Document:

<PAGE>   1
                                                                    EXHIBIT 10.1

                            364-DAY CREDIT AGREEMENT

                                      among

                         DUKE ENERGY FIELD SERVICES, LLC
                                       and
                     DUKE ENERGY FIELD SERVICES CORPORATION
                                  as Borrowers,

                          THE LENDERS IDENTIFIED HEREIN

                                       AND

                             BANK OF AMERICA, N.A.,
                                    as Agent,

                            THE CHASE MANHATTAN BANK
                                       and
                                 SUNTRUST BANK,
                            As Co-Syndication Agents

                                       AND

                                  BANK ONE, NA
                                       and
                            THE BANK OF NOVA SCOTIA,
                           As Co-Documentation Agents

                           DATED AS OF MARCH 30, 2001

                                  Arranged by:

                         BANC OF AMERICA SECURITIES LLC,
                   as Sole Lead Arranger and Sole Book Manager

<PAGE>   2

                                TABLE OF CONTENTS

<Table>
<S>                                                                                                              <C>
SECTION 1.  DEFINITIONS AND ACCOUNTING TERMS......................................................................1
         1.1      Definitions.....................................................................................1
         1.2      Computation of Time Periods....................................................................12
         1.3      Accounting Terms...............................................................................13
         1.4      Time...........................................................................................13

SECTION 2.  LOANS................................................................................................13
         2.1      Revolving Committed Amount.....................................................................13
         2.2      Letter of Credit Subfacility...................................................................13
         2.3      Method of Borrowing for Loans..................................................................19
         2.4      Funding of Loans...............................................................................19
         2.5      Continuations and Conversions..................................................................20
         2.6      Minimum Amounts................................................................................20
         2.7      Reductions of Revolving Committed Amounts......................................................20
         2.8      Notes..........................................................................................21
         2.9      Joint and Several Liability of the Borrowers...................................................21
         2.10     Limitation of Liability of Borrowers...........................................................22

SECTION 3.  PAYMENTS.............................................................................................23
         3.1      Interest.......................................................................................23
         3.2      Prepayments....................................................................................24
         3.3      Payment in full at Maturity....................................................................24
         3.4      Fees...........................................................................................25
         3.5      Place and Manner of Payments...................................................................26
         3.6      Pro Rata Treatment.............................................................................26
         3.7      Computations of Interest and Fees..............................................................27
         3.8      Sharing of Payments............................................................................28
         3.9      Evidence of Debt...............................................................................28

SECTION 4.  ADDITIONAL PROVISIONS REGARDING LOANS................................................................29
         4.1      Eurodollar Loan Provisions.....................................................................29
         4.2      Capital Adequacy...............................................................................31
         4.3      Compensation...................................................................................32
         4.4      Taxes..........................................................................................32
         4.5      Replacement of Lenders.........................................................................34

SECTION 5.  CONDITIONS PRECEDENT.................................................................................35
         5.1      Closing Conditions.............................................................................35
         5.2      Conditions to Loans............................................................................38

SECTION 6.  REPRESENTATIONS AND WARRANTIES.......................................................................38
         6.1      Organization and Good Standing.................................................................38
         6.2      Due Authorization..............................................................................39
         6.3      No Conflicts...................................................................................39
         6.4      Consents.......................................................................................39
</Table>

                                       i
<PAGE>   3

<Table>
<S>                                                                                                             <C>
         6.5      Enforceable Obligations........................................................................39
         6.6      Financial Condition............................................................................39
         6.7      Taxes..........................................................................................40
         6.8      Compliance with Law............................................................................40
         6.9      Use of Proceeds; Margin Stock..................................................................40
         6.10     Government Regulation..........................................................................40
         6.11     Solvency.......................................................................................40
         6.12     Environmental Matters..........................................................................41
         6.13     Subsidiaries...................................................................................41
         6.14     Litigation.....................................................................................41

SECTION 7.  AFFIRMATIVE COVENANTS................................................................................41
         7.1      Information Covenants..........................................................................41
         7.2      Preservation of Existence and Franchises.......................................................43
         7.3      Books and Records..............................................................................44
         7.4      Compliance with Law............................................................................44
         7.5      Payment of Taxes and Other Indebtedness........................................................44
         7.6      Maintenance of Property; Insurance.............................................................44
         7.7      Use of Proceeds................................................................................45
         7.8      Audits/Inspections.............................................................................45
         7.9      Maintenance of Ownership.......................................................................45
         7.10     Debt to Capitalization Ratio...................................................................45

SECTION 8.  NEGATIVE COVENANTS...................................................................................46
         8.1      Nature of Business.............................................................................46
         8.2      Liens..........................................................................................46
         8.3      Consolidation and Merger.......................................................................48
         8.4      Sale or Lease of Assets........................................................................48
         8.5      Transactions with Affiliates...................................................................48
         8.6      Indebtedness...................................................................................49

SECTION 9.  EVENTS OF DEFAULT....................................................................................49
         9.1      Events of Default..............................................................................49
         9.2      Acceleration; Remedies.........................................................................51
         9.3      Allocation of Payments After Event of Default..................................................52

SECTION 10  AGENCY PROVISIONS....................................................................................53
         10.1     Appointment....................................................................................53
         10.2     Delegation of Duties...........................................................................54
         10.3     Exculpatory Provisions.........................................................................54
         10.4     Reliance on Communications.....................................................................54
         10.5     Notice of Default..............................................................................55
         10.6     Non-Reliance on Agent and Other Lenders........................................................55
         10.7     Indemnification................................................................................55
         10.8     Agent in Its Individual Capacity...............................................................56
         10.9     Successor Agent................................................................................56
</Table>

                                       ii

<PAGE>   4

<Table>
<S>                                                                                                             <C>
SECTION 11.  MISCELLANEOUS.......................................................................................57
         11.1     Notices........................................................................................57
         11.2     Right of Set-Off...............................................................................57
         11.3     Benefit of Agreement...........................................................................57
         11.4     No Waiver; Remedies Cumulative.................................................................60
         11.5     Payment of Expenses, etc.......................................................................60
         11.6     Amendments, Waivers and Consents...............................................................61
         11.7     Counterparts/Telecopy..........................................................................62
         11.8     Headings.......................................................................................62
         11.9     Defaulting Lender..............................................................................62
         11.10    Survival of Indemnification and Representations and Warranties.................................62
         11.11    Governing Law; Venue...........................................................................62
         11.12    Waiver of Jury Trial; Waiver of Consequential Damages..........................................63
         11.13    Severability...................................................................................63
         11.14    Further Assurances.............................................................................64
         11.15    Entirety.......................................................................................64
         11.16    Binding Effect; Continuing Agreement...........................................................64
</Table>

SCHEDULES

Schedule 1.1      Commitment Percentages
Schedule 2.2      Existing Letter of Credit
Schedule 6.13     Material Subsidiaries
Schedule 8.2      Liens
Schedule 11.1     Notices

EXHIBITS

Exhibit 2.3       Form of Notice of Borrowing
Exhibit 2.5       Form of Notice of Continuation/Conversion
Exhibit 2.8       Form of Note
Exhibit 7.1(c)    Form of Officer's Certificate
Exhibit 11.3(b)   Form of Assignment Agreement

                                      iii

<PAGE>   5

                            364-DAY CREDIT AGREEMENT

         THIS 364-DAY CREDIT AGREEMENT (this "Credit Agreement"), dated as of
March 30, 2001, is entered into among DUKE ENERGY FIELD SERVICES, LLC, a
Delaware limited liability company and DUKE ENERGY FIELD SERVICES CORPORATION, a
Delaware corporation (individually, a "Borrower" and collectively, the
"Borrowers"), the Lenders (as defined herein) and BANK OF AMERICA, N.A., as
administrative agent for the Lenders (in such capacity, the "Agent").

                                    RECITALS

         WHEREAS, the Borrowers have requested that the Lenders make available
to them a revolving credit facility in the aggregate amount of $675 million for
the purposes set forth herein; and

         WHEREAS, the Lenders have agreed to provide the requested revolving
credit facility to the Borrowers on the terms, and subject to the conditions,
set forth herein.

         NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

                                   SECTION 1.

                        DEFINITIONS AND ACCOUNTING TERMS

         1.1 DEFINITIONS.

         As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:

                  "Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
         Applicable Margin.

                  "Affiliate" means, with respect to any Person, any other
         Person directly or indirectly controlling, controlled by or under
         direct or indirect common control with such Person. A Person shall be
         deemed to control a corporation if such Person possesses, directly or
         indirectly, the power to direct or cause direction of the management
         and policies of such corporation, whether through the ownership of
         voting securities, by contract or otherwise.

                  "Agency Services Address" means Bank of America, N.A., 901
         Main Street, 14th Floor, Dallas, Texas 75202, or such other address as
         may be identified by written notice from the Agent to the Borrowers and
         the Lenders.

<PAGE>   6

                  "Agent" means Bank of America, N.A. and any successors and
         assigns in such capacity.

                  "Applicable Margin" means, at any time, the rate per annum set
         forth in the table below opposite the Debt Rating of the Borrower:

<Table>
<Caption>
                                                                                                    Applicable Margin
                                                              Applicable      Applicable Margin       for Eurodollar
                   Borrower's     Applicable Margin for       Margin for     for Eurodollar Loans      Loans during
 Pricing Level    Debt Rating        Commitment Fees       Utilization Fees   prior to Maturity      term-out period
----------------- ------------- -------------------------- ----------------- --------------------- ---------------------
<S>               <C>           <C>                        <C>               <C>                   <C>
       I            > A-/A3               .100%                 .125%               .500%                 .875%
                    -
----------------- ------------- -------------------------- ----------------- --------------------- ---------------------
       II          BBB+/Baa1              .125%                 .125%               .625%                 1.000%
----------------- ------------- -------------------------- ----------------- --------------------- ---------------------
      III           BBB/Baa2              .150%                 .125%               .750%                 1.125%
----------------- ------------- -------------------------- ----------------- --------------------- ---------------------
       IV          BBB-/Baa3              .200%                 .250%               1.000%                1.500%
----------------- ------------- -------------------------- ----------------- --------------------- ---------------------
       V           < BB+/Ba1              .300%                 .250%               1.250%                1.750%
                   -
----------------- ------------- -------------------------- ----------------- --------------------- ---------------------
</Table>

                  Notwithstanding the above, if at any time there is a split in
         Debt Ratings between S&P and Moody's, (a) in the event of a single
         level split, the higher Debt Rating (i.e. the lower pricing) will apply
         and (b) in the event of a multiple level split, one level below the
         higher Debt Rating will apply.

                  The Applicable Margin for Eurodollar Loans, the Commitment
         Fees and the Utilization Fees shall, in each case, be determined and
         adjusted on the date (each a "Calculation Date") five Business Days
         after the date there is a change in the Borrower's Debt Rating. Each
         determination of the Applicable Margin shall be effective from one
         Calculation Date until the next Calculation Date. Any adjustment in the
         Applicable Margin shall be applicable to all existing Eurodollar Loans
         and Letters of Credit as well as any new Eurodollar Loans made or
         Letters of Credit issued.

                  The Borrower shall promptly deliver to the Agent, at the
         address set forth on Schedule 11.1 and at the Agency Services Address,
         information regarding any change in the Borrower's Debt Rating that
         would change the existing Pricing Level pursuant to the preceding
         paragraph.

                  "Approved Officer" means the president, a vice president, the
         treasurer or the assistant treasurer of the Borrowers or such other
         representative of the Borrowers as may be designated by any one of the
         foregoing with consent of the Agent.

                  "Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
         United States Code, as amended, modified, succeeded or replaced from
         time to time.

                  "Base Rate" means, for any day, the rate per annum equal to
         the greater of (a) the Federal Funds Rate in effect on such day plus
         1/2 of 1% or (b) the Prime Rate in effect on such day. If for any
         reason the Agent shall have determined (which determination shall be
         conclusive absent manifest error) that it is unable after due inquiry
         to ascertain the

                                       2
<PAGE>   7

         Federal Funds Rate for any reason, including the inability or failure
         of the Agent to obtain sufficient quotations in accordance with the
         terms hereof, the Base Rate shall be determined without regard to
         clause (a) of the first sentence of this definition until the
         circumstances giving rise to such inability no longer exist. Any change
         in the Base Rate due to a change in the Prime Rate or the Federal Funds
         Rate shall be effective on the effective date of such change in the
         Prime Rate or the Federal Funds Rate, respectively.

                  "Base Rate Loan" means a Loan which bears interest based on
         the Base Rate.

                  "Borrowers" means, subject to Section 2.10, Duke Energy Field
         Services, LLC, a Delaware limited liability company and Duke Energy
         Field Services Corporation, a Delaware corporation and "Borrower" means
         either of them.

                  "Borrowers Obligations" means, without duplication, all of the
         obligations of the Borrowers to the Lenders and the Agent, whenever
         arising, under this Credit Agreement, the Notes, the LOC Documents or
         any of the other Credit Documents.

                  "Business Day" means any day other than a Saturday, a Sunday,
         a legal holiday or a day on which banking institutions are authorized
         or required by law or other governmental action to close in Dallas,
         Texas or New York, New York; provided that in the case of Eurodollar
         Loans, such day is also a day on which dealings between banks are
         carried on in U.S. dollar deposits in the London interbank market.

                  "Capital Stock" means (a) in the case of a corporation, all
         classes of capital stock of such corporation, (b) in the case of a
         partnership, partnership interests (whether general or limited), (c) in
         the case of a limited liability company, membership interests and (d)
         any other interest or participation that confers on a Person the right
         to receive a share of the profits and losses of, or distributions of
         assets of, the issuing Person.

                  "Change of Control" means that, as of any date, any "person"
         or "group" (within the meaning of section 13(d) or 14(d) of the
         Exchange Act) other than Duke Energy Corporation or Phillips Petroleum
         Company, or their respective Subsidiaries, has become, directly or
         indirectly, the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
         of the Exchange Act), by way of merger, consolidation or otherwise of
         30% or more of the Voting Stock on a fully-diluted basis, after giving
         effect to the conversion and exercise of all outstanding warrants,
         options and other securities of the Borrower convertible into or
         exercisable for Voting Stock of the Borrower (whether or not such
         securities are then currently convertible or exercisable).

                  "Closing Date" means the date hereof.

                  "Code" means the Internal Revenue Code of 1986, as amended
         from time to time.

                                       3
<PAGE>   8

                  "Commitment" means the commitment of each Lender with respect
         to the Revolving Committed Amount and "Commitments" means,
         collectively, all such commitments of the Lenders.

                  "Commitment Fees" has the meaning specified in Section 3.4(a).

                  "Commitment Percentage" means, for each Lender, the percentage
         identified as its Commitment Percentage opposite such Lender's name on
         Schedule 1.1, as such percentage may be modified by assignment in
         accordance with the terms of this Credit Agreement.

                  "Consolidated Capitalization" means, without duplication, the
         sum of (a) all of the shareholders' equity or net worth of the
         Borrowers and their Subsidiaries on a consolidated basis in accordance
         with GAAP (other than, if applicable, equity or net worth of TEPPCO
         Partners, L.P.) plus (b) Consolidated Indebtedness.

                  "Consolidated Indebtedness" means, without duplication, all
         Indebtedness of the Borrowers and their Subsidiaries on a consolidated
         basis, other than (a) the amount of Off Balance Sheet Indebtedness of
         the Borrower and its Subsidiaries which, in the aggregate, constitutes
         less than 25% of the total Indebtedness of the Borrowers and their
         Subsidiaries and (b) Indebtedness, if applicable, of TEPPCO Partners,
         L.P.

                  "Corporate Conversion" means (a) the conversion of Duke Energy
         Field Services, LLC from a limited liability company to a "C"
         corporation or (b) the merger of Duke Field Services LLC with and into
         Duke Energy Field Services Corporation.

                  "Credit Documents" means this Credit Agreement, the Notes, the
         LOC Documents, any Notice of Borrowing, any Notice of
         Continuation/Conversion and all other related agreements and documents
         issued or delivered hereunder or thereunder or pursuant hereto or
         thereto.

                  "Credit Exposure" means, as applied to each Lender (a) at any
         time prior to the termination of the Commitments, the Commitment
         Percentage of such Lender multiplied by the Revolving Committed Amount
         and (b) at any time after the termination of the Commitments, the sum
         of (i) the principal balance of the outstanding Loans of such Lender
         plus (ii) such Lender's Participation Interest in the face amount of
         outstanding Letters of Credit.

                  "Debt Rating" means the long-term senior unsecured, non-credit
         enhanced debt rating of the Borrower by S&P and Moody's.

                  "Debt to Capitalization Ratio" means, the ratio of (a)
         Consolidated Indebtedness to (b) Consolidated Capitalization.

                  "Default" means any event, act or condition which with notice
         or lapse of time, or both, would constitute an Event of Default.

                                       4
<PAGE>   9

                  "Defaulting Lender" means, at any time, any Lender that, at
         such time (a) has failed to make a Loan required pursuant to the term
         of this Credit Agreement, (b) has failed to pay to the Agent or any
         Lender an amount owed by such Lender pursuant to the terms of this
         Credit Agreement or (c) has been deemed insolvent by a court of
         competent jurisdiction or has become subject to a bankruptcy or
         insolvency proceeding or to a receiver, trustee or similar official.

                  "Dollars" and "$" means dollars in lawful currency of the
         United States of America.

                  "Effective Date" means the date on which the conditions set
         forth in Section 5.1 shall have been fulfilled (or waived in the sole
         discretion of the Lenders).

                  "Eligible Assignee" means (a) a Lender and (b) any other
         Person approved by (i) the Borrowers in their sole discretion and (ii)
         the Agent (such approval not to be unreasonably withheld or delayed);
         provided that (A) the Borrowers' consent is not required during the
         existence and continuation of an Event of Default and (B) neither a
         Borrower nor an Affiliate of a Borrower shall qualify as an Eligible
         Assignee.

                  "Environmental Laws" means any legal requirement of any
         Governmental Authority pertaining to (a) the protection of health,
         safety, and the indoor or outdoor environment, (b) the conservation,
         management, or use of natural resources and wildlife, (c) the
         protection or use of surface water and groundwater or (d) the
         management, manufacture, possession, presence, use, generation,
         transportation, treatment, storage, disposal, release, threatened
         release, abatement, removal, remediation or handling of, or exposure
         to, any hazardous or toxic substance or material or (e) pollution
         (including any release to land surface water and groundwater) and
         includes, without limitation, the Comprehensive Environmental Response,
         Compensation, and Liability Act of 1980, as amended by the Superfund
         Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid
         Waste Disposal Act, as amended by the Resource Conservation and
         Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984,
         42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by
         the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act, as
         amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15
         USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC App.
         1801 et seq., Occupational Safety and Health Act of 1970, as amended,
         29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq.,
         Emergency Planning and Community Right-to-Know Act of 1986, 42 USC
         11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321
         et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et
         seq., any analogous implementing or successor law, and any amendment,
         rule, regulation, order, or directive issued thereunder.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended, and any successor statute thereto, as interpreted by
         the rules and regulations thereunder, all as the same may be in effect
         from time to time. References to sections of ERISA shall be construed
         also to refer to any successor sections.

                                       5
<PAGE>   10

                  "ERISA Affiliate" means an entity, whether or not
         incorporated, which is under common control with a Borrower or any of
         its Subsidiaries within the meaning of Section 4001(a)(14) of ERISA, or
         is a member of a group which includes a Borrower or any of its
         Subsidiaries and which is treated as a single employer under Sections
         414(b), (c), (m), or (o) of the Code.

                  "Eurodollar Loan" means a Loan bearing interest at the
         Adjusted Eurodollar Rate.

                  "Eurodollar Rate" means with respect to any Eurodollar Loan,
         for the Interest Period applicable thereto, a rate per annum equal to
         the London Interbank Offered Rate.

                  "Eurodollar Reserve Percentage" means, for any day, that
         percentage (expressed as a decimal) which is in effect from time to
         time under Regulation D as the maximum reserve requirement (including,
         without limitation, any basic, supplemental, emergency, special, or
         marginal reserves) applicable with respect to Eurocurrency liabilities,
         as that term is defined in Regulation D (or against any other category
         of liabilities that includes deposits by reference to which the
         interest rate of Eurodollar Loans is determined).

                  "Event of Default" has the meaning specified in Section 9.1.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended, and the rules and regulations promulgated thereunder, as
         amended, modified, succeeded or replaced from time to time.

                  "Existing Credit Facility" means the credit facility evidenced
         by that certain 364-Day Credit Agreement, dated as of March 31, 2000,
         among the Borrowers, the lenders party thereto and Bank of America,
         N.A., as administrative agent and all documents and instruments entered
         into in connection therewith.

                  "Existing Letter of Credit" means the Letter of Credit
         described by date, issuance, letter of credit number, undrawn amount,
         name of beneficiary and expiry date set forth on Schedule 2.2.

                  "Extension of Credit" means, as to any Lender, the making of a
         Loan by such Lender (or a participation therein by a Lender) or the
         issuance of, or participation in, a Letter of Credit by such Lender.

                  "Fee Letter" means that certain letter agreement, dated as of
         February 13, 2001, between the Agent and the Borrower, as amended,
         modified, supplemented or replaced from time to time.

                  "Federal Funds Rate" means for any day the rate per annum
         (rounded upward to the nearest 1/100th of 1%) equal to the weighted
         average of the rates on overnight Federal funds transactions with
         members of the Federal Reserve System arranged by Federal funds

                                       6
<PAGE>   11

         brokers on such day, as published by the Federal Reserve Bank of New
         York on the Business Day next succeeding such day; provided that (a) if
         such day is not a Business Day, the Federal Funds Rate for such day
         shall be such rate on such transactions on the next preceding Business
         Day and (b) if no such rate is so published on such next succeeding
         Business Day, the Federal Funds Rate for such day shall be the average
         rate quoted to the Agent on such day on such transactions as determined
         by the Agent.

                  "GAAP" means generally accepted accounting principles in the
         United States applied on a consistent basis and subject to Section 1.3.

                  "Governmental Authority" means any Federal, state, local or
         foreign court, monetary authority or governmental agency, authority,
         instrumentality or regulatory body.

                  "Indebtedness" of any Person means, without duplication, (a)
         all obligations of such Person for borrowed money, (b) all obligations
         of such Person for the deferred purchase price of property or services
         purchased, (c) all obligations of such Person created or arising under
         any conditional sale or other title retention agreement with respect to
         the property acquired, (d) all obligations of such Person under lease
         obligations which shall have been, or should be, in accordance with
         GAAP, recorded as capital leases in respect of which such Person is
         liable as lessee, (e) the face amount of all letter of credit
         indebtedness available to be drawn (other than letter of credit
         obligations relating to indebtedness included in Indebtedness pursuant
         to another clause of this definition) and, without duplication, the
         unreimbursed amount of all drafts drawn thereunder, (f) obligations
         secured by a Lien on property or assets of such Person, whether or not
         assumed (but in any event not exceeding the fair market value of the
         property or asset), (g) all guarantees of Indebtedness referred to in
         clauses (a) through (f) above, (h) all amounts payable by such Person
         in connection with mandatory redemptions or repurchases of preferred
         stock, (i) any obligations of such Person (in the nature of principal
         or interest) in respect of acceptances or similar obligations issued or
         created for the account of such Person and (j) all Off Balance Sheet
         Indebtedness of such Person.

                  "Interest Payment Date" means (a) as to Base Rate Loans, the
         first day of each fiscal quarter of the Borrowers, the Maturity Date
         and the Term Out Maturity Date, if applicable, and (b) as to Eurodollar
         Loans, the last day of each applicable Interest Period, the Maturity
         Date and the Term Out Maturity Date, if applicable, and, in addition,
         where the applicable Interest Period for a Eurodollar Loan is greater
         than three months, then also on the last day of each three-month period
         during such Interest Period. If an Interest Payment Date falls on a
         date which is not a Business Day, such Interest Payment Date shall be
         deemed to be the next succeeding Business Day, except that in the case
         of Eurodollar Loans where the next succeeding Business Day falls in the
         next succeeding calendar month, then on the next preceding Business
         Day.

                  "Interest Period" means, with respect to Eurodollar Loans, a
         period of one, two, three or six months' duration, as the Borrowers may
         elect, commencing, in each case, on the date of the borrowing
         (including continuations and conversions of Eurodollar Loans);

                                       7
<PAGE>   12

         provided, however, (a) if any Interest Period would end on a day which
         is not a Business Day, such Interest Period shall be extended to the
         next succeeding Business Day (except that where the next succeeding
         Business Day falls in the next succeeding calendar month, then on the
         next preceding Business Day), (b) no Interest Period shall extend
         beyond the Maturity Date (or, if the Borrower chooses to term out the
         then existing Loans pursuant to Section 3.3(b), the Term Out Maturity
         Date) and (c) where an Interest Period begins on a day for which there
         is no numerically corresponding day in the calendar month in which the
         Interest Period is to end, such Interest Period shall end on the last
         Business Day of such calendar month.

                  "Issuing Lender" means Bank of America, N.A.

                  "Issuing Lender Fees" has the meaning set forth in Section
         3.4(c)(ii).

                  "Letter of Credit" means a Letter of Credit issued for the
         account of the Borrowers or one of their Subsidiaries by the Issuing
         Lender pursuant to Section 2.2, as such Letter of Credit may be
         amended, modified, extended, renewed or replaced.

                  "Letter of Credit Fees" shall have the meaning assigned to
         such term in Section 3.4(c)(i).

                  "Lender" means any Person identified as a Lender on the
         signature pages hereto and any Eligible Assignee which may become a
         Lender by way of assignment in accordance with the terms hereof,
         together with their successors or permitted assigns.

                  "Lien" means any mortgage, pledge, hypothecation, assignment,
         deposit arrangement, security interest, encumbrance, lien (statutory or
         otherwise), preference, priority or charge of any kind (including any
         agreement to give any of the foregoing, any conditional sale or other
         title retention agreement, any financing or similar statement or notice
         filed under the Uniform Commercial Code as adopted and in effect in the
         relevant jurisdiction or other similar recording or notice statute, and
         any lease in the nature thereof).

                  "Loans" means the loans made by the Lenders to the Borrowers
         pursuant to Section 2.1.

                  "LOC Committed Amount" means ONE HUNDRED AND FIFTY MILLION
         DOLLARS ($150,000,000).

                  "LOC Documents" means, with respect to any Letter of Credit,
         such Letter of Credit, any amendments thereto, any documents delivered
         in connection therewith, any application therefor, and any agreements,
         instruments, guarantees or other documents (whether general in
         application or applicable only to such Letter of Credit) governing or
         providing for (a) the rights and obligations of the parties concerned
         or at risk or (b) any collateral security for such obligations.

                                       8
<PAGE>   13

                  "LOC Obligations" means, at any time, the sum of (a) the
         maximum amount which is then available to be drawn under Letters of
         Credit then outstanding, assuming compliance with all requirements for
         drawings referred to in such Letters of Credit plus (b) the aggregate
         amount of all drawings under Letters of Credit honored by the Issuing
         Lender but not theretofore reimbursed.

                  "London Interbank Offered Rate" means, with respect to any
         Eurodollar Loan for the Interest Period applicable thereto, the rate of
         interest per annum appearing on Telerate Page 3750 (or any successor
         page) as the London interbank offered rate for deposits in Dollars at
         approximately 11:00 A.M. (London time) two Business Days prior to the
         first day of such Interest Period for a term comparable to such
         Interest Period; provided, however, if more than one rate is specified
         on Telerate Page 3750, the applicable rate shall be the arithmetic mean
         of all such rates. If, for any reason, such rate is not available, the
         term "London Interbank Offered Rate" shall mean, with respect to any
         Eurodollar Loan for the Interest Period applicable thereto, the rate of
         interest per annum appearing on such other service as may be nominated
         by the British Bankers' Association as the London interbank offered
         rate for deposits in Dollars at approximately 11:00 A.M. (London time)
         two Business Days prior to the first day of such Interest Period for a
         term comparable to such Interest Period; provided, however, if more
         than one rate is specified, the applicable rate shall be the arithmetic
         mean of all such rates.

                  "Material Adverse Effect" means a material adverse effect on
         the business, financial positions or results of operations of the
         Borrowers and their Subsidiaries taken as a whole.

                  "Material Subsidiary" means any Subsidiary of the Borrowers
         that, together with its Subsidiaries, owns in excess of 10% of the
         consolidated assets of the Borrowers and their Subsidiaries.

                  "Maturity Date" means March 29, 2002.

                  "Merger" means the following transaction: (a) the merger of
         Phillips Gas Company Shareholder, Inc., a Subsidiary of Phillips
         Petroleum Company and the parent of Phillips Gas Company, with and into
         Duke Energy Field Services Corporation and (b) the subsequent merger of
         Phillips Gas Company with and into Duke Energy Field Services
         Corporation.

                  "Multiemployer Plan" means a Plan covered by Title IV of ERISA
         which is a multiemployer plan as defined in Section 3(37) or 4001(a)(3)
         of ERISA.

                  "Multiple Employer Plan" means a Plan covered by Title IV of
         ERISA, other than a Multiemployer Plan, which a Borrower or any ERISA
         Affiliate and at least one employer other than a Borrower or any ERISA
         Affiliate are contributing sponsors.

                  "Notes" means the promissory notes of the Borrowers in favor
         of each of the Lenders evidencing the Loans provided pursuant to
         Section 2.1, individually or collectively,

                                       9
<PAGE>   14

         as appropriate, as such notes may be amended or modified from time to
         time and substantially in the form of Exhibit 2.8.

                  "Notice of Borrowing" means a request by the Borrowers for a
         Loan in the form of Exhibit 2.3.

                  "Notice of Continuation/Conversion" means a request by the
         Borrowers for the continuation or conversion of a Loan in the form of
         Exhibit 2.5.

                  "Off Balance Sheet Indebtedness" means any obligation of a
         Person that would be considered indebtedness for tax purposes but is
         not set forth on the balance sheet of such Person, including, but not
         limited to, (a) any synthetic lease, tax retention operating lease, off
         balance sheet loan or similar off-balance sheet financing product of
         such Person, (b) the aggregate amount of uncollected accounts
         receivables of such Person subject at such time to a sale of
         receivables (or similar transaction) and (c) obligations of any
         partnership or joint venture that is recourse to such Person.

                  "Participation Interest" means the Extension of Credit by a
         Lender by way of a purchase of a participation in Letters of Credit or
         LOC Obligations as provided in Section 2.2 or in any Loans as provided
         in Section 3.8.

                  "PBGC" means the Pension Benefit Guaranty Corporation
         established pursuant to Subtitle A of Title IV of ERISA and any
         successor thereto.

                  "Person" means any individual, partnership, joint venture,
         firm, corporation, association, trust, limited liability company or
         other enterprise (whether or not incorporated), or any government or
         political subdivision or any agency, department or instrumentality
         thereof.

                  "Plan" means any employee pension benefit plan (as defined in
         Section 3(2) of ERISA) which is covered by ERISA and with respect to
         which a Borrower or any ERISA Affiliate is (or, if such plan were
         terminated at such time, would under Section 4069 of ERISA be deemed to
         be) an "employer" within the meaning of Section 3(5) of ERISA.

                  "Prime Rate" means the per annum rate of interest established
         from time to time by the Agent at its principal office in Charlotte,
         North Carolina (or such other principal office as communicated by the
         Agent to the Borrowers and the Lenders) as its Prime Rate. Any change
         in the interest rate resulting from a change in the Prime Rate shall
         become effective as of 12:01 a.m. of the Business Day on which each
         change in the Prime Rate is announced by the Agent. The Prime Rate is a
         reference rate used by the Agent in determining interest rates on
         certain loans and is not intended to be the lowest rate of interest
         charged on any extension of credit to any debtor.

                  "Register" has the meaning set forth in Section 11.3(c).

                                       10
<PAGE>   15

                  "Regulation A, D, T, U, or X" means Regulation A, D, T, U or
         X, respectively, of the Board of Governors of the Federal Reserve
         System as from time to time in effect and any successor to all or a
         portion thereof.

                  "Reportable Event" means a "reportable event" as defined in
         Section 4043 of ERISA with respect to which the notice requirements to
         the PBGC have not been waived.

                  "Required Lenders" means Lenders whose aggregate Credit
         Exposure (as hereinafter defined) constitutes more than 50% of the
         aggregate Credit Exposure of all Lenders at such time; provided,
         however, that if any Lender shall be a Defaulting Lender at such time
         then there shall be excluded from the determination of Required Lenders
         the aggregate principal amount of Credit Exposure of such Lender at
         such time.

                  "Responsible Officer" means President/Chief Executive Officer,
         Chief Financial Officer or Treasurer.

                  "Revolving Committed Amount" means SIX HUNDRED AND SEVENTY
         FIVE MILLION Dollars ($675,000,000) as such amount may be otherwise
         reduced in accordance with Section 2.7.

                  "Single Employer Plan" means any Plan which is covered by
         Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
         Employer Plan.

                  "Solvent" means, with respect to any Person as of a particular
         date, that on such date (a) such Person is able to pay its debts and
         other liabilities, contingent obligations and other commitments as they
         mature in the normal course of business, (b) 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 in their ordinary course, (c) such Person is not
         engaged in a business or a transaction, and is not about to engage in a
         business or a transaction, for which such Person's assets would
         constitute unreasonably small capital after giving due consideration to
         the prevailing practice in the industry in which such Person is engaged
         or is to engage, (d) the fair value of the assets of such Person is
         greater than the total amount of liabilities, including, without
         limitation, contingent liabilities, of such Person and (e) the present
         fair saleable value of the assets of such Person is not less than the
         amount that will be required to pay the probable liability of such
         Person on its debts as they become absolute and matured. In computing
         the amount of contingent liabilities at any time, it is intended that
         such liabilities will be computed as the amount which, in light of all
         the facts and circumstances existing at such time, represents the
         amount that can reasonably be expected to become an actual or matured
         liability.

                  "Subsidiary" means, as to any Person, (a) any corporation more
         than 50% of whose stock of any class or classes having by the terms
         thereof ordinary voting power to elect a majority of the directors of
         such corporation (irrespective of whether or not at the time, any class
         or classes of such corporation shall have or might have voting power by
         reason of the happening of any contingency) is at the time owned by
         such Person directly or indirectly

                                       11
<PAGE>   16

         through Subsidiaries and (b) any partnership, association, joint
         venture, limited liability company or other entity in which such person
         directly or indirectly through Subsidiaries has more than 50% equity
         interest at any time.

                  "Termination Event" means (a) with respect to any Single
         Employer Plan, the occurrence of a Reportable Event or the substantial
         cessation of operations (within the meaning of Section 4062(e) of
         ERISA), (b) the withdrawal of a Borrower or any ERISA Affiliate from a
         Multiple Employer Plan during a plan year in which it was a substantial
         employer (as such term is defined in Section 4001(a)(2) of ERISA), or
         the termination of a Multiple Employer Plan, (c) the distribution of a
         notice of intent to terminate or the actual termination of a Plan
         pursuant to Section 4041(a)(2) or 4041A of ERISA, (d) the institution
         of proceedings to terminate or the actual termination of a Plan by the
         PBGC under Section 4042 of ERISA, (e) any event or condition which
         might reasonably constitute grounds under Section 4042 of ERISA for the
         termination of, or the appointment of a trustee to administer, any
         Plan, or (f) the complete or partial withdrawal of a Borrower or any
         ERISA Affiliate from a Multiemployer Plan.

                  "Term Out Maturity Date" has the meaning set forth in Section
         3.3(b).

                  "Unused Commitment" means, for any period from the Closing
         Date to the Maturity Date, the amount by which (a) the Revolving
         Committed Amount exceeds (b) the daily average sum for such period of
         the outstanding principal amount of all Loans plus the aggregate amount
         of outstanding LOC Obligations.

                  "Utilization Fees" has the meaning specified in Section
         3.4(b).

                  "Utilized Revolving Committed Amount" means, for any period
         from the Closing Date to the Maturity Date or the Term Out Maturity
         Date, if applicable, the amount equal to the daily average sum for such
         period of the outstanding aggregate principal amount of all Loans plus
         the aggregate amount of outstanding LOC Obligations.

                  "Voting Stock" means all classes of the Capital Stock (or
         other voting interests) of such Person then outstanding and normally
         entitled to vote in the election of directors or other governing body
         of such Person.

         1.2 COMPUTATION OF TIME PERIODS.

         For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding." References in this Credit Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits
of or to this Credit Agreement unless otherwise specifically provided.

                                       12
<PAGE>   17

         1.3 ACCOUNTING TERMS.

         Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis.

         1.4 TIME.

         All references to time herein shall be references to Central Standard
Time or Central Daylight time, as the case may be, unless specified otherwise.

                                   SECTION 2.

                                      LOANS

         2.1 REVOLVING COMMITTED AMOUNT.

         Subject to the terms and conditions set forth herein, each Lender
severally agrees to make revolving loans to the Borrowers in Dollars, at any
time and from time to time, during the period from the Effective Date to the
Maturity Date (each a "Loan" and collectively the "Loans"); provided, however,
that (a) the sum of the aggregate amount of Loans outstanding plus the aggregate
amount of LOC Obligations outstanding shall not exceed the Revolving Committed
Amount and (b) with respect to each individual Lender, such Lender's pro rata
share of outstanding Loans plus such Lender's pro rata share of outstanding LOC
Obligations shall not exceed such Lender's Commitment Percentage of the
Revolving Committed Amount. Subject to the terms of this Credit Agreement, the
Borrowers may borrow, repay and reborrow Loans.

         2.2 LETTER OF CREDIT SUBFACILITY.

                  (a) Issuance. Subject to the terms and conditions hereof and
         of the LOC Documents, if any, and any other terms and conditions which
         the Issuing Lender may reasonably require (so long as such terms and
         conditions do not impose any financial obligation on or require any
         Lien (not otherwise contemplated by this Credit Agreement) to be given
         by a Borrower or conflict with any obligation of, or detract from any
         action which may be taken by the Borrowers or their Subsidiaries under
         this Credit Agreement), the Issuing Lender shall from time to time upon
         request issue, in Dollars, and the Lenders shall participate in,
         letters of credit (the "Letters of Credit") for the account of a
         Borrower or any of its Subsidiaries, from the Effective Date until the
         Maturity Date, in a form reasonably acceptable to the Issuing Lender;
         provided, however, that (i) the aggregate amount of LOC Obligations
         shall not at any time exceed the LOC Committed Amount, (ii) the sum of
         the aggregate amount of LOC Obligations outstanding plus Loans
         outstanding shall not exceed the Revolving Committed Amount and (iii)
         with respect to each individual Lender, the Lender's pro rata

                                       13
<PAGE>   18

         share of outstanding Loans plus its pro rata share of outstanding LOC
         Obligations shall not exceed such Lender's Commitment Percentage of the
         Revolving Committed Amount. The issuance and expiry date of each Letter
         of Credit shall be a Business Day. Except as otherwise expressly agreed
         upon by all the Lenders, no Letter of Credit shall have an expiry date
         extending beyond the Maturity Date. Each Letter of Credit shall be
         either (x) a standby letter of credit issued to support the obligations
         (including pension or insurance obligations), contingent or otherwise,
         of a Borrower, or (y) a commercial letter of credit in respect of the
         purchase of goods or services by a Borrower in the ordinary course of
         business. Each Letter of Credit shall comply with the related LOC
         Documents.

                  (b) Notice and Reports. The request for the issuance of a
         Letter of Credit shall be submitted to the Issuing Lender at least two
         Business Days prior to the requested date of issuance. The Issuing
         Lender will, at least quarterly and more frequently upon request,
         provide to the Lenders a detailed report specifying the Letters of
         Credit which are then issued and outstanding and any activity with
         respect thereto which may have occurred since the date of the prior
         report, and including therein, among other things, the account party,
         the beneficiary, the face amount, and the expiry date as well as any
         payments or expirations which may have occurred. The Issuing Lender
         will further provide to the Agent, promptly upon request, copies of the
         Letters of Credit.

                  (c) Participations.

                           (i) Each Lender acknowledges that it shall
                  automatically acquire a participation in the liability of the
                  Issuing Lender under the Existing Letter of Credit in an
                  amount equal to its Commitment Percentage of such Existing
                  Letter of Credit.

                           (ii) Each Lender, upon issuance of a Letter of
                  Credit, shall be deemed to have purchased without recourse a
                  risk participation from the Issuing Lender in such Letter of
                  Credit and the obligations arising thereunder and any
                  collateral relating thereto, in each case in an amount equal
                  to its Commitment Percentage of the obligations under such
                  Letter of Credit, and shall absolutely, unconditionally and
                  irrevocably assume, as primary obligor and not as surety, and
                  be obligated to pay to the Issuing Lender therefor and
                  discharge when due, its Commitment Percentage of the
                  obligations arising under such Letter of Credit. Without
                  limiting the scope and nature of each Lender's participation
                  in any Letter of Credit, to the extent that the Issuing Lender
                  has not been reimbursed as required hereunder or under any
                  such Letter of Credit, each such Lender shall pay to the
                  Issuing Lender its Commitment Percentage of such unreimbursed
                  drawing in same day funds on the day of notification by the
                  Issuing Lender of an unreimbursed drawing pursuant to the
                  provisions of subsection (d) hereof. The obligation of each
                  Lender to so reimburse the Issuing Lender shall be absolute
                  and unconditional and shall not be affected by the occurrence
                  of a Default, an Event of Default or any other occurrence or
                  event. Any such reimbursement shall not relieve or otherwise
                  impair the obligation of the Borrowers to reimburse the
                  Issuing Lender under any Letter of Credit, together with
                  interest as hereinafter provided.

                                       14
<PAGE>   19

                  (d) Reimbursement. In the event of any request for a drawing
         or any drawing under any Letter of Credit, the Issuing Lender will
         promptly notify the Borrowers. Unless a Borrower shall immediately
         notify the Issuing Lender of its intent to otherwise reimburse the
         Issuing Lender, the Borrower shall be deemed to have requested a Loan
         at the Base Rate in the amount of the drawing as provided in subsection
         (e) hereof, the proceeds of which will be used to satisfy the
         reimbursement obligations. The Borrower shall reimburse the Issuing
         Lender on the day of drawing under any Letter of Credit either with the
         proceeds of a Loan obtained hereunder or otherwise in same day funds as
         provided herein or in the LOC Documents. If the Borrower shall fail to
         reimburse the Issuing Lender as provided hereinabove, the unreimbursed
         amount of such drawing shall bear interest at a per annum rate equal to
         the Base Rate plus two percent (2%). The Borrowers' reimbursement
         obligations hereunder shall be absolute and unconditional under all
         circumstances irrespective of (but without waiver of) any rights of
         set-off, counterclaim or defense to payment that the applicable account
         party or the Borrowers may claim or have against the Issuing Lender,
         the Agent, the Lenders, the beneficiary of the Letter of Credit drawn
         upon or any other Person, including without limitation, any defense
         based on any failure of the applicable account party or the Borrowers
         to receive consideration or the legality, validity, regularity or
         unenforceability of the Letter of Credit. The Issuing Lender will
         promptly notify the Lenders of the amount of any unreimbursed drawing
         and each Lender shall promptly pay to the Agent for the account of the
         Issuing Lender, in Dollars and in immediately available funds, the
         amount of such Lender's Commitment Percentage of such unreimbursed
         drawing. Such payment shall be made on the day such notice is received
         by such Lender from the Issuing Lender if such notice is received at or
         before 2:00 p.m., otherwise such payment shall be made at or before
         12:00 Noon on the Business Day next succeeding the day such notice is
         received. If such Lender does not pay such amount to the Issuing Lender
         in full upon such request, such Lender shall, on demand, pay to the
         Agent for the account of the Issuing Lender interest on the unpaid
         amount during the period from the date the Lender received the notice
         regarding the unreimbursed drawing until such Lender pays such amount
         to the Issuing Lender in full at a rate per annum equal to, if paid
         within two Business Days of the date of drawing, the Federal Funds Rate
         and thereafter at a rate equal to the Base Rate. Each Lender's
         obligation to make such payment to the Issuing Lender, and the right of
         the Issuing Lender to receive the same, shall be absolute and
         unconditional, shall not be affected by any circumstance whatsoever and
         without regard to the termination of this Credit Agreement or the
         Commitments hereunder, the existence of a Default or Event of Default
         or the acceleration of the obligations hereunder and shall be made
         without any offset, abatement, withholding or reduction whatsoever.
         Simultaneously with the making of each such payment by a Lender to the
         Issuing Lender, such Lender shall, automatically and without any
         further action on the part of the Issuing Lender or such Lender,
         acquire a participation in an amount equal to such payment (excluding
         the portion of such payment constituting interest owing to the Issuing
         Lender) in the related unreimbursed drawing

                                       15
<PAGE>   20

         portion of the LOC Obligation and in the interest thereon and in the
         related LOC Documents, and shall have a claim against the Borrowers
         with respect thereto.

                  (e) Repayment with Loans. On any day on which a Borrower shall
         have requested, or been deemed to have requested, a Loan borrowing to
         reimburse a drawing under a Letter of Credit, the Agent shall give
         notice to the applicable Lenders that a Loan has been requested or
         deemed requested in connection with a drawing under a Letter of Credit,
         in which case a Loan borrowing comprised solely of Base Rate Loans
         (each such borrowing, a "Mandatory Borrowing") shall be immediately
         made from all applicable Lenders (without giving effect to any
         termination of the Commitments pursuant to Section 9.2 or otherwise)
         pro rata based on each Lender's respective Commitment Percentage and
         the proceeds thereof shall be paid directly to the Issuing Lender for
         application to the respective LOC Obligations. Each such Lender hereby
         irrevocably agrees to make such Loans immediately upon any such request
         or deemed request on account of each such Mandatory Borrowing in the
         amount and in the manner specified in the preceding sentence and on the
         same such date notwithstanding (i) the amount of Mandatory Borrowing
         may not comply with the minimum amount for borrowings of Loans
         otherwise required hereunder, (ii) whether any conditions specified in
         Section 5.2 are then satisfied, (iii) whether a Default or Event of
         Default then exists, (iv) failure of any such request or deemed request
         for Loans to be made by the time otherwise required hereunder, (v) the
         date of such Mandatory Borrowing, or (vi) any reduction in the
         Revolving Committed Amount or any termination of the Commitments. In
         the event that any Mandatory Borrowing cannot for any reason be made on
         the date otherwise required above (including, without limitation, as a
         result of the commencement of a proceeding under the Bankruptcy Code
         with respect to the Borrower), then each such Lender hereby agrees that
         it shall forthwith fund (as of the date the Mandatory Borrowing would
         otherwise have occurred, but adjusted for any payments received from
         the Borrower on or after such date and prior to such purchase) its
         Participation Interest in the outstanding LOC Obligations; provided,
         further, that in the event any Lender shall fail to fund its
         Participation Interest on the day the Mandatory Borrowing would
         otherwise have occurred, then the amount of such Lender's unfunded
         Participation Interest therein shall bear interest payable to the
         Issuing Lender upon demand, at the rate equal to, if paid within two
         Business Days of such date, the Federal Funds Rate, and thereafter at a
         rate equal to the Base Rate.

                  (f) Designation of Subsidiaries as Account Parties.
         Notwithstanding anything to the contrary set forth in this Credit
         Agreement, a Letter of Credit issued hereunder may contain a statement
         to the effect that such Letter of Credit is issued for the account of a
         Subsidiary of the Borrower; provided that notwithstanding such
         statement, the Borrower shall be the actual account party for all
         purposes of this Credit Agreement for such Letter of Credit and such
         statement shall not affect the Borrower's reimbursement obligations
         hereunder with respect to such Letter of Credit.

                  (g) Modification and Extension. The issuance of any
         supplement, modification, amendment, renewal, or extension to any
         Letter of Credit shall, for

                                       16
<PAGE>   21

         purposes hereof, be treated in all respects the same as the issuance of
         a new Letter of Credit hereunder.

                  (h) Uniform Customs and Practices. The Issuing Lender may have
         the Letters of Credit be subject to The Uniform Customs and Practice
         for Documentary Credits (the "UCP") or the International Standby
         Practices 1998 (the "ISP98"), in either case as published as of the
         date of issue by the International Chamber of Commerce, in which case
         the UCP or ISP98, as applicable, may be incorporated therein and deemed
         in all respects to be a part thereof.

                  (i) Responsibility of Issuing Lender. It is expressly
         understood and agreed that the obligations of the Issuing Lender
         hereunder to the Lenders are only those expressly set forth in this
         Credit Agreement and that the Issuing Lender shall be entitled to
         assume that the conditions precedent set forth in Section 5.2 have been
         satisfied unless it shall have acquired actual knowledge that any such
         condition precedent has not been satisfied; provided, however, that
         nothing set forth in this Section 2.2 shall be deemed to prejudice the
         right of any Lender to recover from the Issuing Lender any amounts made
         available by such Lender to the Issuing Lender pursuant to this Section
         2.2 in the event that it is determined by a court of competent
         jurisdiction that the payment with respect to a Letter of Credit
         constituted gross negligence or willful misconduct on the part of the
         Issuing Lender.

                  (j) Conflict with LOC Documents. In the event of any conflict
         between this Credit Agreement and any LOC Document, this Credit
         Agreement shall govern.

                  (k) Indemnification of Issuing Lender.

                                    (i) In addition to its other obligations
                  under this Credit Agreement, the Borrowers hereby agree to
                  protect, indemnify, pay and save the Issuing Lender harmless
                  from and against any and all claims, demands, liabilities,
                  damages, losses, costs, charges and expenses (including
                  reasonable attorneys' fees) that the Issuing Lender may incur
                  or be subject to as a consequence, direct or indirect, of (A)
                  the issuance of any Letter of Credit or (B) the failure of the
                  Issuing Lender to honor a drawing under a Letter of Credit as
                  a result of any act or omission, whether rightful or wrongful,
                  of any present or future de jure or de facto government or
                  Governmental Authority (all such acts or omissions, herein
                  called "Government Acts").

                                    (ii) As between the Borrowers and the
                  Issuing Lender, the Borrowers shall assume all risks of the
                  acts, omissions or misuse of any Letter of Credit by the
                  beneficiary thereof. The Issuing Lender shall not be
                  responsible for: (A) the form, validity, sufficiency,
                  accuracy, genuineness or legal effect of any document
                  submitted by any party in connection with the application for
                  and issuance of any Letter of Credit, even if it should in
                  fact prove to be in any or all respects invalid, insufficient,
                  inaccurate, fraudulent or forged; (B) the validity or

                                       17
<PAGE>   22

                  sufficiency of any instrument transferring or assigning or
                  purporting to transfer or assign any Letter of Credit or the
                  rights or benefits thereunder or proceeds thereof, in whole or
                  in part, that may prove to be invalid or ineffective for any
                  reason; (C) failure of the beneficiary of a Letter of Credit
                  to comply fully with conditions required in order to draw upon
                  a Letter of Credit; (D) errors, omissions, interruptions or
                  delays in transmission or delivery of any messages, by mail,
                  cable, telegraph, telex or otherwise, whether or not they be
                  in cipher; (E) errors in interpretation of technical terms;
                  (F) any loss or delay in the transmission or otherwise of any
                  document required in order to make a drawing under a Letter of
                  Credit or of the proceeds thereof; and (G) any consequences
                  arising from causes beyond the control of the Issuing Lender,
                  including, without limitation, any Government Acts. None of
                  the above shall affect, impair, or prevent the vesting of the
                  Issuing Lender's rights or powers hereunder.

                                    (iii) In furtherance and extension and not
                  in limitation of the specific provisions hereinabove set
                  forth, any action taken or omitted by the Issuing Lender,
                  under or in connection with any Letter of Credit or the
                  related certificates, if taken or omitted in good faith, shall
                  not put the Issuing Lender under any resulting liability to
                  the Borrowers. It is the intention of the parties that this
                  Credit Agreement shall be construed and applied to protect and
                  indemnify the Issuing Lender against any and all risks
                  involved in the issuance of the Letters of Credit, all of
                  which risks are hereby assumed by the Borrowers, including,
                  without limitation, any and all risks of the acts or
                  omissions, whether rightful or wrongful, of any present or
                  future Government Acts. The Issuing Lender shall not, in any
                  way, be liable for any failure by the Issuing Lender or anyone
                  else to pay any drawing under any Letter of Credit as a result
                  of any Government Acts or any other cause beyond the control
                  of the Issuing Lender.

                                    (iv) Nothing in this subsection (k) is
                  intended to limit the reimbursement obligation of the
                  Borrowers contained in this Section 2.2. The obligations of
                  the Borrowers under this subsection (k) shall survive the
                  termination of this Credit Agreement. No act or omission of
                  any current or prior beneficiary of a Letter of Credit shall
                  in any way affect or impair the rights of the Issuing Lender
                  to enforce any right, power or benefit under this Credit
                  Agreement.

                                    (v) Notwithstanding anything to the contrary
                  contained in this subsection (k) or any of the Credit
                  Documents, the Borrower shall have no obligation to indemnify
                  the Issuing Lender in respect of any liability incurred by the
                  Issuing Lender arising solely out of the negligence or willful
                  misconduct of the Issuing Lender, as determined by a court of
                  competent jurisdiction. Nothing in this Credit Agreement shall
                  relieve the Issuing Lender of any liability to the Borrower in
                  respect of any action taken by the Issuing Lender which action
                  constitutes negligence or willful misconduct of the Issuing
                  Lender or a violation

                                       18
<PAGE>   23

                  of the UCP, the ISP98 or Uniform Commercial Code (as
                  applicable), as determined by a court of competent
                  jurisdiction.

         2.3 METHOD OF BORROWING FOR LOANS.

         By no later than 11:00 a.m. (a) on the date of the requested borrowing
of Loans that will be Base Rate Loans or (b) three Business Days prior to the
date of the requested borrowing of Loans that will be Eurodollar Loans, the
Borrowers shall submit a written Notice of Borrowing in the form of Exhibit 2.3
to the Agent setting forth (i) the amount requested, (ii) whether such Loans
shall accrue interest at the Base Rate or the Adjusted Eurodollar Rate, (iii)
with respect to Loans that will be Eurodollar Loans, the Interest Period
applicable thereto and (iv) certification that the Borrowers have complied in
all respects with Section 5.2.

         2.4 FUNDING OF LOANS.

         Upon receipt of a Notice of Borrowing, the Agent shall promptly inform
the Lenders as to the terms thereof. Each such Lender shall make its Commitment
Percentage of the requested Loans available to the Agent by 2:00 p.m. on the
date specified in the Notice of Borrowing by deposit, in Dollars, of immediately
available funds at the Agency Services Address. The amount of the requested
Loans will then be made available to the Borrowers by the Agent by crediting the
account of the Borrowers on the books of such office of the Agent, to the extent
the amount of such Loans are made available to the Agent.

         No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make Loans hereunder; provided, however, that the
failure of any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder. Unless the Agent shall have been
notified by any Lender prior to the date of any such Loan that such Lender does
not intend to make available to the Agent its portion of the Loans to be made on
such date, the Agent may assume that such Lender has made such amount available
to the Agent on the date of such Loans, and the Agent in reliance upon such
assumption, may (in its sole discretion but without any obligation to do so)
make available to the Borrowers a corresponding amount. If such corresponding
amount is not in fact made available to the Agent, the Agent shall be able to
recover such corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Agent's demand therefor, the Agent
will promptly notify the Borrowers and the Borrowers shall immediately pay such
corresponding amount within two Business Days to the Agent. The Agent shall also
be entitled to recover from the Lender or the Borrowers, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrowers to the
date such corresponding amount is recovered by the Agent at a per annum rate
equal to (a) from the Borrowers at the applicable rate for such Loan pursuant to
the Notice of Borrowing and (b) from a Lender at the Federal Funds Rate.

                                       19
<PAGE>   24

         2.5 CONTINUATIONS AND CONVERSIONS.

         The Borrowers shall have the option (subject to the limitations set
forth below), on any Business Day, to continue existing Eurodollar Loans for a
subsequent Interest Period, to convert Base Rate Loans into Eurodollar Loans or
to convert Eurodollar Loans into Base Rate Loans; provided, however, that (a)
each such continuation or conversion must be requested by the Borrowers pursuant
to a written Notice of Continuation/Conversion, in the form of Exhibit 2.5, in
compliance with the terms set forth below, (b) if a Eurodollar Loan is continued
or converted into a Base Rate Loan on any day other than the last day of the
Interest Period applicable thereto, then the Borrowers shall be subject to the
provisions set forth in Section 4.3, (c) Eurodollar Loans may not be continued
nor may Base Rate Loans be converted into Eurodollar Loans during the existence
and continuation of a Default or Event of Default and (d) any request to extend
a Eurodollar Loan that fails to comply with the terms hereof or any failure to
request an extension of a Eurodollar Loan at the end of an Interest Period shall
constitute a conversion to a Base Rate Loan on the last day of the applicable
Interest Period. Each continuation or conversion must be requested by the
Borrowers no later than 11:00 a.m. (i) on the date for a requested conversion of
a Eurodollar Loan to a Base Rate Loan or (ii) three Business Days prior to the
date for a requested continuation of a Eurodollar Loan or conversion of a Base
Rate Loan to a Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Agent which shall set forth (A) whether
the Borrowers wish to continue or convert such Loans and (B) if the request is
to continue a Eurodollar Loan or convert a Base Rate Loan to a Eurodollar Loan,
the Interest Period applicable thereto.

         2.6 MINIMUM AMOUNTS.

         Each request for a Loan or a conversion or continuation hereunder shall
be subject to the following requirements: (a) each Eurodollar Loan shall be in a
minimum amount of $10,000,000 (and in integral multiples of $1,000,000 in excess
thereof), (b) each Base Rate Loan shall be in a minimum amount of the lesser of
$10,000,000 (and in integral multiples of $1,000,000 in excess thereof) or the
remaining amount available to be borrowed and (c) no more than ten Eurodollar
Loans shall be outstanding hereunder at any one time. For the purposes of this
Section, all Eurodollar Loans with the same Interest Periods that begin and end
on the same date shall be considered as one Eurodollar Loan, but Eurodollar
Loans with different Interest Periods, even if they begin on the same date,
shall be considered separate Eurodollar Loans.

         2.7 REDUCTIONS OF REVOLVING COMMITTED AMOUNTS.

         Upon at least five Business Days' notice, the Borrowers shall have the
right to permanently terminate or reduce the aggregate unused amount of the
Revolving Committed Amount at any time or from time to time; provided that (a)
each partial reduction shall be in an aggregate amount at least equal to
$10,000,000 and in integral multiples of $1,000,000 above such amount, (b) no
reduction shall be made which would reduce the Revolving Committed Amount to an
amount less than the aggregate amount of the then outstanding Loans plus the
aggregate amount of the then outstanding LOC Obligations. Any reduction in (or
termination of) the Revolving Committed Amount shall be permanent and may not be
reinstated.

                                       20
<PAGE>   25

         2.8 NOTES.

         The Loans made by the Lenders shall be evidenced by a duly executed
promissory note of the Borrowers payable to each Lender in substantially the
form of Exhibit 2.8 (the "Notes").

         2.9 JOINT AND SEVERAL LIABILITY OF THE BORROWERS.

         Subject to Section 2.10:

                  (a) Each of the Borrowers is accepting joint and several
         liability hereunder in consideration of the financial accommodation to
         be provided by the Lenders under this Credit Agreement, for the mutual
         benefit, directly and indirectly, of each of the Borrowers and in
         consideration of the undertakings of each of the Borrowers to accept
         joint and several liability for the obligations of each of them.

                  (b) Each of the Borrowers jointly and severally hereby
         irrevocably and unconditionally accepts, not merely as a surety but
         also as a co-debtor, joint and several liability with the other
         Borrower with respect to the payment and performance of all of the
         obligations arising under this Credit Agreement and the other Credit
         Documents, it being the intention of the parties hereto that all of the
         Borrowers Obligations shall be the joint and several obligations of
         each of the Borrowers without preferences or distinction between them.

                  (c) If and to the extent that either of the Borrowers shall
         fail to make any payment with respect to any of the obligations
         hereunder as and when due or to perform any of such obligations in
         accordance with the terms thereof, then in each such event, the other
         Borrower will make such payment with respect to, or perform, such
         obligation.

                  (d) The provisions of this Section 2.9 are made for the
         benefit of the Lenders and their successors and assigns, and may be
         enforced by them from time to time against either of the Borrowers as
         often as occasion therefor may arise and without requirement on the
         part of the Lenders first to marshall any of its claims or to exercise
         any of its rights against the other Borrower or to exhaust any remedies
         available to it against the other Borrower or to resort to any other
         source or means of obtaining payment of any of the Borrowers
         Obligations hereunder or to elect any other remedy. The provisions of
         this Section 2.9 shall remain in effect until all the Borrowers
         Obligations hereunder shall have been paid in full or otherwise fully
         satisfied. If at any time, any payment, or any part thereof, made in
         respect of any of the Borrowers Obligations, is rescinded or must
         otherwise be restored or returned by the Lenders upon the insolvency,
         bankruptcy or reorganization of any of the Borrowers, or otherwise, the
         provisions of this Section 2.9 will forthwith be reinstated and in
         effect as though such payment had not been made.

                  (e) Notwithstanding any provision to the contrary contained
         herein or in any of the other Credit Documents, to the extent the
         obligations of either Borrower shall be

                                       21
<PAGE>   26

         adjudicated to be invalid or unenforceable for any reason (including,
         without limitation, because of any applicable state or federal law
         relating to fraudulent conveyances or transfers) then the obligations
         of such Borrower hereunder shall be limited to the maximum amount that
         is permissible under applicable law (whether federal or state and
         including, without limitation, the Bankruptcy Code).

                  (f) Each Borrower hereby appoints the other Borrower to act as
         its agent for all purposes under this Credit Agreement (including,
         without limitation, with respect to all matters relating to the
         borrowing and repayment of Loans) and agrees that (i) a Borrower may
         execute such documents on behalf of the other Borrower as it deems
         appropriate and the other Borrower shall be obligated by all of the
         terms of any such document executed on its behalf, (ii) any notice or
         communication delivered by the Agent or a Lender to a Borrower shall be
         deemed delivered to both Borrowers and (iii) the Agent and the Lenders
         may accept, and be permitted to rely on, any document, instrument or
         agreement executed by one Borrower on behalf of the other Borrower.

         2.10 LIMITATION OF LIABILITY OF BORROWERS.

         Notwithstanding anything in this Credit Agreement or in the Notes to
the contrary, including without limitation, Section 2.9:

                  (a) Duke Energy Field Services Corporation shall have no
         rights or obligations as a Borrower, and will not be subject to the
         terms of the Credit Documents, until (i) consummation of the Merger or
         a Corporate Conversion and (ii) notification from the Borrowers to the
         Lenders that the Merger or a Corporate Conversion has occurred and
         that, going forward, Duke Energy Field Services Corporation will
         irrevocably have all of the rights and obligations of a Borrower,
         jointly and severally with Duke Energy Field Services, LLC, under the
         Credit Documents (including, without limitation, any Loans made prior
         to such notification) and will be subject to the terms of the Credit
         Documents.

                  (b) If the Merger occurs, the agreement by Duke Energy Field
         Services Corporation to become jointly and severally liable with Duke
         Energy Field Services, LLC for the indebtedness under the Credit
         Documents pursuant to subsection (a) above shall be accomplished in two
         phases: (i) initially, Duke Energy Field Services Corporation shall
         become directly liable for 69.7% of such indebtedness and shall become
         indirectly liable for 30.3% of such indebtedness through Phillips Gas
         Company ("PGC"), a Delaware corporation and, subsequent to the first
         step of the Merger, a wholly-owned Subsidiary of Duke Energy Field
         Services Corporation, in each case jointly and severally with Duke
         Energy Field Services, LLC, which shall remain jointly and severally
         liable for 100% of such indebtedness; and (ii) immediately thereafter,
         upon the merger of PGC with and into Duke Energy Field Services
         Corporation, Duke Energy Field Services Corporation shall become
         directly liable for the 30.3% of such indebtedness previously
         attributed to it through its ownership of PGC.

                                       22
<PAGE>   27

                  (c) On or after the date that, pursuant to subsection (a) or
         subsections (a) and (b) above, Duke Energy Field Services Corporation
         has become directly liable for 100% of the indebtedness, rights and
         obligations of a Borrower under the Credit Documents, the Borrowers
         may, upon written notice to the Lenders, release Duke Energy Field
         Services, LLC from its joint and several obligations under the Credit
         Documents; provided that if as a result of a Corporate Conversion Duke
         Energy Field Services LLC is converted into a "C" Corporation it shall
         not be released from its obligations hereunder. Thereafter, Duke Energy
         Field Services, LLC will have no rights or obligations under the Credit
         Documents, will no longer be subject to the terms of the Credit
         Documents (except as the terms thereof may relate to it if it
         constitutes a Material Subsidiary) and all obligations owing pursuant
         to the Credit Documents shall be the sole responsibility of Duke Energy
         Field Services Corporation.

                  (d) Notwithstanding the use of the term "Borrowers" as set
         forth in the Credit Documents: (i) prior to Duke Energy Field Services
         Corporation having any rights or obligations as a Borrower, as set
         forth in clause (a) above, the terms "Borrowers" or "a Borrower" as
         used in the Credit Documents shall only mean a reference to Duke Energy
         Field Services, LLC and (ii) on and after the date that Duke Energy
         Field Services, LLC is released from liability, in accordance with
         clause (c) above, the terms "Borrowers" or "a Borrower" as used in the
         Credit Documents shall only mean a reference to Duke Energy Field
         Services Corporation.

                                   SECTION 3.

                                    PAYMENTS

         3.1 INTEREST.

                  (a) Interest Rate.

                           (i) All Base Rate Loans shall accrue interest at the
                  Base Rate.

                           (ii) All Eurodollar Loans shall accrue interest at
                  the Adjusted Eurodollar Rate applicable to such Eurodollar
                  Loan.

                  (b) Default Rate of Interest. Upon the occurrence, and during
         the continuation, of an Event of Default, all past due principal of
         and, to the extent permitted by law, past due interest on, the Loans
         and any other past due amounts owing hereunder or under the other
         Credit Documents shall bear interest, payable on demand, at a per annum
         rate equal to one percent (1%) plus the rate which would otherwise be
         applicable (or if no rate is applicable, then the rate for Loans that
         are Base Rate Loans plus one percent (1%) per annum).

                  (c) Interest Payments. Interest on Loans shall be due and
         payable in arrears on each Interest Payment Date.

                                       23
<PAGE>   28

         3.2 PREPAYMENTS.

                  (a) Voluntary Prepayments. The Borrowers shall have the right
         to prepay Loans in whole or in part from time to time without premium
         or penalty; provided, however, that (i) Eurodollar Loans may only be
         prepaid on three Business Days' prior written notice to the Agent and
         any prepayment of Eurodollar Loans will be subject to Section 4.3; and
         (ii) each such partial prepayment of Loans shall be in the minimum
         principal amount of $10,000,000. Any payments made under this Section
         3.2(a) shall be applied as the Borrowers may elect; provided that if
         the Borrowers fail to specify how a voluntary prepayment should be
         applied then such prepayment shall be applied first to Base Rate Loans
         and then to Eurodollar Loans in direct order of Interest Period
         maturities.

                  (b) Mandatory Prepayments. If at any time (A) the amount of
         Loans outstanding plus the aggregate amount of LOC Obligations
         outstanding exceeds the Revolving Committed Amount or (B) the aggregate
         amount of LOC Obligations outstanding exceeds the LOC Committed Amount,
         the Borrowers shall immediately make a principal payment to the Agent
         in a manner and in an amount necessary to be in compliance with
         Sections 2.1 and 2.2, as applicable, and as directed by the Agent. All
         amounts required to be paid pursuant to this Section 3.2(b) shall be
         (i) applied first to Loans and then to a cash collateral account in
         respect of LOC Obligations, (ii) subject to Section 4.3 and (iii)
         applied first to Base Rate Loans and then to Eurodollar Loans in the
         direct order of Interest Period maturities.

         3.3 PAYMENT IN FULL AT MATURITY.

                  (a) Subject to Section 3.3(b) below, on the Maturity Date, the
         entire outstanding principal balance of all Loans and all LOC
         Obligations, together with accrued but unpaid interest and all other
         sums owing under this Credit Agreement, shall be due and payable in
         full, unless accelerated sooner pursuant to Section 9.2.

                  (b) On or before ten Business Days prior to the Maturity Date,
         the Borrower may, as long as no Default or Event of Default exists and
         is continuing, notify the Agent in writing (and the Agent shall
         promptly forward such notice to the Lenders) that, as of the Maturity
         Date, it is converting the outstanding Loans to a term loan which shall
         be due and payable in full on the date one year subsequent to the
         Maturity Date (the "Term Out Maturity Date"). It is understood and
         agreed that subsequent to the Maturity Date, (i) the Borrowers may no
         longer request, and the Lenders are no longer obligated to make or
         issue, new Loans or Letters of Credit, (ii) any amounts repaid may not
         be reborrowed, (iii) interest shall accrue on the outstanding Loans, at
         the option of the Borrowers, in accordance with the terms of Section
         2.5 and (iv) the Borrowers shall have the right to prepay all or a
         portion of the outstanding Loans in accordance with Section 3.2(a).

                                       24
<PAGE>   29

         3.4 FEES.

                  (a) Commitment Fees. In consideration of the Revolving
         Committed Amount being made available by the Lenders, the Borrowers
         agree to pay to the Agent, for the pro rata benefit of each Lender, a
         fee equal to the Applicable Margin for Commitment Fees on the Unused
         Commitment (the "Commitment Fees"). The accrued Commitment Fees shall
         be due and payable in arrears on the first Business Day after the end
         of each fiscal quarter of the Borrowers (as well as on the Maturity
         Date) for the immediately preceding fiscal quarter (or portion
         thereof), beginning with the first of such dates to occur after the
         Closing Date.

                  (b) Utilization Fees. If, on any day, the sum of the aggregate
         outstanding principal amount of all Loans plus the outstanding amount
         of LOC Obligations exceeds the product of (A) one-third (1/3) times (B)
         the Revolving Committed Amount, the Borrowers agree to pay to the
         Agent, for the pro rata benefit of each Lender, a per annum fee equal
         to the Applicable Margin for Utilization Fees on the Utilized Revolving
         Committed Amount (the "Utilization Fees"). The accrued Utilization
         Fees, if any, shall be due and payable in arrears on the first Business
         Day after the end of each fiscal quarter of the Borrowers (as well as
         on the Maturity Date and the Term Out Maturity Date, if applicable) for
         the immediately preceding fiscal quarter (or portion thereof),
         beginning with the first of such dates to occur after the Closing Date.

                  (c) Letter of Credit Fees.

                           (i) Letter of Credit Fees. In consideration of the
                  issuance of Letters of Credit hereunder, the Borrowers agree
                  to pay to the Issuing Lender, for the pro rata benefit of each
                  Lender, a per annum fee equal to the Applicable Margin for
                  Eurodollar Loans prior to Maturity on the aggregate stated
                  amount for each Letter of Credit from the date of issuance to
                  the date of expiration (the "Letter of Credit Fees"). The
                  accrued Letter of Credit Fees shall be due and payable in
                  arrears on the first Business Day after the end of each fiscal
                  quarter of the Borrowers (as well as on the Maturity Date) for
                  the immediately preceding fiscal quarter (or portion thereof),
                  beginning with the first of such dates to occur after the
                  Closing Date.

                           (ii) Issuing Lender Fees. In addition to the Letter
                  of Credit Fees payable pursuant to subsection (i) above, the
                  Borrowers shall pay to the Issuing Lender for its own account,
                  without sharing by the other Lenders, (A) a fee equal to
                  one-eighth of one percent (.125%) per annum on the total sum
                  of all Letters of Credit issued by the Issuing Lender, such
                  fee to be paid on the date of issuance of any Letter of Credit
                  and (B) the customary charges from time to time to the Issuing
                  Lender for its services in connection with the issuance,
                  amendment, payment, transfer, administration, cancellation and
                  conversion of, and drawings under, such Letters of Credit
                  (collectively, the "Issuing Lender Fees").

                                       25
<PAGE>   30

         3.5 PLACE AND MANNER OF PAYMENTS.

         All payments of principal, interest, fees, expenses and other amounts
to be made by a Borrower under this Credit Agreement shall be made without
setoff, deduction or counterclaim and received not later than 2:00 p.m. on the
date when due in Dollars and in immediately available funds by the Agent at the
Agency Services Address. A Borrower shall, at the time it makes any payment
under this Credit Agreement, specify to the Agent the Loans, Letters of Credit,
fees or other amounts payable by a Borrower hereunder to which such payment is
to be applied (and in the event that it fails to specify, or if such application
would be inconsistent with the terms hereof, the Agent shall distribute such
payment to the Lenders in such manner as it reasonably determines in its sole
discretion). The Agent will distribute such payments to the applicable Lenders
on the same Business Day if any such payment is received prior to 2:00 p.m.;
otherwise the Agent will distribute each payment to the applicable Lenders prior
to 12:00 noon on the next succeeding Business Day. Whenever any payment
hereunder 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 (subject
to accrual of interest and fees for the period of such extension), except that
in the case of Eurodollar Loans, if the extension would cause the payment to be
made in the next following calendar month, then such payment shall be made on
the next preceding Business Day.

         3.6 PRO RATA TREATMENT.

         (a) Loans. Except to the extent otherwise provided herein, all Loans,
each payment or prepayment of principal of any Loan, each payment of interest on
the Loans, each payment of Commitment Fees, each payment of Utilization Fees,
each payment of Letter of Credit Fees, each reduction of the Revolving Committed
Amount and each conversion or continuation of any Loans, shall be allocated pro
rata among the applicable Lenders in accordance with their respective Commitment
Percentages; provided that, if any Lender shall have failed to pay its
applicable pro rata share of any Loan, then any amount to which such Lender
would otherwise be entitled pursuant to this Section 3.6 shall instead be
payable to the Agent until the share of such Loan not funded by such Lender has
been repaid and any interest owed by such Lender as result of such failure to
fund has been paid; and provided further, that in the event any amount paid to
any Lender pursuant to this Section 3.6 is rescinded or must otherwise be
returned by the Agent, each Lender shall, upon the written request of the Agent,
repay to the Agent the amount so paid to such Lender, with interest for the
period commencing on the date such payment is returned by the Agent until the
date the Agent receives such repayment at a rate per annum equal to, during the
period to but excluding the date two Business Days after such request, the
Federal Funds Rate, and thereafter, the Base Rate plus one percent (1%) per
annum.

         (b) Letters of Credit. Each payment of unreimbursed drawings in respect
of LOC Obligations shall be allocated to each Lender pro rata in accordance with
its Commitment Percentage; provided that, if any Lender shall have failed to pay
its applicable pro rata share of any drawing under any Letter of Credit, then
any amount to which such Lender would otherwise be entitled pursuant to this
subsection (b) shall instead be payable to the Issuing Lender; provided further,
that in the event any amount paid to any Lender pursuant to this subsection (b)
is rescinded or must otherwise be returned by the Issuing Lender, each Lender
shall, upon the

                                       26
<PAGE>   31

written request of the Issuing Lender, repay to the Agent for the account of the
Issuing Lender the amount so paid to such Lender, with interest for the period
commencing on the date such payment is returned by the Issuing Lender until the
date the Issuing Lender receives such repayment at a rate per annum equal to,
during the period to but excluding the date two Business Days after such
request, the Federal Funds Rate, and thereafter, the Base Rate plus one percent
(1%) per annum.

         3.7 COMPUTATIONS OF INTEREST AND FEES.

                  (a) Except for Base Rate Loans that are based upon the Prime
         Rate, on which interest shall be computed on the basis of a 365 or 366
         day year as the case may be, all computations of interest and fees
         hereunder shall be made on the basis of the actual number of days
         elapsed over a year of 360 days.

                  (b) It is the intent of the Lenders and the Borrowers to
         conform to and contract in strict compliance with applicable usury law
         from time to time in effect. All agreements between the Lenders and the
         Borrowers are hereby limited by the provisions of this paragraph which
         shall override and control all such agreements, whether now existing or
         hereafter arising and whether written or oral. In no way, nor in any
         event or contingency (including but not limited to prepayment or
         acceleration of the maturity of any obligation), shall the interest
         taken, reserved, contracted for, charged, or received under this Credit
         Agreement, under the Notes or otherwise, exceed the maximum nonusurious
         amount permissible under applicable law. If, from any possible
         construction of any of the Credit Documents or any other document,
         interest would otherwise be payable in excess of the maximum
         nonusurious amount, any such construction shall be subject to the
         provisions of this paragraph and interest owing pursuant to such
         documents shall be automatically reduced to the maximum nonusurious
         amount permitted under applicable law, without the necessity of
         execution of any amendment or new document. If any Lender shall ever
         receive anything of value which is characterized as interest on the
         Loans under applicable law and which would, apart from this provision,
         be in excess of the maximum lawful amount, an amount equal to the
         amount which would have been excessive interest shall, without penalty,
         be applied to the reduction of the principal amount owing on the Loans
         and not to the payment of interest, or refunded to the Borrowers or the
         other payor thereof if and to the extent such amount which would have
         been excessive exceeds such unpaid principal amount of the Loans. The
         right to demand payment of the Loans or any other indebtedness
         evidenced by any of the Credit Documents does not include the right to
         receive any interest which has not otherwise accrued on the date of
         such demand, and the Lenders do not intend to charge or receive any
         unearned interest in the event of such demand. All interest paid or
         agreed to be paid to the Lenders with respect to the Loans shall, to
         the extent permitted by applicable law, be amortized, prorated,
         allocated, and spread throughout the full stated term (including any
         renewal or extension) of the Loans so that the amount of interest on
         account of such indebtedness does not exceed the maximum nonusurious
         amount permitted by applicable law.

                                       27
<PAGE>   32

         3.8 SHARING OF PAYMENTS.

                  Each Lender agrees that, in the event that any Lender shall
         obtain payment in respect of any Loan, any unreimbursed drawing with
         respect to any LOC Obligations or any other obligation owing to such
         Lender under this Credit Agreement through the exercise of a right of
         set-off, banker's lien, counterclaim or otherwise (including, but not
         limited to, pursuant to the Bankruptcy Code) in excess of its pro rata
         share as provided for in this Credit Agreement, such Lender shall
         promptly purchase from the other Lenders a participation in such Loans,
         LOC Obligations and other obligations, in such amounts and with such
         other adjustments from time to time, as shall be equitable in order
         that all Lenders share such payment in accordance with their respective
         ratable shares as provided for in this Credit Agreement. Each Lender
         further agrees that if a payment to a Lender (which is obtained by such
         Lender through the exercise of a right of set-off, banker's lien,
         counterclaim or otherwise) shall be rescinded or must otherwise be
         restored, each Lender which shall have shared the benefit of such
         payment shall, by repurchase of a participation theretofore sold,
         return its share of that benefit to each Lender whose payment shall
         have been rescinded or otherwise restored. The Borrowers agree that any
         Lender so purchasing such a participation may, to the fullest extent
         permitted by law, exercise all rights of payment, including set-off,
         banker's lien or counterclaim, with respect to such participation as
         fully as if such Lender were a holder of such Loan or other obligation
         in the amount of such participation. Except as otherwise expressly
         provided in this Credit Agreement, if any Lender shall fail to remit to
         the Agent or any other Lender an amount payable by such Lender to the
         Agent or such other Lender pursuant to this Credit Agreement on the
         date when such amount is due, such payments shall accrue interest
         thereon, for each day from the date such amount is due until the day
         such amount is paid to the Agent or such other Lender, at a rate per
         annum equal to the Federal Funds Rate. If under any applicable
         bankruptcy, insolvency or other similar law, any Lender receives a
         secured claim in lieu of a setoff to which this Section 3.8 applies,
         such Lender shall, to the extent practicable, exercise its rights in
         respect of such secured claim in a manner consistent with the rights of
         the Lenders under this Section 3.8 to share in the benefits of any
         recovery on such secured claim.

         3.9 EVIDENCE OF DEBT.

                  (a) Each Lender shall maintain an account or accounts
         evidencing each Loan made by such Lender to the Borrowers from time to
         time, including the amounts of principal and interest payable and paid
         to such Lender from time to time under this Credit Agreement. Each
         Lender will make reasonable efforts to maintain the accuracy of its
         account or accounts and to promptly update its account or accounts from
         time to time, as necessary.

                  (b) The Agent shall maintain the Register pursuant to Section
         11.3(c), and a subaccount for each Lender, in which Register and
         subaccounts (taken together) shall be recorded (i) the amount, type and
         Interest Period of each such Loan hereunder, (ii) the amount of any
         principal or interest due and payable or to become due and payable to
         each Lender hereunder and (iii) the amount of any sum received by the
         Agent hereunder from

                                       28
<PAGE>   33

         or for the account of the Borrowers and each Lender's share thereof.
         The Agent will make reasonable efforts to maintain the accuracy of the
         subaccounts referred to in the preceding sentence and to promptly
         update such subaccounts from time to time, as necessary.

                  (c) The entries made in the Register and subaccounts
         maintained pursuant to subsection (b) of this Section 3.9, and the
         entries made in the accounts maintained pursuant to subsection (a) of
         this Section 3.9, if consistent with the entries of the Agent, shall 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 the Agent to maintain any such account, such Register or
         such subaccount, as applicable, or any error therein, shall not in any
         manner affect the obligation of the Borrowers to repay the Loans made
         by such Lender in accordance with the terms hereof.

                                   SECTION 4.

                      ADDITIONAL PROVISIONS REGARDING LOANS

         4.1 EURODOLLAR LOAN PROVISIONS.

                  (a) Unavailability. If, on or prior to the first day of any
         Interest Period, (i) the Agent shall have determined in good faith
         (which determination shall be conclusive and binding upon the
         Borrowers) that (A) Dollar deposits are not generally available in the
         London interbank Eurodollar market in the applicable principal amounts
         and Interest Period of a requested Eurodollar Loan or (B) by reason of
         circumstances affecting the relevant market, adequate and reasonable
         means do not exist for ascertaining the Eurodollar Rate for such
         Interest Period, or (ii) the Agent shall have received notice from the
         Required Lenders that the Eurodollar Rate determined or to be
         determined for such Interest Period will not adequately and fairly
         reflect the cost to the Lenders of making or maintaining Eurodollar
         Loans for such Interest Period (as conclusively certified by such
         Lenders), the Agent shall give notice thereof to the Borrowers and the
         Lenders as soon as practicable thereafter. Upon delivery of such
         notice, (A) any Eurodollar Loans requested to be made on the first day
         of such Interest Period shall be made as Base Rate Loans, (B) any Loans
         that were to have been converted to or continued as Eurodollar Loans
         shall be prepaid by the Borrowers or converted to or continued as Base
         Rate Loans and (C) any outstanding Eurodollar Loans shall be converted,
         on the first day of such Interest Period, to Base Rate Loans. Until the
         Agent has withdrawn such notice, no further Eurodollar Loans shall be
         made or continued as such, nor shall the Borrowers have the right to
         convert Base Rate Loans to Eurodollar Loans.

                  (b) Change in Legality. Notwithstanding any other provision
         herein, if any change, after the date hereof, in any law, governmental
         rule, regulation, guideline or order (including the introduction of any
         new law or governmental rule, regulation, guideline or order) or in the
         interpretation or administration thereof by any Governmental Authority

                                       29
<PAGE>   34

         charged with the interpretation or administration thereof shall make it
         unlawful for any Lender to make or maintain any Eurodollar Loan then,
         by written notice to the Borrowers and to the Agent, such Lender may:

                           (i) declare that Eurodollar Loans and conversions to
                  or continuations of Eurodollar Loans, will not thereafter be
                  made by such Lender hereunder, whereupon any request by the
                  Borrowers for, or for conversion into or continuation of,
                  Eurodollar Loans shall, as to such Lender only, be deemed a
                  request for, or for conversion into or continuation of, Base
                  Rate Loans, unless such declaration shall be subsequently
                  withdrawn; and

                           (ii) require that all outstanding Eurodollar Loans
                  made by it be converted to Base Rate Loans in which event all
                  such Eurodollar Loans shall be converted to Base Rate Loans
                  either (A) on the last day of the then current Interest Period
                  applicable to such Eurodollar Loan if such Lender can lawfully
                  continue to maintain and fund such Eurodollar Loan or (B)
                  immediately if such Lender shall determine that it may not
                  lawfully continue to maintain and fund such Eurodollar Loan to
                  such day.

                  (c) Requirements of Law. If at any time a Lender shall incur
         increased costs or reductions in the amounts received or receivable
         hereunder with respect to the making, the commitment to make or the
         maintaining of any Eurodollar Loan because of (i) any change after the
         date hereof in any law, governmental rule, regulation, guideline or
         order (including the introduction of any new law or governmental rule,
         regulation, guideline or order) or in the interpretation or
         administration thereof by any Governmental Authority charged with the
         interpretation or administration thereof, including, without
         limitation, the imposition, modification or deemed applicability of any
         reserves, deposits or similar requirements (such as, for example, but
         not limited to, a change in official reserve requirements) or (ii)
         other circumstances affecting the London interbank Eurodollar market;
         then the Borrowers shall pay to such Lender promptly upon written
         demand therefor, such additional amounts (in the form of an increased
         rate of, or a different method of calculating, interest or otherwise as
         such Lender may determine in its sole discretion) as may be required to
         compensate such Lender for such increased costs or reductions in
         amounts receivable hereunder. If any Lender becomes entitled to claim
         any additional amounts pursuant to this Section 4.1(c), it shall
         provide prompt notice thereof to the Borrowers, through the Agent,
         certifying (A) that one of the events described in this Section 4.1(c)
         has occurred and describing in reasonable detail the nature of such
         event, (B) as to the increased cost or reduced amount resulting from
         such event and (C) as to the additional amount demanded by such Lender
         and a reasonably detailed explanation of the calculation thereof
         provided that no such amount shall be payable with respect to any
         period commencing more than 90 days prior to the date such Lender first
         notifies the Borrowers of its intention to demand compensation therefor
         under this Section.

                  (d) Regulation D Compensation. In the event that a Lender is
         required to maintain reserves of the type contemplated by the
         definition of "Eurodollar Reserve

                                       30
<PAGE>   35

         Percentage", such Lender may require the Borrowers to pay,
         contemporaneously with each payment of interest on the Eurodollar
         Loans, additional interest on the related Eurodollar Loan of such
         Lender at a rate per annum determined by such Lender up to but not
         exceeding the excess of (i)(A) the applicable London Interbank Offered
         Rate divided by (B) one minus the Eurodollar Reserve Percentage over
         (ii) the applicable London Interbank Offered Rate. Any Lender wishing
         to require payment of such additional interest (x) shall so notify the
         Borrowers and the Agent, in which case such additional interest on the
         Eurodollar Loans of such Lender shall be payable to such Lender at the
         place indicated in such notice with respect to each Interest Period
         commencing at least three Business Days after the giving of such notice
         and (y) shall notify the Borrowers at least three Business Days prior
         to each date on which interest is payable on the Eurodollar Loans of
         the amount then due it under this Section. Each such notification shall
         be accompanied by such information as the Borrowers may reasonably
         request.

         Each determination and calculation made by a Lender under this Section
4.1 shall, absent manifest error, be binding and conclusive on the parties
hereto. Any conversions of Eurodollar Loans made pursuant to this Section 4.1
shall subject the Borrowers to the payments required by Section 4.3 to the
extent applicable. This Section shall survive termination of this Credit
Agreement and the other Credit Documents and payment of the Loans and all other
amounts payable hereunder.

         4.2 CAPITAL ADEQUACY.

         If any Lender has determined that the adoption or becoming effective,
after the date hereof, of any applicable law, rule or regulation regarding
capital adequacy, or any change therein (after the date hereof), or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent corporation)
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's (or parent corporation's) capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such Lender (or
its parent corporation) could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's (or
parent corporation's) policies with respect to capital adequacy), then, upon
notice from such Lender (which shall include the basis and calculations in
reasonable detail supporting the compensation requested in such notice), and
receipt by the Borrowers of such written notice from such Lender (with a copy to
the Agent) the Borrowers shall be obligated to pay to such Lender such
additional amount or amounts as will compensate such Lender on an after tax
basis (after taking into account applicable deductions and credits in respect of
the amount so indemnified) for such reduction provided that no such amount shall
be payable with respect to any period commencing more than 90 days prior to the
date such Lender first notifies the Borrowers of its intention to demand
compensation therefor under this Section. Each determination by any Lender of
amounts owing under this Section 4.2 shall, absent manifest error, be conclusive
and binding on the parties hereto. The covenants of this Section 4.2 shall
survive termination of this Credit Agreement and the other Credit Documents and
the payment of the Loans and all other amounts payable hereunder.

                                       31
<PAGE>   36

         4.3 COMPENSATION.

         The Borrowers promise to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrowers in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrowers have given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by the Borrowers in making any prepayment of a Eurodollar Loan after
the Borrowers have given a notice thereof in accordance with the provisions of
this Credit Agreement, (c) the making of a prepayment of Eurodollar Loans on a
day which is not the last day of an Interest Period with respect thereto and (d)
the payment, continuation or conversion of a Eurodollar Loan on a day which is
not the last day of the Interest Period applicable thereto or the failure to
repay a Eurodollar Loan when required by the terms of this Credit Agreement.
Such indemnification may include an amount equal to (i) an amount of interest
calculated at the Eurodollar Rate which would have accrued on the amount in
question, for the period from the date of such prepayment or of such failure to
borrow, convert, continue or repay to the last day of the applicable Interest
Period (or, in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such failure) in each
case at the applicable rate of interest for such Eurodollar Loans provided for
herein minus (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
Eurocurrency market. If any Lender becomes entitled to claim any additional
amounts pursuant to this Section 4.3, it shall provide prompt notice thereof to
the Borrower, through the Agent, as to the additional amount demanded by such
Lender and a reasonably detailed explanation of the calculation thereof. The
covenants in this Section 4.3 shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable hereunder.

         4.4 TAXES.

                  (a) Except as provided below in this Section 4.4, all payments
         made by the Borrowers under this Credit Agreement and any Notes shall
         be made free and clear of, and without deduction or withholding for or
         on account of, any present or future income, stamp or other taxes,
         levies, imposts, duties, charges, fees, deductions or withholdings, now
         or hereafter imposed, levied, collected, withheld or assessed by any
         court, or governmental body, agency or other official, excluding taxes
         measured by or imposed upon the net income of any Lender or its
         applicable lending office, or any branch or affiliate thereof, and all
         franchise taxes, branch taxes, taxes on doing business or taxes on the
         capital or net worth of any Lender or its applicable lending office, or
         any branch or affiliate thereof, in each case imposed in lieu of net
         income taxes: (i) by the jurisdiction under the laws of which such
         Lender, applicable lending office, branch or affiliate is organized or
         is located, or in which its principal executive office is located, or
         any nation within which such jurisdiction is located or any political
         subdivision thereof; or (ii) by reason of any connection between the
         jurisdiction imposing such tax and such Lender, applicable lending
         office, branch or affiliate other than a connection arising solely from

                                       32
<PAGE>   37

         such Lender having executed, delivered or performed its obligations, or
         received payment under or enforced, this Credit Agreement or any Notes.
         If any such non-excluded taxes, levies, imposts, duties, charges, fees,
         deductions or withholdings ("Non-Excluded Taxes") are required to be
         withheld from any amounts payable to an Agent or any Lender hereunder
         or under any Notes, (A) the amounts so payable to the Agent or such
         Lender shall be increased to the extent necessary to yield to the Agent
         or such Lender (after payment of all Non-Excluded Taxes) interest or
         any such other amounts payable hereunder at the rates or in the amounts
         specified in this Credit Agreement and any Notes, provided, however,
         that the Borrowers shall be entitled to deduct and withhold any Non-
         Excluded Taxes and shall not be required to increase any such amounts
         payable to any Lender that is not organized under the laws of the
         United States of America or a state thereof if such Lender fails to
         comply with the requirements of paragraph (b) of this Section 4.4
         whenever any Non-Excluded Taxes are payable by the Borrowers, and (B)
         as promptly as possible after requested, the Borrowers shall send to
         the Agent for its own account or for the account of such Lender, as the
         case may be, a certified copy of an original official receipt received
         by the Borrowers showing payment thereof. If the Borrowers fail to pay
         any Non-Excluded Taxes when due to the appropriate taxing authority or
         fails to remit to the Agent the required receipts or other required
         documentary evidence, the Borrowers shall indemnify the Agent and any
         Lender for any incremental Non-Excluded Taxes, interest or penalties
         that may become payable by the Agent or any Lender as a result of any
         such failure. The agreements in this Section 4.4 shall survive the
         termination of this Credit Agreement and the payment of the Loans and
         all other amounts payable hereunder.

                  (b) Each Lender that is not incorporated under the laws of the
         United States of America or a state thereof shall:

                                    (i) (A) on or before the date of any payment
                                    by the Borrowers under this Credit Agreement
                                    or the Notes to such Lender, deliver to the
                                    Borrowers and the Agent (x) two duly
                                    completed copies of United States Internal
                                    Revenue Service Form W-8BEN or W-8ECI, or
                                    any successor applicable form, as the case
                                    may be, certifying that it is entitled to
                                    receive payments under this Credit Agreement
                                    and any Notes without deduction or
                                    withholding of any United States federal
                                    income taxes and (y) an Internal Revenue
                                    Service Form W-8 or W-9, or successor
                                    applicable form, as the case may be,
                                    certifying that it is entitled to an
                                    exemption from United States backup
                                    withholding tax;

                                            (B) deliver to the Borrowers and the
                                    Agent two further copies of any such form or
                                    certification on or before the date that any
                                    such form or certification expires or
                                    becomes obsolete and after the occurrence of
                                    any event requiring a change in the most
                                    recent form previously delivered by it to
                                    the Borrower; and

                                       33
<PAGE>   38

                                             (C) obtain such extensions of time
                                    for filing and complete such forms or
                                    certifications as may reasonably be
                                    requested by the Borrowers or the Agent; or

                           (ii) in the case of any such Lender that is not a
                  "bank" within the meaning of Section 881(c)(3)(A) of the
                  Internal Revenue Code, (A) represent to the Borrowers (for the
                  benefit of the Borrowers and the Agent) that it is not a bank
                  within the meaning of Section 881 (c)(3)(A) of the Internal
                  Revenue Code, (B) agree to furnish to the Borrowers, on or
                  before the date of any payment by the Borrowers, with a copy
                  to the Agent, two accurate and complete original signed copies
                  of Internal Revenue Service Form W-8, or successor applicable
                  form, certifying to such Lender's legal entitlement at the
                  date of such certificate to an exemption from U.S. withholding
                  tax under the provisions of Section 881(c) of the Internal
                  Revenue Code with respect to payments to be made under this
                  Credit Agreement and any Notes (and to deliver to the
                  Borrowers and the Agent two further copies of such form on or
                  before the date it expires or becomes obsolete and after the
                  occurrence of any event requiring a change in the most
                  recently provided form and, if necessary, obtain any
                  extensions of time reasonably requested by the Borrowers or
                  the Agent for filing and completing such forms), and (C)
                  agree, to the extent legally entitled to do so, upon
                  reasonable request by the Borrowers, to provide to the
                  Borrowers (for the benefit of the Borrowers and the Agent)
                  such other forms as may be reasonably required in order to
                  establish the legal entitlement of such Lender to an exemption
                  from withholding with respect to payments under this Credit
                  Agreement and any Notes.

                           Notwithstanding the above, if any change in treaty,
                  law or regulation has occurred after the date such Person
                  becomes a Lender hereunder which renders all such forms
                  inapplicable or which would prevent such Lender from duly
                  completing and delivering any such form with respect to it and
                  such Lender so advises the Borrowers and the Agent, then such
                  Lender shall be exempt from such requirements. Each Person
                  that shall become a Lender or a participant of a Lender
                  pursuant to Section 11.3 shall, upon the effectiveness of the
                  related transfer, be required to provide all of the forms,
                  certifications and statements required pursuant to this
                  subsection (b); provided that in the case of a participant of
                  a Lender, the obligations of such participant of a Lender
                  pursuant to this subsection (b) shall be determined as if the
                  participant of a Lender were a Lender except that such
                  participant of a Lender shall furnish all such required forms,
                  certifications and statements to the Lender from which the
                  related participation shall have been purchased.

         4.5 REPLACEMENT OF LENDERS.

         The Agent and each Lender shall use reasonable efforts to avoid or
mitigate any increased cost or suspension of the availability of an interest
rate under Sections 4.1 through 4.4 above to the greatest extent practicable
(including transferring the Loans to another lending

                                       34
<PAGE>   39

office or Affiliate of a Lender) unless, in the opinion of the Agent or such
Lender, such efforts would be likely to have an adverse effect upon it. In the
event a Lender makes a request to the Borrowers for additional payments in
accordance with Section 4.1, 4.2 or 4.4, or suspends Eurodollar Loans under
Section 4.1, then, provided that no Default or Event of Default has occurred and
is continuing at such time, the Borrowers may, at their own expense (such
expense to include any transfer fee payable to the Agent under Section 11.3(b)
and any expense pursuant to Section 4) and in its sole discretion, require such
Lender to transfer and assign in whole (but not in part), without recourse (in
accordance with and subject to the terms and conditions of Section 11.3(b)), all
of its interests, rights and obligations under this Credit Agreement to an
Eligible Assignee which shall assume such assigned obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (a)
such assignment shall not conflict with any law, rule or regulation or order of
any court or other Governmental Authority and (b) the Borrowers or such assignee
shall have paid to the assigning Lender in immediately available funds the
principal of and interest accrued to the date of such payment on the portion of
the Loans hereunder held by such assigning Lender and all other amounts owed to
such assigning Lender hereunder, including amounts owed pursuant to Sections 4.1
through 4.4.

                                   SECTION 5.

                              CONDITIONS PRECEDENT

         5.1 CLOSING CONDITIONS.

         The obligation of the Lenders to enter into this Credit Agreement is
subject to satisfaction (or waiver) of the following conditions:

                  (a) Executed Credit Documents. Receipt by the Agent of duly
         executed copies of (i) this Credit Agreement, (ii) the Notes and (iii)
         all other Credit Documents, each in form and substance acceptable to
         the Lenders.

                  (b) Organizational Documents.

                           (i) Receipt by the Agent of the following with
                  respect to Duke Energy Field Services, LLC:

                                    (A) Certificate of Formation. A copy of the
                           certificate of formation of such Borrower certified
                           to be true and complete by the appropriate
                           Governmental Authority of the State of Delaware and
                           certified by an authorized officer of such Borrower
                           to be true and correct as of the Effective Date.

                                    (B) LLC Agreement. A copy of the LLC
                           Agreement of such Borrower certified by an authorized
                           officer of such Borrower to be true and correct as of
                           the Effective Date.

                                       35
<PAGE>   40

                                    (C) Resolutions. Copies of resolutions of
                           the members of such Borrower approving and adopting
                           the Credit Documents to which such Borrower is a
                           party, the transactions contemplated therein and
                           authorizing execution and delivery thereof and
                           certified by an authorized officer of such Borrower
                           to be in full force and effect as of the Effective
                           Date.

                                    (D) Good Standing. Copies of certificates of
                           good standing, existence or their equivalent with
                           respect to such Borrower certified as of a recent
                           date by the appropriate Governmental Authorities of
                           the State of Delaware.

                                    (E) Incumbency. An incumbency certificate
                           certified by an authorized officer to be true and
                           correct as of the Effective Date.

                           (ii) Receipt by the Agent of the following with
                  respect to Duke Energy Field Services Corporation:

                                    (A) Charter Documents. Copies of the
                           articles or certificates of incorporation or other
                           charter documents of such Borrower certified to be
                           true and complete as of a recent date by the
                           appropriate Governmental Authority of the State of
                           Delaware and certified by a secretary or assistant
                           secretary of such Borrower to be true and correct as
                           of the Effective Date.

                                    (B) Bylaws. A copy of the bylaws or other
                           governing documents of such Borrower certified by a
                           secretary or assistant secretary of such Borrower to
                           be true and correct as of the Effective Date.

                                    (C) Resolutions. Copies of resolutions of
                           the Board of Directors of such Borrower approving and
                           adopting the Credit Documents to which it is a party,
                           the transactions contemplated therein and authorizing
                           execution and delivery thereof, certified by a
                           secretary or assistant secretary of such Borrower to
                           be true and correct and in force and effect as of the
                           Effective Date.

                                    (D) Good Standing. Copies of certificates of
                           good standing, existence or its equivalent with
                           respect to such Borrower certified as of a recent
                           date by the appropriate Governmental Authorities of
                           the State of Delaware.

                                    (E) Incumbency. An incumbency certificate of
                           such Borrower certified by a secretary or assistant
                           secretary to be true and correct as of the Effective
                           Date.

                                       36
<PAGE>   41

                  (c) Opinion of Counsel. Receipt by the Agent of an opinion
         from legal counsel to the Borrowers, addressed to the Agent on behalf
         of the Lenders and dated as of the Effective Date, in form and
         substance satisfactory to the Agent.

                  (d) Financial Statements. Receipt by the Lenders of such
         financial information regarding the Borrowers as the Lenders may
         reasonably request.

                  (e) Fees and Expenses. Payment by the Borrowers of all fees
         and expenses owed by it to the Lenders and the Agent, including,
         without limitation, payment to the Agent of the fees set forth in the
         Fee Letter.

                  (f) Litigation. As of the Closing Date, there shall be no
         material actions, suits, investigations or legal, equitable,
         arbitration or administrative proceedings pending or threatened against
         a Borrower which are likely to be decided adversely to such Borrower
         and if so decided would have a Material Adverse Effect.

                  (g) Material Adverse Effect. As of the Closing Date, no event
         or condition shall have occurred since September 30, 2000 that would
         have or would be reasonably expected to have a Material Adverse Effect.

                  (h) Borrowers' Certificate. The Agent shall have received a
         certificate or certificates executed by an Approved Officer of the
         Borrowers, on behalf of the Borrowers, as of the Closing Date stating
         that (i) the Borrowers are in compliance with all existing financial
         obligations, unless such non-compliance would not have a Material
         Adverse Effect, (ii) no action, suit, investigation or proceeding is
         pending or, to such officer's knowledge, threatened in any court or
         before any arbitrator or governmental instrumentality that purports to
         affect a Borrower or any transaction contemplated by the Credit
         Documents, if such action, suit, investigation or proceeding is likely
         to be adversely determined and if adversely determined would have a
         Material Adverse Effect, (iii) the financial statements and information
         delivered to the Agent on or before the Closing Date were prepared in
         good faith and in accordance with GAAP and (iv) immediately after
         giving effect to this Credit Agreement, the other Credit Documents and
         all the transactions contemplated herein and therein to occur on such
         date, (A) no Default or Event of Default exists, (B) all
         representations and warranties contained herein and in the other Credit
         Documents are true and correct in all material respects on and as of
         the date made and (C) the Borrowers are in compliance with the
         financial covenant set forth in Section 7.10.

                  (i) Existing Credit Facility. All loans and obligations under
         the Existing Credit Facility shall have been paid in full and all
         commitments thereunder shall have terminated.

                  (j) Other. Receipt by the Lenders of such other documents,
         instruments, agreements or information as reasonably requested by any
         Lender.

                                       37
<PAGE>   42

         5.2 CONDITIONS TO LOANS.

         In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make new Loans nor shall the Issuing Lender be
required to issue or extend a Letter of Credit (and the Lenders shall not be
obligated to participate in any Letter of Credit) unless:

                  (a) Request. The Borrowers shall have timely delivered (i) in
         the case of any new Loan, to the Agent, an appropriate Notice of
         Borrowing, duly executed and completed, by the time specified in
         Section 2.1 and (ii) in the case of any Letter of Credit, to the
         Issuing Lender, an appropriate request for issuance of a Letter of
         Credit in accordance with the provisions of Section 2.2.

                  (b) Representations and Warranties. The representations and
         warranties made by the Borrowers in this Credit Agreement are true and
         correct in all material respects at and as if made as of the date of
         the funding of the Loans or the issuance of the Letters of Credit, as
         applicable (except to the extent such representations and warranties
         expressly and exclusively relate to an earlier date).

                  (c) No Default. No Default or Event of Default shall exist or
         be continuing either prior to or after giving effect thereto.

                  (d) Availability. Immediately after giving effect to the
         making of a Loan (and the application of the proceeds thereof) or to
         the issuance of a Letter of Credit, as the case may be, (i) the sum of
         the Loans outstanding plus LOC Obligations outstanding shall not exceed
         the Revolving Committed Amount and (ii) the sum of LOC Obligations
         outstanding shall not exceed the LOC Committed Amount.

The delivery of each Notice of Borrowing and each request for a Letter of Credit
shall constitute a representation and warranty by the Borrowers of the
correctness of the matters specified in subsections (b), (c) and (d) above.

                                   SECTION 6.

                         REPRESENTATIONS AND WARRANTIES

         The Borrowers hereby represents and warrants to each Lender that:

         6.1 ORGANIZATION AND GOOD STANDING.

         Each Borrower (a) is a limited liability company or a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware, (b) is duly qualified and in good standing as a foreign limited
liability company or corporation authorized to do business in every jurisdiction
where the failure to so qualify would have a Material Adverse Effect and (c) has

                                       38
<PAGE>   43

the requisite power and authority to own its properties and to carry on its
business as now conducted and as proposed to be conducted.

         6.2 DUE AUTHORIZATION.

         Each Borrower (a) has the requisite power and authority to execute,
deliver and perform this Credit Agreement and the other Credit Documents and to
incur the obligations herein and therein provided for and (b) has been
authorized by all necessary action to execute, deliver and perform this Credit
Agreement and the other Credit Documents.

         6.3 NO CONFLICTS.

         Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated herein and therein, nor
performance of and compliance with the terms and provisions hereof and thereof
by each Borrower will (a) violate or conflict with any provision of its
organizational documents or bylaws, (b) materially violate, contravene or
conflict with any law (including without limitation, the Public Utility Holding
Company Act of 1935, as amended), regulation (including without limitation,
Regulation U or Regulation X), order, writ, judgment, injunction, decree or
permit applicable to it, (c) materially violate, contravene or conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound or (d) result in
or require the creation of any Lien upon or with respect to its properties.

         6.4 CONSENTS.

         No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or Governmental Authority or third
party is required in connection with the execution, delivery or performance of
this Credit Agreement or any of the other Credit Documents that has not been
obtained.

         6.5 ENFORCEABLE OBLIGATIONS.

         This Credit Agreement and the other Credit Documents have been duly
executed and delivered and constitute legal, valid and binding obligations of
the Borrowers enforceable against the Borrowers in accordance with their
respective terms, except as may be limited by bankruptcy or insolvency laws or
similar laws affecting creditors' rights generally or by general equitable
principles.

         6.6 FINANCIAL CONDITION.

         The financial statements delivered to the Lenders pursuant to Section
5.1(d) and pursuant to Section 7.1(a) and (b): (i) have been prepared in
accordance with GAAP (subject to the provisions of Section 1.3) and (ii) present
fairly the financial condition, results of operations and

                                       39
<PAGE>   44

cash flows of the Borrowers as of such date and for such periods (subject, in
the case of interim statements, to normal year-end adjustments and the absence
of footnotes).

         6.7 TAXES.

         Each Borrower and each of its Material Subsidiaries has filed, or
caused to be filed, all material tax returns (federal, state, local and foreign)
required to be filed and paid all amounts of taxes shown thereon to be due
(including interest and penalties) and has paid all other taxes, fees,
assessments and other governmental charges (including mortgage recording taxes,
documentary stamp taxes and intangibles taxes) owing by it, except (a) for such
taxes which are not yet delinquent or that are being contested in good faith and
by proper proceedings, and against which adequate reserves are being maintained
in accordance with GAAP or (b) where such nonfiling or nonpayment would not have
a Material Adverse Effect.

         6.8 COMPLIANCE WITH LAW.

         Each Borrower and each of its Material Subsidiaries is in compliance
with all laws, rules, regulations, orders, decrees and requirements of
Governmental Authorities applicable to it or to its properties (including,
without limitation, ERISA, the Code and Environmental Laws), except (a) where
the necessity of compliance therewith is being contested in good faith by
appropriate proceedings or (b) such failure to comply would not have or would
not be reasonably expected to have a Material Adverse Effect.

         6.9 USE OF PROCEEDS; MARGIN STOCK.

         The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.7. None of such proceeds will be used for the
purpose of (a) purchasing or carrying any "margin stock" as defined in
Regulation U or Regulation X, (b) for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry "margin stock",
(c) for any other purpose which might constitute this transaction a "purpose
credit" within the meaning of Regulation U or Regulation X or (d) for the
acquisition of another Person unless the board of directors (or other comparable
governing body) or stockholders, as appropriate, of such Person has approved
such acquisition.

         6.10 GOVERNMENT REGULATION.

         Each Borrower is exempt from the provisions of the Public Utility
Holding Company Act of 1935, as amended. Neither Borrower is an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, or controlled by such a company.

         6.11 SOLVENCY.

         Each Borrower is and, after the consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.

                                       40
<PAGE>   45

         6.12 ENVIRONMENTAL MATTERS.

         Except as would not result or be reasonably expected to result in a
Material Adverse Effect: (a) each of the properties of the Borrowers (the
"Properties") and all operations at the Properties are in compliance with all
applicable Environmental Laws, (b) there is no violation of any Environmental
Law with respect to the Properties or the businesses operated by the Borrowers
(the "Businesses"), and (c) there are no conditions relating to the Businesses
or Properties that would reasonably be expected to give rise to a liability
under any applicable Environmental Laws.

         6.13 SUBSIDIARIES.

         Set forth on Schedule 6.13 is a list of all Material Subsidiaries of
the Borrowers.

         6.14 LITIGATION.

         There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge either of the
Borrowers, threatened against a Borrower which (a) are likely to be decided
adversely against a Borrower and (b) if so decided would have or would
reasonably be expected to have a Material Adverse Effect.

                                   SECTION 7.

                              AFFIRMATIVE COVENANTS

         Each Borrower hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest, fees and other obligations hereunder, have been paid in full and the
Commitments and Letters of Credit shall have terminated:

         7.1 INFORMATION COVENANTS.

         The Borrowers will furnish, or cause to be furnished, to the Agent and
each of the Lenders:

                  (a) Annual Financial Statements. As soon as available, and in
         any event within 120 days after the close of each fiscal year of the
         Borrowers, a consolidated balance sheet of the Borrowers and their
         Subsidiaries as of the end of such fiscal year, together with a related
         consolidated income statement and related statements of cash flows,
         capitalization and retained earnings for such fiscal year, setting
         forth in comparative form figures for the preceding fiscal year, all
         such financial information described above to be audited by independent
         certified public accountants of recognized national standing and whose
         opinion, which shall be furnished to the Agent, shall be to the effect
         that such financial statements have been prepared in accordance with
         GAAP (except for changes with which such accountants concur); provided
         that the Borrowers' Form 10-K Annual Report as filed with

                                       41
<PAGE>   46

         the Securities and Exchange Commission, without exhibits, will satisfy
         the requirements of this Section 7.1(a).

                  (b) Quarterly Financial Statements. As soon as available, and
         in any event within 60 days after the close of each fiscal quarter of
         the Borrowers (other than the fourth fiscal quarter) a consolidated
         balance sheet of the Borrowers and their Subsidiaries as of the end of
         such fiscal quarter, together with a related consolidated income
         statement and related statement of cash flows for such fiscal quarter
         in each case setting forth in comparative form figures for the
         corresponding period of the preceding fiscal year, and accompanied by a
         certificate of an Approved Officer of the Borrowers to the effect that
         such quarterly financial statements fairly present in all material
         respects the financial condition of the Borrowers and have been
         prepared in accordance with GAAP, subject to changes resulting from
         audit and normal year-end audit adjustments to same; provided that the
         Borrowers' Form 10-Q Quarterly Report as filed with the Securities and
         Exchange Commission, without exhibits, will satisfy the requirements of
         this Section 7.1(b).

                  (c) Officer's Certificate. At the time of delivery of the
         financial statements provided for in Sections 7.1(a) and 7.1(b) above,
         a certificate of an Approved Officer of the Borrowers, substantially in
         the Form of Exhibit 7.1(c), (i) demonstrating compliance with the
         financial covenant contained in Section 7.10 by calculation thereof as
         of the end of each such fiscal period, (ii) stating that no Default or
         Event of Default exists, or if any Default or Event of Default does
         exist, specifying the nature and extent thereof and what action the
         Borrowers propose to take with respect thereto and (iii) updating
         Schedule 6.13 with respect to Material Subsidiaries, if appropriate.

                  (d) Reports. Promptly upon transmission or receipt thereof,
         copies of any filings and registrations with, and reports to or from,
         the Securities and Exchange Commission, or any successor agency, and
         copies of all financial statements, proxy statements, notices and
         reports as a Borrower shall send to its equityholders.

                  (e) Notices. Within five days after any officer of a Borrower
         with responsibility relating thereto obtaining knowledge thereof, the
         Borrowers will give written notice to the Agent immediately of (i) the
         occurrence of a Default or Event of Default, specifying the nature and
         existence thereof and what action the Borrowers propose to take with
         respect thereto, and (ii) the occurrence of any of the following with
         respect to the Borrowers: (A) the pendency or commencement of any
         litigation, arbitral or governmental proceeding against a Borrower the
         claim of which is likely to be decided adversely to such Borrower and,
         if adversely determined, would have or would be reasonably expected to
         have a Material Adverse Effect or (B) the institution of any
         proceedings against a Borrower with respect to, or the receipt of
         notice by such Person of potential liability or responsibility for
         violation or alleged violation of, any federal, state or local law,
         rule or regulation (including, without limitation, any Environmental
         Law) that is likely to be decided adversely to a Borrower and, if
         adversely decided, would have a Material Adverse Effect.

                                       42
<PAGE>   47

                  (f) ERISA. Upon a Borrower or any ERISA Affiliate obtaining
         knowledge thereof, the Borrowers will give written notice to the Agent
         promptly (and in any event within five Business Days) of: (i) any event
         or condition, including, but not limited to, any Reportable Event, that
         constitutes, or would be reasonably expected to lead to, a Termination
         Event if such Termination Event would have a Material Adverse Effect;
         (ii) with respect to any Multiemployer Plan, the receipt of notice as
         prescribed in ERISA or otherwise of any withdrawal liability assessed
         against a Borrower or any ERISA Affiliate, or of a determination that
         any Multiemployer Plan is in reorganization or insolvent (both within
         the meaning of Title IV of ERISA); (iii) the failure to make full
         payment on or before the due date (including extensions) thereof of all
         amounts which a Borrower or any of its Subsidiaries or ERISA Affiliates
         is required to contribute to each Plan pursuant to its terms and as
         required to meet the minimum funding standard set forth in ERISA and
         the Code with respect thereto; or (iv) any change in the funding status
         of any Plan that would have or would be reasonably expected to have a
         Material Adverse Effect; together, with a description of any such event
         or condition or a copy of any such notice and a statement by an officer
         of a Borrower briefly setting forth the details regarding such event,
         condition, or notice, and the action, if any, which has been or is
         being taken or is proposed to be taken with respect thereto. Promptly
         upon request, each Borrower shall furnish the Agent and each of the
         Lenders with such additional information concerning any Plan as may be
         reasonably requested, including, but not limited to, copies of each
         annual report/return (Form 5500 series), as well as all schedules and
         attachments thereto required to be filed with the Department of Labor
         and/or the Internal Revenue Service pursuant to ERISA and the Code,
         respectively, for each "plan year" (within the meaning of Section 3(39)
         of ERISA).

                  (g) Debt Rating Changes. Upon any change in its Debt Rating,
         the Borrower shall promptly deliver such information to the Agent.

                  (h) Other Information. With reasonable promptness upon any
         such request, such other information regarding the business, properties
         or financial condition of the Borrowers and their Subsidiaries as the
         Agent or the Required Lenders may reasonably request.

         Information required to be delivered pursuant to this Sections 7.1(a),
7.1(b) and 7.1(d) shall be deemed to have been delivered on the date on which
the Borrowers provide notice to the Lenders that such information has been
posted on the Securities and Exchange Commission website on the Internet at
sec.gov/edaux/searches.htm or at another website identified in such notice and
accessible by the Lenders without charge; provided that (i) such notice may be
included in a certificate delivered pursuant to Section 7.1(c) and (ii) the
Borrowers shall deliver paper copies of the information referred to in Sections
7.1(a), 7.1(b) and 7.1(d), to any Lender that requests such delivery.

         7.2 PRESERVATION OF EXISTENCE AND FRANCHISES.

         Each Borrower will, and will cause each Material Subsidiary to, do all
things necessary to preserve and keep in full force and effect its existence and
rights, franchises and authority; provided,

                                       43
<PAGE>   48

however, that, subject to Section 8.3, a Borrower shall not be required to
preserve any such existence, right or franchise if it in good faith determines
that preservation thereof is no longer necessary or desirable in the conduct of
its business and that the loss thereof is not disadvantageous in any material
respect to the Lenders.

         7.3 BOOKS AND RECORDS.

         Each Borrower will keep, and will cause its Material Subsidiaries to
keep, complete and accurate books and records of its transactions in accordance
with good accounting practices on the basis of GAAP (including the establishment
and maintenance of appropriate reserves).

         7.4 COMPLIANCE WITH LAW.

         Each Borrower will comply, and will cause each Material Subsidiary to
comply, with all laws (including, without limitation, all Environmental Laws and
ERISA laws), rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its property, if
(a) the failure to comply would have or would be reasonably expected to have a
Material Adverse Effect or (b) the necessity of compliance therewith is being
contested in good faith by appropriate proceedings.

         7.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.

         Each Borrower will, and will cause each Material Subsidiary to, pay,
settle or discharge (a) all taxes, assessments and governmental charges or
levies imposed upon it, or upon its income or profits, or upon any of its
properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon any of its properties, and (c) all of its other
Indebtedness as it shall become due; provided, however, that no Borrower shall
be required to pay any such tax, assessment, charge, levy, claim or Indebtedness
which (i) is being contested in good faith by appropriate proceedings and as to
which adequate reserves therefor have been established in accordance with GAAP
or (ii) the nonpayment of which would not have a Material Adverse Effect.

         7.6 MAINTENANCE OF PROPERTY; INSURANCE.

                  (a) Each Borrower will keep, and will cause each Material
         Subsidiary to keep, all property useful and necessary in its business
         in good working order and condition, ordinary wear and tear excepted.

                  (b) Each Borrower will, and will cause each of its Material
         Subsidiaries to, maintain (either in the name of such Borrower or in
         such Material Subsidiary's own name) with financially sound and
         responsible insurance companies, insurance on all their respective
         properties in at least such amounts and against at least such risks
         (and with such risk retention) as are usually insured against in the
         same general area by companies of established repute engaged in the
         same or a similar business; provided that self-insurance by a Borrower
         or any such Material Subsidiary shall not be deemed a

                                       44
<PAGE>   49

         violation of this covenant to the extent that companies engaged in
         similar businesses and owning similar properties in the same general
         areas in which the Borrowers or such Material Subsidiary operates
         self-insure.

         7.7 USE OF PROCEEDS.

         The proceeds of the Loans may be used solely (a) to provide credit
support for each Borrower's commercial paper and (b) for working capital and
other general corporate purposes of each Borrower. The Borrowers will use the
Letters of Credit solely for the purposes set forth in Section 2.2(a).

         7.8 AUDITS/INSPECTIONS.

         Upon reasonable notice and during normal business hours, each Borrower
will, and will cause its Material Subsidiaries to, permit representatives
appointed by the Agent, including, without limitation, independent accountants,
agents, attorneys, and appraisers to visit and inspect each Borrower's and its
Material Subsidiaries' property, including its books and records, its accounts
receivable and inventory, each Borrower's and its Material Subsidiaries'
facilities and its other business assets, and to make photocopies or photographs
thereof and to write down and record any information such representatives obtain
and shall permit the Agent or its representatives to investigate and verify the
accuracy of information provided to the Lenders and to discuss all such matters
with the officers, employees and representatives of each Borrower and its
Material Subsidiaries.

         7.9 MAINTENANCE OF OWNERSHIP.

         Each Borrower will maintain ownership of all Capital Stock of each
Material Subsidiary, directly or indirectly, free and clear of all Liens except
as permitted by Section 8.3. The Borrowers will take such action as necessary to
ensure that, on and after the date of the Merger, Duke Energy Field Services,
LLC will be (and will remain) a wholly owned Subsidiary, direct or indirect, of
Duke Energy Field Services Corporation unless Duke Energy Field Services, LLC is
merged with and into Duke Energy Field Services Corporation.

         7.10 DEBT TO CAPITALIZATION RATIO.

         The Debt to Capitalization Ratio shall, at all times, be less than or
equal to the following:

                  (a) From the Effective Date until but not including the
         earlier of (i) the date on which the Merger is consummated and (ii) the
         date on which a Corporate Conversion occurs, .53 to 1.0; and

                  (b) From the earlier of (i) the date on which the Merger is
         consummated and (ii) the date on which a Corporate Conversion occurs
         and thereafter, .57 to 1.0.

                                       45
<PAGE>   50

                                   SECTION 8.

                               NEGATIVE COVENANTS

         Each Borrower hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest, fees and other obligations hereunder, have been paid in full and the
Commitments and Letters of Credit shall have terminated:

         8.1 NATURE OF BUSINESS.

         The Borrowers will not, and will not permit any of their Material
Subsidiaries to, materially alter the character of their business on a
consolidated basis from that conducted as of the Closing Date.

         8.2. LIENS.

         A Borrower will not create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it or any of its Material Subsidiaries,
except for the following:

                  (a) Liens granted by such Borrower or any Material Subsidiary
         existing on the date of this Credit Agreement securing Indebtedness
         outstanding on the date of this Credit Agreement as set forth on
         Schedule 8.2.

                  (b) any Lien on any asset of any Person existing at the time
         such Person is merged or consolidated with or into a Borrower or any
         Material Subsidiary and not created in contemplation of such event.

                  (c) any Lien existing on any asset prior to the acquisition
         thereof by a Borrower or any Material Subsidiary and not created in
         contemplation of such acquisition.

                  (d) any Lien on any asset securing Indebtedness incurred or
         assumed for the purpose of financing all or any part of the cost of
         acquiring such asset; provided that such Lien attaches to such asset
         concurrently with or within 180 days after the acquisition thereof.

                  (e) any Lien arising out of the refinancing, extension,
         renewal or refunding of any Indebtedness secured by any Lien permitted
         by any of the foregoing clauses of this Section 8.2; provided that such
         Indebtedness is not increased and is not secured by any additional
         assets.

                  (f) Liens for taxes, assessments or other governmental charges
         or levies not yet due or which are being contested in good faith by
         appropriate proceedings and with respect to which adequate reserves or
         other appropriate provisions are being maintained in accordance with
         GAAP.

                                       46
<PAGE>   51

                  (g) statutory Liens of landlords and Liens of carriers,
         warehousemen, mechanics, materialmen and interest owners of oil and gas
         production and other Liens imposed by law, created in the ordinary
         course of business and for amounts not past due for more than 60 days
         or which are being contested in good faith by appropriate proceedings
         which are sufficient to prevent imminent foreclosure of such Liens, are
         promptly instituted and diligently conducted and with respect to which
         adequate reserves or other appropriate provisions are being maintained
         in accordance with GAAP.

                  (h) Liens incurred or deposits made in the ordinary course of
         business (including, without limitation, surety bonds and appeal bonds)
         in connection with workers' compensation, unemployment insurance and
         other types of social security benefits or to secure the performance of
         tenders, bids, leases, contracts (other than for the repayment of
         Indebtedness), statutory obligations and other similar obligations or
         arising as a result of progress payments under government contracts.

                  (i) easements (including, without limitation, reciprocal
         easement agreements and utility agreements), rights-of-way, covenants,
         consents, reservations, encroachments, variations and other
         restrictions, charges or encumbrances (whether or not recorded)
         affecting the use of real property.

                  (j) Liens with respect to judgments and attachments which do
         not result in an Event of Default.

                  (k) Liens, deposits or pledges to secure the performance of
         bids, tenders, contracts (other than contracts for the payment of
         money), leases (permitted under the terms of this Agreement), public or
         statutory obligations, surety, stay, appeal, indemnity, performance or
         other obligations arising in the ordinary course of business.

                  (l) rights of first refusal entered into in the ordinary
         course of business.

                  (m) Liens consisting of any (i) rights reserved to or vested
         in any municipality or governmental, statutory or public authority to
         control or regulate any property of a Borrower or any Material
         Subsidiary or to use such property in any manner which does not
         materially impair the use of such property for the purpose for which it
         is held by a Borrower or any such Material Subsidiary, (ii) obligations
         or duties to any municipality or public authority with respect to any
         franchise, grant, license, lease or permit and the rights reserved or
         vested in any Governmental Authority or public utility to terminate any
         such franchise, grant, license, lease or permit or to condemn or
         expropriate any property, or (iii) zoning laws, ordinances or municipal
         regulations.

                  (n) liens on deposits required by any Person with whom a
         Borrower or any Material Subsidiary enters into forward contracts,
         futures contracts, swap agreements or other commodities contracts in
         the ordinary course of business.

                                       47
<PAGE>   52

                  (o) liens on assets in connection with asset securitizations
         entered into by a Borrower or one of its Subsidiaries as long as such
         liens do not secure indebtedness exceeding $400,000,000, in the
         aggregate, at any one time.

                  (p) other Liens, including Liens imposed by Environmental
         Laws, arising in the ordinary course of its business which (i) do not
         secure Indebtedness, (ii) do not secure any obligation in an amount
         exceeding $100,000,000 at any time, (iii) do not in the aggregate
         materially detract from the value of its assets or materially impair
         the use thereof in the operation of its business or (iv) in addition to
         those Liens described in clause (ii) above, secure reimbursement
         obligations under letters of credit not exceeding $100,000,000
         outstanding at any one time other than Letters of Credit.

         8.3 CONSOLIDATION AND MERGER.

         A Borrower will not, and will not permit any of its Material
Subsidiaries to, (a) enter into any transaction of merger or (b) consolidate,
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); provided that: (i) a Person (including a Subsidiary of a Borrower)
may be merged or consolidated with or into a Borrower so long as (A) such
Borrower shall be the continuing or surviving entity, (B) no Default or Event of
Default shall exist or be caused thereby and (C) such Borrower is not downgraded
by S&P or Moody's as a result of such transaction to a rating below BBB- or
Baa3, as applicable, (ii) a Material Subsidiary may merge with or into another
Subsidiary of a Borrower and (iii) a Corporate Conversion can occur as long as
the Agent receives, on behalf of the Lenders, such documents, instruments,
resolutions and opinions as the Agent may reasonably require to ensure that (A)
each Borrower remains liable for the Borrowers Obligations in accordance with
the terms hereof and (B) all of the rights and remedies of the Lenders under the
Credit Documents remain in full force and effect.

         8.4 SALE OR LEASE OF ASSETS.

         During the term of this Credit Agreement, a Borrower will not, directly
or indirectly, convey, sell, lease, transfer or otherwise dispose of assets,
business or operations (other than the assets set forth on Schedule 8.4) with an
aggregate book value in excess of twenty-five percent (25%) of its consolidated
total assets, as determined in accordance with GAAP, as calculated as of the end
of the most recent fiscal quarter.

         8.5. TRANSACTIONS WITH AFFILIATES.

         A Borrower will not, and will not permit any Material Subsidiary to,
directly or indirectly, pay any funds to or for the account of, make any
investment in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect, any transaction with,
any officer, director, employee or Affiliate (other than a wholly-owned
Subsidiary) unless all such transactions between such Borrower and its Material
Subsidiaries on the one hand and any officer, director, employee or Affiliate
(other than a wholly-owned Subsidiary) on the other, taken in the aggregate and
not individually, shall be on an arms-length basis and on terms no less
favorable to such Borrower or such Material Subsidiary than could

                                       48
<PAGE>   53

have been obtained from a third party who was not an officer, director, employee
or Affiliate (other than a wholly-owned Subsidiary); provided that the foregoing
provisions of this Section shall not (a) prohibit a Borrower and each Material
Subsidiary from declaring or paying any lawful dividend or (b) prohibit a
Borrower or a Material Subsidiary from providing credit support for its
Subsidiaries as it deems appropriate in the ordinary course of business, so long
as, in each case, after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing.

         8.6 INDEBTEDNESS.

         The Borrowers will not permit the amount of Indebtedness of the
Subsidiaries of the Borrowers (excluding Duke Energy Field Services LLC, if
applicable) to exceed ten percent (10%) of all Indebtedness of the Borrowers and
their Subsidiaries on a consolidated basis.

                                   SECTION 9.

                                EVENTS OF DEFAULT

         9.1 EVENTS OF DEFAULT.

         An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):

                  (a) Payment. A Borrower shall: (i) default in the payment when
         due of any principal amount of any of the Loans or of any reimbursement
         obligation arising from drawings under any Letters of Credit; or (ii)
         default, and such default shall continue for five or more Business
         Days, in the payment when due of any interest on the Loans or of any
         fees or other amounts owing hereunder, under any of the other Credit
         Documents or in connection herewith.

                  (b) Representations. Any representation, warranty or statement
         made or deemed to be made by a Borrower herein, in any of the other
         Credit Documents, or in any statement or certificate delivered or
         required to be delivered pursuant hereto or thereto shall prove to have
         been untrue in any material respect on the date as of which it was
         deemed to have been made.

                  (c) Covenants. A Borrower shall:

                           (i) default in the due performance or observance of
                  any term, covenant or agreement contained in Section 7.1(e),
                  7.8, 7.10, 8.1, 8.2, 8.3, 8.4, 8.5 and 8.6.

                           (ii) default in the due performance or observance by
                  it of any term, covenant or agreement (other than those
                  referred to in subsections (a), (b), or (c)(i) of this Section
                  9.1) contained in this Credit Agreement or any other Credit

                                       49
<PAGE>   54

                  Document and such default shall continue unremedied for a
                  period of at least 30 days after the earlier of (A) a
                  Respondible Officer of the Borrower becoming aware of such
                  default or (B) notice of such default is given by the Agent or
                  a Lender to the Borrower.

                  (d) Credit Documents. Any Credit Document shall fail to be in
         full force and effect or a Borrower shall so assert or any Credit
         Document shall fail to give the Agent and/or the Lenders the rights,
         powers and privileges purported to be created thereby.

                  (e) Bankruptcy, etc. The occurrence of any of the following
         with respect to a Borrower or a Material Subsidiary (i) a court or
         governmental agency having jurisdiction in the premises shall enter a
         decree or order for relief in respect of a Borrower or a Material
         Subsidiary in an involuntary case under any applicable bankruptcy,
         insolvency or other similar law now or hereafter in effect, or appoint
         a receiver, liquidator, assignee, custodian, trustee, sequestrator or
         similar official of a Borrower or a Material Subsidiary or for any
         substantial part of its property or ordering the winding up or
         liquidation of its affairs; or (ii) an involuntary case under any
         applicable bankruptcy, insolvency or other similar law now or hereafter
         in effect is commenced against a Borrower or a Material Subsidiary and
         such petition remains unstayed and in effect for a period of 90
         consecutive days; or (iii) a Borrower or a Material Subsidiary shall
         commence a voluntary case under any applicable bankruptcy, insolvency
         or other similar law now or hereafter in effect, or consent to the
         entry of an order for relief in an involuntary case under any such law,
         or consent to the appointment or taking possession by a receiver,
         liquidator, assignee, custodian, trustee, sequestrator or similar
         official of such Person or any substantial part of its property or make
         any general assignment for the benefit of creditors; or (iv) a Borrower
         or a Material Subsidiary shall admit in writing its inability to pay
         its debts generally as they become due or any action shall be taken by
         such Person in furtherance of any of the aforesaid purposes.

                  (f) Defaults under Other Agreements. With respect to any
         Indebtedness, including any Off Balance Sheet Indebtedness, in excess
         of $100,000,000 (other than Indebtedness outstanding under this Credit
         Agreement) of a Borrower or any Material Subsidiary, such Borrower or
         such Material Subsidiary shall (A) default in any payment (beyond the
         applicable grace period with respect thereto, if any) with respect to
         any such Indebtedness or fail to timely pay such Indebtedness when due,
         or (B) default (after giving effect to any applicable grace period) in
         the observance or performance of any covenant or agreement relating to
         such Indebtedness or contained in any instrument or agreement
         evidencing, securing or relating thereto, or any other event or
         condition shall occur or condition exist, the effect of which default
         or other event or condition in this clause (B) is to cause any such
         Indebtedness to become due prior to its stated maturity.

                  (g) Judgments. One or more judgments, orders, or decrees shall
         be entered against a Borrower or a Material Subsidiary involving a
         liability of $50,000,000 or more, in the aggregate, (to the extent not
         paid or covered by insurance provided by a carrier who has acknowledged
         coverage) and such judgments, orders or decrees shall continue
         unsatisfied, undischarged and unstayed for a period ending on the first
         to occur of (i) the last day on

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<PAGE>   55

         which such judgment, order or decree becomes final and unappealable
         and, where applicable, with the status of a judicial lien or (ii) 45
         days.

                  (h) ERISA. The occurrence of any of the following events or
         conditions which could result in a liability of a Borrower or an ERISA
         Affiliate of $50,000,000 or more in the aggregate: (i) any "accumulated
         funding deficiency," as such term is defined in Section 302 of ERISA
         and Section 412 of the Code, whether or not waived, shall exist with
         respect to any Plan, or any lien shall arise on the assets of a
         Borrower or any ERISA Affiliate in favor of the PBGC or a Plan; (ii) a
         Termination Event shall occur with respect to a Single Employer Plan
         which is, in the reasonable opinion of the Agent, likely to result in
         the termination of such Plan for purposes of Title IV of ERISA; (iii) a
         Termination Event shall occur with respect to a Multiemployer Plan or
         Multiple Employer Plan which is, in the reasonable opinion of the
         Agent, likely to result in (A) the termination of such Plan for
         purposes of Title IV of ERISA, or (B) a Borrower or any ERISA Affiliate
         incurring any liability in connection with a withdrawal from,
         reorganization of (within the meaning of Section 4241 of ERISA), or
         insolvency (within the meaning of Section 4245 of ERISA) of such Plan;
         or (iv) any prohibited transaction (within the meaning of Section 406
         of ERISA or Section 4975 of the Code) or breach of fiduciary
         responsibility shall occur which would be reasonably expected to
         subject a Borrower or any ERISA Affiliate to any liability under
         Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
         Code, or under any agreement or other instrument pursuant to which a
         Borrower or any ERISA Affiliate has agreed or is required to indemnify
         any person against any such liability.

                  (i) Change of Control. The occurrence of any Change of
         Control.

         9.2 ACCELERATION; REMEDIES.

         Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the Required Lenders
(or the Lenders as may be required hereunder), the Agent may, with the consent
of the Required Lenders, and shall, upon the request and direction of the
Required Lenders, by written notice to the Borrowers take any of the following
actions without prejudice to the rights of the Agent or any Lender to enforce
its claims against the Borrowers, except as otherwise specifically provided for
herein:

                  (i) Termination of Commitments. Declare the Commitments
         terminated whereupon the Commitments shall be immediately terminated.

                  (ii) Acceleration of Loans and Letters of Credit. Declare the
         unpaid principal of and any accrued interest in respect of all Loans,
         any reimbursement obligations arising from drawings under Letters of
         Credit and any and all other indebtedness or obligations of any and
         every kind owing by a Borrower to any of the Lenders hereunder to be
         due whereupon the same shall be immediately due and payable without
         presentment, demand, protest or other notice of any kind, all of which
         are hereby waived by the Borrowers.

                                       51
<PAGE>   56

                  (iii) Cash Collateral. Direct the Borrowers to pay (and the
         Borrowers agree that upon receipt of such notice, or upon the
         occurrence of an Event of Default under Section 9.1(e), it will
         immediately pay) to the Issuing Lender additional cash, to be held by
         the Issuing Lender, for the benefit of the Lenders, in a cash
         collateral account as security for the LOC Obligations in respect of
         subsequent drawings under all then outstanding Letters of Credit in an
         amount equal to the maximum aggregate amount which may be drawn under
         all Letters of Credits then outstanding.

                  (iv) Enforcement of Rights. Enforce any and all rights and
         interests created and existing under the Credit Documents, including,
         without limitation, all rights of set-off.

Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(e) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders and the Agent hereunder shall immediately
become due and payable without the giving of any notice or other action by the
Agent or the Lenders.

Notwithstanding the fact that enforcement powers reside primarily with the
Agent, each Lender has, to the extent permitted by law, a separate right of
payment and shall be considered a separate "creditor" holding a separate "claim"
within the meaning of Section 101(5) of the Bankruptcy Code or any other
insolvency statute.

         9.3 ALLOCATION OF PAYMENTS AFTER EVENT OF DEFAULT.

         Notwithstanding any other provision of this Credit Agreement, after the
occurrence of an Event of Default, all amounts collected or received by the
Agent or any Lender on account of amounts outstanding under any of the Credit
Documents shall be paid over or delivered as follows:

                  FIRST, to the payment of all reasonable out-of-pocket costs
         and expenses (including without limitation reasonable attorneys' fees)
         of the Agent and the Lenders in connection with enforcing the rights of
         the Lenders under the Credit Documents, pro rata as set forth below;

                  SECOND, to payment of any fees owed to the Agent, or any
         Lender, pro rata as set forth below;

                  THIRD, to the payment of all accrued interest payable to the
         Lenders hereunder, pro rata as set forth below;

                  FOURTH, to the payment of the outstanding principal amount of
         the Loans and to the payment or cash collateralization of the
         outstanding LOC Obligations, pro rata, as set forth below;

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<PAGE>   57

                  FIFTH, to all other obligations which shall have become due
         and payable under the Credit Documents and not repaid pursuant to
         clauses "FIRST" through "FOURTH" above; and

                  SIXTH, to the payment of the surplus, if any, to whomever may
         be lawfully entitled to receive such surplus.

In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans and
LOC Obligations held by such Lender bears to the aggregate then outstanding
Loans and LOC Obligations), of amounts available to be applied; and (c) to the
extent that any amounts available for distribution pursuant to clause "FOURTH"
above are attributable to the issued but undrawn amount of outstanding Letters
of Credit, such amounts shall be held by the Agent in a cash collateral account
and applied (i) first, to reimburse the Issuing Lender from time to time for any
drawings under such Letters of Credit and (ii) then, following the expiration of
all Letters of Credit, to all other obligations of the types described in
clauses "FOURTH", "FIFTH" and "SIXTH" above in the manner provided in this
Section 9.3.

                                   SECTION 10

                                AGENCY PROVISIONS

         10.1 APPOINTMENT.

         Each Lender hereby designates and appoints Bank of America, N.A. as
agent of such Lender to act as specified herein and the other Credit Documents,
and each such Lender hereby authorizes the Agent, as the agent for such Lender,
to take such action on its behalf under the provisions of this Credit Agreement
and the other Credit Documents and to exercise such powers and perform such
duties as are expressly delegated by the terms hereof and of the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere herein and in the other
Credit Documents, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein and therein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or any of the other Credit Documents, or shall otherwise exist
against the Agent. The provisions of this Section are solely for the benefit of
the Agent and the Lenders and the Borrowers shall not have any rights as a third
party beneficiary of the provisions hereof. In performing its functions and
duties under this Credit Agreement and the other Credit Documents, the Agent
shall act solely as agent of the Lenders and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with or
for a Borrower. All institutions acting as a Co-Syndication Agent or
Co-Documentation Agent hereunder shall have no obligations in such capacity
under the Credit Documents.

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<PAGE>   58

         10.2 DELEGATION OF DUTIES.

         The Agent may execute any of its duties hereunder or under the other
Credit Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible to the Lenders for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.

         10.3 EXCULPATORY PROVISIONS.

         Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for its
or such Person's own gross negligence or willful misconduct), or responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by a Borrower contained herein or in any of the other Credit
Documents or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection herewith or
in connection with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of a Borrower
to perform its obligations hereunder or thereunder. The Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Credit Agreement, or any
of the other Credit Documents or for any representations, warranties, recitals
or statements made herein or therein or made by a Borrower in any written or
oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Lenders or by or on behalf of a Borrower
to the Agent or any Lender or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or Event of
Default or to inspect the properties, books or records of a Borrower. The Agent
is not a trustee for the Lenders and owes no fiduciary duty to the Lenders.

         10.4 RELIANCE ON COMMUNICATIONS.

         The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrowers, independent accountants and other experts
selected by the Agent with reasonable care). The Agent may deem and treat the
Lenders as the owner of its interests hereunder for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Agent in accordance with Section 11.3(b). The Agent shall be
fully justified in failing or refusing to take any action under this Credit
Agreement or under any of the other Credit Documents unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all

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<PAGE>   59

cases be fully protected in acting, or in refraining from acting, hereunder or
under any of the other Credit Documents in accordance with a request of the
Required Lenders (or to the extent specifically provided in Section 11.6, all
the Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).

         10.5 NOTICE OF DEFAULT.

         The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or the Borrowers referring to the Credit Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Agent receives such a notice, the
Agent shall give prompt notice thereof to the Lenders. The Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders.

         10.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.

         Each Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the Agent or any
Affiliate thereof hereinafter taken, including any review of the affairs of the
Borrowers, shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Borrowers
and made its own decision to make its Extensions of Credit hereunder and enter
into this Credit Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Credit Agreement, and to make such investigation as
it deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Borrowers. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, assets, property, financial or
other conditions, prospects or creditworthiness of the Borrowers which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.

         10.7 INDEMNIFICATION.

         Each Lender agrees to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrowers and without limiting the obligation
of the Borrowers to do so), ratably according to its Commitment Percentage, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any time
following the payment

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<PAGE>   60

in full of the Borrowers Obligations) be imposed on, incurred by or asserted
against the Agent in its capacity as such in any way relating to or arising out
of this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section 10.7
shall survive the payment of the Borrowers Obligations and all other amounts
payable hereunder and under the other Credit Documents and the termination of
the Commitments.

         10.8 AGENT IN ITS INDIVIDUAL CAPACITY.

         The Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrowers as though the
Agent were not Agent hereunder. With respect to the Loans made, Letters of
Credit issued and all Borrowers Obligations owing to it, the Agent shall have
the same rights and powers under this Credit Agreement as any Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" shall include the Agent in its individual capacity.

         10.9 SUCCESSOR AGENT.

         The Agent may, at any time, resign upon 30 days written notice to the
Lenders and the Borrowers. Upon any such resignation, the Borrowers with the
consent of the Required Lenders (such consent of the Required Lenders not to be
unreasonably withheld or delayed) shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed and shall have
accepted such appointment within 30 days after the notice of resignation, then
the retiring Agent shall select a successor Agent provided such successor is a
Lender hereunder or qualifies as an Eligible Assignee (or if no Eligible
Assignee shall have been so appointed by the retiring Agent and shall have
accepted such appointment, then the Lenders shall perform all obligations of the
retiring Agent hereunder until such time, if any, as a successor Agent shall
have been appointed and shall have accepted such appointment as provided for
above). Upon the acceptance of any appointment as Agent hereunder by a
successor, 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 as Agent,
as appropriate, under this Credit Agreement and the other Credit Documents and
the provisions of this Section 10.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Credit
Agreement.

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                                   SECTION 11.

                                  MISCELLANEOUS

         11.1 NOTICES.

         Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device), (c)
the Business Day following the day on which the same has been delivered prepaid
(or pursuant to an invoice arrangement) to a reputable national overnight air
courier service, or (d) the third Business Day following the day on which the
same is sent by certified or registered mail, postage prepaid, in each case to
the respective parties at the address or telecopy numbers set forth on Schedule
11.1, or at such other address as such party may specify by written notice to
the other parties hereto.

         11.2 RIGHT OF SET-OFF.

         In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and the commencement of remedies described in
Section 9.2, each Lender is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind (all of which
rights being hereby expressly waived), to set-off and to appropriate and apply
any and all deposits (general or special) and any other indebtedness at any time
held or owing by such Lender (including, without limitation branches, agencies
or Affiliates of such Lender wherever located) to or for the credit or the
account of a Borrower against obligations and liabilities of such Borrower to
the Lenders hereunder, under the Notes, the other Credit Documents or otherwise,
irrespective of whether the Agent or the Lenders shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them,
may be contingent or unmatured, and any such set-off shall be deemed to have
been made immediately upon the occurrence of an Event of Default even though
such charge is made or entered on the books of such Lender subsequent thereto.

         11.3 BENEFIT OF AGREEMENT.

                  (a) Generally. This Credit Agreement 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, except as set forth
         in Section 2.10, a Borrower may not assign and transfer any of its
         interests without the prior written consent of the Lenders; and
         provided further that the rights of each Lender to transfer, assign or
         grant participations in its rights and/or obligations hereunder shall
         be limited as set forth below in this Section 11.3.

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<PAGE>   62

                  (b) Assignments. Each Lender may assign to one or more
         Eligible Assignees all or a portion of its rights and obligations under
         this Credit Agreement (including, without limitation, all or a portion
         of its Loans, its Notes, and its Commitment); provided, however, that:

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

                           (ii) except in the case of an assignment to another
                  Lender or an assignment of all of a Lender's rights and
                  obligations under this Credit Agreement, any such partial
                  assignment shall be in an amount at least equal to $10,000,000
                  (or, if less, the remaining amount of the Commitment being
                  assigned by such Lender) and an integral multiple of
                  $1,000,000 in excess thereof; and

                           (iii) the parties to such assignment shall execute
                  and deliver to the Agent for its acceptance an Assignment
                  Agreement in substantially the form of Exhibit 11.3(b),
                  together with a processing fee from the assignor of $3,500.

         Upon execution, delivery, and acceptance of such Assignment Agreement,
         the assignee thereunder shall be a party hereto and, to the extent of
         such assignment, have the obligations, rights, and benefits of a Lender
         hereunder and the assigning Lender shall, to the extent of such
         assignment, relinquish its rights (except those rights hereunder which
         by their terms expressly survive) and be released from its obligations
         under this Credit Agreement. Upon the consummation of any assignment
         pursuant to this Section 11.3(b), the assignor, the Agent and the
         Borrowers shall make appropriate arrangements so that, if required, new
         Notes are issued to the assignor and the assignee. If the assignee is
         not incorporated under the laws of the United States of America or a
         state thereof, it shall deliver to the Borrowers and the Agent
         certification as to exemption from deduction or withholding of taxes in
         accordance with Section 4.4.

                  By executing and delivering an assignment agreement in
         accordance with this Section 11.3(b), the assigning Lender thereunder
         and the assignee thereunder shall be deemed to confirm to and agree
         with each other and the other parties hereto as follows: (A) such
         assigning Lender warrants that it is the legal and beneficial owner of
         the interest being assigned thereby free and clear of any adverse claim
         created by such assigning Lender and the assignee warrants that it is
         an Eligible Assignee; (B) except as set forth in clause (A) above, such
         assigning Lender makes no representation or warranty and assumes no
         responsibility with respect to any statements, warranties or
         representations made in or in connection with this Credit Agreement,
         any of the other Credit Documents or any other instrument or document
         furnished pursuant hereto or thereto, or the execution, legality,
         validity, enforceability, genuineness, sufficiency or value of this
         Credit Agreement, any of the other Credit Documents or any other
         instrument or document furnished pursuant hereto or thereto or the
         financial condition of the Borrowers or the performance or observance
         by the Borrowers of any of their obligations under this Credit
         Agreement, any of the other Credit Documents or any other instrument or
         document furnished pursuant hereto or thereto; (C) such assigning
         Lender and such

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<PAGE>   63

         assignee represents and warrants that it is legally authorized to enter
         into such assignment agreement; (D) such assignee confirms that it has
         received a copy of this Credit Agreement, the other Credit Documents
         and such other documents and information as it has deemed appropriate
         to make its own credit analysis and decision to enter into such
         assignment agreement; (E) such assignee will independently and without
         reliance upon the Agent, such assigning Lender or any other Lender, and
         based on such documents and information as it shall deem appropriate at
         the time, continue to make its own credit decisions in taking or not
         taking action under this Credit Agreement and the other Credit
         Documents; (F) such assignee appoints and authorizes the Agent to take
         such action on its behalf and to exercise such powers under this Credit
         Agreement or any other Credit Document as are delegated to the Agent by
         the terms hereof or thereof, together with such powers as are
         reasonably incidental thereto; and (G) such assignee agrees that it
         will perform in accordance with their terms all the obligations which
         by the terms of this Credit Agreement and the other Credit Documents
         are required to be performed by it as a Lender.

                  (c) Register. The Agent shall maintain a copy of each
         Assignment Agreement delivered to and accepted by 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 owing to, each Lender
         from time to time (the "Register"). The entries in the Register shall
         be conclusive and binding for all purposes, absent manifest error, and
         the Borrowers, the Agent and the Lenders may treat each Person whose
         name is recorded in the Register as a Lender hereunder for all purposes
         of this Credit Agreement. The Register shall be available for
         inspection by the Borrowers or any Lender at any reasonable time and
         from time to time upon reasonable prior notice.

                  (d) Acceptance. Upon its receipt of an Assignment Agreement
         executed by the parties thereto, together with any Note subject to such
         assignment and payment of the processing fee, the Agent shall, if such
         Assignment Agreement has been completed and is in substantially the
         form of Exhibit 11.3(b) hereto, (i) accept such Assignment Agreement,
         (ii) record the information contained therein in the Register and (iii)
         give prompt notice thereof to the parties thereto.

                  (e) Participations. Each Lender may sell participations to one
         or more Persons in all or a portion of its rights, obligations or
         rights and obligations under this Credit Agreement (including all or a
         portion of its Commitment, its Notes and its Loans); provided, however,
         that (i) such Lender's obligations under this Credit Agreement shall
         remain unchanged, (ii) such Lender shall remain solely responsible to
         the other parties hereto for the performance of such obligations, (iii)
         the participant shall be entitled to the benefit of the yield
         protection provisions contained in Sections 4.1 through 4.4, inclusive,
         but shall not be entitled to receive any amount greater than such
         Lender would have been able to receive, and (iv) the Borrowers shall
         continue to deal solely and directly with such Lender in connection
         with such Lender's rights and obligations under this Credit Agreement,
         and such Lender shall retain the sole right to enforce the obligations
         of the Borrowers relating to its Loans and its Notes and to approve any
         amendment,

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<PAGE>   64

         modification, or waiver of any provision of this Credit Agreement
         (other than amendments, modifications, or waivers decreasing the amount
         of principal of or the rate at which interest is payable on such Loans
         or Notes, extending any scheduled principal payment date or date fixed
         for the payment of interest on such Loans or Notes, or extending its
         Commitment).

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

                  (g) Information. Any Lender may furnish any information
         concerning the Borrowers in the possession of such Lender from time to
         time to assignees and participants (including prospective assignees and
         participants).

         11.4 NO WAIVER; REMEDIES CUMULATIVE.

         No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrowers and the Agent or any
Lender shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any Lender would otherwise have. No notice to or demand on the
Borrowers in any case shall entitle the Borrowers to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Agent or the Lenders to any other or further action in any circumstances
without notice or demand.

         11.5 PAYMENT OF EXPENSES, ETC.

         The Borrowers agree to: (i) pay all reasonable out-of-pocket costs and
expenses of the Agent and Banc of America Securities LLC ("BAS") in connection
with (A) the negotiation, preparation, execution and delivery, syndication and
administration of this Credit Agreement and the other Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and expenses of Moore & Van Allen, PLLC, special counsel to
the Agent) and (B) any amendment, waiver or consent relating hereto and thereto
including, but not limited to, any such amendments, waivers or consents
resulting from or related to any work-out, renegotiation or restructure relating
to the performance by the Borrowers under this Credit Agreement, (ii) pay all
reasonable out-of-pocket costs and expenses of the Agent and each Lender in
connection with (A) enforcement of the Credit Documents and the documents and
instruments referred to therein (including, without limitation, in connection
with any such enforcement, the reasonable fees and disbursements of counsel for
the Agent and each of the Lenders (including the allocated cost of internal
counsel)) and (B) any bankruptcy or insolvency proceeding of a Borrower

                                       60
<PAGE>   65

and (iii) indemnify the Agent, BAS and each Lender, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding (whether or not the
Agent, BAS or any Lender is a party thereto) related to the entering into and/or
performance of any Credit Document or the use of proceeds of any Loans
(including other extensions of credit) hereunder or the consummation of any
other transactions contemplated in any Credit Document, including, without
limitation, the reasonable fees and disbursements of counsel and settlement
costs incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of negligence or willful misconduct on
the part of the Person to be indemnified).

         11.6 AMENDMENTS, WAIVERS AND CONSENTS.

         Neither this Credit Agreement, nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing and signed by the Required Lenders and the Borrowers; provided that no
such amendment, change, waiver, discharge or termination shall without the
consent of each Lender affected thereby:

                  (a) extend the Maturity Date or the Term Out Maturity Date, or
         postpone or extend the time for any payment or prepayment of principal
         or the time of payment of any reimbursement obligation, or any portion
         thereof, arising from drawings under Letters of Credit;

                  (b) reduce the rate or extend the time of payment of interest
         thereon or fees or other amounts payable hereunder;

                  (c) reduce or waive the principal amount of any Loan or of any
         reimbursement obligation, or any portion thereof, arising from drawings
         under Letters of Credit;

                  (d) increase or extend the Commitment of a Lender (it being
         understood and agreed that a waiver of any Default or Event of Default
         or a waiver of any mandatory reduction in the Commitments shall not
         constitute a change in the terms of any Commitment of any Lender);

                  (e) except as permitted by Section 2.10, consent to the
         assignment or transfer by a Borrower of any of its rights and
         obligations under (or in respect of) the Credit Documents or release a
         Borrower from its obligations under the Credit Documents;

                  (f) amend, modify or waive any provision of this Section 11.6
         or Section 3.6, 3.8, 5.2, 9.1(a), 11.2, 11.3 or 11.5; or

                                       61
<PAGE>   66

                  (g) reduce any percentage specified in, or otherwise modify,
         the definition of Required Lenders.

No provision of Section 10 may be amended or modified without the consent of the
Agent.

Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans or the
Letters of Credit, and each Lender acknowledges that the provisions of Section
1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set
forth herein and (y) the Required Lenders may consent to allow the Borrowers to
use cash collateral in the context of a bankruptcy or insolvency proceeding.

         11.7 COUNTERPARTS/TELECOPY.

         This Credit Agreement may be executed in any number of counterparts,
each of which where so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. Delivery of executed
counterparts by telecopy shall be as effective as an original and shall
constitute a representation that an original will be delivered.

         11.8 HEADINGS.

         The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.

         11.9 DEFAULTING LENDER.

         Each Lender understands and agrees that if such Lender is a Defaulting
Lender then it shall not be entitled to vote on any matter requiring the consent
of the Required Lenders or to object to any matter requiring the consent of all
the Lenders; provided, however, that (a) a Lender's Commitment may not be
increased without its consent whether or not it is a Defaulting Lender and (b)
all other benefits and obligations under the Loan Documents shall apply to such
Defaulting Lender.

         11.10 SURVIVAL OF INDEMNIFICATION AND REPRESENTATIONS AND WARRANTIES.

         All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Credit Agreement,
the making of the Loans, the issuance of the Letters of Credit and the repayment
of the Loans, LOC Obligations and other obligations and the termination of the
Commitments hereunder.

         11.11 GOVERNING LAW; VENUE.

                  (a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
         THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER
         SHALL BE GOVERNED BY AND

                                       62
<PAGE>   67

         CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
         NEW YORK. Any legal action or proceeding with respect to this Credit
         Agreement or any other Credit Document may be brought in the courts of
         the State of New York, or of the United States for the Southern
         District of New York, and, by execution and delivery of this Credit
         Agreement, each Borrower hereby irrevocably accepts for itself and in
         respect of its property, generally and unconditionally, the
         jurisdiction of such courts. Each Borrower further irrevocably consents
         to the service of process out of any of the aforementioned courts in
         any such action or proceeding by the mailing of copies thereof by
         registered or certified mail, postage prepaid, to it at the address for
         notices pursuant to Section 11.1, such service to become effective 30
         days after such mailing. Nothing herein shall affect the right of a
         Lender to serve process in any other manner permitted by law or to
         commence legal proceedings or to otherwise proceed against a Borrower
         in any other jurisdiction.

                  (b) Each Borrower hereby irrevocably waives any objection
         which it may now or hereafter have to the laying of venue of any of the
         aforesaid actions or proceedings arising out of or in connection with
         this Credit Agreement or any other Credit Document brought in the
         courts referred to in subsection (a) hereof and hereby further
         irrevocably waives and agrees not to plead or claim in any such court
         that any such action or proceeding brought in any such court has been
         brought in an inconvenient forum.

         11.12 WAIVER OF JURY TRIAL; WAIVER OF CONSEQUENTIAL DAMAGES.

         EACH OF THE PARTIES TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY. Each Borrower agrees not to assert any
claim against the Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys or agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to any of the transactions contemplated hereby or by
the other Credit Documents.

         11.13 SEVERABILITY.

         If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

                                       63
<PAGE>   68

         11.14 FURTHER ASSURANCES.

         Each Borrower agrees, upon the request of the Agent, to promptly take
such actions, as reasonably requested, as are necessary to carry out the intent
of this Credit Agreement and the other Credit Documents.

         11.15 ENTIRETY.

         This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.

         11.16 BINDING EFFECT; CONTINUING AGREEMENT.

                  (a) This Credit Agreement shall become effective at such time
         when all of the conditions set forth in Section 5.1 have been satisfied
         or waived by the Lenders and it shall have been executed by the
         Borrowers, the Agent and the Lenders, and thereafter this Credit
         Agreement shall be binding upon and inure to the benefit of the
         Borrowers, the Agent and each Lender and their respective successors
         and permitted assigns.

                  (b) This Credit Agreement shall be a continuing agreement and
         shall remain in full force and effect until all Loans, LOC Obligations,
         interest, fees and other Borrowers Obligations have been paid in full
         and all Commitments and Letters of Credit have been terminated. Upon
         such termination, the Borrowers shall have no further obligations
         (other than those provisions that expressly survive the termination
         thereof) under the Credit Documents; provided that should any payment,
         in whole or in part, of the Borrowers Obligations be rescinded or
         otherwise required to be restored or returned by the Agent or any
         Lender, whether as a result of any proceedings in bankruptcy or
         reorganization or otherwise, then the Credit Documents shall
         automatically be reinstated and all amounts required to be restored or
         returned and all costs and expenses incurred by the Agent or any Lender
         in connection therewith shall be deemed included as part of the
         Borrowers Obligations.

                  [Remainder of Page Intentionally Left Blank]

                                       64
<PAGE>   69

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

         Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.

BORROWERS:              DUKE ENERGY FIELD SERVICES, LLC
                        a Delaware limited liability company

                        By:          /s/ Rose M. Robeson
                            --------------------------------------------------
                        Name:            Rose M. Robeson
                             -------------------------------------------------
                        Title:           Vice President and Treasurer
                              ------------------------------------------------

                        DUKE ENERGY FIELD SERVICES CORPORATION,
                        a Delaware corporation

                        By:          /s/ John E. Jackson
                            --------------------------------------------------
                        Name:            John E. Jackson
                             -------------------------------------------------
                        Title:           Vice President and Controller
                              ------------------------------------------------

<PAGE>   70

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

LENDERS:                  BANK OF AMERICA, N.A., individually in its
                          capacity as a Lender and in its capacity as Agent

                          By:           /s/ Gretchen P. Burud
                              ------------------------------------------------
                          Name:             Gretchen P. Burud
                               -----------------------------------------------
                          Title:            Managing Director
                                ----------------------------------------------

<PAGE>   71

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                              THE CHASE MANHATTAN BANK

                              By:          /s/  Steven Wood
                                  ------------------------------------------
                              Name:             Steven Wood
                                   -----------------------------------------
                              Title:            Vice President
                                    ----------------------------------------

<PAGE>   72

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                               SUNTRUST BANK, INC.

                               By:          /s/  Steven J. Newby
                                   -------------------------------------------
                               Name:             Steven J. Newby
                                    ------------------------------------------
                               Title:            Vice President
                                     -----------------------------------------

<PAGE>   73

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                              THE BANK OF NOVA SCOTIA

                              By:           /s/ M. D. Smith
                                  ----------------------------------------
                              Name:             M. D. Smith
                                   ---------------------------------------
                              Title:            Agent
                                    --------------------------------------

<PAGE>   74

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                                  BANK ONE, NA

                                  By:          /s/  Madeleine N. Pember
                                      ----------------------------------------
                                  Name:             Madeleine N. Pember
                                       ---------------------------------------
                                  Title:            Vice President
                                        --------------------------------------

<PAGE>   75

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                                  CITIBANK, N.A.

                                  By:          /s/  Dan Brill
                                      ----------------------------------------
                                  Name:             Dan Brill
                                       ---------------------------------------
                                  Title:            Managing Director
                                        --------------------------------------

<PAGE>   76

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                        THE FUJI BANK, LIMITED

                        By:          /s/  Jacques Azagury
                            -------------------------------------------------
                        Name:             Jacques Azagury
                             ------------------------------------------------
                        Title:            Senior Vice President & Manager
                              -----------------------------------------------

<PAGE>   77

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                   BANK OF TOKYO-MITSUBISHI TRUST COMPANY

                   By:          /s/  Nicholas R. Battista
                       -----------------------------------------------------
                   Name:             Nicholas R. Battista
                        ----------------------------------------------------
                   Title:            Vice President and Manager
                         ---------------------------------------------------

<PAGE>   78

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                       COMMERZBANK AG, NEW YORK AND
                       GRAND CAYMAN BRANCHES

                       By:          /s/ Harry P. Yergey
                           -------------------------------------------------
                       Name:            Harry P. Yergey
                            ------------------------------------------------
                       Title:           Senior Vice President & Manager
                             -----------------------------------------------

                       By:          /s/ Subash R. Viswanathan
                           -------------------------------------------------
                       Name:            Subash R. Viswanathan
                            ------------------------------------------------
                       Title:           Senior Vice President
                             -----------------------------------------------

<PAGE>   79

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                       THE SUMITOMO BANK, LIMITED

                       By:          /s/  C. Michael Garrido
                           -------------------------------------------------
                       Name:             C. Michael Garrido
                            ------------------------------------------------
                       Title:            Senior Vice President
                             -----------------------------------------------

<PAGE>   80

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                       WELLS FARGO BANK (TEXAS) N.A.

                       By:          /s/  Todd Stornetta
                           --------------------------------------------------
                       Name:             Todd Stornetta
                            -------------------------------------------------
                       Title:            Vice President
                             ------------------------------------------------

<PAGE>   81

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                       U.S. BANK NATIONAL ASSOCIATION

                       By:          /s/  M. Ward Polzin
                           ---------------------------------------------------
                       Name:             M. Ward Polzin
                            --------------------------------------------------
                       Title:            Vice President
                             -------------------------------------------------

<PAGE>   82

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                                BARCLAYS BANK PLC

                                By:          /s/  Douglas Berneaaer
                                    -----------------------------------------
                                Name:             Douglas Berneaaer
                                     ----------------------------------------
                                Title:            Director
                                      ---------------------------------------

<PAGE>   83

      Signature Page to Duke Energy Field Services 364-Day Credit Agreement

                           MERRILL LYNCH BANK USA

                           By:          /s/  Preston Jackson
                               ----------------------------------------------
                           Name:             Preston Jackson
                                ---------------------------------------------
                           Title:            President
                                 --------------------------------------------<PAGE>   1

                                                                    EXHIBIT 10.1

                               CONTOUR ENERGY CO.

                     2001 STOCK OPTION AND STOCK AWARD PLAN
<PAGE>   2

                               CONTOUR ENERGY CO.

                     2001 STOCK OPTION AND STOCK AWARD PLAN

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
ARTICLE I -- PLAN...........................................   1
  1.1   Purpose.............................................   1
  1.2   Term of Plan........................................   1
ARTICLE II -- DEFINITIONS...................................   1
  2.1   Affiliate...........................................   1
  2.2   Award...............................................   1
  2.3   Board...............................................   1
  2.4   Change of Control...................................   1
  2.5   Code................................................   1
  2.6   Committee...........................................   1
  2.7   Company.............................................   2
  2.8   Disability..........................................   2
  2.9   Employee............................................   2
  2.10  Exchange Act........................................   2
  2.11  Fair Market Value...................................   2
  2.12  Holder..............................................   2
  2.13  Incentive Option....................................   2
  2.14  Mature Shares.......................................   2
  2.15  Nonqualified Option.................................   2
  2.16  Option..............................................   2
  2.17  Option Agreement....................................   2
  2.18  Plan................................................   2
  2.19  Restricted Stock....................................   2
  2.20  Restricted Stock Agreement..........................   2
  2.21  Restricted Stock Award..............................   2
  2.22  Retirement..........................................   2
  2.23  Stock...............................................   2
  2.24  Ten Percent Stockholder.............................   3
ARTICLE III -- ELIGIBILITY..................................   3
ARTICLE IV -- GENERAL PROVISIONS RELATING TO AWARDS.........   3
  4.1   Authority to Grant Awards...........................   3
  4.2   Dedicated Shares; Maximum Awards....................   3
  4.3   Non-Transferability.................................   3
  4.4   Requirements of Law.................................   3
  4.5   Recapitalization or Reorganization of the Company...   4
  4.6   Election Under Section 83(b) of the Code............   5
ARTICLE V -- OPTIONS........................................   6
  5.1   Type of Option......................................   6
  5.2   Exercise Price......................................   6
  5.3   Duration of Options.................................   6
  5.4   Amount Exercisable..................................   7
  5.5   Exercise of Options.................................   7
  5.6   Substitution Options................................   8
  5.7   No Rights as Stockholder............................   8
</Table>

                                        i
<PAGE>   3

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
ARTICLE VI -- RESTRICTED STOCK AWARDS.......................   8
  6.1   Restricted Stock Awards.............................   8
  6.2   Holder's Rights as Stockholder......................   8
ARTICLE VII -- ADMINISTRATION...............................   8
ARTICLE VIII -- AMENDMENT OR TERMINATION OF PLAN............   9
ARTICLE IX -- MISCELLANEOUS.................................   9
  9.1   No Establishment of a Trust Fund....................   9
  9.2   No Employment or Affiliation Obligation.............   9
  9.3   Forfeiture..........................................   9
  9.4   Tax Withholding.....................................  10
  9.5   Written Agreement...................................  10
  9.6   Indemnification of the Committee....................  10
  9.7   Gender..............................................  11
  9.8   Headings............................................  11
  9.9   Other Compensation Plans............................  11
  9.10  Other Options or Awards.............................  11
  9.11  Governing Law.......................................  11
</Table>

                                        ii
<PAGE>   4

                                   ARTICLE I

                                      PLAN

     1.1  Purpose.  The Plan is intended to advance the best interests of the
Company and its stockholders by providing those persons who have substantial
responsibility for the management and growth of the Company and its Affiliates
with additional incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in
their employment or affiliation with the Company or any of its Affiliates.

     1.2  Term of Plan.  The Plan is effective on March 22, 2001, if within one
year of that date it shall have been approved by the vote of the stockholders of
the Company, voting in accordance with the provisions of the Company's corporate
charter and by-laws and applicable state law. No Award shall be granted under
the Plan after March 21, 2008. The Plan shall remain in effect until all Awards
under the Plan have been satisfied or expired.

                                   ARTICLE II

                                  DEFINITIONS

     The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout the Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower or different
meaning.

     2.1  "Affiliate" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain. The term
"subsidiary corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.

     2.2  "Award" means any Incentive Option, Nonqualified Option or Restricted
Stock Award granted under the Plan.

     2.3  "Board" means the board of directors of the Company.

     2.4  "Change of Control" means if (i) the Company is merged or consolidated
with another corporation and as a result of such merger or consolidation less
than 50% of the outstanding voting securities of the surviving or resulting
corporation are owned in the aggregate by the former shareholders of the
Company; (ii) the Company sells all or substantially all of its assets to
another corporation, which is not a wholly-owned subsidiary of the Company;
(iii) any person or group within the meaning of the Exchange Act acquires
(together with voting securities of the Company held by such person or group)
30% or more of the outstanding voting securities of the Company (whether
directly, indirectly, beneficially or of record) pursuant to any transaction or
combination of transactions; (iv) there is a change of control of the Company of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirements; or (v) the
individuals who, at the beginning of any period of twelve consecutive months,
constituted the Board of Directors cease, for any reason, to constitute at least
a majority thereof, unless the nomination for election or election by the
Company's shareholders of each new director of the Company was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved.

     2.5  "Code" means the Internal Revenue Code of 1986, as amended.

     2.6  "Committee" means a committee of at least two persons appointed by the
Board.
                                        1
<PAGE>   5

     2.7  "Company" means Contour Energy Co., a Delaware corporation.

     2.8  "Disability" means a medically determinable mental or physical
impairment which, in the opinion of a physician selected by the Committee, shall
prevent the Holder from engaging in any substantial gainful activity and which
can be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months and which: (a) was not
contracted, suffered or incurred while the Holder was engaged in, or did not
result from having engaged in, a felonious criminal enterprise; (b) did not
result from alcoholism or addiction to narcotics; (c) did not result from an
injury incurred while a member of the Armed Forces of the United States for
which the Holder receives a military pension; and (d) did not result from an
intentionally self-inflicted injury. Notwithstanding the foregoing, the
Committee may provide for a different definition of "Disability" in a Holder's
Restricted Stock Agreement or Option Agreement relating to a Nonqualified
Option.

     2.9  "Employee" means a person employed by the Company or any Affiliate as
a common law employee.

     2.10  "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     2.11  "Fair Market Value" of the Stock as of any date means (a) the average
of the high and low sale prices of the Stock on that date on the principal
securities exchange on which the Stock is listed; or (b) if the Stock is not
listed on a securities exchange, the average of the high and low sale prices of
the Stock on that date as reported on the NASDAQ National Market System; or (c)
if the Stock is not listed on a securities exchange or the NASDAQ National
Market System, the average of the best ask and best bid quotations for the Stock
on that date as reported by The Nasdaq Stock Market, Inc. on the OTC Bulletin
Board; or (d) if none of the foregoing is applicable, an amount at the election
of the Committee equal to (x) the average between the closing bid and ask prices
per share of stock on the last preceding date on which those prices were
reported, or (y) that amount as determined by the Committee.

     2.12  "Holder" means a person who has been granted an Award or any person
who is entitled to payment under an Award in accordance with the terms of the
Plan.

     2.13  "Incentive Option" means an Option granted under the Plan which is
designated as an "Incentive Option" and satisfies the requirements of section
422 of the Code.

     2.14  "Mature Shares" means shares of Stock that the Holder has held for at
least six months.

     2.15  "Nonqualified Option" means an Option granted under the Plan other
than an Incentive Option.

     2.16  "Option" means either an Incentive Option or a Nonqualified Option
granted under the Plan to purchase shares of Stock.

     2.17  "Option Agreement" means the written agreement which sets out the
terms of an Option.

     2.18  "Plan" means the Contour Energy Co. 2001 Stock Option and Stock Award
Plan, as set forth in this document and as it may be amended from time to time.

     2.19  "Restricted Stock" means stock awarded or purchased under the Plan
pursuant to a Restricted Stock Agreement.

     2.20  "Restricted Stock Agreement" means the written agreement which sets
out the terms of a Restricted Stock Award.

     2.21  "Restricted Stock Award" means an Award of Restricted Stock.

     2.22  "Retirement" means the termination of an Employee's employment
relationship with the Company and all Affiliates after attaining the age of 65.

     2.23  "Stock" means the common stock of the Company, $.10 par value per
share, or, in the event that the outstanding shares of common stock are later
changed into or exchanged for a different class of stock or securities of the
Company or another corporation, that other stock or security.

                                        2
<PAGE>   6

     2.24  "Ten Percent Stockholder" means an individual who, at the time the
Option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock or series of the Company or of any
Affiliate. An individual shall be considered as owning the stock owned, directly
or indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors and lineal descendants; and stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust, shall be
considered as being owned proportionately by or for its stockholders, partners
or beneficiaries.

                                  ARTICLE III

                                  ELIGIBILITY

     The individuals who shall be eligible to receive Incentive Options shall be
those key Employees of the Company or any of its Affiliates as the Committee
shall determine from time to time. The individuals who shall be eligible to
receive Awards other than Incentive Options shall be those persons, including
Employees, consultants, advisors and directors, who have substantial
responsibility for the management and growth of the Company or any of its
Affiliates as the Committee shall determine from time to time.

                                   ARTICLE IV

                     GENERAL PROVISIONS RELATING TO AWARDS

     4.1  Authority to Grant Awards.  The Committee may grant Awards to those
key Employees of the Company or any of its Affiliates and other eligible persons
as it shall from time to time determine, under the terms and conditions of the
Plan. Subject only to any applicable limitations set out in the Plan, the number
of shares of Stock to be covered by any Award to be granted to any person shall
be as determined by the Committee.

     4.2  Dedicated Shares; Maximum Awards.  The maximum number of shares of
Stock with respect to which Awards may be granted under the Plan is 1,100,000.
Such shares of Stock may be treasury shares or authorized but unissued shares.
The maximum number of shares of Stock with respect to which Options may be
granted under the Plan is 1,100,000 shares. The maximum number of shares of
Stock with respect to which Restricted Stock Awards may be granted under the
Plan is 500,000 shares. The maximum number of shares with respect to which
Options may be granted to any person under the Plan during any calendar year is
500,000 shares. If a Holder's Option is cancelled, the cancelled Option
continues to be counted against the maximum number of shares of Stock for which
Options may be granted to the Holder under the Plan. The number of shares stated
in this Section 4.2 shall be subject to adjustment in accordance with the
provisions of Section 4.5. If any outstanding Award expires or terminates for
any reason or any Award is surrendered, the shares of Stock allocable to the
unexercised portion of that Award may again be subject to an Award under the
Plan.

     4.3  Non-Transferability.  Incentive Options shall not be transferable by
the Employee other than by will or under the laws of descent and distribution,
and shall be exercisable, during the Employee's lifetime, only by him. Except as
specified in the applicable Award agreements or in domestic relations court
orders, Awards other than Incentive Options shall not be transferable by the
Holder other than by will or under the laws of descent and distribution, and
shall be exercisable, during the Holder's lifetime, only by him. In the
discretion of the Committee, any attempt to transfer an Award other than under
the terms of the Plan and the applicable Award agreement may terminate the
Award.

     4.4  Requirements of Law.  The Company shall not be required to sell or
issue any Stock under any Award if issuing that Stock would constitute or result
in a violation by the Holder or the Company of any provision of any law, statute
or regulation of any governmental authority. Specifically, in connection with
any applicable statute or regulation relating to the registration of securities,
upon exercise of any Option or pursuant to any other Award, the Company shall
not be required to issue any Stock unless the Committee has received evidence
satisfactory to it to the effect that the Holder of that Award will not transfer
the Stock except in accordance with applicable law, including receipt of an
opinion of counsel satisfactory to the

                                        3
<PAGE>   7

Company to the effect that any proposed transfer complies with applicable law.
The determination by the Committee on this matter shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
Stock covered by the Plan pursuant to applicable securities laws of any country
or any political subdivision. In the event the Stock issuable on exercise of an
Option or pursuant to any other Award is not registered, the Company may imprint
on the certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under an Award, or the issuance of shares
pursuant thereto, to comply with any law or regulation of any governmental
authority.

     4.5  Changes in the Company's Capital Structure.  (a) The existence of
outstanding Awards shall not affect in any way the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stock ahead of or affecting
the Stock or its rights, the dissolution or liquidation of the Company, any sale
or transfer of all or any part of its assets or business or any other corporate
act or proceeding, whether of a similar character or otherwise.

     (b) If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of Stock outstanding, without receiving
compensation for it in money, services or property, then (i) the number, class
or series and per share price of shares of Stock subject to outstanding Options
under this Plan shall be appropriately adjusted in such a manner as to entitle a
Holder to receive upon exercise of an Option, for the same aggregate cash
consideration, the equivalent total number and class or series of shares he
would have received had he exercised his Option in full immediately prior to the
event requiring the adjustment, and (ii) the number and class or series of
shares of Stock then reserved to be issued under the Plan shall be adjusted by
substituting for the total number and class or series of shares of Stock then
reserved, that number and class or series of shares of Stock that would have
been received by the owner of an equal number of outstanding shares of each
class or series of Stock as the result of the event requiring the adjustment.

     (c) If while unexercised Options remain outstanding under the Plan (i) the
Company shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity other than an
entity that was wholly-owned by the Company immediately prior to such merger,
consolidation or other reorganization), (ii) the Company sells, leases or
exchanges or agrees to sell, lease or exchange all or substantially all of its
assets to any other person or entity (other than an entity wholly-owned by the
Company), (iii) the Company is to be dissolved or (iv) the Company is a party to
any other corporate transaction (as defined under section 424(a) of the Code and
applicable Department of Treasury Regulations) that is not described in clauses
(i), (ii) or (iii) of this sentence (each such event is referred to herein as a
"Corporate Change"), then, except as otherwise provided in an Option Agreement,
Section 5.4 or as a result of the Board's effectuation of one or more of the
alternatives described below, there shall be no acceleration of the time at
which any Option then outstanding may be exercised, and no later than ten days
after the approval by the stockholders of the Company of such Corporate Change,
the Board, acting in its sole and absolute discretion without the consent or
approval of any Holder, shall act to effect one or more of the following
alternatives, which may vary among individual Holders and which may vary among
Options held by any individual Holder:

          (A) accelerate the time at which some or all of the Options then
     outstanding may be exercised so that such Options may be exercised in full
     for a limited period of time on or before a specified date (before or after
     such Corporate Change) fixed by the Board, after which specified date all
     such Options that remain unexercised and all rights of Holders thereunder
     shall terminate;

          (B) require the mandatory surrender to the Company by all or selected
     Holders of some or all of the then outstanding Options held by such Holders
     (irrespective of whether such Options are then exercisable under the
     provisions of this Plan or the Option Agreements evidencing such Options)
     as of a date, before or after such Corporate Change, specified by the
     Board, in which event the Board shall

                                        4
<PAGE>   8

     thereupon cancel such Options and the Company shall pay to each such Holder
     an amount of cash per share equal to the excess, if any, of the per share
     price offered to stockholders of the Company in connection with such
     Corporate Change over the exercise prices under such Options for such
     shares;

          (C) with respect to all or selected Holders, have some or all of their
     then outstanding Options (whether vested or unvested) assumed or have a new
     Option substituted for some or all of their then outstanding Options
     (whether vested or unvested) by an entity which is a party to the
     transaction resulting in such Corporate Change and which is then employing
     him, or a parent or subsidiary of such entity, provided that (1) such
     assumption or substitution is on a basis where the excess of the aggregate
     fair market value of the shares subject to the Option immediately after the
     assumption or substitution over the aggregate exercise price of such shares
     is equal to the excess of the aggregate fair market value of all shares
     subject to the Option immediately before such assumption or substitution
     over the aggregate exercise price of such shares, and (2) the assumed
     rights under such existing Option or the substituted rights under such new
     Option as the case may be will have the same terms and conditions as the
     rights under the existing Option assumed or substituted for, as the case
     may be;

          (D) provide that the number and class or series of shares of Stock
     covered by an Option (whether vested or unvested) theretofore granted shall
     be adjusted so that such Option when exercised shall thereafter cover the
     number and class or series of shares of stock or other securities or
     property (including, without limitation, cash) to which the Holder would
     have been entitled pursuant to the terms of the agreement or plan relating
     to such Corporate Change if, immediately prior to such Corporate Change,
     the Holder had been the holder of record of the number of shares of Stock
     then covered by such Option; or

          (E) make such adjustments to Options then outstanding as the Board
     deems appropriate to reflect such Corporate Change (provided, however, that
     the Board may determine in its sole and absolute discretion that no such
     adjustment is necessary).

     In effecting one or more of alternatives (C), (D) or (E) above, and except
as otherwise may be provided in an Option Agreement, the Board, in its sole and
absolute discretion and without the consent or approval of any Holder, may
accelerate the time at which some or all Options then outstanding may be
exercised.

     (d) In the event of changes in the outstanding Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Option and not otherwise provided for by this Section 4.5,
any outstanding Options and any agreements evidencing such Options shall be
subject to adjustment by the Board in its sole and absolute discretion as to the
number and price of shares of stock or other consideration subject to such
Options. In the event of any such change in the outstanding Stock, the aggregate
number of shares available under this Plan may be appropriately adjusted by the
Board, whose determination shall be conclusive.

     (e) After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving corporation, each Holder shall be entitled to have his
Restricted Stock appropriately adjusted based on the manner the Stock was
adjusted under the terms of the agreement of merger or consolidation.

     (f) The issue by the Company of shares of stock of any class or series, or
securities convertible into shares of stock of any class or series, for cash or
property, or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe for them, or upon conversion of shares or
obligations of the Company convertible into shares or other securities, shall
not affect, and no adjustment by reason of such issuance shall be made with
respect to, the number, class or series, or price of shares of Stock then
subject to outstanding Options or Restricted Stock Awards.

     4.6  Election Under Section 83(b) of the Code.  No Holder shall exercise
the election permitted under section 83(b) of the Code with respect to any Award
without the written approval of the Chief Financial Officer of the Company. Any
Holder who makes an election under section 83(b) of the Code with respect to

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<PAGE>   9

any Award without the written approval of the Chief Financial Officer of the
Company may, in the discretion of the Committee, forfeit any or all Awards
granted to him under the Plan.

                                   ARTICLE V

                                    OPTIONS

     5.1  Type of Option.  The Committee shall specify in an Option Agreement
whether a given Option is an Incentive Option or a Nonqualified Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value (determined as of the time an Incentive Option is granted) of the Stock
with respect to which incentive stock options first become exercisable by an
Employee during any calendar year (under the Plan and any other incentive stock
option plan(s) of the Company or any Affiliate) exceeds $100,000, the Incentive
Option shall be treated as a Nonqualified Option. In making this determination,
incentive stock options shall be taken into account in the order in which they
were granted.

     5.2  Exercise Price.  The price at which Stock may be purchased under an
Incentive Option shall not be less than 100% of the Fair Market Value of the
shares of Stock on the date the Option is granted. In the case of any Ten
Percent Stockholder, the price at which shares of Stock may be purchased under
an Incentive Option shall not be less than 110% of the Fair Market Value of the
Stock on the date the Incentive Option is granted. The price at which Stock may
be purchased under a Nonqualified Option shall be such price that the Committee,
in its discretion, shall determine.

     5.3  Duration of Options.  An Option shall not be exercisable after the
earlier of (i) the term of the Option specified in the Option Agreement (which
shall not exceed five years from the date the Option is granted in the case of
an Incentive Option granted to a Ten Percent Stockholder, or seven years from
the date the Option is granted in the case of any other Option), or (ii) the
period of time specified herein that follows the Holder's Retirement,
Disability, death or other severance of the employment or affiliation
relationship between the Holder and the Company and all Affiliates. Unless the
Holder's Option Agreement specifies otherwise, an Option shall not continue to
vest after the severance of the employment or affiliation relationship between
the Company and all Affiliates.

          (a) General Term of Option.  Unless the Option Agreement specifies a
     shorter term, an Option shall expire on the seventh anniversary of the date
     the Option is granted. Notwithstanding the foregoing, unless the Option
     Agreement specifies a shorter term, in the case of an Incentive Option
     granted to a Ten Percent Stockholder, the Option shall expire on the fifth
     anniversary of the date the Option is granted.

          (b) Early Termination of Option Due to Severance of Employment or
     Affiliation Relationship (Other Than for Death, Disability or
     Retirement).  Except as may be otherwise expressly provided in an Option
     Agreement, an Option shall terminate on the earlier of the date of the
     expiration of the general term of the Option or one day less than three
     months after the date of the termination of the employment or affiliation
     relationship between the Holder and the Company and all Affiliates for any
     reason other than the death, Disability or Retirement of the Holder, during
     which period the Holder shall be entitled to exercise the Option in respect
     of the number of shares that the Holder would have been entitled to
     purchase had the Holder exercised the Option on the date of such
     termination of employment or affiliation. Whether authorized leave of
     absence, or absence on military or government service, shall constitute a
     termination of the employment or affiliation relationship between the
     Holder and the Company and all Affiliates shall be determined by the
     Committee at the time thereof.

          (c) Early Termination of Option Due to Death.  Unless the Option
     Agreement specifies otherwise, in the event of the severance of the
     employment or affiliation relationship between the Holder and the Company
     and all Affiliates due to death before the date of expiration of the
     general term of the Option, the Holder's Option shall terminate on the
     earlier of the date of expiration of the general term of the Option or the
     first anniversary of the Holder's death.

          (d) Early Termination of Option Due to Disability.  Unless the Option
     Agreement specifies otherwise, in the event of the severance of the
     employment or affiliation relationship between the Holder

                                        6
<PAGE>   10

     and the Company and all Affiliates due to Disability before the date of the
     expiration of the general term of the Option, the Option shall terminate on
     the earlier of the expiration of the general term of the Option or the
     first anniversary of the termination of the employment or affiliation
     relationship between the Holder and the Company and all Affiliates
     terminates due to Disability.

          (e) Early Termination of Option Due to Retirement.  Unless the Option
     Agreement specifies otherwise, if the Holder is an Employee and the
     employment relationship between the Holder and the Company and all
     Affiliates terminates by reason of Retirement, the Holder's Option shall
     terminate on the earlier of the expiration of the general term of the
     Option or one day less than three months after the date of the Holder's
     termination of employment due to Retirement.

     After the death of the Holder, the Holder's executors, administrators or
any person or persons to whom the Holder's Option may be transferred by will or
by the laws of descent and distribution, shall have the right, at any time prior
to the termination of the Option to exercise the Option, in respect to the
number of shares that the Holder would have been entitled to exercise if the
Holder exercised the Option prior to his death.

     5.4  Amount Exercisable.  Each Option may be exercised at the time, in the
manner and subject to the conditions the Committee specifies in the Option
Agreement in its sole discretion. Notwithstanding any other provision of the
Plan or an Option Agreement, an Option will be exercisable in full upon the
occurrence of a Change of Control.

     5.5  Exercise of Options.  Each Option shall be exercised by the delivery
of written notice to the Committee setting forth the number of shares of Stock
with respect to which the Option is to be exercised, together with: (a) cash,
certified check, bank draft or postal or express money order payable to the
order of the Company for an amount equal to the exercise price under the Option,
(b) Mature Shares with a Fair Market Value on the date of exercise equal to the
exercise price under the Option, (c) an election to make a cashless exercise
through a registered broker-dealer (if approved in advance by the Committee) or
(d) except as specified below, any other form of payment which is acceptable to
the Committee, and specifying the address to which the certificates for the
shares are to be mailed. As promptly as practicable after receipt of written
notification and payment, the Company shall deliver to the Holder certificates
for the number of shares with respect to which the Option has been exercised,
issued in the Holder's name. If Mature Shares are used for payment by the
Holder, the aggregate Fair Market Value of the shares of Stock tendered must be
equal to or less than the aggregate exercise price of the shares being purchased
upon exercise of the Option, and any difference must be paid by cash, certified
check, bank draft or postal or express money order payable to the order of the
Company. Delivery of the shares shall be deemed effected for all purposes when a
stock transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to the Holder, at the address specified by the
Holder.

     Whenever an Option is exercised by exchanging Mature Shares owned by the
Holder, the Holder shall deliver to the Company certificates registered in the
name of the Holder representing a number of shares of Stock legally and
beneficially owned by the Holder, free of all liens, claims and encumbrances of
every kind, accompanied by stock powers duly endorsed in blank by the record
holder of the shares represented by the certificates (with signature guaranteed
by a commercial bank or trust company or by a brokerage firm having a membership
on a registered national stock exchange). The delivery of certificates upon the
exercise of Options is subject to the condition that the person exercising the
Option provide the Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition.

     The Committee may permit a Holder to elect to pay the exercise price upon
exercise of an Option by authorizing a third-party broker to sell all or a
portion of the shares of Stock acquired upon exercise of the Option and remit to
the Company a sufficient portion of the sale proceeds to pay the exercise price
and any applicable tax withholding resulting from such exercise.

     The Committee shall not permit a Holder to pay his exercise price upon the
exercise of an Option by having the Company reduce the number of shares of Stock
that will be delivered to the Holder pursuant to the exercise of the Option. In
addition, the Committee shall not permit a Holder to pay his exercise price upon
the exercise of an Option by using shares of Stock other than Mature Shares.
                                        7
<PAGE>   11

     An Option may not be exercised for a fraction of a share of Stock.

     5.6  Substitution Options.  Options may be granted under the Plan from time
to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and conditions
of the substitute Options granted may vary from the terms and conditions set out
in the Plan to the extent the Committee, at the time of grant, may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted.

     5.7  No Rights as Stockholder.  No Holder shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.

                                   ARTICLE VI

                            RESTRICTED STOCK AWARDS

     6.1  Restricted Stock Awards.  The Committee may make Awards of Restricted
Stock to eligible persons selected by it. The amount of, the vesting and the
transferability restrictions applicable to, any Restricted Stock Award shall be
determined by the Committee in its sole discretion. If the Committee imposes
vesting or transferability restrictions on a Holder's rights with respect to
shares of Restricted Stock, the Committee may issue such instructions to the
Company's stock transfer agent in connection therewith as it deems appropriate.
The Committee may also cause the certificate for shares issued pursuant to a
Restricted Stock Award to be imprinted with any legend which counsel for the
Company considers advisable with respect to the restrictions.

     Each Restricted Stock Award shall be evidenced by a Restricted Stock Award
Agreement that contains any vesting, transferability restrictions and other
provisions not inconsistent with the Plan as the Committee may specify.

     6.2  Holder's Rights as Stockholder.  Subject to the terms and conditions
of the Plan, each Holder receiving a certificate for Restricted Stock shall have
all the rights of a stockholder with respect to the shares of Stock included in
the Stock Award during any period in which such shares are subject to forfeiture
and restrictions on transfer, including without limitation, the right to vote
such shares, if unrestricted shares of the same class have the right to vote.
Dividends paid with respect to shares of Restricted Stock in cash or property
other than stock in the Company or rights to acquire stock in the Company shall
be paid to the Holder currently. Dividends paid in stock in the Company or
rights to acquire stock in the Company shall be added to and become a part of
the Restricted Stock.

                                  ARTICLE VII

                                 ADMINISTRATION

     The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan and Awards shall be subject to the
determination of the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be as effective as if it had been made
by a majority vote at a meeting properly called and held. The Plan shall be
administered in such a manner as to permit the Options which are designated to
be Incentive Options to

                                        8
<PAGE>   12

qualify as Incentive Options. In carrying out its authority under the Plan, the
Committee shall have full and final authority and discretion, including but not
limited to the following rights, powers and authorities, to:

          (a) determine the persons to whom and the time or times at which
     Awards will be made;

          (b) determine the number of shares and the exercise price of Stock
     covered in each Award, subject to the terms of the Plan;

          (c) determine the terms, provisions and conditions of each Award,
     which need not be identical;

          (d) accelerate the time at which any outstanding Option may be
     exercised, or Restricted Stock Award will vest;

          (e) define the effect, if any, on an Award of the death, disability,
     retirement or termination of employment or affiliation relationship between
     the Holder and the Company and Affiliates;

          (f) prescribe, amend and rescind rules and regulations relating to
     administration of the Plan; and

          (g) make all other determinations and take all other actions deemed
     necessary, appropriate or advisable for the proper administration of the
     Plan.

The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of the Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.

                                  ARTICLE VIII

                        AMENDMENT OR TERMINATION OF PLAN

     The Board may amend, terminate or suspend the Plan at any time, in its sole
and absolute discretion; provided, however, that to the extent required to
maintain the status of any Incentive Option under the Code, no amendment that
would change the aggregate number of shares of Stock which may be issued under
Incentive Options, or change the class of Employees eligible to receive
Incentive Options shall be made without the approval of the Company's
stockholders. Subject to the preceding sentence, the Board shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under the Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.

                                   ARTICLE IX

                                 MISCELLANEOUS

     9.1  No Establishment of a Trust Fund.  No property shall be set aside nor
shall a trust fund of any kind be established to secure the rights of any Holder
under the Plan. All Holders shall at all times rely solely upon the general
credit of the Company for the payment of any benefit which becomes payable under
the Plan.

     9.2  No Employment or Affiliation Obligation.  The granting of any Option
or Award shall not constitute an employment contract, express or implied, nor
impose upon the Company or any Affiliate any obligation to employ or continue to
employ, or utilize the services of, any Holder. The right of the Company or any
Affiliate to terminate the employment of any person shall not be diminished or
affected by reason of the fact that an Option or Award has been granted to him.

     9.3  Forfeiture.  Notwithstanding any other provisions of the Plan, if the
Committee finds by a majority vote after full consideration of the facts that
the Holder, before or after termination of his employment or affiliation
relationship with the Company or an Affiliate for any reason committed or
engaged in willful misconduct, gross negligence, a breach of fiduciary duty,
fraud, embezzlement, theft, a felony, a crime

                                        9
<PAGE>   13

involving moral turpitude or proven dishonesty in the course of his employment
by the Company or an Affiliate, which conduct damaged the Company or Affiliate,
the Holder shall forfeit all outstanding Options and all outstanding Awards, and
all exercised Options if the Company has not yet delivered a stock certificate
to the Holder with respect thereto.

     The decision of the Committee as to the cause of the Holder's discharge,
the damage done to the Company or an Affiliate shall be final. No decision of
the Committee, however, shall affect the finality of the discharge of the Holder
by the Company or an Affiliate in any manner.

     9.4  Tax Withholding.  The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Holder any sums required by
federal, state or local tax law to be withheld with respect to the grant or
exercise of an Option, or lapse of restrictions on Restricted Stock. In the
alternative, the Company may require the Holder of an Award to pay such sums for
taxes directly to the Company or any Affiliate in cash or by check within ten
days after the date of exercise or lapse of restrictions. In the discretion of
the Committee, and with the consent of the Holder, the Company may reduce the
number of shares of Stock issued to the Holder upon his exercise of an Option to
satisfy the tax withholding obligations of the Company or an Affiliate; provided
that the Fair Market Value of the shares held back shall not exceed the
Company's or the Affiliate's minimum statutory withholding tax obligations. The
Committee may, in its discretion, permit a Holder to satisfy any tax withholding
obligations arising upon the vesting of Restricted Stock by delivering to the
Holder of the Restricted Stock Award a reduced number of shares of Stock in the
manner specified herein. If permitted by the Committee and acceptable to the
Holder, at the time of vesting of shares of Restricted Stock, the Company shall
(i) calculate the amount of the Company's or an Affiliate's minimum statutory
tax withholding obligation on the assumption that all such vested shares of
Restricted Stock are made available for delivery, (ii) reduce the number of such
shares made available for delivery so that the Fair Market Value of the shares
withheld on the vesting date approximates the amount of tax the Company or an
Affiliate is obliged to withhold and (iii) in lieu of the withheld shares, remit
cash to the United States Treasury and other applicable governmental
authorities, on behalf of the Holder, in the amount of the withholding tax due.
The Company shall withhold only whole shares of Stock to satisfy its withholding
obligation. Where the Fair Market Value of the withheld shares does not equal
the Company's withholding tax obligation, the Company shall withhold shares with
a Fair Market Value slightly less than the amount of its withholding obligation
and the Holder of the Restricted Stock Award must satisfy the remaining
withholding obligation in some other manner permitted under this Section 9.4.
The withheld shares of Restricted Stock not made available for delivery by the
Company shall be retained as treasury stock or will be cancelled and, in either
case, the Holder's right, title and interest in such Restricted Stock shall
terminate. The Company shall have no obligation upon exercise of any Option or
lapse of restrictions on Restricted Stock until the Company or an Affiliate has
received payment sufficient to cover all tax withholding amounts due with
respect to that exercise. Neither the Company nor any Affiliate shall be
obligated to advise a Holder of the existence of the tax or the amount which it
will be required to withhold.

     9.5  Written Agreement.  Each Award shall be embodied in a written
agreement which shall be subject to the terms and conditions of the Plan and
shall be signed by the Holder and by a member of the Committee on behalf of the
Committee and the Company or an executive officer of the Company, other than the
Holder, on behalf of the Company. The agreement may contain any other provisions
that the Committee in its discretion shall deem advisable which are not
inconsistent with the terms of the Plan.

     9.6  Indemnification of the Committee.  The Company shall indemnify each
present and future member of the Committee against, and each member of the
Committee shall be entitled without further act on his part to indemnity from
the Company for, all expenses (including attorney's fees, the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his being or
having been a member of the Committee, whether or not he continues to be a
member of the Committee at the time of incurring the expenses, including,
without limitation, matters as to which he shall be finally adjudged in any
action, suit or proceeding to have been found to have been negligent in the
performance of his duty as a member of the Committee. However, this indemnity
shall not include any expenses incurred by any member of the
                                        10
<PAGE>   14

Committee in respect of matters as to which he shall be finally adjudged in any
action, suit or proceeding to have been guilty of gross negligence or willful
misconduct in the performance of his duty as a member of the Committee. In
addition, no right of indemnification under the Plan shall be available to or
enforceable by any member of the Committee unless, within 60 days after
institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and shall be in
addition to all other rights to which a member of the Committee may be entitled
as a matter of law, contract or otherwise.

     9.7  Gender.  If the context requires, words of one gender when used in the
Plan shall include the other and words used in the singular or plural shall
include the other.

     9.8  Headings.  Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.

     9.9  Other Compensation Plans.  The adoption of the Plan shall not affect
any other stock option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall the Plan preclude the Company
from establishing any other forms of incentive compensation arrangements for
Employees.

     9.10  Other Options or Awards.  The grant of an Award shall not confer upon
the Holder the right to receive any future or other Awards under the Plan,
whether or not Awards may be granted to similarly situated Holders, or the right
to receive future Awards upon the same terms or conditions as previously
granted.

     9.11  Governing Law.  The provisions of the Plan shall be construed,
administered and governed under the laws of the State of Texas.

                                        11

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