Document:

<PAGE>

================================================================================

                                                                    EXHIBIT 10.1

                                 LOAN AGREEMENT

                            dated as of July 26, 2004

                                     between

          EXCALIBAR MINERALS INC. and EXCALIBAR MINERALS OF LA., L.L.C.
                                  as Borrowers

                                       and

                                RBS LOMBARD, INC.
                                    as Lender

================================================================================

<PAGE>

<TABLE>
<S>                                                                        <C>
ARTICLE I :  DEFINITIONS AND ACCOUNTING TERMS............................   1

         SECTION 1.01. DEFINED TERMS.....................................   1
         SECTION 1.02. RULES OF CONSTRUCTION.............................   6
         SECTION 1.03. ACCOUNTING AND FINANCIAL DETERMINATIONS...........   6

ARTICLE II :  THE LOANS..................................................   6

         SECTION 2.01. LOANS.............................................   6
         SECTION 2.02. NOTES.............................................   7
         SECTION 2.03. SCHEDULED PAYMENTS................................   7
         SECTION 2.04. PREPAYMENTS.......................................   7
         SECTION 2.05. INTEREST PROVISIONS...............................   8
         SECTION 2.06. PAYMENTS ABSOLUTE; JOINT AND SEVERAL LIABILITY....   8
         SECTION 2.07. SUSPENSION OF LIBOR...............................   8
         SECTION 2.08. INCREASED COSTS...................................   9
         SECTION 2.09. FUNDING LOSSES....................................   9
         SECTION 2.10. INCREASED CAPITAL COSTS...........................   9
         SECTION 2.11. TAXES.............................................   9
         SECTION 2.12. OBLIGATIONS.......................................  10

ARTICLE III :  CONDITIONS TO LOANS.......................................  10

ARTICLE IV :  REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER......  11

ARTICLE V :  SECURITY INTEREST...........................................  13

ARTICLE VI :  COVENANTS..................................................  13

         SECTION 6.01. AFFIRMATIVE COVENANTS.............................  13
         SECTION 6.02. NEGATIVE COVENANTS................................  15
         SECTION 6.03. INDEMNITY.........................................  16
         SECTION 6.04. PERFORMANCE BY LENDER.............................  16

ARTICLE VII :  EVENTS OF DEFAULT.........................................  17

         SECTION 7.01. EVENTS OF DEFAULT.................................  17
         SECTION 7.02. REMEDIES..........................................  18
         SECTION 7.03. USE OF PROCEEDS...................................  18

ARTICLE VIII :  MISCELLANEOUS PROVISIONS.................................  18

         SECTION 8.01. WAIVERS, AMENDMENTS...............................  18
         SECTION 8.02. NOTICES...........................................  18
         SECTION 8.03. SEVERABILITY......................................  19
         SECTION 8.04. EXECUTION IN COUNTERPARTS.........................  19
         SECTION 8.05. FURTHER ASSURANCE AND CORRECTIVE INSTRUMENTS......  19
         SECTION 8.06. TIME OF THE ESSENCE...............................  19
         SECTION 8.07. ENTIRE AGREEMENT..................................  19
         SECTION 8.08. GOVERNING LAW.....................................  19
         SECTION 8.09. SUCCESSORS AND ASSIGNS; ASSIGNMENTS BY LENDER.....  19
         SECTION 8.10. ASSIGNMENTS, PARTICIPATIONS AND SECURITIZATIONS...  19
         SECTION 8.11. WAIVER OF JURY TRIAL..............................  20
         SECTION 8.12. FORUM SELECTION AND CONSENT TO JURISDICTION.......  20
         SECTION 8.13. WAIVER OF CERTAIN CLAIMS..........................  20
</TABLE>

<PAGE>

                                    SCHEDULES

<TABLE>
<S>                    <C>
SCHEDULE I         -   Definitions
SCHEDULE II        -   Additional Conditions Precedent
SCHEDULE III       -   Financial Covenants
SCHEDULE IV        -   Disclosure Statements
SCHEDULE V         -   List of Subsidiaries
</TABLE>

                                       ii
<PAGE>

                                 LOAN AGREEMENT

      THIS LOAN AGREEMENT (this "Agreement") dated as of July 26, 2004 between
EXCALIBAR MINERALS INC., a Texas corporation ("Excalibar") and EXCALIBAR
MINERALS OF LA., L.L.C., a Louisiana limited liability company ("Excalibar LLC"
and together with Excalibar and each of their respective successors and assigns,
individually and/or collectively, jointly and severally, "Borrower"), and RBS
LOMBARD, INC., a New York corporation (together with its successors and assigns,
"Lender").

                              W I T N E S S E T H:

      WHEREAS, Borrower desires to obtain one or more loans from Lender in an
aggregate principal amount not to exceed the Maximum Principal Amount (as
defined below), secured by the Collateral (as defined below).

      NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and in consideration of the premises contained in this
Agreement, Lender and Borrower agree as follows:

                  ARTICLE I: DEFINITIONS AND ACCOUNTING TERMS

      SECTION 1.01. DEFINED TERMS. The following terms shall have the following
meanings for all purposes of this Agreement:

      "Affiliate" means any Person that, directly or indirectly, controls, is
controlled by or is under common control with any other Person. "Controls,"
"controlled by" or "under common control with" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person whether by ownership of voting securities, contract or
otherwise. Without limitation, any director, executive officer or beneficial
owner of 20% or more of the equity of a Person shall for purposes of this
Agreement be deemed to control the other Person. In no event shall Lender be
deemed an "Affiliate" of Borrower.

      "Agreement" means this Loan Agreement, as amended, supplemented, restated
or otherwise modified from time to time in accordance with the terms hereof.

      "Applicable Interest Swap Fixed Rate" has the meaning ascribed to such
term in Schedule I hereto.

      "Authorizing Entities" has the meaning ascribed to such term in Schedule I
hereto.

      "Authorized Officers" of each Borrower and each Corporate Guarantor shall
mean John R. Dardenne as Treasurer, Matthew W. Hardey as Vice President and Eric
M. Wingerter as Vice President or each of their respective successors thereto.

      "Bank One" has the meaning ascribed to such term in Schedule I hereto.

      "Bank One Loan Agreement" has the meaning ascribed to such term in
Schedule I hereto.

      "Base Rate" means, for any day, a rate per annum equal to the prime or
base rate of interest announced from time to time by The Royal Bank of Scotland
plc (or such other reference bank as Lender may select), which rate of interest
may not, in any event, be the lowest rate of interest charged by such bank for
extensions of credit. The Base Rate shall change, automatically and without
notice, upon each date that such prime or base rate of interest changes.

      "Borrower's State" has the meaning ascribed to such term in Schedule I
hereto.

      "Business Day" means: (a) any day on which Lender is open for business and
is neither a Saturday or Sunday nor a legal holiday on which banks are
authorized or required to be closed in New York, New York or Chicago, Illinois
and (b) with respect to determining LIBOR, which is also a day on which dealings
in United States dollars are carried on in the interbank eurodollar market.

      "Capital Expenditures" has the meaning ascribed to such term in Schedule I
hereto.

      "Capitalized Lease" has the meaning ascribed to such term in Schedule I
hereto.

<PAGE>

      "Change of Control" means a change in control of any Borrower, any of
their Subsidiaries or any Guarantor, including, without limitation, a change in
control resulting from direct or indirect transfers of voting stock or
partnership, membership or other ownership interests, whether in one or a series
of transactions. "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of any
Borrower, any of their Subsidiaries, or any Guarantor, and a Change of Control
shall occur if any of the following occurs: (a) any Person or group (as such
term is used in Section 13(d)(3) of the Exchange Act) acquires, after the date
of this Agreement, the beneficial ownership directly or indirectly, of 50% or
more of the voting power of the total outstanding stock or other ownership
interests of Borrower or any Guarantor or (b) the occurrence of an Owner Change.

      "Closing Date" means with respect to the initial Loan, the Initial Closing
Date, and with respect to any Loan funded after the Initial Closing Date, the
date that the proceeds of such Loan are disbursed to, or on behalf of, Borrower.

      "Closing Fee" has the meaning ascribed to such term in Schedule I hereto.

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

      "Collateral" means the property described on each Collateral Schedule,
which property shall be acceptable to Lender, in its sole discretion, and any
other assets of Borrower, any Guarantor or any other Person that are subject to
a Lien in favor of Lender pursuant to any Loan Document.

      "Collateral Schedule" means each schedule describing Collateral attached
to and referencing a Note or Notes, and executed by Borrower and Lender.

      "Commitment" means Lender's obligation to make Loans to Borrower pursuant
to Section 2.01 in an amount not to exceed the Maximum Principal Amount.

      "Commitment Termination Date" means the earliest of (a) the date on which
the aggregate Original Principal Amount of all Loans equals the Maximum
Principal Amount, (b) the Scheduled Commitment Termination Date, (c) the date
that an Event of Default described in subsection (i) of Section 7.01 occurs or
(d) the date on which Lender elects to terminate the Commitment following (i) an
Event of Default or (ii) the occurrence of a material adverse change in the
business, assets or financial condition of Borrower or any Guarantor.

      "Consolidated Capital Expenditures" has the meaning ascribed to such term
in Schedule I hereto.

      "Consolidated EBITDA" has the meaning ascribed to such term in Schedule I
hereto.

      "Consolidated Fixed Charges" has the meaning ascribed to such term in
Schedule I hereto.

      "Consolidated Interest Expense" has the meaning ascribed to such term in
Schedule I hereto.

      "Consolidated Net Income" has the meaning ascribed to such term in
Schedule I hereto.

      "Consolidated Net Worth" has the meaning ascribed to such term in Schedule
I hereto.

      "Consolidated Tangible Net Worth" has the meaning ascribed to such term in
Schedule I hereto.

      "Corporate Guarantor" means any Guarantor that is not an Individual
Guarantor.

      "Default" means any Event of Default or any condition, occurrence or event
that, after notice or lapse of time or both, would constitute an Event of
Default.

      "Default Rate" has the meaning ascribed to such term in Section 2.05(c).

      "Environmental Laws" means (a) all Federal Toxic Waste Laws, (b) all
local, state or foreign law, statute, regulation, or ordinance analogous to any
of the Federal Toxic Waste Laws and (c) all other federal, state, local, or
foreign law (including any common law, consent decrees and administrative
orders), statute, regulation, or ordinance regulating, permitting, prohibiting
or otherwise restricting the placement, discharge, release, generation,
treatment or disposal upon or into any environmental media of

                                       2
<PAGE>

any substance, pollutant, contaminant or waste that is now or hereafter
classified or considered to be hazardous or toxic; "Environmental Laws" shall
also include any and all amendments to any of (a), (b) or (c).

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.

      "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with Borrower or any Guarantor, as applicable, is
treated as a single employer under Section 414(b) or (c) of the Code or, solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.

      "ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived by the Pension Benefit
Guaranty Corporation), (b) the existence with respect to any Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived, (c) the filing pursuant to Section
412 (d) of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan, (d) the incurrence by
Borrower, any Guarantor or any of its or their ERISA Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Plan, (e) the
receipt by Borrower, any Guarantor or any of its or their ERISA Affiliates from
the Pension Benefit Guaranty Corporation or a plan administrator of any notice
relating to an intention to terminate any Plan or Plans or to appoint a trustee
to administer any Plan, (f) the incurrence by the Borrower, any Guarantor or any
of its or their ERISA Affiliates of any liability with respect to the withdrawal
or partial withdrawal from any Plan or Multiemployer Plan or (g) the receipt by
Borrower, any Guarantor or any of its or their ERISA Affiliates of any notice,
or the receipt by any Multiemployer Plan from Borrower, any Guarantor or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

      "Event of Default" has the meaning assigned to such term in Section 7.01.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

      "Federal Toxic Waste Law" means any federal law or implementing regulation
regulating any substance, matter, material, waste contaminant or pollutant, the
generation, storage, disposal, handling, release, treatment, discharge or
emission of which is regulated, prohibited or limited, including, without
limitation: (i) the Resource Conservation and Recovery Act, as amended by the
Hazardous and Solid Waste Amendments of 1984, as now or hereafter amended (42
U.S.C. Section 6901 et seq.), (ii) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act of 1986, as now or hereafter amended (42 U.S.C. Section 9601
et seq.), (iii) the Clean Water Act, as now or hereafter amended (33 U.S.C.
Section 1251 et seq.), (iv) the Toxic Substances and Control Act, as now or
hereafter amended (15 U.S.C. Section 2601 et seq.) and (v) the Clean Air Act, as
now or hereafter amended (42 U.S.C. Section 7401 et seq.).

      "Financial Statements" has the meaning ascribed to such term in Schedule I
hereto.

      "Fiscal Quarter" has the meaning ascribed to such term in Schedule I
hereto.

      "Fixed Charge Coverage Ratio" has the meaning ascribed to such term in
Schedule I hereto.

      "Fixed Rate Conversion" has the meaning ascribed to such term in Section
2.05(e).

      "Fixed Rate Conversion Fee" has the meaning ascribed to such term in
Schedule I hereto.

      "GAAP" means generally accepted accounting principles in the United
States.

      "Guarantor" means each guarantor of the Obligations.

      "Guaranty" means one or more instruments by which a Guarantor guarantees
the Obligations, in form and substance acceptable to Lender.

      "Indebtedness" means (a) all items of indebtedness or liability which in
accordance with GAAP or federal tax law would be included in determining total
liabilities as shown on the liabilities side of a balance sheet, (b)
indebtedness secured by any

                                       3
<PAGE>

mortgage, pledge, lien or security interest existing on property owned by
Borrower, whether or not the indebtedness secured thereby shall have been
assumed and (c) guaranties and endorsements (other than for purposes of
collection in the ordinary course of business) by Borrower and other contingent
obligations of Borrower in respect of, or to purchase or otherwise acquire,
indebtedness of others.

      "Indenture" has the meaning ascribed to such term in Schedule I hereto.

      "Individual Guarantor" means a Guarantor that is a natural person.

      "Initial Closing Date" has the meaning ascribed to such term in Schedule I
hereto.

      "Initial Interest Period" has the meaning ascribed to such term in
Schedule I hereto.

      "Intangibles" has the meaning ascribed to such term in Schedule I hereto.

      "Intellectual Property Rights" has the meaning ascribed to such term in
Schedule I hereto.

      "Interest Period" has the meaning ascribed to such term in Schedule I
hereto.

      "LIBOR" means, with respect to any Loan and the Interest Period applicable
thereto, a rate of interest equal to: (a) the rate of interest determined by
Lender at which deposits in United States dollars are offered for a period equal
to the Interest Period based on information presented on the Telerate Page 3750
as of 11:00 A.M. (London time) on the day that is two Business Days prior to the
first day of the Interest Period or, if such Telerate Page 3750 is not available
for any reason at such time, the rate that appears on the Reuters Screen LIBOR
Page on the day that is two Business Days prior to the first day of the Interest
Period; provided that if the foregoing sources are unavailable for the relevant
Interest Period, such rate shall be the per annum rate of interest determined by
Lender as of two Business Days prior to the first day of such Interest Period
from any interest rate reporting service of recognized standing that Lender
shall select as the effective rate at which deposits in immediately available
funds in United States dollars are being offered or quoted to major banks in the
London interbank market for deposits for a term comparable to such Interest
Period, divided by (b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two Business Days prior to the
beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board) that are required to be maintained
by a member bank of the Federal Reserve System, which rate of interest shall be
adjusted to the nearest one sixteenth of one percent.

      "Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.

      "Loan" means a loan from Lender to Borrower pursuant to this Agreement.

      "Loan Documents" means, collectively, this Agreement, each Note, each Loan
Request, any Guaranty and each other instrument or document executed or
delivered pursuant to or in connection with this Agreement and the other Loan
Documents, including, without limitation, any instrument or agreement given to
evidence or further secure the Obligations.

      "Loan Request" means a Loan Request, duly executed by an Authorized
Officer of Borrower, in form and substance acceptable to Lender.

      "Margin" has the meaning ascribed to such term on Schedule I hereto.

      "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, properties or condition (financial or otherwise)
of Borrower, any Guarantor or any of their Subsidiaries, (b) the ability of
Borrower to perform or pay its Obligations or any material Indebtedness in
accordance with the terms thereof, (c) the ability of any Guarantor to perform
its, his or her obligations under a Guaranty, (d) Lender's Lien on the
Collateral or the priority of such Lien, or (e) the validity or enforceability
of any Loan Document or the rights and remedies available to Lender under any
Loan Document.

      "Maximum Principal Amount" has the meaning ascribed to such term in
Schedule I hereto.

                                       4
<PAGE>

      "Multiemployer Plan" means a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.

      "Newpark" means Newpark Resources, Inc., a Delaware corporation.

      "Notes" has the meaning ascribed to such term in Section 2.02.

      "Notice Address" has the meaning ascribed to such term in Schedule I
hereto.

      "Obligations" means, subject to Section 8.10(c), the obligations to make
the payment of all indebtedness evidenced by the Notes, together with all
extensions, renewals, amendments and modifications thereof and the payment of
all other Indebtedness and other sums owed under, and the payment and the
performance of all obligations and covenants contained in the Loan Documents, in
each case whether now existing or hereafter incurred, direct or indirect,
absolute or contingent, and due or to become due, together with all fees and
expenses (including, without limitation, all attorneys' fees and expenses)
incurred by Lender in connection with the collection or enforcement of any of
the Obligations.

      "Organizational Documents" has the meaning ascribed to such term in
Schedule I hereto.

      "Original Principal Amount" means the aggregate principal balance of each
Loan as of the Closing Date for such Loan.

      "Owner Change" has the meaning ascribed to such term in Schedule I hereto.

      "Payment Date" has the meaning ascribed to such term in Schedule I hereto.

      "Permitted Liens" means any of the following: (a) Liens (other than Liens
relating to Environmental Laws) for taxes, assessments or other governmental
charges not yet due and payable, (b) statutory Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other similar Liens imposed by law,
which are incurred in the ordinary course of business for sums that are not
delinquent, (c) Liens in favor of Lender, (d) Liens in favor of Bank One, as
agent, (e) Liens on movable equipment securing purchase money Indebtedness,
provided that, such Liens attach only to the movable equipment which was
purchased with the proceeds of such purchase money Indebtedness, and (f) Liens
explicitly identified in any Loan Document as "permitted liens."

      "Person" means any natural person, corporation, partnership, limited
liability company, firm, association, trust, government, governmental agency or
any other entity, whether acting in an individual, fiduciary or other capacity.

      "Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which Borrower, any Guarantor or any
of its or their ERISA Affiliates is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.

      "Prepayment Fee" means with respect to each Loan, the sum of (a) the
prepayment fee described in the related Note, plus (b) in the event that a Fixed
Rate Conversion has occurred, the amount of the Yield Maintenance Payment.

      "Property" has the meaning ascribed to such term in Schedule I hereto.

      "Real Properties" has the meaning ascribed to such term in Schedule I
hereto.

      "Related Property" has the meaning ascribed to such term in Schedule I
hereto.

      "Scheduled Commitment Termination Date" has the meaning ascribed to such
term in Schedule I hereto.

      "Senior Subordinated Notes" has the meaning ascribed to such term in
Schedule I hereto.

      "Stated Maturity Date" means, with respect to each Loan, the scheduled
maturity date described in the related Note.

      "Subsidiary" means shall mean, with respect to any Person (the "Parent")
at any date, (a) any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the Parent in the Parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, (b)
any corporation of which more than 50% of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors or other
governing body of such corporation (irrespective of whether at the time capital
stock of any other

                                       5
<PAGE>

class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
the Parent, or by one or more Subsidiaries of such Parent or (c) any
partnership, joint venture, limited liability company, or other entity as to
which the Parent, or one or more Subsidiaries of such Parent, owns more than a
50% ownership, equity or similar interest or has power to direct or cause the
direction of management and policies, or the power to elect the managing partner
(or the equivalent), of such partnership, joint venture or other entity, as the
case may be.

      "Test Period" has the meaning ascribed to such term in Schedule I hereto.

      "UCC" means the Uniform Commercial Code as from time to time in effect in
the State of New York.

      "Voluntary Prepayment Date" has the meaning ascribed to such term in
Schedule I hereto.

      "Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

      "Yield Maintenance Payment" has the meaning ascribed to such term in
Schedule I hereto.

      SECTION 1.02. RULES OF CONSTRUCTION.

            (a) The singular form of any word used herein, including the terms
      defined in Section 1.01 hereof, shall include the plural, and vice versa.
      The use herein of a word of any gender shall include correlative words of
      all genders.

            (b) Unless otherwise specified, references to Articles, Sections and
      other subdivisions of this Agreement are to the designated Articles,
      Sections and other subdivision of this Agreement as originally executed.
      The words "hereof," "herein," "hereunder" and words of similar import
      refer to this Agreement as a whole.

            (c) The headings or titles of the several articles and sections
      shall be solely for convenience of reference and shall not affect the
      meaning, construction or effect of the provisions hereof.

      SECTION 1.03. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared in accordance with GAAP consistently
applied. In the event that GAAP changes during the term of this Agreement such
that the financial covenants contained herein would then be calculated in a
different manner or with different components, Borrower and Lender shall amend
such provisions of this Agreement in such respects as necessary to conform the
financial covenants as criteria for evaluating the financial condition of
Borrower or a Guarantor, as applicable, to substantially the same criteria as
were effective prior to such change in GAAP.

                              ARTICLE II: THE LOANS

      SECTION 2.01. LOANS.

            (a) COMMITMENT. Lender hereby agrees, subject to the terms and
      conditions of this Agreement (including, without limitation, the
      fulfillment of the conditions set forth in Article III or Lender's written
      waiver thereof), to make one or more Loans to Borrower from time to time
      during the period from the Initial Closing Date to the Commitment
      Termination Date in the aggregate Original Principal Amount not to exceed
      the Maximum Principal Amount (the "Commitment"). With respect to Loans
      funded after the Initial Closing Date, if any, not more than one such Loan
      shall be funded in any calendar month, and each such Loan shall be in an
      Original Principal Amount of at least $3,000,000. The Original Principal
      Amount of each Loan shall reduce, dollar for dollar, the remaining
      available amount under the Commitment, and any amount funded may not be
      reborrowed after being repaid. The Commitment shall terminate
      automatically and without any further action on the Commitment Termination
      Date. Borrower's obligation to repay a Loan shall commence, and interest
      shall begin to accrue, on the Closing Date of such Loan.

            (b) LOAN REQUEST. By delivering a duly completed and executed Loan
      Request to Lender on a Business Day, Borrower may irrevocably request that
      a Loan or Loans (as allowed by the terms hereof) be made on the Closing
      Date specified in such Loan Request (which date shall be at least two
      Business Days but no more than 10 Business Days after the date of delivery
      to Lender of such Loan Request). On such Closing Date, subject to the
      terms and conditions contained herein (including, without limitation, the
      fulfillment of the conditions set forth in Article III or Lender's written
      waiver thereof), Lender shall disburse the Original Principal Amount
      specified in such Loan Request to, or on behalf of, Borrower to the
      accounts or entities specified in such Loan Request. Such Loan Request
      shall specify the applicable

                                       6
<PAGE>

      Closing Date, the Original Principal Amount of such Loan and the
      applicable disbursement instructions. Borrower agrees that the proceeds of
      all Loans shall be used solely for the purposes described in such Loan
      Request.

            (c) FUNDING. Lender may, if it so elects, fulfill its obligation to
      make Loans hereunder by causing one of its foreign branches or Affiliates
      (or an international banking facility created by Lender) to make or
      maintain such Loan; provided, however, that such Loan shall nonetheless be
      deemed to have been made and to be held by Lender, and the obligation of
      Borrower to repay such Loan shall nevertheless be to Lender for the
      account of such foreign branch, Affiliate or international banking
      facility. In addition, Borrower hereby consents and agrees that, for
      purposes of any determination to be made for purposes of Sections 2.08
      through 2.11, it shall be conclusively assumed that Lender elected to fund
      all Loans by purchasing United States dollar deposits.

      SECTION 2.02. NOTES Each Loan made by Lender under this Agreement shall be
evidenced by, and repaid with interest in accordance with a separate promissory
note of Borrower for each such Loan in form and substance acceptable to Lender,
duly completed, in the Original Principal Amount of such Loan, dated as of the
Closing Date for such Loan, made payable to Lender or order, and maturing on the
Stated Maturity Date of such Loan or such earlier date pursuant to an
acceleration hereunder (collectively the "Notes").

      SECTION 2.03. SCHEDULED PAYMENTS. On each Payment Date, Borrower shall pay
the aggregate scheduled principal payments owed with respect to each Loan as set
forth in the Notes, all accrued and unpaid interest thereon and any prepayment
as provided in Section 2.04; provided, however, on the Stated Maturity Date or
date of acceleration of a Loan, Borrower shall repay in full the aggregate then
outstanding principal amount of such Loan plus all accrued and unpaid interest
thereon and all other amounts owed hereunder or under any other Loan Document
related to such Loan.

      All amounts required to be paid by Borrower hereunder shall be paid in
lawful money of the United States of America in immediately available funds to
the following account, or to such other account as designated by Lender to
Borrower in writing:

      Clearing Bank: JP Morgan Chase NYC
      ABA: 021000021
      Beneficiary: RBS Lombard, Inc.
      Account: 323945724
      Borrower: Excalibar Minerals Inc. and Excalibar Minerals of LA., L.L.C.

      Any payment received after 12:00 p.m. New York time will be deemed to be
received on the next succeeding Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a Business Day, such
payment may be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of interest or the fees
hereunder, as the case may be. All payments shall be applied first to accrued
interest and then to principal.

      SECTION 2.04. PREPAYMENTS.

            (a) VOLUNTARY PREPAYMENTS. Prior to the Stated Maturity Date, so
      long as an Event of Default has not occurred and is continuing, Borrower
      may, from time to time on any Business Day occurring after the Voluntary
      Prepayment Date, (i) make a voluntary prepayment, in whole, of the
      outstanding principal amount of any Loan solely in connection with the
      sale of the Related Property described in the Note evidencing such Loan or
      (ii) make a voluntary prepayment, in whole, of the outstanding principal
      amount of all of the Loans provided, however, that in connection with the
      voluntary prepayment of such Loan or Loans described in clauses (i) and
      (ii) above, (A) the principal amount outstanding under the related Note or
      Notes shall be paid in full; (B) notice of such voluntary prepayment shall
      be made by Borrower on or before the date that is 45 calendar days in
      advance of any prepayment of such Loan or Loans; (C) Borrower shall pay
      (x) all accrued interest on the outstanding principal amount of the Loan
      or Loans being prepaid, (y) all other amounts owed under any Loan Document
      to the extent related to such Loan or Loans being prepaid, as determined
      by Lender and (z) except as otherwise provided in any Loan Document, the
      aggregate Prepayment Fee for the Loan or Loans being prepaid, which shall
      not be refundable; and (D) with respect to prepayment pursuant to clause
      (i) above only, Borrower shall also provide evidence of the consummation
      and terms of the sale of the Related Property with respect to such Loan.

            (b) MANDATORY PREPAYMENT UPON ACCELERATION. Upon any acceleration of
      any Loan pursuant to Section 7.02, Borrower shall immediately repay all
      (or if only a portion is accelerated thereunder, such portion of) the
      Loans then outstanding, including accrued and unpaid interest thereon,
      plus the aggregate Prepayment Fee for all such Loans and all other amounts
      owed under the Loan Documents.

                                       7
<PAGE>

      SECTION 2.05. INTEREST PROVISIONS.

            (a) Subject to Section 2.05(e), interest on the outstanding
      principal amount of each Loan shall accrue during each Interest Period at
      a rate per annum equal to LIBOR for such Interest Period plus the Margin.
      Interest shall be computed on the basis of a 360-day year and the actual
      number of days elapsed. Interest accruing on each Loan with respect to the
      Initial Interest Period for such Loan shall be payable on the initial
      Payment Date following the Closing Date. Interest accruing on each Loan
      after the Initial Interest Period for such Loan shall be payable on each
      Payment Date thereafter or the date of prepayment, as applicable.

            (b) Any payment under a Loan Document that is not paid by Borrower
      on the due date thereof shall, to the extent permissible by law, bear a
      late charge equal to the lesser of three cents ($.03) per dollar of the
      delinquent amount or the lawful maximum, and Borrower shall be obligated
      to pay the same immediately upon receipt of Lender's written invoice
      therefor.

            (c) Upon the occurrence and during the continuation of any Event of
      Default or after acceleration, Borrower shall pay interest (i) with
      respect to all Loans at a rate per annum equal to the rate otherwise in
      effect plus an additional 3% per annum and (ii) with respect to all other
      Obligations of Borrower to Lender at a rate per annum equal to the highest
      LIBOR then in effect plus the sum of the Margin and 3% per annum (each
      such rate a "Default Rate").

            (d) The obligations of Borrower hereunder and under the Notes and
      the other Loan Documents shall be subject to the limitation that payments
      of interest to Lender, plus any other amounts paid to Lender in connection
      herewith and therewith, shall not be required to the extent (but only to
      the extent) that contracting for and receiving such payment by Lender
      would be contrary to the provisions of any law applicable to Lender
      limiting the highest rate of interest which may be contracted for, charged
      or received by Lender, and in such event Borrower shall pay such Lender
      interest and other amounts at the highest rate permitted by applicable
      law.

            (e) Provided that no Event of Default has occurred and is
      continuing, on a single occasion with respect to each Loan following the
      first anniversary of the Initial Closing Date, Borrower may elect, by
      providing 45 calendar days prior notice to Lender, to convert the interest
      rate applicable to each such Loan for the entire remaining term thereof
      from the interest rate set forth in Section 2.05(a) to a fixed rate per
      annum equal to the sum of (a) the Applicable Interest Swap Fixed Rate,
      plus (b) the Margin (the "Fixed Rate Conversion"). The conversion
      described in this Section 2.05(e) shall not be effective unless and until
      Borrower shall have paid the Fixed Rate Conversion Fee.

      SECTION 2.06. PAYMENTS ABSOLUTE; JOINT AND SEVERAL LIABILITY.

            (a) The obligations of Borrower to pay interest and principal
      required under this Article II and to make other payments under the Loan
      Documents and to perform and observe the covenants and agreements
      contained herein and therein shall be joint and several, and absolute and
      unconditional in all events, without abatement, diminution, deduction,
      setoff or defense for any reason, including, without limitation, any
      failure of the Collateral to be delivered, installed or constructed, as
      applicable, any defects, malfunctions, breakdowns or infirmities in the
      Collateral or any accident, condemnation, destruction or unforeseen
      circumstances. Notwithstanding any dispute between Borrower and Lender or
      any other person, Borrower shall make all payments under the Loan
      Documents when due and shall not withhold any payments pending final
      resolution of such dispute, nor shall Borrower assert any right of set-off
      or counterclaim against its obligation to make such payments required
      under the Loan Documents.

            (b) Each Borrower hereby irrevocably and unconditionally: (i)
      acknowledges and agrees that it is jointly and severally liable to Lender
      for the full and prompt payment of the Obligations and the performance by
      each Borrower of the obligations under this Agreement and the other Loan
      Documents in accordance with the terms hereof and thereof; (ii) agrees
      that all of the representations, warranties, covenants, obligations,
      conditions, agreements and other terms contained in the Loan Documents
      shall be applicable to and shall be binding upon each Borrower; (iii)
      agrees as a primary obligation to indemnify Lender on demand for and
      against any loss incurred by Lender as a result of any of the Obligations
      of any Borrower being or becoming void, voidable, unenforceable or
      ineffective for any reason whatsoever, whether or not known to Lender or
      any Person, the amount of such loss being the amount which Lender would
      otherwise have been entitled to recover from any Borrower.

      SECTION 2.07. SUSPENSION OF LIBOR.

            (a) ILLEGALITY. If Lender shall determine (which determination
      shall, upon notice thereof to Borrower, be conclusive and binding on
      Borrower) that the introduction of or any change in or in the
      interpretation of any law or regulation makes it unlawful, or any central
      bank or other governmental authority asserts that it is unlawful, for
      Lender to perform its obligations hereunder to make, fund or maintain any
      Loan as a LIBOR based obligation, then, on notice thereof and demand
      therefor by Lender to Borrower, the interest rate applicable to all
      outstanding Loans shall

                                       8
<PAGE>

      automatically convert into the Base Rate plus the Margin until such time
      as Lender shall notify Borrower that Lender has determined that the
      circumstances causing such suspension no longer exist.

            (b) INABILITY TO DETERMINE RATES. If Lender shall determine (which
      determination shall, upon notice thereof to Borrower, be conclusive and
      binding on Borrower) that (i) LIBOR cannot be determined in accordance
      with the definition thereof or (ii) LIBOR for any Interest Period will not
      adequately reflect the costs to Lender of making, funding or maintaining
      any Loans for such Interest Period, Lender shall notify Borrower,
      whereupon the interest rate applicable to the Loans shall thereafter be
      the Base Rate plus the Margin.

      SECTION 2.08. INCREASED COSTS. Borrower agrees to reimburse Lender for any
increase in the cost to Lender of, or any reduction in the amount of any sum
receivable by Lender in respect of, making, continuing or maintaining (or of its
obligation to make, continue or maintain) any Loans based upon LIBOR (including,
without limitation, any imposition or effectiveness of reserve requirements but
excluding any costs resulting from reserve requirements taken into account in
the definition of LIBOR) that arise in connection with any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority. Lender shall promptly notify Borrower in
writing of the occurrence of any such event, such notice to state, in reasonable
detail, the reasons therefor and the additional amount required fully to
compensate Lender for such increased cost or reduced amount. Borrower shall pay
such additional amounts directly to Lender promptly (and, in any event, within
three Business Days of receipt of such notice), and such notice shall, in the
absence of manifest error, be conclusive and binding on Borrower.

      SECTION 2.09. FUNDING LOSSES. In the event of (a) the payment or
prepayment of any principal of a Loan other than on the last day of the Interest
Period applicable thereto (including as a result of an Event of Default), or (b)
the failure by Borrower to borrow or prepay a Loan on the date specified in any
applicable notice (regardless of whether such notice is withdrawn or revoked),
then, in any such event, Borrower shall compensate Lender within three Business
Days after written demand from Lender for any loss, cost or expense attributable
to such event. Such demand notice shall, in absence of manifest error, be
conclusive and binding on Borrower.

      SECTION 2.10. INCREASED CAPITAL COSTS. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by Lender or any Person controlling
Lender, and Lender determines that the rate of return on its or such controlling
Person's capital as a consequence of its Commitment or the Loans made by Lender
is reduced to a level below that which Lender or such controlling Person could
have achieved but for the occurrence of any such circumstance, then, in any such
case upon notice from time to time by Lender to Borrower, Borrower shall
immediately pay directly to Lender additional amounts sufficient to compensate
Lender or such controlling Person for such reduction in rate of return. A
statement of Lender as to any such additional amount or amounts (including
calculations thereof in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on Borrower. In determining such amount, Lender
may use any method of averaging and attribution that it shall deem applicable.

      SECTION 2.11. TAXES.

            (a) WITHHOLDING TAXES. Any and all payments by Borrower of principal
      of, and interest on, the Loans and all other amounts payable hereunder and
      under the Loan Documents shall be made free and clear of and without
      deduction for any present or future taxes, levies, imposts, deductions,
      fees, duties, withholdings or other charges of any nature whatsoever
      imposed by any taxing authority, but excluding franchise taxes and taxes
      imposed on or measured by Lender's gross or net income or receipts by the
      jurisdiction under the laws of which Lender is organized or any political
      subdivision thereof or in which Lender is maintaining a lending office
      (such non-excluded items are referred to herein as "Taxes"). In the event
      that any withholding or deduction from any payment to be made by Borrower
      hereunder is required in respect of any Taxes pursuant to any applicable
      law, rule or regulation, then Borrower will (i) pay directly to the
      relevant authority the full amount required to be so withheld or deducted;
      (ii) promptly forward to Lender an official receipt or other documentation
      satisfactory to Lender evidencing such payment to such authority; and
      (iii) pay to Lender such additional amount or amounts as is necessary to
      ensure that the net amount actually received by Lender will equal the full
      amount Lender would have received had no such withholding or deduction
      been required (including penalties, interest, additional taxes and
      expenses (including reasonable attorney's fees and expenses) arising
      therefrom or with respect thereto).

            (b) OTHER TAXES. In addition, Borrower shall pay any present or
      future stamp, documentary, excise, property or similar taxes, charges or
      levies that arise from any payment made hereunder or under the Notes or
      from the

                                       9
<PAGE>

      execution, delivery or registration of, or otherwise with respect to, this
      Agreement or any other Loan Document (collectively, "Other Taxes").

            (c) TAX INDEMNITY. Borrower shall indemnify Lender for the full
      amount of Taxes and Other Taxes (including, without limitation, any
      amounts paid by Lender) and any liability (including, without limitation,
      penalties, additions to tax, interest and expenses) arising therefrom or
      with respect thereto. This indemnification shall be made within 30 days
      from the date Lender makes written demand therefor and shall survive the
      termination of this Agreement.

      SECTION 2.12. OBLIGATIONS. All Loans to Borrower and all of the
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured by all of
the Collateral.

                        ARTICLE III: CONDITIONS TO LOANS

      Lender's agreement to make the Loans to Borrower hereunder and to disburse
the proceeds thereof shall be subject to the condition precedent that Lender
shall have received, on or prior to the applicable Closing Date (or by such
other time as may be specified herein with respect thereto), all of the
following, each in form and substance satisfactory to Lender:

            (a) This Agreement and all other Loan Documents, properly executed
      on behalf of Borrower, and each of the exhibits and schedules hereto and
      thereto properly completed.

            (b) The respective Notes, properly executed on behalf of Borrower.

            (c) A Loan Request for each Loan to be funded, duly completed and
      properly executed on behalf of Borrower.

            (d) A certificate of the Secretary or an Assistant Secretary of each
      Borrower, certifying as to (i) the resolutions of the Authorizing Entities
      of Borrower, authorizing the execution, delivery and performance of this
      Agreement, the Notes, the other Loan Documents and any related documents,
      (ii) the Organizational Documents of Borrower, and (iii) the signatures of
      the officers or agents of Borrower authorized to execute and deliver this
      Agreement, the Notes, the other Loan Documents and other instruments,
      agreements and certificates on behalf of Borrower.

            (e) Current certified copies of the Organizational Documents of each
      Borrower.

            (f) A Certificate of Good Standing issued as to each Borrower by the
      Secretary of the State of the state of such Borrower's organization not
      more than 30 days prior to the Closing Date.

            (g) A Certificate of Qualification issued as to each Borrower by the
      Secretary of the State of the state where the Collateral is or will be
      located not more than 30 days prior to the Closing Date.

            (h) The Guaranties, if any, properly executed by or on behalf of
      Guarantors.

            (i) A certificate of the Secretary or an Assistant Secretary of any
      Corporate Guarantor certifying as to (i) the resolutions of the
      Authorizing Entities of such Guarantor, authorizing the execution,
      delivery and performance of the Guaranty and any related documents, (ii)
      the Organizational Documents of Guarantor, and (iii) the signatures of the
      officers or agents of Guarantor authorized to execute and deliver the
      Guaranty and other instruments, agreements and certificates on behalf of
      Guarantor.

            (j) Current certified copies of the Organizational Documents of any
      Corporate Guarantor.

            (k) A Certificate of Good Standing issued as to all Corporate
      Guarantors by the Secretary of the State of the state of such Guarantor's
      organization not more than 30 days prior to the Closing Date.

            (l) Opinion of counsel to Borrower and such opinions of local
      counsel to Borrower, as required by Lender.

            (m) Opinion of counsel to Guarantors, as applicable.

            (n) Certificates of the insurance required hereunder, containing a
      lender's loss payable clause or endorsement in favor of Lender.

            (o) A true and correct copy of any and all leases pursuant to which
      any Borrower is leasing any property where the Collateral will be located,
      together with a landlord's disclaimer and consent with respect to each
      such lease.

            (p) A true and correct copy of any and all mortgages, deeds of trust
      or similar agreements (whether or not Borrower is a party to any such
      agreement) relating to the Collateral or any property where the Collateral
      will be located, together with a mortgagee's waiver or estoppel
      certificate, as applicable, with respect to each such mortgage, deed of
      trust or similar agreement.

                                       10
<PAGE>

            (q) The original certificate of title or manufacturer's certificate
      of origin and title application if any of the Collateral is subject to
      certificate of title laws.

            (r) Current searches of appropriate filing offices showing that (i)
      no state or federal tax liens have been filed and remain in effect against
      Borrower, and (ii) no financing statements have been filed and remain in
      effect against Borrower relating to the Collateral except those financing
      statements filed by Lender.

            (s) Payment of the Closing Fee and, if any, all of Lender's other
      fees, commissions and expenses in connection with the funding of each
      Loan.

            (t) Evidence that no Default or event or circumstance that could
      reasonably be likely to have a Material Adverse Effect has occurred.

            (u) An Access Agreement, duly executed by Bank One, N.A., in its
      capacity as agent for certain lenders, addressing the rights of Lender and
      Bank One, as agent in the assets of Borrower.

            (v) Any other documents or items required by Lender.

            (w) Any other documents or items listed on Schedule II hereto.

        ARTICLE IV: REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER

      Each Borrower represents, warrants and covenants for the benefit of
Lender, as follows:

            (a) Borrower is a corporation or limited liability company, as
      applicable, duly organized, validly existing and in good standing under
      the laws of the jurisdiction of its organization. Borrower is in good
      standing and is duly licensed or qualified to transact business in each
      jurisdiction where the nature of its business requires such qualification,
      except for those jurisdictions in which the failure to qualify could not
      reasonably be expected to have a Material Adverse Effect. Borrower's exact
      legal name is as set forth on the execution page hereof.

            (b) Borrower has full power and authority and holds all requisite
      governmental licenses, permits and other approvals to (i) enter into and
      perform its obligations under this Agreement, the Notes and each other
      Loan Document to which it is a party and to own its property, (ii) use the
      Collateral and (iii) conduct its business substantially as currently
      conducted by it, except as to clause (iii) where the failure to hold such
      licenses, permits and approvals could not reasonably be expected to have a
      Material Adverse Effect.

            (c) This Agreement, the Notes and the other Loan Documents to which
      it is a party have been duly authorized, executed and delivered by
      Borrower and constitute legal, valid and binding obligations of Borrower,
      enforceable against Borrower in accordance with their respective terms,
      except to the extent limited by bankruptcy, reorganization or other laws
      of general application relating to or effecting the enforcement of
      creditors' rights.

            (d) The execution and delivery of this Agreement, the Notes and the
      other Loan Documents, the consummation of the transactions contemplated
      hereby and thereby (subject to satisfaction of the conditions described in
      Article III hereof) and the fulfillment of the terms and conditions hereof
      and thereof do not and will not violate any law, rule, regulation or
      order, conflict with or result in a breach of any of the terms or
      conditions of any Organizational Document of Borrower or of any corporate
      or limited liability company, as applicable, restriction or of any
      agreement or instrument to which Borrower is now a party and do not and
      will not constitute a default under any of the foregoing or result in the
      creation or imposition of any liens, charges or encumbrances of any nature
      upon any of the property or assets of Borrower other than Liens in favor
      of Lender.

            (e) The authorization, execution, delivery and performance of this
      Agreement, the Notes and the other Loan Documents by Borrower do not
      require submission to, approval of, or other action by any governmental
      authority or agency, except for such action that has been duly obtained or
      taken and is in full force and effect.

            (f) Each of the Loan Documents that purports to create a security
      interest creates a valid first priority Lien on the Collateral subject
      only to Permitted Liens, securing the payment and performance of the
      Obligations.

            (g) Except as disclosed on Schedule IV, there is no action, suit,
      proceeding, claim, inquiry or investigation, at law or in equity, before
      or by any court, regulatory agency, public board or body pending or, to
      the best of Borrower's knowledge, threatened against or affecting
      Borrower, any Guarantor or any of their Subsidiaries challenging
      Borrower's or any Guarantor's authority to enter into this Agreement, the
      Notes or any of the other Loan Documents or any other action wherein an
      unfavorable ruling or finding would adversely affect the enforceability of
      this Agreement, the Notes or any of the other Loan Documents, or could
      reasonably be expected to have a Material Adverse Effect.

                                       11
<PAGE>

            (h) Borrower has good, marketable and insurable title in fee simple
      to all Collateral that is real property, and good title to all other
      Collateral, in each case free and clear of all Liens except for Permitted
      Liens. With respect to Collateral that is personal property, Borrower
      owns/leases the real property where the Collateral will be located,
      subject to no Liens of any kind except for Permitted Liens, and has
      provided a complete and accurate legal description and the exact name of
      the fee simple owner of record of such real property, and no person other
      than Borrower is in occupancy or possession of any portion of such real
      property.

            (i) Borrower is in compliance with all laws, rules, regulations and
      orders of governmental authorities applicable to it and its properties
      except to the extent the non-compliance with which could not reasonably be
      expected to have a Material Adverse Effect.

            (j) Borrower has heretofore furnished to Lender the Financial
      Statements and those statements fairly present the financial condition of
      Borrower and such Guarantor, if any, on the dates thereof and the results
      of its operations and cash flows for the periods then ended and were
      prepared in accordance with GAAP. Since the date of the most recent
      financial statements, there has been no material adverse change in the
      business, properties or condition (financial or otherwise) of Borrower or
      any Guarantor. Except as disclosed in the Financial Statements or the
      notes thereto and for the items disclosed on Schedule IV, neither Borrower
      nor any Guarantor, as of each Closing Date, has or will have any
      liabilities, contingent or otherwise, that could reasonably be expected to
      have a Material Adverse Effect.

            (k) Borrower has paid or caused to be paid, and will pay, to the
      proper authorities when due all federal, state and local taxes required to
      be withheld by it. Borrower has filed, and will pay, all federal, state
      and local tax returns which are required to be filed, and Borrower has
      paid or caused to be paid to the respective taxing authorities all taxes
      as shown on said returns or on any assessment received by it to the extent
      such taxes have become due, except any such taxes or charges which are
      being diligently contested in good faith by appropriate proceedings and
      for which adequate reserves in accordance with GAAP have been set aside on
      its books.

            (l) For purposes of Section 9-307 of the UCC, Borrower is and will
      remain located in the Borrower's State. Borrower has authorized Lender to
      file financing statements that are sufficient when filed to perfect the
      security interests created pursuant to this Agreement and the other Loan
      Documents. When such financing statements are filed in the offices noted
      therein, Lender will have a valid and perfected security interest in the
      Collateral that constitutes personal property, subject to no other Lien
      other than Permitted Liens.

            (m) None of the Collateral constitutes a replacement of,
      substitution for or accessory to any property of Borrower subject to a
      lien of any kind except Permitted Liens.

            (n) No ERISA Event has occurred or is reasonably expected to occur
      that, when taken together with all other such ERISA Events for which
      liability is reasonably expected to occur, could reasonably be expected to
      result in a Material Adverse Effect. The present value of all accumulated
      benefit obligations under each Plan (based on the assumptions used for
      purposes of Statement of Financial Accounting Standards No. 87) did not,
      as of the date of the most recent financial statements reflecting such
      amounts, exceed by more than 10% of the fair market value of the assets of
      such Plan, and the present value of all accumulated benefit obligations of
      all underfunded Plans (based on the assumptions used for purposes of
      Statement of Financial Accounting Standards No. 87) did not, as of the
      date of the most recent financial statements reflecting such amounts,
      exceed by more than $100,000 the fair market value of the assets of all
      such underfunded Plans.

            (o) Borrower has obtained all permits, licenses and other
      authorizations which are required under all Environmental Laws at
      Borrower's facilities or in connection with the operation of its business.
      Except as disclosed on Schedule IV, Borrower and all activities of
      Borrower at its facilities comply with all Environmental Laws and with all
      terms and conditions of any required permits, licenses and authorizations
      applicable to Borrower with respect thereto. Except as disclosed on
      Schedule IV, Borrower is also in compliance with all limitations,
      restrictions, conditions, standards, prohibitions, requirements,
      obligations, schedules and timetables contained in Environmental Laws or
      contained in any plan, order, decree, judgment or notice of which Borrower
      is aware. Except as disclosed on Schedule IV, Borrower is not aware of,
      nor has Borrower received notice of, any events, conditions,
      circumstances, activities, practices, incidents, actions or plans which
      may interfere with or prevent continued compliance with, or which may give
      rise to any liability under, any Environmental Laws.

            (p) All factual information heretofor or contemporaneously furnished
      by or on behalf of Borrower or any Guarantor in writing to Lender for
      purposes of or in connection with this Agreement or any transaction
      contemplated hereby is, and all other such factual information hereafter
      furnished by or on behalf of Borrower or any Guarantor to Lender will be,
      true and correct in every material respect on the date as of which such
      information is dated or certified, and such information is not, or shall
      not be, as the case may be, incomplete by omitting to state any material
      fact necessary to make such information not misleading.

                                       12
<PAGE>

            (q) None of Borrower, any Guarantor or any of their Subsidiaries is
      engaged principally, or as one of its important activities, in the
      business of extending credit for the purpose of purchasing or carrying
      "margin stock." None of the proceeds of any Loan will be used for the
      purpose of, or be made available by Borrower, any Guarantor or any of
      their Subsidiaries in any manner to any other Person to enable or assist
      such Person in, directly or indirectly purchasing or carrying "margin
      stock". Terms for which meanings are provided in F.R.S. Board Regulation
      T, U or X or any regulations substituted therefor, as from time to time in
      effect, are used in this Section with such meanings.

            (r) None of Borrower, any Guarantor or any of their Subsidiaries is
      an "investment company" nor a "company controlled by an investment
      company" within the meaning of the Investment Company Act of 1940, as
      amended, or a "holding company," or a "subsidiary company" of a "holding
      company," or an "affiliate" of a "holding company" or of a "subsidiary
      company" of a "holding company," within the meaning of the Public Utility
      Holding Company Act of 1935, as amended.

            (s) Schedule V is an accurate and complete list of all Subsidiaries
      of Borrower and each Corporate Guarantor and the respective ownership
      interests therein.

            (t) Borrower and each Guarantor are solvent and will not be rendered
      insolvent by the Loan Documents or the transactions contemplated thereby
      and, after giving effect to such transactions, neither Borrower nor any
      Guarantor will be left with an unreasonably small amount of capital with
      which to engage in its business, nor does Borrower or any Guarantor intend
      to incur, or believe that it has incurred, debts beyond its ability to pay
      as they mature. Neither Borrower nor any Guarantor contemplates the
      commencement of insolvency, bankruptcy, liquidation or consolidation
      proceedings or the appointment of a receiver, liquidator, conservator,
      trustee or similar official in respect of Borrower or any Guarantor or any
      of their assets. Neither Borrower nor any Guarantor are entering into the
      transactions contemplated by the Loan Documents with any intent to hinder,
      delay or defraud any of Borrower's or any Guarantor's creditors.

            (u) The Obligations constitute senior indebtedness which is entitled
      to the benefits of the subordination provisions of all outstanding
      Subordinated Indebtedness. In addition, (a) no Event of Default or Default
      (each as defined in the Indenture) exists, nor will any such Event of
      Default or default exist immediately after granting or continuation of any
      Loan, under the Indenture, the Senior Subordinated Notes or any agreement
      executed by any Borrower in connection therewith; (b) no Borrower or
      Guarantor nor any of their subsidiaries has incurred any Indebtedness (as
      defined in the Indenture) in violation of Section 1008 of the Indenture;
      and (c) all of the Obligations constitute Indebtedness permitted by the
      terms of Section 1008 of the Indenture.

                          ARTICLE V: SECURITY INTEREST

      This Agreement is intended to constitute a security agreement within the
meaning of the UCC. To secure the payment and performance of the Obligations,
Borrower hereby grants to Lender a security interest constituting a first Lien
on the Collateral subject to Permitted Liens. Borrower hereby authorizes, and
ratifies any previous authorization for, Lender to file UCC financing statements
and any amendments thereto describing the Collateral and containing any other
information required by the applicable UCC. Borrower authorizes Lender, and
hereby grants Lender a power of attorney (which is coupled with an interest), to
file financing statements and amendments thereto describing the Collateral and
containing any other information required by the applicable UCC and all proper
terminations of the filings of other secured parties with respect to the
Collateral, in such form and substance as Lender, in its sole discretion, may
determine. Borrower hereby waives any right that Borrower may have to file with
the applicable filing officer, and agrees that it will not file or authorize the
filing of, any financing statement, amendment, termination or other record
pertaining to the Collateral and/or Lender's interest therein, except as
authorized by Lender in writing.

                              ARTICLE VI: COVENANTS

      SECTION 6.01. AFFIRMATIVE COVENANTS. So long as any Loan shall remain
unpaid, each Borrower will comply, and shall cause each Guarantor to comply,
with the following requirements unless waived by Lender in writing:

            (a) FINANCIAL STATEMENTS. Borrower shall deliver to Lender for
      Newpark and its subsidiaries, including each Borrower and each Corporate
      Guarantor: (i) on the date of the filing of Form 10-Q with the Securities
      and Exchange Commission of the United States but in any event within 45
      days after the end of each fiscal quarter (other than the last fiscal
      quarter), unaudited financial statements including in each instance,
      balance sheets, income statements, and statements of cash flow, on a
      consolidated and consolidating basis, as appropriate, and separate profit
      and loss statements as of and for the quarterly period then ended and for
      the fiscal year to date, prepared in accordance with GAAP, and certified
      by an Authorized Officer of Newpark and Borrower, to be true and correct,
      (ii) on the date of the filing of Form 10-K with the Securities and
      Exchange Commission of the United States but in any event within 90 days
      after the end of each fiscal year, annual audited financial statements,
      including balance sheets, income statements and statements of cash flow
      for the fiscal year then ended, on a consolidated and consolidating basis,
      as appropriate, which have been prepared by the independent accountants of
      each of Newpark, Borrower and such Corporate Guarantors, in accordance
      with

                                       13
<PAGE>

      GAAP, and (iii) as soon as practicable, any certifications required by the
      Securities and Exchange Commission of the United States or by securities
      laws applicable to Borrower and each Corporate Guarantor concerning
      financial statements of Borrower or the Corporate Guarantor, as
      applicable. Such audited financial statements shall be accompanied by the
      independent accountant's opinion, which opinion shall be in form generally
      recognized as "unqualified." Borrower shall cause each Individual
      Guarantor to deliver such financial information as Lender shall require
      from time to time.

            (b) COMPLIANCE CERTIFICATE. If any financial covenants are set forth
      on Schedule III, concurrently with the delivery of the financial
      statements pursuant to subsection (a), Borrower shall deliver to Lender a
      certificate from Borrower's or Corporate Guarantor's Authorized Officer,
      as applicable, containing information (in reasonable detail and with
      appropriate calculations and computations in all respects reasonably
      satisfactory to Lender) that demonstrates compliance with the financial
      covenants set forth on Schedule III.

            (c) NOTICES. Borrower shall deliver to Lender each of the following:

                  (i) as soon as possible and in any event within three Business
            Days after the occurrence of a Default, an Event of Default or an
            event which could reasonably be expected to result in a Material
            Adverse Effect, a statement of Borrower setting forth reasonably
            detailed information regarding such Default, Event of Default or
            event and the action that Borrower has taken and proposes to take
            with respect thereto;

                  (ii) promptly after the commencement thereof, notice in
            writing of all litigation and of all proceedings before any
            governmental or regulatory agency affecting Borrower, any Guarantor
            or any of their Subsidiaries of the type described in Article IV
            hereof or which seek a monetary recovery against Borrower, any
            Guarantor or any of their Subsidiaries in excess of $3,000,000;

                  (iii) promptly upon knowledge thereof, notice of any loss,
            theft or destruction of or material damage to, any accident
            involving any, and any action, suit or proceeding relating to,
            Collateral having a value in excess of $250,000;

                  (iv) promptly after the amending thereof, copies of any and
            all amendments to any of its Organizational Documents;

                  (v) promptly upon knowledge thereof, notice of the violation
            by Borrower of any law, rule or regulation applicable to Borrower,
            which violation could reasonably be expected to have a Material
            Adverse Effect;

                  (vi) as soon as possible and in any event within three
            Business Days after the occurrence thereof, notice of any event
            that, alone or together with any other events that have occurred,
            could reasonably be expected to result in liability of Borrower or
            any Corporate Guarantor or any of their Subsidiaries under ERISA in
            an aggregate amount exceeding $3,000,000; and

                  (vii) promptly thereafter, copies of any notices delivered to
            or by Bank One relating to any "Default" or "Unmatured Default" (as
            defined in the Bank One Loan Agreement).

            (d) COMPLIANCE WITH LAWS. Borrower and each of its Subsidiaries
      shall comply in all material respects with all governmental rules and
      regulations and all other applicable laws, rules, regulations and orders,
      including, without limitation, all Environmental Laws.

            (e) MAINTENANCE OF PROPERTIES. Borrower shall, at its own expense,
      maintain, preserve, protect and keep the Collateral in good repair,
      working order and condition in compliance with all applicable laws, rules,
      regulations and the requirements of all applicable insurance policies, and
      make necessary and proper repairs, renewals and replacements so that its
      business carried on in connection therewith may be properly conducted at
      all times and shall maintain in full force and effect all rights,
      franchises, permits, licenses, trademarks, trade names, approvals,
      authorizations, leases and contracts necessary to carry on its business as
      presently or proposed to be conducted where the failure to so maintain the
      same could reasonably be expected to have a Material Adverse Effect.
      Borrower will not make any material alterations, modifications or
      additions to the Collateral which cannot be removed without materially
      damaging the functional capabilities or economic value of the Collateral
      unless Lender has provided its prior written consent.

            (f) INSURANCE. Borrower shall, at its own expense, procure and
      maintain continuously in effect: (i) public liability insurance for
      personal injuries, death or damage to or loss of property arising out of
      or in any way relating to the Collateral sufficient to protect Lender from
      liability in all events, and (ii) insurance against such hazards as Lender
      may require, including, without limitation, all-risk property and casualty
      insurance, in each case in amounts acceptable to Lender. All insurance
      policies required by this Section shall be taken out and maintained with
      insurance companies acceptable to Lender; and shall contain a provision
      that the insurer shall not cancel or revise coverage thereunder without
      giving written notice to the insured parties at least 30 days before the
      cancellation or revision becomes effective. No

                                       14
<PAGE>

      insurance shall be subject to any co-insurance clause. Borrower shall
      cause Lender to be named as loss payee on all insurance policies relating
      to any Collateral and shall cause Lender to be named as additional insured
      under all liability policies, in each case pursuant to appropriate
      endorsements in form and substance satisfactory to Lender. Such insurance
      shall not be affected by any unintentional act or negligence or
      representation or warranty on the part of Borrower or other owner of the
      policy or the property described in such policy. Prior to each Closing
      Date, Borrower shall deposit with Lender evidence satisfactory to Lender
      of such insurance and, at least 10 days prior to the expiration thereof,
      shall provide Lender evidence of all renewals or replacements thereof.
      Borrower shall provide or cause to be provided to Lender and to its
      insurance consultant (or any agent, officer or employee of Lender) such
      other information relating to its insurance coverage as may be reasonably
      requested by Lender.

            (g) BOOKS AND RECORDS; INSPECTIONS. Borrower will keep books and
      records that accurately reflect all of its business affairs and
      transactions. Borrower will, and will cause each Guarantor to, permit
      Lender or any of its representatives (including outside auditors), at
      reasonable times and intervals, to visit all of its offices, to discuss
      its financial matters with its officers and independent public accountant
      (and Borrower hereby authorizes such independent accountant to discuss
      Borrower's financial matters with Lender or its representatives whether or
      not any representative of Borrower is present) and to examine (and, at the
      expense of Borrower, copy extracts from) books or other corporate records
      (including computer records). If Lender exercises its rights under this
      Section following the occurrence of a Default, Borrower shall pay any fees
      of such independent accountant incurred in connection therewith.

            (h) PERFECTION OF LIENS. Borrower shall take such action as may be
      necessary or as Lender may request in order to perfect and protect
      Lender's Lien on the Collateral. If requested by Lender, Borrower shall
      obtain a landlord and/or mortgagee's consent and waiver with respect to
      the property where the Collateral is located. If requested by Lender,
      Borrower shall conspicuously mark the Collateral with appropriate
      lettering, labels or tags, and maintain such markings, so as clearly to
      disclose Lender's security interest in the Collateral.

            (i) TITLE. Borrower will at all times protect and defend, at its own
      cost and expense, its title from and against all claims, liens and legal
      processes of creditors of Borrower (other than Lender), and keep all
      Collateral free and clear of all such claims, liens and processes other
      than Permitted Liens.

            (j) USE OF PROCEEDS. Borrower will use the proceeds of the Loans to
      repay a portion of that certain Indebtedness of Borrower as specified in
      the Loan Request.

            (k) FINANCIAL COVENANTS. Borrower agrees to comply with, and to
      cause each Guarantor to comply with, the financial covenants set forth on
      Schedule III, if any.

            (l) POST CLOSING CONDITIONS. Notwithstanding the obligations and
      conditions required by Borrower pursuant to this Agreement, including such
      conditions set forth in Article I of Schedule II hereto, Borrower and
      Lender agree that Borrower may comply with the requirements under
      subsections (a), (b), (c), (f), (g), (h), (i), (j) and (l) of Article I of
      Schedule II with respect to the Real Property located in Corpus Christi,
      Texas, by complying with such requirements within thirty (30) days after
      the Closing Date of the Loan related thereto (the "Post Closing
      Conditions"). In the event that Borrower fails to satisfy any of the Post
      Closing Conditions within the time period set forth in this subsection (l)
      of Section 6.01, such failure shall not be an "Event of Default"
      hereunder; provided however, that Lender may, at its option, demand
      immediate repayment of such Loan, and upon written notice thereof from
      Lender, Borrower shall immediately repay the outstanding principal amount
      of such Loan, together with all accrued and unpaid interest thereon, plus
      the Prepayment Fee related thereto and any other amounts owed under the
      Loan Documents with respect to such Loan; provided further, however, that
      the failure of Borrower to satisfy the repayment of such Loan pursuant to
      this subsection (l) of Section 6.01, together with all such amounts owed
      thereunder as further described above, shall constitute an "Event of
      Default" hereunder.

      SECTION 6.02. NEGATIVE COVENANTS. So long as the Loan shall remain unpaid,
Borrower agrees that unless waived by Lender in writing:

            (a) LIENS. Borrower will not create, incur or suffer to exist any
      mortgage, deed of trust, pledge, Lien, security interest, assignment or
      transfer in, on or of any of the Collateral except for Permitted Liens.

            (b) FUNDAMENTAL CHANGES. Borrower will not, and will not permit any
      of its Subsidiaries to, form or acquire any Subsidiary, enter into any
      merger, consolidation, reorganization, or recapitalization, or reclassify
      its capital stock, or liquidate, wind up, or dissolve itself (or suffer
      any liquidation or dissolution), or, other than in the ordinary course of
      its business, convey, sell assign, lease, transfer, or otherwise dispose
      of, in one transaction or series of transactions, all or any substantial
      part of its property or assets.

            (c) SALE OF COLLATERAL. Borrower will not, and will not permit any
      of its Subsidiaries to, sell, transfer, lease, contribute or otherwise
      convey or dispose of (in each case in one transaction or series of
      transactions), or grant options,

                                       15
<PAGE>

      warrants or other rights with respect to (in each case in one transaction
      or series of related transactions), or agree to do any of the foregoing
      with respect to, all or any part of the Collateral.

            (d) LOCATION OR NAME CHANGES. Borrower will not change its location
      for purposes of Section 9-307 of the UCC or its name in any manner that
      could make any financing statement filed in connection with any Loan
      Document seriously misleading within the meaning of Section 9-506 of the
      UCC or any similar statute, unless it shall have given Lender at least 30
      days' prior written notice thereof.

      SECTION 6.03. INDEMNITY.

            (a) Whether or not covered by insurance, each Borrower hereby
      assumes responsibility for and agrees to reimburse Lender, its affiliates
      and its and their respective officers, directors, employees and agents
      (individually and collectively, the "Indemnified Parties") for and will
      indemnify, defend and hold the Indemnified Parties harmless from and
      against all liabilities, obligations, losses, damages, penalties, claims,
      suits, actions, proceedings, judgments, awards, amounts paid in
      settlements, obligations, debts, diminutions in value, fines, penalties,
      charges, fees, costs and expenses (including reasonable attorneys' fees
      and expenses) of whatsoever kind and nature, imposed on, incurred by or
      asserted against any Indemnified Party that in any way relate to or arise
      out of any of the Loan Documents, the transactions contemplated thereby or
      the Collateral, including, without limitation (collectively, the
      "Losses"), (i) the selection, manufacture, construction, acquisition,
      acceptance or rejection of the Collateral, (ii) the ownership of the
      Collateral, (iii) the delivery, installation, lease, possession,
      maintenance, use, condition, return or operation of the Collateral, (iv)
      the condition of the Collateral sold or otherwise disposed of after
      possession by Borrower, (v) any patent or copyright infringement, (vi) any
      act or omission on the part of Borrower, Guarantor or any of its or their
      officers, employees, agents, contractors, lessees, licensees or invitees,
      (vii) any misrepresentation or inaccuracy in any representation or
      warranty of Borrower or any Guarantor, or a breach of Borrower or any
      Guarantor of any of its covenants or obligations under any of the Loan
      Documents, (viii) any claim, loss, cost or expense involving alleged
      damage to the environment relating to the Collateral , including, without
      limitation, investigation, removal, cleanup and remedial costs, (ix) any
      personal injury, wrongful death or property damage arising under any
      statutory or common law or tort law theory, including, without limitation,
      damages assess for the maintenance of a private or public nuisance or for
      the conducting of an abnormally dangerous activity on or near the
      Collateral, (x) any past, present or threatened, in writing, injury to, or
      destruction of, the Collateral, including, without limitation, costs to
      investigate and assess such injury or damage and (xi) any administrative
      process or proceeding or judicial or other similar proceeding (including,
      without limitation, any alternative dispute resolution process and any
      bankruptcy proceeding) in any way connected with any matter addressed in
      any of the Loan Documents.

            (b) If any action or proceeding be commenced, to which action or
      proceeding the Indemnified Parties are made a party by reason of the
      execution or performance of this Agreement or any other Loan Document, or
      in which it becomes necessary to defend or uphold the Lien of this
      Agreement, all sums paid by the Indemnified Parties, for the expense of
      any litigation to prosecute or defend the rights and Lien created hereby
      or otherwise, shall be paid by Borrower to such Indemnified Parties as the
      case may be, as hereinafter provided. Borrower will pay and save the
      Indemnified Parties harmless against any and all liability with respect to
      any intangible personal property tax or similar imposition of any state or
      any subdivision or authority thereof now or hereafter in effect, to the
      extent that the same may be payable by the Indemnified Parties in respect
      of this Agreement or any Obligation.

            (c) All amounts payable to the Indemnified Parties under this
      Section shall be deemed Obligations secured by this Agreement and shall be
      payable immediately upon demand. In case any action, suit or proceeding is
      brought against the Indemnified Parties by reason of any such occurrence,
      Borrower, upon request of such Indemnified Parties, will, at Borrower's
      expense, resist and defend such action, suit or proceeding or cause the
      same to be resisted or defended by counsel designated by Lender. The
      obligations of Borrower under this Section shall survive the termination
      of this Agreement and not be merged with any applicable judgment. If and
      to the extent that the foregoing undertaking may be unenforceable for any
      reason, Borrower hereby agrees to make the maximum contribution to the
      payment and satisfaction of each of the Losses that is permissible under
      applicable law.

      SECTION 6.04. PERFORMANCE BY LENDER. If any Borrower at any time fails to
perform or observe any of the covenants or agreements contained in this
Agreement, Lender may, but need not, perform or observe such covenant on behalf
and in the name, place and stead of each Borrower (or, at Lender's option, in
Lender's name) and may, but need not, take any and all other actions which
Lender may reasonably deem necessary to cure or correct such failure (including,
without limitation, the payment of taxes, the satisfaction of security
interests, liens or encumbrances, the performance of obligations owed to account
debtors or other obligors, the procurement and maintenance of insurance, the
execution of assignments, security agreements and financing statements, and the
endorsement of instruments); and Borrower shall thereupon pay to Lender on
demand the amount of all moneys expended and all costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred by Lender in connection
with or as a result of the performance or observance of such agreements or the
taking of such action by Lender,

                                       16
<PAGE>

together with interest thereon from the date expended or incurred at the lesser
of the highest Default Rate then in effect or the highest rate permitted by law.
To facilitate the performance or observance by Lender of such covenants of
Borrower, each Borrower hereby irrevocably appoints Lender, or the delegate of
Lender, acting alone, as the attorney in fact of Borrower with the right (but
not the duty) from time to time to create, prepare, complete, execute, deliver,
endorse or file in the name and on behalf of Borrower any and all instruments,
documents, assignments, security agreements, financing statements, applications
for insurance and other agreements and writings required to be obtained,
executed, delivered or endorsed by Borrower under this Agreement.

                         ARTICLE VII: EVENTS OF DEFAULT

      SECTION 7.01. EVENTS OF DEFAULT. Each of the following events or
occurrences shall constitute an "Event of Default":

            (a) Borrower shall default in the payment of any Obligation when due
      and such failure continues for 10 calendar days;

            (b) Any representation or warranty of Borrower made in any Loan
      Document or any other writing or certificate furnished by or on behalf of
      Borrower pursuant to any Loan Document is or shall be incorrect when made
      in any material respect;

            (c) Borrower shall fail to perform any of its obligations under
      Section 6.01(c), 6.01(f), 6.01(i), 6.01(j) or 6.02(a);

            (d) Borrower shall default in the due performance and observance of
      any other agreement contained herein or in any other Loan Document (other
      than items set forth elsewhere in this Section 7.01), and such default
      shall continue unremedied for a period of 30 days after Borrower has
      actual knowledge thereof or has received notice by Lender thereof;

            (e) The occurrence of an event of default or a breach or default,
      after the passage of all applicable notice and cure or grace periods
      provided therefor, under any other Loan Document or any other agreement
      between or among Borrower, any Guarantor or any of their Subsidiaries and
      Lender or any of its Affiliates;

            (f) The occurrence of a default or an event of default (however
      defined) under any instrument, agreement or other document evidencing or
      relating to, and the acceleration of, any indebtedness or other monetary
      obligation of Borrower, any Guarantor or any of their Subsidiaries having
      a principal amount, individually or in the aggregate, in excess of
      $3,000,000;

            (g) Any judgment or order for the payment of money (not paid or
      fully covered by insurance maintained in accordance with the requirements
      of this Agreement and as to which the relevant insurance company has
      acknowledged coverage) in excess of $3,000,000 shall be rendered against
      Borrower, any Guarantor or any of their Subsidiaries;

            (h) The occurrence of any Change in Control;

            (i) Borrower, any Guarantor or any of their Subsidiaries shall be or
      become insolvent, or admit in writing its inability to pay its debts as
      they mature, or make an assignment for the benefit of creditors; or
      Borrower, any Guarantor or any of their Subsidiaries shall apply for or
      consent to the appointment of any receiver, trustee or similar officer for
      it or for all or any substantial part of its property; or such receiver,
      trustee or similar officer shall be appointed without the application or
      consent of Borrower, any Guarantor or any of their Subsidiaries; Borrower,
      any Guarantor or any of their Subsidiaries shall institute (by petition,
      application, answer, consent or otherwise) any bankruptcy, insolvency,
      reorganization, arrangement, readjustment of debt, dissolution,
      liquidation or similar proceeding relating to it under the laws of any
      jurisdiction; or any such proceeding shall be instituted (by petition,
      application or otherwise) against Borrower , any Guarantor or any of their
      Subsidiaries; or any Individual Guarantor shall become disabled or die;

            (j) Any Loan Document or any Lien granted thereunder shall (except
      in accordance with its terms), in whole or in part, terminate, cease to be
      effective or cease to be the legally valid, binding and enforceable
      obligation of Borrower; Borrower, any Guarantor, any of their Subsidiaries
      or any other party shall, directly or indirectly, contest in any manner
      the effectiveness, validity, binding nature or enforceability of any Loan
      Document or any Lien granted thereunder; or any Lien securing (or required
      to secure) any Obligation shall, in whole or in part, cease to be a first
      priority perfected Lien subject only to Permitted Liens;

            (k) The occurrence of an ERISA Event that, when taken together with
      all other ERISA Events that have occurred, could reasonably be expected to
      result in liability of Borrower or any Guarantor or any of their
      Subsidiaries in an aggregate exceeding $3,000,000; or

            (l) The occurrence of a material adverse change in the business,
      assets or financial condition of Borrower or any of their Subsidiaries or
      any Guarantor.

                                       17
<PAGE>

      SECTION 7.02. REMEDIES.

            (a) Following the occurrence of an Event of Default described in
      subsection (i) of Section 7.01, all of the outstanding principal amount of
      the Loans and other Obligations shall be due and payable and the
      Commitment (if not theretofore terminated) shall terminate, whereupon the
      full unpaid amount of such Loans and other Obligations which shall be so
      declared due and payable shall be and become immediately due and payable,
      without presentment, notice of dishonor, protest or further notice of any
      kind, all of which are hereby expressly waived by Borrower, and, as the
      case may be, the Commitment shall terminate.

            (b) Following the occurrence of any Event of Default and subject to
      subsection (a) of this Section, Lender may exercise, at its option,
      concurrently, successively or in any combination, all rights and remedies
      of a secured party in, to and against the Collateral granted by the UCC or
      otherwise available at law or in equity, including, without limitation:

                  (i) by notice to Borrower, declare all or any portion of the
            outstanding principal amount of the Loans and other Obligations to
            be due and payable and/or the Commitment (if not theretofore
            terminated) to be terminated, whereupon the full unpaid amount of
            such Loans and other Obligations which shall be so declared due and
            payable shall be and become immediately due and payable, without
            presentment, notice of dishonor, protest or further notice of any
            kind, all of which are hereby expressly waived by Borrower, and/or,
            as the case may be, the Commitment shall terminate;

                  (ii) recover all fees and expenses (including, without
            limitation, reasonable attorneys' fees) in connection with the
            collection or enforcement of the Obligations, which fees and
            expenses shall constitute additional Obligations of Borrower
            hereunder.

                  (iii) take immediate and exclusive possession of the
            Collateral, which constitutes personal property, or any part
            thereof, with or without any court order or other process of law and
            enter the premises where such Collateral is located and remove the
            same therefrom, or require Borrower to assemble and package such
            Collateral and make it available to Lender for its possession at a
            place designated by Lender;

                  (iv) sell, lease, sublease, hold or otherwise dispose of all
            or any part of the Collateral and hold, maintain, preserve and
            prepare the Collateral for sale until disposed of;

                  (v) act as, and Borrower hereby constitutes and appoints
            Lender, Borrower's true, lawful and irrevocable attorney-in-fact
            (which appointment is coupled with an interest) to demand, receive
            and enforce payments and to give receipts, releases, satisfaction
            for and to sue for moneys payable to Borrower under or with respect
            to any of the Collateral, and actions taken pursuant to this
            appointment may be taken either in the name of Borrower or in the
            name of Lender with the same force and effect as if this appointment
            had not been made;

                  (vi) sue for specific performance of any Obligation or recover
            damages for breach thereof; and

                  (vii) exercise any one or more of the remedies available under
            any Loan Document.

      SECTION 7.03. USE OF PROCEEDS. Any proceeds received by Lender in
exercising the rights and remedies specified in Section 7.02 shall be first
applied to pay the costs and expenses, including, without limitation, reasonable
attorneys' fees and expenses, incurred by Lender as a result of an Event of
Default. Any proceeds remaining after payment of such costs and expenses shall
be applied to the satisfaction of the Obligations as determined by Lender in its
sole discretion and, unless Lender accepts the Collateral in full or partial
satisfaction of the Obligations, any excess proceeds after satisfaction of all
Obligations shall be paid to Borrower.

                     ARTICLE VIII: MISCELLANEOUS PROVISIONS

      SECTION 8.01. WAIVERS, AMENDMENTS. No provision of this Agreement or any
of the other Loan Documents shall be deemed waived or amended except by a
written instrument setting forth the matter waived or amended and signed by the
party against which enforcement of such waiver or amendment is sought. Waiver of
any matter shall not be deemed a waiver of the same or any other matter on any
future occasion. No notice to or demand on Borrower in any case shall entitle it
to any notice or demand in similar or other circumstances.

      SECTION 8.02. NOTICES. All notices, certificates, requests, demands and
other communications provided for hereunder or under any Loan Document shall be
in writing and shall be (a) personally delivered or (b) sent by overnight
courier of national reputation, and shall be deemed to have been given on (i)
the date received if personally delivered and (ii) the next Business Day if sent
by overnight courier. All communications shall be addressed to the party to whom
notice is being given at its Notice Address.

                                       18
<PAGE>

      If notice to Borrower of any intended disposition of the Collateral or any
other intended action is required by law in a particular instance, such notice
shall be deemed commercially reasonable if given (in the manner specified in
this Section) at least 10 calendar days prior to the date of intended
disposition or other action.

      SECTION 8.03. SEVERABILITY. Any provision of this Agreement or any other
Loan Document which is invalid, illegal or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such invalidity, illegality or unenforceability without invalidating the
remaining provisions of this Agreement or such Loan Document or affecting the
validity, legality or enforceability of such provision in any other
jurisdiction.

      SECTION 8.04. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute one and the same document, and any of the parties hereto may execute
this Agreement by signing any such counterpart, provided that only the original
marked "ORIGINAL: 1 of 4" on the execution page thereof shall constitute chattel
paper under the UCC.

      SECTION 8.05. FURTHER ASSURANCE AND CORRECTIVE INSTRUMENTS. Borrower
hereby agrees that it will, from time to time, execute, acknowledge and deliver
or authorize, as applicable, or cause to be executed, acknowledged and delivered
or authorized, such further acts, instruments, conveyances, transfers and
assurances and take such other actions, as Lender reasonably deems necessary or
advisable for the implementation, correction, confirmation or perfection of this
Agreement or the other Loan Documents and any rights of Lender hereunder or
thereunder. Borrower hereby designates and appoints Lender as its agent, and
grants to Lender a power of attorney (which is coupled with an interest), to
execute on behalf of Borrower such additional documents and to take such other
action.

      SECTION 8.06. TIME OF THE ESSENCE. Time is of the essence with respect to
the performance by Borrower of the Obligations.

      SECTION 8.07. ENTIRE AGREEMENT. This Agreement and the other Loan
Documents constitute the entire agreement between Lender and Borrower. There are
no other understandings, agreements, representations or warranties, written or
oral, between Lender and Borrower with respect to the subject matter of this
Agreement and the other Loan Documents. Upon the execution and delivery of this
Agreement and the other Loan Documents, any proposal or loan commitment with
respect to the transactions contemplated by this Agreement shall be deemed null
and void and of no further force and effect (except to the extent of the
provisions therein concerning any Closing Fee), and the terms and conditions of
this Agreement and the other Loan Documents shall control notwithstanding that
such terms and conditions may be inconsistent with or vary from those set forth
in such bid proposal or loan commitment.

      SECTION 8.08. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL EACH BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

      SECTION 8.09. SUCCESSORS AND ASSIGNS; ASSIGNMENTS BY LENDER. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however, that
Borrower may not assign or transfer its rights or obligations hereunder without
the prior written consent of Lender. Lender may assign, in whole or in part, its
rights under this Agreement, including, without limitation, in connection with
any assignment, participation and/or securitization. Upon any assignment by
Lender of its entire right and interest under the Loan Documents, Lender shall
automatically be relieved, from and after the date of such assignment, of any
liability for the performance of any obligation of Lender therein.

      SECTION 8.10. ASSIGNMENTS, PARTICIPATIONS AND SECURITIZATIONS. Borrower
acknowledges and agrees that a material inducement to Lender's willingness to
complete the transactions contemplated by the Loan Documents is that Lender may,
at any time, complete an assignment, participation or securitization with
respect to any Loan Document or any or all of the servicing rights with respect
thereto. In connection with any such assignment, participation or
securitization:

            (a) Borrower agrees to cooperate in good faith with Lender,
      including, without limitation, providing such documents, financial
      information and other information ("Information") reasonably requested by
      Lender or any entity involved with respect to such assignment,
      participation or securitization;

            (b) Borrower consents to Lender's providing the Information,
      including any other information that Lender may now have or hereafter
      acquire with respect to Borrower or the Collateral to any entity involved
      with respect to such assignment, participation or securitization;

                                       19
<PAGE>

            (c) Notwithstanding anything to the contrary in any Loan Document,
      in the event that Lender assigns a Note, (i) the related Loan shall be
      deemed a separate loan that includes and incorporates each term and
      condition in this Agreement and the Loan Documents related thereto, (ii)
      the term "Obligations" as used herein and in the Loan Documents with
      respect to any assignee shall mean only the Indebtedness and obligations
      evidenced by or related to the Notes held by the assignee and (iii) the
      term Collateral as used herein and in the Loan Documents with respect to
      such assignee shall mean only the Collateral described on the Collateral
      Schedules that specifically refer to the Notes held by such assignee.

            (d) If at least one, but not all, of the Loans is subject to an
      assignment, participation or securitization, Borrower, at Lender's
      request, shall promptly execute (i) a separate loan agreement with respect
      to the Loans subject to assignment, participation or securitization which
      shall be in substantially the same form and substance as this Agreement
      but shall only apply with respect to Collateral corresponding to such
      Loans subject to an assignment, participation or securitization and (ii)
      an amendment to the Loan Documents to delete the Collateral corresponding
      to the Loans that are subject to assignment, participation or
      securitization.

      SECTION 8.11. WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY OF THE LOAN
DOCUMENTS, ANY DEALINGS BETWEEN LENDER AND BORROWER RELATING TO THE SUBJECT
MATTER OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY LOAN DOCUMENT,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LENDER AND BORROWER.
BORROWER ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT
MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS).
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY LOAN DOCUMENT, OR TO ANY
OTHER DOCUMENT OR AGREEMENT RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY RELATED TRANSACTION. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

      SECTION 8.12. FORUM SELECTION AND CONSENT TO JURISDICTION. BORROWER AND
LENDER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE
OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR
IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREUNDER OR
FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL MAY BE
FOUND. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF
SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH SUCH LITIGATION. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT BORROWER HAS OR HEREAFTER
MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, BORROWER
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.

      SECTION 8.13. WAIVER OF CERTAIN CLAIMS. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER AND EACH GUARANTOR SHALL NOT ASSERT, AND HEREBY WAIVES,
ANY CLAIM AGAINST LENDER ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES)
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, ANY LOAN DOCUMENT OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED THEREBY, ANY LOAN OR THE USE OF THE
PROCEEDS THEREOF.

                                       20
<PAGE>

        [REMAINDER OF PAGE INTENTIONALLY BLANK; EXECUTION PAGE FOLLOWS.]

                                       21
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                       BORROWER:

                                       EXCALIBAR MINERALS INC.

                                       By:    /s/ John R. Dardenne
                                           ------------------------------
                                       Name:  John R. Dardenne
                                       Title: Treasurer

                                       EXCALIBAR MINERALS OF LA., L.L.C.

                                       By:    /s/ John R. Dardenne
                                           ------------------------------
                                       Name:  John R. Dardenne
                                       Title: Treasurer

                                       LENDER:

                                       RBS LOMBARD, INC.

                                       By:    /s/ Richard Petrucci
                                           ------------------------------
                                       Name:  Richard Petrucci
                                       Title: Vice President

                               ORIGINAL: ___ OF 4

                       [EXECUTION PAGE OF LOAN AGREEMENT]<PAGE>
                                                                     EXHIBIT 4.6

                            CENTERPOINT ENERGY, INC.
                           SECOND AMENDED AND RESTATED
                             INVESTOR'S CHOICE PLAN

                  CenterPoint Energy, Inc. (successor to Reliant Energy,
Incorporated, formerly Houston Industries Incorporated), a Texas corporation
(the "Company"), hereby amends and restates its Amended and Restated Investor's
Choice Plan (the "ICP") in its entirety to establish the following CenterPoint
Energy, Inc. Second Amended and Restated Investor's Choice Plan (the "Plan"):

                                    RECITAL:

                  WHEREAS, the purpose of the Plan is to provide interested
investors and holders of certain debt and equity securities of the Company and
its subsidiaries a convenient, economical means of increasing their investment
in the Company through (i) regular investment of cash dividends paid and
interest payments made on such securities, (ii) optional cash investments and/or
(iii) initial cash investments in shares of the Company's common stock, par
value $0.01 per share, including associated preferred stock purchase rights (the
"Common Stock"); and

                  WHEREAS, the Company desires to amend and restate the ICP to
(i) change the name of the ICP, (ii) revise the list of Eligible Securities (as
defined herein), (iii) reflect the removal of the option to reinvest Dividends
(as defined herein) on Common Stock in self-directed Individual Retirement
Accounts through a Company-selected IRA trustee, and (iv) provide certain other
clarifications.

                  NOW, THEREFORE:

                                   ARTICLE I

                                  Definitions

                  The terms defined in this Article I shall, for all purposes of
this Plan, have the following respective meanings:

                  Account

                  The term "Account" shall mean, as to any Participant, the
account maintained by the Administrator evidencing (i) the shares (and/or
fraction of a share) of Common Stock (a) purchased through the Plan and/or (b)
deposited by such Participant into the Plan pursuant to Section 4.1 hereof, and
credited to such Participant and (ii) cash held in the Plan pending investment
in Common Stock for such Participant.

                  Account Shares

                  The term "Account Shares" shall mean all shares (and/or
fraction of a share) of Common Stock credited to the Account of a Participant by
the Administrator, which shall include shares deposited into the Plan pursuant
to Section 4.1 hereof.

<PAGE>

                  Administrator

                  The term "Administrator" shall mean the individual (who may be
an employee of the Company), bank, trust company or other entity (including the
Company) appointed from time to time by the Company to act as Administrator
hereunder.

                  Automatic Investing Authorization Form

                  The term "Automatic Investing Authorization Form" shall mean
the documentation, including a voided check or deposit slip on the bank, savings
or credit union account from which funds are to be drawn, that the Administrator
shall require to be completed and received for a Participant to authorize the
Administrator to make automatic deductions from an account designated by the
Participant for investment in Common Stock through the Plan.

                  Common Stock

                  As defined in the Recitals.

                  Company

                  As defined in the introduction to the Recitals.

                  Company Share Purchase Price

                  The term "Company Share Purchase Price," when used with
respect to Fractional Account Shares, newly issued shares of Common Stock or
shares of Common Stock held in the Company's treasury, shall mean the average of
the high and low sales prices of Common Stock on a given trading day as reported
on the New York Stock Exchange Composite Tape as published in The Wall Street
Journal. In the absence of knowledge of inaccuracy, the Administrator may rely
upon such prices as published in The Wall Street Journal. In the event no
trading is so reported for a trading day, the Company Share Purchase Price for
such shares may be determined by the Company on the basis of such market
quotations as it deems appropriate.

                  Direct Deposit Authorization Form

                  The term "Direct Deposit Authorization Form" shall mean the
documentation, including a voided check or deposit slip for the designated bank,
savings or credit union account, that the Administrator shall require to be
completed and received prior to a Participant having any Dividends on Account
Shares not being reinvested in Common Stock paid by electronic direct deposit to
the Participant's predesignated bank, savings or credit union account pursuant
to Section 7.7 hereof.

                  Dividend

                  The term "Dividend" shall mean cash dividends paid on
Reinvestment Eligible Securities.

                  Dividend Payment Date

                  The term "Dividend Payment Date" shall mean a date on which a
cash dividend on shares of Common Stock is paid.

                  Eligible Securities

                  The term "Eligible Securities" shall mean those equity and
debt securities of the Company and its subsidiaries, whether issued prior to, on
or after the date hereof, set forth in

                                       2
<PAGE>

Section 6.1 hereof, and such other equity and debt securities of the Company and
its subsidiaries as the Company may designate, in its sole discretion, pursuant
to Section 6.2 hereof.

                  Enrollment Form

                  The term "Enrollment Form" shall mean the documentation that
(i) the Administrator shall require to be completed and received prior to an
investor's enrollment in the Plan pursuant to Section 2.2, 2.3, 2.4 or 4.1
hereof and (ii) a Participant may submit to the Administrator to change his
options under the Plan pursuant to Section 7.1 hereof.

                  Exchange Act

                  The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder.

                  Foreign Person

                  The term "Foreign Person" shall mean a Person that is a
citizen or resident of, or is organized or incorporated under, or has its
principal place of business in, a country other than the United States, its
territories and possessions.

                  Fractional Account Shares

                  The term "Fractional Account Shares" shall mean the shares
(and fractions of shares) of Common Stock held in the Fractional Share Account.

                  Fractional Share Account

                  The term "Fractional Share Account" shall mean an account
under the Plan, owned by the Company, consisting of Fractional Account Shares,
which is held by the Administrator and administered pursuant to Section 8.3
hereof.

                  ICP

                  As defined in the introduction to the Recitals.

                  Independent Agent

                  The term "Independent Agent" shall mean an agent independent
of the Company who satisfies applicable legal requirements (including without
limitation the requirements of Regulation M and Rule 10b-18 promulgated under
the Exchange Act) and who has been selected by the Company, pursuant to Section
10.6 hereof, to serve as an Independent Agent for purposes of making open market
purchases and sales of Common Stock under the Plan.

                  Interest

                  The term "Interest" shall mean interest payments made on
Reinvestment Eligible Securities.

                  Investment Date

                  The term "Investment Date" shall mean each date on which the
Administrator or Independent Agent shall begin to purchase or sell shares of
Common Stock pursuant to the Plan. An Investment Date shall occur at least every
fifth business day, and may occur as often as every business date, if
practicable, as determined in the sole discretion of the Administrator.

                                       3
<PAGE>

                  Market Share Purchase Price

                  The term "Market Share Purchase Price," when used with respect
to shares of Common Stock purchased in the open market, shall mean the weighted
average purchase price per share (including brokerage commissions, any related
service charges and applicable taxes) of the aggregate number of shares
purchased in the open market for an Investment Date.

                  Market Share Sales Price

                  The term "Market Share Sales Price," when used with respect to
shares of Common Stock sold under the Plan, shall mean the weighted average
sales price per share (less brokerage commissions, any related service charges
and applicable taxes) of the aggregate number of shares sold in the open market
for the relevant period.

                  Maximum Amount

                  As defined in Section 2.5 hereof.

                  Participant

                  As defined in Section 2.1 hereof.

                  Person

                  The term "Person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, estate or unincorporated organization.

                  Plan

                  As defined in the introduction to the Recitals.

                  Reinvestment Eligible Securities

                  The term "Reinvestment Eligible Securities" shall mean (i)
those Eligible Securities of which a Participant is the record or registered
holder and on which the Participant has elected to have all or a portion of the
Dividends or Interest paid reinvested in Common Stock and (ii) those Account
Shares on which the Participant has elected to have all or a portion of the
Dividends paid reinvested in Common Stock, which election under (i) or (ii) has
been made by delivering a completed optional cash investment stub or a completed
Enrollment Form, as the case may be, to the Administrator.

                  Statement of Account

                  The term "Statement of Account" shall mean a written statement
prepared by the Administrator and sent to each Participant which reflects (i)
all transactions to date completed under the Plan during the current calendar
year, (ii) the number of Account Shares credited to such Participant's Account
at the date of such statement, (iii) the amount of cash, if any, credited to
such Participant's Account pending investment at the date of such statement and
(iv) such additional information regarding such Participant's Account as the
Administrator may determine to be pertinent to the Participant.

                  Trust Account

                  As defined in Section 11.1 hereof.

                  Trustee

                  As defined in Section 11.7 hereof.

                                       4
<PAGE>

A pronoun or adjective in the masculine gender includes the feminine gender, and
the singular includes the plural, unless the context clearly indicates
otherwise.

                                   ARTICLE II

                                  Participation

                  Section 2.1. Participation. Any Person, whether or not a
record holder of Common Stock, may elect to participate in the Plan; provided,
however, that if such Person is a Foreign Person, he must provide evidence
satisfactory to the Administrator that his participation in the Plan would not
violate local laws applicable to the Company, the Plan or such Foreign Person.

                  An election by a Person to participate in the Plan shall be
made by completing and returning to the Administrator an Enrollment Form and (i)
electing to have Dividends on Eligible Securities of which such Person is the
record holder invested in Common Stock pursuant to Section 2.2 hereof, (ii)
electing to have Interest on Eligible Securities of which such Person is the
registered owner invested in Common Stock pursuant to Section 2.3 hereof, (iii)
depositing certificates representing Common Stock of which such person is the
record holder into the Plan pursuant to Section 4.1 hereof or (iv) making an
initial cash investment pursuant to Section 2.4 hereof.

                  Any Person who has met such requirements and has made and not
revoked such election is herein referred to as a "Participant." Notwithstanding
the foregoing, each participant in the ICP or the Plan on the date hereof is
automatically a Participant without submitting a new Enrollment Form; provided,
however, that any such Participant who wishes to change his current
participation in any way must submit written or facsimile instructions or a new
Enrollment Form to the Administrator. A Participant (or a Person completing an
Enrollment Form in order to become a Participant) may elect to participate in
any or all forms of investment provided in Sections 2.2 through 2.5 hereof and
to utilize the Plan's safekeeping services provided in Section 4.1 hereof by
submitting an Enrollment Form designating such election to the Administrator;
provided, however, that in lieu of an Enrollment Form, a Participant may submit
to the Administrator (i) written or facsimile instructions in order to elect
Dividend and/or Interest reinvestment pursuant to Sections 2.2 and/or 2.3
hereof, (ii) a completed optional cash investment stub attached to a quarterly
Statement of Account in order to elect to make optional cash investments
pursuant to Section 2.5 hereof and (iii) the stock certificates representing the
Common Stock to be deposited into the Plan in order to elect to utilize the
safekeeping services provided by the Plan.

                  Section 2.2. Dividend Reinvestment. A Participant may elect to
have all or a portion of any Dividend on his Reinvestment Eligible Securities
invested in shares (and/or a fraction of a share) of Common Stock to be credited
to his Account in lieu of receiving such Dividend directly. If a Participant
elects to reinvest only a portion of the Dividends received on his Reinvestment
Eligible Securities, the portion of Dividends not reinvested will be sent to the
Participant by check in the manner otherwise associated with payment of such
Dividends or, if such Reinvestment Eligible Securities are also Account Shares,
by electronic direct deposit if the Participant has elected the direct deposit
option provided in Section 7.7 hereof.

                                       5
<PAGE>

                  Section 2.3. Interest Reinvestment. A Participant may elect to
have all or a portion of any Interest on his Reinvestment Eligible Securities
invested in shares (and/or a fraction of a share) of Common Stock to be credited
to his Account in lieu of receiving such Interest directly. If a Participant
elects to reinvest only a portion of the Interest on his Reinvestment Eligible
Securities, that portion of Interest not reinvested in Common Stock will be sent
to the Participant by check in the manner otherwise associated with payment of
Interest.

                  Section 2.4. Initial Cash Investment. A Person not already a
Participant may become a Participant by (i) making an initial cash payment of at
least $250, or (ii) in the case of a Person who is already a record or
registered holder of Eligible Securities, of at least $50, by personal check,
money order or wire transfer payable to CenterPoint Energy, Inc. Investor's
Choice Plan, to be invested in Common Stock pursuant to Section 3.4 hereof;
provided, however, that such initial cash payment may not exceed $120,000 and
payment for such initial cash investment must be accompanied by a completed
Enrollment Form.

                  Section 2.5. Optional Cash Investments. A Participant may
elect to make cash payments at any time or from time to time to the Plan, by
personal check, money order or wire transfer payable to CenterPoint Energy, Inc.
Investor's Choice Plan, or by automatic deductions from a predesignated bank,
savings or credit union account pursuant to Section 7.8 hereof, for investment
in Common Stock pursuant to Section 3.4 hereof; provided, however, that any
Participant who elects to make optional cash investments pursuant to this
Section 2.5 must invest at least $50 for any single investment and may not
invest more than $120,000 in aggregate amount in any calendar year (the "Maximum
Amount"). For purposes of determining whether the Maximum Amount has been
reached, initial cash investments shall be counted as optional cash investments.

                                  ARTICLE III

             Dividend and Interest Reinvestment and Stock Purchase

                  Section 3.1. Dividend and Interest Reinvestment. Dividends and
Interest as to which reinvestment has been elected by a Participant shall be
paid to the Administrator or its nominee on behalf of such Participant.
Dividends and Interest shall be reinvested, at the Company's election, in either
(i) newly issued shares of Common Stock or shares of Common Stock held in the
Company's treasury purchased from the Company or (ii) shares of Common Stock
purchased in the open market. Any reinvestment of Dividends or Interest in, or
other purchases of, Common Stock pursuant to this Article III shall be subject
to Section 3.5 hereof.

                  Section 3.2. Dividend and Interest Reinvestment in Newly
Issued or Treasury Shares. Dividend and Interest reinvestment in newly issued
shares of Common Stock or shares of Common Stock held in the Company's treasury
shall be governed by this Section 3.2. On an Investment Date with respect to
which the Company elects to issue new shares or sell shares of Common Stock held
in the Company's treasury to the Plan in order to effect the reinvestment of
Dividends and/or Interest, the Company shall issue to the Administrator upon the
Company's receipt of the funds described in (a) below, for crediting by the
Administrator to the Account of a Participant, a number of shares (and/or
fraction of a share rounded to three decimal places) of Common Stock equal to
(a) the amount of any Dividends and/or Interest paid to the Administrator on
behalf of such Participant since the preceding Investment Date plus the amount
of any Dividends paid to the

                                       6
<PAGE>

Administrator on behalf of such Participant on such Investment Date divided by
(b) the Company Share Purchase Price on the trading day immediately preceding
such Investment Date. Such shares shall be issued or sold to, and registered in
the name of, the Administrator or its nominee as custodian for such
Participants. No interest shall be paid on Dividends or Interest held pending
reinvestment pursuant to this Section 3.2.

                  Section 3.3. Dividend and Interest Reinvestment in Shares
Purchased in the Open Market. Dividend and Interest reinvestment in shares of
Common Stock purchased in the open market shall be governed by this Section 3.3.
On an Investment Date with respect to which the Company elects to effect
reinvestment of Dividends and/or Interest in shares of Common Stock purchased in
the open market, the Administrator shall (if it is an Independent Agent), or
shall cause an Independent Agent to, apply the amount of any Dividends and/or
Interest paid to the Administrator on behalf of the Participants since the
preceding Investment Date plus the amount of any Dividends paid to the
Administrator on behalf of the Participants on such Investment Date to the
purchase of shares of Common Stock in the open market. Purchases in the open
market pursuant to this Section 3.3 and Subsection 3.4.2 hereof may begin on the
applicable Investment Date and shall be completed no later than five days from
such date unless completion at a later date is necessary or advisable under
applicable law, including without limitation any federal securities laws. Any
Dividends, Interest, optional cash investments and initial cash investments to
be reinvested in shares of Common Stock purchased in the open market pursuant to
this Section 3.3 and Subsection 3.4.2 hereof not reinvested in shares of Common
Stock within 30 days of receipt by the Administrator, or if the Company is not
the Administrator by the Company, shall be promptly returned to the Participant
at his address of record by First Class Mail. Open market purchases pursuant to
this Section 3.3 and Subsection 3.4.2 hereof may be made on any securities
exchange on which the Common Stock is traded, in the over-the-counter market or
by negotiated transactions, and may be upon such terms and subject to such
conditions with respect to price and delivery to which the Independent Agent
(including the Administrator if it is also an Independent Agent) may agree. With
regard to open market purchases of shares of Common Stock pursuant to this
Section 3.3 and Subsection 3.4.2 hereof, none of the Company, the Administrator
(if it is not also serving as the Independent Agent) or any Participant shall
have any authority or power to direct the time or price at which shares of
Common Stock may be purchased, the markets on which such shares are to be
purchased (including on any securities exchange, in the over-the-counter market
or in negotiated transactions) or the selection of the broker or dealer (other
than the Independent Agent) through or from whom purchases may be made. For the
purpose of making, or causing to be made, purchases of shares of Common Stock
pursuant to this Section 3.3 and Subsection 3.4.2 hereof, and sales of Account
Shares pursuant to Section 5.1 hereof, the Independent Agent shall be entitled
to commingle each Participant's funds with those of all other Participants and
to offset purchases of shares of Common Stock against sales of shares of Common
Stock to be made for Participants, resulting in a net purchase or a net sale of
shares. The number of shares (and/or fraction of a share rounded to three
decimal places) of Common Stock that shall be credited to a Participant's
Account with respect to an Investment Date to which this Section 3.3 applies
shall be equal to (a)(i) the amount of any Dividends and/or Interest paid to the
Administrator on behalf of such Participant since the preceding Investment Date
plus (ii) the amount of any Dividends paid to the Administrator on behalf of
such Participant on such Investment Date less (iii) any Dividends and/or
Interest to be returned to such Participant pursuant to this Section 3.3 divided

                                       7
<PAGE>

by (b) the Market Share Purchase Price with respect to such Investment Date.
Such shares shall be registered in the name of the Administrator or its nominee
as custodian for the Participants. No interest shall be paid on Dividends or
Interest held pending reinvestment pursuant to this Section 3.3.

                  Section 3.4. Investment of Optional Cash Payments and Initial
Cash Payments. Any optional cash investments and initial cash investments
received by the Administrator from a Participant at least one business day prior
to an Investment Date shall be invested, beginning on such Investment Date, in
either (i) newly issued shares or shares of Common Stock held in the Company's
treasury in the manner provided in Subsection 3.4.1 hereof, or (ii) Common Stock
purchased in the open market in the manner provided in Subsection 3.4.2 hereof.
Optional cash investments and initial cash investments not received by the
Administrator at least one business day prior to an Investment Date need not be
invested on such Investment Date; provided, however, that any such optional cash
investments and initial cash investments not invested on such Investment Date
shall be invested beginning on the next succeeding Investment Date. No interest
shall be paid on optional cash investments and initial cash investments held
pending investment pursuant to this Section 3.4.

                  Subsection 3.4.1 Newly Issued or Treasury Shares. On an
Investment Date with respect to which the Company elects to issue new shares or
sell shares of Common Stock held in the Company's treasury to the Plan in order
to effect the investment of optional cash investments and initial cash
investments, the Company shall issue to the Administrator upon the Company's
receipt of the funds described in (a) below, for crediting by the Administrator
to the Account of a Participant, a number of shares (and/or fraction of a share
rounded to three decimal places) of Common Stock equal to (a) the amount of any
optional cash investments and/or initial cash investment received by the
Administrator from such Participant since the preceding Investment Date
(excluding any amounts received from such Participant within one business day of
such Investment Date but including any amounts received from such Participant
within one business day prior to the preceding Investment Date that were not
invested on the preceding Investment Date as set forth in Section 3.4 hereof)
divided by (b) the Company Share Purchase Price on the trading day immediately
preceding such Investment Date. Such shares shall be issued or sold to, and
registered in the name of, the Administrator or its nominee as custodian for the
Participants.

                  Subsection 3.4.2 Shares Purchased in the Open Market. On an
Investment Date with respect to which the Company elects to effect the
investment of optional cash investments and initial cash investments in shares
of Common Stock purchased in the open market, the Administrator shall (if it is
an Independent Agent), or shall cause an Independent Agent to, purchase for
crediting by the Administrator to the Account of a Participant a number of
shares (and/or fraction of a share rounded to three decimal places) of Common
Stock in the open market equal to (a)(i) the amount of any optional cash
investments and/or initial cash investment received by the Administrator from
such Participant since the preceding Investment Date (excluding any amounts
received from such Participant within one business day of such Investment Date
but including any amounts received from such Participant within one business day
prior to the preceding Investment Date as set forth in Section 3.4 hereof) less
(ii) any optional cash investments and/or initial cash investments to be
returned to such Participant pursuant to Section 3.3 hereof divided by (b) the
Market Share Purchase Price with respect to

                                       8
<PAGE>

such Investment Date. Such purchases shall be made in the manner set forth in
Section 3.3 hereof. Such shares shall be registered in the name of the
Administrator or its nominee as custodian for the Participants.

                  Subsection 3.4.3 Request to Stop Investment. If a written
request to stop investment of optional cash investments or an initial cash
investment is received by the Administrator from a Participant at least two
business days before the next Investment Date, any optional cash investments or
initial cash investment from such Participant then held by the Administrator
shall not be invested in Common Stock and shall be returned to such Participant.
If such a request is not received by the Administrator at least two business
days prior to an Investment Date, any such optional cash investments or initial
cash investment shall be invested in shares of Common Stock for such
Participant's Account.

                  Section 3.5. Exhaustion of Fractional Share Account. Prior to
any purchase of Common Stock by the Administrator or an Independent Agent
pursuant to this Article III, the Administrator shall first purchase, at the
Company Share Purchase Price on the trading day immediately preceding the
Investment Date, the Fractional Account Shares from the Fractional Share
Account. To the extent made, such purchases from the Fractional Share Account
shall substitute for purchases required by this Article III.

                                   ARTICLE IV

                Safekeeping Services for Deposited Common Stock

                  Section 4.1. Deposited Common Stock. A Participant who has
already delivered an Enrollment Form to the Administrator may elect to have
certificates representing shares of Common Stock of which the Participant is the
record holder deposited into the Plan by delivering such certificates to the
Administrator, while a Person meeting the requirements set forth in Section 2.1
hereof who is not yet a Participant may elect to have his certificates
representing shares of Common Stock of which he is the record holder deposited
into the Plan by completing an Enrollment Form and delivering such certificates
and Enrollment Form to the Administrator. Shares of Common Stock so deposited
shall be transferred into the name of the Administrator or its nominee and
credited to the depositing Participant's Account. Dividends paid on shares of
Common Stock deposited into the Plan pursuant to this Section 4.1 shall be
reinvested in Common Stock pursuant to Article III hereof in accordance with the
depositing Participant's reinvestment election designated on a completed
Enrollment Form.

                  Section 4.2. Withdrawal of Common Stock Deposited Pursuant to
Section 4.1. Shares of Common Stock deposited pursuant to Section 4.1 hereof may
be withdrawn from the Plan pursuant to Section 7.2 hereof.

                                   ARTICLE V

           Sale of Account Shares; Gift or Transfer of Account Shares

                  Section 5.1. Sale of Account Shares. At any time, a
Participant may request, by written, telephone or facsimile instructions, that
the Administrator sell all or a portion of his

                                       9
<PAGE>

whole Account Shares. The Administrator (if it is not also an Independent Agent)
shall forward such sale instructions to the Independent Agent as soon as
practicable, but within five business days, after receipt thereof (except in the
case of instructions to sell all whole Account Shares of a Participant described
below in the immediately following paragraph). The Independent Agent shall make
such sales as soon as practicable (in accordance with stock transfer
requirements and federal and state securities laws) after processing such sale
instructions. Within five business days after the sale has been completed by the
Independent Agent, the Administrator shall mail by First Class Mail to such
Participant at his address of record a check in an amount equal to (a) the
Market Share Sales Price multiplied by (b) the number of his Account Shares
sold.

                  If instructions for the sale of Account Shares which are not
Reinvestment Eligible Securities are received by the Administrator on or after
the record date relating to a Dividend Payment Date but before the Dividend
Payment Date, the sale shall be processed as described above, and the
Administrator shall, as soon as practicable following the receipt of Dividends
paid on such Account Shares, mail a check for such Dividends by First Class Mail
to the Participant at his address of record or directly deposit such Dividends
in the Participant's designated direct deposit account, if such Participant has
elected the direct deposit option pursuant to Section 7.7 hereof. If
instructions for the sale of Account Shares which are also Reinvestment Eligible
Securities are received by the Administrator on or after the record date
relating to a Dividend Payment Date but before the Dividend Payment Date, the
shares of Common Stock purchased from the reinvestment of such Dividends shall
be credited to the Participant's Account, and (i) if the Participant's sale
instructions cover less than all of his whole Account Shares, the sale shall be
processed as described above in the immediately preceding paragraph or (ii) if
the Participant's sale instructions cover all of his whole Account Shares, the
sale instructions shall not be processed until after such Dividends have been
reinvested pursuant to the Plan and the shares of Common Stock purchased
therewith have been credited to his Account. In the case of clause (ii) of the
immediately preceding sentence, the Administrator shall forward such sale
instructions to the Independent Agent promptly (within at least five business
days) after such Dividend Payment Date.

                  With regard to open market sales of Account Shares pursuant to
this Section 5.1, none of the Company, the Administrator (if it is not also
serving as the Independent Agent) or any Participant shall have any authority or
power to direct the time or price at which shares of Common Stock may be sold,
the markets on which such shares are to be sold (including on any securities
exchange, in the over-the-counter market or in negotiated transactions) or the
selection of the broker or dealer (other than the Independent Agent) through or
from whom sales may be made, except that the timing of such sales must be made
in accordance with the terms and conditions of the Plan.

                  Section 5.2. Gift or Transfer of Account Shares. A Participant
may elect to transfer (whether by gift, private sale or otherwise) ownership of
all or a portion of his Account Shares to the Account of another Participant or
establish an Account for a Person not already a Participant by delivering to the
Administrator written, telephone or facsimile instructions to that effect and a
stock assignment (stock power), acceptable to the Administrator. No fraction of
a share of Common Stock credited to the transferor's Account shall be
transferred unless the transferor's entire Account is transferred.

                                       10
<PAGE>

                  Account Shares transferred in accordance with the preceding
paragraph shall continue to be registered in the name of the Administrator as
custodian and shall be credited to the transferee's Account. If the transferee
is not already a Participant, an Account shall be opened in the name of the
transferee and the Administrator shall send the transferee an Enrollment Form as
soon as practicable after such transfer. Until the transferee elects otherwise
or the transferor specifically requests that the new Account be enrolled in one
or more of the Plan's options, the new Account will be treated as having elected
only to have shares held in safekeeping under the Plan. The transferor may
request that the Administrator deliver a Statement of Account to the transferor
for personal delivery to the transferee and/or the transferor may request that
the Administrator deliver to such transferee a gift certificate. The transferor
may request that the Administrator send the gift certificate directly to such
transferee with the first Statement of Account following such transfer or
request that the Administrator deliver such gift certificate to the transferor
for personal delivery to the transferee. The Administrator shall comply with any
such request of a transferor relating to Statements of Account and/or gift
certificates as soon as practicable following receipt of such request.

                  If transfer instructions with regard to Account Shares which
are not Reinvestment Eligible Securities are received by the Administrator on or
after the record date relating to a Dividend Payment Date but before the
Dividend Payment Date, the transfer shall be processed as described above, and
the Administrator shall, as soon as practicable following the receipt of
Dividends paid on such designated Account Shares, mail a check for such
Dividends by First Class Mail to the transferor at his address of record or
directly deposit such Dividends in the transferor's direct deposit account, if
he has elected the direct deposit option pursuant to Section 7.7 hereof. If
transfer instructions with regard to Account Shares that are also Reinvestment
Eligible Securities are received by the Administrator on or after the record
date relating to a Dividend Payment Date but before the Dividend Payment Date,
the shares of Common Stock purchased from the reinvestment of such Dividends
shall be credited to the Participant's Account, and (i) if the Participant's
transfer instructions cover less than all of his whole Account Shares, the
transfer shall be processed as described above in the immediately preceding
paragraph or (ii) if the Participant's transfer instructions cover all of his
whole Account Shares, the transfer shall not be processed until after such
Dividends have been reinvested pursuant to the Plan and the shares of Common
Stock purchased therewith have been credited to his Account. In the case of
clause (ii) of the immediately preceding sentence, the Administrator shall
effect such transfer as soon as practicable after such Dividend Payment Date.

                  Section 5.3. Reinvestment of Dividends on Remaining Account
Shares. If only a portion of a Participant's Account Shares are Reinvestment
Eligible Securities and the Participant elects to (i) sell a portion of his
Account Shares pursuant to Section 5.1 hereof, (ii) transfer a portion of his
Account Shares pursuant to Section 5.2 hereof or (iii) withdraw a portion of his
Account Shares pursuant to Section 7.2 hereof, all of the Account Shares which
are not Reinvestment Eligible Securities shall be sold, transferred or
withdrawn, as the case may be, before any Account Shares which are Reinvestment
Eligible Securities are sold, transferred or withdrawn unless the Participant
gives specific instructions to the contrary in connection with such sale,
transfer or withdrawal of Account Shares.

                                       11
<PAGE>

                                   ARTICLE VI

                               Eligible Securities

                  Section 6.1. Eligible Securities. The following debt and
equity securities of the Company and its subsidiaries shall be Eligible
Securities:

                  (i)    Common Stock; and

                  (ii)   First Mortgage Bonds, 9.15% Series due 2021.

                  Section 6.2. Additional Eligible Securities. The Company may
from time to time or at any time designate other debt or equity securities of
the Company and its subsidiaries as Eligible Securities by notifying the
Administrator in writing of the designation of such securities as Eligible
Securities.

                                  ARTICLE VII

                              Treatment of Accounts

                  Section 7.1. Changing Plan Options. A Participant may elect to
change his Plan options, including (i) changing the reinvestment levels (i.e.,
full, partial or none) of Dividends and Interest on Reinvestment Eligible
Securities and (ii) changing the designation of Reinvestment Eligible
Securities, by delivering to the Administrator written or facsimile instructions
or a new Enrollment Form to that effect. To be effective with respect to any
Dividend or Interest payment, the instructions or Enrollment Form with respect
to such Reinvestment Eligible Securities must be received by the Administrator
on or before the record date relating to such Dividend and/or Interest. If the
instructions or Enrollment Form are not received by the Administrator on or
before the record date relating to such Dividend and/or Interest, such
instructions shall not become effective until after the payment of such Dividend
and/or Interest. The shares of Common Stock purchased from the reinvestment of
such Dividend and/or Interest shall be credited to the Participant's Account.
After the Administrator's receipt of effective option changing instructions,
Dividends and Interest on Reinvestment Eligible Securities as to which the
reinvestment election has been revoked will be paid in cash or with regard to
Dividends on Common Stock, by direct deposit to the Participant's designated
direct deposit account, if such Participant has elected the direct deposit
option pursuant to Section 7.7 hereof.

                  Section 7.2. Right of Withdrawal. A Participant may, at any
time or from time to time, withdraw from the Plan all or any part (other than
fractions) of his Account Shares by delivering to the Administrator (i)
appropriate withdrawal instructions to that effect, if such Participant will be
the record holder of such Account Shares after withdrawal or (ii) written
instructions specifying the recipient's name, address, Social Security number
and telephone number (or such items as required by the Administrator) and a
stock assignment (stock power) to that effect, if the Participant will not be
the record holder of such Account Shares after withdrawal. Subject to the
limitations described in the immediately following paragraph, within two
business days of the Administrator's receipt of (i) appropriate withdrawal
instructions or (ii) appropriate written transfer instructions and a stock
assignment (stock power), as the case

                                       12
<PAGE>

may be, which indicates the Participant's desire to withdraw certain of his
whole Account Shares, the Administrator shall mail by First Class Mail to the
Participant at his address of record, or to the address of any Person that the
Participant designated, certificates representing such designated Account
Shares.

                  If withdrawal instructions with regard to Account Shares which
are not Reinvestment Eligible Securities are received by the Administrator on or
after the record date relating to a Dividend Payment Date but before the
Dividend Payment Date, the withdrawal shall be processed as described above, and
the Administrator shall, as soon as practicable following the receipt of
Dividends paid on the withdrawn Account Shares, mail a check for such Dividends
by First Class Mail to the Participant at his address of record or directly
deposit such Dividends in the Participant's designated direct deposit account,
if such Participant has elected the direct deposit option pursuant to Section
7.7 hereof. If withdrawal instructions with regard to Account Shares which are
also Reinvestment Eligible Securities are received by the Administrator on or
after the record date relating to a Dividend Payment Date but before the
Dividend Payment Date, the shares of Common Stock purchased from the
reinvestment of such Dividends shall be credited to the Participant's Account,
and (i) if the Participant's withdrawal instructions cover less than all of his
Account Shares, the withdrawal shall be processed as described above in the
immediately preceding paragraph or (ii) if the Participant's withdrawal
instructions cover all of his whole Account Shares, the withdrawal instructions
shall not be processed until after such Dividends have been reinvested pursuant
to the Plan and the shares of Common Stock purchased therewith have been
credited to his Account. In the case of clause (ii) of the immediately preceding
sentence, the Administrator shall mail by First Class Mail to the Participant at
his address of record, or to the address of any Person that the Participant
designated, certificates representing the withdrawn Account Shares as soon as
practicable following such Dividend Payment Date.

                  Withdrawal of Account Shares shall not affect reinvestment of
Dividends on the Account Shares withdrawn unless (i) the Participant is no
longer the record holder of such Account Shares, (ii) such reinvestment is
changed by the Participant by delivering to the Administrator written or
facsimile instructions or an Enrollment Form to that effect pursuant to Section
7.1 hereof or (iii) the Participant has terminated his participation in the
Plan.

                  Section 7.3. Right of Termination of Participation. If a
Participant's written, telephone or facsimile instructions to the Administrator
indicate the Participant's desire to terminate his participation in the Plan,
the Administrator shall treat such request as a withdrawal of all of such
Participant's whole Account Shares pursuant to Section 7.2 hereof. As soon as
practicable after receipt of termination instructions, the Administrator, in
addition to mailing certificates representing all whole Account Shares, if any,
pursuant to Section 7.2 hereof, shall mail by First Class Mail to the
Participant at his address of record a check for an amount equal to the sum of
(i) the amount of cash credited to such Participant's Account pending investment
in Common Stock and (ii) the cash value of any fraction of a share of Common
Stock credited to his Account. Such fraction of a share shall be valued at the
Company Share Purchase Price for the trading day immediately preceding the date
of termination.

                  Section 7.4. Stock Splits, Stock Dividends and Rights
Offerings. Any shares or other securities representing stock splits or other
noncash distributions on Account Shares shall

                                       13
<PAGE>

be credited to such Participant's Account. Stock splits, combinations,
recapitalizations and similar events affecting the Common Stock shall, as to
shares credited to Accounts of Participants, be credited to such Accounts on a
pro rata basis. In the event of a rights offering, a Participant shall receive
rights based upon the total number of whole shares of Common Stock credited to
his Account.

                  Section 7.5. Shareholder Materials; Voting Rights. The
Administrator shall send or forward to each Participant all applicable proxy
solicitation materials, other shareholder materials or consent solicitation
materials. Participants shall have the exclusive right to exercise all voting
rights respecting Account Shares credited to their respective Accounts. A
Participant may vote any of his whole Account Shares in person or by proxy. A
Participant's proxy card shall include his whole Account Shares and shares of
Common Stock of which he is the record holder. Account Shares shall not be voted
unless a Participant or his proxy votes them. Fractions of shares of Common
Stock shall not be voted.

                  Solicitation of the exercise of Participants' voting rights by
the management of the Company and others under a proxy or consent provision
applicable to all holders of Common Stock shall be permitted. Solicitation of
the exercise of Participants' tender or exchange offer rights by management of
the Company and others shall also be permitted. The Administrator shall notify
the Participants of each occasion for the exercise of their voting rights or
rights with respect to a tender offer or exchange offer within a reasonable time
before such rights are to be exercised. Such notification shall include all
information distributed to the shareholders of the Company by the Company
regarding the exercise of such rights.

                  Section 7.6. Statements of Account. As soon as practicable
after each calendar quarter, the Administrator shall send to each Participant a
quarterly Statement of Account. Additionally, the Administrator shall send a
confirmation to each Participant promptly after each cash investment, deposit of
Common Stock into the Plan pursuant to Section 4.1 hereof or sale, transfer or
withdrawal of Account Shares by such Participant. The Administrator need not
confirm Dividend and Interest reinvestments individually but shall confirm any
such reinvestments on quarterly Statements of Account.

                  Section 7.7. Direct Deposit Option. A Participant may elect to
have any Dividends on Account Shares not being reinvested in Common Stock
pursuant to the Plan paid by electronic direct deposit to the Participant's
predesignated bank, savings or credit union account. To receive such direct
deposit of funds, a Participant must complete and return a Direct Deposit
Authorization Form to the Administrator. Direct deposit authorization must be
received by the Administrator at least 30 days before an applicable Dividend
Payment Date to be effective for that Dividend Payment Date. Participants can
cancel direct deposit of Dividends by notifying the Administrator in writing or
by facsimile. In order to be effective for an applicable Dividend Payment Date,
the Administrator must receive the cancellation notice at least 30 days before
that Dividend Payment Date. To change a designated bank, savings or credit union
account for direct deposit of Dividends, the Administrator must receive written
notice, accompanied by a voided check or deposit slip for the new bank account,
at least 30 days before an applicable Dividend Payment Date.

                                       14
<PAGE>

                  Section 7.8. Automatic Investing Option. A Participant may
elect to make automatic monthly or quarterly investments of a specified amount
(not less than $50 per purchase nor more than $120,000 per calendar year) by
electronic automatic transfer of funds from a predesignated bank, savings or
credit union account. A Participant must complete an Automatic Investing
Authorization Form and return it to the Administrator at least 30 days before
initiating automatic investing. Automatic investing deductions shall be made two
business days before the Investment Date. A Participant shall be charged a
returned check fee by his bank if the designated bank, savings or credit union
account does not have sufficient funds to cover the authorized deduction.

                  A Participant may change the amount of his automatic
investment by notifying the Administrator in writing or by facsimile of the new
amount, and the change shall be effective approximately two weeks after the
notice is received. A Participant may cancel automatic investing by instructing
the Administrator in writing or by facsimile to cancel the automatic investing,
and the cancellation shall be effective approximately two weeks after the notice
is received. To change a designated bank, savings or credit union account, a
Participant must notify the Administrator in writing, by telephone or by
facsimile at least 30 days before the change is to take effect and supply a
voided check or deposit slip for the new account.

                                  ARTICLE VIII

                      Certificates and Fractions of Shares

                  Section 8.1. Certificates. Shares of Common Stock purchased
for a Participant will be held in an automated, electronic record keeping system
by the Administrator in its name or the name of its nominee. The number of
shares, including fractional shares, held for each Participant will be shown on
each Statement of Account. A Participant, at any time or from time to time, may
request in writing, by telephone or by facsimile to receive a certificate for
all or a portion of his whole Account Shares. The Administrator shall mail such
certificate(s) within two business days after the receipt of such request to
such Participant at his address of record; provided, however, that upon the
mailing of such certificate(s) the shares of Common Stock represented by such
certificate shall no longer be Account Shares but shall remain Reinvestment
Eligible Securities (to the extent such Participant has elected to have
Dividends on such Account Shares reinvested in Common Stock).

                  Section 8.2. Fractional Shares. Fractions of shares of Common
Stock shall be credited to Accounts as provided in Article III hereof; provided,
however, that no certificate for a fraction of a share shall be distributed to
any Participant at any time; and provided, further, that the Company shall issue
and sell only whole shares of Common Stock to the Administrator in respect of
Dividends and Interest reinvested in, and purchases made by the Administrator
hereunder of, newly issued shares or shares of Common Stock held in the
Company's treasury.

                  Section 8.3. Fractional Share Account. In the event that, upon
a Participant's termination of participation in the Plan, the Account of such
Participant is credited with a fraction of a share of Common Stock, such
fraction of a share shall be purchased by the Administrator for the Fractional
Share Account at the Company Share Purchase Price determined as of the trading
date specified in Section 7.3, 9.1 or 9.4 hereof, as the case may be, and the

                                       15
<PAGE>

proceeds thereof shall be remitted to such Participant as set forth in Section
7.3, 9.1 or 9.4 hereof, respectively. The Company shall from time to time credit
the Fractional Share Account with such amounts of money as may be necessary to
fund such purchases for the Fractional Share Account; provided, however, that
the Company may, at any time or from time to time, direct the Administrator to
repay, and thereupon the Administrator shall repay to the Company such portion
of the cash as the Company may, in its discretion, deem to be in excess of the
amount needed to fund the operations of the Fractional Share Account.

                  As set forth in Section 3.5 hereof, on each Investment Date,
the Administrator shall first apply the aggregate amount of optional cash
investments, initial cash investments, Dividends and Interest to the purchase of
all currently existing Fractional Account Shares. If the remaining aggregate
amount of optional cash investments, initial cash investments, Dividends and
Interest is not sufficient to purchase a whole number of shares of Common Stock,
the Company shall provide to the Administrator, as agent for the Company, such
additional amount of money as may be necessary to enable the Administrator (or
the Independent Agent, as the case may be) to purchase an additional share of
Common Stock. The fraction of a share that has been purchased with funds
provided by the Company shall be credited to the Fractional Share Account, and
the remaining fraction of a share shall be allocated among the Participants'
Accounts as necessary.

                                   ARTICLE IX

                               Concerning the Plan

                  Section 9.1. Suspension, Modification and Termination. The
Company may at any time and from time to time, at its sole option, suspend,
modify, amend or terminate the Plan, in whole, in part or in respect of
Participants in one or more jurisdictions; provided, however, no such amendment
shall decrease the Account of any Participant or result in a distribution to the
Company of any amount credited to the Account of any Participant. Upon complete
termination of the Plan, the Accounts of all Participants (or in the case of
partial termination of the Plan, the Accounts of all affected Participants)
shall be treated as if each such Participant had elected to terminate his
participation in the Plan pursuant to Section 7.3 hereof, except that any
fraction of a share of Common Stock shall be valued as of the trading date
immediately preceding the date on which the Plan is terminated. The
Administrator shall promptly send each affected Participant notice of such
suspension, modification or termination.

                  Section 9.2. Rules and Regulations. The Company may from time
to time adopt such administrative rules and regulations concerning the Plan as
it deems necessary or desirable for the administration of the Plan. The Company
shall have the power and authority to interpret the terms and the provisions of
the Plan and shall interpret and construe the Plan and reconcile any
inconsistency or supply any omitted detail in a manner consistent with the
general terms of the Plan and applicable law.

                  Section 9.3. Costs. All costs of administration of the Plan
shall be paid by the Company; provided, however, that any brokerage commissions,
service charges or applicable taxes incurred in connection with open market
purchases and sales of shares of Common Stock made under the Plan shall be borne
by the Participants.

                                       16
<PAGE>

                  Section 9.4. Termination of a Participant. If a Participant
does not have at least one whole Account Share or own or hold any other
Reinvestment Eligible Securities, the Participant's participation in the Plan
may be terminated by the Company, in its sole discretion, after written notice
is mailed to such Participant at his address of record. Additionally, the
Company, in its sole discretion, may terminate any Participant's participation
in the Plan after written notice mailed in advance to such Participant at his
address of record. Upon such termination, the Account of such Participant shall
be treated as if he had elected to terminate his participation in the Plan
pursuant to Section 7.3 hereof, except that any fraction of a share of Common
Stock shall be valued as of the trading date immediately preceding the date on
which such Participant's participation is terminated.

                  Section 9.5. Interpretation of Plan. With respect to any
matter relating to the Plan, including, without limitation, the timing and
pricing of purchases and sales of Common Stock for Participants, the written
provisions of the Plan as set forth herein shall be controlling. None of the
Company, the Administrator or any Independent Agent shall be liable for a
Participant's reliance on any oral statement that is inconsistent with the
written provisions of the Plan as set forth herein.

                                   ARTICLE X

                           Administration of the Plan

                  Section 10.1. Selection of an Administrator. The Administrator
shall be appointed by the Company. The Administrator's appointment to serve as
such may be revoked by the Company at any time. The Administrator may resign at
any time upon reasonable notice to the Company. In the event that no
Administrator is appointed, the Company shall be deemed to be the Administrator
for purposes of the Plan. The Company shall be the initial Administrator.

                  Section 10.2. Compensation. The officers of the Company shall
make such arrangements regarding compensation, reimbursement of expenses and
indemnification of the Administrator and any Independent Agent as they from time
to time deem reasonable and appropriate.

                  Section 10.3. Authority and Duties of Administrator. The
Administrator shall have the authority to undertake any act necessary to fulfill
its duties as set forth in the various provisions of the Plan. Upon receipt, the
Administrator shall deposit all Dividends, Interest, optional cash investments
and initial cash investments in the Trust Account. The Administrator shall
maintain appropriate records of the Accounts of Participants and the Fractional
Share Account.

                  Section 10.4. Liability of the Company, the Administrator and
Any Independent Agent. The Company, the Administrator and any Independent Agent
shall not be liable for any act done in good faith, or for the good faith
omission to act in administering or performing their duties with respect to the
Plan, including, without limitation, any claim of liability arising out of
failure to terminate a Participant's Account upon such Participant's death prior
to receipt of notice in writing of such death, or with respect to the prices at
which shares are purchased or sold

                                       17
<PAGE>

for a Participant's Account and the times when such purchases and sales are
made, or with respect to any loss or fluctuation in the market value after the
purchase or sale of such shares.

                  Section 10.5. Records and Reports. The Administrator shall
keep appropriate records concerning the Plan, Accounts of Participants,
purchases and sales of Common Stock made under the Plan and Participants'
addresses of record and shall send Statements of Account and confirmations to
each Participant in accordance with the provisions of Section 7.6 hereof.

                  Section 10.6. Selection of Independent Agent. Any Independent
Agent serving in such capacity pursuant to the Plan shall be selected by the
Company, and the Administrator and the Company, or either of them, shall,
subject to the provisions of Section 3.3 hereof, make such arrangements and
enter into such agreements with the Independent Agent in connection with the
activities contemplated by the Plan as the Administrator and the Company, or
either of them, deem reasonable and appropriate.

                  Section 10.7. Source of Shares of Common Stock. The Company
shall not change the source of shares of Common Stock purchased by Participants
in the Plan (i.e., either (i) newly issued shares of Common Stock or shares of
Common Stock held in the Company's treasury purchased from the Company or (ii)
shares of Common Stock purchased in the open market) more than once in any
three-month period. At any time that the source of shares of Common Stock
purchased in the Plan are shares purchased in the open market, the Company shall
not exercise its right to change the source of shares absent a determination by
the Company's Board of Directors or Finance Committee of the Board of Directors
that the Company has a need to raise additional capital or there is another
compelling reason for a change.

                                   ARTICLE XI

                                 Trust Agreement

                  Section 11.1. Continuation of Trust Account. The Company has
previously created with the Trustee a trust consisting of all Dividends,
Interest, optional cash investments and initial cash investments deposited by
the Administrator in that certain non-interest bearing trust account (together
with all Dividends, Interest, optional cash investments and initial cash
investments deposited therein from time to time, the "Trust Account")
established by the Company at JPMorgan Chase Bank Texas, account no.
0010-091-2428, or such other non-interest bearing accounts as the Company may
establish from time to time hereunder with any commercial bank organized under
the laws of the United States or any state, which commercial bank must have
assets in excess of $500,000,000. The Trust Account is hereby continued.

                  Section 11.2. Acceptance of Trust. This provision is no longer
applicable.

                  Section 11.3. Successor Trustees. The person serving at any
particular time as the Chief Financial Officer of the Company shall be the
trustee of the trust hereunder. Therefore, if any person who is serving as
trustee for any reason ceases to serve as Chief Financial Officer of the
Company, that person shall also be deemed to have ceased to serve as trustee
hereunder, and the successor Chief Financial Officer of the Company shall be the
trustee hereunder. If the

                                       18
<PAGE>

situation arises, under the preceding part of this Section 11.3 or otherwise, in
which no trustee is either serving or designated to serve hereunder, a trustee
of the trust shall be appointed by the Company in accordance with Section 11.4
or, if the Company fails to appoint a successor within sixty (60) days of
receiving notification that a vacancy has occurred, a trustee for the trust
shall be appointed in accordance with applicable law.

                  Section 11.4. Method of Appointment by Company. The
appointment of a successor trustee hereunder by the Company shall be
accomplished by (i) an instrument in writing appointing such successor trustee,
executed by the Company, together with a certified copy of resolutions of the
Board of Directors of the Company to such effect and (ii) an acceptance in
writing of the office of successor trustee hereunder executed by the successor
so appointed. The Company shall send notice of such appointment to the
Administrator. Any successor trustee hereunder may be either a corporation
authorized and empowered to exercise trust powers or one or more individuals.

                  Section 11.5. Removal of Trustee. Any person or entity serving
as trustee may be removed as such by the Company at any time, with or without
cause, effective sixty (60) days after delivery of written notice to the
trustee, but such notice may be waived by the trustee. Such removal shall be
effected by delivering to the trustee a written notice of removal executed by
the Company and by giving notice to the trustee of the appointment of a
successor trustee in the manner set forth in Section 11.4.

                  Section 11.6. Resignation of Trustee. Any person or entity
serving as trustee may resign as such, effective sixty (60) days after delivery
of notice thereof in writing to the Company.

                  Section 11.7. Trustee Defined. As used or applied below in
this Article XI, the term "Trustee" refers collectively to the one or ones at
any particular time serving as the trustee or trustees of the trust. The neuter
gender is used in referring to that term.

                  Section 11.8. General Duties of the Company. The Company shall
provide the Trustee with a true and correct copy of the Plan and true and
correct copies of any amendments to the Plan promptly upon their adoption and
shall certify to the Trustee the names and specimen signatures of any person who
shall have authority to control and manage the operation and administration of
the Plan on behalf of the Administrator.

                  Section 11.9. General Duties and Powers of the Trustee. No
bond or other security shall ever be required of the Trustee.

                  The Trustee shall keep accurate and detailed records of
receipts and disbursements and other transactions affecting the Trust Account,
and shall make disbursements from the Trust Account at such times, to such
persons (including the Administrator) and in such amounts as the Administrator
shall direct in writing. All such disbursements shall comply with the provisions
of the Plan and no disbursement shall be made which would cause any property in
the Trust Account to be used or diverted for purposes not consistent with the
provisions of the Plan.

                                       19
<PAGE>

                  The Trustee shall, in the Trustee's sole and absolute
discretion, perform such other acts as the Trustee may deem necessary or proper
for the protection of the Trust Account and, except to the extent inconsistent
with the provisions of the Plan, may exercise all such further rights and powers
as may be granted to trustees generally under the Texas Trust Code.

                  Section 11.10. Liability of Trustee. The Trustee shall use
ordinary care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and
with like aims. The Trustee shall not be liable or responsible for any loss
sustained by the Trust Account by reason of the insolvency of the financial
institution holding such account or for acting without question on the direction
of, or failing to act in the absence of any direction from, the Administrator or
any person with authority to act on behalf of the Administrator, unless the
Trustee knows that by such action or failure to act he or she will be in breach
of his or her fiduciary duty. The Trustee shall not be responsible in any
respect for the administration of the Plan.

                  The duties and obligations of the Trustee hereunder shall be
governed solely by the terms of this Article XI, and no implied covenants or
obligations shall be read into this Article XI against the Trustee.

                  Section 11.11. Transfer of Trust Account to Successor. Upon
resignation or removal, the Trustee shall transfer and deliver control over the
Trust Account and all records relating to the Trust Account to the successor
trustee of the trust. All of the provisions set forth herein with respect to the
Trustee shall relate to each successor trustee hereunder with the same force and
effect as if such successor trustee had been originally named herein as the
Trustee hereunder.

                  Section 11.12. Trustee's Compensation. The officers of the
Company shall make such arrangements regarding compensation, reimbursement of
expenses and indemnification of the Trustee as they from time to time deem
reasonable and appropriate.

                                  ARTICLE XII

                            Miscellaneous Provisions

                  Section 12.1. Controlling Law. This Plan shall be construed,
regulated and administered under the laws of the State of Texas.

                  Section 12.2. Acceptance of Terms and Conditions of Plan by
Participants. Each Participant, by completing an Enrollment Form and as a
condition of participation herein, for himself, his heirs, executors,
administrators, legal representatives and assigns, approves and agrees to be
bound by the provisions of this Plan and any subsequent amendments hereto, and
all actions of the Company and the Administrator hereunder.

                                       20
<PAGE>

                  IN WITNESS WHEREOF, CENTERPOINT ENERGY, INC. has amended and
restated the ICP in the form of this CenterPoint Energy, Inc. Second Amended and
Restated Investor's Choice Plan and has executed this Plan and continued the
trust contemplated herein as evidenced by the signature affixed hereto of its
Executive Vice President and Chief Financial Officer, Gary L. Whitlock, and Gary
L. Whitlock, individually as Trustee, has evidenced his acceptance of the trust
contemplated herein and has agreed to the terms of the trust as evidenced by his
signature affixed hereto, effective as of September 1, 2004.

                                           CENTERPOINT ENERGY, INC.

                                           By: /s/ Gary L. Whitlock
                                              ----------------------------------
                                              Name:  Gary L. Whitlock
                                              Title: Executive Vice President
                                                     and Chief Financial Officer

                                           TRUSTEE:

                                           /s/ Gary L. Whitlock
                                           -------------------------------------
                                           Gary L. Whitlock, Trustee

                                       21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}]]