deduction to be reflected in the Partners' Capital
Accounts, the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification for
federal income tax purposes (including, without limitation, any method of
depreciation, cost recovery or amortization used for that purpose), provided,
that:

                           (i) Solely for purposes of this Section 4.5, the
Partnership shall be treated as owning directly its proportionate share (as
determined by the General Partner) of all property owned by any partnership that
the Partnership controls.

                                       12
<PAGE>

                           (ii) All fees and other expenses incurred by the
Partnership to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if any, shall,
for purposes of Capital Account maintenance, be treated as an item of deduction
at the time such fees and other expenses are incurred and shall be allocated
among the Partners pursuant to Section 5.1.

                           (iii) Except as otherwise provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Partnership and, as to those
items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
regard to the fact that such items are not includable in gross income or are
neither currently deductible nor capitalized for federal income tax purposes.

                           (iv) Any income, gain or loss attributable to the
taxable disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were equal in
amount to the Partnership's Carrying Value with respect to such property as of
such date.

                           (v) In accordance with the requirements of Section
704(b) of the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be determined as if
the adjusted basis of such property on the date it was acquired by the
Partnership were equal to the Agreed Value of such property. Upon an adjustment
pursuant to Section 4.5(d) to the Carrying Value of any Partnership property
subject to depreciation, cost recovery or amortization, any further deductions
for such depreciation, cost recovery or amortization attributable to such
property shall be determined (A) as if the adjusted basis of such property were
equal to the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery or amortization
derived from the same method and useful life (or, if applicable, the remaining
useful life) as is applied for federal income tax purposes; provided, however,
that, if the asset has a zero adjusted basis for federal income tax purposes,
depreciation, cost recovery or amortization deductions shall be determined using
any reasonable method that the General Partner may adopt.

                           (vi) If the Partnership's adjusted basis in
depreciable or cost recovery property is reduced for federal income tax purposes
pursuant to Section 50(c)(1) of the Code, the amount of such reduction shall,
solely for purposes hereof, be deemed to be an additional depreciation or cost
recovery deduction in the year such property is placed in service and shall be
allocated among the Partners pursuant to Section 5.1. Any restoration of such
basis pursuant to Section 50(c)(2) of the Code shall, to the extent possible, be
allocated in the year of such restoration as an item of income pursuant to
Section 5.1.

                  (c) A transferee of a Partnership Interest shall
succeed to a pro rata portion of the Capital Account of the transferor relating
to the Partnership Interest so transferred. As required by the capital account
maintenance rules of Treasury Regulation Section 1.704-1(b)(2)(iv), a single
Capital Account shall be maintained for each Partner regardless of the number
and type of Partnership Units held by such Partner. Upon the conversion of
Preferred Units into Common Units or the redemption of Preferred Units as
provided in the applicable Certificate of Designation, the Partners' Capital
Accounts shall be adjusted as expressly provided in this Agreement.

                  (d)      (i) Consistent with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), on an issuance of additional
Partnership Units or other Partnership Securities for cash or Contributed
Property, the Capital Accounts of all Partners and the Carrying Value of each
Partnership property immediately prior to such issuance shall be adjusted upward
or downward to reflect any Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as if such Unrealized Gain or Unrealized Loss had
been recognized on an actual sale of each such property immediately prior to
such issuance and had been allocated to the Partners at such time pursuant to
Section 5.1.

                           (ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any distribution to a Partner of any
Partnership property (excluding distributions of cash that are not in redemption
or retirement of a Partnership Interest but including distributions in
connection with the redemption of a Preferred Unit for cash), the Capital
Accounts of all Partners and the Carrying Value of each Partnership property
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such Unrealized
Gain or Unrealized Loss had been recognized in a sale of such property
immediately prior to such distribution for an amount equal to its fair market
value, and had been allocated to the Partners, at such time, pursuant to Section
5.1.

                                       13
<PAGE>

                  (e) Immediately after the effective time of conversion of any
Preferred Units into Common Units pursuant to the applicable Certificate of
Designation, the respective Capital Account balances of the Partners who
thereafter own Common Units or Special Units with respect to such Common Units
or Special Units shall be equal to their respective Target Balances, which
balances shall thereafter be adjusted as provided in this Article IV. For
purposes of this Section 4.5(e), such Partner's Capital Account balance
immediately preceding the determinations of the Target Balances shall include
all adjustments and allocations required by Section 4.5(f).

                  (f) In the event any Partner's Percentage Interest changes
during a Fiscal Year for any reason, including without limitation, the
redemption of any Partnership Units or the conversion of any Preferred Unit into
a Common Unit, the allocations contained in Article V shall be applied by the
General Partner as necessary to reflect the varying interest of the Partners
during such year using any method determined by the General Partner to be
permissible by the Code and Treasury Regulations.

         4.6 Issuance of Additional Partnership Units and Other Securities

                  (a) The General Partner is hereby authorized to cause the
Partnership to issue, in addition to the Partnership Units issued pursuant to
Section 4.3, such additional Partnership Units, or classes or series thereof
(senior or junior to any of the Partnership Units), or options, rights, warrants
or appreciation rights relating thereto, or any other type of equity security
that the Partnership may lawfully issue, any unsecured or secured debt
obligations of the Partnership or debt obligations of the Partnership
convertible into any class or series of equity securities of the Partnership
(collectively, "Partnership Securities"), for any Partnership purpose, at any
time or from time to time, to the Partners or to other Persons for such
consideration and on such terms and conditions as shall be established by the
General Partner in its sole discretion, all without the approval of any Limited
Partners or any other Person; provided, however, in no event shall the General
Partner cause the Partnership to have Outstanding at any time Partnership Units
(other than Preferred Units that are not convertible into Common Units) in
excess of the total authorized common stock of the General Partner. The General
Partner shall have sole discretion, subject to the guidelines set forth in this
Section 4.6 and the requirements of the Delaware Act, in determining the
consideration and terms and conditions with respect to any future issuance of
Partnership Securities.

                  (b) Notwithstanding any provision of this Agreement to the
contrary, additional Partnership Securities to be issued by the Partnership
pursuant to this Section 4.6 shall be issuable from time to time in one or more
classes, or one or more series of any such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including, without limitation, rights, powers and duties
senior to existing classes and series of Partnership Securities, all as shall be
fixed by the General Partner in the exercise of its sole and complete
discretion, subject to Delaware law, including, without limitation, (i) the
allocations of items of Partnership income, gain, loss, deduction and credit to
each such class or series of Partnership Securities; (ii) the right of each such
class or series of Partnership Securities to share in Partnership distributions;
(iii) the rights of each such class or series of Partnership Securities upon
dissolution and liquidation of the Partnership; (iv) whether such class or
series of additional Partnership Securities is redeemable by the Partnership
and, if so, the price at which, and the terms and conditions upon which, such
class or series of additional Partnership Securities may be redeemed by the
Partnership; (v) whether such class or series of additional Partnership
Securities is issued with the privilege of conversion and, if so, the rate at
which, and the terms and conditions upon which, such class or series of
Partnership Securities may be converted into any other class or series of
Partnership Securities; (vi) the terms and conditions upon which each such class
or series of Partnership Securities will be issued, evidenced by Partnership
Unit Certificates and assigned or transferred; and (vii) the right, if any, of
each such class or series of Partnership Securities to vote on Partnership
matters, including, without limitation, matters relating to the relative rights,
preferences and privileges of each such class or series.

                  (c) Nothing contained herein shall restrict the General
Partner's right to issue additional REIT Shares or other capital stock of the
General Partner or to transfer REIT Shares to the Partnership in connection with
a redemption pursuant to Section 7.5 hereof; provided, however, in the event
that REIT Shares or shares of other capital stock are issued by the General
Partner, (i) the General Partner shall cause the Partnership to issue to the
General Partner an equivalent amount of Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the Partnership
having designations, preferences and other rights, all such that the economic
interests are substantially similar to those of the REIT Shares or

                                       14
<PAGE>

other capital stock issued by the General Partner to finance such investment,
and (ii) the General Partner shall contribute (or be deemed to have contributed)
to the Partnership the net proceeds from the offering of such REIT Shares or
other capital stock and from the exercise of rights contained in such REIT
Shares or other capital stock. In lieu of contributing such proceeds directly to
the Partnership, the General Partner may contribute such proceeds to the
Partnership indirectly through the General Partner's wholly-owned subsidiary or
subsidiaries, and in that event, the Partnership will issue to such subsidiary
or subsidiaries the securities of the Partnership required by clause (i) above.
In connection with any and all issuances of REIT Shares and other capital stock
of the General Partner, the General Partner shall make a Capital Contribution to
the Partnership of the proceeds raised in connection with such issuance as
required above, provided that if the proceeds actually received by the General
Partner are less than the gross proceeds of such issuance as a result of any
underwriter's discount or other expenses paid or incurred in connection with
such issuance, then the General Partner shall be deemed to have made a Capital
Contribution to the Partnership in the amount of the gross proceeds of such
issuance and the Partnership shall be deemed simultaneously to have paid such
underwriting discount and offering expenses in connection with the required
issuance of additional Partnership Units to the General Partner for such Capital
Contribution.

                  (d) The General Partner is hereby authorized and directed to
take all actions that it deems necessary or appropriate in connection with each
issuance of Partnership Units or other Partnership Securities pursuant to
Section 4.6(a) to amend this Agreement in any manner that it deems necessary or
appropriate to provide for each such issuance, to admit Additional Limited
Partners in connection therewith and to specify the relative rights, powers and
duties of the holders of the Partnership Units or other Partnership Securities
being so issued.

                  (e) The General Partner shall do all things necessary to
comply with the Delaware Act and is authorized and directed to do all things it
deems necessary or advisable in connection with any future issuance of
securities representing Partnership Interests, including, without limitation,
compliance with any statute, rule, regulation or guideline of any federal, state
or other governmental agency or any National Securities Exchange on which
Partnership Units or other securities representing Partnership Interests are
listed for trading.

         4.7 Adjustment to Percentage Interests and Outstanding Partnership
Units.

                  (a) The General Partner shall cause the number of Common Units
and Special Units Outstanding (and the conversion ratio of any Preferred Units
that are convertible into Common Units) to be proportionately adjusted for any
increase or decrease in the number of issued shares of common stock of the
General Partner, or any successor in interest thereto, resulting from a
subdivision or consolidation of shares, the payment of a stock dividend in
common stock or other recapitalization, such that upon each Redeeming Partner's
exercise of its Redemption Right pursuant to Section 7.5 hereof, such Redeeming
Partner shall receive the same number of shares of common stock of the General
Partner that it would have received had it exercised its Redemption Right
immediately before the effective date of such change in the number of issued
shares of common stock of the General Partner. In the event the General Partner
effects a redemption or otherwise acquires any outstanding shares of its capital
stock (other than common stock) for which corresponding Partnership Interests
were issued to the General Partner (or its wholly-owned subsidiary or
subsidiaries) in accordance with Section 4.6(c) hereof, the General Partner
shall cause the Partnership to redeem from the General Partner (or its
wholly-owned subsidiary or subsidiaries) an equivalent number of such
Partnership Interests upon the same terms and conditions as the redemption
effected by the General Partner.

                  (b) Upon any conversion of Preferred Units into Common Units
in accordance with the terms of the applicable Certificate of Designation, the
Percentage Interests of the Partners shall be adjusted to reflect the Common
Units issued pursuant to such conversion. Any Preferred Units so converted shall
be retired.

         4.8 Interest. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.

         4.9 No Withdrawal. No Partner shall be entitled to withdraw any part of
its Capital Contributions or its Capital Account or to receive any distribution
from the Partnership, except as provided herein.

         4.10 Loans from Partners. Loans by a Partner to the Partnership shall
not constitute Capital Contributions. If any Partner shall advance funds to the
Partnership in excess of the amounts required hereunder to be contributed by it
to the capital of the Partnership, the making of such excess advances shall not
result in any increase in the amount of the Capital Account of such Partner. The
amount of any such excess advances shall be a debt obligation of the Partnership
to such Partner and shall be payable or collectible only out of the Partnership
Assets in accordance with the terms and conditions upon which such advances are
made.

                                       15
<PAGE>

                                    ARTICLE V

                          ALLOCATIONS AND DISTRIBUTIONS

         5.1 Allocations for Capital Account Purposes. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.5(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided herein below.

                  (a) Net Income. After giving effect to the Regulatory
Allocations, Section 5.1(k), Section 5.1(l), and after all distributions under
Section 5.3 but before distributions under Section 14.3, all items of income,
gain, loss and deduction taken into account in computing Net Income for such
taxable period shall be allocated in the same manner as such Net Income is
allocated hereunder, which Net Income shall be allocated to the Partners in the
following order of priority:

                           (i) First, Net Income shall be allocated to each
holder of any Preferred Units that have a Liquidation Preference, pro rata
within each class or series of Preferred Units and according to the priorities
among each such class or series, as set forth in the applicable Certificates of
Designations, until the positive Capital Account balance of such holder is equal
to the sum of the Liquidation Preferences of such holder's Preferred Units;

                           (ii) Second, Net Income shall be allocated among the
Partners to the least extent necessary so that the ratio among the Partners'
Excess Balances is as close as possible to the ratio among their respective
Percentage Interests; and then

                           (iii) Finally, Net Income shall be allocated pro rata
to all Partners in proportion to their respective Percentage Interests.

For purposes of making allocations under this Section 5.1(a), a Partner's
Capital Account balance shall be increased by the Partner's share of Partnership
Minimum Gain and Minimum Gain Attributable to Partner Nonrecourse Debt as of the
applicable time.

                  (b) Net Losses. After giving effect to the Regulatory
Allocations, Section 5.1(k), Section 5.1(l), and after all distributions under
Section 5.3 but before distributions under Section 14.3, all items of income,
gain, loss and deduction taken into account in computing Net Losses for such
taxable period shall be allocated in the same manner as such Net Losses are
allocated hereunder, which Net Losses shall be allocated to the Partners in the
following order of priority:

                           (i) First, Net Loss shall be allocated among the
Partners in the least amount necessary so that the ratio among the Partners'
Excess Balances is as close as possible to the ratio among their respective
Percentage Interests and then to such Partners in proportion to their Percentage
Interests until their respective Excess Balances are reduced to zero; and then

                           (ii) Second, Net Loss shall be allocated among the
holders of any Preferred Units that have a Liquidation Preference, pro rata
within each class or series of Preferred Units and according to the priorities
among each such class or series as set forth in the applicable Certificate of
Designation, until the positive balances of their Capital Accounts are reduced
to zero; and then

                           (iii) Third, Net Loss shall be allocated to the
Partners in accordance with their Percentage Interests.

For purposes of making allocations under this Section 5.1(b), a Partner's
Capital Account balance shall be increased by the Partner's share of Partnership
Minimum Gain and Minimum Gain Attributable to Partner Nonrecourse Debt as of the
applicable time.

                                       16
<PAGE>

                  (c) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount of
Partnership Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain
shall be allocated among the Partners in accordance with their respective
Percentage Interests.

                  (d) Partnership Minimum Gain Chargeback. Notwithstanding the
other provisions of this Section 5.1, except as provided in Treasury Regulation
Sections 1.704-2(f)(2) through (5), if there is a net decrease in Partnership
Minimum Gain during any Partnership taxable period, each Partner shall be
allocated items of Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts provided in Treasury
Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any
successor provisions. For purposes of this Section 5.1(d), each Partner's
Adjusted Capital Account balance shall be determined, and the allocation of
income or gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 5.1 with respect to such taxable
period (other than an allocation pursuant to Sections 5.1(h) or 5.1(i)).

                  (e) Chargeback of Minimum Gain Attributable to Partner
Nonrecourse Debt. Notwithstanding the other provisions of this Section 5.1
(other than 5.1(d) and (i)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Minimum Gain Attributable to
Partner Nonrecourse Debt during any Partnership taxable period, any Partner with
a share of Minimum Gain Attributable to Partner Nonrecourse Debt at the
beginning of such taxable period shall be allocated items of Partnership income
and gain for such period (and, if necessary, subsequent periods) in the manner
and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-
2(j)(2)(ii), or any successor provisions. For purposes of this Section 5.1(e),
each Partner's Adjusted Capital Account balance shall be determined and the
allocation of income or gain required hereunder shall be effected, prior to the
application of any other allocations pursuant to this Section 5.1, other than
Section 5.1(d) (and other than an allocation pursuant to Sections 5.1(h) or
5.1(i)), with respect to such taxable period.

                  (f) Qualified Income Offset. In the event any Partner
unexpectedly receives adjustments, allocations or distributions described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specifically allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations promulgated under
Section 704(b) of the Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as quickly as
possible unless such deficit balance is otherwise eliminated pursuant to Section
5.1(d) or 5.1(e).

                  (g) Gross Income Allocations. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership taxable
period that is in excess of the sum of (i) the amount, if any the Partner is
obligated to restore pursuant to this Agreement and (ii) the amount the Partner
is deemed to be obligated to restore pursuant to the penultimate sentences of
Section 1.704-2(g)(1) and Section 1.704-2(i)(5) of the Treasury Regulations,
such Partner shall be specially allocated items of Partnership gross income and
gain in the amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 5.1(g) shall be made only and to the extent
that such Partner would have a deficit balance in its Capital Account (as
adjusted above in this Section 5.1(g)) after all other allocations provided in
this Section 5.1 have been tentatively made as if this Section 5.1(g) were not
in the Agreement.

                  (h) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Treasury
Regulations promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the Limited Partners, to revise the prescribed ratio
to the numerically closest ratio which does satisfy such requirements.

                  (i) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the Partner that
bears the Economic Risk of Loss for such Partnership Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with Treasury
Regulation Section 1.704-2(i). If more than one Partner bears the Economic Risk
of Loss with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among such
Partners in accordance with the ratios in which they share such Economic Risk of
Loss.

                                       17
<PAGE>

                  (j) Loss Limitation. The Net Losses allocated to a Partner
pursuant to Section 5.1(b) shall not exceed the maximum amount of Net Losses
that can be so allocated without causing, or increasing, a deficit balance in a
Partner's Adjusted Capital Account at the end of any Fiscal Year, and all Net
Losses in excess of such limitation shall be allocated (subject to this Section
5.1(j)) to the other Partners in the same ratio that their respective Percentage
Interests bear to the total Percentage Interests of all such Partners, or if
such losses are not so allocable by reason of this Section 5.1(j), to the
General Partner.

                  (k) Gross Income Allocation.

                           (i) Each Fiscal Year, after giving effect to the
Regulatory Allocations, gross income shall be allocated to the Partners with
respect to their Preferred Units until the cumulative amount allocated under
this Section 5.1(k)(i) to them for the current year and prior years is equal to
the cumulative amount for the current year and prior years of the distributions
made to such Partners with respect to their Preferred Units under the first
sentence of Section 5.3(a). To the extent that there is insufficient gross
income in any year to allocate the full amount provided for by this Section
5.1(k)(i), the available gross income will be allocated among classes or series
of Preferred Units in accordance with their relative distribution priorities, as
set forth in the applicable Certificate of Designation, and pro rata within each
such class or series.

                           (ii) For any Fiscal Year in which a Preferred Unit
that has a Liquidation Preference is redeemed under the Certificate of
Designation therefor, after giving effect to the Regulatory Allocations, gross
income shall be allocated to the Partner owning such Preferred Unit until the
cumulative amount allocated under this Section 5.1(k)(ii) is equal to the sum of
(A) the excess of (i) the amount distributed in redemption of the unit pursuant
to the applicable Certificate of Designation over (ii) the Liquidation
Preference for such Preferred Unit, and (B) the excess of (i) the total Net Loss
allocated under Section 5.1(b)(ii) for the current Fiscal Year and all prior
Fiscal Years attributable to the Preferred Unit redeemed over (ii) the Net
Income allocated under Section 5.1(a)(i) for the current Fiscal Year and all
prior Fiscal Years attributable to the Preferred Unit redeemed.

                  (l) Curative Allocations. The allocations set forth in Section
5.1 (c) through (j) (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Partnership income, gain, loss or deduction pursuant to this
Section 5.1(l). Therefore, notwithstanding any other provision of this Article V
(other than the Regulatory Allocations), the General Partner shall make such
offsetting special allocations of Partnership income, gain, loss or deduction in
whatever manner it determines appropriate so that, after such offsetting
allocations are made, each Partner's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such Partner would have had if
the Regulatory Allocations were not part of the Agreement and all Partnership
items were allocated pursuant to this Section 5.1 other than the Regulatory
Allocations.

         5.2 Allocations for Tax Purposes.

                  (a) Except as otherwise provided herein, for federal income
tax purposes, each item of income, gain, loss and deduction which is recognized
by the Partnership for federal income tax purposes shall be allocated among the
Partners in the same manner as its correlative item of "book" income, gain, loss
or deduction is allocated pursuant to Section 5.1 hereof.

                  (b) In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, depreciation, amortization and cost recovery deductions shall be
allocated for federal income tax purposes among the Partners as follows:

                           (i) (A) In the case of a Contributed Property, such
items attributable thereto shall be allocated among the Partners in the manner
provided under Section 704(c) of the Code that takes into account the variation
between the Agreed Value of such property and its adjusted basis at the time of
contribution; and (B) except as otherwise provided in Section 5.2(b)(iii), any
item of Residual Gain or Residual Loss attributable to a Contributed Property
shall be allocated among the Partners in the same manner as its correlative item
of "book" gain or loss is allocated pursuant to Section 5.1.

                                       18
<PAGE>

                           (ii) (A) In the case of an Adjusted Property, such
items shall (1) first, be allocated among the Partners in a manner consistent
with the principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and the
allocations thereof pursuant to Section 4.5(d)(i) or (ii), and (2) second, in
the event such property was originally a Contributed Property, be allocated
among the Partners in a manner consistent with Section 5.2(b)(i)(A); and (B)
except as otherwise provided in Section 5.2(b)(iii), any item of Residual Gain
or Residual Loss attributable to an Adjusted Property shall be allocated among
the Partners in the same manner as its correlative item of "book" gain or loss
is allocated pursuant to Section 5.1.

                           (iii) Any items of income, gain, loss or deduction
otherwise allocable under Section 5.2(b)(i)(B), or 5.2(b)(ii)(B) shall be
subject to allocation by the General Partner in a manner designed to eliminate,
to the maximum extent possible, Book-Tax Disparities in a Contributed Property
or Adjusted Property otherwise resulting from the application of the "ceiling"
limitation (under Section 704(c) of the Code or Section 704(c) principles) to
the allocations provided under Section 5.2(b)(i)(A) or 5.2(b)(ii)(A).

                  (c) For the proper administration of the Partnership or for
the preservation of uniformity of the Partnership Units (or any class or classes
thereof), the General Partner shall have sole discretion to (i) adopt such
conventions as it deems appropriate in determining the amount of depreciation,
amortization and cost recovery deductions; (ii) make special allocations for
federal income tax purposes of income (including, without limitation, gross
income) or deductions; and (iii) amend the provisions of this Agreement as
appropriate (x) to reflect the proposal or promulgation of Treasury Regulations
under Section 704(b) or Section 704(c) of the Code or (y) otherwise to preserve
or achieve uniformity of the Partnership Units (or any class or classes
thereof). The General Partner may adopt such conventions, make such allocations
and make such amendments to this Agreement as provided in this Section 5.2(c)
only if such conventions, allocations or amendments would not have a material
adverse effect on the Partners, the holders of any class or classes of the
Partnership Units issued and Outstanding, and if such allocations are consistent
with the principles of Section 704 of the Code.

                  (d) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent possible after
taking into account other required allocations of gain pursuant to this Section
5.2, be characterized as Recapture Income in the same proportions and to the
same extent as such Partners (or their predecessors in interest) have been
allocated any deductions directly or indirectly giving rise to the treatment of
such gain as Recapture Income.

                  (e) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and allocated to
the Partners in accordance with the provisions hereof shall be determined
without regard to any election under Section 754 of the Code which may be made
by the Partnership; provided, however, that such allocations, once made, shall
be adjusted as necessary or appropriate to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.

         5.3 Distribution of Cash.

                  (a) The holders of Preferred Units shall be entitled to
receive distributions in accordance with the Certificates of Designation for
such Preferred Units, to the extent such Preferred Units are entitled thereunder
to preferential distributions from the Partnership. Such distributions shall be
made pro rata within each class or series of Preferred Units and according to
the relative priorities among each such class or series, as set forth in the
applicable Certificate of Designation. After the distributions required pursuant
to the preceding sentence are made, the General Partner shall distribute, at
least quarterly, cash in such amount, if any, as may be determined by the
General Partner, in its sole discretion, to be available and appropriate for
distribution, to the holders of Common Units and Special Units who are Partners
on the Record Date with respect to such quarter pro rata in accordance with
their respective Percentage Interests on such Record Date. Notwithstanding
anything in the immediately preceding sentence, all distributions after the
commencement of the dissolution and liquidation of the Partnership shall be made
under Section 14.3.

                  (b) In no event may a Partner receive a distribution of cash
with respect to a Partnership Unit if such Partner is entitled to receive a
dividend out of the General Partner's share of such cash with respect to a REIT
Share for which all or part of such Partnership Unit has been exchanged.

                                       19
<PAGE>

         5.4 REIT Distribution Requirements. Unless the General Partner
determines that such a distribution would not be in the best interests of the
Partnership, it is the intent, but not the obligation, of the Partnership that
cash distributions shall be made no less often than quarterly during each fiscal
year of the Partnership in an amount sufficient to enable the General Partner
(i) to meet its distribution requirement for qualification as a REIT as set
forth in Section 857(a)(1) of the Code, (ii) to avoid corporate income tax under
Section 857(b)(1) of the Code, and (iii) to avoid the excise tax imposed by
Section 4981 of the Code.

                                   ARTICLE VI

                      MANAGEMENT AND OPERATION OF BUSINESS

         6.1 Management. The General Partner shall conduct, direct and exercise
full control over all activities of the Partnership. Except as otherwise
expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership shall be exclusively vested in the General
Partner, and the Limited Partners shall not have any right of control or
management power over the business and affairs of the Partnership. In addition
to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to
Section 6.3, shall have full power and authority to do all things and on such
terms as it, in its sole discretion, may deem necessary or desirable to conduct
the business of the Partnership, to exercise all powers set forth in Section 3.2
and to effectuate the purposes set forth in Section 3.1, including, without
limitation, (A) acquiring, purchasing, owning, leasing and disposing of any real
property and any other property or assets that the General Partner determines
are necessary or appropriate or in the best interests of the business of the
Partnership; (B) constructing buildings and making other improvements on the
properties owned or leased by the Partnership; (C) the making of any
expenditures, the lending or borrowing of money, the assumption or guarantee of,
or other contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness and the incurring of any other obligations and the
securing of same by mortgage, deed of trust or other lien or encumbrance; (D)
the making of tax, regulatory and other filings, or rendering of periodic or
other reports to governmental or other agencies having jurisdiction over the
business or assets of the Partnership; (E) leasing all or any portion of any of
the Partnership Assets, whether or not the terms of such leases extend beyond
the termination date of the Partnership and whether or not any portion of the
Partnership's Assets so leased are to be occupied by the lessee, or, in turn,
subleased in whole or in part to others, for such consideration and on such
terms as the General Partner may determine; (F) the acquisition, disposition,
mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the
assets of the Partnership or the merger or other combination of the Partnership
with or into another Person (the matters described in this clause (F) being
subject, however, to any prior approval that may be required by Section 6.3);
(G) the use of the assets of the Partnership (including, without limitation,
cash on hand) for any purpose consistent with the terms of this Agreement,
including, without limitation, the financing of the conduct of the operations of
the Partnership, the lending of funds to other Persons and the repayment of
obligations of the Partnership; (H) the negotiation, execution and performance
of any contracts, conveyances or other instruments (including, without
limitation, instruments that limit the liability of the Partnership under
contractual arrangements to all or particular Partnership Assets, with the other
party to the contract to have no recourse against the General Partner or its
assets other than its interest in the Partnership, even if same results in the
terms of the transaction being less favorable to the Partnership than would
otherwise be the case); (I) the distribution of Partnership cash; (J) the
selection and dismissal of employees and agents (including, without limitation,
employees having titles such as "president," "vice president," "secretary" and
"treasurer") and agents, outside attorneys, accountants, consultants and
contractors and the determination of their compensation and other terms of
employment or hiring; (K) the maintenance of insurance for the benefit of the
Partners and the Partnership (including, without limitation, the assets and
operations of the Partnership); (L) the formation of, or acquisition of an
interest in, and the contribution of property to, any further limited or general
partnerships, joint ventures or other relationships; (M) the control of any
matters affecting the rights and obligations of the Partnership, including,
without limitation, the bringing and defending of actions at law or in equity
and otherwise engaging in the conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation; (N) the indemnification of
any person against liabilities and contingencies to the extent permitted by law;
(O) the maintenance of such insurance coverage for public liability, fire and
casualty, and any and all other insurance for the protection of the Partnership,
for the conservation of Partnership Assets, or for any other purpose convenient
or beneficial to the Partnership, in such amounts and such types, as it shall
determine from time to time; and (P) the undertaking of any action in connection
with the Partnership's participation in the business activities that may be
available to it (including, without limitation, contributions or loans of funds
by the

                                       20
<PAGE>

Partnership to any limited or general partnership, joint venture or other
relationship in which the Partnership has, or would have upon making any such
contribution, an interest).

         6.2 Certificate of Limited Partnership. The General Partner has caused
the Certificate of Limited Partnership to be filed with the Secretary of State
of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware or of any other state in which the Partnership may
elect to do business or own property. Subject to the terms of Section 7.4(a),
the General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to the Limited Partners.

         6.3 Restrictions on General Partner's Authority.

                  (a) The General Partner may not, without written approval of
the specific act by holders of a Majority of the Outstanding Partnership Units
or by other written instrument executed and delivered by the holders of at least
80% of the Outstanding Partnership Units subsequent to the date of this
Agreement, take any action in contravention of this Agreement, including,
without limitation, (i) any act that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise provided in this
Agreement; (ii) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose; (iii) admit a Person
as a Partner, except as otherwise provided in this Agreement; (iv) amend this
Agreement in any manner, except as otherwise provided in this Agreement or
applicable law; or (v) transfer its interest as general partner of the
Partnership, except as otherwise provided in this Agreement.

                  (b) Except as provided in Articles XIV or XVI, the General
Partner may not sell, exchange or otherwise dispose of all or substantially all
of the Partnership Assets in a single transaction or a series of related
transactions without the approval of holders of at least 80% of the Outstanding
Partnership Units.

                  (c) Unless approved by holders of at least 80% of the
Outstanding Partnership Units, the General Partner shall not take any action or
refuse to take any reasonable action the effect of which, if taken or not taken,
as the case may be, would be to cause the Partnership to be taxable as a
corporation or otherwise taxed as an entity for federal income tax purposes.

         6.4 Reimbursement of the General Partner.

                  (a) Except as provided in this Section 6.4 and elsewhere in
this Agreement, the General Partner shall not be compensated for its services as
general partner of the Partnership.

                  (b) The Partnership shall have no employees. The General
Partner, in its sole and absolute discretion and without the approval of the
Limited Partners, shall employ any and all persons which it may deem necessary
or appropriate for the conduct of the business of the Partnership, establish the
compensation and benefits to be provided to such employees and, in connection
therewith, may from time to time adopt, modify or terminate any benefit plans or
programs which it may deem necessary or appropriate and determine the directors,
officers and employees of the General Partner eligible to participate therein.
The General Partner shall be reimbursed on a monthly basis, or such other basis
as the General Partner may determine in its sole discretion, for (i) all direct
and indirect expenses it incurs or payments it makes on behalf of the
Partnership (including, without limitation, amounts paid to any Person to
perform services for the Partnership), and (ii) that portion of the General
Partner's or its Affiliates' legal, accounting, investor communications,
utilities, telephone, secretarial, travel, entertainment, bookkeeping,
reporting, data processing, office rent and other office expenses (including,
without limitation, overhead charges), salaries, fees and other compensation and
benefit expenses of employees, officers and directors, insurance, other
administrative or overhead expenses and all other expenses, in each such case,
necessary or appropriate to the conduct of the Partnership's business

                                       21
<PAGE>

and reasonably allocable to the Partnership or otherwise incurred by the General
Partner in connection with operating the Partnership's business (including,
without limitation, expenses allocated to the General Partner by its
Affiliates). The General Partner shall determine the fees and expenses that are
allocable to the Partnership in any reasonable manner determined by the General
Partner in its sole discretion. Such reimbursements shall be in addition to any
reimbursement to the General Partner as a result of indemnification pursuant to
Section 6.7.

         6.5 Outside Activities.

                  (a) Subject to the Restated Certificate of Incorporation of
the General Partner and any agreements entered into by the General Partner or
its Affiliates with the Partnership or a Subsidiary, the General Partner and any
officer, director, employee, agent, trustee, Affiliate or shareholder of the
General Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities substantially similar or identical
to those of the Partnership. Neither the Partnership nor any of the Limited
Partners shall have any rights by virtue of this Agreement in any business
ventures of the General Partner. None of the Limited Partners nor any other
Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any such business interests or activities of
the General Partner, and the General Partner shall have no obligation pursuant
to this Agreement to offer any interest in any such business interests and
activities to the Partnership or any Limited Partner, even if such opportunity
is of a character which, if presented to the Partnership or any Limited Partner,
could be taken by such Person.

                  (b) Except as otherwise expressly provided in Section 6.5(a),
each Indemnitee is free to engage in any business, including any business that
is in competition with the business of the Partnership. The General Partner and
any other Persons affiliated with the General Partner may acquire Partnership
Units, in addition to those acquired by any of such Persons on the Closing Date,
and shall be entitled to exercise all rights of an assignee or limited partner,
as applicable, relating to such Partnership Units or securities representing
Partnership Interests as the case may be.

         6.6 Loans to and from the General Partner; Contracts with Affiliates.

                  (a) The Partners or any of their Affiliates may lend to the
Partnership, and the Partnership may borrow funds needed or desired by the
Partnership for such periods or time as the General Partner may determine;
provided, however, that none of the Partners, nor any of their Affiliates may
charge the Partnership interest at a rate greater than the rate that would be
charged the Partnership (without reference to the General Partner's financial
abilities or guarantees) by unrelated lenders on comparable loans. The
Partnership shall reimburse the Partners, or any of their Affiliates, as the
case may be, for any costs (other than any interest costs in excess of that
permitted by the preceding sentence) incurred by it in connection with the
borrowing of funds obtained by the General Partner, the Limited Partners or any
of their Affiliates and loaned to the Partnership.

                  (b) The General Partner may itself, or may enter into an
agreement with any of its Affiliates to, render services to the Partnership. Any
service rendered to the Partnership by the General Partner or any of its
Affiliates shall be on terms that are fair and reasonable to the Partnership as
determined by the General Partner in good faith; provided, however, that the
requirements of this Section 6.6(b) shall be deemed satisfied as to any
transaction the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties. The
provisions of Section 6.4 shall apply to the rendering of services described in
this Section 6.6(b).

                  (c) The Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions as
are consistent with this Agreement and applicable law.

                  (d) Neither the General Partner nor any of its Affiliates
shall sell, transfer or convey any property to, or purchase any property from,
the Partnership, directly or indirectly, except pursuant to transactions that
are fair and reasonable to the Partnership as determined by the General Partner
in good faith; provided, however, that the requirements of this Section 6.6(d)
shall be deemed to be satisfied as to (i) the transactions effected pursuant to
Sections 4.2 and 4.3, and any other transactions described in or contemplated by
the Registration Statement and (ii) as to any transaction the terms of which are
no less favorable to the Partnership than those generally being provided to or
available from unrelated third parties.

                                       22
<PAGE>

                  (e) The General Partner and its Affiliates shall have no
obligation to permit the Partnership to use any facilities of the General
Partner and its Affiliates, except as may be provided in contracts entered into
from time to time specifically dealing with such use, nor shall there be any
obligation of the General Partner or its Affiliates to enter into such
contracts.

         6.7 Indemnification.

                  (a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, the General Partner, any
Departing Partner and any person who is or was an officer or director of the
General Partner or any Departing Partner shall be indemnified and held harmless
by the Partnership, and all other Indemnitees may be indemnified and held
harmless by the Partnership, to the extent deemed advisable by the General
Partner to the fullest extent permitted by law, from and against any and all
losses, claims, damages, liabilities (joint or several), expenses (including,
without limitation, legal fees and expenses), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as (i) the General Partner, a Departing
Partner or any of their Affiliates, (ii) an officer, director, employee,
partner, agent or trustee of the General Partner, any Departing Partner or any
of their Affiliates or (iii) a Person serving at the request of the Partnership
in another entity in a similar capacity; provided, that in each case the
Indemnitee acted in good faith, in a manner which such Indemnitee believed to be
in, or not opposed to, the best interests of the Partnership and, with respect
to any criminal proceeding, had no reasonable cause to believe its conduct was
unlawful; provided, further, no indemnification pursuant to this Section 6.7
shall be available to the General Partner with respect to its obligations
incurred pursuant to the Underwriting Agreement (other than obligations incurred
by the General Partner on behalf of the Partnership). The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
the Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 6.7 shall be made only out of the
Partnership Assets.

                  (b) To the fullest extent permitted by law, expenses
(including, without limitation, reasonable legal fees and expenses) incurred by
an Indemnitee in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Partnership prior to the final disposition
of such claim, demand, action, suit or proceeding upon receipt by the
Partnership of an undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 6.7.

                  (c) The indemnification provided by this Section 6.7 shall be
in addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitees' capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer, director,
employee, partner, agent or trustee of the General Partner, any Departing
Partner or an Affiliate thereof or (iii) a Person serving at the request of the
Partnership in another entity in a similar capacity, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and as to actions in any
other capacity (including, without limitation, any capacity under the
Underwriting Agreement).

                  (d) The Partnership may purchase and maintain (or reimburse
the General Partner or its Affiliates for the cost of) insurance, on behalf of
the General Partner and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expense that
may be incurred by such Person in connection with the Partnership's activities,
whether or not the Partnership would have the power to indemnify such Person
against such liabilities under the provisions of this Agreement.

                  (e) For purposes of Section 6.7(a), the Partnership shall be
deemed to have requested an Indemnitee to serve as a fiduciary of any employee
benefit plan maintained by the General Partner whenever the performance by such
Indemnitee of its duties to the General Partner or the Partnership also imposes
duties on, or otherwise involves services by, it to such plan or participants or
beneficiaries of any such plan; excise taxes assessed on an Indemnitee with
respect to any such employee benefit plan pursuant to applicable law shall
constitute "fines" within the meaning of Section 6.7(a); and action taken or
omitted by it with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Partnership.

                                       23
<PAGE>

                  (f) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.

                  (g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.

                  (h) The provisions of this Section 6.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.

                  (i) No amendment, modification or repeal of this Section 6.7
or any other provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Indemnitee to be indemnified by the
Partnership, nor the obligation of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 6.7 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.

         6.8 Liability of Indemnitees.

                  (a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who have
acquired Partnership Interests in the Partnership, for losses sustained or
liabilities incurred as a result of any act or omission if such Indemnitee acted
in good faith.

                  (b) Subject to its obligations and duties as General Partner
set forth in Section 6.1(a), the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents, and the General Partner
shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the General Partner in good faith.

                  (c) Any amendment, modification or repeal of this Section 6.8
or any other provision hereof shall be prospective only and shall not in any way
affect the limitations on the liability to the Partnership and the Limited
Partners or the General Partner, its directors, officers and employees under
this Section 6.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring,
in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.

         6.9 Resolution of Conflicts of Interest.

                  (a) Unless otherwise expressly provided in this Agreement,
whenever a potential conflict of interest exists or arises between the General
Partner or any of its Affiliates, on the one hand, and the Partnership or the
Limited Partners on the other hand, any resolution or course of action in
respect of such conflict of interest shall be permitted and deemed approved by
all Partners, and shall not constitute a breach of this Agreement, of any
agreement contemplated herein or of any duty stated or implied by law or equity,
if the resolution or course of action is or, by operation of this Agreement is
deemed to be, fair and reasonable to the Partnership. The General Partner shall
be authorized in connection with its determination of the "fair and reasonable"
nature of any transaction or arrangement and in its resolution of any conflict
of interest to consider (i) the relative interests of any party to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interest; (ii) any customary or accepted industry practices and
any customary or historical dealings with a particular Person; (iii) any
applicable generally accepted accounting practices or principles; and (iv) such
additional factors as the General Partner determines in its sole discretion to
be relevant, reasonable or appropriate under the circumstances. Nothing
contained in this Agreement, however, is intended to nor shall it be construed
to require the General Partner to consider the interests of any Person other
than the Partnership. In the absence of bad faith by the General Partner, the
resolution, action or terms so made, taken or provided by the General Partner
with respect to such matter shall not constitute a breach of this Agreement or
any other agreement contemplated herein or a breach of any standard of care or
duty imposed herein or therein or under the Delaware Act or any other law, rule
or regulation.

                                       24
<PAGE>

                  (b) Whenever this Agreement or any other agreement
contemplated hereby provides that the General Partner or any of its Affiliates
is permitted or required to make a decision (i) in its "sole discretion" or
"discretion" that it deems "necessary or appropriate" or under a grant of
similar authority or latitude, the General Partner or such Affiliate shall be
entitled to consider only such interests and factors as it desires and shall
have no duty or obligation to give any consideration to any interest of, or
factors affecting, the Partnership or the Limited Partners, or (ii) in "good
faith" or under another express standard, the General Partner or such Affiliate
shall act under such express standard and shall not be subject to any other or
different standards imposed by this Agreement, any other agreement contemplated
hereby or under the Delaware Act or any other law, rule or regulation.

                  (c) Whenever a particular transaction, arrangement or
resolution of a conflict of interest is required under this Agreement to be
"fair and reasonable" to any Person, the fair and reasonable nature of such
transaction, arrangement or resolution shall be considered in the context of all
similar or related transactions.

         6.10 Liability of the General Partner.

                  (a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership, any Partners or any Assignees for losses sustained or liabilities
incurred as a result of errors in judgment or of any act or omission if the
General Partner acted in good faith.

                  (b) The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership and the General Partner's
shareholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to the Limited Partners) in deciding whether to
cause the Partnership to take (or decline to take) any actions, and that the
General Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by the Limited Partners in
connection with such decisions, provided that the General Partner has acted in
good faith.

                  (c) Subject to its obligations and duties as General Partner
set forth in Section 6.1 hereof and the restrictions on its authority set forth
in Section 6.3, the General Partner may exercise any of the powers granted to it
under this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by it in good faith.

                  (d) Notwithstanding any other provisions of this Agreement or
the Act, any lawful action of the General Partner on behalf of the Partnership
or any decision of the General Partner to refrain from acting on behalf of the
Partnership, taken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner to continue to qualify as a REIT or (ii) to prevent the General Partner
from incurring any taxes under Section 857 or Section 4981 of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.

                  (e) Any amendment, modification or repeal of this Section 6.10
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 6.10 as in effect immediately prior to
such amendment, modification or repeal with respect to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when claims relating to such matters may arise or be asserted.

         6.11 Other Matters Concerning the General Partner.

                  (a) The General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture,
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.

                  (b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisors selected by it, and any act taken or omitted in
reliance upon the opinion (including, without limitation, an Opinion of Counsel)
of such Persons as to matters that the General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.

                                       25
<PAGE>

                  (c) The General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact. Each
such attorney shall, to the extent provided by the General Partner in the power
of attorney, have full power and authority to do and perform each and every act
and duty that is permitted or required to be done by the General Partner
hereunder.

                  (d) Any standard of care and duty imposed by this Agreement or
under the Delaware Act or any applicable law, rule or regulation shall be
modified, waived or limited as required to permit the General Partner to act
under this Agreement or any other agreement contemplated by this Agreement and
to make any decision pursuant to the authority prescribed in this Agreement, so
long as such action is reasonably believed by the General Partner to be in, or
not inconsistent with, the best interests of the Partnership.

         6.12 Title to Partnership Assets. Title to Partnership Assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner or Assignee,
individually or collectively, shall have any ownership interest in such
Partnership Assets or any portion thereof. Title to any or all of the
Partnership Assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine, including
Affiliates of the General Partner. The General Partner hereby declares and
warrants that any Partnership Assets for which record title is held in the name
of the General Partner or any nominee or Affiliate of the General Partner shall
be held by the General Partner for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its reasonable efforts to cause beneficial and record
title to such assets (other than those assets in respect of which the General
Partner determines that the expense and difficulty of conveyancing makes
transfer of record title to the Partnership impracticable; provided that, prior
to the withdrawal of the General Partner or as soon thereafter as practicable,
the General Partner will use reasonable efforts to effect the transfer of record
title to the Partnership and, prior to any such transfer, will provide for the
use of such assets in a manner satisfactory to the Partnership) to be vested in
the Partnership as soon as reasonably practicable. All Partnership Assets shall
be recorded as the property of the Partnership in its books and records,
irrespective of the name in which record title to such Partnership Assets are
held.

         6.13 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all Partnership Assets and
to enter into any contracts on behalf of the Partnership, and such Person shall
be entitled to deal with the General Partner as if it were the Partnership's
sole party in interest, both legally and beneficially. The Limited Partners
hereby waive any and all defenses or other remedies that may be available
against such Person to contest, negate or disaffirm any action of the General
Partner in connection with any such dealing. In no event shall any Person
dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.

                                   ARTICLE VII

                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

         7.1 Limitation of Liability. The Limited Partners and the
Organizational Limited Partner and the Assignees shall have no liability under
this Agreement except as expressly provided in this Agreement or the Delaware
Act.

         7.2 Management of Business. The Limited Partners or Assignees shall not
take part in the operation, management or control (within the meaning of the
Delaware Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. The transaction of any such business by the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee

                                       26
<PAGE>

of the General Partner or any of its Affiliates, in its capacity as such, shall
not affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.

         7.3 Return of Capital. The Limited Partners shall not be entitled to
the withdrawal or return of their Capital Contribution, except to the extent, if
any, that distributions made pursuant to this Agreement or upon termination of
the Partnership may be considered as such by law and then only to the extent
provided for in this Agreement. Except to the extent provided in the applicable
Certificate of Designation or as otherwise expressly provided in this Agreement,
no Limited Partner or Assignee shall have priority over any other Limited
Partner or Assignee, either as to the return of Capital Contributions or as to
profits, losses or distributions.

         7.4 Rights of Limited Partners Relating to the Partnership.

                  (a) In addition to other rights provided by this Agreement or
by applicable law, and except as limited by Section 7.4(b), each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon reasonable demand and at
such Limited Partner's own expense (including such reasonable administrative
charges as the General Partner may establish from time to time):

                           (i) to obtain true and full information regarding the
status of the business and financial condition of the Partnership;

                           (ii) promptly after becoming available, to obtain a
copy of the Partnership's federal, state and local tax returns for each year;

                           (iii) to have furnished to it, upon notification to
the General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;

                           (iv) to have furnished to it, upon notification to
the General Partner, a copy of this Agreement and the Certificate of Limited
Partnership and all amendments and restatements thereto;

                           (v) to obtain true and full information regarding the
amount of cash and description and statement of the Net Agreed Value of any
other Capital Contribution by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner;

                           (vi) to obtain such other information regarding the
affairs of the Partnership as is just and reasonable; and

                           (vii) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and Exchange Commission by the
Partnership pursuant to the Securities Exchange Act of 1934.

                  (b) Notwithstanding any other provision of this Agreement, the
General Partner may keep confidential from the Limited Partners and Assignees
for such period of time as the General Partner deems reasonable, any information
that the General Partner reasonably believes to be in the nature of trade
secrets or other information the disclosure of which the General Partner in good
faith believes is not in the best interests of the Partnership or could damage
the Partnership or that the Partnership is required by law or by agreements with
third parties to keep confidential.

         7.5 Redemption Right.

                  (a) Subject to Section 7.5(c) and except as otherwise provided
for any class or series of Preferred Units in the Certificate of Designation
establishing such class or series, each Limited Partner or Assignee thereof
shall have the right (the "Redemption Right") to require the Partnership to
redeem on a Specified Redemption Date all or a portion of the Partnership Units
held by such Limited Partner or Assignee thereof at a redemption price equal to
and in the form of the Redemption Amount. The Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the General Partner by
the Limited Partner or Assignee thereof who is exercising the Redemption Right
(the "Redeeming Partner"). A Limited Partner or Assignee thereof may not
exercise the Redemption Right for less than One Hundred (100) Partnership Units
or, if such Limited Partner holds less than One Hundred (100) Partnership Units,
all of the Partnership Units held by such Limited Partner or Assignee thereof.
The Redeeming Partner shall have no right,

                                       27
<PAGE>

with respect to any Partnership Units so redeemed, to receive any distributions
paid with respect to Partnership Units after the Specified Redemption Date.

                  (b) Notwithstanding the provisions of Section 7.5(a), the
General Partner may, in its sole and absolute discretion, assume directly and
satisfy a Redemption Right by paying to the Redeeming Partner the Redemption
Amount on the Specified Redemption Date, whereupon the General Partner shall
acquire the Partnership Units offered for redemption by the Redeeming Partner
and shall be treated for all purposes of this Agreement as the owner of such
Partnership Units. In the event the General Partner shall exercise its right to
satisfy the Redemption Right in the manner described in the preceding sentence,
the Partnership shall have no obligation to pay any amount to the Redeeming
Partner with respect to such Redeeming Partner's exercise of the Redemption
Right, and each of the Redeeming Partner, the Partnership, and the General
Partner shall treat the transaction between the General Partner and the
Redeeming Partner as a sale of the Redeeming Partner's Partnership Units to the
General Partner for federal income tax purposes. Each Redeeming Partner agrees
to execute such documents as the General Partner may reasonably require in
connection with the issuance of REIT Shares upon exercise of the Redemption
Right.

                  (c) Except as otherwise provided in this Section 7.5(c), the
Partnership or the General Partner, as the case may be, shall pay the Redemption
Amount either through payment of the REIT Shares Amount or the Cash Amount, or a
combination of both, in its sole discretion. Notwithstanding the foregoing,
neither the Partnership nor the General Partner shall have any obligation or
authority to pay the Redemption Amount (whether in cash or REIT Shares) if
payment of the Redemption Amount in REIT Shares (i) would result in a violation
of the Ownership Limit (as such term is defined in the Articles of Amendment and
Restatement, as amended, of the General Partner), (ii) would cause the General
Partner to fail the "closely held" stock ownership test of Section 856(a)(6) of
the Code, (iii) would cause the General Partner to be treated as owning,
directly or constructively, 10% or more of the ownership interests in a tenant
(or subtenant) of the Partnership's real property (or of the General Partner's
real property), within the meaning of Sections 856(d)(2)(B) and 856(d)(5) of the
Code, (iv) would otherwise jeopardize the REIT status of the General Partner, or
(v) would cause the acquisition of REIT Shares by the Partner to be "integrated"
with any other distribution of REIT Shares for purposes of complying with the
registration provisions of the Securities Act of 1933, as amended; provided,
however, that the Partnership or General Partner, as the case may be, may elect,
in its sole discretion, to pay all or a portion of the Redemption Amount for all
or a portion of the tendered Partnership Units in cash and/or such lesser amount
of REIT Shares as would not cause a violation of clauses (i) through (v) above.
Each Limited Partner tendering Units for redemption shall provide to the General
Partner such information as the General Partner may request regarding such
Limited Partner's actual and constructive ownership of common stock of the
General Partner (and of individuals and entities related to such Limited
Partner) in order for the General Partner to determine, in its sole discretion
and with the advice of tax counsel to the General Partner, whether a purchase or
redemption of the offered Units for shares of common stock of the General
Partner would result in a violation of the foregoing restrictions.

                  (d) In the event that a redemption pursuant to this Section
7.5 would result in the Limited Partners, in the aggregate, owning less than 1%
of the Partnership Interests, the General Partner shall form another
partnership, which shall acquire sufficient Partnership Units so that the
Limited Partners, in the aggregate, own at least 1% of the Partnership
Interests.

                  (e) In the event the General Partner shall repurchase or
redeem REIT Shares, then the General Partner shall cause the Partnership to
purchase from the General Partner or its wholly-owned subsidiary or subsidiaries
the same number of Partnership Units on the same terms that the General Partner
redeemed such REIT Shares.

         7.6 Outside Activities of Limited Partners. Subject to any agreements
entered into pursuant to Section 6.6 hereof and any other agreements entered
into by a Limited Partner or its Affiliates with the Partnership or any of its
subsidiaries, any Limited Partner and any officer, director, employee, agent,
trustee, Affiliate or shareholder of any Limited Partner shall be entitled to
and may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
that are in direct competition with the Partnership or that are enhanced by the
activities of the Partnership. Neither the Partnership nor any Partners shall
have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee. None of the Limited Partners nor any other Person
shall have any rights by virtue of this Agreement or the Partnership
relationship established hereby in any business ventures of any other Person and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such

                                       28
<PAGE>

opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.

                                  ARTICLE VIII

                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

         8.1 Records and Accounting. The General Partner shall keep or cause to
be kept at the principal office of the Partnership appropriate books and records
with respect to the Partnership's business including, without limitation, all
books and records necessary to provide to the Limited Partners any information,
lists and copies of documents required to be provided pursuant to Section
7.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including, without limitation, books of
account and records of Partnership proceedings, may be kept on, or be in the
form of, computer disks, hard disks, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided, that the books
and records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance
with generally accepted accounting principles.

         8.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.

                                   ARTICLE IX

                                   TAX MATTERS

         9.1 Preparation of Tax Returns. The General Partner shall arrange for
the preparation and timely filing of all returns of Partnership income, gains,
deductions, losses and other items required of the Partnership for federal and
state income tax purposes and shall use all reasonable efforts to furnish,
within 90 days of the close of each taxable year of the Partnership, the tax
information reasonably required by the Limited Partners for federal and state
income tax reporting purposes. The classification, realization and recognition
of income, gain, losses and deductions and other items shall be on the accrual
method of accounting for federal income tax purposes or such other method as the
General Partner determines to be necessary or appropriate. The taxable year of
the Partnership shall be the calendar year.

         9.2 Tax Elections. Except as otherwise provided herein, the General
Partner shall in its sole discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
discretion that such revocation is in the best interests of the Limited Partners
and Assignees.

         9.3 Tax Controversies. Subject to the provisions hereof, the General
Partner is designated the Tax Matters Partner (as defined in Section 6231 of the
Code), and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including, without limitation, resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services, including legal and accounting services, and costs
associated therewith. Each Partner agrees to cooperate with the General Partner
and to do or refrain from doing any or all things reasonably required by the
General Partner to conduct such proceedings. The General Partner shall receive
no special compensation for serving as Tax Matters Partner but shall be
reimbursed for its costs and expenses in that connection in accordance with
Section 6.4.

         9.4 Organizational Expenses. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.

         9.5 Withholding. Notwithstanding any other provision of this Agreement,
the General Partner is authorized to take any action that it determines in its
sole discretion to be necessary or appropriate to cause the Partnership to
comply with any withholding requirements established under the Code or any other
federal, state or local law, including,

                                       29
<PAGE>

without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
To the extent that the Partnership is required to withhold and pay over to any
taxing authority any amount resulting from the allocation or distribution of
income to any Partner (including, without limitation, by reason of Section 1446
of the Code), the amount withheld shall be treated as a distribution of cash
pursuant to Section 5.3 in the amount of such withholding from such Partner.

         9.6 Opinions of Counsel. Notwithstanding any other provision of this
Agreement, if the Partnership is taxable for federal income tax purposes as a
corporation or otherwise treated for federal income tax purposes as an
association taxable as a corporation at any time and, pursuant to the provisions
of this Agreement, an Opinion of Counsel would otherwise be required to the
effect that an action will not cause the Partnership to become so taxable as a
corporation or other entity or to be treated as an association taxable as a
corporation, such requirement for an Opinion of Counsel shall be deemed
automatically waived.

                                    ARTICLE X

                              TRANSFER OF INTERESTS

         10.1 Transfer.

                  (a) The term "transfer," when used in this Article X with
respect to a Partnership Interest, shall be deemed to refer to an appropriate
transaction by which the General Partner assigns its Partnership Interest as
General Partner to another Person or by which the holder of a Partnership Unit
assigns such Partnership Unit to another Person who is or becomes an Assignee
and includes a sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise.

                  (b) No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article X. Any transfer or purported transfer of a Partnership Interest not made
in accordance with this Article X shall be null and void.

         10.2 Transfer of General Partner's Partnership Interest.

                  (a) The General Partner may not transfer all or any part of
its Partnership Interest as a general partner except as provided in Section
10.2(b) or 10.2(c).

                  (b) The General Partner shall not engage in any merger,
consolidation or other combination with or into another Person, where the
General Partner is not the surviving entity, any sale of all or substantially
all of its assets, or any reclassification, recapitalization or change of
outstanding REIT Shares (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination of REIT Shares) (a
"Transaction"), unless (i) the Transaction also includes a corresponding merger
of the Partnership, sale of all or substantially all of the Partnership Assets,
or reclassification, recapitalization or change of outstanding Partnership
Units, as appropriate, as a result of which holders of a Redemption Right
pursuant to Section 7.5 will have the right to receive, upon exercise of their
Redemption Right or otherwise, for each Partnership Unit a Redemption Amount
equal to the greatest amount of cash, securities or other property paid in the
Transaction to a holder of one REIT Share in consideration of one REIT Share;
provided, however, that if, in connection with the Transaction, a purchase,
tender or exchange offer ("Offer") shall have been made to and accepted by the
holders of more than fifty percent (50%) of the outstanding REIT Shares, each
holder of a Redemption Right pursuant to Section 7.5 shall have the right to
receive, upon exercise of their Redemption Right or otherwise, the greatest
amount of cash, securities, or other property which such holder would have
received had it (A) exercised its Redemption Right immediately prior to the
earlier of the record date (if any) for the Transaction or the effective date of
the Transaction and (B) sold, tendered or exchanged pursuant to the Offer the
REIT Shares received upon such exercise of the Redemption Right; and (ii) no
more than seventy-five percent (75%) of the equity securities of the acquiring
Person in any Transaction that is a merger, consolidation or other combination
of the General Partner with and into another Person or a sale of all or
substantially all of the General Partner's assets, shall be owned, after
consummation of such Transaction, by Persons who were Affiliates of the
Partnership or the General Partner immediately prior to the date on which the
Transaction is consummated.

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<PAGE>

                  (c) Notwithstanding Subsection 10.2(a) above, the General
Partner may transfer from time to time any or all of its Partnership Interests
to one or more wholly-owned subsidiaries of the General Partner, except that the
General Partner must retain at all times at least a 1% Partnership Interest as a
general partner and the General Partner and one or more wholly-owned
subsidiaries of the General Partner must at all times own in the aggregate at
least 20% of all of the Partnership Interests.

         10.3 Transfer of Partnership Units.

                  (a) Partnership Units may be transferred only in the manner
described in Section 13.2. The transfer of any Partnership Units and the
admission of any new Partner shall not constitute an amendment to this
Agreement.

                  (b) Until admitted as a Substituted Limited Partner pursuant
to Article XI, the Record Holder of a Partnership Unit shall be an Assignee in
respect of such Partnership Unit. Limited Partners may include custodians,
nominees or any other individual or entity in its own or any representative
capacity.

                  (c) Each distribution in respect of Partnership Units shall be
paid by the Partnership, directly or through the Transfer Agent or through any
other Person or agent, only to the Record Holders thereof as of the Record Date
set for the distribution. Such payment shall constitute full payment and
satisfaction of the Partnership's liability in respect of such payment,
regardless of any claim of any Person who may have an interest in such payment
by reason of an assignment or otherwise.

                  (d) A transferee who has completed and delivered a Transfer
Application shall be deemed to have (i) requested admission as a Substituted
Limited Partner, (ii) agreed to comply with and be bound by and to have executed
this Agreement, (iii) represented and warranted that such transferee has the
capacity and authority to enter into this Agreement, (iv) made the powers of
attorney set forth in this Agreement and (v) given the consents and made the
waivers contained in this Agreement.

                  (e) No transfer by a Partner of his Partnership Units, in
whole or in part, may be made to any Person if (i) in the opinion of legal
counsel for the Partnership, the transfer would result in the Partnership's
being treated as an association taxable as a corporation (other than a qualified
REIT subsidiary within the meaning of Section 856(i) of the Code), or (ii) such
transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.

                  (f) Any transfer in contravention of the provisions of this
Article X shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.

         10.4 Restrictions on Transfers. Notwithstanding the other provisions of
this Article X, no transfer of any Partnership Units or interest therein of any
Limited Partner or Assignee shall be made if such transfer would (a) violate the
then applicable federal or state securities laws or rules and regulations of the
Securities and Exchange Commission, any state securities commission or any other
governmental authorities with jurisdiction over such transfer, (b) cause the
Partnership to be taxable as a corporation or otherwise taxed as an entity for
federal income tax purposes or (c) affect the Partnership's existence or
qualification as a limited partnership under the Delaware Act.

                                   ARTICLE XI

                              ADMISSION OF PARTNERS

         11.1 Admission of Substituted Limited Partners. By transfer of a
Partnership Unit in accordance with Article X, the transferor shall be deemed to
have given the transferee the right to seek admission as a Substituted Limited
Partner subject to the conditions of, and in the manner permitted under, this
Agreement. A transferor of a Certificate shall, however, only have the authority
to convey to a purchaser or other transferee who does not execute and deliver a
Transfer Application (i) the right to negotiate such Certificate to a purchaser
or other transferee and (ii) the right to transfer the right to request
admission as a Substituted Limited Partner to such purchaser or other transferee
in respect of the transferred Partnership Units. Each transferee of a
Partnership Unit (including without limitation, any nominee

                                       31
<PAGE>

holder or an agent acquiring such Partnership Unit for the account of another
Person) who executes and delivers a Transfer Application shall, by virtue of
such execution and delivery, be an Assignee and be deemed to have applied to
become a Substituted Limited Partner with respect to the Partnership Units so
transferred to such Person. Such Assignee shall become a Substituted Limited
Partner (i) at such time as the General Partner consents thereto, which consent
may be given or withheld in the General Partner's sole discretion, and (ii) when
any such admission is shown on the books and records of the Partnership. If such
consent is withheld such transferee shall be an Assignee. An Assignee shall have
an interest in the Partnership equivalent to that of a Limited Partner with
respect to allocations and distributions, including, without limitation,
liquidating distributions, of the Partnership; provided, however, in the event
that the transferor of the Partnership Units was an Initial Limited Partner or
an Assignee thereof, such transferee shall also be vested with a Redemption
Right pursuant to Section 7.5 with respect to such Partnership Units. With
respect to voting rights attributable to Partnership Units that are held by
Assignees, the General Partner shall be deemed to be the Limited Partner with
respect thereto and shall, in exercising the voting rights in respect of such
Partnership Units on any matter, vote such Partnership Units at the written
direction of the Assignee who is the Record Holder of such Partnership Units. If
no such written direction is received, such Partnership Units will not be voted.
An Assignee shall have no other rights of a Limited Partner.

         11.2 Admission of Successor General Partner. A successor General
Partner approved pursuant to Section 12.1 or the transferee of or successor to
all of the General Partner's Partnership Interest pursuant to Section 10.2 who
is proposed to be admitted as a successor General Partner shall be admitted to
the Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the General Partner pursuant to Section 12.1 or the
transfer of the General Partner's Partnership Interest pursuant to Section 10.2;
provided, however, that no such successor shall be admitted to the Partnership
until such successor has complied with the terms of Section 10.2. Any such
successor shall carry on the business of the Partnership without dissolution. In
each case, the admission shall be subject to the successor General Partner
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or instruments as may
be required to effect the admission.

         11.3 Amendment of Agreement and Certificate of Limited Partnership. To
effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement and, if required by law, to prepare and
file an amendment to the Certificate of Limited Partnership and may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 1.4.

         11.4 Admission of Additional Limited Partners.

                  (a) A Person (other than the General Partner, an Initial
Limited Partner or a Substituted Limited Partner) who makes a Capital
Contribution to the Partnership in accordance with this Agreement shall be
admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including without limitation, the power of attorney granted in
Section 1.4, and (ii) such other documents or instruments as may be required in
the discretion of the General Partner to effect such Person's admission as an
Additional Limited Partner.

                  (b) Notwithstanding anything to the contrary in this Section
11.4, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole discretion. The admission of any Person as an Additional
Limited Partner shall become effective on the date upon which the name of such
Person is recorded on the books and records of the Partnership, following the
consent of the General Partner to such admission.

                                   ARTICLE XII

                             WITHDRAWAL OF PARTNERS

         12.1 Withdrawal of the General Partner.

                  (a) The General Partner shall be deemed to have withdrawn from
the Partnership upon the occurrence of any one of the following events (each
such event herein referred to as an "Event of Withdrawal"):

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<PAGE>

                           (i) the General Partner voluntarily withdraws from
the Partnership by giving written notice to the Limited Partners;

                           (ii) the General Partner transfers all of its rights
as general partner pursuant to Section 10.2;

                           (iii) the General Partner (A) makes a general
assignment for the benefit of creditors; (B) files a voluntary bankruptcy
petition; (C) files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any law; (D) files an answer or other pleading admitting or failing
to contest the material allegations or a petition filed against the General
Partner in a proceeding of the type described in clauses (A)-(C) of this
sentence; or (E) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the General Partner or of all or any
substantial part of its properties;

                           (iv) a final and non-appealable judgment is entered
by a court with appropriate jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief is entered
by a court with appropriate jurisdiction against the General Partner, in each
case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect; or

                           (v) a certificate of dissolution or its equivalent is
filed for the General Partner, or ninety days expire after the date of notice to
the General Partner of revocation of its charter without a reinstatement of its
charter, under the laws of its state of incorporation.

If an Event of Withdrawal specified in this Section 12.1(a)(i), (iii),(iv) or
(v) occurs, the withdrawing General Partner shall give written notice to the
Limited Partners within 30 days after such occurrence. The Partners hereby agree
that only the Events of Withdrawal described in this Section 12.1 shall result
in the withdrawal of the General Partner from the Partnership.

                  (b) Withdrawal of the General Partner from the Partnership
upon the occurrence of an Event of Withdrawal will not constitute a breach of
this Agreement if the General Partner ceases to be a General Partner pursuant to
Section 12.1(a)(ii) or Section 12.1(a)(iii). If the General Partner gives a
notice of withdrawal pursuant to Section 12.1(a)(i), the Limited Partners may,
prior to the effective date of such withdrawal, elect a successor General
Partner. If, prior to the effective date of the General Partner's withdrawal, a
successor is not selected by the Limited Partners as provided herein, the
Partnership shall be dissolved in accordance with Section 14.1. If a successor
General Partner is elected, such successor shall be admitted (subject to Section
11.2) immediately prior to the effective time of the withdrawal or removal of
the Departing Partner and shall continue the business of the Partnership without
dissolution.

         12.2 Interest of Departing Partner and Successor General Partner. The
Partnership Interest of a Departing Partner departing as a result of withdrawal
or removal pursuant to Section 12.1 shall be purchased by the successor to the
Departing Partner. Such purchase shall be a condition to the admission of the
successor to the Partnership as a General Partner. The purchase price for such
Partnership Interest shall be paid in cash and shall be equal to the fair market
value of the Departing Partner's Partnership Interest as General Partner, such
amount to be determined and payable as of the effective date of its departure.
Any successor General Partner shall indemnify the Departing Partner as to all
debts and liabilities of the Partnership arising on or after the effective date
of the removal of the Departing Partner, and shall secure such obligation in a
manner satisfactory to the Departing Partner.

         12.3 Reimbursement of Departing Partner. The Partnership shall
reimburse a Departing Partner for all employee related liabilities, including,
without limitation, reasonable severance liabilities incurred in connection with
the termination of employees employed by such Departing Partner for the benefit
of the Partnership.

         12.4 Withdrawal of Limited Partner. The Limited Partners shall not have
any right to withdraw from the Partnership without the prior consent of the
General Partner. This Section 12.4 shall not prohibit permitted transfers by a
Limited Partner pursuant to Article 10 hereof.

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<PAGE>

                                  ARTICLE XIII

                          PARTNERSHIP UNIT CERTIFICATE

         13.1 Partnership Unit Certificates. Upon the Partnership's issuance of
Partnership Units to any Person, the Partnership shall issue one or more
Certificates in the name of such Person evidencing the number of such
Partnership Units being so issued. Certificates shall be executed on behalf of
the Partnership by the General Partner. No Partnership Unit Certificate shall be
valid for any purpose until it has been countersigned by the Transfer Agent.

         13.2 Registration, Registration of Transfer and Exchange.

                  (a) The General Partner shall cause to be kept on behalf of
the Partnership a register (the "Partnership Unit Register") in which, subject
to such reasonable regulations as it may prescribe and subject to the provisions
of Section 13.2(b), the General Partner will provide for the registration and
the transfer of Partnership Units. The Transfer Agent is hereby appointed
registrar and transfer agent for the purpose of registering and transferring
Partnership Units as herein provided. The Partnership shall not recognize
transfers of Certificates representing Partnership Units unless same are
effected in the manner described in this Section 13.2. Upon surrender for
registration of transfer of any Partnership Units evidenced by a Certificate and
subject to the provisions of Section 13.2(b), the General Partner on behalf of
the Partnership will execute, and the Transfer Agent will countersign and
deliver, in the name of the holder or the designated transferee or transferees,
as required pursuant to the holder's instructions, one or more new Certificates
evidencing the same aggregate number of Partnership Units as was evidenced by
the Certificate so surrendered.

                  (b) The Partnership shall not recognize any transfer of
Partnership Units until the Certificates evidencing such Partnership Units are
surrendered for registration of transfer and such Certificates are accompanied
by a Transfer Application duly executed by the transferee (or the transferee's
attorney-in-fact duly authorized in writing). No charge shall be imposed by the
Partnership for such transfer, provided, that, as a condition to the issuance of
any new Certificate under this Section 13.2, the General Partner may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed with respect thereto.

         13.3 Mutilated, Destroyed, Lost or Stolen Certificates.

                  (a) If any mutilated Certificate is surrendered to the
Transfer Agent, the General Partner on behalf of the Partnership shall execute,
and upon its request, the Transfer Agent shall countersign and deliver in
exchange therefor, a new Certificate evidencing the same number of Partnership
Units as the Certificate so surrendered.

                  (b) The General Partner on behalf of the Partnership shall
execute, and upon its request, the Transfer Agent shall countersign and deliver
a new Certificate in place of any Certificate previously issued if the Record
Holder of the Certificate:

                           (i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued Certificate has
been lost, destroyed or stolen;

                           (ii) requests the issuance of a new Certificate
before the Partnership has received notice that the Certificate has been
acquired by a purchaser for value in good faith and without notice of an adverse
claim;

                           (iii) if requested by the General Partner, delivers
to the Partnership such security or indemnity as may be required by the General
Partner, in form and substance satisfactory to the General Partner, with surety
or sureties and with fixed or open penalty as the General Partner may direct, in
its sole discretion, to indemnify the Partnership, the General Partner and the
Transfer Agent against any claim that may be made on account of the alleged
loss, destruction or theft of the Certificate; and

                           (iv) satisfies any other reasonable requirements
imposed by the General Partner.

If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Partnership Units represented by the
Certificate is registered

                                       34
<PAGE>

before the Partnership, the General Partner or the Transfer Agent receives such
notification, such Limited Partner or Assignee shall be precluded from making
any claim against the Partnership, the General Partner or the Transfer Agent for
such transfer or for a new Certificate.

                  (c) As a condition to the issuance of any Certificate under
this Section 13.3, the General Partner may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including, without limitation, the fees
and expenses of the Transfer Agent) connected therewith.

         13.4 Record Holder. In accordance with Section 13.2(b), the Partnership
shall be entitled to recognize the Record Holder as the Limited Partner or
Assignee with respect to any Partnership Units and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such
Partnership Units on the part of any other Person, whether or not the
Partnership shall have actual or other notice thereof, except as otherwise
provided by law or any applicable rule, regulation, guideline or requirement of
any National Securities Exchange on which the Partnership Units are listed for
trading. Without limiting the foregoing, when a Person (such as a broker,
dealer, bank trust company or clearing corporation or an agent of any of the
foregoing) is acting as nominee, agent or in some other representative capacity
for another Person in acquiring and/or holding Partnership Units, as between the
Partnership on the one hand and such other Persons on the other hand such
representative Person (a) shall be the Limited Partner or Assignee (as the case
may be) of record and beneficially, (b) must execute and deliver a Transfer
Application and (c) shall be bound by this Agreement and shall have the rights
and obligations of a Limited Partner or Assignee (as the case may be) hereunder
and as provided for herein.

                                   ARTICLE XIV

                           DISSOLUTION AND LIQUIDATION

         14.1 Dissolution. The Partnership shall not be dissolved by the
admission of a Substituted Limited Partner or by the admission of a successor
General Partner in accordance with the terms of this Agreement. Upon the removal
or withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs should be wound up, upon, the first to occur of any of the
following:

                  (a) the expiration of its term as provided in Section 1.5;

                  (b) an Event of Withdrawal of the General Partner as provided
in Section 12.1(a), unless a successor is named as provided in Section 12.1(b);

                  (c) an election to dissolve the Partnership by the General
Partner;

                  (d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Delaware Act;

                  (e) the sale of all or substantially all of the assets and
properties of the Partnership; or

                  (f) the redemption of all Limited Partner Interests (other
than any of such interests held by the General Partner).

         14.2 Continuation of the Business of the Partnership after Dissolution.
Upon (i) dissolution of the Partnership following an Event of Withdrawal caused
by the withdrawal of the General Partner and a failure of the Limited Partners
to appoint a successor General Partner as provided in Section 12.1 or (ii)
dissolution of the Partnership upon an event constituting an Event of Withdrawal
described in Section 12.1(a)(iv), then, within 90 days thereafter in the case of
a dissolution described in clause (i) and within 180 days thereafter in the case
of a dissolution described in clause (ii), Record Holders of at least a Majority
of the Outstanding Partnership Units may elect to reconstitute the Partnership
and continue its business on the same terms and conditions set forth in this
Agreement by forming a new limited partnership on terms identical to those set
forth in this Agreement and having as a general partner a Person approved by the
Record Holders of at least a Majority of the Outstanding Partnership Units. Upon
any such election by

                                       35
<PAGE>

the Record Holders of at least a Majority of the Outstanding Partnership Units,
all Partners shall be bound thereby and shall be deemed to have approved
thereof. Unless such an election is made within the applicable time period as
set forth above, the Partnership shall conduct only activities necessary to wind
up its affairs. If such an election is so made, then:

                  (a) The reconstituted Partnership shall continue until the end
of the term set forth in Section 1.5 unless earlier dissolved in accordance with
this Article XIV;

                  (b) if the successor General Partner is not the former General
Partner, then the interest of the former General Partner shall be purchased by
the successor general partner in the manner provided in Section 12.2; and

                  (c) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited Partnership and to enter into and, as
necessary, to file a new partnership agreement and certificate of limited
partnership, and the successor general partner may for this purpose exercise the
powers of attorney granted to the General Partner pursuant to Section 1.4;
provided that the right of the Limited Partners to approve a successor general
partner and to reconstitute and to continue the business of the Partnership
shall not exist and may not be exercised unless the Partnership has received an
Opinion of Counsel that (x) the exercise of the right would not result in the
loss of limited liability of the Limited Partners and (y) neither the
Partnership nor the reconstituted limited partnership would become taxable as a
corporation or otherwise be taxed as an entity for federal income tax purposes
upon the exercise of such right to continue.

         14.3 Liquidation. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 14.2, the General Partner, or in the event the
General Partner has been dissolved or removed, has become bankrupt as set forth
in Section 12.1(a)(iii) or (iv) or has withdrawn from the Partnership, a
liquidator or liquidating committee approved by the Record Holders of at least a
Majority of the Outstanding Partnership Units, shall be the Liquidator. The
Liquidator (if other than the General Partner) shall be entitled to receive such
compensation for its services as may be approved by Record Holders of at least a
Majority of the Outstanding Partnership Units. The Liquidator shall agree not to
resign at any time without 15 days' prior written notice and (if other than the
General Partner) may be removed at any time, with or without Cause by notice of
removal approved by Record Holders of at least a Majority of the Outstanding
Partnership Units. Upon dissolution, removal or resignation of the Liquidator, a
successor and substitute Liquidator (who shall have and succeed to all rights,
powers and duties of the original Liquidator) shall within thirty days
thereafter be approved by Record Holders of at least a Majority of the
Outstanding Partnership Units. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also to any
such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XIV, the Liquidator approved in the
manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers
conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers, other than the limitation on sale set forth in
Section 6.3(b)) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the Liquidator
hereunder for and during such period of time as shall be reasonably required in
the good faith judgment of the Liquidator to complete the winding-up and
liquidation of the Partnership as provided for herein. The Liquidator shall
liquidate the Partnership Assets, and apply and distribute the proceeds of such
liquidation in the following order of priority, unless otherwise required by any
Certificate of Designation for the Preferred Units or mandatory provisions of
applicable law:

                  (a) the payment to creditors of the Partnership, including,
without limitation, Partners who are creditors, in the order of priority
provided by law; and the creation of a reserve of cash or other Partnership
Assets for contingent liabilities in an amount, if any, determined by the
Liquidator to be appropriate for such purposes; and

                  (b) to all Partners in accordance with the positive balances
in their respective Capital Accounts after taking into account all adjustments
to such Capital Accounts pursuant to this Agreement (other than distributions
pursuant to this Section 14.3).

To the extent deemed advisable by the General Partner or the Liquidator,
appropriate arrangements (including the use of a liquidating trust) may be made
to assure that adequate funds are available to pay any contingent debts or
obligations of the Partnership. The General Partner shall receive no special
compensation for serving as Liquidator but shall be reimbursed for its costs and
expenses in that connection in accordance with Section 6.4.

                                       36
<PAGE>

         14.4 Distributions in Kind. Notwithstanding the provisions of Section
14.3, which require the liquidation of the Partnership Assets, but subject to
the order of priorities set forth therein, if prior to or upon dissolution of
the Partnership the Liquidator determines that an immediate sale of part or all
of the Partnership Assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its absolute discretion, defer for a reasonable
time the liquidation of any assets except those necessary to satisfy liabilities
of the Partnership (including, without limitation, those to Partners as
creditors) or distribute to the Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 14.3, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Limited Partners, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable
and equitable and to any agreement governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.

         14.5 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 14.3 and 14.4, the Partnership shall be terminated and the Certificate
of Limited Partnership and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.

         14.6 Reasonable Time for Winding Up. A reasonable time shall be allowed
for the orderly winding up of business and affairs of the Partnership and the
liquidation of its assets pursuant to Section 14.3 in order to minimize any
losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.

         14.7 Return of Capital. The General Partner shall not be personally
liable for the return of the Capital Contributions of the Partners, or any
portion thereof, it being expressly understood that any such return shall be
made solely from Partnership assets.

         14.8 No Capital Account Restoration Obligation. If any Partner has a
deficit balance in its Capital Account upon liquidation of such Partner's
interest in the Partnership or the Partnership, such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered to be a debt
owed to the Partnership or to any other person.

         14.9 Waiver of Partition. Each Partner hereby waives any right to
partition of the Partnership property.

                                   ARTICLE XV

            AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

         15.1 Amendments to be Adopted Solely by General Partner. Each Limited
Partner agrees that the General Partner (pursuant to its powers of attorney from
the Limited Partners and Assignees), without the approval of any Limited Partner
or Assignee, may amend any provision of this Agreement, and execute, swear to,
acknowledge, deliver, file and record whatever documents may be required in
connection therewith, to reflect:

                  (a) a change in the name of the Partnership, the location of
the principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;

                  (b) admission, substitution, withdrawal or removal of Partners
in accordance with this Agreement;

                  (c) a change that, in the sole discretion of the General
Partner, is reasonable and necessary or appropriate to qualify or continue the
qualification of the Partnership as a limited partnership or a partnership in
which the limited partners have limited liability under the laws of any state or
that is necessary or advisable in the opinion of the General Partner to ensure
that the Partnership will not be taxable as a corporation or otherwise taxed as
an entity for federal income tax purposes;

                                       37
<PAGE>

                  (d) a change (i) that, in the sole discretion of the General
Partner, does not adversely affect the Limited Partners in any material respect,
(ii) that is necessary or appropriate to satisfy any requirements, conditions,
guidelines or interpretations contained in any opinion, interpretative release,
directive, order, ruling or regulation of any federal or state agency or
judicial authority or contained in any federal or state agency or judicial
authority or contained in any federal or state statute (including, without
limitation, the Delaware Act) or that is necessary or appropriate to facilitate
the trading of the Partnership Units (including, without limitation, the
division of Outstanding Partnership Units into different classes to facilitate
uniformity of tax consequences within such classes of Partnership Units) or
compliance with any of which the General Partner determines in its sole
discretion to be in the best interests of the Partnership and the Limited
Partners or (iii) that is required to effect the intent of the provisions of
this Agreement or is otherwise contemplated by this Agreement;

                  (e) an amendment that is necessary, in the Opinion of Counsel,
to prevent the Partnership or the General Partner or its directors or officers
from in any manner being subjected to the provisions of the Investment Company
Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or
"plan asset" regulations adopted under the Employee Retirement Income Security
Act of 1974, as amended, whether or not substantially similar to plan asset
regulations currently applied or proposed by the United States Department of
Labor;

                  (f) subject to the terms of Section 4.4, an amendment that the
General Partner determines in its sole discretion to be necessary or appropriate
in connection with the authorization for issuance of any class or series of
Partnership Units pursuant to Section 4.4;

                  (g) any amendment expressly permitted in this Agreement to be
made by the General Partner acting alone;

                  (h) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 16.3; or

                  (i) any other amendments substantially similar to the
foregoing.

         15.2 Amendment Procedures. Except as provided in Sections 15.1 and
15.3, all amendments to this Agreement shall be made in accordance with the
following requirements. Amendments to this Agreement may be proposed solely by
the General Partner. Each such proposal shall contain the text of the proposed
amendment. If an amendment is proposed, the General Partner shall seek the
written approval of the holders of the requisite percentage of Outstanding
Partnership Units or call a meeting of the Partners to consider and vote on such
proposed amendment. A proposed amendment shall be effective upon its approval of
the Record Holders of at least a Majority of the Outstanding Partnership Units,
unless a greater or different percentage is required under this Agreement, and
an amendment that would materially and adversely affect the rights and
preferences of any type or class of Partnership Interests in relation to other
types or classes of Partnership Interests requires the approval of at least a
majority of such class or type of partnership interest (excluding those held by
the General Partner and its Affiliates). The General Partner shall notify all
Partners upon final adoption of any proposed amendment.

         15.3 Amendment Requirements.

                  (a) Notwithstanding the provisions of Sections 15.1 and 15.2,
no provision of this Agreement that establishes a percentage of Outstanding
Partnership Units required to take any action shall be amended, altered,
changed, repealed or rescinded in any respect that would have the effect of
reducing such voting requirement unless such amendment is approved by the
written consent or the affirmative vote of holders of Outstanding partnership
Units whose aggregate percentage of Outstanding Partnership Units constitutes
not less than the required percentage of Outstanding Partnership Units sought to
be reduced.

                  (b) Notwithstanding the provisions of Sections 15.1 and 15.2,
no amendments to this Agreement may (i) enlarge the obligations of any Limited
Partner without such Limited Partner's consent, which may be given or withheld
in its sole discretion, (ii) without the consent of the General Partner, which
may be given or withheld in its sole discretion, (A) modify the amounts
distributable to the General Partner in respect of its general partner interest
in the Partnership or modify the amounts reimbursable or otherwise payable to
the General Partner or any of its Affiliates by the Partnership, (B) change
Section 14.1(a) or (c), (C) restrict in any way any action by or rights of the
General Partner

                                       38
<PAGE>

as set forth in this Agreement or (D) change the term of the Partnership or,
except as set forth in Section 14.1(c), give any Person the right to dissolve
the Partnership.

                  (c) Notwithstanding any other provision of this Agreement,
except for amendments pursuant to 15.1, no amendments shall become effective
without the approval of the Record Holders of at least a Majority of the
Outstanding Partnership Units unless the Partnership obtains an Opinion of
Counsel to the effect that (a) such amendment will not cause the Partnership to
be taxable as a corporation or otherwise taxed as an entity for federal income
tax purposes and (b) such amendment will not affect the limited liability of any
Limited Partner.

                  (d) This Section 15.3 shall only be amended with the approval
of the Record Holders of not less than a Majority of the Outstanding Partnership
Units.

         15.4 Meetings of, or Actions by, the Partners.

                  (a) Meetings of the Partners to vote upon any matters on which
the Partners are authorized to take action under this Agreement or as the same
may be amended from time to time may be called at any time by the General
Partner. The General Partner shall cause a written notice to be given, either in
person or by registered mail, to the Partners entitled to vote advising them
that a meeting, convenient to the Partners, will be held at a time and place
fixed by the General Partner. Such meeting will be held not less than ten (10)
days nor more than sixty (60) days after the mailing of the notice of the
meeting. Included with the notice of the meeting shall be a detailed statement
of the action proposed, including a verbatim statement of the wording of any
resolution proposed for adoption by the Partners and of any proposed amendments
to this Agreement, as the same may from time to time be amended. Meetings of the
Partners may be conducted by means of telephone conference or similar
communications equipment whereby all persons participating in the meeting can
hear and speak to each other. All expenses of the meeting and notification shall
be borne by the Partnership.

                  (b) Record Holders of at least a Majority of the Outstanding
Partnership Units entitled to vote on any such action shall constitute a quorum
for the transaction of that specific action at any meeting. Personal presence of
the Partners shall not be required, provided an effective and notarized written
consent to or rejection of such proposed action is submitted to a General
Partner. Attendance by a Partner and voting in person at any meeting shall
revoke any written consents or rejections of such Partner submitted with respect
to action proposed to be taken at such meeting.

                  (c) Any matter on which the Partners are authorized to take
action under this Agreement or under law may be taken by the Partners without a
meeting and shall be as valid and effective as action taken by the Partners at a
meeting assembled, if written consents to such action by the Partners are (i)
signed by the Partners entitled to vote upon such action at a meeting who hold
at least the minimum percentage of Outstanding Partnership Units required to
authorize such action, and (ii) are delivered to the General Partner. In the
event that there shall be no General Partner, the Limited Partners may take
action without a meeting by the written consent of Limited Partners having at
least a majority of all of the Limited Partner Interests entitled to vote
thereon.

                                   ARTICLE XVI

                                     MERGER

         16.1 Authority. The Partnership may merge or consolidate with one or
more corporations, business trusts or associations, real estate investment
trusts, common law trusts or unincorporated businesses, including, without
limitation, a general partnership or limited partnership, formed under the laws
of the State of Delaware or any other state of the United States of America,
pursuant to a written agreement of merger or consolidation ("Merger Agreement")
in accordance with this Article.

         16.2 Procedure for Merger or Consolidation. Merger or consolidation of
the Partnership pursuant to this Article requires the prior approval of the
General Partner. If the General Partner shall determine, in the exercise of its
sole discretion, to consent to the merger or consolidation, the General Partner
shall approve the Merger Agreement, which shall set forth:

                                       39
<PAGE>

                  (a) the names and jurisdictions of formation or organization
of each of the business entities proposing to merge or consolidate;

                  (b) the name and jurisdictions of formation or organization of
the business entity that is to survive the proposed merger or consolidation
(hereafter designated as the "Surviving Business Entity");

                  (c) the terms and conditions of the proposed merger or
consolidation;

                  (d) the manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or into, cash,
property or general or limited partnership interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any general or limited
partnership interests, securities or rights of any constituent business entity
are not to be exchanged or converted solely for, or into, cash, property or
general or limited partnership interests, rights, securities or obligations of
the Surviving Business Entity, the cash, property or general or limited
partnership interests, rights, securities or obligations of any limited
partnership, corporation, trust or other entity (other than the Surviving
Business Entity) which the holders of such general or limited partnership
interest are to receive in exchange for, or upon conversion of their securities
or rights, and (ii) in the case of securities represented by certificates, upon
the surrender of such certificates, which cash, property or general or limited
partnership interests, rights, securities or obligations of the Surviving
Business Entity or any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;

                  (e) a statement of any amendments or other changes in the
constituent documents (the articles or certificate of incorporation, articles of
trust, declaration of trust, certificate or agreement of limited partnership or
other similar charter or governing document), or the adoption of new constituent
documents, in either case as contemplated in Section 17-211(g) of the Delaware
Act, of the Surviving Business Entity to be effected by such merger or
consolidation;

                  (f) the effective time of the merger, which may be the date of
the filing of the certificate of merger pursuant to Section 16.4 or a later date
specified in or determinable in accordance with the Merger Agreement; provided
that if the effective time of the merger is to be later than the date of the
filing of the certificate of merger, it shall be fixed no later than the time of
the filing of the certificate of merger and stated therein; and

                  (g) such other provisions with respect to the proposed merger
or consolidation as are deemed necessary or appropriate by the General Partner.

         16.3 Approval of Merger or Consolidation by the Partners.

                  (a) The General Partner of the Partnership, upon its approval
of the Merger Agreement, shall direct that a copy of the Merger Agreement be
submitted to a vote of the Partners whether at a meeting or by written consent,
in either case in accordance with the requirements of Article XV.

                  (b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of the holders of at least a majority of the
Outstanding Partnership Units, unless the Merger Agreement contains any
provision as to which, if contained in an amendment to this Agreement, the
provisions of this Agreement or the Delaware Act would require the vote or
consent of a greater percentage of the Outstanding Partnership Units or of any
class of Partnership Units (voting separately as a class), in which case the
vote or consent of such greater percentage or of such class of Partnership Units
shall be required for approval of the Merger Agreement.

                  (c) After such approval by vote or consent of the Partners,
and at any time prior to the filing of the certificate of merger pursuant to
Section 16.4, the merger or consolidation may be abandoned pursuant to
provisions therefor, if any, set forth in the Merger Agreement.

         16.4 Certificate of Merger. Upon the required approval by the General
Partner and the Limited Partners of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of Delaware
in conformity with the requirements of the Delaware Act.

         16.5 Effect of Merger.

                                       40
<PAGE>

                  (a) Upon the effective date of the certificate of merger:

                           (i) all of the rights, privileges and powers of each
of the business entities that has merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business entities
and all other things and causes of action belonging to each of those business
entities shall be vested in the Surviving Business Entity and, after the merger
or consolidation, shall be the property of the Surviving Business Entity to the
extent they were part of each constituent business entity;

                           (ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not revert and
shall not be in any way impaired because of the merger or consolidation;

                           (iii) all rights of creditors and all liens on or
security interest in property of any of those constituent business entities
shall be preserved unimpaired; and

                           (iv) all debts, liabilities and duties of those
constituent business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.

                  (b) A merger or consolidation effected pursuant to this
Article shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.

                                  ARTICLE XVII

                               GENERAL PROVISIONS

         17.1 Addresses and Notices. Any notice, demand, request or report
required or permitted to be given or made to a Partner under this Agreement
shall be in writing and shall be deemed given or made if received by it at the
principal office of the Partnership designated pursuant to Section 1.3 hereof.

         17.2 Titles and Captions. All article or section titles or captions in
this Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provisions hereof. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.

         17.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice-versa.

         17.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.

         17.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.

         17.6 Integration. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.

         17.7 Creditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.

         17.8 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.

                                       41
<PAGE>

         17.9 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto, independently of the
signature of any other party.

         17.10 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.

         17.11 Invalidity of Provisions. If any provision of this Agreement is
or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.

                         [SIGNATURES ON FOLLOWING PAGE]

                                       42
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 31st day of December, 2001.

                         GENERAL PARTNER:

                         FELCOR LODGING TRUST INCORPORATED, a Maryland
                         corporation formerly known as FelCor Suite Hotels, Inc.

                         By:  /s/ Lawrence D. Robinson
                            ----------------------------------------------------
                              Lawrence D. Robinson, Executive Vice President

                         LIMITED PARTNERS (for all the Limited Partners now and
                         hereafter admitted as limited partners of the
                         Partnership, pursuant to the powers of attorney in
                         favor of the General Partner contained in Section 1.4
                         of the Partnership Agreement):

                         By:  FELCOR LODGING TRUST INCORPORATED, a Maryland
                              corporation, formerly known as FelCor Suite
                              Hotels, Inc., acting as General Partner and as
                              duly authorized attorney-in-fact

                              By:   /s/ Lawrence D. Robinson
                                 -----------------------------------------------
                                    Lawrence D. Robinson,
                                    Executive Vice President

                                       43
<PAGE>

                                    EXHIBIT A

                             INTENTIONALLY OMITTED.

<PAGE>

                                    EXHIBIT B

                     NOTICE OF EXERCISE OF REDEMPTION RIGHT

         In accordance with Section 7.5 of the Second Amended and Restated
Agreement of Limited Partnership of FelCor Lodging Limited Partnership (the
"Agreement"), the undersigned hereby irrevocably (i) presents for redemption
______ Partnership Units in FelCor Lodging Limited Partnership in accordance
with the terms of the Agreement and the Redemption Right referred to in Section
7.5 thereof, (ii) surrenders such Partnership Units and all right, title and
interest therein, and (iii) directs that the Cash Amount or REIT Shares Amount
(as defined in the Agreement) as determined by the General Partner deliverable
upon exercise of the Redemption Right be delivered to the address specified
below, and if REIT Shares are to be delivered, such REIT Shares be registered or
placed in the name(s) and at the address(es) specified below. Notwithstanding
the foregoing, the undersigned acknowledges that there are certain limitations
set forth in Section 7.5(c) of the Agreement relating to the Company's
obligation to redeem Partnership Units.

Dated:
       ----------------------------

Name of Limited Partner:
                                      ------------------------------------------

                                      ------------------------------------------
                                      (Signature of Limited Partner)

                                      ------------------------------------------
                                      (Mailing Address)

                                      ------------------------------------------
                                      (City)             (State)      (Zip Code)

                                      Signature Guaranteed by:

                                      ------------------------------------------

If REIT Shares are to be issued,
issue to:
                                      ------------------------------------------

Please insert social security or
identifying number:
                                      ------------------------------------------

Name:
                                      ------------------------------------------

<PAGE>

                       FELCOR LODGING LIMITED PARTNERSHIP

                              ---------------------

                  ADDENDUM NO. 1 TO SECOND AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP

                              ---------------------

                                 DESIGNATION OF
                                  CLASS B UNITS

         The General Partner of FelCor Lodging Limited Partnership, a Delaware
limited partnership (the "Partnership"), pursuant to the authority expressly
granted to the General Partner by the Second Amended and Restated Agreement of
Limited Partnership of FelCor Lodging Limited Partnership, as amended (the
"Agreement"), and in particular Sections 1.4 and 4.6 thereof, has approved this
Addendum No. 1 to the Agreement (the "Addendum"), which Addendum is a part of
the Agreement for all purposes, to create and provide for the issue of a class
of Partnership Units and to fix the designations, preferences and relative,
participating, optional or other special rights, powers and duties thereof as
follows (initially capitalized terms used without definition herein having the
meanings set forth therefor in the Agreement):

         1. Designation of Class. A class of Partnership Units is hereby
designated the "Class B Units" of the Partnership. The Class B Units shall have
the preferences and relative, participating, optional or other special rights,
powers and duties that are set forth in this Addendum and, to the extent
permitted by this Addendum, established by the General Partner and set forth in
any amendments to the Agreement or any amendments or annexes to this Addendum.

         2. Designation of Series of Class B Units. The General Partner shall
have authority to establish series of unissued Class B Units by fixing the
preferences, rights, powers and duties of the Class B Units of any series so
established in accordance with and to the extent permitted by the provisions of
Section 4.6 of the Agreement, except that the General Partner may not decrease
the number of Class B Units within a series to not less than the number of Class
B Units within such series that are issued and may not increase or decrease the
number of Class B Units within a series if prohibited by the annex to this
Addendum providing for such series. Any such series shall be (i) established by
the General Partner through an annex to this Addendum, for which no vote or
consent of any Limited Partners shall be required, which annex shall set forth
in detail the rights, preferences, powers and duties of that series, and (ii)
subject to the terms and provisions of this Addendum.

         3. Preferences, Rights, Powers and Duties. The Class B Units will have
all of the same preferences, rights, powers and duties as the Partnership Units
that are currently issued and outstanding, and in addition thereto, will have
the preferences, rights, powers and duties set forth in this Addendum and any
annex thereto.

         4. Certain Definitions. For purposes of this Addendum only, the
following terms have the indicated meanings:

                  (a) "Class B Unitholder" shall mean any Person who owns, at
the time of determination of whether such party is a "Class B Unitholder," a
Class B Unit according to the Partnership's Unitholder records.

                  (b) The term "Commission" shall mean the Securities and
Exchange Commission and any successor agency.

                  (c) The term "Holder" or "Holders" shall mean any Person who
shall hereafter acquire any Qualified Registrable Securities and who holds, at
the time of determination of whether such party is a "Holder", Qualified
Registrable Securities of record.

                  (d) The term "Independent Director" shall mean a director of
the General Partner who is not an officer or employee of the General Partner,
any Affiliate of an officer or employee or an Affiliate of (a) any advisor to

<PAGE>

the General Partner under an advisory agreement, (b) any lessee of any property
of the General Partner, (c) any subsidiary of the General Partner, or (d) any
partnership which is an Affiliate of the General Partner.

                  (e) The term "NASDAQ" shall mean The Nasdaq Stock Market
(formerly known as the National Market System), or any stock exchange on which
the General Partner's REIT Shares may be subsequently listed for trading in
substitution for The Nasdaq Stock Market.

                  (f) The term "Qualified Registrable Securities" shall mean the
REIT Shares that the General Partner or the Partnership may elect in their
discretion to issue in redemption of Class B Units offered for redemption by a
Redeeming Partner (who is then a Class B Unitholder) under Section 7.5(a) of the
Agreement. As to any particular Qualified Registrable Securities, once issued,
such REIT Shares shall cease to be Qualified Registrable Securities when (a) a
registration statement with respect to such REIT Shares shall have become
effective under the Securities Act and such REIT Shares shall have been disposed
of in accordance with such registration statement, (b) such REIT Shares shall
have ceased to be outstanding, (c) such REIT Shares shall have been sold
pursuant to Rule 144 (or any successor provision) under the Securities Act or
(d) at the time of determination of whether such REIT Shares are Qualified
Registrable Securities, such REIT Shares may be sold under Rule 144(K) or
otherwise by their owner or holder publicly without registration under the
Securities Act.

                  (g) The term "Qualified Registration" shall mean a
registration statement of the General Partner under the Securities Act on a form
which permits the sale of Qualified Registrable Securities (other than a
registration statement (a) on Form S-4 or S-8 or any successor or similar form
then in effect, (b) relating to warrants, options or shares of capital stock
granted or to be granted or sold primarily to employees, directors or officers
of the General Partner, (c) filed in connection with a transaction described in
Rule 145 under the Securities Act or any successor rule, (d) relating to
employee benefit plans or interests therein, or (e) relating primarily to
preferred stock or other securities issued in connection with any financing by
the General Partner which is principally debt or preferred stock financing).

                  (h) The term "REIT Share" shall mean a share of the class of
voting common stock of the General Partner.

                  (i) The term "Securities Act" shall mean the Securities Act of
1933, as amended.

                  (j) The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.

         5. Registrations.

                  5.1 Registration for Resale of REIT Shares. If the General
Partner or the Partnership redeems any Class B Units through the issuance of
REIT Shares to a Redeeming Partner who is a Class B Unitholder, either (i) the
General Partner shall file with the Commission and cause to become effective a
shelf registration statement under Rule 415 of the Securities Act, or any
similar rule that may be adopted by the Commission, covering the reoffering and
resale of such REIT Shares ("Shelf Registration"), or (ii) the General Partner
shall provide to the Redeeming Partner an opinion of counsel satisfactory to the
General Partner and the Redeeming Partner to the effect that such REIT Shares
may be resold by the Redeeming Partner publicly without registration under the
Securities Act. The General Partner may include in such Shelf Registration other
securities of the General Partner to be resold by holders other than the
Holders. The General Partner shall use reasonable efforts to cause the Shelf
Registration to remain continuously effective until the date when all Qualified
Registrable Securities registered thereunder cease to qualify as Qualified
Registrable Securities. The General Partner shall amend or supplement the Shelf
Registration, if and as required, to identify each Holder after its acquisition
of Qualified Registrable Securities.

                  5.2 Piggyback Registration. Whenever the General Partner
proposes to register any of its REIT Shares in a Qualified Registration, whether
or not for sale for its own account, the General Partner will give prompt
written notice ("Piggyback Notice") to the Holders of Qualified Registrable
Securities of its intention to effect such a registration. Upon written request
of any Holder of Qualified Registrable Securities made within 20 days after
delivery of any Piggyback Notice (which request shall specify the Qualified
Registrable Securities requested to be included in such Qualified Registration
by such Holder), the General Partner will, subject to Sections 5.3 and 5.4
below, use its reasonable efforts to include in such Qualified Registration all
Qualified Registrable Securities the Holders of which shall have so requested
the inclusion thereof in such Qualified Registration, to permit the disposition
by such Holders of such

                                       2
<PAGE>

Qualified Registrable Securities; provided, however, that (i) if, at any time
after giving written notice of its intention to register any such REIT Shares
(other than Qualified Registrable Securities requested to be included therein
pursuant to this Section 5.2) in such Qualified Registration and prior to the
effective date of the registration statement filed in connection with such
Qualified Registration, the General Partner shall determine for any reason not
to register such REIT Shares, the General Partner may, at its election, give
written notice of such determination to all Holders of Qualified Registrable
Securities requesting the inclusion of Qualified Registrable Securities therein
and, thereupon, shall be relieved of its obligation to register any Qualified
Registrable Securities in connection with such registration, without prejudice,
however, to the future rights of Holders under this Section 5.2, (ii) in case of
a determination by the General Partner to delay such registration of the REIT
Shares (other than Qualified Registrable Securities requested to be included
therein pursuant to this Section 5.2), the General Partner shall be permitted to
delay the registration of such Qualified Registrable Securities for the same
period as the delay in registering such other REIT Shares, and (iii) the General
Partner shall not be required to effect any registration pursuant to this
Section 5.2 unless it shall have received reasonable assurances that the seller
or sellers of any such Qualified Registrable Securities covered thereby will pay
any expenses required to be paid by such sellers as provided in Section 7. The
registrations requested pursuant to this Section 5.2 are referred to herein as
the "Piggyback Registrations."

                  5.3 Priority on Piggyback Registrations. If a Piggyback
Registration is an underwritten registration and the managing underwriter(s) for
the offering advises the General Partner in writing that in its opinion the
number of shares of Qualified Registrable Securities requested or proposed to be
included in such registration exceeds the number which can be sold in such
offering without materially affecting the offering price of the securities
proposed to be included therein, the General Partner will include in such
registration (i) first, to the extent such securities of the General Partner may
be included in such Qualified Registration without materially affecting the
offering price thereof, in the opinion of such managing underwriter(s), (a) if
such registration is initiated by the General Partner proposing to register any
of its REIT Shares, such REIT Shares proposed to be sold by the General Partner,
and (b) the securities of holders of securities of the General Partner (other
than the Holders of Qualified Registrable Securities, as such, with respect to
such Qualified Registrable Securities) who otherwise have preferential
registration rights to include such securities in such Piggyback Registration in
preference to the Holders which such holders have duly requested to be included
in such Piggyback Registration, in each case in accordance with the agreement(s)
with respect to such registration rights between the General Partner and such
holders; and (ii) second, to the extent such Qualified Registrable Securities
may be included in such Qualified Registration without materially affecting the
offering price of the securities referred to in clause (i), in the opinion of
such managing underwriter(s), the Qualified Registrable Securities requested by
the Holders to be included in such Piggyback Registration pursuant to Section
5.2 and any other securities of the General Partner held by persons other than
the Holders having rights to participate in such Piggyback Registration which
are non-preferential to the Holders, pro rata among all such holders on the
basis of the total number of shares of securities of the General Partner,
including Qualified Registrable Securities, requested by each such holder to be
included therein.

                  5.4 Selection of Underwriters. If any Piggyback Registration
is an underwritten offering, the General Partner will have the sole right to
select the managing underwriter(s) thereof.

         6. Registration Procedures. If and whenever the General Partner is
required by the provisions of this Addendum to use its reasonable efforts to
effect the registration of any Qualified Registrable Securities as provided
hereby:

                  6.1 The General Partner shall, as expeditiously as reasonably
practicable:

                           (a) Prepare and file with the Commission under the
Securities Act a registration statement with respect to such Qualified
Registrable Securities, which registration statement will state that the
Qualified Registrable Securities are covered thereby, and use its reasonable
efforts to cause such registration statement to become effective and to remain
effective as provided herein; provided, however, that the General Partner may
discontinue any registration of securities that is being effected pursuant to
Section 5.2 at any time prior to the effective date of the registration
statement relating thereto.

                           (b) Prepare and file with the Commission such
amendments and supplements, if any, to such registration statement and the
prospectus used in connection therewith as may be necessary to (a) keep the
registration statement effective (1) as to a Piggyback Registration until the
earlier of 90 days after the effectiveness thereof or the completion of the
distribution under such registration statement, or (2) as to the Shelf
Registration until

                                       3
<PAGE>

the date on which all Qualified Registrable Securities registered thereunder
cease to qualify as Qualified Registrable Securities, and (b) comply with the
provisions of the Securities Act applicable to it with respect to the
disposition of all Qualified Registrable Securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement.

                           (c) Furnish to each seller of such Qualified
Registrable Securities and each underwriter, if any, of the Qualified
Registrable Securities being sold by such seller such number of copies of such
registration statement (including exhibits), each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and of each amendment and supplement thereto as such
seller and underwriter may reasonably request in order to facilitate the public
disposition of the Qualified Registrable Securities owned by such seller and
included in such registration statement.

                           (d) Use its reasonable efforts to (a) register or
qualify such Qualified Registrable Securities under such securities or blue sky
laws of such jurisdictions as any seller of Qualified Registrable Securities or
any managing underwriter reasonably requests, (b) keep such registration and
qualification in effect for so long as such registration statement is in effect,
and (c) do any and all other acts and things which may be reasonably necessary
or advisable to enable such seller or underwriter to consummate the disposition
in such jurisdictions of the relevant Qualified Registrable Securities (provided
that the General Partner will not for any such purpose be required to (1)
qualify generally to do business as a foreign corporation in any jurisdiction
where it would not otherwise be required to qualify but for the requirements of
this subsection; (2) subject itself to taxation in any such jurisdiction; (3)
consent to general service of process in any such jurisdiction; or (4) register
or qualify Qualified Registrable Securities or take any other action under the
state securities or "Blue Sky" laws of any jurisdiction if, in the judgment of
the Board of Directors of the General Partner, the consequences of such
registration, qualification or other action would be unduly burdensome to the
General Partner).

                           (e) At any time when a prospectus relating thereto is
required to be delivered under the Securities Act, notify each seller of
Qualified Registrable Securities covered by a registration statement when it
becomes aware of the happening of any event as a result of which the prospectus
(as then amended or supplemented) contains any untrue statement of a material
fact or omits any fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, and, at the request
of any such seller, as promptly as practicable thereafter, prepare in sufficient
quantities and furnish to such seller and each underwriter a reasonable number
of copies of a prospectus supplemented or amended so that, as thereafter
delivered to the offerees or purchasers of such Qualified Registrable
Securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein in light
of the circumstances then existing not misleading.

                           (f) Comply with all applicable rules and regulations
of the Commission, and make generally available to its security holders, as soon
as reasonably practicable, an earnings statement covering the period of at least
twelve consecutive months beginning with the first day of the General Partner's
first calendar quarter after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.

                           (g) Use its reasonable efforts to cause all such
Qualified Registrable Securities covered by such registration statement to be
listed on NASDAQ or on any securities exchange on which similar securities
issued by the General Partner are then listed, if the listing of such Qualified
Registrable Securities is then permitted under the rules governing NASDAQ or
such exchange.

                           (h) Enter into customary agreements relating to the
registration (including an under writing agreement in customary form).

                           (i) Subject to the execution of confidentiality
agreements in a form satisfactory to the General Partner, make reasonably
available for inspection by any seller of such Qualified Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement, the Representative Counsel (as hereinafter defined), and any legal
counsel, accountant or other agent retained by any such Representative Counsel
or underwriter, all financial and other records, pertinent corporate documents
and properties of the General Partner, and cause the General Partner's officers,
directors employees, counsel and independent public accountants to supply all
information reasonably requested by, and to respond to inquiries from, any such
seller, underwriter, Representative

                                       4
<PAGE>

Counsel, legal counsel, attorney, accountant or agent in connection with such
registration statement, in each case, to the extent such information is
reasonably necessary to satisfy any of its obligations under applicable law.

                           (j) Use reasonable efforts to obtain an appropriate
opinion from counsel for the General Partner and a "cold comfort" letter from
the General Partner's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions of counsel and
cold comfort letters in similar registrations; provided, however, that failure
to provide such opinion or letter, or the provision of any such opinion or
letter in a form not satisfactory to any seller whose Qualified Registrable
Securities are covered by such registration statement, notwithstanding the
General Partner's reasonable efforts, shall not give rise to any action, at law
or in equity, for damages or injunctive or other relief, but rather shall only
entitle such seller to withdraw his Qualified Registrable Securities from such
registration statement, pursuant to Section 6.4 below.

                           (k) Provide (a) the Holders of such Qualified
Registrable Securities to be included in a registration statement hereunder, (b)
the underwriters (which term, for purposes of this Addendum, shall include any
person deemed to be an underwriter within the meaning of Section 2(11) of the
Securities Act), if any, of the securities being sold, (c) counsel of such
underwriters, and (d) Representative Counsel (as defined in Section 6.3) the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment or supplement thereto.

                           (l) Promptly notify the selling Holders of Qualified
Registrable Securities to be included in a registration statement hereunder and
the managing underwriters, if any, of the securities being sold and (if
requested by any such person) confirm such advice in writing, (a) when such
registration statement, the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to such registration
statement or any post-effective amendment thereto, when the same has become
effective, (b) of the issuance by the Commission of any stop order suspending
the effectiveness of such registration statement or the initiation of any
proceedings for that purpose, or (c) of the receipt by the General Partner of
any notification with respect to the suspension of the qualification of the
Qualified Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose.

                           (m) Use its reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of a registration statement
hereunder or any post-effective amendment thereto at the earliest practicable
date.

                           (n) Notify in writing each Holder of Qualified
Registrable Securities of any proposal by the General Partner to amend or waive
any provision of this Addendum pursuant to Sections 12.1 and 12.2 hereof and of
any amendment or waiver effected pursuant thereto, each of which notices shall
contain the text of the amendment or waiver proposed or effected, as the case
may be.

                  6.2 Certain Agreements by Holders. Each Holder of Qualified
Registrable Securities selling securities in a registration hereunder agrees
that upon receipt of any notice from the General Partner of the happening of any
event of the kind described in Section 6.1(v), such seller will forthwith
discontinue such seller's disposition of Qualified Registrable Securities
pursuant to the registration statement covering such seller's Qualified
Registrable Securities until such seller's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6.1(v) and, if so
directed by the General Partner, will deliver to the General Partner (at the
General Partner's expense) all copies, other than permanent file copies, then in
such seller's possession of the prospectus covering such Qualified Registrable
Securities that was in effect at the time of receipt of such notice. In the
event the General Partner shall give any such notice, the period mentioned in
Section 6.1(ii) shall be extended by the number of days during the period from
and including the date of the giving of such notice to and including the date
when each seller of any Qualified Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by Section 6.1(v).

                  6.3 Representative Counsel. In connection with the preparation
and review of any registration statement or prospectus or any amendments or
supplements thereto, the sellers (other than the General Partner) of the
securities of the General Partner included in such registration will choose
counsel ("Representative Counsel") who shall participate in the registration
process on behalf of all of such sellers of securities of the General Partner,
coordinate requests by such sellers for information from the General Partner,
and act as liaison between such sellers or their

                                       5
<PAGE>

individual counsel, accountants and agents and the General Partner. The General
Partner shall establish reasonable procedures with respect to the selection of
the Representative Counsel.

                  6.4 Withdrawal. If any Holder disapproves of the terms of any
offering, such Holder's sole remedy shall be, at its sole discretion, to
withdraw the Holder's Qualified Registrable Securities and other securities of
the General Partner therefrom by written notice to the General Partner and the
underwriter (if any); and the Holder's Qualified Registrable Securities and
other securities of the General Partner so withdrawn from the offering will also
be withdrawn from registration. If the Holders participating therein withdraw
all Qualified Registrable Securities from the offering, the General Partner may
withdraw the registration.

                  6.5 Information. The General Partner may require each seller
of Qualified Registrable Securities or securities of the General Partner as to
which any registration is being effected to furnish the General Partner such
information regarding such seller and the distribution of such securities as the
General Partner may from time to time reasonably request in writing for purposes
of preparation of the registration statement, to the extent that such
information is required in order to comply with applicable legal requirements.
If any such registration statement refers to any Holder by name or otherwise as
the Holder of any securities of the General Partner, then such Holder shall have
the right to require (i) the insertion therein of language, in form and
substance satisfactory to such Holder, to the effect that the holding by such
Holder of such securities is not to be construed as a recommendation by such
Holder of the investment quality of the General Partner's securities covered
thereby and that such holding does not imply that such Holder will assist in
meeting any future financial requirements of the General Partner, or (ii) in the
event that such reference to such Holder by name or otherwise is not in the
judgment of the General Partner, as advised by counsel, required by the
Securities Act or any similar federal statute or any state "blue sky" or
securities law then in force, the deletion of such reference to such Holder.

         7. Registration Expenses.

                  7.1 Responsibility for Payment. Whether or not any
registration pursuant to this Addendum shall become effective, all expenses
incident to the General Partner's performance of or compliance with this
Addendum, including without limitation all registration and filing fees,
National Association of Securities Dealers' fees, fees and expenses of
compliance with state securities or blue sky laws, printing and engraving
expenses and fees and disbursements of counsel for the General Partner and the
independent certified public accountants for the General Partner, underwriters
(excluding discounts, commissions and transfer taxes and amounts to be borne by
such underwriters) and other persons retained by the General Partner (all such
expenses being herein called "Registration Expenses"), will be borne by the
General Partner; provided, however, that each seller of Qualified Registrable
Securities or other securities of the General Partner shall pay any underwriting
discounts and selling commissions and transfer taxes applicable to Qualified
Registrable Securities or other securities of the General Partner sold by such
seller as aforesaid.

         8. Indemnification.

                  8.1 Indemnification by the General Partner. The General
Partner will, and hereby does indemnify and hold harmless, with respect to any
registration statement filed by it, to the full extent permitted by law, each
Holder which is a seller of Qualified Registrable Securities covered by such
registration statement, its officers, directors, employees, agents and general
or limited partners (and the directors, officers, employees and agents thereof)
and each other person, partnership, trust, corporation, joint venture,
unincorporated organization or government or any department or agency thereof
(each, a "Person") if any, who controls such Holder within the meaning of the
Securities Act (collectively, the "Holder Indemnitees") against all losses,
claims, damages, liabilities and expenses, joint or several, (including
reasonable fees of counsel and any amounts paid in settlement effected with the
General Partner's consent, which consent shall not be unreasonably withheld) to
which any such Holder Indemnitee may become subject under the Securities Act, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings, whether commenced or threatened, in respect
thereof), are caused by (i) any untrue statement or alleged untrue statement of
a material fact contained in any registration statement in which such Qualified
Registrable Securities were included as contemplated hereby or the omission or
alleged omission to state therein a

                                       6
<PAGE>

material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary, final or summary prospectus,
together with the documents incorporated by reference therein (as amended or
supplemented if the General Partner shall have filed with the Commission any
amendment thereof or supplement thereto), or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein in the light of the circumstances under
which they were made not misleading, or (iii) any violation by the General
Partner of any federal, state or common law rule or regulation applicable to the
General Partner and relating to action of or inaction by the General Partner in
connection with any such registration; and in each such case the General Partner
will reimburse each such Holder Indemnitee for any reasonable legal or any other
expenses incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability, expense, action or proceeding;
provided, that the General Partner shall not be liable to any such Holder
Indemnitee in any such case to the extent that any such loss, claim, damage,
liability or expense (or action or proceeding, whether commenced or threatened,
in respect thereof) arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or amendment thereof or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in conformity
with written information furnished to the General Partner by or on behalf of any
such Holder Indemnitee relating to such Holder Indemnitee for use in the
preparation thereof; and provided further that the General Partner shall not be
liable to any such Holder Indemnitee with respect to any preliminary prospectus
to the extent that any such loss, claim, damage, liability or expense of such
Holder Indemnitee results from the fact that such Holder Indemnitee sold
Qualified Registrable Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
prospectus (excluding documents incorporated by reference) or of the prospectus
as then amended or supplemented (excluding documents incorporated by reference)
if the General Partner has previously furnished copies thereof to such Holder
Indemnitee in compliance with Section 6 of this Addendum and the loss, claim,
damage, liability or expense of such Holder Indemnitee results from an untrue
statement or omission of a material fact contained in such preliminary
prospectus which was corrected in the prospectus (or the prospectus as amended
or supplemented). Such indemnity and reimbursement of expenses shall remain in
full force and effect regardless of any investigation made by or on behalf of
such Holder Indemnitee and shall survive the transfer of such securities by such
Holder.

                  8.2 Indemnification by Holders. Each Holder participating in
any registration statement hereunder will and hereby does indemnify and hold
harmless, to the fullest extent permitted by law, the General Partner, its
directors, officers, employees and agents and each Person who controls the
General Partner (within the meaning of the Securities Act) (collectively, the
"General Partner Indemnitees") against all losses, claims, damages, liabilities
and expenses, joint or several (including reasonable fees of counsel and any
amounts paid in settlement effected with such Holder's consent, which consent
shall not be unreasonably withheld) to which any General Partner Indemnitee may
become subject under the Securities Act, at common law or otherwise insofar as
such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) are caused by
(i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement in which such Holder's Qualified
Registrable Securities were included or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary, final or
summary prospectus, together with the documents incorporated by reference
therein (as amended or supplemented if the General Partner shall have filed with
the Commission any amendment thereof or supplement thereto), or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein in the light of the
circumstances under which they were made not misleading to the extent, but only
to the extent, in the cases described in clauses (i) and (ii), that such untrue
statement or omission is contained in any information furnished in writing by
such Holder relating to such Holder for use in the preparation thereof and if
the General Partner does not know, at the time such information is included in
the registration statement, prospectus, preliminary prospectus, amendment or
supplement, that such information is false or misleading, (iii) any violation by
such Holder of any federal, state or common law, rule or regulation applicable
to such Holder and relating to action of or inaction by such Holder in
connection with any such registration, and (iv) with respect to any preliminary
prospectus, the fact that such Holder sold Qualified Registrable Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the prospectus (excluding documents
incorporated by reference) or of the prospectus as then amended or supplemented
(excluding documents incorporated by reference) if (a) the General Partner has
previously furnished copies thereof to such Holder in compliance with Section 6
of this Addendum and (b) the loss, claim, damage, liability or expense of such
Holder Indemnitee results from an untrue statement or omission of a material
fact contained in such preliminary prospectus which was corrected in the
prospectus (or the prospectus as amended or supplemented). Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the General Partner (except as provided above) or any of the
prospective sellers or any of their respective directors, officers, employees,
agents, general or limited partners or controlling Persons and shall survive the
transfer of such securities by such Holder.

                                       7
<PAGE>

                  8.3 Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under subsection 8.1 or 8.2 above of written
notice of the commencement of any action, suit, proceeding, investigation or
threat thereof made in writing with respect to which a claim for indemnification
may be made pursuant to this Section 8, such indemnified party shall, if a claim
in respect thereto is to be made against an indemnifying party, give written
notice to the indemnifying party of the threat or commencement thereof; but the
failure so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. In
case any such claim or action referred to under subsections 8.1 or 8.2 shall be
brought against any indemnified party and it shall notify the indemnifying party
of the threat or commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party). After notice from the indemnifying party to such indemnified party of
its election so to assume the defense of any such claim or action, the
indemnifying party shall not be liable to such indemnified party under this
Section 8 for any legal expenses of counsel or any other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation unless the indemnifying party has failed
to assume the defense of such claim or action or to employ counsel reasonably
satisfactory to such indemnified party. The indemnifying party shall not be
required to indemnify the indemnified party with respect to any amounts paid in
settlement of any action, proceeding or investigation entered into without the
written consent of the indemnifying party which consent shall not be
unreasonably withheld. No indemnifying party will consent to the entry of any
judgment or enter into any settlement without the consent of the indemnified
party, unless (i) such judgment or settlement does not impose any obligation or
liability upon the indemnified party other than the execution, delivery or
approval thereof, and (ii) such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim for
all persons that may be entitled to or obligated to provide indemnification or
contribution under this Section 8.

                  8.4 Additional Indemnification. Indemnification similar to
that specified in the preceding subsections of this Section 8 (with appropriate
modifications) shall be given by the General Partner and each seller of
Qualified Registrable Securities with respect to any required registration or
other qualification of securities under any state securities or blue sky laws.

                  8.5 Contribution. If the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless an indemnified
party under subsections 8.1 or 8.2 above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to in subsections 8.1 or 8.2 in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the
statements, omissions, actions or inactions which resulted in such losses,
claims, damages, liabilities or expenses. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party, any
action or inaction by any such party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, omission, action or inaction. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to above in this subsection
8.5 shall be deemed to include any reasonable legal or other expenses incurred
by such indemnified party in connection with investigating or defending any such
action or claim (which shall be limited as provided in subsection 8.3 if the
indemnifying party has assumed the defense of any such action in accordance with
the provisions thereof) which is the subject of this subsection 8.5. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Promptly after receipt by an
indemnified party under this subsection 8.5 of written notice of the
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing with respect to which a claim for contribution may be made
against an indemnifying party under this subsection 8.5, such indemnified party
shall, if a claim for contribution in respect thereto is to be made against an
indemnifying party, give written notice to the indemnifying party in writing of
the commencement thereof (if the notice specified in subsection 8.3 has not been
given with respect to such action); but the failure to so to notify the
indemnifying party shall not relieve it from any obligation to provide
contribution which it may have to any indemnified party under this subsection
8.5 except to the extent that the indemnifying party is actually prejudiced by
the failure to give notice. Notwithstanding anything in this subsection 8.5 to
the contrary, no indemnifying party (other than the General Partner) shall be
required pursuant to this subsection

                                       8
<PAGE>

8.5 to contribute any amount which exceeds the amount by which the dollar amount
of the proceeds received by such indemnifying party from the sale of Qualified
Registrable Securities and other securities of the General Partner (after
deducting any underwriting commissions, discounts and transfer taxes applicable
thereto) in the offering to which the losses, claims, damages, liabilities or
expenses of the indemnified parties relate exceeds the amount of any losses,
claims, damages, liabilities and expenses which such indemnifying party has
otherwise been required to pay as indemnity or contribution hereunder by reason
of such losses, claims, damages, liabilities or expenses.

                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this subsection 8.5 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph.

                  If indemnification is available under this Section 8, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in subsections 8.1 and 8.2 without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this subsection 8.5. The provisions of this subsection 8.5 shall
be in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the transfer of securities by any such
party.

                  8.6 Indemnification and Contribution of Underwriters. In
connection with any underwritten offering contemplated by this Addendum which
includes Qualified Registrable Securities, the General Partner, and all sellers
of Qualified Registrable Securities included in any registration statement will
agree to customary provisions for indemnification and contribution (consistent
with the other provisions of this Section 8) in respect of losses, claims,
damages, liabilities and expenses of the underwriters of such offering.

         9. Participation in Underwritten Registrations. In the case of a
registration hereunder, if the General Partner has determined to enter into an
underwriting agreement in connection therewith, all shares of Qualified
Registrable Securities or securities of the General Partner to be included in
such registration shall be subject to such underwriting agreement which shall be
in customary form and contain such terms as are customarily contained in such
agreements, and no person may participate in any such registration unless such
person (a) agrees to sell such person's securities on the basis provided in any
underwriting arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.

         10. Rights to Withdraw From Registration. If, as a result of the
proration provisions of Section 5.2, any Holder shall not be entitled to include
all Qualified Registrable Securities in a registration that such Holder has
requested to be included, after the delivery to such Holder of notice thereof
from the General Partner, such Holder may elect to withdraw his request to
include Qualified Registrable Securities in such registration (a "Withdrawal
Election"); provided, however, that a Withdrawal Election shall be irrevocable
and, after making a Withdrawal Election, a Holder shall no longer have any right
to include Qualified Registrable Securities in the registration as to which such
Withdrawal Election was made.

         11. Limitations on Sale or Distribution of Other Securities. If
requested in writing by (A) the General Partner or (B) the managing underwriter,
if any, of any underwritten registration contemplated by Section 5.2 hereof (a
"Subsequent Registration"), each Holder hereby agrees not to effect any public
offering, sale or distribution (including any sale pursuant to Rule 144 under
the Securities Act) of any Qualified Registrable Security, REIT Shares, or other
securities of the General Partner (other than as part of such underwritten
public offering) within 45 days after the effective date of the Subsequent
Registration, if such Holder was given the opportunity to include in the
Subsequent Registration such Qualified Registrable Securities, REIT Shares, or
any other securities of the General Partner. The General Partner may, at its
sole discretion, waive, as to any one or more Holders, the restrictions
contained in this Section 11 as they apply to a Subsequent Registration.

         12. Miscellaneous.

                  12.1 Waivers. Except as otherwise provided herein, the General
Partner may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the General Partner has obtained the
written consent of Holders of a majority of the outstanding REIT Shares.

                                       9
<PAGE>

                  12.2 Amendments. Except as otherwise provided herein or in any
annexes hereto, this Addendum may be amended only with the written consent of
the General Partner, the Class B Unitholders holding at least two-thirds of the
outstanding Class B Units and the Holders of a majority of the outstanding
Qualified Registrable Securities.

                  12.3 Successors and Assigns. This Addendum shall be binding
upon and inure to the benefit of and be enforceable by the respective permitted
(as provided in Section 12.4) successors and assigns of the parties hereto,
whether so expressed or not. Each of the Class B Holders, the Holders and the
General Partner shall be entitled to enforce the respective obligations and
receive the respective benefits of this Addendum notwithstanding that any Holder
no longer is a Partner in the Partnership or a Class B Unitholder.

                  12.4 Subsequent Holders.

                           (a) The rights of a Holder shall continue with
respect to Qualified Registrable Securities of a Holder upon transfer of such
securities by a Holder. The term "Holder" shall include any transferee of
Qualified Registrable Securities, and the term "Qualified Registrable
Securities" shall include the Qualified Registrable Securities transferred to
such transferee but only so long as they continue to qualify as Qualified
Registrable Securities.

                           (b) Notwithstanding the foregoing, no rights
hereunder shall inure to the benefit of, or be exercisable by, any transferee
acquiring Qualified Registrable Securities in a public sale or public
distribution.

                  12.5 Severability. Whenever possible, each provision of this
Addendum will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Addendum is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Addendum.

                  12.6 Descriptive Headings. The descriptive headings of this
Addendum are inserted for convenience only and shall not limit or otherwise
affect the meaning hereof.

                  12.7 Changes in Outstanding Securities. The provisions of this
Addendum regarding REIT Shares and Qualified Registrable Securities shall apply
to securities of the General Partner or any successor or assign of the General
Partner (whether by merger, consolidation, sale of assets or otherwise) that may
be issued in respect of, or by reason of any stock dividend, stock split, stock
issuance, reverse stock split, combination, recapitalization, reclassification,
merger, consolidation or otherwise. Upon the occurrence of any of such events,
the definitions of REIT Shares and Qualified Registrable Securities shall be
appropriately modified by the Board of Directors of the General Partner.

                  12.8 Exchange Act Reports. The General Partner covenants that
it will timely file the reports required to be filed by it under the Exchange
Act (including but not limited to the reports under Section 13 of the Exchange
Act referred to in subparagraph (c)(1) of Rule 144 under the Securities Act),
and will take such further action as any Holder of Qualified Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Qualified Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act. Upon the request of any Holder of
Qualified Registrable Securities, the General Partner will deliver to such
Holder a written statement as to whether it has complied with the requirements
of this Section 12.8.

                  12.9 Reissuance of Class B Units. Unless otherwise
specifically stated in the designation of any series, Class B Units which have
been redeemed or purchased by the Partnership may be canceled by the General
Partner or may have the status of authorized and unissued Class B Units and may
be reissued as Class B Units, or may be reissued as a part of the series for
which they were originally a part or may be reclassified and reissued as part of
a new series of Class B Units to be established by the General Partner or as
part of any other series of Class B Units.

                                       10
<PAGE>

                       FELCOR LODGING LIMITED PARTNERSHIP

                              ---------------------

                                   ANNEX NO. 1
                       TO ADDENDUM NO. 1 TO SECOND AMENDED
                  AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

                              ---------------------

                             [Intentionally Deleted]

<PAGE>

                       FELCOR LODGING LIMITED PARTNERSHIP

                              ---------------------

                                 ANNEX NO. 2 TO
                  ADDENDUM NO. 1 TO SECOND AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP

                              ---------------------

                                 DESIGNATION OF
                            CLASS B UNITS, SERIES II

         The General Partner of FelCor Lodging Limited Partnership, a Delaware
limited partnership (the "Partnership"), pursuant to the authority expressly
granted to the General Partner by the Amended and Restated Agreement of Limited
Partnership of FelCor Lodging Limited Partnership, as amended (the "Agreement"),
and Addendum No. 1 to the Agreement (the "Addendum"), and in particular Sections
1.4 and 4.6 of the Agreement and Section 2 of the Addendum, has approved this
Annex No. 2 to the Addendum (the "Annex"), which Annex is a part of the Addendum
for all purposes, to create and provide for the issue of a series of Class B
Units and to fix the designations, preferences and relative, participating,
optional or other special rights, powers and duties thereof as follows
(initially capitalized terms used without definition herein having the meanings
set forth therefor in the Agreement and the Addendum):

         1. Designation of Series. A series of Class B Units is hereby
designated the "Class B Units, Series II" of the Partnership. The Class B Units,
Series II shall have the preferences and relative, participating, optional or
other special rights, powers and duties that are set forth in this Annex and the
Addendum and, to the extent permitted by this Annex and the Addendum,
established by the General Partner and set forth in any amendments to this Annex
or the Addendum.

         2. Authorized Number of Class B Units, Series II. 350,000

         3. Preferences, Rights, Powers and Duties. The Class B Units, Series II
will have all of the same preferences, rights, powers and duties as the other
Class B Units and, in addition thereto, will have the preferences, rights,
powers and duties set forth in this Annex. Other Class B Units that are not part
of this Series II shall not be entitled or subject to the preferences, rights,
powers and duties set forth in this Annex.

         4. Shelf Registration. Notwithstanding the provisions of Section 5.1 of
the Addendum, the General Partner does not intend to effect the Shelf
Registration until after May 30, 1996. Consequently, if the Class B Unitholder
elects to obtain a redemption of any Class B Units, Series II prior to the
effectiveness of such Shelf Registration, the condition specified in the first
sentence of Section 5.1 does not apply and unregistered REIT Shares may be
issued in redemption of the Class B Units, Series II by the General Partner or
the Partnership. However, the General Partner covenants to effect the Shelf
Registration of such REIT Shares no later than July 1, 1996. The General Partner
shall only be obligated to maintain the effectiveness of the Shelf Registration
for a period of 30 months after July 1, 1996. Notwithstanding the foregoing, if
for any reason the effectiveness of the Shelf Registration is suspended or it
ceases to be available for resales by any Holder of the Holder's Qualified
Registrable Securities thereunder, the 30-month registration period shall be
extended by the aggregate number of days of such suspension or nonavailability.

         5. Qualified Registrable Securities. For the purpose of this Annex
only, the definition of the term "Qualified Registrable Securities" in the
Addendum shall be deemed amended by replacing the words "Class B Units" with
"Class B Units, Series II."

<PAGE>

         6. Commencement of Redemption Rights. The redemption rights arising
under Section 7.5(a) of the Agreement with respect to a Class B Unitholder's
Class B Units, Series II shall not be exercisable prior to July 1, 1996. A Class
B Unitholder may elect to require the Partnership to redeem his Class B Units,
Series II after that date.

         7. Amendments. This Annex may be amended only with the written consent
of the General Partner and each Class B Unitholder that owns any Class B Units,
Series II.

                                        2

<PAGE>

                       FELCOR LODGING LIMITED PARTNERSHIP

                              ---------------------

                  ADDENDUM NO. 2 TO SECOND AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP

                              ---------------------

                                 DESIGNATION OF
                 SERIES A CUMULATIVE CONVERTIBLE PREFERRED UNITS

         The General Partner of FelCor Lodging Limited Partnership, a Delaware
limited partnership (the "Partnership"), pursuant to the authority expressly
granted to the General Partner by the Second Amended and Restated Agreement of
Limited Partnership of FelCor Lodging Limited Partnership, as amended (the
"Agreement"), and in particular Sections 1.4 and 4.6 thereof, has approved this
Addendum No. 2 to the Agreement (the "Addendum"), which Addendum is a part of
the Agreement for all purposes, to create and provide for the issue of a class
of Partnership Units and to fix the designations, preferences and relative,
participating, optional or other special rights, powers and duties thereof as
follows:

         1. Designation of Class. A class of units of the Partnership is hereby
authorized and designated as the "Series A Cumulative Convertible Preferred
Units" (the "Series A Preferred Units"). The Series A Preferred Units shall have
the preferences and relative, participating, optional or other special rights,
powers and duties that are set forth in this Addendum and to the extent
permitted by this Addendum, established by the General Partner and set forth in
any amendments to the Agreement or any amendments or annexes to this Addendum.

         2. Authorized Number of Series A Preferred Units. The authorized number
of Series A Preferred Units shall be 6,900,000.

         3. Preferences, Rights, Powers and Duties.

                  3.1 Definitions. For purposes of the Series A Preferred Units,
         the following terms shall have the meanings indicated:

                  "Act" shall mean the Securities Act of 1933, as amended.

                  "Addendum" shall have the meaning set forth in the preamble
         hereof.

                  "Agreement" shall have the meaning set forth in the preamble
         hereof.

                  "Business Day" shall mean any day other than a Saturday,
         Sunday or a day on which state or federally-chartered banking
         institutions in Texas or New York are not required to be open.

                  "Call Date" shall have the meaning set forth in Section
         3.4(b).

                  "Common Unit" shall mean the units of partnership interest of
         the Partnership not designated as Preferred Units.

                  "Common Stock" shall mean the common stock, $0.01 par value
         per share, of the General Partner.

                  "Conversion Date" shall have the meaning set forth in Section
         3.5(a).

                  "Conversion Price" shall mean the conversion price per Common
         Unit for which the Series A Preferred Units are convertible, as such
         Conversion Price may be adjusted pursuant to Section 3.5. The initial
         Conversion

<PAGE>

         Price shall be $32.25 (equivalent to a conversion rate of 0.7752 Common
         Units for each Series A Preferred Unit).

                  "Current Market Price" of Common Units shall mean the
         equivalent of the current market price of the Common Stock. The current
         market price of the Common Stock or any other class of capital stock or
         other security of the General Partner or any other issuer for any day
         shall mean the last reported sales price, regular way on such day, or,
         if no sale takes place on such day, the average of the reported closing
         bid and asked prices on such day, regular way, in either case as
         reported on the New York Stock Exchange ("NYSE") or, if such security
         is not listed or admitted for trading or, if not listed or admitted for
         trading on any national securities exchange, on the National Market
         System of the National Association of Securities Dealers, Inc.
         Automated Quotations System ("NASDAQ") or, if such security is not
         quoted on such National Market System, the average of the closing bid
         and asked prices on such day in the over-the-counter market as reported
         by NASDAQ or, if bid and asked prices for such security on such day
         shall not have been reported through NASDAQ, the average of the bid and
         asked prices on such day as furnished by any NYSE member firm regularly
         making a market in such security selected for such purpose by the
         General Partner.

                  "Distribution Payment Date" shall mean the last calendar day
         of January, April, July and October in each year, commencing on July
         31, 1996; PROVIDED, HOWEVER, that if any Distribution Payment Date
         falls on any day other than a Business Day, the distribution payment
         due on such Distribution Payment Date shall be paid on the Business Day
         immediately following such Distribution Payment Date.

                  "Distribution Period" shall mean quarterly distribution
         periods commencing January 1, March 1, June 1 and September 1 of each
         year and ending on and including the day preceding the first day of the
         next succeeding Distribution Period (other than the initial
         Distribution Period, which shall commence on May 6, 1996 and end on and
         include June 30, 1996).

                  "Fair Market Value" shall mean the average of the daily
         Current Market Prices of a Common Unit during the five (5) consecutive
         Trading Days selected by the Partnership commencing not more than
         twenty (20) Trading Days before, and ending not later than, the earlier
         of the day in question and the day before the "ex" date with respect to
         the issuance or distribution requiring such computation. The term "'ex'
         date," when used with respect to any issuance or distribution, means
         the first day on which the shares of Common Stock trade regular way,
         without the right to receive such issuance or distribution, on the
         exchange or in the market, as the case may be, used to determine that
         day's Current Market Price.

                  "General Partner" shall mean FelCor Lodging Trust
         Incorporated, a Maryland corporation, which is the sole general partner
         of the Partnership.

                  "Issue Date" shall mean the date on which the Partnership
         first issues a Series A Preferred Unit.

                  "Junior Units" shall have the meaning set forth in Section
         3.6(c).

                  "Parity Units" shall have the meaning set forth in Section
         3.6(b).

                  "Partnership" shall have the meaning set forth in the preamble
         hereof.

                  "Person" shall mean any individual, partnership, limited
         liability company, corporation or other entity, and shall include any
         successor (by merger or otherwise) of such entity.

                  "Preferred Units" shall mean units of partnership interest of
         the Partnership designated as having certain preferences to the Common
         Units with respect to distributions or upon liquidation of the
         Partnership.

                  "Series A Preferred Stock" shall mean the $1.95 Series A
         Cumulative Convertible Preferred Stock, $0.01 par value and $25.00
         liquidation preference per share, of the General Partner.

                                       2
<PAGE>

                  "Series A Preferred Units" shall have the meaning set forth in
         Section 1.

                  "set apart for payment" shall be deemed to include, without
         any action other than the following, the recording by the Partnership
         in its accounting ledgers of any accounting or bookkeeping entry which
         indicates, pursuant to a declaration of dividends or other distribution
         by the Partnership, the allocation of funds to be so paid on any series
         or class of capital units of the Partnership; PROVIDED, HOWEVER, that
         if any funds for a class or series of Junior Units or any class or
         series of Parity Units are placed in a separate account of the
         Partnership or delivered to a disbursing, paying or other similar
         agent, then "set apart for payment" with respect to the Series A
         Preferred Units shall mean placing such funds in a separate account or
         delivering such funds to a disbursing, paying or other similar agent.

                  "Trading Day" shall mean any day on which the Common Stock is
         traded on the NYSE, or if such securities are not listed or admitted
         for trading on the NYSE, on the principal national securities exchange
         on which such securities are listed or admitted, or if not listed or
         admitted for trading of any national securities exchange, on the
         National Market System of NASDAQ, or if such securities are not quoted
         on such National Market System, in the applicable securities market in
         which the securities are traded.

                  Initially capitalized terms used without definition herein
         shall have the meanings set forth therefor in the Agreement. Other
         terms defined herein have the meanings so given them. Whenever the
         context requires, the gender of all words used in this Addendum shall
         include the masculine, feminine and neuter form of such words, and the
         singular form shall include the plural and vice versa.

                  3.2 Distributions.

                  (a) The holders of the Series A Preferred Units shall be
         entitled to receive, when, as and if declared by the General Partner
         out of funds legally available for that purpose, distributions payable
         in cash in an amount per Series A Preferred Unit equal to the greater
         of $1.95 per annum or the cash distributions declared or paid for the
         corresponding period (determined on each Distribution Payment Date) on
         the number of Common Units, or portion thereof, into which each Series
         A Preferred Unit is convertible (under Section 3.5). Such distributions
         shall be cumulative from May 6, 1996, whether or not in any
         Distribution Period or Periods there shall be funds of the Partnership
         legally available for the payment of such distributions, and shall be
         payable quarterly, when, as and if declared by the General Partner, in
         arrears on Distribution Payment Dates, commencing on the first
         Distribution Payment Date after the Issue Date. Each such distribution
         shall be payable in arrears to the holders of record of the Series A
         Preferred Units, as they appear on the records of the Partnership at
         the close of business on such record dates, not more than sixty (60)
         days preceding such Distribution Payment Dates thereof, as shall be
         fixed by the General Partner. Accrued and unpaid distributions for any
         past Distribution Periods may be declared and paid at any time, without
         reference to any regular Distribution Payment Date, to holders of
         record on such date, not exceeding forty-five (45) days preceding the
         payment date thereof, as may be fixed by the General Partner.

                  (b) The amount of distributions payable for each full
         Distribution Period for the Series A Preferred Units shall be computed
         by dividing the annual distribution rate by four (4). The amount of
         distributions payable for any period shorter or longer than a full
         Distribution Period, on the Series A Preferred Units shall be computed
         on the basis of twelve (12), thirty (30) day months and a 360-day year.
         Holders of the Series A Preferred Units shall not be entitled to any
         distributions, whether payable in cash, property or units, in excess of
         cumulative distributions, as herein provided, on the Series A Preferred
         Units. No interest, or sum of money in lieu of interest, shall be
         payable in respect of any distribution payment or payments on the
         Series A Preferred Units that may be in arrears.

                  (c) So long as any of the Series A Preferred Units are
         outstanding, no distributions, except as described in the immediately
         following sentence, shall be declared or paid or set apart for payment
         on any class or series of Parity Units for any period unless full
         cumulative distributions have been or contemporaneously are declared
         and paid or declared and a sum sufficient for the payment thereof set
         apart for such payment on the Series A Preferred Units for all
         Distribution Periods terminating on or prior to the Distribution
         Payment

                                       3
<PAGE>

         Date on such class or series of Parity Units. When distributions are
         not paid in full or a sum sufficient for such payment is not set apart,
         as aforesaid, all distributions declared upon the Series A Preferred
         Units and all distributions declared upon any other class or series of
         Parity Units shall be declared ratably in proportion to the respective
         amounts of distributions accumulated and unpaid on the Series A
         Preferred Units and accumulated and unpaid on such Parity Units.

                  (d) So long as any of the Series A Preferred Units are
         outstanding, no distributions (other than dividends or distributions
         paid in units of, or options, warrants or rights to subscribe for or
         purchase units of, Junior Units), shall be declared or paid or set
         apart for payment or other distribution declared or made upon Junior
         Units, nor shall Junior Units be redeemed, purchased or otherwise
         acquired (other than a redemption, purchase or other acquisition of
         Common Units made for purposes of an employee incentive or benefit plan
         of the Partnership for any consideration (or any moneys be paid to or
         made available for a sinking fund for the redemption of any such units)
         by the Partnership, directly or indirectly (except by conversion into
         or exchange for Junior Units)), unless in each case (i) the full
         cumulative distributions on all outstanding Series A Preferred Units
         and any other Parity Units shall have been paid or set apart for
         payment for all past Distribution Periods with respect to the Series A
         Preferred Units and all past distribution periods with respect to such
         Parity Units and (ii) sufficient funds shall have been paid or set
         apart for the payment of the distribution for the current Distribution
         Period with respect to the Series A Preferred Units and the current
         Distribution Period with respect to such Parity Units.

                  3.3 Liquidation Preference.

                  (a) In the event of any liquidation, dissolution or winding up
         of the Partnership, whether voluntary or involuntary, before any
         payment or distribution of the assets of the Partnership (whether
         capital or surplus) shall be made to or set apart for the holders of
         Junior Units, the holders of the Series A Preferred Units shall be
         entitled to receive twenty-five Dollars ($25.00) per Series A Preferred
         Unit plus an amount equal to all distributions (whether or not earned
         or declared) accrued and unpaid thereon to the date of final
         distribution to such holders, but such holders shall not be entitled to
         any further payment. If, upon any liquidation, dissolution or winding
         up of the Partnership, the assets of the Partnership, or proceeds
         thereof, distributable among the holders of the Series A Preferred
         Units shall be insufficient to pay in full the preferential amount
         aforesaid and liquidating payments on any other class or series of
         Parity Units, then such assets, or the proceeds thereof, shall be
         distributed among the holders of the Series A Preferred Units and any
         such other Parity Units ratably in accordance with the respective
         amounts that would be payable on such Series A Preferred Units and any
         such other Parity Units if all amounts payable thereon were paid in
         full. For the purposes of this Section 3.3, (i) a consolidation or
         merger of the Partnership with one or more Persons, (ii) a sale or
         transfer of all or substantially all of the assets of the Partnership,
         or (iii) a statutory exchange of units shall not be deemed to be a
         liquidation, dissolution or winding up, voluntary or involuntary, of
         the Partnership.

                  (b) Subject to the rights of the holders of any series or
         class or classes of Parity Units, after payment shall have been made in
         full to the holders of the Series A Preferred Units, as provided in
         this Section 3.3, any other series or class or classes of Junior Units
         shall, subject to the respective terms and provisions (if any) applying
         thereto, be entitled to receive any and all assets remaining to be paid
         or distributed, and the holders of the Series A Preferred Units shall
         not be entitled to share therein.

                  3.4 Redemption.

                  (a) The Series A Preferred Units shall be redeemable by the
         Partnership solely when, as, and if any share of the Series A Preferred
         Stock is redeemed by the General Partner and in the same proportion as
         shares of the Series A Preferred Stock are redeemed by the General
         Partner so that the number of Series A Preferred Units remaining
         unredeemed shall be the same as, and at all times equal to, the number
         of shares of Series A Preferred Stock remaining unredeemed. The Series
         A Preferred Stock is not redeemable by the General Partner prior to
         April 30, 2001, and, therefore, the Series A Preferred Units shall not
         be redeemable by the Partnership prior to such date.

                                       4
<PAGE>

                  (b) Upon redemption of the Series A Preferred Units by the
         Partnership on the date specified in the notice to holders required
         under subparagraph (d) of this Section 3.4 (the "Call Date"), each
         Series A Preferred Unit called for redemption shall (i) be converted
         into a number of Common Units equal to the liquidation preference
         (excluding any accrued and unpaid distributions) of the Series A
         Preferred Units being redeemed divided by the Conversion Price as of
         the opening of business on the Call Date or (ii) be redeemed in cash at
         a price per unit equal to the aggregate Current Market Price
         (determined as of the date of the notice of redemption) of the number
         of Common Units into which the Series A Preferred Units are then
         convertible divided by the then current Conversion Price, in either
         case to the same extent and in the same amounts as the shares of Series
         A Preferred Stock are redeemed by the General Partner.

                  Upon any redemption of the Series A Preferred Units, the
         Partnership shall pay any accrued and unpaid distributions in arrears
         for any full Distribution Period ending on or prior to the Call Date.
         If the Call Date falls after a distribution payment record date and
         prior to the corresponding Distribution Payment Date, then each holder
         of Series A Preferred Units at the close of business on such
         distribution payment record date shall be entitled to the distribution
         payable on such units on the corresponding Distribution Payment Date.
         Except as provided above, the Partnership shall make no payment or
         allowance for unpaid distributions, whether or not in arrears, on
         Series A Preferred Units called for redemption or on the Common Units
         issued upon such redemption.

                  (c) If full cumulative distributions on the Series A Preferred
         Units and any other class or series of Parity Units have not been paid
         or declared and set apart for payment, the Series A Preferred Units may
         not be redeemed in part and the Partnership may not purchase or acquire
         Series A Preferred Units, otherwise than pursuant to a purchase or
         exchange offer made on the same terms to all holders of Series A
         Preferred Units.

                  (d) If the Partnership shall redeem Series A Preferred Units
         pursuant to this Section 3.4, notice of such redemption shall be given
         to the holders of the Series A Preferred Units called for redemption as
         soon as practicable after notice of redemption of the Series A
         Preferred Stock is given by the General Partner.

                  From and after the Call Date (unless the Partnership shall
         fail to make available a number of the Common Units or amount of cash
         necessary to effect such redemption), (i) except as otherwise provided
         herein, distributions on the Series A Preferred Units so called for
         redemption shall cease to accrue, (ii) such units shall no longer be
         deemed to be outstanding, and (iii) all rights of the holders thereof
         as holders of Series A Preferred Units shall cease (except the rights
         to receive the Common Units and cash payable upon such redemption,
         without interest thereon, upon surrender and endorsement of their
         certificates if so required to receive any distributions payable
         thereon).

                  As promptly as practicable after the surrender in accordance
         with such notice of the certificates for any such units so redeemed
         (properly endorsed or assigned for transfer, if the Partnership shall
         so require and if the notice shall so state), such units shall be
         exchanged for certificates of Common Units and any cash (without
         interest thereon) for which such units have been redeemed. If fewer
         than all the outstanding Series A Preferred Units are to be redeemed,
         units to be redeemed shall be selected by the Partnership from
         outstanding Series A Preferred Units not previously called for
         redemption by lot or pro rata (as nearly as may be) or by any other
         method determined by the Partnership in its sole discretion to be
         equitable. If fewer than all the Series A Preferred Units represented
         by any certificate are redeemed, then new certificates representing the
         unredeemed units shall be issued without cost to the holder thereof.

                  (e) No fractional units or scrip representing fractions of
         Common Units shall be issued upon redemption of the Series A Preferred
         Units. Instead of any fractional interest in a Common Unit that would
         otherwise be deliverable upon the redemption of a Series A Preferred
         Unit, the Partnership shall pay to the holder of such unit an amount in
         cash (computed to the nearest cent) based upon the Current Market Price
         of Common Units on the Trading Day immediately preceding the Call Date.
         If more than one (1) unit shall be surrendered for redemption at one
         time by the same holder, the number of full Common Units issuable, or
         cash paid, upon redemption thereof shall be computed on the basis of
         the aggregate number of Series A Preferred Units so surrendered.

                                       5
<PAGE>

                  3.5 Mandatory Conversion. Series A Preferred Units shall be
         automatically convertible into Common Units, as follows:

                  (a) When, as and if any share of the Series A Preferred Stock
         is converted into Common Stock, then (and solely in such event) a
         Series A Preferred Unit shall automatically be converted into Common
         Units in the same proportion as shares of the Series A Preferred Stock
         are converted into shares of Common Stock so that the number of shares
         of Series A Preferred Stock remaining unconverted (if any) shall be the
         same as, and at all times equal to, the number of Series A Preferred
         Units remaining unconverted (if any).

                  The Partnership or the General Partner shall cause a notice of
         such mandatory conversion to be mailed, postage prepaid, to the holders
         of the Series A Preferred Units at their respective addresses appearing
         on the unit transfer records of the Partnership. The notice shall set
         forth (i) the effective date of the conversion (which shall be the same
         date upon which the corresponding shares of Series A Preferred Stock
         are converted into Common Stock) (the "Conversion Date"), (ii) with
         respect to each holder, the number of Series A Preferred Units to be
         converted together with the number of Common Units to be issued upon
         conversion, and (iii) the address of the office of the General Partner
         where such the Series A Preferred Units called for conversion shall be
         surrendered. Any notice which is mailed in the manner provided herein
         shall be conclusively deemed to have been duly given, whether or not
         the holder of the Series A Preferred Units receives such notice, and
         failure to duly give such notice by mail, or any defect in such notice,
         to any holder of the Series A Preferred Units shall not affect the
         validity of the conversion thereof into Common Units.

                  (b) On or after the Conversion Date, the holder of each Series
         A Preferred Unit to be converted shall surrender the certificate
         representing such unit, duly endorsed or assigned to the Partnership or
         in blank, at the office of the General Partner. Unless the units
         issuable on conversion are to be issued in the same name as the name in
         which such Series A Preferred Unit is registered, each unit surrendered
         for conversion shall be accompanied by instruments of transfer, in form
         satisfactory to the Partnership, duly executed by the holder or such
         holder's duly authorized attorney and an amount sufficient to pay any
         transfer or similar tax (or evidence reasonably satisfactory to the
         Partnership demonstrating that such taxes have been paid).

                  Holders of Series A Preferred Units at the close of business
         on a distribution payment record date shall be entitled to receive the
         distribution payable on such units on the corresponding Distribution
         Payment Date notwithstanding the conversion thereof following such
         distribution payment record date and prior to such Distribution Payment
         Date. However, Series A Preferred Units called for conversion during
         the period between the close of business on any distribution payment
         record date and the opening of business on the corresponding
         Distribution Payment Date (except units converted after the issuance of
         notice of redemption with respect to a Call Date during such period,
         such Series A Preferred Units being entitled to such distribution on
         the Distribution Payment Date) shall be accompanied by a payment of an
         amount equal to the distribution payable on such units on such
         Distribution Payment Date. Each holder of Series A Preferred Units
         called for conversion on a distribution payment record date shall on
         such Distribution Payment Date receive the distribution payable by the
         Partnership on such Series A Preferred Units on such date, and the
         holder of such units need not include payment of the amount of such
         distribution upon conversion of the Series A Preferred Units. Except as
         provided above, the Partnership shall make no payment or allowance for
         unpaid distributions, whether or not in arrears, on Series A Preferred
         Units called for conversion or for distributions on the Common Units
         issued upon such conversion.

                  As promptly as practicable after the surrender of certificates
         for Series A Preferred Units as aforesaid, the Partnership shall issue
         and shall deliver at the office of the General Partner to such holder,
         or on his or her written order, a certificate or certificates for the
         number of full Common Units issuable upon the conversion of such units
         in accordance with provisions of this Section 3.5, and any factional
         interest in respect of a Common Unit arising upon such conversion shall
         be settled as provided in paragraph (c) of this Section 3.5. If fewer
         than all the outstanding Series A Preferred Units are to be converted,
         units to be converted shall be selected by the Partnership from
         outstanding Series A Preferred Units not previously called for
         conversion by lot or pro rata (as nearly as may be) or by any other
         method determined by the Partnership in its sole discretion

                                       6
<PAGE>

         to be equitable. If fewer than all the Series A Preferred Units
         represented by any certificate are converted, then new certificates
         representing the unconverted units shall be issued without cost to the
         holder thereof.

                  Each conversion shall be deemed to have been effected
         immediately prior to the close of business on the Conversion Date and
         the Person or Persons in whose name or names any certificate or
         certificates for Common Units shall be issuable upon such conversion
         shall be deemed to have become the holder or holders of record of the
         units represented thereby at such time on the Conversion Date and such
         conversion shall be at the Conversion Price in effect at such time on
         the Conversion Date unless the unit transfer books of the Partnership
         shall be closed on that date, in which event such Person or Persons
         shall be deemed to have become holder or holders of record at the close
         of business on the next succeeding day on which such unit transfer
         books are open, but such conversion shall be at the Conversion Price in
         effect on the Conversion Date.

                  On or after the Conversion Date, (i)(a) all distributions upon
         the Series A Preferred Units called for conversion shall cease and (b)
         all rights of the holders of the Series A Preferred Units called for
         conversion shall cease, except for the right to receive Common Units,
         and (ii) the Series A Preferred Units called for conversion shall no
         longer be deemed to be outstanding.

                  (c) No fractional units or scrip representing Common Units
         shall be issued upon conversion of the Series A Preferred Units.
         Instead of any fractional interest in a Common Unit that would
         otherwise be deliverable upon the conversion of a Series A Preferred
         Unit, the Partnership shall pay to the holder of such unit an amount in
         cash (computed to the nearest cent) based upon the Current Market Price
         of Common Units on the Trading Day immediately preceding the Conversion
         Date. If more than one (1) unit of the same holder shall be called for
         conversion at one time, the number of full Common Units issuable, or
         cash paid, upon conversion thereof shall be computed on the basis of
         the aggregate number of Series A Preferred Units so converted.

                  (d) The Conversion Price shall be adjusted from time to time
         in the same manner and to the same extent as the conversion price with
         respect to the Series A Preferred Stock is adjusted from time to time
         so that the Conversion Price shall be the same as and at all times
         equal to the conversion price of the Series A Preferred Stock.

                  (e) Prior to the delivery of any securities that the
         Partnership shall be obligated to deliver upon conversion of the Series
         A Preferred Units, the Partnership shall endeavor to comply with all
         federal and state laws and the regulations promulgated thereunder
         requiring the registration of such securities with, or any approval of
         or consent to the delivery thereof, by any governmental authority.

                  (f) The Partnership will pay any and all documentary stamp or
         similar issue or transfer taxes payable in respect of the issue or
         delivery of Common Units or other securities or property on conversion
         of the Series A Preferred Units pursuant hereto; PROVIDED, HOWEVER,
         that the Partnership shall not be required to pay any tax that may be
         payable in respect of any transfer involved in the issue or delivery of
         Common Units or other securities or property in a name other than that
         of the holder of the Series A Preferred Units to be converted, and no
         such issue or delivery shall be made unless and until the Person
         requesting such issue or delivery has paid to the Partnership the
         amount of any such tax or established, to the reasonable satisfaction
         of the Partnership, that such tax has been paid.

                  3.6 Ranking. Any class or series of units of the Partnership
         shall be deemed to rank:

                  (a) prior to the Series A Preferred Units, as to the payment
         of distributions and as to distribution of assets upon liquidation,
         dissolution or winding up, if the holders of such class or series shall
         be entitled to the receipt of distributions or of amounts distributable
         upon liquidation, dissolution or winding up, as the case may be, in
         preference or priority to the holders of Series A Preferred Units;

                  (b) on a parity with the Series A Preferred Units, as to the
         payment of distributions and as to distribution of assets upon
         liquidation, dissolution or winding up, whether or not the distribution
         rates,

                                       7
<PAGE>

         distribution payment dates or redemption or liquidation prices per unit
         thereof be different from those of the Series A Preferred Units, if the
         holders of such class of units or series and the Series A Preferred
         Units shall be entitled to the receipt of distributions and of amounts
         distributable upon liquidation, dissolution or winding up in proportion
         to their respective amounts of accrued and unpaid distributions per
         unit or liquidation preferences, without preference or priority one
         over the other ("Parity Units"); and

                  (c) junior to the Series A Preferred Units, as to the payment
         of distributions or as to the distribution of assets upon liquidation,
         dissolution or winding up, if such units or series shall be Common
         Units or if the holders of the Series A Preferred Units shall be
         entitled to receipt of distributions or of amounts distributable upon
         liquidation, dissolution or winding up, as the case may be, in
         preference or priority to the holders of such units or series ("Junior
         Units").

                  3.7 Record Holders. The Partnership may deem and treat the
         record holder of any Series A Preferred Units as the true and lawful
         owner thereof for all purposes, and the Partnership shall not be
         affected by any notice to the contrary.

                                       8
<PAGE>

                       FELCOR LODGING LIMITED PARTNERSHIP

                              ---------------------

                  ADDENDUM NO. 3 TO SECOND AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP

                              ---------------------

                                 DESIGNATION OF
                 SERIES B CUMULATIVE REDEEMABLE PREFERRED UNITS

         The General Partner of FelCor Lodging Limited Partnership, a Delaware
limited partnership (the "Partnership"), pursuant to the authority expressly
granted to the General Partner by the Second Amended and Restated Agreement of
Limited Partnership of FelCor Lodging Limited Partnership, as amended (the
"Agreement"), and in particular Sections 1.4 and 4.6 thereof, has approved this
Addendum No. 3 to the Agreement (the "Addendum"), which Addendum is a part of
the Agreement for all purposes, to create and provide for the issue of a class
of Partnership Units and to fix the designations, preferences and relative,
participating, optional or other special rights, powers and duties thereof as
follows:

         1. Designation of Class. A class of units of the Partnership is hereby
authorized and designated as the "Series B Cumulative Redeemable Preferred
Units" (the "Series B Preferred Units"). The Series B Preferred Units shall have
the preferences and relative, participating, optional or other special rights,
powers and duties that are set forth in this Addendum and to the extent
permitted by this Addendum, established by the General Partner and set forth in
any amendments to the Agreement or any amendments or annexes to this Addendum.

         2. Authorized Number of Series B Preferred Units. The authorized number
of Series B Preferred Units shall be 57,500.

         3. Preferences, Rights, Powers and Duties.

                  3.1 Definitions. For purposes of the Series B Preferred Units,
         the following terms shall have the meanings indicated:

                  "Addendum" shall have the meaning set forth in the preamble
         hereof.

                  "Agreement" shall have the meaning set forth in the preamble
         hereof.

                  "Business Day" shall mean any day other than a Saturday,
         Sunday or a day on which state or federally-chartered banking
         institutions in Texas or New York are not required to be open.

                  "Call Date" shall have the meaning set forth in Section
         3.4(b).

                  "Common Unit" shall mean the units of partnership interest of
         the Partnership not designated as Preferred Units.

                  "Common Stock" shall mean the common stock, $0.01 par value
         per share, of the General Partner.

                  "Distribution Payment Date" shall mean the last calendar day
         of January, April, July and October in each year, commencing on July
         31, 1998; PROVIDED, HOWEVER, that if any Distribution Payment Date
         falls on any day other than a Business Day, the distribution payment
         due on such Distribution Payment Date shall be paid on the Business Day
         immediately following such Distribution Payment Date.

<PAGE>

                  "Distribution Period" shall mean quarterly distribution
         periods commencing February 1, May 1, August 1 and November 1 of each
         year and ending on and including the day preceding the first day of the
         next succeeding Distribution Period (other than the initial
         Distribution Period, which shall commence on May 7, 1998 and end on and
         include July 31, 1998).

                  "General Partner" shall mean FelCor Lodging Trust
         Incorporated, a Maryland corporation, which is the sole general partner
         of the Partnership.

                  "Issue Date" shall mean the date on which the Partnership
         first issues a Series B Preferred Unit.

                  "Junior Units" shall have the meaning set forth in Section
         3.6(c).

                  "Parity Units" shall have the meaning set forth in Section
         3.6(b).

                  "Partnership" shall have the meaning set forth in the preamble
         hereof.

                  "Preferred Units" shall mean units of partnership interest of
         the Partnership designated as having certain preferences to the Common
         Units with respect to distributions or upon liquidation of the
         Partnership.

                  "Series B Preferred Stock" shall mean the 9% Series B
         Cumulative Redeemable Preferred Stock, $0.01 par value and $2,500.00
         liquidation preference per share, of the General Partner.

                  "Series B Preferred Units" shall have the meaning set forth in
         Section 1.

                  "Set apart for payment" shall be deemed to include, without
         any action other than the following, the recording by the Partnership
         in its accounting ledgers of any accounting or bookkeeping entry which
         indicates, pursuant to a declaration of dividends or other distribution
         by the Partnership, the allocation of funds to be so paid on any series
         or class of capital units of the Partnership; PROVIDED, HOWEVER, that
         if any funds for a class or series of Junior Units or any class or
         series of Parity Units are placed in a separate account of the
         Partnership or delivered to a disbursing, paying or other similar
         agent, then "set apart for payment" with respect to the Series B
         Preferred Units shall mean placing such funds in a separate account or
         delivering such funds to a disbursing, paying or other similar agent.

                  Initially capitalized terms used without definition herein
         shall have the meanings set forth therefor in the Agreement. Other
         terms defined herein have the meanings so given them. Whenever the
         context requires, the gender of all words used in this Addendum shall
         include the masculine, feminine and neuter form of such words, and the
         singular form shall include the plural and vice versa.

                  3.2 Distributions.

                  (a) The holders of the Series B Preferred Units shall be
         entitled to receive, when, as and if declared by the General Partner
         out of funds legally available for that purpose, distributions payable
         in cash in an amount per Series B Preferred Unit equal to $225.00 per
         annum. Such distributions shall be cumulative from May 7, 1998, whether
         or not in any Distribution Period or Periods there shall be funds of
         the Partnership legally available for the payment of such
         distributions, and shall be payable quarterly, when, as and if declared
         by the General Partner, in arrears on Distribution Payment Dates,
         commencing on the first Distribution Payment Date after the Issue Date.
         Each such distribution shall be payable in arrears to the holders of
         record of the Series B Preferred Units, as they appear on the records
         of the Partnership at the close of business on such record dates, not
         more than sixty (60) days preceding such Distribution Payment Dates
         thereof, as shall be fixed by the General Partner. Accrued and unpaid
         distributions for any past Distribution Periods may be declared and
         paid at any time, without reference to any regular Distribution Payment
         Date, to holders of record on such date, not exceeding forty-five (45)
         days preceding the payment date thereof, as may be fixed by the General
         Partner.

                                       2
<PAGE>

                  (b) The amount of distributions payable for each full
         Distribution Period for the Series B Preferred Units shall be computed
         by dividing the annual distribution rate by four. The amount of
         distributions payable for any period shorter or longer than a full
         Distribution Period, on the Series B Preferred Units shall be computed
         on the basis of a 360-day year. consisting of twelve 30-day months.
         Holders of the Series B Preferred Units shall not be entitled to any
         distributions, whether payable in cash, property or units, in excess of
         cumulative distributions, as herein provided, on the Series B Preferred
         Units. No interest, or sum of money in lieu of interest, shall be
         payable in respect of any distribution payment or payments on the
         Series B Preferred Units that may be in arrears.

                  (c) So long as any of the Series B Preferred Units are
         outstanding, no distributions, except as described in the immediately
         following sentence, shall be declared or paid or set apart for payment
         on any class or series of Parity Units for any period unless full
         cumulative distributions have been or contemporaneously are declared
         and paid or declared and a sum sufficient for the payment thereof set
         apart for such payment on the Series B Preferred Units for all
         Distribution Periods terminating on or prior to the Distribution
         Payment Date on such class or series of Parity Units. When
         distributions are not paid in full or a sum sufficient for such payment
         is not set apart, as aforesaid, all distributions declared upon the
         Series B Preferred Units and all distributions declared upon any other
         class or series of Parity Units shall be declared ratably in proportion
         to the respective amounts of distributions accumulated and unpaid on
         the Series B Preferred Units and accumulated and unpaid on such Parity
         Units.

                  (d) So long as any of the Series B Preferred Units are
         outstanding, no distributions (other than dividends or distributions
         paid in units of, or options, warrants or rights to subscribe for or
         purchase units of, Junior Units), shall be declared or paid or set
         apart for payment or other distribution declared or made upon Junior
         Units, nor shall Junior Units be redeemed, purchased or otherwise
         acquired (other than a redemption, purchase or other acquisition of
         Common Units made for purposes of an employee incentive or benefit plan
         of the Partnership for any consideration (or any moneys be paid to or
         made available for a sinking fund for the redemption of any such units)
         by the Partnership, directly or indirectly), unless in each case (i)
         the full cumulative distributions on all outstanding Series B Preferred
         Units and any other Parity Units shall have been paid or set apart for
         payment for all past Distribution Periods with respect to the Series B
         Preferred Units and all past distribution periods with respect to such
         Parity Units and (ii) sufficient funds shall have been paid or set
         apart for the payment of the distribution for the current Distribution
         Period with respect to the Series B Preferred Units and the current
         Distribution Period with respect to such Parity Units.

                  3.3 Liquidation Preference.

                  (a) In the event of any liquidation, dissolution or winding up
         of the Partnership, whether voluntary or involuntary, before any
         payment or distribution of the assets of the Partnership (whether
         capital or surplus) shall be made to or set apart for the holders of
         Junior Units, the holders of the Series B Preferred Units shall be
         entitled to receive two thousand five hundred dollars ($2,500.00) per
         Series B Preferred Unit plus an amount equal to all distributions
         (whether or not earned or declared) accrued and unpaid thereon to the
         date of final distribution to such holders, but such holders shall not
         be entitled to any further payment. If, upon any liquidation,
         dissolution or winding up of the Partnership, the assets of the
         Partnership, or proceeds thereof, distributable among the holders of
         the Series B Preferred Units shall be insufficient to pay in full the
         preferential amount aforesaid and liquidating payments on any other
         class or series of Parity Units, then such assets, or the proceeds
         thereof, shall be distributed among the holders of the Series B
         Preferred Units and any such other Parity Units ratably in accordance
         with the respective amounts that would be payable on such Series B
         Preferred Units and any such other Parity Units if all amounts payable
         thereon were paid in full. For the purposes of this Section 3.3, (i) a
         consolidation or merger of the Partnership with one or more Persons,
         (ii) a sale or transfer of all or substantially all of the assets of
         the Partnership, or (iii) a statutory exchange of units shall not be
         deemed to be a liquidation, dissolution or winding up, voluntary or
         involuntary, of the Partnership.

                  (b) Subject to the rights of the holders of any series or
         class or classes of Parity Units, after payment shall have been made in
         full to the holders of the Series B Preferred Units, as provided in
         this Section 3.3, any other series or class or classes of Junior Units
         shall, subject to the respective terms and

                                       3
<PAGE>

         provisions (if any) applying thereto, be entitled to receive any and
         all assets remaining to be paid or distributed, and the holders of the
         Series B Preferred Units shall not be entitled to share therein.

                  3.4 Redemption.

                  (a) The Series B Preferred Units shall be redeemable by the
         Partnership solely when, as, and if any share of the Series B Preferred
         Stock is redeemed by the General Partner and in the same proportion as
         shares of the Series B Preferred Stock are redeemed by the General
         Partner so that the number of Series B Preferred Units remaining
         unredeemed shall be the same as, and at all times equal to, the number
         of shares of Series B Preferred Stock remaining unredeemed. The Series
         B Preferred Stock is not redeemable by the General Partner prior to May
         7, 2003, and, therefore, the Series B Preferred Units shall not be
         redeemable by the Partnership prior to such date.

                  (b) Upon redemption of the Series B Preferred Units by the
         Partnership on the date specified in the notice to holders required
         under subparagraph (d) of this Section 3.4 (the "Call Date"), each
         Series B Preferred Unit called for redemption shall be redeemed in cash
         at a price per unit equal to $2,500.00 per unit, plus all accrued and
         unpaid distributions thereon to the Call Date, without interest, to the
         extent that the Partnership has funds legally available therefor. The
         redemption price of the Series B Preferred Units (other than any
         portion thereof consisting of accrued and unpaid distributions) must be
         paid solely from the sale proceeds of other equity interests of the
         Partnership and not from any other source. For purposes of the
         foregoing sentence, "equity interests" means any general partner
         interests, limited partner interests, preferred units, depositary
         shares, interests, participations, or other ownership interests
         (however designated) and any rights (other than debt securities
         convertible into or exchangeable for partnership units) or options to
         purchase any of the foregoing. Distributions payable on the Series B
         Preferred Units for any period greater or less than a full dividend
         period will be computed on the basis of a 360-day year consisting of
         twelve 30-day months. Except as provided above, the Partnership shall
         make no payment or allowance for unpaid distributions, whether or not
         in arrears, on Series B Preferred Units called for redemption or on the
         equity interests issued upon such redemption.

                  (c) If full cumulative distributions on the Series B Preferred
         Units and any other class or series of Parity Units have not been paid
         or declared and set apart for payment, the Series B Preferred Units may
         not be redeemed in part and the Partnership may not purchase or acquire
         Series B Preferred Units, otherwise than pursuant to a purchase or
         exchange offer made on the same terms to all holders of Series B
         Preferred Units.

                  (d) If the Partnership shall redeem Series B Preferred Units
         pursuant to this Section 3.4, notice of such redemption shall be given
         to the holders of the Series B Preferred Units called for redemption as
         soon as practicable after notice of redemption of the Series B
         Preferred Stock is given by the General Partner.

                  From and after the Call Date (unless the Partnership shall
         fail to make available the amount of cash necessary to effect such
         redemption), (i) except as otherwise provided herein, distributions on
         the Series B Preferred Units so called for redemption shall cease to
         accrue, (ii) such units shall no longer be deemed to be outstanding,
         and (iii) all rights of the holders thereof as holders of Series B
         Preferred Units shall cease (except the rights to receive the cash
         payable upon such redemption, without interest thereon, upon surrender
         and endorsement of their certificates).

                  As promptly as practicable after the surrender in accordance
         with such notice of the certificates for any such units so redeemed
         (properly endorsed or assigned for transfer, if the Partnership shall
         so require and if the notice shall so state), such units shall be
         exchanged for cash (without interest thereon) for which such units have
         been redeemed. If fewer than all the outstanding Series B Preferred
         Units are to be redeemed, units to be redeemed shall be selected by the
         Partnership from outstanding Series B Preferred Units not previously
         called for redemption by lot or pro rata (as nearly as may be) or by
         any other method determined by the Partnership in its sole discretion
         to be equitable. If fewer than all the Series B Preferred Units
         represented by any certificate are redeemed, then new certificates
         representing the unredeemed units shall be issued without cost to the
         holder thereof.

                                       4
<PAGE>

                  3.5 Conversion. Holders of Series B Preferred Units shall have
         no conversion rights.

                  3.6 Ranking. Any class or series of units of the Partnership
         shall be deemed to rank:

                  (a) prior to the Series B Preferred Units, as to the payment
         of distributions and as to distribution of assets upon liquidation,
         dissolution or winding up, if the holders of such class or series shall
         be entitled to the receipt of distributions or of amounts distributable
         upon liquidation, dissolution or winding up, as the case may be, in
         preference or priority to the holders of Series B Preferred Units;

                  (b) on a parity with the Series B Preferred Units, as to the
         payment of distributions and as to distribution of assets upon
         liquidation, dissolution or winding up, whether or not the distribution
         rates, distribution payment dates or redemption or liquidation prices
         per unit thereof be different from those of the Series B Preferred
         Units, if the holders of such class of units or series and the Series B
         Preferred Units shall be entitled to the receipt of distributions and
         of amounts distributable upon liquidation, dissolution or winding up in
         proportion to their respective amounts of accrued and unpaid
         distributions per unit or liquidation preferences, without preference
         or priority one over the other ("Parity Units"); the Series A
         Cumulative Convertible Preferred Units shall be Parity Units with
         respect to the Series B Preferred Units; and

                  (c) junior to the Series B Preferred Units, as to the payment
         of distributions or as to the distribution of assets upon liquidation,
         dissolution or winding up, if such units or series shall be Common
         Units or if the holders of the Series B Preferred Units shall be
         entitled to receipt of distributions or of amounts distributable upon
         liquidation, dissolution or winding up, as the case may be, in
         preference or priority to the holders of such units or series ("Junior
         Units").

                  3.7 Record Holders. The Partnership may deem and treat the
         record holder of any Series B Preferred Units as the true and lawful
         owner thereof for all purposes, and the Partnership shall not be
         affected by any notice to the contrary.

                                       5

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