Document:

<PAGE>
                                                                     EXHIBIT 4.1

             SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

                                      AMONG

                           FLEET CAPITAL CORPORATION,

                          SOUTHWEST BANK OF TEXAS, N.A.

                                       AND

                             WHITNEY NATIONAL BANK,

                                   AS LENDERS

                           FLEET CAPITAL CORPORATION,

                            AS AGENT FOR THE LENDERS

                          CAL DIVE INTERNATIONAL, INC.,

                        ENERGY RESOURCE TECHNOLOGY, INC.,

                                 AQUATICA, INC.

                                       AND

                              CANYON OFFSHORE, INC.

                                  AS BORROWERS

                           DATED: FEBRUARY _____, 2002

<PAGE>

                                TABLE OF CONTENTS

<Table>
<S>                                                                                                             <C>
ARTICLE 1.        GENERAL DEFINITIONS.............................................................................2
         Section 1.1       Defined Terms..........................................................................2
         Section 1.2       Accounting Terms......................................................................20
         Section 1.3       Other Terms...........................................................................21
         Section 1.4       Certain Matters of Construction.......................................................21
         Section 1.5       The Term "Borrower" or Borrowers".....................................................21

ARTICLE 2.        CREDIT FACILITY................................................................................21
         Section 2.1       Revolving Loans.......................................................................21
         Section 2.2       Vessel Sublimit.......................................................................22
         Section 2.3       Overadvances..........................................................................22
         Section 2.4       Manner of Borrowing...................................................................23
         Section 2.5       Letters of Credit; LC Guaranties......................................................23
         Section 2.6       All Loans to Constitute One Obligation................................................29
         Section 2.7       Loan Account..........................................................................29
         Section 2.8       Joint and Several Liability: Rights of Contribution...................................29
         Section 2.9       Contribution of Lenders; Non-Ratable Loans............................................30

ARTICLE 3.        INTEREST, FEES, TERM, REDUCTION AND REPAYMENT..................................................35
         Section 3.1       Interest, Fees and Charges............................................................35
         Section 3.2       Additional Provisions Regarding LIBOR Loans...........................................39
         Section 3.3       Term of Agreement.....................................................................41
         Section 3.4       Early Termination by Borrower.........................................................41
         Section 3.5       Effect of Termination.................................................................41
         Section 3.6       Payments..............................................................................42
         Section 3.7       Application of Payments and Collections...............................................42
         Section 3.8       Statements of Account.................................................................43
         Section 3.9       Increased Costs.......................................................................44
         Section 3.10      Basis for Determining Interest Rate Inadequate or Unfair..............................45

ARTICLE 4.        COLLATERAL: GENERAL TERMS......................................................................45
         Section 4.1       Security Interest in Collateral.......................................................45
         Section 4.2       Other Collateral......................................................................47
         Section 4.3       Lien on Vessels.......................................................................47
         Section 4.4       Negative Pledge.......................................................................48
         Section 4.5       Representations, Warranties and Covenants.............................................48
         Section 4.6       Lien Perfection.......................................................................49
         Section 4.7       Location of Collateral................................................................49
         Section 4.8       Insurance of Collateral...............................................................49
         Section 4.9       Protection of Collateral..............................................................50

ARTICLE 5.        PROVISIONS RELATING TO ACCOUNTS................................................................50
         Section 5.1       Representations, Warranties and Covenants.............................................50
         Section 5.2       Assignments, Records and Schedules of Accounts........................................51
</Table>

                                       i
<PAGE>

<Table>
<S>                                                                                                             <C>
         Section 5.3       Administration of Accounts............................................................52
         Section 5.4       Collection of Accounts................................................................52

ARTICLE 6.        PROVISIONS RELATING TO EQUIPMENT, VESSELS AND OFFSHORE PLATFORMS...............................53
         Section 6.1       Representations, Warranties and Covenants.............................................53
         Section 6.2       Evidence of Ownership of Equipment and Vessels........................................53
         Section 6.3       Records and Schedules of Equipment and the Vessels....................................53
         Section 6.4       Dispositions..........................................................................53

ARTICLE 7.        REPRESENTATIONS AND WARRANTIES.................................................................54
         Section 7.1       General Representations and Warranties................................................54
         Section 7.2       Solvent Financial Conditions..........................................................56
         Section 7.3       Survival of Representations and Warranties............................................61

ARTICLE 8.        COVENANTS AND CONTINUING AGREEMENTS............................................................61
         Section 8.1       Affirmative Covenants.................................................................61
         Section 8.2       Negative Covenants....................................................................69
         Section 8.3       Specific Financial Covenants..........................................................74

ARTICLE 9.        CONDITIONS PRECEDENT...........................................................................74
         Section 9.1       Documentation.........................................................................74
         Section 9.2       Other Conditions......................................................................76

ARTICLE 10.       EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT..............................................77
         Section 10.1      Events of Default.....................................................................77
         Section 10.2      Acceleration of the Obligations.......................................................80
         Section 10.3      Remedies..............................................................................80
         Section 10.4      Remedies Cumulative: No Waiver........................................................81

ARTICLE 11.       THE AGENT......................................................................................82
         Section 11.1      Authorization and Action..............................................................82
         Section 11.2      Agent's Reliance, Etc.................................................................82
         Section 11.3      Fleet and Affiliates..................................................................82
         Section 11.4      Lender Credit Decision................................................................83
         Section 11.5      Indemnification.......................................................................83
         Section 11.6      Successor Agent.......................................................................83
         Section 11.7      Communications to and from Agent......................................................83
         Section 11.8      Limitations of Agency.................................................................84
         Section 11.9      No Representations or Warranty........................................................84
         Section 11.10     Distribution..........................................................................84
         Section 11.11     Limitation of Suits...................................................................84
         Section 11.12     Right of Setoff.......................................................................84

ARTICLE 12.       MISCELLANEOUS..................................................................................85
         Section 12.1      Power of Attorney.....................................................................85
         Section 12.2      Indemnity.............................................................................86
</Table>

                                       ii

<PAGE>

<Table>
<S>                                                                                                             <C>
         Section 12.3      Reimbursement of Expenses.............................................................87
         Section 12.4      Indulgences Not Waivers...............................................................87
         Section 12.5      Severability..........................................................................88
         Section 12.6      Modification of Agreement; Sale of Interest...........................................88
         Section 12.7      Cumulative Effect: Conflict of Terms..................................................92
         Section 12.8      Execution in Counterparts.............................................................92
         Section 12.9      Notice................................................................................92
         Section 12.10     Agent or Lenders' Consent.............................................................93
         Section 12.11     Time of Essence.......................................................................93
         Section 12.12     Interpretation........................................................................93
         Section 12.13     No Fiduciary Relationship or Joint Venture............................................93
         Section 12.14     Publicity.............................................................................93
         Section 12.15     Destruction of Borrower's Documents...................................................93
         Section 12.16     Nonapplicability of Chapter 346.......................................................94
         Section 12.17     No Preservation or Marshaling.........................................................94
         Section 12.18     GOVERNING LAW; CONSENT TO FORUM.......................................................94
         Section 12.19     WAIVERS BY BORROWER...................................................................95
         Section 12.20     DTPA WAIVER...........................................................................95
         Section 12.21     ORAL AGREEMENTS INEFFECTIVE...........................................................96
         Section 12.22     RELEASE...............................................................................96
         Section 12.23     Amendment and Restatement.............................................................96
</Table>

Exhibit A -- Form of Note
Exhibit B -- Form of Borrowing Notice
Exhibit C -- Location of Collateral
Exhibit D -- Organization and Qualification
Exhibit E -- List Corporate Names
Exhibit F -- List of Patents, Trademarks, Copyrights and Licenses
Exhibit G -- Capital Structure
Exhibit H -- Shareholder Agreements
Exhibit I -- List of Restrictions
Exhibit J -- List of Litigation
Exhibit K -- ERISA
Exhibit L -- List of Tax Liability
Exhibit M -- List of Taxing Authorities
Exhibit N -- List of Labor Relations
Exhibit O -- List of Existing Environmental Violations
Exhibit P -- List of Surety Obligations
Exhibit Q -- List of Capitalized Leases
Exhibit R -- List of Operating Leases
Exhibit S -- Form of Compliance Certificate
Exhibit T -- Form of Tax Certificate
Exhibit U -- List of Other Guaranties
Exhibit V -- List of Liens
Exhibit W -- Material Changes since November 30, 2001.

                                      iii
<PAGE>

Exhibit X -- Form of Borrowing Base Certificate
Exhibit Y -- Form of Assignment and Acceptance

Schedules

Schedule 1 -- List of Lenders
Schedule 2 -- List of Vessels
Schedule 3 -- Reduction Amounts

                                       iv
<PAGE>

                        SECOND AMENDED AND RESTATED LOAN
                             AND SECURITY AGREEMENT

         THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made
this _____ day of February, 2002, by and among FLEET CAPITAL CORPORATION, a
Rhode Island corporation (in its individual capacity, "Fleet"), successor in
interest by assignment to Shawmut Capital Corporation ("Shawmut"), with an
office at 5050 Sherry Lane, Suite 300, Dallas, Texas 75225; SOUTHWEST BANK OF
TEXAS, N.A., a national banking association ("Southwest") with an office at 5
Post Oak Park, 4400 Post Oak Parkway, Houston, Texas 77027; WHITNEY NATIONAL
BANK, a national banking association ("Whitney") with an office at New Orleans,
Louisiana (Fleet, Whitney and Southwest being referred to herein collectively as
the "Lenders"), Fleet as Agent for the Lenders (the "Agent"); CAL DIVE
INTERNATIONAL, INC. ("Cal Dive"), a Minnesota corporation, ENERGY RESOURCE
TECHNOLOGY, INC. ("ERT"), a Delaware corporation, AQUATICA, INC. ("Aquatica"), a
Louisiana corporation and CANYON OFFSHORE, INC. ("Canyon"), a Texas corporation
(Cal Dive, ERT, Aquatica and Canyon being referred to individually and
collectively as "Borrower"), each Borrower having its chief executive office at
400 N. Sam Houston Parkway E., Suite 400, Houston, Texas 77060-3500.

                             PRELIMINARY STATEMENTS

A.       On August 3, 1993, Barclays Business Credit, Inc. ("Barclays") and Cal
         Dive entered into that certain Loan and Security Agreement, as amended
         by (i) that certain First Amendment to Loan and Security Agreement,
         dated as of August 31, 1994, executed by Barclays and Cal Dive, and
         (ii) that certain Letter Agreement, dated as of December 30, 1994 by
         Barclays pursuant to which Barclays agreed to make loans and advances
         to Cal Dive in accordance with the terms thereof.

B.       On May 23, 1995, Shawmut and Cal Dive entered into that certain Amended
         and Restated Loan and Security Agreement, as so amended by First
         Amendment dated September 19, 1995, Second Amendment dated March 8,
         1996, Third Amendment dated October 2, 1996, Fourth Amendment dated
         January 7, 1997, Fifth Amendment dated April 30, 1997 and Sixth
         Amendment dated May 12, 1999, as so amended the "Amended Loan
         Agreement") pursuant to which Fleet agreed to make loans and advances
         (collectively, the "Loans") to the Borrower in accordance with the
         terms thereof.

C.       The Amended Loan Agreement and any other documents evidencing,
         governing, securing or otherwise pertaining to the Loans are
         hereinafter referred to as the "Amended Loan Documents".

D.       Cal Dive has requested Fleet to extend its relationship with Cal Dive
         in connection with the Amended Loan Documents and to add Aquatica and
         Canyon as Borrowers, and Fleet, as the legal and equitable owner and
         holder of the Amended Loan Documents is willing to do so, subject to
         certain terms and conditions expressed herein.

E.       In connection with the extension of the relationship with Cal Dive,
         Southwest and Whitney have agreed to become Lenders.

                                       1
<PAGE>

F.       In connection with the extension of the relationship between Cal Dive
         and Lenders, Cal Dive and ERT , Aquatica, Canyon, Agent and Lenders
         wish to completely amend, restate and modify (but not extinguish) the
         Amended Loan Agreement and the other Amended Loan Documents, each
         through the execution of this Agreement, which will supersede all prior
         agreements among Fleet, Cal Dive and ERT, including without limitation
         the Amended Loan Documents, and Cal Dive, ERT, Aquatica, Canyon, Agent
         and Lenders have agreed that the agreements contained herein represent
         an arms-length transaction among Agent, Lenders, Cal Dive, ERT,
         Aquatica and Canyon.

         NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Agent, Lenders, Cal
Dive, ERT, Aquatica and Canyon covenant and agree as follows:

                                    AGREEMENT

                         ARTICLE 1. GENERAL DEFINITIONS

         Section 1.1 Defined Terms. When used herein, the following terms shall
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):

         Accounts -- all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by Borrower or
in which Borrower now has or hereafter acquires any interest.

         Account Debtor -- any Person who is or may become obligated under or on
account of an Account.

         Affected Portion -- as defined in Section 3.2(c).

         Affiliate -- a Person (other than ERT, Aquatica, Canyon, or a
Subsidiary): (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, Borrower; (b)
which beneficially owns or holds ten percent (10%) or more of any class of the
Voting Stock of Borrower; (c) twenty percent (20%) or more of the Voting Stock
(or in the case of a Person which is not a corporation, twenty percent (20%) or
more of the equity interest) of which is beneficially owned or held by Borrower
or a Subsidiary of Borrower; (d) twenty percent (20%) or more of whose Voting
Stock (or in the case of a Person which is not a corporation, twenty percent
(20%) or more of the equity interest) is beneficially owned or held by a Person
referred to in clauses (a), (b) or (c) above; or (e) in the case of a natural
Person, is a director or officer of any of the foregoing. For purposes hereof,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of Voting Stock, by contract or otherwise.

         Agent Advance -- as defined in Section 2.9.

         Agreement -- this Second Amended and Restated Loan and Security
Agreement, including all Exhibits hereto, as amended, modified, extended or
supplemented from time to time.

                                       2
<PAGE>

         Applicable Annual Rate -- as defined in Section 3.1(a).

         Applicable Margin Amount -- at any time with respect to all Eurodollar
or Base Rate Loans, the basis points as set forth in the table below.

                                APPLICABLE MARGIN

<Table>
<Caption>
        Cash Flow Leverage Ratio       Eurodollar        Base Rate
<S>                                    <C>               <C>
                 <1.75                     125              -25.0
           > or = 1.75 < 2.00              150                0.0
           > or = 2.00 < 2.25              175               25.0
           > or = 2.25 < 2.50              200               50.0
           > or = 2.50 < 2.75              225               75.0
              > or = 2.75                  250              100.0
</Table>

         Authority -- as defined in Section 8.1(u).

         Average Monthly Loan Balance -- an amount equal to the quotient of (i)
the sum of the unpaid balance of all Loans at the end of each day for each
calendar day during the month in question, divided by (ii) the number of days in
such month.

         Base Rate -- the rate of interest generally announced or quoted by
Fleet from time to time as its base rate for commercial loans, whether or not
such rate is the lowest rate charged by Fleet to its most preferred borrowers;
and, if such base rate for commercial loans is discontinued by Fleet as a
standard, a comparable reference rate designated by Fleet as a substitute
therefor shall be the Base Rate.

         Bank -- means Fleet National Bank, a national banking association and
an Affiliate of Fleet.

         Base Rate Loan -- a Loan which bears interest at a Base Rate.

         Borrower -- as defined in the preamble of this Agreement.

         Borrowing -- means any advance by the Lenders hereunder, whether in the
form of a Revolving Loan or a Credit Enhancement.

         Borrowing Base -- as at any date of determination thereof, an amount
equal to the lesser of:

         (a)      the Revolving Credit Commitment then in effect; or

                                       3
<PAGE>

         (b)      an amount equal to:

                  (i)      eighty-five percent (85%) (or after an Event of
                           Default, such lesser percentage as Agent may in its
                           discretion determine from time to time after
                           providing Borrower with written notice of such
                           reduction, which discretion shall be exercised in
                           good faith) of the net amount of Eligible Accounts
                           outstanding at such date;

                                      Plus

                  (ii)     the lesser of (A) Four Million Dollars ($4,000,000)
                           or (B) eighty-five percent (85%) (or after an Event
                           of Default, such lesser percentage as Agent may in
                           its discretion determine from time to time after
                           providing Borrower with written notice of such
                           reduction, which discretion shall be exercised in
                           good faith) of the amount of Unbilled Accounts
                           outstanding at such date;

                                      Plus

                  (iii)    the Vessel Borrowing Base as of such date;

                                      Minus

                  (iv)     an amount equal to the sum of (A) the face amount of
                           all Credit Enhancements outstanding at such date, (B)
                           any amounts which Agent or Lenders may pay pursuant
                           to any of the Loan Documents for the account of
                           Borrower, and (C) all other reserves which Agent
                           deems necessary in the exercise of its reasonable
                           credit judgment to maintain with respect to the
                           Borrower, including reserves for any amounts which
                           Agent or any Lender may be obligated to pay in the
                           future for the account of Borrower.

For purposes hereof, the net amount of Eligible Accounts at any time shall be
the face amount of such Eligible Accounts less (1) any and all returns, rebates,
discounts, (which may, at Agent's option, be calculated on shortest terms),
credits, allowances or sales, excise or other taxes of any nature at any time
granted, issued, owing, or claimed by Account Debtors, outstanding or payable in
connection with such Accounts at such time and (2) any interest, late fees, and
services charges that may have accrued on such Accounts by reason of the Account
Debtors not having paid the Accounts as they became due.

         Borrowing Notice -- as defined in Section 2.4(a).

         Business Day -- any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the States of Texas or Rhode Island or is a
day on which banking institutions located in such state are closed or, with
respect to LIBOR Periods, a day on which dealings in U.S. dollars are carried
out in the interbank Eurodollar market selected by Agent.

         Capitalized Lease Obligation -- any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and

                                       4
<PAGE>

the amount of such Indebtedness shall be the capitalized amount of such
obligations determined in accordance with GAAP.

         Cash Collateral -- means collateral consisting of cash or Cash
Equivalents on which the Agent has a first priority Lien.

         Cash Equivalents -- means

                  (a)      Dollars;

                  (b)      Securities issued or directly and fully guaranteed or
                           insured by the United States government or any agency
                           or instrumentality thereof or any state having
                           maturities of not more than one year after the date
                           of acquisition or up to $5,000,000 with maturities up
                           to five (5) years;

                  (c)      Certificates of deposit and LIBOR time deposits with
                           maturities of one year or less from the date of
                           acquisition, bankers' acceptances with maturities not
                           exceeding one year and overnight bank deposits, in
                           each case with any lender or any domestic commercial
                           bank or US branch of a foreign commercial bank having
                           capital and surplus in excess of $250 million and a
                           Thompson Bank Watch Rating of "B" or better and up to
                           $1,000,000 in a Eurodollar sweep account at Southwest
                           Bank of Texas, N.A.;

                  (d)      Repurchase obligations with a term of not more than
                           seven days for underlying securities of the types
                           described in clauses (b) and (c) above entered into
                           with any financial institution meeting the
                           qualifications specified in said clause (c);

                  (e)      Commercial paper having the highest rating obtainable
                           from Moody's or S&P and in each case maturing within
                           270 days after the date of acquisition or a fund
                           which purchases such commercial paper; and

                  (f)      Mutual funds that purchase the types of investments
                           referred to in (a) through (e) above.

         Cash Flow Leverage Ratio -- on a Consolidated basis, the ratio of (a)
the total Funded Indebtedness (provided, however that for purposes of
calculation this ratio ERT's abandonment liabilities for its Properties shall
not be considered a part of Funded Indebtedness to (b) EBITDA for the prior
twelve months, calculated quarterly ending on the last day of each fiscal
quarter of the Borrower.

         Closing Date -- the date on which all of the conditions precedent in
Section 9 are satisfied and the initial Loan is made hereunder.

         Code -- the Uniform Commercial Code as in effect in the State of Texas
on the date of this Agreement as the same may be amended or otherwise revised.

                                       5
<PAGE>

         Collateral -- all of the Property and interests in Property described
in Sections 4.1, 4.2 and 4.3 and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.

         Computer Hardware and Software -- all of a Person's rights (including
rights as a licensee and lessee) with respect to (i) computer and other
electronic data processing hardware, including all integrated computer systems,
central processing units, memory units, display terminals, printers, computer
elements, card readers, tape drives, hard and soft disk drives, cables,
electrical supply hardware, generators, power equalizers, accessories,
peripheral devices and other related computer hardware; (ii) all Software and
all software programs designed for use on the computers and electronic data
processing hardware described in clause (i) above, including all operating
system software, utilities and application programs in any form (source code and
object code in magnetic tape, disk or hard copy format or any other listings
whatsoever); (iii) any firmware associated with any of the foregoing; and (iv)
any documentation for hardware, Software and firmware described in clauses (i),
(ii) and (iii) above, including flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes.

         Consolidated -- the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies, as applied to Cal Dive,
ERT, Aquatica, Canyon and their Subsidiaries.

         Consolidated Financial Statements -- the Consolidated financial
statements of Cal Dive, ERT, Aquatica, Canyon and their Subsidiaries, if any,
delivered to Agent pursuant to Section 8.1(j).

         Construction Contract Assignment -- the assignment by Cal Dive to the
Agent of the contract for the refurbishment of the SEA SORCERESS between Cal
Dive and Bender Shipyards or a successor shipyard in form and substance
satisfactory to the Agent.

         Contract Right -- any right of a Person to payment under a contract for
the sale or lease of goods or the rendering of services, which right is at the
time not yet earned by performance.

         Credit Enhancements -- LC Guaranties and Letters of Credit issued by
the Issuing Bank from time to time for Borrower's account in accordance with
Section 2.5.

         Dated Assets -- as defined in Section 2.8.

         Dated Liabilities -- as defined in Section 2.8.

         Default -- an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of Default.

         Default Rate -- as defined in Section 3.1(b).

         Defaulting Lender -- as defined in Section 2.9.

         Distressed Auction Value -- of any Vessel, shall have the meaning
customarily attributed to it in the equipment appraisal industry at the time of
the valuation, less the estimated

                                       6
<PAGE>

marshaling, reconditioning and sale expenses designed to maximize the resale
value of such Vessel for a sale within six (6) months. The appraisal firm's
valuation shall be made with or without physical inspection at the Agent's
discretion.

         Distribution -- in respect of any corporation means and includes: (a)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (b) the redemption or
acquisition of its Securities unless made contemporaneously from the net
proceeds of the sale of Securities; provided, however, that the acquisition of
Securities by Cal Dive or Canyon arising out of the completion of the
acquisition of Canyon by Cal Dive shall not be considered a Distribution.

         Dominion Account -- a special account of Agent established by Borrower
pursuant to this Agreement at a bank selected by Borrower, but acceptable to
Agent, and over which Agent shall have sole and exclusive access and control for
withdrawal purposes.

         EBIT -- means, for any period, on a Consolidated basis, the sum of the
amounts for such period, without duplication, of: (i) Net Income, plus (ii)
charges against income for foreign, federal, state, and local taxes, to the
extent deducted in computing Net Income, plus (iii) Interest Expense, plus (iv)
extraordinary or non-recurring non-cash losses to the extent deducted in
computing Net Income, minus (v) extraordinary or non-recurring non-cash gains to
the extent included in computing Net Income.

         EBITDA -- means, for any period, on a Consolidated basis, the sum of
the amounts for such period, without duplication, of: (i) Net Income, plus (ii)
charges against income for foreign, federal, state, and local taxes, to the
extent deducted in computing Net Income, plus (iii) Interest Expense, plus (iv)
depreciation expense, to the extent deducted in computing Net Income, plus (v)
amortization expense, including without limitation amortization of goodwill,
other intangible assets and transaction expenses, to the extent deducted in
computing Net Income, plus (vi) extraordinary or non-recurring non-cash losses
to the extent deducted in computing Net Income, minus (vii) extraordinary or
non-recurring non-cash gains to the extent included in computing Net Income.

         Eligible Account -- an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services which Agent
in its credit judgment, deems to be an Eligible Account. Without limiting the
generality of the foregoing, no Account shall be an Eligible Account if:

         (a)      it is an Unbilled Account; or

         (b)      the services giving rise to such Account require performance
                  bonds, except for those Accounts where the services giving
                  rise to such Account require Cash Deposits for Salvage
                  Operations or have been completed and there is no continuing
                  obligation of Borrower; or

         (c)      the services giving rise to such Account require retention
                  withheld to the extent of such retention; or

                                       7
<PAGE>

         (d)      it is an Account arising out of a contract requiring
                  acknowledgment of assignment from the Account Debtor and Agent
                  has notified Borrower that obtaining such acknowledgment of
                  assignment is necessary, unless the Account Debtor has
                  acknowledged such assignment in a form and substance
                  satisfactory to Agent; or

         (e)      it arises out of a sale made by or services rendered by
                  Borrower to (i) another Borrower, (ii) a Subsidiary of
                  Borrower, (iii) an Affiliate of Borrower, (iv) a Person
                  controlled by an Affiliate of Borrower, or (v) an officer,
                  director, employee or agent of Borrower, a Subsidiary of
                  Borrower or an Affiliate of Borrower; or

         (f)      thirty-five percent (35%) or more of the Accounts from the
                  Account Debtor are not deemed Eligible Accounts hereunder; or

         (g)      any covenant, representation or warranty contained in this
                  Agreement with respect to such Account has been breached; or

         (h)      the Account Debtor is also Borrower's creditor or supplier, or
                  has disputed liability with respect to such Account, or has
                  made any claim with respect to any other Account due from such
                  Account Debtor to Borrower, or the Account otherwise is or may
                  become subject to any right of setoff by the Account Debtor,
                  to the extent of any offset, dispute or claim; or

         (i)      the Account Debtor has commenced a voluntary case under the
                  federal bankruptcy laws, as now constituted or hereafter
                  amended, or made an assignment for the benefit of creditors,
                  or a decree or order for relief has been entered by a court
                  having jurisdiction in the premises in respect of the Account
                  Debtor in an involuntary case under the federal bankruptcy
                  laws, as now constituted or hereafter amended, or any other
                  petition or other application for relief under the federal
                  bankruptcy laws has been filed against the Account Debtor, or
                  if the Account Debtor has failed, suspended business, ceased
                  to be Solvent, or consented to or suffered a receiver,
                  trustee, liquidator or custodian to be appointed for it or for
                  all or a significant portion of its assets or affairs; or

         (j)      it arises from the rendition of services or a sale to an
                  Account Debtor outside the United States, unless the sale or
                  services are to a Major Domestic Energy Company and the
                  invoice and payment are in U.S. Dollars, or the sale or
                  services are on letter of credit, guaranty or acceptance
                  terms, in each case acceptable to Lenders; or

         (k)      it arises from a sale to the Account Debtor on a
                  bill-and-hold, guaranteed sale, sale-or-return,
                  sale-on-approval, consignment or any other repurchase or
                  return basis; or

         (l)      the Account Debtor is the United States of America or any
                  department, agency or instrumentality thereof, unless Borrower
                  assigns its right to payment of such Account to Lenders, in
                  form and substance satisfactory to Agent, so as to comply

                                       8
<PAGE>

                  with the Assignment of Claims Act of 1940, as amended (31
                  U.S.C. Section 203 et seq.); or

         (m)      the Account is subject to a Lien other than a Permitted Lien;
                  or

         (n)      the goods giving rise to such Account have not been delivered
                  to and accepted by the Account Debtor or the services giving
                  rise to such Account have not been performed by Borrower and
                  accepted by the Account Debtor or the Account otherwise does
                  not represent a final sale, except for Accounts which arise
                  from (i) Long Day Rate Contracts or (ii) Turnkey Contracts
                  where the Account Debtor has approved the basic work completed
                  and an invoice for such work has been issued; or

         (o)      the Account arises from a progress billing or an invoice for
                  deposit, except for Accounts which arise from (i) Long Day
                  Rate Contracts or (ii) Turnkey Contracts where the Account
                  Debtor has approved the basic work completed and an invoice
                  for such work has been issued; or

         (p)      the Account arises from a sale which is an installment sale or
                  lease or is otherwise a sale on an extended payment basis; or

         (q)      the Account is evidenced by chattel paper or an instrument of
                  any kind, or has been reduced to judgment; or

         (r)      Borrower has made any agreement with the Account Debtor for
                  any deduction therefrom, except for discounts or allowances
                  made in the ordinary course of business and which discounts or
                  allowances are disclosed to Agent; or

         (s)      Borrower has made an agreement with the Account Debtor to
                  extend the time of payment thereof.

         (t)      the Account arises from a retail sale of goods to a Person who
                  is purchasing same primarily for personal, family or household
                  purposes; or

         (u)      the Account is due and unpaid from an Account Debtor for more
                  than ninety (90) days from the original invoice date;

         (v)      Agent in good faith believes that collection of such Account
                  is insecure or that payment thereof is doubtful or will be
                  delayed by reason of the Account Debtor's financial condition.

         In determining whether an Account is an Eligible Account, Agent may
from time to time in its credit judgment, which will be exercised in good faith,
establish credit limits for certain Account Debtors after providing Borrower
with written notice thereof. Borrower may request from time to time that Agent
remove a credit limit for an Account Debtor and Agent may or may not do so in
its credit judgment, which will be exercised in good faith.

         Environmental Complaint -- as defined in Section 8.1(u).

                                       9
<PAGE>

         Environmental Laws -- all federal, state and local laws, rules,
regulations, ordinances, permits, orders and consent decrees relating to health,
safety and environmental matters, including, but not limited to, the Resource
Conservation and Recovery Act, the Oil Pollution Act of 1990; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980; the Clean Air
Act; the Toxic Substances Control Act, as amended; the River and Harbor Act;
Water Pollution Control Act; the Marine Protection Research and Sanctuaries Act;
the Deep-Water Port Act; the Safe Drinking Water Act; the Superfund Amendments
and Reauthorization Act of 1986; the Federal Insecticide, Fungicide and
Rodenticide Act; the Mineral Lands and Leasing Act; the Surface Mining Control
and Reclamation Act; state and federal superlien and environmental cleanup laws;
and the Hazardous Materials Transportation Authorization Act.

         Equipment -- all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles, and other tangible personal Property (other than
Inventory and Offshore Platforms) of every kind and description used in
Borrower's operations or owned by Borrower or in which Borrower has an interest,
whether now owned or hereafter acquired and wherever located, and all parts,
accessories and special tools and all increases and accessions thereto and
substitutions and replacements therefor.

         ERISA -- the Employee Retirement Income Security Act of 1974 and all
rules and regulations promulgated thereunder.

         ERISA Affiliate -- Borrower and each Person under common control with
Borrower or otherwise treated as a single employer with Borrower under ERISA or
IRC Section 414.

         Excess -- as defined in Section 3.1(d).

         Event of Default -- as defined in Section 10.1.

         Fixed Charge Coverage Ratio -- means, with reference to the periods
referred to below, on a Consolidated basis, the ratio of Income from Operations
to Interest Expense and scheduled payments of principal, for the three-month
period ending March 31, 2002, the six-month period ending June 30, 2002, the
nine-month period ending September 30, 2002, and thereafter on a rolling
four-quarter basis, calculated as of the last day of each such quarter;
provided, however that for the three-month period ending March 31, 2002 up to
$3,000,000 of capitalized interest for the Title XI Debt shall not be included
in calculating Interest Expense.

         Funded Indebtedness -- the sum of the Borrower's Consolidated (i) long
term debt evidenced by contracts or instruments plus (ii) capitalized lease
obligations and (iii) ERT's abandonment liabilities for its Properties.

         Funding Date -- the date on which a Borrowing is made available to the
Borrower.

         GAAP -- with respect to any date of determination, generally accepted
accounting principles as used by the Financial Accounting Standards Board and/or
the American Institute of Certified Public Accountants consistently applied and
maintained throughout the periods indicated.

                                       10
<PAGE>

         General Intangibles -- all general intangibles of Borrower, whether now
owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, deposit accounts, inventions, designs, patents, patent applications,
trademarks, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, rights to royalties, blueprints, drawings, confidential
information, catalogs, sales literature, video tapes, consulting agreements,
employment agreements, customer lists, tax refund claims, computer programs,
insurance policies, deposits with insurers, all claims under guaranties,
security interests or other security held by or granted to a Borrower to secure
payment of any of the Accounts by an Account Debtor, all rights to
indemnification and all other intangible property of every kind and nature
(other than Accounts and Cash Deposits for Salvage Operations).

         Hazardous Discharge -- as defined in Section 8.1(u).

         Hazardous Substance -- without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances or related materials
as defined in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act, the Oil
Pollution Act, 1990, the Toxic Substances Control Act, the Hazardous Materials
Transportation Act, each as amended, applicable state or local law, or any other
applicable federal and state Environmental Laws now in force or hereafter
enacted.

         Hydrocarbons -- all oil, gas, hydrocarbons (including, distillate,
condensate, residue gas and liquified petroleum gas) and all other substances
that may be found in, associated with, or produced from a well, together with
all components thereof, and substances that may be executed therefrom.

         Income From Operations -- with respect to any fiscal period, means the
Consolidated EBITDA of the Borrower, less (a) Unfunded Capital Expenditures and
(b) accrued Taxes for such period (excluding deferred taxes, which shall be
deducted from Income From Operations for the quarter in which they are due and
payable).

         Indebtedness -- as applied to a Person means, without duplication (a)
all items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations, (b) all obligations of other Persons
which such Person has guaranteed, (c) in the case of Borrower (without
duplication), the Obligations, (d) obligations of Borrower under the Synthetic
Lease financing of the Gunnison production platform and (e) obligations of
Borrower under other Synthetic Leases which have a term of five (5) years or
more.

         Indemnified Persons -- as defined in Section 12.2.

         Intellectual Property -- all past, present and future: trade secrets,
know-how and other proprietary information; trademarks, internet domain names,
service marks, trade dress, trade names, business names, designs, logos, slogans
(and all translations, adaptations, derivations and

                                       11
<PAGE>

combinations of the foregoing) indicia and other source and/or business
identifiers, and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights (including
copyrights for computer programs) and copyright registrations or applications
for registrations which have heretofore been or may hereafter be issued
throughout the world and all tangible property embodying the copyrights,
unpatented inventions (whether or not patentable); patent applications and
patents; industrial design applications and registered industrial designs;
license agreements related to any of the foregoing and income therefrom; books,
records, writings, computer tapes or disks, flow diagrams, specification sheets,
computer software, source codes, object codes, executable code, data, databases
and other physical manifestations, embodiments or incorporations of any of the
foregoing; the right to sue for all past, present and future infringements of
any of the foregoing; all other intellectual property; and all common law and
other rights throughout the world in and to all of the foregoing; provided,
however, that the patents, trade secrets, trademarks, copyrights and related
appurtenances, additions, improvements, replacements, physical manifestations,
embodiments or incorporations concerning the vessel now known as the Q 4000
assigned to the Secretary of Transportation as security for the Title XI Debt
under the License Rights Agreement dated August 16, 2000 shall not be considered
part of Borrower's Intellectual Property.

         Interest Coverage Ratio -- means, on a Consolidated basis, the ratio of
(a) EBIT to (b) Interest Expense ending on the last day of the most recent
fiscal quarter of the Borrower, calculated for the three-month period ending
March 31, 2002, the six-month period ending June 30, 2002, the nine-month period
ending September 30, 2002, and thereafter on a rolling four-quarter basis.

         Interest Expense -- for any fiscal period, the amount equal to (a)
interest charges paid or accrued during such fiscal period (including imputed
interest on Capitalized Lease Obligations, but excluding amortization of debt
discount and expense) on the Indebtedness, (b) the net amount payable under any
interest rate swap, collar or hedging agreement, (c) the interest component of
Synthetic Leases, (d) commitment, facility, usage and similar fees payable in
connection with any Indebtedness, and (e) letter of credit fees for Letters of
Credit or any other financial letter of credit, all determined in accordance
with GAAP, but excluding interest income received during such fiscal period.

         Inventory -- all of Borrower's inventory, whether now owned or
hereafter acquired and wherever located, including, but not limited to, all
goods intended for sale or lease by Borrower, or for display or demonstration;
all work in process; all raw materials and other materials and supplies of every
nature and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in Borrower's business;
and all documents evidencing and General Intangibles relating to any of the
foregoing.

         IRC -- the United States Internal Revenue Code of 1986, as amended, and
all rules and regulations promulgated thereunder.

         Issuing Bank -- means the Bank in its capacity as the issuer of Letters
of Credit.

                                       12
<PAGE>

         Lawful Substances -- as defined in Section 7.2 (q)(iii).

         LC Application -- means an application by Borrower, any Subsidiary of
Borrower and Fleet to the Bank, on a form approved by Fleet, for the issuance of
a Letter of Credit that is submitted to Fleet at least two Business Days prior
to the requested issuance date of such Letter of Credit.

         LC Conditions -- means each of the following conditions, the
satisfaction of each of which is required before Fleet shall be obligated to
procure the issuance of a Letter of Credit: (i) each of the conditions set forth
in Section 9 has been and continues to be satisfied, including the absence of
any Default or Event of Default; (ii) after giving effect to the issuance of the
requested Letter of Credit and all other unissued Letters of Credit for which LC
Applications have been approved by Fleet, the LC Outstandings would not exceed
in the aggregate $6,000,000, (iii) the expiry date of such Letter of Credit does
not extend beyond the earlier to occur of 365 days after the date of issuance or
the 30th day prior to the last Business Day before the last day of the Term; and
(iv) the currency in which payment is to be made under the Letter of Credit in
Dollars.

         LC Documents -- means any and all agreements, instruments and documents
(other than an LC Application or an LC Guaranty) required by the Bank to be
executed by Borrower, any Subsidiary of Borrower or any other Person and
delivered to the Bank in connection with the issuance of a Letter of Credit.

         LC Facility - means a subfacility of the Revolving Credit Facility
consisting of LC Outstandings in an aggregate not to exceed $6,000,000.

         LC Guaranty -- means a guaranty or other support agreement from Fleet
in favor of the Bank pursuant to which Fleet shall guarantee or otherwise assure
the payment or performance by the parties (other than Fleet) to an LC
Application of such parties' obligations with respect to the Letter of Credit
issued thereon, including the obligation of such parties to reimburse the
Issuing Bank for any payment made by the Issuing Bank under such Letter of
Credit.

         LC Outstandings -- means, on any date of determination thereof, an
amount in Dollars equal to the sum of (i) all amounts then due on such date and
payable by Borrower or any of its Subsidiaries on such date by reason of any
payment made on or before such date by Fleet under any LC Guaranty plus (ii) the
aggregate Letter of Credit Amount of all Letters of Credit then outstanding or
to be issued by the Bank under an LC Application therefore submitted to the
Bank.

         LC Reserve -- means at any date, (i) 100% of the Letter of Credit
Amount of all Letters of Credit outstanding on such date minus (ii) the amount
of any Cash Collateral for Letters of Credit.

         Legal Requirement -- any requirement imposed upon any Lender by any law
of the United States of America or the United Kingdom or by any regulation,
order, interpretation, ruling of official directive (whether or not having the
force of law) of the Board, the Bank of England or any other board, central bank
or governmental or administrative agency, institution or authority

                                       13
<PAGE>

of the United States of America, the United Kingdom or any political subdivision
of either thereof.

         Letter of Credit Amount -- means, with respect to any Letter of Credit,
the aggregate maximum amount at any time available for drawing under such Letter
of Credit, assuming all conditions to drawing are satisfied.

         Letter of Credit -- a standby letter of credit at any time issued by an
Issuing Bank or another Person for the account of Borrower.

         LIBOR Loan -- a Loan which bears interest at a rate that is determined
by reference to the LIBOR Rate.

         LIBOR Period -- any period, selected as provided in Section 2.4, of 1
month, 2 month, or 3 months, commencing on any Business Day; provided, however,
that no LIBOR Period shall extend beyond the last day of the Term, unless
Borrower and Agent and Lenders have agreed to an extension of the Term beyond
the expiration of the LIBOR Period in question. If any LIBOR Period so elected
shall end on a date that is not a Business Day, such LIBOR Period shall instead
end on the next preceding or succeeding Business Day as determined by Agent in
accordance with the then current banking practice in London. Each determination
by Agent of a LIBOR Period shall, in the absence of manifest error, be
conclusive, and at Borrower's request, Agent shall demonstrate the basis for
such determination. In no event shall Borrower be permitted to have outstanding
at any one time LIBOR Loans with more than five (5) different LIBOR Periods.

         LIBOR Rate -- as applicable to any LIBOR Loan, the rate per annum
(rounded upward, if necessary, to the nearest 1/32 of one percent) as determined
on the basis of the offered rates for deposits in U.S. dollars, for a period of
time comparable to such LIBOR Loan which appears on the Telerate page 3750 as of
11:00 a.m. (London time) on the day that is two (2) London Banking Days
preceding the first day of such LIBOR Loan; provided, however, if the rate
described above does not appear on the Telerate System on any applicable
interest determination date, the LIBOR Rate shall be the rate (rounded upwards
as described above, if necessary) for deposits in U.S. dollars for a period
substantially equal to the interest period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the day that is two
(2) London Banking Days prior to the beginning of such interest period. If both
the Telerate and Reuters systems are unavailable, then the rate for that date
will be determined on the basis of the offered rates for deposits in U.S.
dollars for a period of time comparable to such LIBOR Loan which are offered by
four (4) major banks in the London interbank market at approximately 11:00 a.m.
(London time), on the day that is two (2) London

                                       14
<PAGE>

Banking Days preceding the first day of such LIBOR Loan as selected by Agent.
The principal London office of each of the major London Banks so selected will
be requested to provide a quotation of its U.S. dollar deposit offered rate. If
at least two (2) such quotations are provided, the rate for that date will be
the arithmetic mean of the quotations. If fewer than two quotations are provided
as requested, the rate for that date will be determined on the basis of the
rates quoted for loans in U.S. dollars to leading European banks for a period of
time comparable to such LIBOR Loan offered by major banks in New York City at
approximately 11:00 a.m. (New York City time), on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Loan. In the event that Agent
is unable to obtain any such quotation as provided above, it will be determined
that LIBOR Rate pursuant to a LIBOR Loan cannot be determined. In the event that
the Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of a Lender then for any period during
which such Reserve Percentage shall apply, LIBOR Rate shall be equal to the
amount determined above divided by an amount equal to 1 minus the Reserve
Percentage.

         LIBOR Reserve Requirement -- at any date of determination, that
percentage (expressed as a decimal fraction) which is in effect on such day, as
provided by the Board of Governors of the Federal Reserve System (or any
successor governmental body) applied for determining the maximum reserve
requirements (including without limitation, basic, supplemental, marginal and
emergency reserves) under Regulation D with respect to "Eurocurrency
liabilities" as currently defined in Regulation D, or under any similar or
successor regulation with respect to Eurocurrency liabilities or Eurocurrency
funding. Each determination by Agent of the LIBOR Reserve Requirement shall be
provided to Borrower and, in the absence of manifest error, be conclusive and
binding. Any LIBOR Reserve Requirement shall be determined in accordance with
Agent's customary practice and applied on a consistent basis.

         Lien -- any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including, but not limited
to, the security interest, security title or lien arising from a security
agreement, mortgage, deed of trust, preferred ship mortgage, deed to secure
debt, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of this Agreement, Borrower shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person.

         Loan Account -- the loan account established on the books of Lenders
pursuant to Section 2.7.

         Loan Documents -- this Agreement, the Notes, the Other Agreements and
the Security Documents.

         Loans -- all loans and advances made by Lenders pursuant to this
Agreement, including, without limitation, all Revolving Loans and each payment
made pursuant to a Credit Enhancement.

         Long Day Rate Contracts -- contracts for services performed on a time
and materials basis for which: (a) services continue for more than one billing
cycle of Borrower, (b) the Account Debtor is willing to accept for payment an
invoice appropriate for that billing cycle, and (c) payment of such invoice is
due and owing, not being contingent on further provision of such services.

                                       15
<PAGE>

         Losses -- as defined in Section 12.2.

         Major Domestic Energy Company -- a multinational energy company (or
subsidiary thereof) with substantial corporate representation in the United
States that Agent, in its sole discretion, deems to be an acceptable credit
risk.

         Majority Lenders -- those Lenders holding at least 51% of the Loans but
at all times when there are three (3) or more Lenders, at least two (2) Lenders.

         Maximum Legal Rate -- as defined in Section 3.1(c).

         MMS -- the Department of Interior Mineral Management Services and any
successor thereto.

         Money Borrowed -- as applied to Indebtedness, means (a) Indebtedness
for borrowed money; (b) Indebtedness, whether or not in any such case the same
was for borrowed money, (i) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (ii) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (iii) upon
which interest charges are customarily paid (other than accounts payable) or
that was issued or assumed as full or partial payment for Property; (c)
Indebtedness that constitutes a Capitalized Lease Obligation; and (d)
Indebtedness under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (a) through (c).

         Multiemployer Plan -- a multiemployer plan as defined in Section 3(37)
of ERISA to which any ERISA Affiliate contributes, has contributed to in the
last six years or is required to contribute to.

         Net Income -- means, with reference to any period, the net income (or
loss) of the Borrower and its Subsidiaries calculated on a Consolidated basis
for such period.

         New Ship Mortgages -- as defined in Section 4.2.

         Non-Ratable Loan -- as defined in Section 2.9.

         Notes -- the promissory notes of the Borrower in favor of the Lenders,
substantially in the form of Exhibit A attached hereto and made a part hereof.

         Obligations -- all Loans and all other advances, debts, liabilities,
obligations, covenants and duties from Borrower to any Lender, Fleet, Issuing
Bank, the Agent or any Affiliate of the Agent, together with all interest, fees
(including without limitation attorneys' fees), expenses and other charges
thereon, owing, arising, due or payable from Borrower to the Agent, Fleet and/or
the Lenders of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, whether arising under this Agreement
or any of the other Loan Documents or otherwise, whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and however
acquired.

                                       16
<PAGE>

         Offshore Platforms -- any structure located in the Gulf of Mexico,
together with all equipment, facilities or structures affixed thereto utilized
in connection with, or related to, drilling or work with respect to wells, or
the production, processing, treating, gathering, storing, measuring or
transportation of Hydrocarbons.

         OSHA -- the Occupational Safety and Health Act and all rules and
regulations from time to time promulgated thereunder.

         Other Agreements -- any and all agreements, instruments and documents
(other than this Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower and delivered to Agent or Lenders in respect to
the transactions contemplated by this Agreement.

         PBGC -- the Pension Benefit Guaranty Corporation.

         Pension Plan -- an employee pension benefit plan as defined in Section
3(2) of ERISA, which is maintained or contributed to by an ERISA Affiliate or
for which contributions are required from an ERISA Affiliate, and which is
subject to Title IV of ERISA.

         Permitted Liens -- any Lien of a kind specified in clauses (i) through
(x) of Section 8.2(h).

         Permitted Purchase Money Indebtedness -- Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the Consolidated principal amount of all
other such Purchase Money Indebtedness and Capitalized Lease Obligations of
Borrower at the time outstanding, does not exceed (a) One Million Dollars
($1,000,000) for the purchase of fixed assets other than vessels and (b) Five
Million Dollars ($5,000,000) for the purchase of vessels. For the purposes of
this definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized Lease
Obligation.

         Person -- an individual, partnership, corporation, joint stock company,
land trust, business trust or unincorporated organization, or a government or
agency or political subdivision thereof.

         Plan -- an employee benefit plan as defined in Section 3(3) of ERISA
that is maintained or contributed to or for which contributions are required by
an ERISA Affiliate.

         Prohibited Transaction -- a transaction described in Section 406 of
ERISA or Section 4975 of the IRC which would subject any Plan or ERISA Affiliate
to any taxes, fines, penalties or other liabilities, directly or through any
indemnification agreements.

         Projections -- Borrower's Consolidated and consolidating forecasted (a)
balance sheets, (b) profit and loss statements, and (c) cash flow statements,
all prepared on a consistent basis with Borrower's historical Consolidated
Financial Statements, together with appropriate supporting details and a
statement of underlying assumptions.

         Property -- any interest of Borrower in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.

                                       17
<PAGE>

         Pro Rata Share -- for any Lender, the amount of any Revolving Loan or
reimbursement for a Credit Enhancement equal to the principal amount thereof
multiplied by such Lender's percentage of the Revolving Credit Commitment.

         Purchase Money Indebtedness -- means and includes (a) Indebtedness
(other than the Obligations) for the payment of all or any part of the purchase
price of any assets, (b) any Indebtedness (other than the Obligations) incurred
at the time of or within ten days prior to or after the acquisition of any
assets for the purpose of financing all or any part of the purchase price
thereof, and (c) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.

         Purchase Money Lien -- a Lien upon assets which secure Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
assets the purchase price of which was financed through the incurrence of the
Purchase Money Indebtedness secured by such Lien.

         Qualified Pooling of Interests -- a financial accounting method for the
combination of one or more business entities with Borrower which qualifies for
the pooling-of-interests method of accounting for business combinations under
GAAP and is so accounted for by Borrower.

         Real Property -- as defined in Section 8.1(u).

         Reduction Amount -- the amount by which the Vessel Borrowing Base
reduces each month commencing on April 1, 2002, as more specifically set forth
on Schedule 4 hereto.

         Release -- as defined in Section 7.1(aa).

         Renewal Term -- as defined in Section 3.3.

         Rentals -- as at any date of determination thereof, the amount of all
payments which the lessee is required to make by the terms of any lease, but
excluding those payments for which lessee is directly or indirectly compensated
as a result of services provided.

         Reportable Event -- any of the events set forth in Section 4043(c) of
ERISA and the regulations thereunder, excluding any event not subject to the
provision for 30 days notice to the PBGC under such regulations.

         Restricted Investment -- any investment in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following: (a) investments in one or
more Subsidiaries of Borrower to the extent existing on the Closing Date; (b)
Property to be used in the ordinary course of business; (c) current assets
arising from the sale of goods and services in the ordinary course of business
of Borrower and its Subsidiaries; (d) Cash Equivalents and (e) investments
pursuant to agreements by and between Borrower and any Lender satisfactory to
Agent.

         Revolving Credit Commitment -- as at any date of determination thereof,
an amount equal to (a) Sixty Million Dollars ($60,000,000) minus (b) the face
amount of all Credit Enhancements

                                       18
<PAGE>

outstanding at such date. Each Lender's portion of the Revolving Credit
Commitment is as set forth on Schedule 1 hereto.

         Revolving Loan -- a Loan made by Lenders as provided in Section 2.1.

         Schedule of Accounts -- as defined in Section 5.2.

         Security -- shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.

         Security Documents -- the Ship Mortgages, each New Ship Mortgage, the
Construction Contract Assigment and all other instruments and agreements now or
at any time hereafter securing the whole or any part of the Obligations.

         Settlement -- as defined in Section 2.9.

         Settlement Date -- as defined in Section 2.9.

         Ship Mortgages -- the U.S. First Preferred Fleet Mortgage executed by
Cal Dive on August 3, 1993, on the Vessels listed on Schedule 2A, the Bahamian
Deed of Covenants dated January 29, 2002 and related Statutory Mortgages on the
Vessels listed on Schedule 2B, the U.S. First Preferred Ship Mortgage dated
February ___, 2002 on the MR. JOE and any New Ship Mortgages, as such mortgages
may be amended, modified or supplemented from time to time.

         Solvent - as to any Person, such Person (a) owns Property whose fair
salable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (b) is able to pay all of its
Indebtedness as such Indebtedness matures and (c) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.

         Statutory Liens -- as defined in Section 8.2(h).

         Subsidiary -- any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than fifty percent (50%) of
the Voting Stock at the time of determination; provided, however, with respect
to Cal Dive, the term "Subsidiary" as used in this Agreement shall not include
ERT, Aquatica or Canyon.

         Synthetic Lease -- a lease arrangement treated as an operating lease
for financial accounting purposes and a financing lease for tax purposes.

         Term -- as defined in Section 3.3.

         Termination Amount -- at any date of determination thereof, an amount
equal to the sum of (a) the Revolving Credit Commitment, (b) the face amount of
all Credit Enhancements outstanding at such date.

                                       19
<PAGE>

         Title XI Debt -- short and long term debt guaranteed by the U.S.
government under Title XI of the Merchant Marine Act, 1936 used to finance the
Borrower's construction and acquisition of the vessel now known as the Q 4000.

         Total Commitment -- means Sixty Million and No/100 Dollars
($60,000,000).

         Turnkey Contracts -- contracts entered into in the ordinary course of
business to perform a specific scope of work for a set price, subject at times
to additional charges resulting from changes to the agreed upon scope of work.

         Unbilled Account -- an Account arising in the ordinary course of
Borrower's business for the rendition of services that represent completed
services of Borrower not yet invoiced to the Account Debtor (except for Long Day
Rate Contracts), but which shall be invoiced within 90 days from the date such
services were completed, and which Account is otherwise an Eligible Account.

         Unfunded Capital Expenditures -- for any period, on a Consolidated
basis, the amount of capital expenditures during such period less the funded
amount of Funded Indebtedness in such period, the proceeds of which are used to
finance such capital expenditures; provided that, for purposes of this
definition, the capital expenditures through January 2002 related to the
acquisition of Canyon shall be excluded; and provided further that for fiscal
2002 there shall also be excluded an amount of capital expenditures up to
$40,000,000 to the extent that such amount is actually expended by Borrower and
is not provided by Funded Indebtedness.

         Vessel Borrowing Base -- the lesser of (a) the then 46.7% of the
current Distressed Auction Value of the Vessels and (b) the Vessel Sublimit.

         Vessel Sublimit -- USD 35,000,000, as reduced from time to time by
Reduction Amounts and prepayments pursuant to Section 2.2.

         Vessels -- the vessels listed on Schedule 2 attached hereto.

         Voting Stock -- Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).

         Section 1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with that
applied in preparation of the Consolidated Financial Statements, and all
financial data pursuant to this Agreement shall be prepared in accordance with
such principles. In the event that changes in GAAP shall be mandated by the
Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants or any similar accounting body of comparable standing, and
shall be recommended by Borrower's certified public accountants, to the extent
that such changes would modify such accounting terms or the interpretation or
computation thereof as contemplated by this Agreement at the time of execution
hereof, then in such event such changes shall be followed in defining such
accounting terms only after Lender and Borrower amend this Agreement to reflect
the original intent of such terms in light of such changes, and such terms shall
continue to be applied and interpreted without such change until such agreement.

                                       20
<PAGE>

         Section 1.3 Other Terms. All other terms contained in this Agreement
shall have, when the context so indicates, the meanings provided for by the Code
to the extent the same are used or defined therein.

         Section 1.4 Certain Matters of Construction. The terms "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. The section
titles, table of contents and list of exhibits appear as a matter of convenience
only and shall not affect the interpretation of this Agreement. All references
to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. All references to any instruments or
agreements, including, without limitation, references to any of the Loan
Documents, shall include any and all modifications or amendments thereto and any
and all extensions or renewals thereof.

         Section 1.5 The Term "Borrower" or Borrowers". All references to
"Borrower" or "Borrowers" herein shall refer to and include each Borrower
separately and all representations contained herein shall be deemed to be
separately made by each of them, and each of the covenants, agreements and
obligations set forth herein shall be deemed to be the joint and several
covenants, agreements and obligations of them. Any notice, request, consent,
report or other information or agreement delivered to Lender by any Borrower
shall be deemed to be ratified by, consented to and also delivered by the other
Borrower. Each Borrower recognizes and agrees that each covenant and agreement
of "Borrower" or "Borrowers" under this Agreement and the Other Agreements shall
create a joint and several obligation of the Borrowers, which may be enforced
against Borrowers, jointly, or against each Borrower separately. Without
limiting the terms of this Agreement and the Other Agreements, security
interests granted under this Agreement and Other Agreements in properties,
interests, assets and collateral shall extend to the properties, interests,
assets and collateral of each Borrower. Similarly, the term "Obligations" shall
include, without limitation, all obligations, liabilities and indebtedness of
such corporations, or any one of them, to Lender, whether such obligations,
liabilities and indebtedness shall be joint, several, joint and several or
individual.

                           ARTICLE 2. CREDIT FACILITY

         Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, each Lender agrees severally and not jointly to make its percentage
share of a total credit facility of up to Sixty Million Dollars ($60,000,000.00)
available upon Borrower's request therefor, as follows:

         Section 2.1 Revolving Loans.

         (a)      Subject to all of the terms and conditions of this Agreement,
                  Lenders agree, for so long as no Event of Default exists, to
                  make Revolving Loans to Borrower from time to time, as
                  requested by Borrower in accordance with the terms of Section
                  2.4, up to a maximum principal amount at any time outstanding
                  equal to the Borrowing Base at such time. No Lender shall be
                  required to make any Revolving Loan in excess of its
                  commitment as set forth in Schedule 1 hereto. It is expressly
                  understood and agreed that Lenders shall use the Borrowing
                  Base as a

                                       21
<PAGE>

                  maximum ceiling on Revolving Loans outstanding to Borrower at
                  any time, subject to the provisions of Section 2.3. If the
                  unpaid balance of the Revolving Loans should exceed the
                  Borrowing Base or any other limitation set forth in this
                  Agreement, such Revolving Loans shall nevertheless constitute
                  Obligations that are secured by the Collateral and entitled to
                  all the benefits thereof; provided, however, if such an
                  overadvance occurs, Borrower shall immediately repay, without
                  premium or penalty, Revolving Loans in an amount equal to such
                  excess, along with accrued unpaid interest on the amount so
                  repaid to the date of such repayment. In no event shall
                  Borrower be authorized to request a Revolving Loan at any time
                  that there exists an Event of Default.

         (b)      Notwithstanding the foregoing provisions of Section 2.1(a),
                  Lenders shall have the right to establish reserves in such
                  amounts, and with respect to such matters, as Lenders shall
                  deem necessary or appropriate, against the amount of Revolving
                  Loans which Borrower may otherwise request under Section
                  2.1(a), including, without limitation, with respect to (i)
                  price adjustments, damages, unearned discounts, returned
                  products or other matters for which credit memoranda are
                  issued in the ordinary course of Borrower's business; (ii)
                  other sums chargeable against Borrower's Loan Account as
                  Revolving Loans under any section of this Agreement; (iii)
                  sales tax liabilities; (iv) price adjustments, damages,
                  returned products or other matters related to contractual
                  obligations of Borrower; (v) offset exposure relating to
                  contractual obligations of Borrower; and (vi) such other
                  matters, events, conditions or contingencies as to which
                  Lenders, in their credit judgment, determine reserves should
                  be established from time to time hereunder.

         (c)      The Revolving Loans shall be used solely for (i) the payment
                  of costs, expenses and fees relating to the Loans to be made
                  under this Agreement, (ii) the purchase of the capital stock
                  of Borrower, and (iii) Borrower's general operating capital
                  needs, to the extent not inconsistent with the provisions of
                  this Agreement.

         Section 2.2 Vessel Sublimit. If Borrower sells any Vessel or if any
Vessel is a total or constructive total loss, the Vessel Sublimit shall be
reduced by an amount equal to the appraised value of such Vessel according to
the most recent appraisal thereof.

         Section 2.3 Overadvances. Insofar as Borrower may request and Fleet may
be willing in its sole and absolute discretion to make Revolving Loans to
Borrower at a time when the unpaid balance of Revolving Loans exceeds, or would
exceed with the making of any such Revolving Loan, the Borrowing Base (any such
Loan or Loans being herein referred to individually as an "Overadvance" and
collectively as "Overadvances"), Fleet may make such Overadvances in amount not
to exceed USD 1,000,000 at any time outstanding, and the Agent shall enter such
Overadvances as debits in the Loan Account. All Overadvances shall be repaid on
demand, shall be secured by the Collateral and shall bear interest as provided
in this Agreement for Revolving Loans generally, and shall be subject to the
terms of Section 2.9(d) hereof with respect to Agent Advances. The foregoing
notwithstanding, in no event, unless otherwise consented to by the Agent, shall
any Overadvances be outstanding for more than thirty (30) consecutive days.

                                       22
<PAGE>

         Section 2.4 Manner of Borrowing. Borrowings under the Revolving Credit
Commitment shall be as follows:

         (a)      A request for a LIBOR Loan shall be made, or shall be deemed
                  to be made, if Borrower gives Agent notice of its intention to
                  borrow in the form of Exhibit B (a "Borrowing Notice"), in
                  which notice Borrower shall specify (i) the aggregate amount
                  of such LIBOR Loan, (ii) the requested date of such LIBOR
                  Loan, (iii) the Applicable Annual Rate selected in accordance
                  with Section 3.1, and (iv) the LIBOR Period applicable
                  thereto. If Borrower selects a LIBOR Loan, Borrower shall give
                  Agent the Borrowing Notice at least two (2) Business Days
                  prior to the requested date of the LIBOR Loan.

         (b)      A request for a Base Rate Loan shall be made, or shall be
                  deemed to be made, if (i) Borrower sends by facsimile
                  transmission to (214) 706-7079, or such other number as Agent
                  may designate, a request for a Base Rate Loan prior to 12:00
                  p.m. Central Standard Time on the Business Day on which
                  Borrower is requesting such Base Rate Loan (if a request is
                  received after such time on a Business Day, Agent, in its sole
                  discretion, may request the Lenders to make the requested Base
                  Rate Loan on the day of such notice or on the next following
                  Business Day); (ii) Borrower fails to pay any interest
                  accruing under this Agreement or the Notes on the date such
                  interest becomes due and payable, or (iii) Borrower fails to
                  pay any other Obligations under this Agreement on the date
                  such Obligations become due and payable. The amount of Base
                  Rate Loans advanced according to clause (i) shall be for the
                  amount requested. The amount of Base Rate Loans advanced
                  according to clauses (ii) and (iii) shall be deemed to be an
                  amount equal to the amount of interest that was not actually
                  paid by Borrower or the amount of funds actually disbursed,
                  respectively.

         (c)      Borrower hereby irrevocably authorizes Lenders to disburse the
                  proceeds of each Loan requested, or deemed to be requested,
                  pursuant to this Section 2.4 as follows: (i) the proceeds of
                  each Loan requested under Sections 2.4(a) or 2.4(b)(i) shall
                  be disbursed by Lenders in lawful money of the United States
                  of America in immediately available funds, in the case of the
                  initial borrowing, in accordance with the terms of the written
                  disbursement letter from Borrower, and in the case of each
                  subsequent borrowing, by wire transfer to such bank account as
                  may be agreed upon by Borrower and Agent from time to time;
                  and (ii) the proceeds of each Revolving Loan requested under
                  Section 2.4(b)(ii) or (iii) shall be disbursed by Lenders by
                  way of direct payment of the relevant Obligation.

         Section 2.5 Letters of Credit; LC Guaranties.

                                       23
<PAGE>

         (a)      Agreement to Issue. Upon the terms and subject to the
                  conditions of, and in reliance upon the representations and
                  warranties made under this Agreement from time to time during
                  the period commencing on the Closing Date and ending on the
                  last day of the Term, Fleet agrees to issue or cause the
                  issuance by the Issuing Bank, for the account of Borrower, one
                  or more Letters of Credit in accordance with this Section 2.5.

         (b)      Amounts. Fleet shall not have any obligation to procure any
                  Letter of Credit at any time:

                  (i)      if, after giving effect to the issuance of the
                           requested Letter of Credit, (A) the aggregate LC
                           Outstandings would exceed the LC Facility then in
                           effect or (B) the aggregate principal amount of the
                           Revolving Credit Loans outstanding would exceed the
                           Borrowing Base (after reduction for the LC Reserve in
                           respect of such Letter of Credit) or (C) if no
                           Revolving Credit Loans are outstanding, the aggregate
                           LC Outstandings would exceed the Borrowing Base; or

                  (ii)     which has a term longer than 365 days or an
                           expiration date after the 30th day prior to the last
                           Business Day of the Term.

         (c)      Conditions. The obligation of Fleet to procure a Letter of
                  Credit is subject to the satisfaction of (a) the LC Conditions
                  and (b) the following additional conditions precedent in a
                  manner satisfactory to Agent, Fleet and the Issuing Bank:

                  (i)      Borrower shall (i) have delivered to Fleet, the
                           Issuing Bank and Agent at such times and in such
                           manner as Fleet or Agent may prescribe an LC
                           Application in form and substance satisfactory to
                           Fleet, the Issuing Bank and Agent for the issuance of
                           such Letter of Credit and such other LC Documents as
                           may be required pursuant to the terms thereof, and
                           (ii) the form and terms of the proposed Letter of
                           Credit shall be satisfactory to Fleet, the Issuing
                           Bank and Agent; and

                  (ii)     as of the date of issuance, no order of any court,
                           arbitrator or governmental authority having
                           jurisdiction or authority over Fleet or the Issuing
                           Bank shall purport by its terms to enjoin or restrain
                           Fleet from issuing any guaranty, including any LC
                           Guaranty, or banks generally from issuing letters of
                           credit of the type and in the amount of the proposed
                           Letter of Credit, and no law, rule or regulation
                           applicable to banks generally and no request or
                           directive (whether or not having the force of law)
                           from any governmental authority with jurisdiction
                           over banks generally shall prohibit, or request that
                           the Issuing Bank refrain from, the issuance of
                           letters of credit generally or the issuance of such
                           Letter of Credit.

         (d)      Issuance of Letters of Credit.

                                       24
<PAGE>

                  (i)      Request for Issuance. Borrower shall deliver a
                           completed and signed LC Application (unless Fleet is
                           to join in such LC Application, in which case it
                           shall be signed by Borrower and completed but for any
                           information to be supplied by Fleet), to Fleet,
                           Issuing Bank and Agent no later than three (3)
                           Business Days prior to the proposed date of issuance
                           of the requested Letter of Credit. Such notice shall
                           be irrevocable and shall specify the original face
                           amount of the Letter of Credit requested, the
                           effective date (which date shall be a Business Day)
                           of issuance of such requested Letter of Credit,
                           whether such Letter of Credit may be drawn in a
                           single or in multiple draws, the date on which such
                           requested Letter of Credit is to expire (which date
                           shall be a Business Day prior to the last day of the
                           Term), the purpose for which such Letter of Credit is
                           to be issued and the beneficiary of the requested
                           Letter of Credit.

                  (ii)     Responsibilities of the Agent; Issuance. Agent shall
                           determine, as of the Business Day immediately
                           preceding the requested effective date of issuance of
                           the Letter of Credit set forth in the related LC
                           Application, the amount of the unused LC Facility and
                           the Borrowing Base. If (A) the form of the Letter of
                           Credit delivered by Borrower to Agent is acceptable
                           to Fleet, the Issuing Bank and Agent in their sole
                           discretion, (ii) the undrawn available amount of the
                           requested Letter of Credit is less than or equal to
                           the lesser of (A) the unused LC Facility, and (B) the
                           unused Borrowing Base and (iii) Agent has received a
                           certificate from Borrower stating that the applicable
                           conditions set forth in Section 9 have been
                           satisfied, then Fleet will cause the Letter of Credit
                           to be issued.

                  (iii)    Notice of Issuance. Fleet shall give Agent written or
                           facsimile notice, or telephonic notice confirmed
                           promptly thereafter in writing, of the issuance of
                           each Letter of Credit and related LC Guaranty, and
                           Agent shall give each Lender periodic notice of the
                           issuance of each Letter of Credit and related LC
                           Guaranty and Agent shall provide the Lenders at least
                           monthly with a report of all Letters of Credit and LC
                           Guaranties outstanding.

                  (iv)     No Extension or Amendment. No Letter of Credit nor LC
                           Guaranty shall be extended or amended unless the
                           requirements of this Section 2.5(d) are met as though
                           a new Letter of Credit were being requested and
                           issued.

         (e)      Duties of Issuing Bank. The rights and obligations of Borrower
                  and the Issuing Bank in respect of any Letter of Credit shall
                  be governed by the LC Application and other LC Documents
                  pursuant to which such Letter of Credit was issued. No action
                  taken or omitted to be taken by the Issuing Bank under or in
                  connection with any Letter of Credit shall result in any
                  liability of Fleet or the Agent to the Loan Parties or any
                  Lender or relieve the Borrower or any Lender of its
                  obligations hereunder to Fleet, including in respect of the
                  related LC Guaranty. In determining whether to reimburse an
                  amount drawn under any Letter of Credit, Fleet shall have no
                  obligation to any Borrower or any Lender other than to confirm
                  that such drawing has been honored by the Issuing Bank.

                                       25
<PAGE>

         (f)      Payment of Reimbursement Obligations.

                  (i)      Payment. Notwithstanding any provisions to the
                           contrary in any LC Application or other LC Document,
                           Borrower agrees to reimburse the Issuing Bank for any
                           drawings (whether partial or full) under each Letter
                           of Credit issued by the Issuing Bank and agrees to
                           pay to the Issuing Bank the amount of all other LC
                           Outstandings and other amounts payable to the Issuing
                           Bank under or in connection with such Letter of
                           Credit immediately when due and (but without
                           duplication) to pay or to reimburse Fleet on demand
                           for any amounts payable or paid by Fleet under any LC
                           Guaranty, irrespective of any claim, set-off, defense
                           or other right which any Loan Party may have at any
                           time against the Issuing Bank, Fleet or any other
                           Person.

                  (ii)     Recovery or Avoidance of Payments. In the event any
                           payment by or on behalf of any Loan Party with
                           respect to any Letter of Credit or related LC
                           Guaranty received by the Issuing Bank, Fleet, or
                           Agent and distributed by Agent to the Lenders on
                           account of their respective participations therein,
                           is thereafter set aside, avoided or recovered from
                           the Issuing Bank, Fleet or Agent in connection with
                           any receivership, liquidation or bankruptcy
                           proceeding or otherwise, the Lenders shall, upon
                           demand by the Agent, pay to Agent, for the account of
                           the Issuing Bank, Fleet or the Agent their respective
                           Revolving Credit Percentage of such amount set aside,
                           avoided or recovered together with interest at the
                           rate required to be paid by Agent on the amount
                           required to be repaid by it.

         (g)      Participations.

                  (i)      Purchase of Participations. Immediately upon issuance
                           by Fleet of an LC Guaranty, each Lender shall be
                           deemed to have irrevocably and unconditionally
                           purchased and received without recourse or warranty,
                           an undivided interest and participation in such LC
                           Guaranty, equal to such Lender's Revolving Credit
                           Percentage of the face amount thereof, and any
                           security therefor or guaranty pertaining thereto,
                           including any rights of Fleet on payment thereunder
                           to be subrogated to the rights of the Issuing Bank
                           under the related Letter of Credit.

                  (ii)     Sharing of Letter of Credit Payments. In the event
                           that Fleet makes a payment under any LC Guaranty and
                           Fleet shall not have been repaid such amount pursuant
                           to Section 2.5(f), then on a weekly basis, or more
                           frequently if requested by Fleet, each Lender shall
                           make payment to Fleet, in immediately available
                           funds, of an amount equal to such Lender's pro rata
                           share of the amount of any payment made by Fleet in
                           respect of any LC Guaranty. The obligation of each
                           Lender to reimburse Fleet under this Section 2.5(g)
                           shall be unconditional, continuing, irrevocable and
                           absolute. In the event that any Lender fails to make
                           payment to Fleet of any amount due under this Section
                           2.5(g), the Agent shall be entitled to

                                       26
<PAGE>

                           receive, retain and deliver to Fleet for application
                           against such obligation the principal and interest
                           otherwise payable to such Lender hereunder until
                           Fleet receives such payment from such Lender or such
                           obligation is otherwise fully satisfied.

                  (iii)    Sharing of Reimbursement Obligation Payments.
                           Whenever Fleet receives a payment from or on behalf
                           of Borrower on account of a reimbursement obligation
                           under an LC Guaranty, Fleet shall promptly pay to
                           Agent, for the benefit of each Lender that has
                           previously paid its pro rata share of such amount to
                           or for the benefit of Fleet, such Lender's pro rata
                           share of the amount of such payment from the Borrower
                           in Dollars. Each such payment shall be made by Fleet
                           on the Business Day on which Fleet receives
                           immediately available funds, if received prior to
                           11:00 a.m. (Dallas, Texas time) on such Business Day,
                           and otherwise on the next succeeding Business Day.

                  (iv)     Documentation. Upon the request of any Lender, Agent
                           shall furnish to such Lender copies of any Letter of
                           Credit, LC Application or LC Guaranty for any Letter
                           of Credit and such other documentation as may
                           reasonably be requested by such Lender.

                  (v)      Obligations Irrevocable. The obligations of each
                           Lender to make payments to Agent with respect to any
                           LC Guaranty and their participations therein and the
                           obligations of Borrower to make payments to Fleet or
                           to Agent, for the account of Lenders, shall be
                           irrevocable, shall not be subject to any
                           qualification or exception whatsoever and shall be
                           made in accordance with the terms and conditions of
                           this Agreement (assuming, in the case of the
                           obligations of the Lenders to make such payments,
                           that the LC Guaranty has been issued in accordance
                           with Section 2.5(d).

         (h)      Indemnification, Exoneration.

                  (i)      Indemnification. In addition to amounts payable as
                           elsewhere provided in this Section 2.5, Borrower
                           agrees to protect, indemnify, pay and save the
                           Lenders, Fleet, the Issuing Bank and Agent harmless
                           from and against any and all claims, demands,
                           liabilities, damages, losses, costs, charges and
                           expenses (including reasonable attorneys' fees) which
                           any Lender, Fleet, the Issuing Bank or the Agent may
                           incur or be subject to as a consequence, directly or
                           indirectly, of

                           (A)      the issuance of any Letter of Credit or LC
                                    Guaranty, other than as a result of its
                                    gross negligence or willful misconduct, as
                                    determined by a court of competent
                                    jurisdiction, or

                           (B)      the failure of the Issuing Bank to honor a
                                    drawing under any Letter of Credit as a
                                    result of any act or omission, whether
                                    rightful or

                                       27
<PAGE>

                                    wrongful, of any present or future de jure
                                    or de facto governmental authority (all such
                                    acts or omissions being hereinafter referred
                                    to collectively as "Government Acts").

                  (ii)     Assumption of Risk. As among Borrower, Fleet, the
                           Lenders and Agent, Borrower assumes all risks of the
                           acts and omissions of, or misuse of any of the
                           Letters of Credit by, the respective beneficiaries of
                           such Letters of Credit and confirm, for the benefit
                           of Fleet, the Lenders and Agent that as between
                           Borrower and the Issuing Bank, such matters will be
                           subject to the terms of the LC Application and other
                           LC Documents.

                  (iii)    Exoneration. In furtherance and extension, and not in
                           limitation, of the specific provisions set forth
                           above, any action taken or omitted by the Agent,
                           Fleet, the Issuing Bank or any Lender under or in
                           connection with any of the Letters of Credit, any LC
                           Guaranty or any related agreements, certificates, or
                           other documents, if taken or omitted in good faith,
                           shall not result in any liability of any of Fleet,
                           Lender or the Agent to Borrower or relieve Borrower
                           of any of its obligations hereunder to any such
                           Person.

         (i)      Supporting Letter of Credit; Cash Collateral. If,
                  notwithstanding the provisions of Section 2.5(b), any LC
                  Guaranty is outstanding on the last day of the Term, then on
                  or prior to the last day of the Term, or in any case upon the
                  occurrence of any Default or Event of Default, Borrower shall,
                  promptly on demand by Agent, deposit with Agent, for the
                  ratable benefit of the Lenders, with respect to each LC
                  Guaranty then outstanding, as Agent shall specify, either (a)
                  a standby letter of credit (a "Supporting Letter of Credit")
                  in form and substance satisfactory to Agent, issued by an
                  issuer satisfactory to Agent in its reasonable judgment under
                  which Supporting Letter of Credit Agent is entitled to draw
                  amounts necessary to reimburse Fleet for payments made by
                  Fleet under such LC Guaranty or under any reimbursement or
                  guaranty agreement with respect thereto or any Letter of
                  Credit issued for the account of Borrower, or (b) Cash
                  Collateral, in either case with respect to the foregoing
                  clauses (a) or (b), in an amount equal to 105% of the greatest
                  amount for which the Letter of Credit relating to such LC
                  Guaranty may be drawn plus all related costs then accrued or
                  which may be incurred or which may in the future accrue. Such
                  Supporting Letter of Credit or Cash Collateral shall be held
                  by Agent, as security for, and to provide for the payment of,
                  Borrower's obligations in respect of such outstanding LC
                  Guaranty or under any reimbursement or guaranty agreement with
                  respect thereto or any Letter of Credit issued for the account
                  of Borrower in an amount necessary to reimburse Fleet for
                  payments made by Fleet. In addition, Agent may at any time
                  after the last day of the Term apply any or all of such Cash
                  Collateral to the payment of any or all of the Obligations
                  then due and payable. At Borrower's request, but subject to
                  Agent's reasonable approval, Agent shall invest any Cash
                  Collateral consisting of cash or any proceeds of Cash
                  Collateral consisting of cash, in Cash Equivalents, and any
                  commissions, expenses and penalties incurred by Agent in
                  connection with any investment and redemption of such Cash
                  Collateral shall be Obligations hereunder secured by the
                  Collateral, shall bear interest at the rates provided herein

                                       28
<PAGE>

                  for the Revolving Credit Base Loan and shall be charged to the
                  Loan Account of the Borrower, or, at Agent's option, shall be
                  paid out of the proceeds of any earnings received by Agent
                  from the investment of such Cash Collateral as provided herein
                  or out of such cash itself. Agent makes no representation or
                  warranty as to, and shall not be responsible for, the rate of
                  return, if any, earned on any Cash Collateral. Any earnings on
                  Cash Collateral shall be held as additional Cash Collateral on
                  the terms set forth in this Section 2.5(i).

         Section 2.6 All Loans to Constitute One Obligation. All Loans shall
constitute one general joint and several obligation of Borrowers, shall be
evidenced by the Notes, and shall be secured by Agent's security interest in and
Lien upon all of the Collateral, and by all other security interests and Liens
heretofore, now or at any time or times hereafter granted by Borrower to Agent.

         Section 2.7 Loan Account. Lenders shall enter all Loans as debits to
the Loan Account and shall also record in the Loan Account all payments made by
Borrowers on each Loan and all proceeds of Collateral which are finally paid to
Lenders, and may record therein, in accordance with customary accounting
practices, all charges and expenses properly chargeable to Borrower hereunder.

         Section 2.8 Joint and Several Liability: Rights of Contribution.

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

         (b)      Each Borrower hereby irrevocably and unconditionally: (i)
                  agrees that it is jointly and severally liable to Lenders for
                  the full and prompt payment of the Obligations and the
                  performance by each Borrower of its obligations hereunder in
                  accordance with the terms hereof; (ii) agrees to fully and
                  promptly perform all of its obligations hereunder with respect
                  to each advance of credit hereunder as if such advance had
                  been made directly to it; and (iii) agrees as a primary
                  obligation to indemnify Lenders on demand for and against any
                  loss incurred by Lenders 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 Agent, Lenders or any Person, the
                  amount of such loss being the amount which Lenders would
                  otherwise have been entitled to recover from Borrower.

It is the intent of each Borrower that the indebtedness, obligations and
liability hereunder of no one of them be subject to challenge on any basis.
Accordingly, as of the date hereof, the liability

                                       29
<PAGE>

of each Borrower under this Section 2.8, together with all of its other
liabilities to all Persons as of the date hereof and as of any other date on
which a transfer is deemed to occur by virtue of this Agreement, calculated in
amount sufficient to pay its probable net liabilities on its existing
Indebtedness as the same become absolute and matured ("Dated Liabilities") is,
and is to be, less than the amount of the aggregate of a fair valuation of its
property as of such corresponding date ("Dated Assets"). To this end, each
Borrower under this Section 2.8, (i) grants to and recognizes in each other
Borrower, ratably, rights of subrogation and contribution in the amount, if any,
by which the Dated Assets of such Borrower, but for the aggregate of subrogation
and contribution in its favor recognized herein, would exceed the Dated
Liabilities of such Borrower or, as the case may be, (ii) acknowledges receipt
of and recognizes its right to subrogation and contribution ratably from the
other Borrower in the amount, if any, by which the Dated Liabilities of such
Borrower, but for the aggregate of subrogation and contribution in its favor
recognized herein, would exceed the Dated Assets of such Borrower under this
Section 2.8. In recognizing the value of the Dated Assets and the Dated
Liabilities, it is understood that Borrowers will recognize, to at least the
same extent of their aggregate recognition of liabilities hereunder, their
rights to subrogation and contribution hereunder. It is a material objective of
this Section 2.8 that each Borrower recognizes rights to subrogation and
contribution rather than be deemed to be insolvent (or in contemplation thereof)
by reason of an arbitrary interpretation of its joint and several obligations
hereunder.

         Section 2.9 Contribution of Lenders; Non-Ratable Loans

         (a)      Agent's Election. Promptly after receipt of a Borrowing Notice
                  pursuant to Section 2.4, the Agent shall elect, in its
                  discretion, (i) to have the terms of Section 2.9(b) apply to
                  such requested Borrowing, or (ii) to request Fleet to make a
                  Non-Ratable Loan pursuant to the terms of Section 2.9(c) in
                  the amount of the requested Borrowing; provided, however that
                  if Fleet declines in its sole discretion to make a Non-Ratable
                  Loan pursuant to Section 2.9(c) the Agent shall elect to have
                  the terms of Section 2.9(b) apply to such requested Borrowing.

         (b)      Making of Revolving Loans.

                  (i)      In the event that the Agent shall elect to have the
                           terms of this Section 2.9(b) apply to a requested
                           Borrowing as described in Section 2.4, then promptly
                           after receipt of a Borrowing Notice, the Agent shall
                           notify the Lenders by telecopy, telephone, or other
                           similar form of transmission, of the requested
                           Borrowing. Each Lender shall make the amount of such
                           Lender's Pro Rata Share of the requested Borrowing
                           available to the Agent in immediately available
                           funds, to such account of the Agent as the Agent may
                           designate, not later than 2:00 p.m., (Dallas, Texas
                           time) on the Funding Date applicable thereto. After
                           the Agent's receipt of the proceeds of such Revolving
                           Loans, upon satisfaction of the applicable conditions
                           precedent set forth in Article 9, the Agent shall
                           make the proceeds of such Revolving Loans available
                           to the Borrower on the applicable Funding Date by
                           transferring same day funds equal to the proceeds of
                           such Revolving Loans received by the Agent to the
                           account designated pursuant

                                       30
<PAGE>

                           to Section 2.4 or disbursing such funds in such other
                           manner as the Borrower may direct to the Agent.

                  (ii)     Unless the Agent receives notice from a Lender at
                           least one Business Day prior to the date of a
                           requested Borrowing, that such Lender will not make
                           available its Pro Rata Share of such Borrowing, the
                           Agent may assume that each Lender has made such
                           amount available to the Agent in immediately
                           available funds on the Funding Date and the Agent may
                           (but shall not be required) to make available to the
                           Borrower on such date a corresponding amount. If and
                           to the extent a Lender has not made such amounts
                           available to the Agent, and the Agent has made the
                           Borrowing available to the Borrower, such Lender
                           shall on the Business Day following such Funding Date
                           make such amount available to the Agent, together
                           with interest at the Base Rate for each day during
                           such period. A notice by the Agent submitted to any
                           Lender with respect to such amounts owing under this
                           subsection shall be conclusive, absent manifest
                           error. If such amount is not made available to the
                           Agent on the Business Day following the Funding Date,
                           the Agent will notify the Borrower of such failure
                           and, upon demand by the Agent, the Borrower will pay
                           such amount to the Agent for Agent's account,
                           together with interest for each day elapsed since the
                           Funding Date at the interest rate then applicable to
                           Revolving Loans. The failure of a Lender to make its
                           Pro Rata Share of a Borrowing available on a Funding
                           Date (a "Defaulting Lender") shall not relieve any
                           other Lender of its obligation to make its Pro Rata
                           Share of such Borrowing on the Funding Date, but
                           neither the Agent nor any Lender shall be responsible
                           for the failure of any other Lender to make its Pro
                           Rata Share of such Borrowing available on such
                           Funding Date.

                  (iii)    The Agent shall not be obligated to transfer to a
                           Defaulting Lender any payments made by any Borrower
                           to the Agent for the Defaulting Lender's benefit; nor
                           shall a Defaulting Lender be entitled to the sharing
                           of any payments hereunder. Amounts payable to a
                           Defaulting Lender shall instead be paid to or
                           retained by the Agent. The Agent may hold and, in its
                           discretion, re-lend to the Borrower the amount of all
                           such payments received or retained by it for the
                           account of the Defaulting Lender. Any amounts so
                           re-lent to the Borrower shall bear interest at the
                           rate applicable to Base Rate Loans and for all other
                           purposes of this Agreement shall be treated as
                           Revolving Loans; provided, however, that for purposes
                           of voting or consenting to matters with respect to
                           the Loan Documents and determining a Lender's Pro
                           Rata Share, such Defaulting Lender shall be deemed
                           not to be a "Lender". Until a Defaulting Lender cures
                           its failure to fund its Pro Rata Share of any
                           Borrowing (A) such Defaulting Lender shall not be
                           entitled to any portion of the unused commitment fee
                           set forth in Section 3.1(f) and (B) such fee shall
                           accrue in favor of the Lenders which have funded
                           their respective Pro Rata Shares of such requested
                           Borrowing land shall be allocated among such
                           performing Lenders ratably based upon their relative
                           Commitments. This Section shall remain

                                       31
<PAGE>

                           effective with respect to such Lender until such time
                           as the Defaulting Lender shall no longer be in
                           default of any of its obligations under this
                           Agreement. The terms of this Section shall not be
                           construed to increase or otherwise affect the
                           Commitment of any Lender, or relieve or excuse the
                           performance by Borrower of its duties and obligations
                           hereunder.

         (c)      Making of Non-Ratable Loans.

                  (i)      In the event the Agent shall elect, with the consent
                           of Fleet, to have the terms of this Section 2.9(c)
                           apply to a requested Borrowing, Fleet shall make a
                           Revolving Loan in the amount of such Borrowing (any
                           such Revolving Loan made solely by Fleet pursuant to
                           this Section 2.9(c) being referred to as a
                           "Non-Ratable Loan" and such Revolving Loans being
                           referred to collectively as "Non-Ratable Loan")
                           available to the Borrower on the Funding Date
                           applicable thereto by transferring same day funds to
                           the account of such Borrower, designated pursuant to
                           Section 2.4. Each Non-Ratable Loan is a Revolving
                           Loan hereunder and shall be subject to all the terms
                           and conditions applicable to other Revolving Loans
                           except that all payments thereon shall be payable to
                           Fleet solely for its own account (and for the account
                           of the holder of any participation interest with
                           respect to such Revolving Loan). The Agent shall not
                           request Fleet to make any Non-Ratable Loan if (A) the
                           Agent shall have received written notice from any
                           Lender that one or more of the applicable conditions
                           precedent set forth in Article 9 will not be
                           satisfied on the requested Funding Date for the
                           applicable Borrowing, or (B) the requested Borrowing
                           would exceed the Revolving Credit Commitment on such
                           Funding Date. Fleet shall not otherwise be required
                           to determine whether the applicable conditions
                           precedent set forth in Article 9 have been satisfied
                           or the requested Borrowing would exceed the Revolving
                           Credit Commitment on the Funding Date applicable
                           thereto prior to making, in its sole discretion, any
                           Non-Ratable Loan.

                  (ii)     The Non-Ratable Loans shall be secured by the
                           Collateral, shall constitute Revolving Loans and
                           Obligations hereunder, and shall bear interest at the
                           rate applicable to the Revolving Loans from time to
                           time.

         (d)      Agent Advances.

                  (i)      Subject to the limitations set forth in the provisos
                           contained in this Section 2.9(d), the Agent is hereby
                           authorized by the Borrowers and the Lenders, from
                           time to time in the Agent's sole discretion, (A)
                           after the occurrence of a Default or an Event of
                           Default, or (B) at any time that any of the other
                           applicable conditions precedent set forth in Article
                           9 have not been satisfied, to make Base Rate Loans to
                           the Borrower on behalf of the Lenders which the
                           Agent, in its reasonable business judgment, deems
                           necessary or desirable (1) to preserve or protect the
                           Collateral or any portion thereof, (2) to enhance the
                           likelihood of, or maximize the amount

                                       32
<PAGE>

                           of, repayment of the Loans and other Obligations, or
                           (3) to pay any other amount chargeable to the
                           Borrower pursuant to the terms of this Agreement,
                           including costs, fees, and expenses as described in
                           Section 12.4 (any of the advances described in this
                           Section 2.9(d) being hereinafter referred to as
                           "Agent Advances"); provided that the Majority Lenders
                           may at any time revoke the Agent's authorization
                           contained in this Section 2.9(d) to make Agent
                           Advances, any such revocation to be in writing and to
                           become effective prospectively upon the Agent's
                           receipt thereof;

                  (ii)     The Agent Advances shall be repayable on demand and
                           secured by the Collateral, shall constitute Revolving
                           Loans and Obligations hereunder, and shall bear
                           interest at the rate applicable to Base Rate Loans
                           from time to time. The Agent shall notify the
                           Borrower and each Lender in writing of each such
                           Agent Advance; provided that the failure of the Agent
                           to provide any such notice to the Borrower or any
                           Lender shall not affect the Borrower's liability for
                           or obligation to repay such Agent Advances or result
                           in any liability or constitute the breach of any duty
                           or obligation of the Agent hereunder.

         (e)      Settlement. Except as may be specifically provided otherwise
                  by this Section 2.9, it is agreed that each Lender's funded
                  portion of the Revolving Loans is intended by the Lenders to
                  be equal at all times to such Lender's Pro Rata Share of the
                  outstanding Revolving Loans. Notwithstanding such agreement,
                  the Agent, Fleet, and the other Lenders agree (which agreement
                  shall not be for the benefit of or enforceable by the
                  Borrowers) that in order to facilitate the administration of
                  this Agreement and the other Loan Documents, settlement among
                  them as to the Revolving Loans, the Non-Ratable, Loans, and
                  the Agent Advances shall take place on a periodic basis in
                  accordance with the following provisions:

                  (i)      The Agent shall request settlement (a "Settlement")
                           with the Lenders on at least a weekly basis, or on a
                           more frequent basis if so determined by the Agent,
                           (A) on behalf of Fleet, with respect to each
                           outstanding Non-Ratable Loan, (B) for itself, with
                           respect to each Agent Advance, and (C) with respect
                           to collections received, in each case, by notifying
                           the Lenders of such requested Settlement by telecopy,
                           telephone, or other similar form of transmission, of
                           such requested Settlement, no later than 11:00 a.m.
                           (Dallas, Texas time) on the date of such requested
                           Settlement (the "Settlement Date"), each Lender
                           (other than Fleet, in the case of Non-Ratable Loans,
                           and the Agent, in the case of Agent Advances) shall
                           make the amount of such Lender's Pro Rata Share of
                           the outstanding principal amount of the Non-Ratable
                           Loans and Agent Advances with respect to which
                           Settlement is requested available to the Agent, to
                           such account of the Agent as the Agent may designate,
                           not later than 2:00 p.m. (Dallas, Texas time), on the
                           Settlement Date applicable thereto, which may occur
                           before or after the occurrence or during the
                           continuation of a Default or an Event of Default and
                           whether or not the applicable conditions precedent

                                       33
<PAGE>

                           set forth in Article 9 have then been satisfied. Such
                           amounts made available to the Agent shall be applied
                           against the amounts of the applicable Non-Ratable
                           Loan or Agent Advance and, together with the portion
                           of such Non-Ratable Loan or Agent Advance
                           representing Fleet's Pro Rata Share thereof, shall
                           constitute Revolving Loans of the Lenders,
                           respectively. If any such amount is not made
                           available to the Agent by any Lender on the
                           Settlement Date applicable thereto, the Agent shall
                           be entitled to recover such amount on demand from
                           such Lender together with interest thereon at the
                           Base Rate for the first three (3) days from and after
                           the Settlement Date and thereafter at the Interest
                           Rate then applicable to the Revolving Loans.

                  (ii)     Notwithstanding the foregoing, not more than one (1)
                           Business Day after demand is made by the Agent
                           (whether before or after the occurrence of a Default
                           or an Event of Default and regardless of whether the
                           Agent has requested a Settlement with respect to a
                           Non-Ratable Loan or Agent Advance), each other Lender
                           (A) shall irrevocably and unconditionally purchase
                           and receive from Fleet or the Agent, as applicable,
                           without recourse or warranty, an undivided interest
                           and participation in such Non-Ratable Loan or Agent
                           Advance equal to such Lender's Pro Rata Share of such
                           Non-Ratable Loan or Agent Advance and (B) if
                           Settlement has not previously occurred with respect
                           to such Non-Ratable Loans or Agent Advances, upon
                           demand by Fleet or the Agent, as applicable, shall
                           pay to Fleet or the Agent, as applicable, as the
                           purchase price of such participation an amount equal
                           to one-hundred percent (100%) of such Lender's Pro
                           Rata Share of such Non-Ratable Loans or Agent
                           Advances. If such amount is not in fact made
                           available to the Agent by any Lender, the Agent shall
                           be entitled to recover such amount on demand from
                           such Lender together with interest thereon at the
                           interest rate then applicable to Base Rate Loans.

                  (iii)    From and after the date, if any, on which any Lender
                           purchases an undivided interest and participation in
                           any Non-Ratable Loan or Agent Advance pursuant to
                           clause (ii) preceding, the Agent shall promptly
                           distribute to such Lender at such address as such
                           Lender may request in writing, such Lender's Pro Rata
                           Share of all payments of principal and interest and
                           all proceeds of Collateral received by the Agent in
                           respect of such Non-Ratable Loan or Agent Advance.

                  (iv)     Between Settlement Dates, the Agent, to the extent no
                           Agent Advances or Non-Ratable Loans are outstanding,
                           may pay over to Fleet any payments received by the
                           Agent, which in accordance with the terms of this
                           Agreement would be applied to the reduction of the
                           Revolving Loans, for application to Fleet's Revolving
                           Loans. If, as of any Settlement Date, collections
                           received since the then immediately preceding
                           Settlement Date have been applied to Fleet's
                           Revolving Loans (other than to Non-Ratable Loans or
                           Agent Advances in which such Lender has not yet
                           funded its

                                       34
<PAGE>

                           purchase of a participation pursuant to Section
                           2.9(d)(ii)), as provided for in the previous
                           sentence, Fleet shall pay to the Agent for the
                           accounts of the Lenders, to be applied to the
                           outstanding Revolving Loans of such Lenders, an
                           amount such that each Lender shall, upon receipt of
                           such amount, have, as of such Settlement Date, its
                           Pro Rata Share of the Revolving Loans. During the
                           period between Settlement Dates, Fleet with respect
                           to Non-Ratable Loans, the Agent with respect to Agent
                           Advances, and each Lender with respect to the
                           Revolving Loans other than Non-Ratable Loans and
                           Agent Advances, shall be entitled to interest at the
                           applicable rate or rates payable under this Agreement
                           on the actual average daily amount of funds employed
                           by Fleet, the Agent and the other Lenders.

         (f)      Notation. The Agent shall record on its books the principal
                  amount of the Revolving Loans owing to each Lender, including
                  the Non-Ratable Loans owing to Fleet, and the Agent Advances
                  owing to the Agent, from time to time. In addition, each
                  Lender is authorized, at such Lender's option, to note the
                  date and amount of each repayment or prepayment of principal
                  of such Lender's Revolving Loans in its books and records,
                  including computer records, such books and records
                  constituting presumptive evidence, absent manifest error, of
                  the accuracy of the information contained therein.

         (g)      Lenders' Failure to Perform. All Revolving Loans (other than
                  Non-Ratable Loans and Agent Advances) shall be made by the
                  Lenders simultaneously and in accordance with their Pro Rata
                  Shares. It is understood that (i) no Lender shall be
                  responsible for any failure by any other Lender to perform its
                  obligation to make any Revolving Loans hereunder, nor shall
                  any commitment of any Lender be increased or decreased as a
                  result of any failure by any other Lender to perform its
                  obligation to make any Revolving Loans hereunder, (ii) no
                  failure by any Lender to perform its obligation to make any
                  Revolving Loans hereunder shall excuse any other Lender from
                  its obligation to make any Revolving Loans hereunder, and
                  (iii) the obligations of each Lender hereunder shall be
                  several, not joint and several.

            ARTICLE 3. INTEREST, FEES, TERM, REDUCTION AND REPAYMENT

         Section 3.1 Interest, Fees and Charges.

         (a)      Interest. Outstanding principal on the Loans shall bear
                  interest at the option of Borrower (subject to the terms and
                  conditions herein) at either the Base Rate or LIBOR Rate,
                  calculated daily, at the following rates per annum
                  (individually called, as applicable, an "Applicable Annual
                  Rate"):

                  (i)      Existing LIBOR Loans. Each LIBOR Loan outstanding on
                           the date of this Agreement shall bear interest at a
                           rate per annum equal to the existing Applicable
                           Annual Rate.

                                       35
<PAGE>

                  (ii)     New LIBOR Loans. Each LIBOR Loan drawn after the
                           Closing Date shall bear interest at a rate per annum
                           equal to the LIBOR Rate plus the Applicable Margin
                           Amount.

                  (iii)    Base Rate Loans. The Base Rate Loans shall bear
                           interest at a fluctuating rate per annum equal to the
                           Base Rate plus the Applicable Margin Amount.

         The interest rate applicable to Base Rate Loans shall be increased or
decreased, as the case may be, by an amount equal to any increase or decrease in
the Base Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Base Rate becomes effective. The
Base Rate in effect on the date hereof shall be the Base Rate effective as of
the opening of business on the date hereof, but if this Agreement is executed on
a day that is not a Business Day, the Base Rate in effect on the date hereof
shall be the Base Rate effective as of the opening of business on the last
Business Day immediately preceding the date hereof. Interest on the Loans shall
be calculated daily, based on the actual days elapsed over a three hundred-sixty
(360) day year. Further, for the purpose of computing interest, all items of
payment received by Lenders shall be applied by Lenders (subject to final
payment of all drafts and other items received in form other than immediately
available funds) against the Obligations on the day of receipt. The
determination of when a payment is received by Lenders will be made in
accordance with Section 3.6.

         (b)      Default Rate of Interest. Upon and after the occurrence of an
                  Event of Default, and during the continuation thereof, the
                  principal amount of the Loans and other Obligations shall bear
                  interest, calculated daily (computed on the actual days
                  elapsed over a three hundred-sixty (360) day year), at two
                  percent (2.00%) above the Base Rate or other applicable rate
                  of interest (a "Default Rate").

         (c)      Maximum Rate of Interest. Notwithstanding anything to the
                  contrary in this Agreement or otherwise, (i) if at any time
                  the amount of interest computed on the basis of an Applicable
                  Annual Rate or a Default Rate would exceed the amount of such
                  interest computed upon the basis of the maximum rate of
                  interest permitted by applicable state or federal law in
                  effect from time to time hereafter (the "Maximum Legal Rate"),
                  the interest payable under this Agreement shall be computed
                  upon the basis of the Maximum Legal Rate, but any subsequent
                  reduction in such Applicable Annual Rate or Default Rate, as
                  applicable, shall not reduce such interest thereafter payable
                  hereunder below the amount computed on the basis of the
                  Maximum Legal Rate until the aggregate amount of such interest
                  accrued and payable under this Agreement equals the total
                  amount of interest which would have accrued if such interest
                  had been at all times computed solely on the basis of an
                  Applicable Annual Rate or Default Rate, as applicable; and
                  (ii) unless preempted by federal law, an Applicable Annual
                  Rate or Default Rate, as applicable, from time to time in
                  effect hereunder may not exceed the applicable indicated rate
                  ceiling as defined in the Texas Finance Code, (and as the same
                  may be incorporated by reference in other Texas statutes), but
                  otherwise without limitation, that rate based upon the "weekly
                  rate ceiling" and calculated after taking into account any and
                  all relevant fees, payments, and other charges in

                                       36
<PAGE>

                  respect of the Loan which are deemed to be interest under
                  applicable law. If the applicable state or federal law is
                  amended in the future to allow a greater rate of interest to
                  be charged under this Agreement than is presently allowed by
                  applicable state or federal law, then the limitation of
                  interest hereunder shall be increased to the maximum rate of
                  interest allowed by applicable state or federal law as
                  amended, which increase shall be effective hereunder on the
                  effective date of such amendment, and all interest charges
                  owing to Lender by reason thereof shall be payable upon
                  demand. (d) Excess Interest. No agreements, conditions,
                  provisions or stipulations contained in this Agreement or
                  any other instrument, document or agreement between Borrower,
                  Agent and Lenders or default of Borrower, or the exercise by
                  Agent or Lenders of the right to accelerate the payment of the
                  maturity of principal and interest, or to exercise any option
                  whatsoever contained in this Agreement or any other Loan
                  Document, or the arising of any contingency whatsoever, shall
                  entitle Lenders to contract for, charge, or receive, in any
                  event, interest exceeding the Maximum Legal Rate. In no event
                  shall Borrower be obligated to pay interest exceeding such
                  Maximum Legal Rate and all agreements, conditions or
                  stipulations, if any, which may in any event or contingency
                  whatsoever operate to bind, obligate or compel Borrower to pay
                  a rate of interest exceeding the Maximum Legal Rate, shall be
                  without binding force or effect, at law or in equity, to the
                  extent only of the excess of interest over such Maximum Legal
                  Rate. In the event any interest is contracted for, charged or
                  received in excess of the Maximum Legal Rate ("Excess"),
                  Borrower acknowledges and stipulates that any such contract,
                  charge, or receipt shall be the result of an accident and bona
                  fide error, and that any Excess received by Lenders shall be
                  applied, first, to reduce the principal then unpaid hereunder;
                  second, to reduce the other Obligations; and third, returned
                  to Borrower, it being the intention of the parties hereto not
                  to enter at any time into a usurious or otherwise illegal
                  relationship. Borrower recognizes that, with fluctuations in
                  the Base Rate or the LIBOR Rate and the Maximum Legal Rate,
                  such a result could inadvertently occur. By the execution of
                  this Agreement, Borrower covenants that (i) the credit or
                  return of any Excess shall constitute the acceptance by
                  Borrower of such Excess, and (ii) Borrower shall not seek or
                  pursue any other remedy, legal or equitable, against Lenders,
                  based in whole or in part upon contracting for, charging or
                  receiving of any interest in excess of the maximum authorized
                  by applicable law. For the purpose of determining whether or
                  not any Excess has been contracted for, charged or received by
                  Lenders, all interest at any time contracted for, charged or
                  received by Lenders in connection with this Agreement shall be
                  amortized, prorated, allocated and spread in equal parts
                  during the entire term of this Agreement.

         (e)      Incorporation by this Reference. The provisions of Section
                  3.1(d) shall be deemed to be incorporated into every document
                  or communication relating to the Obligations which sets forth
                  or prescribes any account, right or claim or alleged account,
                  right or claim of Lenders with respect to Borrower (or any
                  other obligor in respect of Obligations), whether or not any
                  provision of this Section 3.1 is referred to therein. All such
                  documents and communications and all figures set

                                       37
<PAGE>

                  forth therein shall, for the sole purpose of computing the
                  extent of the Obligations and obligations of the Borrowers (or
                  other obligor) asserted by Agent or Lenders thereunder, be
                  automatically re-computed by any Borrower or obligor, and by
                  any court considering the same, to give effect to the
                  adjustments or credits required by Section 3.1(d).

         (f)      Unused Commitment Fee. Borrower agrees to pay to Agent for
                  distribution to Lenders a monthly unused commitment fee equal
                  to 0.375% per annum multiplied by the amount by which the
                  Total Commitment exceeds the Average Monthly Loan Balance;
                  provided, however, that if the Total Commitment exceeds the
                  Average Monthly Loan Balance by $50,000,000 or more at any
                  time during the first two (2) years following the Closing Date
                  the fee shall be increased to 0.50% per annum for such period.
                  Such unused commitment fee shall be payable (i) on the Closing
                  Date, and (ii) monthly in arrears on the first day of each
                  calendar month after the Closing Date.

         (g)      Closing Fees. Borrower shall pay to Agent on the Closing Date
                  for distribution to the Lenders a closing fee of $225,000 and
                  an underwriting fee to the Agent as provided in the letter
                  agreement between Borrower and Agent dated February ___, 2002.

         (h)      Agency Fee. Borrower shall pay to Agent on the Closing Date
                  and on each anniversary of the Closing Date during the term of
                  this Agreement an agency fee of Twenty Thousand Dollars
                  ($20,000).

         (i)      Capital Adequacy Charge. In the event that a Lender shall have
                  determined in good faith that the adoption of any law, rule or
                  regulation regarding capital adequacy, or any change therein
                  or in the interpretation or application thereof or compliance
                  by such Lender with any request or directive regarding capital
                  adequacy (whether or not having the force of law) from any
                  central bank or governmental authority, does or shall have the
                  effect of reducing the rate of return on such Lender's capital
                  as a consequence of its obligations hereunder to a level below
                  that which such Lender could have achieved but for such
                  adoption, change or compliance (taking into consideration such
                  Lender's policies with respect to capital adequacy) by an
                  amount deemed- by such Lender, in its sole discretion, to be
                  material, then from time to time, after submission by such
                  Lender to Borrower of a certificate certifying the amount by
                  which such rate of return is actually reduced with respect to
                  this transaction, together with the calculation and a written
                  demand therefor, Borrower shall promptly pay to such Lender
                  such additional amount or amounts as will compensate such
                  Lender for such reduction; provided, that, such Lender's other
                  debtors are required to reimburse such Lender for the same
                  type of reduction. The certificate of such Lender claiming
                  entitlement to payment as set forth above shall be conclusive
                  in the absence of manifest error. Such certificate shall set
                  forth the nature of the occurrence giving rise to such
                  payment, the additional amount or amounts to be paid to such
                  Lender, and the method by which such amounts were determined.
                  In determining such amount, a Lender may use any reasonable
                  averaging and attribution method, so

                                       38
<PAGE>

                  long as it accurately reflects the reduction. A Lender
                  claiming amounts under this Section 3.1(i) agrees to provide
                  Borrower such additional information with respect thereto upon
                  request.

         (j)      Letter of Credit: LC Guaranty Fees. As additional
                  consideration for the Issuing Bank's issuing its Letters of
                  Credit for Borrower's account or for issuing its LC Guaranties
                  at Borrower's request pursuant to Section 2.4, Borrower agrees
                  to pay to the Issuing Bank, in addition to the Issuing Bank's
                  costs and expenses incurred in issuing such Letters of Credit
                  and LC Guaranties, fees equal to the Applicable Margin for
                  LIBOR Loans (equal to the face amount of each Letter of Credit
                  and LC Guaranty) times the face amount of each Letter of
                  Credit and LC Guaranty, which fee shall be deemed fully earned
                  upon issuance of each such Letter of Credit or LC Guaranty,
                  and shall be due and payable in equal monthly installments
                  beginning on the first Business Day of the month following the
                  date of issuance of such Letter of Credit or LC Guaranty and
                  continuing on the first Business Day of each month thereafter
                  during the term thereof. No fee payable by Borrower to the
                  Issuing Bank under this Section 3.1(j) shall be subject to
                  rebate or proration upon the termination of this Agreement for
                  any reason.

         Section 3.2 Additional Provisions Regarding LIBOR Loans.

         (a)      Borrower may select a LIBOR Rate with respect to all or any
                  portion of the Loans as provided in this Section 3.2;
                  provided, however, that (i) each LIBOR Loan shall be in a
                  principal amount of not less than One Million Dollars
                  ($1,000,000) (and, if greater than One Million Dollars
                  ($1,000,000), in integral multiples of One Hundred Thousand
                  Dollars ($100,000)), (ii) no more than five (5) LIBOR Periods
                  may be in existence at any one time, and (iii) Borrower may
                  not select a LIBOR Rate for a Loan if there exists a Default
                  or Event of Default. Borrower shall select LIBOR Periods with
                  respect to LIBOR Loans so that no LIBOR Period expires after
                  the end of the Original Term, or if extended pursuant to
                  Section 3.3, any Renewal Term. With respect to a LIBOR Loan,
                  the Borrowing Notice shall be delivered to Agent not later
                  than two (2) Business Days before the proposed borrowing date
                  referenced therein. An outstanding Base Rate Loan may be
                  converted to a LIBOR Loan at any time subject to the
                  provisions of this Section 3.2.

         (b)      Each LIBOR Loan shall bear interest from and including the
                  first day of the LIBOR Period applicable thereto (but not
                  including the last day of such LIBOR Period) at the interest
                  rate determined as applicable to such LIBOR Loan, but interest
                  on such LIBOR Loan shall be payable as provided in Section
                  3.6. If at the end of an LIBOR Period for an outstanding LIBOR
                  Loan, Borrower has failed to deliver to Lender a new Borrowing
                  Notice with respect to such LIBOR Loan or to pay such LIBOR
                  Loan, then such LIBOR Loan shall be converted to a Base Rate
                  Loan on and after the last day of such LIBOR Period and shall
                  remain a Base Rate Loan until paid or until the effective date
                  of a new Borrowing Notice with respect thereto.

                                       39
<PAGE>

         (c)      If a Lender determines that maintenance of any of its portion
                  of LIBOR Loans would violate any applicable law, rule,
                  regulation or directive, whether or not having the force of
                  law, such Lender shall suspend the availability of its portion
                  of LIBOR Loans (the "Affected Portion") and require the
                  Affected Portion of any LIBOR Loans outstanding to be repaid;
                  or if such Lender determines that (i) deposits of a type or
                  maturity appropriate to match fund the Affected Portion of
                  LIBOR Loans are not available, or (ii) the LIBOR Rate does not
                  accurately reflect the cost of making the Affected Portion of
                  a LIBOR Loan, then such Lender shall promptly provide notice
                  to Borrower of its decision to suspend Borrower's ability to
                  make the Affected Portion of LIBOR Loans and/or require
                  Borrower to repay the Affected Portion of LIBOR Loans and
                  shall suspend the availability of the Affected Portion of
                  LIBOR Loans after the date of any such determination.

         (d)      If any payment of a LIBOR Loan occurs on a date which is not
                  the last day of the applicable LIBOR Period, whether because
                  of acceleration, prepayment or otherwise, or a LIBOR Loan is
                  not made on the date specified by Borrower because Borrower
                  has not satisfied the conditions precedent to such LIBOR Loan
                  contained in this Agreement or a Default or Event of Default
                  has occurred and is continuing, Borrower will indemnify
                  Lenders for any loss or cost incurred by it resulting
                  therefrom, including without limitation any loss or cost in
                  liquidating or employing deposits required to fund or maintain
                  the LIBOR Loan.

         (e)      Agent shall deliver a written statement as to the amount due,
                  if any, under Sections 3.2(c) or (d). Such written statement
                  shall set forth in reasonable detail the calculations upon
                  which Agent determined such amount and shall be final,
                  conclusive and binding on Borrower in the absence of manifest
                  error. Determination of amounts payable under such Sections in
                  connection with a LIBOR Loan shall be calculated as though the
                  affected Lender funded its portion of LIBOR Loan through the
                  purchase of a deposit of the type and maturity corresponding
                  to the deposit used as a reference in determining the LIBOR
                  Rate applicable to such Loan whether in fact that is the case
                  or not. Unless otherwise provided herein, the amount specified
                  in the written statement shall be payable on demand after
                  receipt by Borrower of the written statement.

         (f)      Borrower may prepay a LIBOR Loan only upon at least three (3)
                  Business Days prior written notice to Agent (which notice
                  shall be irrevocable). Borrower shall pay to Agent, upon
                  request of Agent, such amount or amounts as shall be
                  sufficient (in the reasonable opinion of Agent) to compensate
                  Lenders for any loss, cost, or expense incurred as a result
                  of: (i) any payment of a LIBOR Loan on a date other than the
                  last day of the LIBOR Period for such LIBOR Loan; (ii) any
                  failure by Borrower to borrow a LIBOR Loan on the date
                  specified by Borrower's written notice; or (iii) any failure
                  by Borrower to pay a LIBOR Loan on the date for payment
                  specified in Borrower's written notice. Without limiting the
                  foregoing, Borrower shall pay to Agent for the benefit of
                  Lenders a "yield maintenance fee" in an amount computed as
                  follows: the current rate for United States Treasury
                  securities (bills on a discounted basis shall be converted to
                  a bond equivalent) with a maturity date closest to the LIBOR
                  Period chosen pursuant to

                                       40
<PAGE>

                  the LIBOR Loan as to which the prepayment is made, shall be
                  subtracted from the LIBOR Rate in effect at the time of
                  prepayment. If the result is zero or a negative number, there
                  shall be no yield maintenance fee. If the result is a positive
                  number, then the resulting percentage shall be multiplied by
                  the amount of the principal balance being prepaid. The
                  resulting amount shall be divided by 360 and multiplied by the
                  number of days remaining in the LIBOR Period chosen pursuant
                  to the LIBOR Loan as to which the prepayment is made. Said
                  amount shall be reduced to present value calculated by using
                  the above referenced United States Treasury securities rate
                  and the number of days remaining in the term chosen pursuant
                  to the LIBOR Loan as to which prepayment is made. The
                  resulting amount shall be the yield maintenance fee due to
                  Agent for the benefit of Lenders upon the prepayment of a
                  LIBOR Loan. If by reason of an Event of Default, Agent or the
                  Majority Lenders elect to declare the Obligations to be
                  immediately due and payable, then any yield maintenance fee
                  with respect to a LIBOR Loan shall become due and payable in
                  the same manner as though the Borrower had exercised such
                  right of prepayment.

         Section 3.3 Term of Agreement. Subject to the terms hereof and to
Lenders' right to cease making Loans to Borrower at any time upon or after the
occurrence of an Event of Default, this Agreement shall be in effect for (a) a
period of three (3) years from the date hereof, through and including February
___, 2005 (the "Term"). Upon written request by Borrower, Lenders may, in their
sole and absolute discretion, renew this Agreement for any number of successive
one year periods thereafter (each such successive one year period, a "Renewal
Term"), but Lenders shall have no obligation to do so. Notwithstanding anything
contained herein to the contrary, Lenders may terminate this Agreement without
notice upon or after the occurrence of an Event of Default.

         Section 3.4 Early Termination by Borrower. Borrower may terminate the
Revolving Credit Commitment hereunder at any time during the term of this
Agreement by repaying all outstanding Loans and the interest thereon, plus a
premium as follows: (i) if such prepayment occurs on or before the first
anniversary of the Closing Date, a premium of 2% of the then existing Revolving
Credit Commitment; (ii) if such prepayment occurs after the first anniversary of
the Closing Date and on or before the second anniversary of the Closing Date a
premium of 1.5% of the then existing Revolving Credit Commitment; and (iii) if
such prepayment occurs after the second anniversary of the Closing Date and on
or before the third anniversary of the Closing Date a premium of .5% of the then
existing Revolving Credit Commitment.

         Section 3.5 Effect of Termination. All of the Obligations shall be
forthwith due and payable upon any termination of this Agreement in accordance
with Section 3.4. Except as otherwise expressly provided for in this Agreement
or the other Loan Documents, no termination or cancellation (regardless of cause
or procedure) of this Agreement or any of the other Loan Documents shall in any
way affect or impair the rights, powers or privileges of Lenders or the
obligations, duties or liabilities of Borrower or Lenders in any way relating to
(a) any transaction or event occurring prior to such termination or cancellation
or (b) any of the undertakings, agreements, covenants, warranties or
representations of Borrower contained in this Agreement or any of the other Loan
Documents. All such undertakings, agreements, covenants, warranties and
representations of Borrower shall survive such termination or cancellation and
Agent shall retain

                                       41
<PAGE>

its Liens in the Collateral and all of its rights and remedies under this
Agreement and the other Loan Documents notwithstanding such termination or
cancellation until all of the Obligations known existing, threatened or claimed
which can be given a monetary value have been paid in full, in immediately
available funds.

         Section 3.6 Payments.

         Principal and interest on the Loans shall be payable as follows:

         (a)      principal payable on account of Loans shall be payable by
                  Borrower to Lenders immediately upon the earliest of (i) the
                  receipt by Agent, a Lender or Borrower of any proceeds of any
                  of the Collateral, to the extent of said proceeds, (ii) the
                  occurrence of an Event of Default in consequence of which
                  Agent elects to accelerate the maturity and payment of such
                  Loans, or (iii) termination of this Agreement.

         (b)      interest accrued on the Loans shall be due on the earliest of
                  (i) the first day of each month (for the immediately preceding
                  month), computed through the last calendar day of the
                  preceding month, (ii) the occurrence of an Event of Default in
                  consequence of which Agent elects to accelerate the maturity
                  and payment of the Obligations, or (iii) termination of this
                  Agreement.

         (c)      reasonable and itemized costs, fees and expenses payable
                  pursuant to this Agreement shall be promptly payable by
                  Borrower to Agent or to any other Person designated by Agent
                  in writing.

         (d)      the balance of the Obligations requiring the payment of money,
                  if any, shall be payable by Borrower to Agent as and when
                  provided in this Agreement, the Other Agreements or the
                  Security Documents, or, if not otherwise provided, then on
                  demand.

         Borrower hereby irrevocably authorizes Agent, in Agent's good faith
discretion, to advance to Borrower and to charge to the Loan Account as a
Revolving Loan, sums sufficient to pay all amounts due and payable under
Sections 3.6(b), (c) and (d) above whether or not any such advance would cause
the outstanding Revolving Loans to exceed the Borrowing Base.

         Section 3.7 Application of Payments and Collections. (a) Except as
otherwise provided in this Section 3.7, Borrower irrevocably waives the right to
direct the application of any and all payments and collections at any time or
times hereafter received by Agent or Lenders from or on behalf of Borrower, and
Borrower does hereby irrevocably agree that Agent shall have the continuing
exclusive right to apply and reapply any and all such payments and collections
received at any time or times hereafter by Agent or its agent against the
Obligations, in such manner as Agent may deem advisable, notwithstanding any
entry by Agent upon any of its books and records. If as the result of
collections of Accounts as authorized by Section 5.2 a credit balance exists in
the Loan Account with respect to the Revolving Credit Commitment, such credit
balance shall not accrue interest in favor of Borrower, but shall be returned to
Borrower within one (1) Business Day for so long as no Default or Event of
Default exists.

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<PAGE>

Agent may offset any credit balance against the Obligations upon or after the
occurrence of an Event of Default. Payments and collections received by Agent
from the Dominion Account or otherwise in Houston, Texas (a) before 2:00 p.m.
Central Standard Time on a Business Day shall be deemed received on such
Business Day, and (b) after 2:00 p.m. Central Standard Time on a Business Day
shall be deemed received on the next succeeding Business Day, in each case for
purposes of determining the amount of Revolving Loans available for borrowing
hereunder and for purposes of computing interest on the Loans (subject in each
case to final payment of all items and collections received in form other than
immediately available funds). For so long as no Event of Default has occurred,
all payments and collections deposited into the Dominion Account shall be
transferred to a bank account specified by Borrower, and upon the occurrence of
an Event of Default, Agent may, in its sole discretion, direct all such payments
and collections to be transferred to a bank account specified by Agent.

         (a)      All monies to be applied to the Obligations, other than as
                  expressly provided for elsewhere in this Agreement, whether
                  such monies represent voluntary payments by the Borrower or
                  are received pursuant to demand for payment or realized from
                  any disposition of Collateral, shall be allocated among the
                  Agent and such of the Lenders and other holders of the
                  Obligations as are entitled thereto (and, with respect to
                  monies allocated to the Lenders, on a ratable basis unless
                  otherwise provided in this Section 3.7): (i) to pay principal
                  and accrued interest on any Overadvance; (ii) second, to the
                  Agent to pay the amount of expenses that have not been
                  reimbursed to the Agent by the Borrower or the Lenders,
                  together with interest accrued thereon; (iii) third, to the
                  Agent to pay any indemnified amount that has not been paid to
                  the Agent by the Borrower or the Lenders, together with
                  interest accrued thereon; (iv) fourth, to the Agent to pay any
                  fees due and payable to the Agent under this Agreement; (v)
                  fifth, to the Lenders for any indemnified amount that they
                  have paid to the Agent and for any expenses that they have
                  reimbursed to the Agent; (vi) sixth, to the Lenders to pay any
                  fees due and payable to the Lenders under this Agreement;
                  (vii) seventh, in payment of the unpaid principal and accrued
                  interest in respect of the Loans and (viii) eighth, any other
                  Obligations then outstanding and held by any Lender to be
                  shared among the Lenders on a ratable basis, or on such other
                  basis as may be agreed upon in writing by all of the Lenders
                  (which agreement or agreements may be entered into without
                  notice to or the consent or approval of the Borrower). The
                  allocations set forth in this Section 3.7 are solely to
                  determine the rights and priorities of the Agent and the
                  Lenders as among themselves and may be changed by the Agent
                  and the Lenders without notice to or the consent or approval
                  of the Borrower or any other Person.

         Section 3.8 Statements of Account. Agent will account to Borrower
monthly with a statement of Loans, charges and payments made pursuant to this
Agreement, and such account rendered by Agent, absent manifest error, shall be
deemed final, binding and conclusive upon Borrower unless Agent is notified by
Borrower in writing to the contrary within seventy-five (75) days after the date
each account is mailed to Borrower. Such notice shall only be deemed an
objection to those items specifically objected to therein.

                                       43
<PAGE>

         Section 3.9 Increased Costs. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and having
general applicability to all banks within the jurisdiction in which any Lender
operates (excluding, for the avoidance of doubt, the effect of and phasing in of
capital requirements or other regulations or guidelines passed prior to the date
of this Agreement), or any interpretation or application thereof by any
governmental authority charged with the interpretation or application thereof,
or the compliance of any Lender therewith, shall:

         (a)      (i) subject any Lender to any tax with respect to this
                  Agreement (other than (A) any tax based on or measured by net
                  income or otherwise in the nature of a net income tax,
                  including, without limitation, any franchise tax or any
                  similar tax based on capital, net worth or comparable basis
                  for measurement and (B) any tax collected by a withholding on
                  payments and which neither is computed by reference to the net
                  income of the payee nor is in the nature of an advance
                  collection of a tax based on or measured by the net income of
                  the payee) or (ii) change the basis of taxation of payments to
                  any Lender of principal, fees, interest or any other amount
                  payable hereunder or under any Loan Documents (other than in
                  respect of (A) any tax based on or measured by net income or
                  otherwise in the nature of a net income tax, including,
                  without limitation, any franchise tax or any similar tax based
                  on capital, net worth or comparable basis for measurement and
                  (B) any tax collected by a withholding on payments and which
                  neither is computed by reference to the net income of the
                  payee nor is in the nature of an advance collection of a tax
                  based on or measured by the net income of the payee);

         (b)      impose, modify or hold applicable any reserve (except any
                  reserve taken into account in the determination of the
                  applicable LIBOR Rate), special deposit, assessment or similar
                  requirement against assets held by, or deposits in or for the
                  account of, advances or loans by, or other credit extended by,
                  any office of any Lender, including (without limitation)
                  pursuant to Regulation D of the Board of Governors of the
                  Federal Reserve System; or

         (c)      impose on any Lender or the London interbank market any other
                  condition with respect to any Loan Document;

and the result of any of the foregoing is to increase the cost to any Lender of
making, renewing or maintaining Loans hereunder by an amount that any Lender
deems to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Loans by an amount
that any Lender deems to be material, then, in any such case, Borrower shall pay
such Lender, upon demand and certification not later than sixty (60) days
following its receipt of notice of the imposition of such increased costs, such
additional amount as will compensate such Lender for such additional cost or
such reduction, as the case may be, to the extent such Lender has not otherwise
been compensated, with respect to a particular Loan, for such increased cost as
a result of an increase in the Base Rate or the LIBOR Rate. An officer of such
Lender shall determine the amount of such additional cost or reduced amount
using reasonable averaging and attribution methods and shall certify the amount
of such additional cost or reduced amount to Borrower, which certification shall
include a written explanation of such

                                       44
<PAGE>

additional cost or reduction to Borrower and a statement that such costs affect
other borrowers with similar LIBOR loans. Such certification shall be conclusive
absent manifest error. If such Lender claims any additional cost or reduced
amount pursuant to this Section 3.8, then such Lender shall use reasonable
efforts (consistent with legal and regulatory restrictions) to designate a
different lending office or to file any certificate or document reasonably
requested by Borrower if the making of such designation or filing would avoid
the need for, or reduce the amount of, any such additional cost or reduced
amount and would not, in the sole discretion of such Lender, be otherwise
disadvantageous to such Lender.

         Section 3.10 Basis for Determining Interest Rate Inadequate or Unfair.
In the event that Agent shall have determined that:

         (a)      reasonable means do not exist for ascertaining the LIBOR Rate
                  for any LIBOR Period; or

         (b)      Dollar deposits in the relevant amount and for the relevant
                  maturity are not available in the London interbank market with
                  respect to a proposed LIBOR Loan, or a proposed conversion of
                  a Base Rate Loan into a LIBOR Loan; then

Agent shall give Borrower prompt written, telephonic or electronic notice of the
determination of such effect. If such notice is given, (i) any such requested
LIBOR Loan shall be made as a Base Rate Loan, unless Borrower shall notify Agent
no later than 10:00 A.M. (Dallas, Texas Time) two (2) Business Days prior to the
date of such proposed borrowing that the request for such borrowing shall be
canceled or made as an unaffected type of LIBOR Loan, and (ii) any Base Rate
Loan which was to have been converted to an affected type of LIBOR Loan shall be
continued as or converted into a Base Rate Loan, or, if Borrower shall notify
Agent, no later than 10:00 A.M. (Dallas, Texas Time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of LIBOR
Loan.

                      ARTICLE 4. COLLATERAL: GENERAL TERMS

         Section 4.1 Security Interest in Collateral. To secure the prompt
payment and performance to Lenders of the Obligations, Borrower hereby grants to
Agent on behalf of the Lenders a continuing security interest in and Lien upon
all the following Property and interests in Property of Borrower, whether now
owned or existing or hereafter created, acquired or arising and wheresoever
located:

         (a)      Accounts;

         (b)      Certificated Securities;

         (c)      Chattel Paper (including Electronic Chattel Paper);

         (d)      Computer Hardware and Software and all rights with respect
                  thereto, including, any and all licenses, options, warranties,
                  service contracts, program services, test rights, maintenance
                  rights, support rights, improvement rights, renewal rights and
                  indemnifications, and any substitutions, replacements,
                  additions or model conversions of any of the foregoing;

                                       45
<PAGE>

         (e)      Contract Rights;

         (f)      Deposit Accounts;

         (g)      Documents;

         (h)      Equipment;

         (i)      Financial Assets;

         (j)      Fixtures;

         (k)      General Intangibles, including Payment Intangibles and
                  Software;

         (l)      Goods (including all of its Equipment, Fixtures and
                  Inventory), and all accessions, additions, attachments,
                  improvements, substitutions and replacements thereto and
                  therefor;

         (m)      Instruments;

         (n)      Intellectual Property;

         (o)      Inventory;

         (p)      Investment Property;

         (q)      money (of every jurisdiction whatsoever);

         (r)      Letter-of-Credit Rights;

         (s)      Payment Intangibles;

         (t)      Security Entitlements;

         (u)      Software;

         (v)      Supporting Obligations;

         (w)      Uncertificated Securities; and

         (x)      to the extent not included in the foregoing, all other
                  personal property of any kind or description;

together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided that to the extent that the provisions of any lease or
license of Computer Hardware and Software or Intellectual Property expressly
prohibit (which prohibition is enforceable under applicable law) any assignment
thereof, and the grant of a security interest

                                       46
<PAGE>

therein, Agent will not enforce its security interest in Borrower's rights under
such lease or license (other than in respect of the Proceeds thereof) for so
long as such prohibition continues, it being understood that upon request of
Agent, Borrower will in good faith use reasonable efforts to obtain consent for
the creation of a security interest in favor of Agent (and to Agent's
enforcement of such security interest) in such Agent's rights under such lease
or license.

         Section 4.2 Other Collateral.

         (a)      Commercial Tort Claims. Borrower shall promptly notify Agent
                  in writing upon incurring or otherwise obtaining a Commercial
                  Tort Claim after the Closing Date against any third party and,
                  upon request of Agent, promptly enter into an amendment to
                  this Agreement and do such other acts or things deemed
                  appropriate by Agent to give Agent a security interest in any
                  such Commercial Tort Claim.

         (b)      Other Collateral. Borrower shall promptly notify Agent in
                  writing upon acquiring or otherwise obtaining any Collateral
                  after the date hereof consisting of Deposit Accounts,
                  Investment Property, Letter-of-Credit Rights or Electronic
                  Chattel Paper and, upon the request of Agent, promptly execute
                  such other documents, and do such other acts or things deemed
                  appropriate by Agent to deliver to Agent control with respect
                  to such Collateral; promptly notify Agent in writing upon
                  acquiring or otherwise obtaining any Collateral after the date
                  hereof consisting of Documents or Instruments and, upon the
                  request of Agent, will promptly execute such other documents,
                  and do such other acts or things deemed appropriate by Agent
                  to deliver to Agent possession of such Documents which are
                  negotiable and Instruments, and, with respect to nonnegotiable
                  Documents, to have such nonnegotiable Documents issued in the
                  name of Agent; and with respect to Collateral in the
                  possession of a third party, other than Certificated
                  Securities and Goods covered by a Document and obtain an
                  acknowledgement from the third party that it is holding the
                  Collateral for the benefit of Agent.

         The security interests in the Collateral granted to Agent by Borrower
are given in renewal, extension and modification of the security interests
previously granted to Fleet by Cal Dive and ERT in the Amended Loan Documents;
such prior security interests are not extinguished hereby; and the making,
perfection and priority of such prior security interests shall continue in full
force and effect.

         Section 4.3 Lien on Vessels. (a) The due and punctual payment and
performance of the Obligations shall be secured by the Lien created by the Ship
Mortgages upon the Vessels. Except as otherwise permitted herein, if Borrower
shall acquire at any time or times hereafter any interest in other vessels,
Borrower hereby agrees to promptly execute and deliver to Agent, as additional
security and Collateral for the Obligations, Ship Mortgages or other collateral
documents satisfactory in form and substance to Agent and its counsel (herein
collectively referred to as "New Ship Mortgages") covering such new vessels. The
Ship Mortgages and each New Ship Mortgage shall be duly recorded in each office
where such recording is required to constitute a valid and perfected Lien on the
vessels covered by such Mortgage. Borrower shall

                                       47
<PAGE>

deliver to Agent such other documents as Agent and its counsel may reasonably
request relating to the Property subject to the Ship Mortgage and any New Ship
Mortgages.

         (b)      Upon demand by Agent, Borrower shall execute and deliver to
                  Agent the Construction Contract Assignment and shall do all
                  such other things deemed appropriate by Agent to perfect such
                  assignment as a first preferred security interest on the
                  collateral described in it.

         Section 4.4 Negative Pledge. Borrower agrees that for so long as any
Obligations remain outstanding, it will not, without the prior written consent
of Agent create or permit any Lien (other than Permitted Liens) or its interests
in the Offshore Platforms and its other oil and gas Properties.

         Section 4.5 Representations, Warranties and Covenants. To induce
Lenders to enter into this Agreement, Borrower represents, warrants, and
covenants to Agent and Lender:

         (a)      The Collateral is now and, so long as any of the Obligations
                  are outstanding, will continue to be owned solely by Borrower,
                  and no other Person has or will have any right, title,
                  interest, claim, or Lien therein, thereon or thereto other
                  than a Permitted Lien.

         (b)      Except for Permitted Liens or as specifically consented to in
                  writing by Agent the Liens granted to Agent shall be first and
                  prior on the Collateral and as to the Accounts and proceeds,
                  including insurance proceeds, resulting from the sale,
                  disposition, or loss thereof. No further action need be taken
                  to perfect the Liens granted to Lender, other than the filing
                  of continuation statements under the Code or other applicable
                  law, continued possession by Agent of that portion of the
                  Collateral constituting instruments or documents, the
                  recording of the Ship Mortgage and each New Ship Mortgage as
                  required by applicable law.

         (c)      All goods evidenced by the Collateral constituting chattel
                  paper, documents or instruments, the possession of which has
                  been given to Agent, are owned by Borrower and the same are
                  free and clear of any prior Lien, except for Statutory Liens
                  contested by Borrower as required by Section 8.2(h). Borrower
                  further warrants and guarantees the value, quantities,
                  adequate condition, grades and qualities of the goods and
                  services described therein. Borrower shall pay and discharge
                  when due all taxes, levies, and other charges upon said
                  Collateral and upon the goods evidenced by any documents
                  constituting Collateral, except and to the extent only that
                  such taxes, levies and other charges are being actively
                  contested in good faith and by appropriate lawful proceedings,
                  and Borrower has established adequate reserves therefor, which
                  are properly reflected on the Consolidated Financial
                  Statements, and the nonpayment of such taxes, levies and
                  charges does not result in a lien upon any Collateral other
                  than a Permitted Lien. Borrower shall defend Agent against and
                  save it harmless from all claims of any Person with respect to
                  the Collateral. This indemnity shall include reasonable
                  attorneys' fees and legal expenses.

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<PAGE>

         Section 4.6 Lien Perfection. Borrower agrees to execute the UCC-1
financing statements provided for by the Code or otherwise together with any and
all other instruments, assignments or documents and shall take such other action
as may be required to perfect or to continue the perfection of Agent's security
interest in the Collateral. Unless prohibited by applicable law, Borrower hereby
authorizes Agent to execute and file any such financing statement on Borrower's
behalf, including without limitation financing statements that indicate the
Collateral (i) as all assets of Cal Dive, ERT, Aquatica or Canyon or words of
similar effect, or (ii) as being equal or lesser in scope or with greater or
lesser detail, than as set forth in Section 4.1 on Borrower's behalf. Borrower
also hereby ratifies its authorization for the Agent to have filed in any
jurisdiction any like financial statements or amendments thereto if filed prior
to the date hereof. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof.

         Section 4.7 Location of Collateral. All Collateral, other than
Inventory in transit, motor vehicles, Vessels and diving equipment, will at all
times be kept by Borrower at one or more of the business locations set forth in
Exhibit C attached hereto and shall not, without the prior written approval of
Agent, be moved therefrom except, prior to an Event of Default, for (a) sales of
Inventory and the providing of services in the ordinary course of business; (b)
the storage of Inventory at locations within the continental United States other
than those shown on Exhibit C attached hereto if (i) Borrower gives Agent
written notice of the new storage location at least sixty (60) days prior to
storing Inventory at such location, (ii) except for Statutory Liens contested by
Borrower as required by Section 8.2(h), Agent's security interest in such
Inventory is and continues to be a duly perfected, first priority Lien thereon,
(iii) neither Borrower's nor Agent's right of entry upon the premises where such
Inventory is stored, or its right to remove the Inventory therefrom, is in any
way restricted, (iv) the owner of such premises agrees with Agent not to assert
any landlord's, bailee's or other Lien in respect of the Inventory for unpaid
rent or storage charges, and (v) all negotiable documents and receipts in
respect of any Collateral maintained at such premises are promptly delivered to
Agent; (c) temporary transfers (for period not to exceed three months in any
event) of Equipment from a location set forth on Exhibit C attached hereto to
another location if done for the limited purpose of repairing, refurbishing or
overhauling such Equipment in the ordinary course of Borrower's business; and
(d) removals in connection with dispositions of Equipment that are authorized by
Section 6.4.

         Section 4.8 Insurance of Collateral. Borrower agrees to maintain and
pay for insurance upon all Collateral (other than Offshore Platforms) wherever
located, in storage or in transit, including goods evidenced by documents,
covering casualty, hazard, public liability and such other risks and in such
amounts and with insurance companies acceptable to Agent. Borrower shall deliver
to Agent certificates regarding such insurance and the originals of such
policies when available, with satisfactory endorsements naming Agent as loss
payee or co-insured and as mortgagee pursuant to a standard mortgagee clause
without liability for premiums, club calls or assessments. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than thirty (30) days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever and a clause that the
interest of Agent shall not be impaired or invalidated by any act or neglect of
Borrower or owner of the Property nor by the occupation of the premises for
purposes more hazardous than are permitted by said policy. If Borrower fails to
provide and pay for such insurance, Agent may, at

                                       49
<PAGE>

Borrower's expense, procure the same, but shall not be required to do so.
Borrower agrees to deliver to Agent, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies. Borrower will
maintain, with financially sound and reputable insurers, insurance with respect
to its Properties and business against such casualties and contingencies of such
type (including public liability, product liability, larceny, embezzlement, or
other criminal misappropriation insurance) and in such amounts as is customary
in the business or as otherwise required by Agent.

         Section 4.9 Protection of Collateral. All insurance expenses and all
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral, any and all excise, property, sales, and use taxes
imposed by any state, federal, or local authority on any of the Collateral or in
respect of the sale thereof shall be bome and paid by Borrower. If Borrower
fails to promptly pay any portion thereof when due or is not actively contesting
such taxes in good faith and by appropriate proceedings and has not established
adequate reserves, which are properly reflected on the Consolidated Financial
Statements, Agent may, at its option, but shall not be required to, pay the same
and charge the Loan Account therefor. Borrower agrees to reimburse Agent
promptly therefor with interest accruing thereon daily at the Applicable Annual
Rate for Base Rate Loans. All sums so paid or incurred by Agent for any of the
foregoing and all costs and expenses (including reasonable attorneys' fees,
legal expenses, and court costs) which Agent may incur in enforcing or
protecting its Lien on or rights and interest in the Collateral or any of its
rights or remedies under any Loan Document or in respect of any of the
transactions to be had hereunto, together with interest at the Default Rate
applicable to Base Rate Loans, shall be considered Obligations hereunder secured
by all Collateral. Agent shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Agent's
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at Borrower's sole risk.

                   ARTICLE 5. PROVISIONS RELATING TO ACCOUNTS

         Section 5.1 Representations, Warranties and Covenants. With respect to
all Accounts, Borrower represents and warrants to Agent and Lenders that Agent
may rely, in determining which Accounts are Eligible Accounts, on all statements
and representations made by Borrower with respect to any Account or Accounts,
and, unless otherwise indicated in writing to Agent, that with respect to each
Account:

         (a)      it is genuine and in all respects what it purports to be, and
                  it is not evidenced by a judgment;

         (b)      it arises out of a completed, bona fide sale and delivery of
                  goods or rendition of services by Borrower in the ordinary
                  course of its business and in accordance with the terms and
                  conditions of all purchase orders, contracts or other
                  documents relating thereto and forming a part of the contract
                  between Borrower and the Account Debtor;

                                       50
<PAGE>

         (c)      it has been generated in compliance with Borrower's normal
                  credit policies as historically in effect (or as modified from
                  time to time on prior written notice to Agent) or on such
                  other reasonable terms disclosed in writing to Agent in
                  advance of the creation of such Account, and such terms are
                  expressly set forth on the face of the invoice covering such
                  sale or rendition of services;

         (d)      it is for a liquidated amount maturing as stated in the
                  duplicate invoice covering such sale or rendition of services,
                  a copy of which has been furnished or is available to Agent;

         (e)      Borrower has made no agreement with any Account Debtor
                  thereunder for any deduction therefrom, except discounts or
                  allowances which are granted by Borrower in the ordinary
                  course of its business and which are disclosed to Agent;

         (f)      to the best of Borrower's knowledge, there are no facts,
                  events or occurrences which have not been disclosed to Agent
                  which in any way impair the validity or enforceability thereof
                  or tend to reduce the amount payable thereunder from the face
                  amount of the invoice and statements delivered to Agent with
                  respect thereto;

         (g)      to the best of Borrower's knowledge, the Account Debtor
                  thereunder (i) is Solvent and (ii) had the capacity to
                  contract at the time any contract or other document giving
                  rise to the Account was executed; and

         (h)      Borrower has no knowledge of any fact or circumstance which
                  would impair the validity or collectability of the Account,
                  and to the best of Borrower's knowledge there are no
                  proceedings or actions which are threatened or pending against
                  any Account Debtor thereunder which might result in any
                  material adverse change in such Account Debtor's financial
                  condition or the collectability of such Account.

         Section 5.2 Assignments, Records and Schedules of Accounts. If so
requested by Agent, Borrower shall execute and deliver to Agent formal written
assignments of all of its Accounts on a weekly or more frequent basis, which
shall include all Accounts that have been created since the date of the last
assignment, together with copies of invoices or invoice registers related
thereto. Borrower shall keep accurate and complete records of its Accounts and
all payments and collections thereon and shall submit to Agent on a weekly
basis, unless requested on a more frequent basis by Agent, a sales and
collections report for the preceding week, in form satisfactory to Agent. On or
before the last day of each week from and after the date hereof, Borrower shall
deliver to Agent, in form satisfactory to Agent, a detailed listing of all
Unbilled Accounts existing as of the last day of the preceding week, a detailed
aged trial balance of all Accounts existing as of the last day of the preceding
week, specifying the names, face value, dates of invoices and due dates for each
Account Debtor obligated on an Account so listed and a listing of all disputed
amounts due and owing (a "Schedule of Accounts"), and upon Agent's request
therefor, the reason for any disputed amounts, all claims related thereto and
the amount in controversy, and addresses, copies of proof of delivery and the
original copy of all documents, including, without limitation, repayment
histories and present status reports relating to the Accounts so scheduled, and
such other matters and information relating to the status of then existing
Accounts as Agent shall reasonably request.

                                       51
<PAGE>

         Section 5.3 Administration of Accounts.

         (a)      Borrower shall report discounts, allowances or credits granted
                  by Borrower that are not shown on the face of the invoice for
                  the Account involved to Agent at the time of its submission to
                  Agent of the next Schedule of Accounts as provided in Section
                  5.2 or more frequently upon the request of Agent. Upon and
                  after the occurrence of an Event of Default, Agent shall have
                  the right to settle or adjust all disputes and claims directly
                  with the Account Debtor and to compromise the amount or extend
                  the time for payment of the Accounts upon such terms and
                  conditions as Agent may deem advisable, and to charge the
                  deficiencies, costs and expenses thereof, including reasonable
                  attorney's fees, to Borrower.

         (b)      If an Account includes a charge for any tax payable to any
                  governmental taxing authority, Agent is authorized, in its
                  sole discretion, to pay the amount thereof to the proper
                  taxing authority for the account of Borrower and to charge the
                  Loan Account therefor. Borrower shall notify Agent if any
                  Account includes any tax due to any govenunental taxing
                  authority and, in the absence of such notice, Agent shall have
                  the right to retain the full proceeds of the Account and shall
                  not be liable for any taxes to any governmental taxing
                  authority that may be due by Borrower by reason of the sale
                  and delivery creating the Account.

         (c)      Whether or not an Event of Default has occurred, any of
                  Agent's officers, employees or agents shall have the right, at
                  any time or times hereafter, in the name of Agent, any
                  designee of Agent or Borrower, to verify the validity, amount
                  or any other matter relating to any Accounts by mail,
                  telephone, telegraph or otherwise. Borrower shall cooperate
                  fully with Agent in an effort to facilitate and promptly
                  conclude any such verification process.

         Section 5.4 Collection of Accounts.

         (a)      To expedite collection, Borrower shall endeavor in the first
                  instance to make collection of its Accounts for Agent. All
                  remittances received by Borrower on account of Accounts shall
                  be held as Agent's property by Borrower as trustee of an
                  express trust for Agent's benefit and Borrower shall
                  immediately deposit same in the Dominion Account. Agent shall
                  have the right at any time after the occurrence of an Event of
                  Default to notify Account Debtors that Accounts have been
                  assigned to Agent and to collect Accounts directly in its own
                  name and to charge the collection costs and expenses,
                  including reasonable attorneys' fees, to Borrower. Agent has
                  no duty to protect, insure, collect or realize upon the
                  Accounts or preserve rights in them.

         (b)      Borrower shall deposit all proceeds of the Collateral, other
                  than receipts for the sale of Property held by third parties
                  as reserves for like/kind exchanges, or cause the same to be
                  deposited in kind in a Dominion Account pursuant to a lockbox
                  arrangement with such banks as may be selected by Borrower and
                  be acceptable to Agent. Borrower shall issue to any such bank,
                  an irrevocable letter of instruction directing such banks to
                  deposit all payments or other remittances

                                       52
<PAGE>

                  received in the lockbox to the Dominion Account for
                  application on account of the Obligations. All funds deposited
                  in the Dominion Account shall immediately become the property
                  of Agent and Borrower shall obtain the agreement by such banks
                  to waive any offset rights against the funds so deposited.
                  Agent assumes no responsibility for such lockbox arrangement,
                  including, without limitation, any claim of accord and
                  satisfaction or release with respect to deposits accepted by
                  any bank thereunder.

  ARTICLE 6. PROVISIONS RELATING TO EQUIPMENT, VESSELS AND OFFSHORE PLATFORMS

         Section 6.1 Representations, Warranties and Covenants. With respect to
the Equipment, Vessels and the Offshore Platforms, Borrower represents, warrants
and covenants to and with Agent that:

         (a)      substantially all of the Equipment and the Vessels are in
                  adequate operating condition and repair, and all necessary
                  replacements of and repairs thereto shall be made so that the
                  value and operating efficiency of the Equipment and the
                  Vessels shall be maintained and preserved, reasonable wear and
                  tear excepted; and

         (b)      except for Equipment affixed to Offshore Platforms in the
                  ordinary course of ERT's business, Borrower will not permit
                  any of the Equipment to become affixed to any Real Property
                  leased to Borrower so that an interest arises therein under
                  the real estate laws of the applicable jurisdiction unless the
                  landlord of such Real Property has executed a landlord waiver
                  or leasehold mortgage in favor of Agent, and Borrower will not
                  permit any of the Equipment to become an accession to any
                  personal Property other than Equipment subject to first
                  priority Liens in favor of Agent or subject to Permitted
                  Liens.

         Section 6.2 Evidence of Ownership of Equipment and Vessels. Immediately
on request therefor by Agent, Borrower shall deliver to Agent any and all
evidence of ownership, if any, of any of the Equipment and the Vessels.

         Section 6.3 Records and Schedules of Equipment and the Vessels.
Borrower shall maintain accurate records itemizing and describing the kind,
type, quality, quantity, location and value of its Equipment and Vessels and all
dispositions made in accordance with Section 6.4, and shall furnish Agent with a
current schedule, in form and substance satisfactory to Agent, containing the
foregoing information on at least an annual basis and more often if requested by
Agent.

         Section 6.4 Dispositions. Borrower will not sell, lease or otherwise
dispose of or transfer any of the Equipment, any Vessel, any Offshore Platform,
or any oil or gas Properties, or any part thereof without the prior written
consent of Agent; provided, however, that the foregoing restriction shall not
apply to dispositions required by the United States government, or, for so long
as no Event of Default exists, to the following:

                                       53
<PAGE>

         (a)      dispositions of Offshore Platforms and related Equipment and
                  oil and gas Properties by ERT and vessels owned by Borrower
                  and not mortgaged to Agent in the ordinary course of business;
                  provided, that, all proceeds thereof, other than receipts for
                  the sale of Property held by third parties as reserves for
                  like/kind exchanges, are delivered to Agent for application to
                  the Obligations in accordance with the terms of this
                  Agreement; or

         (b)      replacement of Equipment and Vessels that are substantially
                  worn, damaged or obsolete with Equipment or Vessels of
                  substantially like kind and function and with a value not less
                  than the Equipment or Vessels being replaced; which
                  replacement Equipment and Vessels shall be acceptable to
                  Agent; provided, that, (i) the replacement Equipment or
                  Vessels shall be acquired prior to concurrently with or within
                  six (6) months of any disposition of the Equipment or Vessel
                  that is to be replaced, (ii) the replacement Equipment or
                  Vessels shall be free and clear of Liens other than Permitted
                  Liens, (iii) Borrower shall give Agent at least five (5) days
                  prior written notice of such disposition, and (iv) Borrower
                  shall deliver to Agent all proceeds realized from any such
                  disposition for application to the Obligations.

         (c)      None of the provisos or other exceptions to the restriction
                  against dispositions of Equipment, Vessels or Offshore
                  Platforms set forth in this Section 6.4 shall be construed to
                  allow any disposition, whether by Borrower of a Vessel on
                  which Agent has been granted a Lien, without the prior written
                  consent of Agent.

                   ARTICLE 7. REPRESENTATIONS AND WARRANTIES

         Section 7.1 General Representations and Warranties. To induce Lenders
to enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Agent and Lenders as follows:

         (a)      Organization and Qualification. Borrower is a corporation duly
                  organized, validly existing and in good standing under the
                  laws of the state of its incorporation. Borrower has duly
                  qualified and is authorized to do business and is in good
                  standing as a foreign corporation in each state or
                  jurisdiction listed on Exhibit D attached hereto and made a
                  part hereof and in all other states and jurisdictions where
                  the character of its Properties or the nature of its
                  activities make such qualification necessary.

         (b)      Corporate Names. Since July 27, 1990, Cal Dive, since
                  September 30, 1992, ERT since September 24, 1997, Aquatica and
                  since September 12, 1996, Canyon, have not been known as or
                  used any corporate, fictitious or trade names except as
                  disclosed on Exhibit E attached hereto and made a part hereof.
                  Except as set forth on Exhibit E attached hereto, Borrower has
                  not, during the preceding three years, been the surviving
                  corporation of a merger or consolidation or acquired all or
                  substantially all of the assets of any Person. Each Borrower's
                  exact legal name, state of incorporation, type of organization
                  and organizational identification number is set forth on
                  Exhibit E.

                                       54
<PAGE>

         (c)      Corporate Power and Authority. Borrower has the right and
                  power and is duly authorized and empowered to enter into,
                  execute, deliver and perform this Agreement and each of the
                  other Loan Documents to which it is a party. The execution,
                  delivery and performance of this Agreement and each of the
                  other Loan Documents have been duly authorized by all
                  necessary corporate action and do not and will not (i) require
                  any consent or approval of the shareholders of Borrower; (ii)
                  contravene Borrower's charter, articles of incorporation or
                  by-laws; (iii) violate, or cause Borrower to be in default
                  under, any provision of any law, rule, regulation, order,
                  writ, judgment, injunction, decree, determination or award in
                  effect having applicability to Borrower; (iv) result in a
                  breach of or constitute a default under any indenture or loan
                  or credit agreement or any other agreement, lease or
                  instrument to which Borrower is a party or by which it or its
                  Properties may be bound or affected; or (v) result in, or
                  require, the creation or imposition of any Lien (other than
                  Permitted Liens) upon or with respect to any of the Properties
                  now owned or hereafter acquired by Borrower.

         (d)      Legally Enforceable Agreement. This Agreement is, and each of
                  the other Loan Documents when delivered under this Agreement
                  will be, a legal, valid and binding obligation of Borrower
                  enforceable against it in accordance with their respective
                  terms, except to the extent that such enforcement may be
                  limited by applicable bankruptcy, insolvency and other similar
                  laws affecting creditors' rights generally or by principles of
                  equity pertaining to the availability of equitable remedies.

         (e)      Use of Proceeds. Borrower's uses of the proceeds of any Loans
                  pursuant to this Agreement are, and will continue to be, legal
                  and proper corporate uses, duly authorized by its Board of
                  Directors, and such uses will not violate any applicable laws,
                  including, without limitation, the Foreign Assets Control
                  Regulations, the Foreign Funds Control Regulations and the
                  Transaction Control Regulations of the United States Treasury
                  Department (31 CFR, Subtitle B, Chapter V, as amended), where
                  the failure to do so would have a material adverse effect on
                  its business, condition (financial or otherwise), operations,
                  prospects, or Properties.

         (f)      Margin Stock. Borrower is not engaged principally, or as one
                  of its important activities, in the business of purchasing or
                  carrying "margin stock" (within the meaning of Regulation U of
                  the Board of Governors of the Federal Reserve System), and no
                  part of the proceeds of any Loans to Borrower will be used to
                  purchase or carry any margin stock or to extend credit to
                  others for the purpose of purchasing or carrying any margin
                  stock or be used for any purpose which violates or is
                  inconsistent with the provisions of Regulation T, U or X of
                  said Board of Governors.

         (g)      Governmental Consents. Except where failure to do so would
                  have a material adverse effect on its business, condition
                  (financial or otherwise), operations, prospects, or
                  Properties, Borrower has, and is in good standing with respect
                  to, all governmental consents, approvals, authorizations,
                  permits, certificates, inspections, and franchises necessary
                  to continue to conduct its business as

                                       55
<PAGE>

                  heretofore or proposed to be conducted by it and to own or
                  lease and operate its Properties as now owned or leased by it.

         (h)      Patents, Trademarks, Copyrights and Licenses. Borrower owns or
                  possesses all the patents, trademarks, service marks, trade
                  names, copyrights and licenses necessary for the present and
                  planned future conduct of its business without any known
                  conflict with the rights of others. All such patents,
                  trademarks, service marks, trade names, copyrights, licenses
                  and other similar rights are listed on Exhibit F attached
                  hereto and made a part hereof.

         (i)      Capital Structure. Exhibit G attached hereto and made a part
                  hereof states (i) the correct name of each of the Subsidiaries
                  of Borrower, the jurisdiction of incorporation and the
                  percentage of its Voting Stock owned by Borrower, (ii) the
                  name of each of Borrower's corporate or joint venture
                  Affiliates and the nature of the affiliation, (iii) the
                  number, nature and holder of all outstanding Securities of
                  each Subsidiary of Cal Dive, and (iv) the number of
                  authorized, issued and treasury shares of Borrower and each
                  Subsidiary of Borrower. Borrower has good title to all of the
                  shares of stock it purports to own of each Subsidiary, free
                  and clear in each case of any Lien other than Permitted Liens.
                  All such shares have been duly issued and are fully paid and
                  nonassessable. Except as provided in Exhibits G and H attached
                  hereto, there are not outstanding any options to purchase, or
                  any rights or warrants to subscribe for, or any commitments or
                  agreements to issue or sell, or any Securities or obligations
                  convertible into, or any powers of attorney relating to,
                  shares of the capital stock of Borrower.

         Except as provided in Exhibits G and H attached hereto, there are not
outstanding any agreements or instruments binding upon any of Borrower's
shareholders relating to the ownership of its shares of capital stock.

         Section 7.2 Solvent Financial Conditions. Borrower is now and, after
giving effect to initial Loans to be made hereunder, at all times will be,
Solvent.

         (a)      Restrictions. Borrower is not a party or subject to any
                  contract, agreement, or charter or other ------------
                  corporate restriction, which materially and adversely affects
                  its business or the use or ownership of any of its Properties
                  other than as set forth on Exhibit I attached hereto. Borrower
                  is not a party or subject to any contract or agreement which
                  restricts its right or ability to incur Indebtedness, other
                  than as set forth on Exhibit I attached hereto, none of which
                  prohibit the execution of or compliance with this Agreement by
                  Borrower. Neither Borrower nor any of its Subsidiaries has
                  agreed or consented to cause or permit in the future (upon the
                  happening of a contingency or otherwise) any of its Property,
                  whether now owned or hereafter acquired, to be subject to a
                  Lien that is not a Permitted Lien.

         (b)      Litigation. Except as set forth on Exhibit J attached hereto
                  and made a part hereof, there are no actions, suits,
                  proceedings or investigations pending, or to the knowledge of
                  Borrower, threatened, against or affecting Borrower or any of
                  its Subsidiaries, or the business, operations, Properties,
                  prospects, profits or

                                       56
<PAGE>

                  condition of Borrower or any of its Subsidiaries, in any court
                  or before any governmental authority or arbitration board or
                  tribunal, and no action, suit, proceeding or investigation
                  shown on Exhibit J attached hereto, except as indicated on
                  such Exhibit J, involves the possibility of materially and
                  adversely affecting the Properties, business, prospects,
                  profits or condition (financial or otherwise) of Borrower or
                  the ability of Borrower to perform this Agreement. Neither
                  Borrower nor any of its Subsidiaries is in default with
                  respect to any order, writ, injunction, judgment, decree or
                  rule of any court, governmental authority or arbitration board
                  or tribunal.

         (c)      Title to Properties. Subject to the statutory right of the MMS
                  to approve the acquisition of an Offshore Platform and related
                  oil and gas Properties, each Borrower and each of its
                  Subsidiaries has good, indefeasible and marketable title to
                  and fee simple ownership of, or valid and subsisting leasehold
                  interests in, all of its oil and gas Properties and Real
                  Property, and good title to all of its other Property, in each
                  case, free and clear of all Liens except Permitted Liens.
                  Exhibits C and R attached hereto identifies all of the
                  Offshore Platforms, other oil and gas Properties and Real
                  Property leased or owned by Borrower and its Subsidiaries and,
                  if leased, identifies the lessor thereof.

         (d)      Financial Statements: Fiscal Year. The Consolidated balance
                  sheet of Borrower and such other Persons described therein
                  (including the accounts of all Subsidiaries for the respective
                  periods during which a Subsidiary relationship existed) as of
                  November 30, 2001 and the related statements of income,
                  changes in stockholder's equity, and changes in cash flow for
                  the periods ended on such dates, have been prepared in
                  accordance with GAAP (except for changes in application in
                  which Borrower's independent certified public accountants
                  concur), and present fairly the financial positions of
                  Borrower and its Subsidiaries at such dates and the results of
                  Borrower's operations for such periods. Except as disclosed in
                  Schedule W hereto, since November 30, 2001 there has been no
                  material change in the condition, financial or otherwise, of
                  Borrower, its Subsidiaries and such other Persons as shown on
                  the Consolidated balance sheet as of such date and no change
                  in the aggregate value of Equipment and other Property owned
                  by Borrower or its Subsidiaries or such other Persons, except
                  as otherwise disclosed in the footnotes to such financial
                  statements and changes in the ordinary course of business,
                  which individually or in the aggregate has not been materially
                  adverse. The fiscal year of Borrower and each of its
                  Subsidiaries ends on December 31 of each year.

         (e)      Full Disclosure. The financial statements referred to in
                  Section 7.1(n), do not, nor does this Agreement or any other
                  written statement of Borrower to Lender (including, without
                  limitation, Borrower's filings, if any, with the Securities
                  and Exchange Commission), contain any untrue statement of a
                  material fact or omit a material fact necessary to make the
                  statements contained therein or herein not misleading. There
                  is no fact which Borrower has failed to disclose to Agent or
                  Lenders in writing which materially affects adversely or, so
                  far as Borrower can now foresee, will materially affect
                  adversely the Properties, business, prospects,

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<PAGE>

                  profits, or condition (financial or otherwise) of Borrower or
                  any of its Subsidiaries or the ability of Borrower or its
                  Subsidiaries to perform this Agreement.

         (f)      ERISA. Except as disclosed in Exhibit K attached hereto, there
                  are no Pension Plans or Multiemployer Plans and no fact exists
                  that could result in any material liability (other than as
                  disclosed on Borrower's financial statements) to Borrower
                  relating to any former Plan. No Reportable Event has occurred
                  with respect to any Pension Plan that is not a Multiemployer
                  Plan. No Prohibited Transaction has occurred. The PBGC has not
                  instituted proceedings to terminate any Pension Plan. No ERISA
                  Affiliate nor any duly appointed administrator of a Pension
                  Plan has (i) incurred any liability to the PBGC with respect
                  to a Pension Plan other than for premiums not yet due and
                  payable, or (ii) instituted or intends to institute
                  proceedings under Section 4041(c) of ERISA to terminate any
                  Pension Plan, or (iii) instituted proceedings to withdraw from
                  any Pension Plan that is a Multiemployer Plan. No "accumulated
                  funding deficiency" within the meaning of Section 302(a)(2) of
                  ERISA exists with respect to any Pension Plan. No liability
                  has been incurred by any ERISA Affiliate which remains
                  unsatisfied for any taxes or penalties, with respect to any
                  Plan that is not a Multiemployer Plan or, to the best of
                  Borrower's knowledge and belief, with respect to any
                  Multiemployer Plan. No litigation is pending or, to the
                  Borrower's knowledge, threatened concerning or involving any
                  Plan. No amendment to any Pension Plan has been adopted such
                  that security is required to be given pursuant to IRC Section
                  401(a)(29) and no lien exists under IRC Section 412(n) with
                  respect to any Plan. Except as shown on Exhibit K attached
                  hereto with respect to the date and using the assumptions
                  described thereon, and to the best of Borrower's knowledge and
                  belief, no unfunded or unreserved liability exists for
                  benefits under any Plan that would have a material adverse
                  effect on the business or finances of Borrower. No ERISA
                  Affiliate contributes to, has contributed to, or is or has
                  been obligated to contribute to, any Multiemployer Plan. No
                  ERISA Affiliate maintains, or has promised to maintain, any
                  Plan which provides medical benefits to an employee or the
                  employee's dependents after the employee terminates employment
                  other than as required by law.

         (g)      Taxes. The federal tax identification numbers for Cal Dive,
                  ERT, Aquatica and Canyon are 95-3409686, 76-0413713,
                  72-1396623 and 76-0515050, respectively. Borrower and its
                  Subsidiaries each has filed all federal, state and local tax
                  returns and other reports it is required by law to file and
                  has paid, or made provision for the payment of, all taxes,
                  assessments, fees and other governmental charges that are due
                  and payable. The provision for taxes on the books of Borrower
                  and its Subsidiaries are adequate for all years not closed by
                  applicable statutes, and for its current fiscal year. There
                  are no material unresolved questions or claims concerning any
                  tax liability of Borrower except as described in Exhibit L
                  attached hereto. None of the transactions contemplated hereby
                  or under any agreements referred to hereunder will result in
                  any material tax liability for Borrower or result in any other
                  material adverse tax consequence for Borrower. Exhibit M
                  attached hereto contains an accurate list of all taxing
                  authorities to which Borrower and its Subsidiaries and their
                  respective Properties are subject. No Properties of

                                       58
<PAGE>

                  Borrower or its Subsidiaries are or could become subject to
                  any Lien in favor of any such taxing authorities for
                  nonpayment of taxes, except as specified on Exhibit M attached
                  hereto.

         (h)      Labor Relations. Except as described on Exhibit N attached
                  hereto, neither Borrower nor any of its Subsidiaries is a
                  party to any collective bargaining agreement, and there are no
                  material grievances, disputes or controversies with any union
                  or any other organization of Borrower's employees, or threats
                  of strikes, work stoppages or any asserted pending demands for
                  collective bargaining by any union or organization.

         (i)      Compliance With Laws. Except as disclosed on Exhibit O
                  attached hereto as to existing violations of Environmental
                  Laws (the "Existing Environmental Violations"), Borrower has
                  duly complied in all material respects with, and its Property,
                  business operations and leaseholds are in compliance in all
                  material respects with, the provisions of all federal, state
                  and local laws, rules, regulations orders, citations and final
                  and enforceable notices applicable to Borrower, its Properties
                  or the conduct of its business, including, without limitation,
                  OSHA, Environmental Laws, the Securities Act of 1933, the
                  Securities Exchange Act of 1934, the Fair Labor Standards Act,
                  laws relating to income, unemployment, payroll or social
                  security taxes and Plans under ERISA, the Flood Disaster
                  Protection Act of 1973, the Consumer Credit Protection Act,
                  the Federal Trade Commission Act, statutes creating and
                  governing the Bureau of Alcohol, Tobacco and Firearms, and any
                  and all state statutes or pronouncements addressing, or
                  related to, subjects the same as or comparable to those
                  covered by such enumerated federal statutes, and there have
                  been no citations, notices or orders of noncompliance issued
                  to Borrower or any of its Subsidiaries under any such law,
                  rule or regulation.

         (j)      Surety Obligations. Except as described in Exhibit P attached
                  hereto, Borrower is not obligated as surety or indemnitor
                  under any surety or similar bond or other contract issued or
                  entered into any agreement to assure payment, performance or
                  completion of performance of any undertaking or obligation of
                  any Person.

         (k)      No Defaults. No event has occurred and no condition exists
                  which would, upon the execution and delivery of this Agreement
                  or Borrower's performance hereunder, constitute a Default or
                  an Event of Default. Neither Borrower nor any of its
                  Subsidiaries is in default, and no event has occurred and no
                  condition exists which constitutes, or which with the passage
                  of time or the giving of notice or both would constitute, a
                  default in the payment of any Indebtedness to any Person for
                  Money Borrowed.

         (l)      Brokers. There are no claims for brokerage commissions,
                  finder's fees or investment banking fees in connection with
                  the transactions contemplated by this Agreement.

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<PAGE>

         (m)      Business Locations. Agent for Process. During the preceding
                  three year period, Borrower has had no office, place of
                  business or agent for service of process located in any state
                  or county other than as shown on Exhibit C attached hereto.

         (n)      Trade Relations. There exists no actual or threatened
                  termination, cancellation or limitation of, or any
                  modification or change in, the business relationship between
                  Borrower and any customer or any group of customers whose
                  purchases individually or in the aggregate are material to the
                  business of Borrower, or with any material supplier, and there
                  exists no present condition or state of facts or circumstances
                  which would materially affect adversely Borrower or prevent
                  Borrower from conducting such business after the consummation
                  of the transaction contemplated by this Agreement in
                  substantially the same manner in which it has heretofore been
                  conducted.

         (o)      Leases. Exhibit Q attached hereto is a complete listing of all
                  capitalized leases of Borrower and Exhibit R attached hereto
                  is a complete listing of all operating leases of Borrower.

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

         (q)      OSHA and Environmental Compliance.

                  (i)      Except for the Existing Environmental Violations,
                           Borrower is in compliance with, and its facilities,
                           business, operations, assets, Property, leaseholds,
                           Offshore Platforms, Vessels and Equipment are in
                           compliance in all material respects with, the
                           provisions of OSHA, the Resource Conservation and
                           Recovery Act, Oil Pollution Act, 1990, all
                           Environmental Laws and all permits issued to Borrower
                           under any Environmental Laws; there have been no and
                           are not now any outstanding citations, notices or
                           orders of non-compliance issued to Borrower, nor is
                           Borrower aware of any potential or threatening
                           citations, notices or orders of noncompliance that
                           may be issued to Borrower or relating to its
                           business, assets, Property, leaseholds, Offshore
                           Platforms, Vessels or Equipment under such laws,
                           rules or regulations.

                  (ii)     Borrower has been issued all required federal, state
                           and local licenses, certificates or permits relating
                           to all applicable Environmental Laws.

                  (iii)    Except for the Existing Environmental Violations, (1)
                           there are no visible signs of material releases,
                           spills, discharges, leaks or disposal (collectively
                           referred to as "Releases") of Hazardous Substances
                           at, upon, under or within any Real Property or
                           Vessels in violation of any Environmental Law, nor is
                           Borrower aware of the existence of any nonvisible
                           Releases; (2) there are no underground storage tanks
                           or polychlorinated biphenyls on the Real Property;
                           (3) the Real Property has never been used as a

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<PAGE>

                           treatment, storage or disposal facility of Hazardous
                           Substance (except for the storage of fuels,
                           Hydrocarbons, lubricants, solvents, paints and
                           coatings, compressed gases, explosives,
                           anti-oxidants, rust inhibitors, surfactants, C02
                           scavengers, soap and chemical dispersants, batteries
                           and similar or substitute items, substances or
                           chemicals used or useful in the ordinary course of
                           business by Borrower (collectively the "Lawful
                           Substances")); and (4) no Hazardous Substances are
                           present on the Real Property or Vessels in violation
                           of any Environmental Laws.

         (r)      Reaffirmation. Each request for a Loan made by Borrower
                  pursuant to this Agreement or any of the other Loan Documents
                  shall constitute (i) an automatic representation and warranty
                  by Borrower to Agent and Lenders that there does not then
                  exist any Default or Event of Default unless otherwise
                  disclosed to Lender in writing and (ii) a reaffirmation as of
                  the date of said request that all of the representations and
                  warranties of Borrower contained in this Agreement and the
                  other Loan Documents are true in all material respects except
                  for any changes in the nature of Borrower's business or
                  operations that would render the information contained in any
                  exhibit attached hereto either inaccurate or incomplete, so
                  long as Agent has consented to such changes in writing or such
                  changes are expressly permitted by this Agreement.

         Section 7.3 Survival of Representations and Warranties. Borrower
covenants, warrants and represents to Agent and Lenders that all representations
and warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall be true at the time of Borrower's execution of this Agreement
and the other Loan Documents, and shall survive the execution, delivery and
acceptance thereof by Agent and Lenders and the parties thereto and the closing
of the transactions described therein or related thereto until four (4) years
and one (1) day after all of the Obligations have been paid in full.

                 ARTICLE 8. COVENANTS AND CONTINUING AGREEMENTS

         Section 8.1 Affirmative Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Agent in writing, it shall:

         (a)      Taxes and Liens. Pay and discharge, and cause each Subsidiary
                  to pay and discharge, all taxes, assessments and governmental
                  charges upon it, its income and Properties as and when such
                  taxes, assessments and charges are due and payable (and, if
                  requested by Agent, provide Agent with proof that Borrower or
                  such Subsidiary has done so), except and to the extent only
                  that such taxes, assessments and charges are being actively
                  contested in good faith and by appropriate proceedings,
                  Borrower maintains adequate reserves on its books therefor and
                  the nonpayment of such taxes, assessments and charges does not
                  result in a Lien upon any Properties or Borrower other than a
                  Permitted Lien. Borrower shall also pay and discharge any
                  lawful claims which, if unpaid, might become a Lien against
                  any of Borrower's Properties, except for Permitted Liens.
                  Borrower shall also make timely payment or deposit of all FICA
                  payments and

                                       61
<PAGE>

                  withholding taxes required of it by the applicable laws, and
                  will, upon request, furnish Agent with proof satisfactory of
                  it that Borrower has made such payments or deposits.

         (b)      Tax Returns. File, and cause each Subsidiary to file, all
                  federal, state and local tax returns and other reports
                  Borrower or such Subsidiary is required by law to file and
                  maintain adequate reserves for the payment of all taxes,
                  assessments, governmental charges, and levies imposed upon it,
                  its income, or its profits, or upon any Property belonging to
                  it.

         (c)      Payment of Bank Charges. Pay to Agent or Lenders, on demand,
                  any and all reasonable and customary fees, costs or expenses
                  which Agent or Lenders pay to a bank or other similar
                  institution arising out of or in connection with (i) the
                  forwarding to Borrower or any other Person on behalf of
                  Borrower, by Agent or Lenders proceeds of loans made by
                  Lenders to Borrower pursuant to this Agreement and (ii) the
                  depositing for collection, by Agent or Lenders of any check or
                  item of payment received or delivered to Agent or Lenders on
                  account of the Obligations.

         (d)      Business and Existence. Preserve and maintain, and cause each
                  Subsidiary to preserve and maintain, its separate corporate
                  existence and all rights, privileges, and franchises in
                  connection therewith, and maintain, and cause each Subsidiary
                  to maintain, its qualification and good standing in all states
                  in which such qualification is necessary except in connection
                  with business combinations that result in a Subsidiary or a
                  Borrower being acquired by or merging with another Borrower.

         (e)      Maintain Properties. Maintain, and cause each Subsidiary to
                  maintain, its Properties in adequate operating condition and
                  make, and cause each Subsidiary to make, all necessary
                  renewals, repairs, replacements, additions and improvements
                  thereto.

         (f)      Compliance with Laws and Remediation of Existing Environmental
                  Violations. (i) Except for the Existing Environmental
                  Violations and the storage of the Lawful Substances, comply,
                  and cause each Subsidiary to comply, with all laws,
                  ordinances, governmental rules and regulations to which it is
                  subject, including, without limitation, all Environmental
                  Laws, and obtain and keep in force any and all licenses,
                  permits, franchises, or other governmental authorizations
                  necessary to the ownership or lease of its Properties or to
                  the conduct and operation of its business, except for
                  violations or failures to obtain that will not materially and
                  adversely affect the business, prospects, profits, Properties,
                  or condition (financial or otherwise) of Borrower.

         (g)      ERISA Compliance. (i) Make and cause each ERISA Affiliate to
                  make prompt payment of all contributions it is obligated to
                  make under all Plans or are required to meet the minimum
                  funding standard set forth in ERISA, (ii) within thirty (30)
                  days after the filing thereof, furnish to Agent a copy of the
                  most recently filed

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<PAGE>

                  annual report/return (Form 5500 Series), as well as all
                  schedules and attachments required to be filed with the
                  Department of Labor and/or the Internal Revenue Service
                  pursuant to ERISA, and the regulations promulgated thereunder,
                  in connection with each of its Plans that is not a
                  Multiemployer Plan, (iii) notify Agent prior to any request by
                  any ERISA Affiliate for a waiver of the funding requirements
                  of IRC Section 412 or the commencement of any distress
                  termination pursuant to ERISA Section 4041(c) with respect to
                  any Pension Plan, (iv) notify Agent immediately of any
                  Reportable Event, Prohibited Transaction, and of any fact
                  arising in connection with any of its Plans that is not a
                  Multiemployer Plan, which might constitute grounds for
                  termination thereof by the PBGC or for the appointment by the
                  appropriate United States District Court of a trustee to
                  administer such Plan, together with a statement, if requested
                  by Agent, as to the reason therefor and the action, if any,
                  proposed to be taken with respect thereto, (v) notify Agent
                  immediately of any event which is likely to give rise to an
                  assertion of withdrawal liability in connection with a
                  Multiemployer Plan, and (vi) furnish to Agent, promptly upon
                  Agent's request therefor, such additional information
                  concerning any Plan as may be reasonably requested.

         (h)      Business Records. Keep, and cause each Subsidiary to keep,
                  adequate records and books of account with respect to its
                  business activities in which proper entries are made in
                  accordance with GAAP reflecting all its financial
                  transactions.

         (i)      Visits and Inspections. Upon two (2) Business Days notice to
                  Borrower, permit representatives of Agent, from time to time,
                  as often as may be reasonably requested, but only during
                  normal business hours, to visit and inspect the Properties of
                  Borrower, inspect and make extracts from its books and
                  records, and discuss with its officers, its employees and its
                  independent accountants, Borrower's business, assets,
                  liabilities, financial condition, business prospects and
                  results of operations; provided, however, if a Default or
                  Event of Default exists, Agent shall not be required to give
                  notice to Borrower prior to inspection or visitation by Agent
                  of Borrower's Properties.

         (j)      Financial Statements. Cause to be prepared and furnished to
                  Agent the following (all to be kept and prepared in accordance
                  with GAAP applied on a consistent basis, unless Borrower's
                  certified public accountants concur in any change therein and
                  such change is disclosed to Agent and is consistent with
                  GAAP):

                  (i)      as soon as possible, but not later than ninety (90)
                           days after the close of each fiscal year of Borrower,
                           unqualified audited financial statements of Borrower
                           and its Subsidiaries as of the end of such year, on a
                           Consolidated basis, certified by a firm of
                           independent certified public accountants of
                           recognized national standing or otherwise acceptable
                           to Agent (except for a qualification for a change in
                           accounting principles with which the independent
                           public accountant concurs);

                  (ii)     as soon as possible, but not later than thirty (30)
                           days after the end of each month (except that
                           statements for the month of January shall be
                           delivered

                                       63
<PAGE>

                           within sixty (60) days after the end thereof)
                           hereafter, unaudited interim financial statements of
                           Borrower and its Subsidiaries as of the end of such
                           month and of the portion of Borrower's fiscal year
                           then elapsed, on a consolidating basis certified by
                           the principal financial officer of Borrower as
                           prepared in accordance with GAAP and fairly
                           presenting the consolidated financial position and
                           results of operations of Borrower and its
                           Subsidiaries for such month and period subject only
                           to changes from audit and year-end adjustments and
                           except that such statements need not contain notes;

                  (iii)    promptly after the sending or filing thereof, as the
                           case may be, copies of any proxy statements,
                           financial statements or reports which Borrower has
                           made available to its shareholders and copies of any
                           regular, periodic and special reports or registration
                           statements which Borrower files with the Securities
                           and Exchange Commission or any governmental authority
                           which may be substituted therefor, or any national
                           securities exchange; and

                  (iv)     such other data and information (financial and
                           otherwise) as Lender, from time to time, may
                           reasonably request, bearing upon or related to the
                           Collateral, Borrower's financial condition or results
                           of operations, including, without limitation, federal
                           income tax returns of Borrower, accounts payable
                           ledgers, vendor listings and bank statements.

         Upon receipt, Borrower shall forward to Agent a copy of the
accountants' letter to Borrower's management that is prepared in connection with
the financial statements described in clause (i) above and also shall cause to
be prepared and shall furnish to Agent a certificate of the aforesaid certified
public accountants certifying to Agent that, based upon their examination of the
financial statements of Borrower and its Subsidiaries performed in connection
with their examination of said financial statements, they are not aware of any
Default or Event of Default, or, if they are aware of such Default or Event of
Default, specifying the nature thereof. Concurrently with the delivery of the
financial statements described in clause (i) above and the financial statements
for the months ending on March 30, June 30, September 30 and December 31 of each
calendar year delivered pursuant to clause (ii) above, Borrower shall cause to
be prepared and furnished to Agent a Compliance Certificate in the form of
Exhibit S attached hereto.

         (k)      Notices to Lender. Notify Agent in writing: (i) promptly after
                  Borrower's learning thereof, of the commencement of any
                  litigation affecting Borrower or any of its Properties,
                  whether or not the claim is considered by Borrower to be
                  covered by insurance, and of the institution of any
                  administrative proceeding, and of the receipt of any order or
                  citation from any f'ederal, state or local agency which may
                  materially and adversely affect Borrower's operations,
                  financial condition, Properties or business or Agent's Lien
                  upon any of the Collateral; (ii) at least ten (10) Business
                  Days prior thereto, of Borrower's opening of any new office or
                  place of business or Borrower's closing of any existing office
                  or place of business; except if any such closing arises out of
                  a consolidation of offices or

                                       64
<PAGE>

                  places of business at Cal Dive's current address; in which
                  case substantially contemporaneous notice shall be sufficient;
                  (iii) promptly after Borrower's learning thereof, of any labor
                  dispute to which Borrower may become a party, any strikes or
                  walkouts relating to any of its plants or other facilities,
                  and the expiration of any labor contract to which it is a
                  party or by which it is bound; (iv) promptly after Borrower's
                  learning thereof, of any material default by Borrower under
                  any note, indenture, loan agreement, mortgage, lease, deed,
                  guaranty or other similar agreement relating to any
                  Indebtedness of Borrower exceeding Five Hundred Thousand
                  Dollars ($500,000); (v) promptly after the occurrence thereof,
                  of any Default or Event of Default; (vi) promptly after the
                  occurrence thereof, of any default by any obligor under any
                  note or other evidence of Indebtedness payable to Borrower;
                  and (vii) promptly after the rendition thereof, of any
                  judgment rendered against Borrower or any of its Subsidiaries.

         (l)      Landlord and Storage Agreements. Provide Agent with copies of
                  all agreements between Borrower and any landlord or
                  warehouseman which owns any premises at which any Collateral
                  may, from time to time, be kept.

         (m)      Subordinations. Except for Permitted Purchase Money
                  Indebtedness, provide Agent with a debt subordination
                  agreement, in form and substance satisfactory to Agent,
                  executed by Borrower and any Person who is an officer,
                  director or Affiliate of Borrower to whom Borrower is or
                  hereafter becomes indebted for Money Borrowed, subordinating
                  in right of payment and claim all of such Indebtedness and any
                  future advances thereon to the full and final payment and
                  performance of the Obligations.

         (n)      Further Assurances. At Agent's request, promptly execute or
                  cause to be executed and deliver to Agent any and all
                  documents, instruments and agreements deemed necessary by
                  Agent to give effect to or carry out the terms or intent of
                  this Agreement or any of the other Loan Documents. Without
                  limiting the generality of the foregoing, if any of the
                  Accounts, the face value of which exceeds One Thousand Dollars
                  ($1,000), arises out of a contract with the United States of
                  America, or any department, agency, subdivision or
                  instrumentality thereof, Borrower shall promptly notify Agent
                  thereof in writing and shall execute any instruments and take
                  any other action required or requested by Agent to comply with
                  the provisions of the Federal Assignment of Claims Act. For
                  each deposit account or brokerage account that Borrower at any
                  time opens or maintains, Borrower shall at Agent's request and
                  option, pursuant to an agreement in form and substance
                  satisfactory to Agent, cause the depository bank or securities
                  intermediary, as applicable, to agree to comply at any time
                  with instructions from Agent to such depository bank or
                  securities intermediary, as applicable, directing the
                  disposition of funds from time to time credited to such
                  deposit or brokerage account without the further consent of
                  Borrower.

         (o)      Tax Certificate. Within ninety (90) days after the end of each
                  fiscal year of Borrower, or more frequently if requested by
                  Agent, cause the chief financial

                                       65
<PAGE>

                  officer of Borrower to prepare and deliver to Agent a tax
                  certificate in the form of Exhibit T attached hereto, with
                  appropriate insertions.

         (p)      Vessel Appraisals. Agent shall have the option to prepare an
                  appraisal of the Vessels no less than annually from the
                  Closing Date at Borrower's expense.

         (q)      Vessel Certifications. As soon as available, and in any event
                  no later than thirty (30) days after receipt by Borrower,
                  deliver to Lender copies of Coast Guard Certificates of
                  Inspection and ABS Load Line Certifications (or similar
                  certificates issued for foreign registered marine vessels) for
                  each Vessel.

         (r)      Vessel Maintenance. Keep adequate records with respect to
                  maintenance of Vessels which detail drydocking, machinery
                  overhauls and maintenance history for each Vessel.

         (s)      Projections. As soon as available, and in any event no later
                  than thirty (30) days after the end of each fiscal year of
                  Borrower, deliver to Agent Projections of Borrower for the
                  forthcoming fiscal year, on a month by month basis.

         (t)      Systems. Maintain any system reasonably requested by Agent for
                  creating backup data on computer hardware, software or
                  firmware, such as Accounts and customer lists, and deliver and
                  pledge to Agent such tapes or discs with respect thereto as
                  may be required by Lender.

         (u)      Environmental Matters.

                  (i)      Ensure that the Real Property and the Vessels remain
                           in compliance with all Environmental Laws where the
                           failure to do so would have a material adverse effect
                           on its business, condition (financial or otherwise),
                           operations, prospects or Properties, and it will not
                           place or permit to be placed any Hazardous Substance
                           on any Real Property or Vessel except as not
                           prohibited by applicable law or appropriate
                           governmental authorities. Notwithstanding the
                           foregoing, Agent and Borrower recognize the Existing
                           Environmental Violations and the storing and carrying
                           of the Lawful Substances and Borrower hereby agrees
                           to ensure that all Existing Environmental Violations
                           are remediated in a manner consistent with any lawful
                           requirements and schedules established by appropriate
                           governmental authorities.

                  (ii)     Establish and maintain a system to assure and monitor
                           continued material compliance with all applicable
                           Environmental Laws appropriate to the nature of
                           Borrower's business and review the adequacy and
                           effectiveness of such system on an annual basis.

                  (iii)    (1) employ in connection with its use of the Real
                           Property and the Vessels appropriate technology
                           necessary to maintain material compliance with any
                           applicable Environmental Laws, and (2) dispose of any
                           and all Hazardous Substance generated at the Real
                           Property or on board the

                                       66
<PAGE>

                           Vessels only at facilities and with carriers that
                           maintain any required permits under the Resource
                           Conservation and Recovery Act and any other
                           applicable Environmental Laws. Borrower shall obtain
                           certificates of disposal, such as hazardous waste
                           manifest receipts, from all treatment, transport,
                           storage or disposal facilities or operators in
                           connection with the transport or disposal of any
                           Hazardous Substance generated at the Real Property or
                           on board the Vessels to the extent such certificates
                           are required by applicable Environmental Laws.

                  (iv)     In the event the Borrower obtains, gives or receives
                           notice of any Release or threat of Release of a
                           reportable quantity of any Hazardous Substances at
                           the Real Property or on board the Vessels (any such
                           event being hereinafter referred to as a "Hazardous
                           Discharge") or receives any notice of violation,
                           request for information or notification that it is
                           potentially responsible for investigation or cleanup
                           of environmental conditions, demand letter or
                           complaint, order, citation, or other written notice
                           alleging liability on the part of Borrower or any
                           Subsidiary with regard to any Hazardous Discharge or
                           violation of Environmental Laws (any of the foregoing
                           is referred to herein as an "Environmental
                           Complaint") from any Person or entity, including any
                           state or local agency responsible in whole or in part
                           for environmental matters in the state in which the
                           Real Property is located , the United States Coast
                           Guard, the United States Environmental Protection
                           Agency or any similar agency of a foreign government
                           where a Vessel is operating (any such person or
                           entity hereinafter the "Authority"), then the
                           Borrower shall, within ten (10) Business Days, give
                           written notice of same to the Agent and furnish the
                           Agent a copy of the Environmental Complaint. Such
                           notice is not intended to create nor shall it create
                           any obligation upon Agent with respect thereto.

                  (v)      Promptly forward to Agent copies of any request for
                           information, notification of potential liability,
                           demand letter relating to potential responsibility
                           with respect to the investigation or cleanup of
                           Hazardous Substances at any other site owned,
                           operated or used by Borrower to dispose of Hazardous
                           Substances and shall continue to forward copies of
                           correspondence between Borrower and the Authority
                           regarding such claims to the Agent until the claim is
                           settled. The Borrower shall promptly forward to the
                           Agent copies of all documents and reports concerning
                           a Hazardous Discharge that the Borrower is required
                           to file under any Environmental Laws. Such
                           information is to be provided solely to allow the
                           Agent to protect Agent's security interest in the
                           Collateral and is not intended to create nor shall it
                           create any obligation upon Agent with respect
                           thereto.

                  (vi)     Respond promptly to any Hazardous Discharge or
                           Environmental Complaint and take all necessary action
                           in order to safeguard the health of any Person and to
                           avoid subjecting the Collateral or Real Property to
                           any

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                           Lien. Borrower shall be deemed to be taking all
                           necessary action only if, and for so long as, the
                           execution or enforcement of an Environmental
                           Complaint is, and continues to be, effectively stayed
                           and the Borrower maintains adequate reserves
                           therefore, which are properly reflected on Borrower's
                           Consolidated Financial Statements, the validity and
                           amount of the claims secured thereby are being
                           actively contested in good faith and by appropriate
                           lawful proceedings, and any Liens associated with the
                           Environmental Complaint do not, in the aggregate,
                           materially detract from the value of the Property of
                           Borrower or materially impair the use thereof in the
                           operation of Borrower's business. If Borrower shall
                           fail to so respond to any Hazardous Discharge or
                           Environmental Complaint or Borrower shall fail to
                           comply with any of the requirements of any
                           Environmental Laws where the failure to do so would
                           have a material adverse effect on its business,
                           condition (financial or otherwise), operations,
                           prospects or Properties, Agent may, but without the
                           obligation to do so, for the sole purpose of
                           protecting Agent's interest in Collateral after
                           giving Borrower prior written notice: (a) give such
                           notices or (b) enter onto the Real Property or
                           Vessels (or authorize third parties to enter onto the
                           Real Property or Vessels) and take such actions as
                           Agent(or such third parties as directed by the Agent)
                           deem reasonably necessary or advisable, to clean up,
                           remove, or mitigate any such Hazardous Discharge or
                           Environmental Complaint. All reasonable costs and
                           expenses incurred by Agent (or such third parties) in
                           the exercise of any such rights, including any sums
                           paid in connection with any judicial or
                           administrative investigation or proceedings, fines
                           and penalties, together with interest thereon from
                           the date expended at the Applicable Annual Rate for
                           Base Rate Loans shall be paid upon demand by the
                           Borrower, and until paid shall be added to and become
                           a part of the Obligations secured by the Liens
                           created by the terms of this Agreement or any other
                           agreement between Agent or Lenders and Borrower.

                  (vii)    Promptly upon the written request of the Agent, in
                           connection with any Hazardous Discharge or
                           Environmental Complaint as described in clause (vi)
                           immediately preceding, provide to Agent, at the
                           Borrower's expense, with an environmental site
                           assessment or environmental audit report prepared by
                           an environmental engineering firm acceptable to Agent
                           to assess with a reasonable degree of certainty the
                           existence of a Hazardous Discharge and the potential
                           costs in connection with abatement, cleanup and
                           removal of any Hazardous Substances required as a
                           result of the Hazardous Discharge or Environmental
                           Complaint. Any investigation of or response to such
                           Hazardous Discharge proposed and acceptable to an
                           appropriate Authority that is charged to oversee the
                           clean-up of such Hazardous Discharge shall be
                           acceptable to the Agent.

                  (viii)   Defend and indemnify Agent and Lenders and hold Agent
                           and Lenders, and their respective employees, agents,
                           directors and officers harmless from and against all
                           loss, liability, damage and expense, claims, costs,

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<PAGE>

                           fines and penalties, including attorney's fees,
                           suffered or incurred by Agent or Lenders under or on
                           account of any Environmental Laws, including, without
                           limitation, the assertion of any Lien thereunder,
                           with respect to any Hazardous Discharge, the presence
                           of any Hazardous Substances affecting its business
                           and operations, the Real Property or the Vessels,
                           whether or not the same originates or emerges from
                           the Real Property or any contiguous real estate or
                           the Vessels, including any loss of value of the Real
                           Property as a result of the foregoing. Borrower's
                           obligations under this Section 8.1(u) shall arise
                           upon the discovery of the presence of any Hazardous
                           Substances at the Real Property or on board the
                           Vessels that would have a material adverse effect on
                           Borrower's business, condition (financial or
                           otherwise), operations, prospects or Properties, or
                           Borrower's use of Hazardous Substances in its
                           business and operations in a manner that would have a
                           material adverse effect on its business, condition
                           (financial or otherwise), operations, prospects or
                           Properties, whether or not any federal, state, or
                           local environmental agency has taken or threatened
                           any action in connection with the presence of any
                           Hazardous Substances. Borrower's obligation and the
                           indemnification hereunder shall survive the
                           termination of this Agreement.

                  (ix)     For purposes of Section 7.1(aa), 8.1(u) and 8.2(aa),
                           all references to "Real Property" shall be deemed to
                           be all of Borrower's right, title and interest in and
                           to all leased and owned premises, including, without
                           limitation, the Offshore Platforms.

         (v)      Reporting of Locations of Vessels. Concurrently with the
                  delivery of the monthly unaudited interim financial statements
                  of Borrower and its Subsidiaries, as required by Section
                  8.1(j)(ii), deliver to Agent a report identifying by name and
                  location, the Vessels that, as of the end of the month covered
                  by the monthly unaudited financial statements then delivered
                  to Agent, are operating in waters outside of the territorial
                  jurisdiction of the United States.

         Section 8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lenders, Borrower
covenants that, unless consented to by Lender in writing, it will not and will
not allow its Subsidiaries to:

         (a)      Mergers, Consolidations; Acquisitions. Merge or consolidate,
                  or permit any Subsidiary to merge or consolidate, with any
                  Person, except a consolidation or merger between both
                  Borrowers, or a Borrower and one or more wholly owned
                  Subsidiaries; nor acquire all or any substantial part of the
                  Properties of any Person; nor change its or any of its
                  Subsidiaries' state of incorporation or type of organization,
                  nor change its or any of its Subsidiaries' legal names except
                  in connection with a consolidation or merger permitted by this
                  Section 8.2(a).

         (b)      Loans. Make, or permit any Subsidiary to make, any loans or
                  other advances of money (other than for salary, travel
                  advances, advances against commissions and other similar
                  advances in the ordinary course of business) to any Person,

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<PAGE>

                  including, without limitation, any of Borrower's Subsidiaries,
                  Affiliates, officers or employees.

         (c)      Total Indebtedness. Create, incur, assume, or suffer to exist
                  any Indebtedness, except: (i) Obligations owing to Lenders;
                  (ii) unsecured accounts payable to trade creditors which are
                  not aged more than ninety (90) days from billing date and
                  current operating expenses (other than for Money Borrowed)
                  which are not more than sixty (60) days past due, in each case
                  incurred in the ordinary course of business and paid within
                  such time period, unless the same are actively being contested
                  in good faith and by appropriate and lawful proceedings and
                  Borrower shall have set aside such reserves, if any, with
                  respect thereto as are required by GAAP and deemed adequate by
                  Borrower and its independent public accountants; (iii)
                  Obligations to pay Rentals permitted by Section 8.2(u); (iv)
                  Permitted Purchase Money Indebtedness; (v) contingent
                  liabilities arising out of endorsements of checks and other
                  negotiable instruments for deposit or collection in the
                  ordinary course of business; (vi) liabilities arising under
                  the Synthetic Lease financing of the Gunnison production
                  platform; (vii) liabilities arising under the Title XI Debt;
                  (viii) plug and abandonment obligations not to exceed
                  $50,000,000 at any time; and (ix) Indebtedness not included in
                  clauses (i) through (v) above which does not exceed at any
                  time, in the aggregate, the sum of Five Hundred Thousand
                  Dollars ($500,000).

         (d)      Affiliate Transactions. Enter into, or be a party to, or
                  permit any Subsidiary to enter into or be a party to, any
                  transaction with any Affiliate, except (i) transactions in the
                  ordinary course of and pursuant to the reasonable requirements
                  of Borrower's or such Subsidiary's business and upon fair and
                  reasonable terms which are fully disclosed to Agent and are no
                  less favorable to Borrower than would obtain in a comparable
                  arm's length transaction with a Person not an Affiliate or
                  stockholder of Borrower or such Subsidiary, or (ii)
                  transactions contemplated by the Shareholders Agreement, in
                  effect on the Closing Date.

         (e)      Partnerships or Joint Ventures. Become or agree to become a
                  general or limited partner in any general or limited
                  partnership or a joint venturer in any joint venture other
                  than arising from acquisitions by ERT of oil and gas
                  properties with aggregate plug and abandonment obligations of
                  $25,000,000 or less per year.

         (f)      Adverse Transactions. Except for Turnkey Contracts, enter into
                  any transaction, or permit any Subsidiary to enter into any
                  transaction, which materially and adversely affects or may
                  materially and adversely affect the Collateral or Borrower's
                  ability to repay the Obligations or permit or agree to any
                  material extension, compromise or settlement or make any
                  change or modification of any kind or nature with respect to
                  any Account, including any of the terms relating thereto,
                  other than discounts and allowances in the ordinary course of
                  business, all of which shall be reflected in the Schedules of
                  Accounts submitted to Lender pursuant to Section 5.2.

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<PAGE>

         (g)      Guaranties. Except as described on Exhibit U attached hereto
                  guarantee, assume, endorse or otherwise, in any way, become
                  directly or contingently liable with respect to the
                  Indebtedness of any Person (other than a guaranty by Cal Dive
                  on behalf of ERT, Aquatica or Canyon), except by endorsement
                  of instruments or items of payment for deposit or collection.

         (h)      Limitation on Liens. Create or suffer to exist any Lien upon
                  any of its Property, income or profits, whether now owned or
                  hereafter acquired, except: (i) Liens at any time granted in
                  favor of Agent or Lenders; (ii) Liens for taxes (excluding any
                  Lien imposed pursuant to any of the provisions of ERISA) not
                  yet due or being contested as permitted by Section 8.1(a), but
                  only if in Agent's sole discretion and judgment such Lien does
                  not affect adversely Agent's rights or the priority of Agent's
                  Lien in the Collateral; (iii) Liens securing the claims or
                  demands of materialmen, mechanics, carriers, warehousemen,
                  landlords, operators and other like Persons or common law
                  maritime liens or liens under the Federal Maritime Lien Act or
                  similar state statutes (collectively, the "Statutory Liens")
                  for labor, materials, supplies, injuries or rentals incurred
                  in the ordinary course of Borrower's business, but only if the
                  payment thereof is not at the time required and only if such
                  Liens are junior to the Liens in favor of Agent, or if, and
                  for so long as, the execution or other enforcement of such
                  Liens is, and continues to be, effectively stayed, the
                  validity and amount of the claims secured thereby are being
                  actively contested in good faith and by appropriate lawful
                  proceedings, and such Liens do not, in the aggregate,
                  materially detract from the value of the Property of Borrower
                  or materially impair the use thereof in the operation of
                  Borrower's business; (iv) Liens resulting from deposits made
                  in the ordinary course of business in connection with
                  workmen's compensation, unemployment insurance, social
                  security and other like laws; (v) attachment, judgment and
                  other similar non-tax Liens arising in connection with court
                  proceedings, but only if and for so long as the execution or
                  other enforcement of such Liens is and continues to be
                  effectively stayed and bonded on appeal in a manner
                  satisfactory to Agent for the full amount thereof, the
                  validity and amount of the claims secured thereby are being
                  actively contested in good faith and by appropriate lawful
                  proceedings and such Liens do not, in the aggregate,
                  materially detract from the value of the Property of Borrower
                  or materially impair the use thereof in the operation of
                  Borrower's business; (vi) Purchase Money Liens securing
                  Permitted Purchase Money Indebtedness which is not incurred in
                  violation of Section 8.2(c); (vii) contractual rights,
                  reservations, exceptions, easements, rights of way, and other
                  similar encumbrances affecting Real Property other than as
                  described in Exhibit V attached hereto; provided, that, in
                  Agent's judgment, which will be exercised in good faith, they
                  do not in the aggregate materially detract from the value of
                  said Properties or materially interfere with their use in the
                  ordinary conduct of Borrower's business and, if said Real
                  Property constitutes Collateral, Agent has consented thereto;
                  (viii) Liens securing Indebtedness of a Subsidiary to Borrower
                  or another Subsidiary; (ix) such other Liens as described on
                  Exhibit V attached hereto; and (x) such other Liens as Agent
                  may hereafter approve in writing.

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<PAGE>

         (i)      Distributions. Without the prior written consent of Agent,
                  declare or make, or permit any Subsidiary to declare or make,
                  any Distributions except for the repurchase or its Securities
                  from employees.

         (j)      Subsidiaries. Hereafter create any Subsidiary or divest itself
                  of any material assets by transferring them to a new
                  Subsidiary to whose existence Agent has not consented.

         (k)      Business Locations. Transfer its principal place of business
                  or chief executive office, or maintain warehouses or records
                  with respect to Accounts, Equipment or Inventory, to or at any
                  locations other than those at which the same are presently
                  kept or maintained, as set forth on Exhibit C attached hereto,
                  except upon at least sixty (60) days prior written notice to
                  Lender and after the delivery to Lender of financing
                  statements, if required by Lender, in form satisfactory to
                  Lender to perfect or continue the perfection of Lender's Lien
                  and security interest hereunder.

         (l)      Change of Business. Enter into any new business or make any
                  material change in any of Borrower's business objectives,
                  purposes and operations.

         (m)      Disposition of Assets. Sell, lease or otherwise dispose of any
                  of its Properties, including any disposition of Property as
                  part of a sale and leaseback transaction, to or in favor of
                  any Person, except (i) sales of Inventory in the ordinary
                  course of Borrower's business for so long as no Event of
                  Default exists hereunder, (ii) a transfer of Property to
                  Borrower by a Subsidiary, or (iii) dispositions expressly
                  authorized by Section 6.4.

         (n)      Name of Borrower. Use any corporate name (other than its own)
                  or any fictitious name, tradestyle or "d/b/a" except for the
                  names disclosed on Exhibit E attached hereto.

         (o)      Bill-and-Hold Sales, Etc. Make a sale to any customer on a
                  bill-and-hold, guaranteed sale, sale and return, sale on
                  approval or consignment basis, or any sale on a repurchase or
                  return basis.

         (p)      Use of Lenders' Names. Without the prior written consent of
                  Agent, use the names or trademarks of Agent or Lenders or the
                  name or trademark of any affiliates of Agent or Lenders in
                  connection with any of Borrower's business or activities,
                  except in connection with internal business matters, as
                  required in dealings with governmental agencies and financial
                  institutions and to trade creditors of Borrower solely for
                  credit reference purposes.

         (q)      Margin Securities. Own, purchase or acquire (or enter into any
                  contract to purchase or acquire) any "margin security" as
                  defined by any regulation of the Federal Reserve Board as now
                  in effect or as the same may hereafter be in effect unless,
                  prior to any such purchase or acquisition or entering into any
                  such contract, Agent shall have received an opinion of counsel
                  satisfactory to Agent to the effect that such purchase or
                  acquisition will not cause this Agreement to

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<PAGE>

                  violate Regulations T, U or X or any other regulation of the
                  Federal Reserve Board then in effect.

         (r)      Restricted Investment. Make or have, or permit any Subsidiary
                  to make or have, any Restricted Investment.

         (s)      Fiscal Year. Change, or permit any Subsidiary to change, its
                  fiscal year from a calendar year.

         (t)      Stock of Subsidiary, Etc. Sell or otherwise dispose of any
                  Security of any Subsidiary, except in connection with a
                  transaction permitted under Section 8.2(a), or permit any
                  Subsidiary to issue any additional shares of its capital stock
                  except director's qualifying shares or as required by a stock
                  option program in existence on or before the Closing Date or
                  as required for Cal Dive to complete its acquisition of
                  Canyon.

         (u)      Leases. Become a lessee under any operating lease (other than
                  a lease under which Borrower is lessor) of Property if the
                  aggregate Rentals payable during any current or future period
                  of twelve consecutive months under the lease in question and
                  all other leases under which Borrower is then lessee would
                  exceed $750,000, unless the terms and conditions thereof are
                  approved by Borrower's Board of Directors and acceptable to
                  Agent.

         (v)      Tax Consolidation. File or consent to the filing of any
                  consolidated income tax return with any Person other than a
                  Subsidiary.

         (w)      Prepayments. Make, or permit any Subsidiary to make, any
                  prepayment of any part or all of any Money Borrowed, except
                  that (i) Borrower and its Subsidiaries may prepay outstanding
                  Money Borrowed in connection with a Purchase Money Lien from
                  the proceeds of the sale of property subject to such Lien, and
                  (ii) Borrower may prepay Lenders as provided in this Agreement
                  or any of the Other Agreements.

         (x)      Compliance with Environmental Laws. Except as specifically
                  permitted by applicable Environmental Law or permits or
                  consents granted pursuant to such laws (i) use any of the Real
                  Property or any Vessel or any portion thereof for the
                  handling, processing, storage or disposal of Hazardous
                  Substances (other than the Lawful Substances), (ii) cause or
                  permit to be located on any of the Real Property any
                  underground tank or other underground storage receptacle for
                  Hazardous Substances, (iii) generate any Hazardous Substances
                  on any of the Real Property or any Vessel, (iv) conduct any
                  activity at any Real Property or on board any Vessel or any
                  other location or use any Real Property in any manner so as to
                  cause a Release or threatened Release of Hazardous Substances
                  on, upon or into the Real Property, or (v) otherwise conduct
                  any activity at any Real Property or on board any Vessel or
                  any other location or use any Real Property or any other
                  location in any manner that would violate any Environmental
                  Law or bring such Real Property in violation of any
                  Environmental Law.

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<PAGE>

         (y)      Amend any Pension Plan. Amend any Pension Plan so as to
                  require security to be provided pursuant to IRC Section
                  401(a)(29).

         (z)      Capital Expenditures. Incur capital expenditures in excess of
                  (i) $200,000,000 for the fiscal year 2002 (excepting capital
                  expenditures made in January 2002 for Canyon), (ii)
                  $95,000,000 for the fiscal year 2003 and (iii) $70,000,000 for
                  the fiscal year 2004.

         (aa)     Gunnison Financing. Enter into or consent to any amendment or
                  modification to the Synthetic Lease financing of the Gunnison
                  production platform the effect of which would be to:

                  (i)      extend the term or amount of such financing; or

                  (ii)     change the pricing for such financing more than 300
                           basis points from that in effect on the Closing Date;
                           or

                  (iii)    increase the amount or type of collateral for the
                           financing.

         Section 8.3 Specific Financial Covenants. During the term of this
Agreement, and thereafter for so long as there are any Obligations to Lender,
Borrower covenants that, unless otherwise consented to by Lender in writing, it
shall:

         (a)      Cash Flow Leverage Test. The Borrower will not permit its Cash
                  Flow Leverage Ratio to be greater than (i) 3.00 to 1.00 until
                  September 30, 2003 and (ii) 2.75 to 1.00 thereafter.

         (b)      Interest Coverage Test. The Borrower will not permit its
                  Interest Coverage Ratio to be less than 2.50 to 1.00.

         (c)      Fixed Charge Coverage Test. The Borrower will not permit its
                  Fixed Charge Coverage Ratio to be less than 1.75 to 1.00.

                        ARTICLE 9. CONDITIONS PRECEDENT

         Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Agent or
Lenders under the other Sections of this Agreement, it is understood and agreed
that Lenders will not make any Loan under Section 2 unless and until each of the
following conditions has been and continues to be satisfied, all in form and
substance satisfactory to Lenders and their legal counsel:

         Section 9.1 Documentation. Agent shall have received the following
documents, each to be in form and substance satisfactory to Agent and its
counsel:

         (a)      certificates evidencing Borrower's casualty insurance
                  policies, together with endorsements naming Lender as loss
                  payee and as mortgagee pursuant to a

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<PAGE>

                  standard mortgagee clause, and certificates evidencing
                  Borrower's liability insurance policies, together with
                  endorsements naming Agent as a co-insured;

         (b)      copies of all filing receipts or acknowledgments issued by any
                  governmental authority to evidence any filing or recordation
                  necessary to perfect the Liens of Agent in the Collateral and
                  evidence to Agent that such Liens constitute valid and
                  perfected security interests and Liens, having the Lien
                  priority specified in Section 4.3(b);

         (c)      on or prior to the Closing Date, landlord or warehouseman
                  agreements with respect to all premises leased by Borrower,
                  other than the premises located at 1028 Jackson, Morgan City,
                  Louisiana and prior to sixty (60) days after the Closing Date,
                  a landlord agreement for the premises located at 1028 Jackson,
                  Morgan City, Louisiana;

         (d)      a copy of the Articles of Incorporation of Borrower, and all
                  amendments thereto, certified within fifteen (15) days before
                  the Closing Date by the Secretary of State or other
                  appropriate official of its jurisdiction of incorporation;

         (e)      a copy of the bylaws of Borrower, and all amendments thereto,
                  certified as of the Closing Date by the Secretary of Borrower;

         (f)      good standing certificates for Borrower, issued within fifteen
                  (15) days before the Closing Date by the Secretary of State or
                  other appropriate official of Borrower's jurisdiction of
                  incorporation and each jurisdiction where the conduct of
                  Borrower's business activities or the ownership of its
                  Properties necessitates qualification;

         (g)      a Closing Certificate signed by two (2) duly authorized senior
                  officers of Borrower dated as of the Closing Date, stating
                  that (i) the representations and warranties set forth in
                  Section 7 are true and correct on and as of such date, (ii)
                  Borrower is on such date in compliance with all the terms and
                  provisions set forth in this Agreement, and (iii) on such date
                  no Default or Event of Default has occurred or is continuing;

         (h)      the Security Documents duly executed, accepted and
                  acknowledged by or on behalf of each of the signatories
                  thereto;

         (i)      the Other Agreements duly executed and delivered by Borrower;

         (j)      the favorable, written opinion of Andrew Becher, General
                  Counsel of the Borrower, regarding Borrower, the Loan
                  Documents and the transactions contemplated by the Loan
                  Documents, in form and substance satisfactory to Agent and its
                  legal counsel;

         (k)      duly executed agreements establishing the Dominion Account
                  with a financial institution acceptable to Agent for the
                  collection or servicing of the Accounts, or, at Agent's
                  discretion, within thirty (30) days of the Closing Date;

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<PAGE>

         (l)      a copy certified by the Borrower as true, correct and complete
                  of the Participation Agreement dated November 8, 2001, as
                  amended, concerning the Synthetic Lease financing of the
                  Gunnison Platform;

         (m)      the consent of Bank One, NA as Agent in connection with the
                  Synthetic Lease financing of the Gunnison Platform to this
                  Agreement.

         (n)      a Borrowing Base Certificate in the form of Exhibit W attached
                  hereto, reflecting that Borrower has Eligible Accounts and
                  Vessels in which Agent has a perfected first priority Lien, in
                  amounts sufficient in value and amount to support the initial
                  Revolving Loan in the amount requested by Borrower;

         (o)      a certificate regarding Equipment and Vessels signed by a duly
                  authorized senior officer of Borrower dated the date hereof,
                  reflecting the type, value and location of Borrower's
                  Equipment and Vessels; and

         (p)      such other documents, instruments and agreements as Agent
                  shall reasonably request in connection with the foregoing
                  matters, including, without limitation, any items identified
                  in the closing checklist delivered by Agent to Borrower
                  immediately prior to the Closing Date.

         Section 9.2 Other Conditions. The following conditions have been and
shall continue to be satisfied:

         (a)      no Default or Event of Default shall exist;

         (b)      each of the conditions precedent set forth in the other Loan
                  Documents shall have been satisfied;

         (c)      since November 30, 2001, except as disclosed in Exhibit W, and
                  except for changes which are reflected on the financial
                  statements and notes through November 30, 2001 prepared by
                  management and submitted to Agent, there shall not have
                  occurred any material adverse change in the business,
                  financial condition or results of operations of Borrower or
                  its Subsidiaries, or the existence or value of any Collateral,
                  or any event, condition or state of facts which would
                  reasonably be expected materially and adversely to affect the
                  business, financial condition or results of operations of
                  Borrower or its Subsidiaries;

         (d)      no action, proceeding, investigation, regulation or
                  legislation shall have been instituted, threatened or proposed
                  before any court, governmental agency or legislative body to
                  enjoin, restrain or prohibit, or to obtain damages in respect
                  of, or which is related to or arises out of this Agreement or
                  the consummation of the transactions contemplated hereby or
                  which, in Agent's discretion, would make it inadvisable to
                  consummate the transactions contemplated by this Agreement or
                  any of the other Loan Documents;

         (e)      Borrower shall have paid all expenses of Agent and Lenders
                  pursuant to any invoices presented to Borrower relating to the
                  negotiation, preparation and

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<PAGE>

                  execution of the Loan Documents, including, without
                  limitation, reasonable attorneys' fees;

         (f)      all representations and warranties made by Borrower to Agent
                  and Lenders in the Loan Documents shall be true and correct;

         (g)      Borrower shall have paid to Agent and Lenders all fees
                  required by Section 3 to be paid on the Closing Date;

         (h)      Lenders' servicing requirements for the Loans shall have been
                  approved by Lenders' credit officers; and

         (i)      all covenants in this Agreement shall have been approved by
                  Lenders' credit officers.

         ARTICLE 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

         Section 10.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an "Event of Default":

         (a)      Payment of Notes. Borrower shall fail to pay any installment
                  of principal, interest or premium, if any, owing on the Notes
                  on the due date of such installment.

         (b)      Payment of Other Obligations. Borrower shall fail to pay any
                  of the Obligations that are not evidenced by the Notes on the
                  due date thereof (whether due at stated maturity, on demand,
                  upon acceleration or otherwise) and such failure to pay is not
                  remedied within ten (10) days.

         (c)      Misrepresentations. Any warranty, representation, or other
                  statement made or furnished to Agent or Lender by or on behalf
                  of Borrower or in any instrument, certificate or financial
                  statement fumished in compliance with or in reference to this
                  Agreement or any of the other Loan Documents proves to have
                  been false or misleading in any material respect when made or
                  furnished.

         (d)      Breach of Covenants. Borrower shall fail or neglect to
                  perform, keep or observe (i) any covenant contained in
                  Sections 4.2, 4.3, 4.5, 4.6, 5.4(b), 6.4, 8.1(a), 8.1(f),
                  8.1(i), 8.1(j), 8.1(o), 8.1(w), or 8.2 of this Agreement or
                  (ii) any other covenant in this Agreement (other than a
                  covenant of default of which the performance or observance is
                  dealt with specifically elsewhere in this Section 10.1) and
                  the breach of such other covenant is not cured to Agent's
                  satisfaction within thirty (30) days after the sooner to occur
                  of Borrower's receipt of notice of such breach from Agent or
                  the date on which such failure or neglect becomes known to any
                  officer of Borrower.

         (e)      Default Under Other Agreements. Any event of default shall
                  occur under, or Borrower shall default in the performance or
                  observance of any term, covenant, condition or agreement
                  contained in, any of the Other Agreements and such default
                  shall continue beyond any applicable period of grace.

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         (f)      Default Under Security Documents. Any event of default shall
                  occur under, or Borrower shall default in the performance or
                  observance of any term, covenant, condition or agreement
                  contained in, any of the Security Documents and such default
                  shall continue beyond any applicable period of grace.

         (g)      Other Defaults. There shall occur an event of default on the
                  part of Borrower (including specifically, but without
                  limitation, due to nonpayment) under any agreement, document
                  or instrument to which Borrower is a party or by which
                  Borrower or any of its Property is bound, creating or relating
                  to any Indebtedness greater than Five Hundred Thousand Dollars
                  ($500,000) (other than the Obligations) if the payment or
                  maturity of such Indebtedness is or could be accelerated in
                  consequence of such event of default or demand for payment of
                  such Indebtedness is made.

         (h)      Uninsured Losses: Unauthorized Dispositions. Any material
                  loss, theft, damage or destruction not fully covered by
                  insurance (as required by this Agreement and subject to
                  deductibles), or sale, lease or encumbrance of any of the
                  Collateral or the making of any levy, seizure, or attachment
                  thereof or thereon except in all cases as may be specifically
                  permitted by other provisions of this Agreement.

         (i)      Insolvency, etc. Borrower shall cease to be Solvent or shall
                  suffer the appointment of a receiver, trustee, custodian or
                  similar fiduciary, or shall make an assignment for the benefit
                  of creditors, or any petition for an order for relief shall be
                  filed by or against Borrower under the Bankruptcy Code (if
                  against Borrower, the continuation of such proceeding for more
                  than thirty (30) days), or Borrower shall make any offer of
                  settlement, extension or composition to their respective
                  unsecured creditors generally.

         (j)      Business Disruption; Condemnation. There shall occur a
                  cessation of a substantial part of the business of Borrower
                  for a period which significantly affects Borrower's capacity
                  to continue its business, on a profitable basis; or Borrower
                  shall suffer the loss or revocation of any license or permit
                  now held or hereafter acquired by Borrower which is necessary
                  to the continued or lawful operation of its business; or
                  Borrower shall be enjoined, restrained or in any way prevented
                  by court, governmental or administrative order from conducting
                  all or any material part of its business affairs; or any
                  material lease or agreement pursuant to which Borrower leases,
                  uses or occupies any Property shall be cancelled or terminated
                  prior to the expiration of its stated term; or all or any
                  material part of the Collateral shall be taken through
                  condemnation or the value of such Property shall be impaired
                  through condemnation.

         (k)      Change of Control. Cal Dive shall cease to own and control,
                  beneficially and of record all of the issued and outstanding
                  capital stock of ERT or Aquatica or eighty-five percent (85%)
                  of the issued and outstanding capital stock of Canyon, or a
                  controlling interest in Cal Dive is acquired by any Person who
                  is on the Closing Date not a shareholder of Cal Dive.

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         (l)      ERISA.

                  (i)      Both events described in clauses (a) and (b)
                           following shall occur: (a) either (w) proceedings
                           have been instituted to terminate, or a notice of
                           termination has been filed with respect to, any
                           Pension Plan (other than a Multiemployer Plan) by any
                           ERISA Affiliate, the PBGC or any representative of
                           either, or any such Pension Plan shall be terminated
                           under Section 4041 or Section 4042 of ERISA, (x) a
                           Reportable Event has occurred with respect to any
                           Pension Plan (other than a Multiemployer Plan) and
                           continues for a period of sixty (60) days, (y) a
                           Prohibited Transaction has occurred, or (z) any other
                           event or condition which constitutes grounds under
                           Section 4042 of ERISA for the termination of, or
                           appointment of a trustee to administer, a Pension
                           Plan has occurred, and (b) the sum of any liability
                           to PBGC under Section 4062 of ERISA, plus the
                           currently payable obligations of any ERISA Affiliate
                           to fund liabilities under all Pension Plans (when
                           aggregated with the liabilities related to the events
                           described in clause (a) above), shall have a material
                           adverse effect on Borrower's business or finances;

                  (ii)     Any of the events described in clauses (a), (b), or
                           (c) following shall occur with respect to any
                           Multiemployer Plan: (a) any ERISA Affiliate incurs a
                           withdrawal liability under Section 4201 of ERISA, or
                           (b) any Multiemployer Plan is "in reorganization" as
                           that term is defined in Section 4241 of ERISA, or (c)
                           any such Multiemployer Plan is terminated under
                           Section 4041A of ERISA; and the aggregate liability
                           likely to be incurred by any ERISA Affiliate as a
                           result of all or any of the events occurring that are
                           specified in clauses (a), (b) and (c) above when
                           aggregated with any liabilities arising pursuant to
                           any event described in the preceding clause (i),
                           shall have a material adverse effect on Borrower's
                           business or finances.

                  (iii)    Borrower adopts or amends any Plan so as to create or
                           result in a liability or funding obligation that has
                           a material adverse effect on Borrower's business or
                           finances, or when aggregated with all other
                           liabilities described in this Section 10.1(n) has a
                           material adverse effect on Borrower's business or
                           finances.

         (m)      Litigation. Borrower, or any Affiliate, shall challenge or
                  contest in any action, suit or proceeding the validity or
                  enforceability of this Agreement or any of the other Loan
                  Documents, the legality or enforceability of any of the
                  Obligations or the perfection or priority of any Lien granted
                  to Agent.

         (n)      Criminal Forfeiture. Borrower shall be criminally indicted or
                  convicted under any law that could lead to a forfeiture of any
                  material Property of Borrower.

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         (o)      Judgments. Any money judgment, writ of attachment or similar
                  process is entered or filed against Borrower or any of its
                  Property and results in the creation or imposition of any Lien
                  that is not a Permitted Lien.

         Section 10.2 Acceleration of the Obligations. Without in any way
limiting the right of Agent to demand payment of any portion of the Obligations
payable on demand in accordance with Section 3.6 hereof, upon or at any time
after the occurrence of an Event of Default as above provided, all or any
portion of the Obligations due or to become due from Borrower to Lenders
(whether under this Agreement, or any of the other Loan Documents or otherwise)
shall, at Agent's option (or, in the case of an Event of Default under Section
10.1(j) hereof, immediately upon the occurrence thereof), become at once due and
payable without presentment, demand, protest, notice of dishonor, notice of
default, notice of intent to accelerate, notice of acceleration, or any other
notice whatsoever, and Borrower shall forthwith pay to Lenders, in addition to
any and all sums and charges due, the entire principal of and interest accrued
on the Obligations.

         Section 10.3 Remedies. Upon and after the occurrence of an Event of
Default, Agent shall have and may exercise from time to time the following
rights and remedies:

         (a)      All of the rights and remedies of a secured party under the
                  Code, or under other applicable law, and all other legal and
                  equitable rights to which Agent may be entitled, all of which
                  rights and remedies shall be cumulative, and none of which
                  shall be exclusive, and shall be in addition to any other
                  rights or remedies contained in this Agreement or any of the
                  other Loan Documents.

         (b)      The right to take immediate possession of the Collateral, and
                  (i) to require Borrower to assemble the Collateral, at
                  Borrower's expense, and make it available to Agent at a place
                  designated by Agent which is reasonably convenient to both
                  parties, and (ii) to enter any of the premises of Borrower or
                  wherever any of the Collateral shall be located, and to keep
                  and store the same on said premises until sold (and if said
                  premises be the Property of Borrower, Borrower agrees not to
                  charge Agent for storage thereof).

         (c)      The right to sell or otherwise dispose of all or any Inventory
                  or Equipment in its then condition, or after any further
                  manufacturing or processing thereof, at public or private sale
                  or sales, with such notice as may be required by law, in lots
                  or in bulk, for cash or on credit, all as Agent, in its
                  discretion, may deem advisable. Borrower agrees that ten days
                  written notice to Borrower of any public or private sale or
                  other disposition of such Collateral shall be reasonable
                  notice thereof, and such sale shall be at such locations as
                  Agent may designate in said notice. Agent shall have the right
                  to conduct such sales on Borrower's premises, without charge
                  therefor, and such sales may be adjourned from time to time in
                  accordance with applicable law. Agent shall have the right to
                  sell, lease or otherwise dispose of such Collateral, or any
                  part thereof, for cash, credit or any combination thereof, and
                  Agent and Lenders may purchase all or any part of such
                  Collateral at public or, if permitted by law, private sale
                  and, in lieu of actual payment of such purchase price, may set
                  off the amount of such price against the Obligations.

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         (d)      Agent is hereby granted a license or other right to use,
                  without charge, Borrower's labels, patents, copyrights, rights
                  of use of any name, trade secrets, trade names, trademarks and
                  advertising matter, or any Property of a similar nature, as it
                  pertains to the Collateral, in advertising for sale and
                  selling any Collateral and Borrower's rights under all
                  licenses and all franchise agreements shall inure to Agent's
                  benefit.

         (e)      The proceeds realized from the sale of any Collateral may be
                  applied, after allowing two Business Days for collection,
                  first to the costs, expenses and reasonable attorneys' fees
                  incurred by Agent in collecting the Obligations, in enforcing
                  the rights of Agent and Lenders under the Loan Documents and
                  in collecting, retaking, completing, protecting, removing,
                  storing, advertising for sale, selling and delivery any of the
                  Collateral; secondly, to interest due upon any of the
                  Obligations; and thirdly, to the principal of the Obligations.

         (f)      With respect to the face amount of all LC Guaranties and
                  Letters of Credit issued by Agent may, at its option, require
                  Borrower to deposit with Lender funds equal to such face
                  amount, and if Borrower fails to promptly make such deposit,
                  Lenders may advance such amount as a Revolving Loan (whether
                  or not such advance would cause the outstanding balance of
                  Revolving Loans to exceed the Borrowing Base). Any such
                  deposit or advance shall be held by Agent as a reserve to fund
                  future payments on such LC Guaranties and future drawings
                  against such Letters of Credit. At such time as all LC
                  Guaranties have been paid or terminated and all Letters of
                  Credit issued by Issuing Bank have been drawn upon or expired,
                  any amounts remaining in such reserve shall be applied against
                  any outstanding Obligations, or to the extent all Obligations
                  have been indefeasibly paid in full, returned to Borrower.

         Section 10.4 Remedies Cumulative: No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or contained in any other agreement between Agent or Lenders,
or and Borrower, heretofore, concurrently, or hereafter entered into, shall be
deemed cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrower herein contained or of any of
the other rights or remedies of Agent or Lenders as provided by any applicable
law or in equity. The failure or delay of Agent or Lenders to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral or other
rights or remedies shall not operate as a waiver of such Liens, rights, powers
and remedies, but all such Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Agent or Lenders shall have been fully satisfied,
and all Liens, rights, powers, and remedies herein provided for are cumulative
and none are exclusive.

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                             ARTICLE 11. THE AGENT

         Section 11.1 Authorization and Action. Each Lender hereby appoints and
authorizes Agent to take such action on its behalf and to exercise such powers
under this Agreement, and the other Loan Documents as are delegated to Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including, without limitations
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Majority Lenders, and such instructions
shall be binding upon all Lenders; provided, however, that Agent shall not be
required to take any action which exposes Agent to personal liability or which
is contrary to this Agreement or the other Loan Documents or applicable law. To
the extent the Lenders do not receive such materials directly from Borrower,
Agent agrees to give each Lender promptly a copy of each notice, financial
statement or report given to it by Borrower pursuant to the terms of this
Agreement and the other Loan Documents.

         Section 11.2 Agent's Reliance, Etc. Neither Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement or
the other Loan Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing,
Agent: (a) may treat the payee of any Note as the holder thereof until Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to Agent; (b) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representations to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (d) shall not have
any duty beyond Agent's customary practices to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Loan Party or to
inspect the property (including the books and records) of any Loan Party; (e)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed in good faith by it to be genuine and signed or sent by
the proper party or parties.

         Section 11.3 Fleet and Affiliates. With respect to its commitment
hereunder to make Revolving Credit Loans, Fleet shall have the same rights and
powers under this Agreement and the other Loan Documents as any other Lender and
may exercise the same as though it were not Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Fleet in its
individual capacity. Fleet and its Affiliates may lend money to, and generally
engage in any kind of business with, Borrower or any of its Subsidiaries and any
Person who may do business with or own Securities of Borrower or any such
Subsidiary, all as if Fleet were not Agent and without any duty to account
therefor to Lenders.

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         Section 11.4 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon Agent or any other Lender and based
on the financial statements referred to in Section 8.3 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.

         Section 11.5 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrower), ratably according to the respective
principal amounts of the Notes then held by each of them, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of this Agreement or any other Loan Document
or any action taken or omitted by Agent under this Agreement, provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse Agent promptly upon
demand for its ratable shares of any out-of-pocket expenses (including counsel
fees) incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Borrower.

         Section 11.6 Successor Agent. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent which shall
be reasonably acceptable to Borrower. If no successor Agent shall have been so
appointed by the Majority Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank or financial institution organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000).
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Section 11 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.

         Section 11.7 Communications to and from Agent.

         When any notice, approval, consent, waiver or other communication or
action is required or may be delivered by the Lenders hereunder or the other
Loan Documents, action by the Agent shall be effective for all purposes
hereunder; provided, that upon any occasion requiring or permitting an approval,
consent, waiver, election or other action on the part of the Lenders, unless
action by the Agent alone, or only upon instruction of all of the Lenders, is
expressly

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permitted or required hereunder, action shall be taken by the Agent for and on
behalf of or for the benefit of all the Lenders as provided in Section
11.1above. The Borrowers may rely on any communication from the Agent hereunder
or the other Loan Documents, and need not inquire into the propriety of or
authorization for such communication. Upon receipt by the Agent from the
Borrower or any Lender of any communication it will, in turn, promptly forward
such communication to the Lenders; provided, however, that the Agent shall not
be liable for any costs, expenses or losses arising from any failure to so
forward any such communication.

         Section 11.8 Limitations of Agency.

         Notwithstanding anything in the Loan Documents, expressed or implied,
it is agreed by the parties hereto, that the Agent will act under the Loan
Documents as Agent solely for the Lenders and only to the extent specifically
set forth herein, and will, under no circumstances, be considered to be an agent
or fiduciary of any nature whatsoever in respect to any other person.

         Section 11.9 No Representations or Warranty.

         (a)      No Lender (including the Agent) makes to any other Lender any
                  representation or any warranty, expressed or implied, or
                  assumes any responsibility with respect to the Loan or the
                  execution, construction or enforceability of the Loan
                  Documents or any instrument or agreement executed by the
                  Borrower or any other Person in connection therewith.

         (b)      The Agent takes no responsibility for the accuracy or
                  completeness of any information concerning the Borrower
                  distributed by the Agent in connection with the Loan nor for
                  the truth of any representation or warranty given or made
                  herein, nor for the validity, effectiveness, adequacy or
                  enforceability of this Agreement or any of the other Loan
                  Documents.

         Section 11.10 Distribution.

         The Agent shall be responsible for promptly distributing each Lender's
share of all net amounts received by the Agent under any of the Loan Documents
pursuant to the terms of the Loan Documents. Each Lender shall be responsible
for designating by written notice to the Agent the account to which such
distribution shall be deposited.

         Section 11.11 Limitation of Suits.

         All rights of action and claims under this Agreement and the other Loan
Documents of the Lenders shall be prosecuted and enforced only by the Agent. The
Lenders agree that they shall not independently institute any proceedings,
judicial or otherwise, to enforce their rights against the Borrowers under this
Agreement and the other Loan Documents. However, notwithstanding anything
contained in this Section 11.11, the Lenders shall always retain their ability
to retain independent counsel and to protect their rights under this Agreement
and the other Loan Documents.

         Section 11.12 Right of Setoff.

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         Upon the occurrence and during the continuation of any Event of
Default, the Lenders each are hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being expressly waived by
the Borrower), to setoff and apply any and all deposits (general or special,
time or demand, provisional or final, whether or not such setoff results in any
loss of interest or other penalty, and including without limitation all
certificates of deposit) at any time held by the Lenders and all of the
indebtedness arising in connection with this Agreement irrespective of whether
or not such Lender will have made any demand under this Agreement, the Note or
any other Loan Document. The Borrower also hereby grants to each of the Lenders
a security interest in and hereby transfers, assigns, sets over and conveys to
each of the Lenders, as security for payment of the Loan, all such deposits,
funds or property of the Borrower or indebtedness of any Lender to the Borrower.
Should the right of any Lender to realize funds in any manner set forth
hereinabove be challenged and any application of such funds be reversed, whether
by court order or otherwise, the Lenders shall make restitution or refund to the
Borrower pro rata in accordance with their respective portions of the Loan. Each
Lender agrees to promptly notify the Borrower and the Agent after any such
setoff and application, provided that the failure to give such notice will not
affect the validity of such setoff and application. The rights of the Agent and
the Lenders under this Section 11.12 are in addition to other rights and
remedies (including without limitation other rights of setoff) which the Agent
or the Lenders may have. Nothing contained herein shall affect the right of any
Lender to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrower to such Lender.

                           ARTICLE 12. MISCELLANEOUS

         Section 12.1 Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's
agent, may, in either Borrower's or Agent's name, but at the cost and expense of
Borrower:

         (a)      At such time or times hereafter as Agent or said agent may
                  determine and after notice to Borrower, endorse Borrower's
                  name on any checks, notes, acceptances, drafts, money orders
                  or any other evidence of payment or proceeds of the Collateral
                  which come into the possession of Agent or under Agent's
                  control; and

         (b)      At such time or times upon or after the occurrence of an Event
                  of Default as Agent or its agent may determine: (i) demand
                  payment of the Accounts from the Account Debtors, enforce
                  payment of the Accounts by legal proceedings or otherwise, and
                  generally exercise all of Borrower's rights and remedies with
                  respect to the collection of the Accounts; (ii) settle,
                  adjust, compromise, discharge or release any of the Accounts
                  or other Collateral or any legal proceedings brought to
                  collect any of the Accounts or other Collateral; (iii) sell or
                  assign any of the Accounts and other Collateral upon such
                  terms, for such amounts and at such time or times as Agent
                  deems advisable; (iv) take control, in any manner, of any item
                  of payment or proceeds relating to any Collateral; (v)
                  prepare, file and sign Borrower's name to a proof of claim in
                  bankruptcy or similar document against any Account Debtor or
                  to any notice of lien, assignment or satisfaction of lien or
                  similar document in connection with any of the Collateral;
                  (vi) receive,

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                  open and dispose of all mail addressed to Borrower and to
                  notify postal authorities to change the address for delivery
                  thereof to such address as Agent may designate; (vii) endorse
                  the name of Borrower upon any of the items of payment or
                  proceeds relating to any Collateral and deposit the same to
                  the account of Agent on account of the Obligations; (viii)
                  endorse the name of Borrower upon any chattel paper, document,
                  instrument, invoice, freight bill, bill of lading or similar
                  document or agreement relating to the Accounts, Inventory, and
                  any other Collateral; (ix) use Borrower's stationery and sign
                  the name of Borrower to verifications of the Accounts and
                  notices thereof to Account Debtors; (x) use the information
                  recorded on or contained in any data processing equipment and
                  computer hardware and software relating to the Accounts,
                  Inventory, Vessels, Equipment and any other Collateral and to
                  which Borrower has access; (xi) make and adjust claims under
                  policies of insurance; and (xii) do all other acts and things
                  necessary, in Agent's determination, to fulfill Borrower's
                  obligations under this Agreement.

         Section 12.2 Indemnity. Borrower hereby indemnifies, holds harmless,
and shall defend Agent and Lenders and their directors, officers, agents,
counsel and employees ("Indemnified Persons") from and against any and all
losses, liabilities, damages, costs, expenses, suits, actions and proceedings
("Losses") ever suffered or incurred by any Indemnified Person arising out of or
relating to this Agreement or any other transaction contemplated hereby,
including, without limitation, any Losses caused by the negligence of such
Indemnified Person, but not including any Losses caused by the gross negligence
or willful misconduct of such Indemnified Person, and Borrower shall reimburse
Agent and Lenders and each other Indemnified Person for any expenses (including
in connection with the investigation of, preparation for or defense of any
actual or threatened claim, action or proceeding arising therefrom, including
any such costs of responding to discovery requests or subpoenas, regardless of
whether Agent and Lenders or such other Indemnified Person is a party thereto).
Without limiting the generality of the foregoing, this indemnity shall extend to
any claims asserted against Agent and Lenders or any other Indemnified Person by
any Person under any Environmental Laws or similar laws by reason of Borrower's
or any other Person's failure to comply with laws applicable to solid or
hazardous waste materials or other toxic substances. Borrower may select counsel
with respect to any Losses; provided, however, each Indemnified Person shall
have the right to monitor the progress of any claims, suits and administrative
proceedings defended by Borrower hereunder with counsel of such Indemnified
Person's choice, or conduct its defense through counsel of such Indemnified
Person's choice, in the event that (i) such Indemnified Person determines in
good faith that the conduct of its defense by Borrower could be materially
prejudicial to such Indemnified Person's interests or that other reasonable
grounds exist which demonstrate a lack of effectiveness or high level of quality
in the conduct of such defense by Borrower, and (ii) prior to retaining such
counsel for such purpose, such Indemnified Person shall consult with Borrower
and shall attempt in good faith to agree upon counsel to conduct the defense on
behalf of Borrower and such Indemnified Person, and in each case the fees and
disbursements of such counsel shall be paid by Borrower; provided, however, that
if such mutual agreement is not reached within a reasonable time on selecting
counsel, then such Indemnified Person may retain its own counsel at Borrower's
expense. Notwithstanding any contrary provision of this Agreement, the
obligation of Borrower under this Section 12.2 shall survive the payment in full
of the Obligations and the termination of this Agreement.

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         Section 12.3 Reimbursement of Expenses. Without limiting Borrower's
obligations for payment of expenses as provided elsewhere in this Agreement or
in any other Loan Document, if, at any time or times prior or subsequent to the
date hereof, regardless of whether or not an Event of Default then exists or any
of the transactions contemplated hereunder are concluded, Agent or Lenders incur
any out-of-pocket expenses (including, without limitation, the fees and expenses
of Agent or Lenders' attorneys if Agent or Lenders retain legal counsel) in
connection with: (a) the negotiation and preparation of the Loan Documents, any
amendment or modification of any Loan Documents; or (b) the administration of
the Loan Documents and the transactions contemplated thereby; (c) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, Lenders, Borrower or any other Person) in any way relating to the
Collateral, any Loan Documents, Agent's, Lenders' and Borrower's relationship,
or Borrower's affairs; (d) any attempt to enforce any rights of Agent or Lenders
against Borrower or any other Person which may be obligated to Agent or Lenders
by virtue of any Loan Documents, including, without limitation, the Account
Debtors; (e) the exercise or enforcement of any rights, remedies or privileges
of Lender under the Loan Documents or applicable law; (f) the analysis of
information received in connection with any Loan Documents; (g) the audit or
appraisal of any Collateral or Borrower's books and records; (h) the granting of
any consents or waivers requested in connection with the Loan Documents; (i) the
collection of any Obligations; or (j) any attempt to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral; then, in any such event, all expenses, costs, charges and
other fees incurred by Agent, Lender or their attorneys or relating to any of
the events or actions described in this Section 12.4 shall be payable, on
demand, by Borrower to Agent, and shall be additional Obligations hereunder
secured by the Collateral. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: recording costs; appraisal
costs; accountants' fees, costs and expenses; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses;
attorney and paralegal fees, costs and expenses; long distance telephone
charges; air express charges; telegram and facsimile charges; wire transfer
fees; secretarial overtime charges; and expenses for travel, lodging and food.
Additionally, if any taxes (excluding taxes imposed upon or measured by the net
income of Agent or Lenders) shall be payable on account of the execution or
delivery of any of the Loan Documents, or the creation of any of the Obligations
hereunder, by reason of any existing or hereafter enacted federal or state
statute, Borrower will pay all such taxes, including, but not limited to, any
interest and penalties thereon, and will indemnify and hold Lender harmless from
and against liability in connection therewith. Notwithstanding anything else
contained in this Agreement, Borrower shall have no obligation to reimburse or
indemnify any Lender for its costs, expenses or losses if they arise out of an
action by Borrower to enforce such Lender's several obligations under this
Agreement and Borrower is successful in such an action.

         Section 12.4 Indulgences Not Waivers. Agent's failure, at any time or
times hereafter, to require strict performance by Borrower of any provision of
this Agreement shall not waive, affect or diminish any right of Agent thereafter
to demand strict compliance and performance therewith. Any suspension or waiver
by Agent of an Event of Default by Borrower under this Agreement or any of the
other Loan Documents shall not suspend, waive or affect any other Event of
Default by Borrower under this Agreement or any of the other Loan Documents,
whether the same is prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default by

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Borrower under this Agreement or any of the other Loan Documents shall be deemed
to have been suspended or waived by Agent, unless such suspension or waiver is
by an instrument in writing specifying such suspension or waiver and is signed
by a duly authorized representative of Agent and sent to Borrower.

         Section 12.5 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

         Section 12.6 Modification of Agreement; Sale of Interest.

         (a)      The Loan Documents constitute the complete agreement between
                  the parties with respect to the subject matter hereof and may
                  not be modified, altered or amended except by an agreement in
                  writing signed by Borrower, Majority Lenders and, if required
                  by the terms hereof, Agent. No Borrower may sell, assign or
                  transfer any of the Loan Documents, or any of the Obligations,
                  or any portion thereof, including without limitation, any
                  Borrower's rights, title, interests, remedies, powers and
                  duties hereunder or thereunder. Each Borrower hereby consents
                  to Agent's and any Lender's sale of participation, assignment,
                  transfer or other disposition in accordance with the terms of
                  this Section 12.6, at any time or times, of any of the Loan
                  Documents or of any portion thereof or interest therein,
                  including, without limitation, Agent's and any Lender's
                  rights, title, interests, remedies, powers or duties
                  thereunder, whether evidenced in writing or not; Each Borrower
                  agrees that it will use its best efforts to assist and
                  cooperate with Agent and any Lender in any manner reasonably
                  requested by Agent or such Lender to effect the sale of
                  participation in or assignment of any of the Loan Documents or
                  of any portion thereof or interest therein, including, without
                  limitation, assistance in the preparation of appropriate
                  disclosure documents or placement memoranda and executing
                  appropriate amendments to the signature pages hereto to
                  reflect the addition of any Lenders and such Lender's
                  respective commitments. The foregoing notwithstanding, except
                  with respect to sales, assignments or transfers to Affiliates
                  under common control pursuant to which the selling, assigning
                  or transferring Lender retains its voting rights, no Lender
                  shall sell participate or assign, transfer or otherwise
                  dispose of any of the Loan Documents or any portion thereof or
                  interest therein, without the prior written consent of Agent,
                  which shall not be unreasonably withheld.

         (b)      In respect to any assignment by a Lender of its rights and
                  obligations under this Agreement (including, without
                  limitation, all or a portion of its Revolving Credit
                  Commitments, the Revolving Loans owed to it and the Note held
                  by it (i) each such assignment shall be of a uniform, and not
                  a varying, percentage of all rights and obligations, (ii)
                  except in the case of an assignment of all of a Lender's
                  rights and obligations under this Agreement, (A) the aggregate
                  amount of the Revolving Credit Commitments of the assigning
                  Lender being assigned pursuant to each such assignment
                  (determined as of the date of the Assignment and Acceptance

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<PAGE>

                  with respect to such assignment) shall in no event be less
                  than $2,000,000, and in integral multiples of $1,000,000
                  thereafter, or such lesser amount as to which Borrower and the
                  Agent may consent to and (B) after giving effect to each such
                  assignment in the amount of the Revolving Credit Commitments
                  of the Assigning Lender shall in no event be less than
                  $2,000,000, (iii) the parties to each such assignment shall
                  execute and deliver to the Agent, for its acceptance, an
                  Assignment and Acceptance in the form of Exhibit Y hereto (an
                  "Assignment and Acceptance"), together with any Note subject
                  to such assignment and a processing and recordation fee of
                  $3,500, and (iv) any Lender may without the consent of
                  Borrower or the Agent, and without paying any fee, assign to
                  any Affiliate of such Lender that is a bank or financial
                  institution all of its rights and obligations under this
                  Agreement. The foregoing notwithstanding, no Person may become
                  a Lender or a Participating Lender hereunder, unless such
                  Person is a financial institution having stockholders' equity
                  (or the equivalent) of at least One Hundred Million Dollars
                  ($100,000,000). Upon such execution, delivery, acceptance and
                  recording, from and after the effective date specified in such
                  Assignment and Acceptance (x) the assignee thereunder shall be
                  a party hereto and, to the extent that rights and obligations
                  hereunder have been assigned to it pursuant to such Assignment
                  and Acceptance, have the rights and obligations of a Lender
                  hereunder and (y) the Lender assignor thereunder shall, to the
                  extent that rights and obligations hereunder have been
                  assigned by it pursuant to such Assignment and Acceptance,
                  relinquish its rights and be released from its obligations
                  under this Agreement (and, in the case of an Assignment and
                  Acceptance covering all of the remaining portion of an
                  assigning Lender's rights and obligations under this
                  Agreement, such Lender shall cease to be a party hereto). If,
                  pursuant to this Section 12.6, any interest in this Agreement
                  or any Revolving Credit Loan or any Note is transferred to any
                  transferee which is organized under the laws of any
                  jurisdiction other than the United States or any state
                  thereof, the transferor Lender shall cause such transferee
                  (other than any Participating Lender), and may cause any
                  Participating Lender concurrently with the effectiveness of
                  such transfer, (a) to represent to the transferor Lender (for
                  the benefit of the transferor Lender, Agent and Borrower) that
                  under applicable law and treaties no Taxes will be required to
                  be withheld by Agent, Borrower or the transferor Lender with
                  respect to any payments to be made to such transferee in
                  respect of the Revolving Credit Loans, or the Notes, (b) to
                  furnish to the transferor Lender, Agent or Borrower either
                  U.S. Internal Revenue Service Form 4224 or U.S. Internal
                  Revenue Service Form 1001 (wherein such transfer claims
                  entitlement to complete exemption form U.S. federal
                  withholding tax on all interest payments hereunder), and (c)
                  to agree (for the benefit of the transferor Lender, Agent and
                  Borrower) to provide the transferor Lender, Agent and Borrower
                  a new Form 4224 or Form 1001 upon the obsolescence of any
                  previously delivered form and comparable statements in
                  accordance with applicable U.S. laws and regulations and
                  amendments duly executed and completed by such transferee, and
                  to comply from time to time with all applicable U.S. laws and
                  regulations with regard to such withholding tax exemption.

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<PAGE>

         (c)      In addition to, and not in limitation of the foregoing,
                  Borrower acknowledges that if Fleet intends to sell, assign or
                  participate any of its Revolving Credit Commitments, Borrower
                  agrees to use its best efforts to assist Fleet in any respect
                  to any such sale, assignment or participation.

                  (i)      In the event any Lender assigns or otherwise
                           transfers all or any part of its Note any such Lender
                           shall so notify Borrower and Borrower shall, upon the
                           request of such Lender, issue new Notes in exchange
                           for the old Notes.

                  (ii)     Any Lender may at any time sell to one or more
                           commercial banks, financial institutions, or other
                           Persons not Affiliates of Borrower (a "Participating
                           Lender") participating interests in any Loans, the
                           Revolving Credit Commitments of that Lender and the
                           other interests of that Lender (the "Originating
                           Lender") hereunder and under the other Loan
                           Documents; provided, however, that (i) the
                           Originating Lender's obligations under this Agreement
                           shall remain unchanged, (ii) the Originating Lender
                           shall remain solely responsible for the performance
                           of such obligations, (iii) Borrower and the Agent
                           shall continue to deal solely and directly with the
                           Originating Lender in connection with the Originating
                           Lender's rights and obligations under this Agreement
                           and the other Loan Documents, and (iv) no Lender
                           shall grant any participation under which the
                           Participating Lender shall have rights to approve any
                           amendment to or waiver of this Agreement or the Loan
                           Documents, except to the extent such amendment or
                           waiver would: (A) extend the final maturity date for
                           payment of the Loans in which such Participating
                           Lender is participating; (B) reduce the interest rate
                           or the amount of principal or fees applicable to the
                           Loans in which such Participating Lender is
                           participating; or (C) release all or substantially
                           all of the Collateral, except as expressly provided
                           herein. In those cases in which an Originating Lender
                           grants rights to a Participating Lender to approve
                           any amendment to or waiver of this Agreement or the
                           other Loan Documents respecting the matters described
                           in clauses (A) through (C) of the preceding sentence,
                           the relevant participation agreements shall provide
                           for a voting mechanism whereby a majority of the
                           amount of such Lender's portion of the Loans
                           (irrespective of whether held by such Lender or
                           participated) shall control the vote for all of such
                           Lender's portion of the Loans. In the case of any
                           participation, the Participating Lender shall not
                           have any rights under this Agreement or any of the
                           other Loan Documents entered into in connection
                           herewith (the Participating Lender's right against
                           such Lender in respect of such participation to be
                           those set forth in the participation or other
                           agreement executed by such Lender and the
                           Participating Lender relating thereto). In no event
                           shall any Participating Lender grant a participation
                           in its participation interest in the Loans without
                           the prior written consent of Agent, which approval
                           shall not be unreasonably withheld. All amounts
                           payable by Borrower hereunder shall be determined as
                           if the Originating Lender had not sold any such
                           participation, except that, if amounts outstanding
                           under this Agreement are due and unpaid, or shall
                           have been

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<PAGE>

                           declared or shall have become due and payable upon
                           the occurrence of an Event of Default, each
                           Participating Lender shall be deemed to have the
                           right of set-off in respect of its participating
                           interest in amounts owing under this Agreement to the
                           same extent as if the amount of its participating
                           interest were owing directly to it as a Lender under
                           this Agreement.

                  (iii)    Notwithstanding any other provision in this
                           Agreement, any Lender may at any time create a
                           security interest in, or pledge, all or any portion
                           of its rights under and interest in this Agreement in
                           favor of any Federal Reserve Bank in accordance with
                           Regulation A of the Board or U.S. Treasury Regulation
                           31 C.F.R. Section 203.14, and such Federal Reserve
                           Bank may enforce such pledge or security interest in
                           any manner permitted under applicable law.

                  (iv)     No amendment or waiver of any provision of this
                           Agreement or the Notes or any other Loan Document,
                           nor consent to any departure by Borrower therefrom,
                           shall in any event be effective unless the same shall
                           be in writing and signed by the Majority Lenders, and
                           then such waiver or consent shall be effective only
                           in the specific instance and for the specific purpose
                           for which given; provided, however: (a) that no
                           amendment, waiver or consent -------- shall, unless
                           in writing and signed by each Lender affected thereby
                           do any of the following: (i) increase the aggregate
                           Revolving Credit Commitments, or subject any Lender
                           to any additional obligations, (ii) reduce the
                           principal of, or decrease the rate of interest on,
                           the Notes or other amount payable hereunder other
                           than those payable only to Fleet in its capacity as
                           Agent which may be reduced by Fleet unilaterally,
                           (iii) postpone any date fixed for any payment of
                           principal of, or interest on, the Notes or other
                           amounts payable hereunder, other than those payable
                           only to Fleet in its capacity as Agent which may be
                           postponed by Fleet unilaterally, (iv) reduce the
                           aggregate unpaid principal amount of the Notes, or
                           the number of Lenders which shall be required for the
                           Lenders or any of them to take any action hereunder,
                           (v) release or discharge any Person liable for the
                           performance of any obligations of Borrower hereunder
                           or under any of the Loan Documents, (vi) increase the
                           advance rates contained in the definition of the
                           Borrowing Base, (vii) to the extent Agent's or
                           Lenders' consent is required by the terms hereof,
                           release all or substantially all of the Collateral or
                           (viii) amend this Section 12.6; (b) that no
                           amendment, waiver or consent shall be effective
                           unless in writing and signed by either Required
                           Lenders or all Lenders, as required by the terms
                           hereof and, if such amendment, waiver or consent
                           affects Agent or its rights hereunder, Agent.

                  (v)      The foregoing notwithstanding, Agent on behalf of
                           itself and all Lenders may waive Events of Default
                           arising from the breach of any of the financial
                           covenants contained in Section 8.3 if the deviation
                           from each such financial covenant does not exceed ten
                           percent (10%).

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         Section 12.7 Cumulative Effect: Conflict of Terms. The provisions of
the Other Agreements and the Security Documents are hereby made cumulative with
the provisions of this Agreement. Except as otherwise provided in Section 3.6
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.

         Section 12.8 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts taken together shall constitute but
one and the same instrument.

         Section 12.9 Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto shall be in writing and shall be
sent by certified or registered mail return receipt requested, by Federal
Express or similar courier company or by telefax during normal business hours
and, unless otherwise expressly provided herein, shall be deemed to have been
validly served, given or delivered when delivered against receipt or one
Business Day after deposit in the U.S. mail postage prepaid, or, in the case of
telegraphic notice, when delivered to the telegraph company, addressed as
follows:

         (a)      If to Agent:      Fleet Capital Corporation
                                    5950 Sherry Lane, Suite 300
                                    Dallas, Texas 75225
                                    Attn: Loan Administration Manager
                                    Fax No: (214) 706-7066

         (b)      If to Lenders:    Fleet Capital Corporation
                                    5950 Sherry Lane, Suite 300
                                    Dallas, Texas 75225
                                    Attn: Loan Administration Manager
                                    Fax No: (214) 706-7066

                                    Southwest Bank of Texas, N.A.
                                    5 Post Oak Park
                                    4400 Post Oak Parkway
                                    Houston, Texas 77027
                                    Attention: Steve Stephens
                                    Fax No: (713) 232-1533

                                    Whitney National Bank
                                    P.O. Box 61260
                                    New Orleans, Louisiana  70161
                                    Attention: Kevin Rafferty
                                    Fax No: (504) 586-3409

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<PAGE>

         (c)      If to Borrower:   Cal Dive International, Inc.
                                    400 N. Sam Houston Parkway E., Suite 400
                                    Houston, Texas 77060-3500
                                    Attention: Wade Pursell
                                    Fax No: (281) 618-0505

or to such other address as each party may designate for itself by like notice
given in accordance with this Section 12.10; provided, however, that any notice,
request or demand to or upon Agent or Lenders pursuant to Sections 2.4 or 3.4
shall not be effective until received by Agent or Lenders. Any written notice
that is not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice is actually received by the noticed
party.

         Section 12.10 Agent or Lenders' Consent. Whenever Agent's or Lenders'
consent is required to be obtained under this Agreement, any of the Other
Agreements or any of the Security Documents as a condition to any action,
inaction, condition or event, Agent or Lenders shall be authorized to give or
withhold such consent in their good faith discretion (unless otherwise
specifically provided herein) and to condition their consent upon the giving of
additional collateral security for the Obligations, the payment of money or any
other matter.

         Section 12.11 Time of Essence. Time is of the essence of this
Agreement, the Other Agreements and the Security Documents.

         Section 12.12 Interpretation. No provision of this Agreement or any of
the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision.

         Section 12.13 No Fiduciary Relationship or Joint Venture. No provision
herein or in any of the other Loan Documents and no course of dealing between
the parties hereto shall be deemed to create any fiduciary relationship among
Agent or Lenders and Borrower or to create any partnership or joint venture
among Lenders and Borrower.

         Section 12.14 Publicity. Each Borrower and Lender hereby consents to
Agent's use of the name or tradestyle of such Person in any announcements or
advertisements relating to the completion of the transactions contemplated
hereby and the role played by Agent in providing financing to Borrower hereunder
in such media and in such manner as Agent, with the prior written consent of
Borrower, which shall not be unreasonably withheld or delayed, deems
appropriate.

         Section 12.15 Destruction of Borrower's Documents. Any documents,
schedules, invoices or other papers delivered to Agent may be destroyed or
otherwise disposed of by Agent one (1) month after they are delivered to or
received by Agent, unless Borrower requests, in writing, the return of the said
documents, schedules, invoices or other papers and makes arrangements, at
Borrower's expense, for their return; provided, that in no event shall Agent be
liable to Borrower for any failure to retain Borrower's records for any period
of time or to return such records to Borrower.

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         Section 12.16 Nonapplicability of Chapter 346. Borrower, Agent and
Lenders hereby agree that Chapter 346 of the Texas Finance Code (regulating
certain revolving loans and revolving tri-party accounts) shall not apply to
this Agreement or any of the other Loan Documents.

         Section 12.17 No Preservation or Marshaling. Borrower agrees that Agent
and Lenders have no obligation to preserve rights to the Collateral against
prior parties or to marshal any Collateral for the benefit of any Person.

         Section 12.18 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS, TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF TEXAS; PROVIDED, HOWEVER, THAT IF ANY OF
THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE LAWS
OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S
OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF TEXAS. AS PART
OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR
FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER, AGENT OR BORROWER
HEREBY CONSENTS AND AGREES THAT THE DISTRICT COURT OF DALLAS COUNTY, TEXAS, OR,
AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE U.S. DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND
AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF
OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING FOR SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF

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ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORM OR
JURISDICTION.

         Section 12.19 WAIVERS BY BORROWER. BORROWER WAIVES (a) THE RIGHT TO
TRIAL BY JURY (WHICH AGENT AND LENDER HEREBY ALSO WAIVE) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (b) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, INTENT TO
ACCELERATE, ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION
OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT OR LENDERS
ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER AGENT OR LENDERS MAY DO IN THIS REGARD; (c) NOTICE PRIOR TO TAKING
POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE
REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO EXERCISE ANY OF AGENT'S
REMEDIES; (d) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND
(e) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND LENDERS' ENTERING INTO THIS
AGREEMENT AND THAT AGENT AND LENDER ARE RELYING UPON THE FOREGOING WAIVERS IN
THEIR FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT. BORROWER HEREBY AGREES THAT IT SHALL HAVE NO
RIGHT TO REQUIRE AGENT TO TERMINATE AGENT'S SECURITY INTEREST IN THE COLLATERAL
OR IN ANY OF THE PROPERTY OF BORROWER UNTIL THE OCCURRENCE OF EACH OF THE
FOLLOWING: (i) PAYMENT IN FULL IN IMMEDIATELY AVAILABLE FUNDS OF ALL OBLIGATIONS
KNOWN EXISTING, THREATENED OR CLAIMED WHICH CAN BE GIVEN A MONETARY VALUE; (ii)
TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 3.4; AND (iii)
EXECUTION BY BORROWER AND BY ANY PERSON WHOSE LOANS TO BORROWER ARE USED IN
WHOLE OR IN PART TO SATISFY THE OBLIGATIONS OF AN AGREEMENT INDEMNIFYING AGENT
AND LENDERS FROM ANY LOSS OR DAMAGE AGENT OR LENDERS MAY INCUR AS THE RESULT OF
DISHONORED CHECKS OR OTHER ITEMS OF PAYMENT RECEIVED BY AGENT AND LENDERS FROM
BORROWER OR ANY ACCOUNT DEBTOR AND APPLIED TO THE OBLIGATIONS, AND BORROWER
HEREBY WAIVES ANY RIGHT TO REQUIRE A TERMINATION OF AGENT'S SECURITY INTEREST
PRIOR TO THE OCCURRENCE OF EACH OF THE ABOVE-DESCRIBED EVENTS.

         Section 12.20 DTPA WAIVER. BORROWER HEREBY WAIVES ALL PROVISIONS OF THE
DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT (TEX. BUS. & COM. CODE ANN.
Section 17.01 ET SEQ. (VERNON SUPP. 1987)), OTHER THAN SECTION 17.555

                                       95
<PAGE>

THEREOF PERTAINING TO CONTRIBUTION AND INDEMNITY, AND EXPRESSLY WARRANTS
AND REPRESENTS THAT BORROWER (a) HAS ASSETS OF $5,000,000 OR MORE, (b) HAS
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE BORROWER
TO EVALUATE THE MERITS AND RISKS OF THIS TRANSACTION, (c) IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO AGENT AND LENDERS, AND
(d) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

         Section 12.21 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

         Section 12.22 RELEASE. BORROWER ACKNOWLEDGES AND AGREES THAT (a) IT HAS
NO CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE AMENDED LOAN
DOCUMENTS AND THE PERFORMANCE OF ITS OBLIGATIONS THEREUNDER, OR (b) IF IT HAS
ANY SUCH CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE AMENDED LOAN
DOCUMENTS AND/OR ANY TRANSACTION RELATED TO THE AMENDED LOAN DOCUMENTS, SAME ARE
HEREBY WAIVED, RELINQUISHED AND RELEASED IN CONSIDERATION OF AGENT'S AND
LENDERS' EXECUTION AND DELIVERY OF THIS AGREEMENT.

         Section 12.23 Amendment and Restatement. This Agreement and the Notes
are given in amendment, restatement, renewal and extension (and not in
extinguishment or satisfaction) of the Amended Loan Documents. With respect to
matters relating to the period prior to the date hereof, all the provisions of
the Amended Loan Documents are hereby ratified and confirmed and shall remain in
full force and effect.

                         [Remainder of page left blank]

                                       96
<PAGE>

         IN WITNESS WHEREOF, this Agreement has been duly executed in _________,
Texas, on the day and year specified at the beginning hereof.

                                               BORROWER:

                                               CAL DIVE INTERNATIONAL, INC.

                                               By:
                                                  -----------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                               ENERGY RESOURCE TECHNOLOGY, INC.

                                               By:
                                                  -----------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                               AQUATICA, INC.

                                               By:
                                                  -----------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                               CANYON OFFSHORE, INC.

                                               By:
                                                  -----------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                               LENDERS:

                                               SOUTHWEST BANK OF TEXAS, N.A.

                                               By:
                                                  -----------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                               FLEET CAPITAL CORPORATION

                                               By:
                                                  -----------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                       97
<PAGE>

                                               WHITNEY NATIONAL BANK

                                               By:
                                                  -----------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                               AGENT:

                                               FLEET CAPITAL CORPORATION

                                               By:
                                                  -----------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                       98
<PAGE>

                                   SCHEDULE 1

                                 LIST OF LENDERS

<Table>
<Caption>
                                                            PERCENTAGE OF
                                    AMOUNT OF REVOLVING    REVOLVING CREDIT
 NAME AND ADDRESS OF LENDER          CREDIT COMMITMENT       COMMITMENT
-----------------------------       -------------------    ----------------
<S>                                 <C>                    <C>
Fleet Capital Corporation
5950 Sherry Lane, Suite 300             $35,000,000             58.3%
Dallas, Texas 75225

Southwest Bank of Texas, N.A.
5 Post Oak Park                         $ 5,000,000              8.3%
4400 Post Oak Parkway
Houston, Texas 77027

Whitney National Bank
P.O. Box 61260                          $20,000,000             33.3%
New Orleans, Louisiana 70161

</Table>

<PAGE>

                                   SCHEDULE 2

                                 LIST OF VESSELS

<Table>
<Caption>
                  VESSEL                FLAG         OFFICIAL NUMBER
                  ------                ----         ---------------
<S>           <C>                     <C>            <C>
     1.       CAL DIVER I               U.S.             555055
     2.       CAL DIVER II              U.S.             582698
     3.       CAL DIVER III             U.S.             590456
     4.       CAL DIVER V               U.S.             536440
     5.       CAL DIVE BARGE I          U.S.             610175
     6.       MR. JOE                   U.S.             547927
     7.       WITCH QUEEN             Bahamas            726136
     8.       ECLIPSE                 Bahamas           8000430
     9.       MYSTIC VIKING           Bahamas            800547
    10.       MERLIN                  Bahamas            730930
    11.       SEA SORCERESS           Bahamas           9000009
    12.       UNCLE JOHN              Bahamas            728134
</Table>

<PAGE>

                                   SCHEDULE 3

                                REDUCTION AMOUNT<PAGE>
                                                                     EXHIBIT 4.2

                             PARTICIPATION AGREEMENT

                          Dated as of November 8, 2001

                                      among

                        ENERGY RESOURCE TECHNOLOGY, INC.
                    Lessee, Construction Agent and Guarantor

                          CAL DIVE INTERNATIONAL, INC.
                               as Parent Guarantor

              CAL DIVE/GUNNISON BUSINESS TRUST NO. 2001-1, through
                            WILMINGTON TRUST COMPANY,
          not in its individual capacity, except as expressly provided
     herein, but solely as trustee under the Trust Agreement dated as of the
                                  date hereof,
                            Owner Trustee and Lessor

                     THE PERSONS NAMED ON SCHEDULE I HERETO,
                             as Certificate Holders

                                  BANK ONE, NA,
                     and the various financial institutions
                party to the Loan Agreement from time to time as
                       the Tranche A and Tranche B Lenders

                                       and

                                  BANK ONE, NA,
                                      Agent

                                   ----------

                 Synthetic Lease Financing of Gunnison Platform

                         BANC ONE CAPITAL MARKETS, INC.
                                  Lead Arranger

<PAGE>

                             PARTICIPATION AGREEMENT

         THIS PARTICIPATION AGREEMENT (this "PARTICIPATION AGREEMENT") dated as
of November 8, 2001 is entered into by and among ENERGY RESOURCE TECHNOLOGY,
INC., a Delaware corporation, as Lessee, Construction Agent and Guarantor
(together with its permitted successors and assigns, in its capacity as Lessee,
the "LESSEE", in its capacity as Construction Agent, and in its capacity as
Guarantor; CAL DIVE INTERNATIONAL, INC. a Minnesota corporation, as Parent
Guarantor; WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its
individual capacity except as expressly provided herein, but solely as trustee
under the Trust Agreement (in such capacity, together with its successors and
permitted assigns under the Trust Agreement the "OWNER TRUSTEE"); CAL
DIVE/GUNNISON BUSINESS TRUST NO. 2001-1-1, a Delaware business trust (the
"LESSOR"); the Persons named on Schedule I hereto (together with their
respective permitted successors, assigns and transferees), each as owners of an
undivided beneficial interest in the Lessor ("CERTIFICATE HOLDERS"); BANK ONE,
NA (with its principal office in Chicago, Illinois) and various financial
institutions party to the Loan Agreement from time to time as the Tranche A
Lenders and various financial institutions party to the Loan Agreement from time
to time as the Tranche B Lenders thereunder (together with each of their
permitted successors and assigns, the "LENDERS"); and BANK ONE, NA (with its
principal office in Chicago, Illinois), in its capacity as Agent (together with
its successors and assigns in such capacity from time to time, the "AGENT") for
the Lenders;

                                   WITNESSETH:

         WHEREAS, pursuant to the terms and provisions of the Trust Agreement
(which is substantially in the form of Exhibit A hereto), the Certificate
Holders have authorized the Owner Trustee to take certain actions with respect
to the transactions contemplated hereby for the purpose of providing financing
for the construction of a production platform known as the Gunnison Platform
(the "Platform").

         WHEREAS, Lessor shall own a twenty percent (20%) undivided beneficial
interest in the Platform (such undivided interest being referred to as the
"Property") and as such, subject to the terms of this Agreement and the other
Operative Documents, shall provide financing for the Construction Costs relating
to the Platform in accordance with the terms of the Operative Documents in a
maximum aggregate amount of $67,000,000 (the "Aggregate Commitment"). Subject to
the terms and conditions of this Agreement and other Operative Documents,
94.076745% of the Aggregate Commitment (i.e $63,031,419, in the aggregate) will
be provided through Advances made by the Lenders and 5.923255% of the Aggregate
Commitment (i.e. $3,968,581, in the aggregate) will be provided through Advances
made by the Certificate Holders. The Construction Costs are equal to
approximately 20% of the total cost of construction of the Platform.

         WHEREAS, the remaining cost of construction of the Platform will be
provided pursuant to a separate financing arrangement by Kerr-McGee (the
"Kerr-McGee Financing") and pursuant to a separate financing or purchase
arrangement by CXY Energy Offshore Inc. (fka Nexen Petroleum Offshore U.S.A.
Inc.). Funds provided through the Kerr-McGee Financing will represent
approximately 50% of the total cost of construction of the Platform and funds
provided

                                                         Participation Agreement
<PAGE>

by, or for the benefit of, CXY Energy Offshore Inc. will represent approximately
30% of the total cost of construction of the Platform.

         WHEREAS, the finance parties under the Kerr-McGee Financing will,
subject to the terms and conditions of the documents evidencing that
transaction, provide Kerr-McGee Oil & Gas Corporation with financing in the
maximum aggregate amount of $157,000,000 (the "Kerr-McGee Commitment"). Subject
to the terms and condition of the documents evidencing the Kerr-McGee Financing,
approximately 95.54% of the Kerr-McGee Commitment (i.e $150,000,000, in the
aggregate) will be provided through loan advances made by the lenders under that
facility and approximately 4.46% of the Kerr-McGee Commitment (i.e. $7,000,000,
in the aggregate) will be provided through loan advances made by the certificate
holders under that facility.

         WHEREAS, pursuant to the financing arrangements set forth and
contemplated by the terms of this Agreement, (i) Lessee, as Construction Agent,
shall cause the construction of the Platform and shall apply Advances from
Lessor to pay the costs thereof, (ii) Lessee and Parent Guarantor shall grant to
Lessor such rights in and to the Governmental Leases and the Site (each as
defined in Appendix A) and provide such other covenants of support as are set
forth in Section 8(d)(xix) in connection therewith, and (iii) Lessee shall lease
the Property from the Lessor for the Basic Term pursuant to that certain Lease
Agreement and Mortgage and Deed of Trust (which is substantially in the form of
Exhibit B hereto) dated of even date herewith (the "Lease").

         WHEREAS, the Certificate Holders are willing personally to provide a
portion of the funding of the costs of undertaking and completing those actions
set forth above;

         WHEREAS, the Lessor wishes to obtain, and the Lenders are willing to
provide, financing of the remaining portion of the funding of the costs of
undertaking and completing those actions set forth above;

         WHEREAS, the Lessee contemplates leasing from the Lessor the Property;
and

         WHEREAS, to secure such financing, the Lenders will have, to the extent
provided in the Operative Documents, the benefit of a Lien from the Lessor on
the Lessor's right, title and interest in the Property and on substantially all
of the Lessor's rights against the Lessee under the Lease and against the
Construction Agent under the Construction Agency Agreement;

         NOW, THEREFORE, in consideration of the mutual agreements contained in
this Participation Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

SECTION 1. DEFINITIONS; INTERPRETATION

         Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix A hereto
for all purposes hereof; and the rules of interpretation set forth in Appendix A
hereto shall apply to this Participation Agreement.

                                                         Participation Agreement

                                       2
<PAGE>

SECTION 2. DOCUMENTATION DATE; AVAILABILITY DATE.

         (a) DOCUMENTATION DATE. The Documentation Date (the "Documentation
Date") shall occur on the earliest date on which the following conditions
precedent shall have been satisfied:

                  (i) PARTICIPATION AGREEMENT. This Participation Agreement
         shall have been duly authorized, executed and delivered by the parties
         hereto.

                  (ii) LEASE. The Lease shall have been duly authorized,
         executed and delivered by the parties thereto.

                  (iii) CONSTRUCTION AGENCY AGREEMENT; CONSTRUCTION DOCUMENTS
         ASSIGNMENT. The Construction Agency Agreement and the Construction
         Documents Assignment shall have been duly authorized, executed and
         delivered by the parties thereto.

                  (iv) CONSTRUCTION AGENCY AGREEMENT ASSIGNMENT. The
         Construction Agency Agreement Assignment shall have been duly
         authorized, executed and delivered by the Lessor, as assignor, in favor
         of the Agent, and consented to and acknowledged by the Construction
         Agent.

                  (v) LOAN AGREEMENT. The Loan Agreement shall have been duly
         authorized, executed and delivered by the parties thereto.

                  (vi) ASSIGNMENT OF LEASES AND RENTS. The Assignment of Leases
         and Rents shall have been duly authorized, executed and delivered by
         the Lessor, as assignor, in favor of the Agent, and consented to and
         acknowledged by the Lessee.

                  (vii) FEES. The Lessee shall have paid in full all fees then
         due and payable pursuant to the Fee Letter.

                  (viii) OTHER OPERATIVE DOCUMENTS. The other Operative
         Documents to be delivered in connection with the Documentation Date
         shall have been duly authorized, executed and delivered by the parties
         thereto.

                  (ix) OTHER CONDITIONS PRECEDENT. The conditions precedent set
         forth in Section 9(a) shall have been satisfied or waived by the
         applicable parties as set forth therein.

         (b) AVAILABILITY DATE. For purposes of this Participation Agreement and
the other Operative Documents, the "AVAILABILITY DATE" shall mean the date, on
or after the Documentation Date, on which all the conditions precedent set forth
in Section 9(b) shall have been satisfied or waived by the applicable parties as
set forth therein, on or after which Advances may be made pursuant to Funding
Requests (as defined in Section 3(c)) subject to the terms of this Agreement.

                                                         Participation Agreement

                                       3
<PAGE>

SECTION 3. FUNDING OF ADVANCES

         (a) CERTIFICATE HOLDERS' COMMITMENT. (i) Subject to the conditions and
terms hereof, the Certificate Holders shall cause the Lessor to take the
following actions at the written request of the Lessee from time to time during
the Commitment Period:

                           (1) the Lessor shall make Advances (out of funds
                  provided by the Participants) to the Construction Agent for
                  the purpose of financing the Allocated Construction Costs of
                  the Platform; and

                           (2) the Lessor shall lease the Property to the Lessee
                  under the Lease. Notwithstanding any other provision hereof,
                  the Lessor shall not be obligated to make any Advance with
                  respect to the Platform if, after giving effect thereto, (i)
                  the aggregate outstanding amounts of the Tranche A Loans,
                  Tranche B Loans and the Equity Amounts would exceed the
                  aggregate Commitments of the Tranche A Lenders, the Tranche B
                  Lenders and the Certificate Holders, or (ii) the remaining
                  Allocated Estimated Construction Costs at such time exceed the
                  remaining aggregate amount of undisbursed Commitments.

                  (ii) Subject to the conditions and terms hereof, each
         Certificate Holder severally agrees that it shall personally make
         available at the request of the Lessee from time to time during the
         Commitment Period, on each Funding Date an amount (each an "EQUITY
         AMOUNT") in immediately available funds equal to such Certificate
         Holder's applicable Commitment Percentage of the amount of the Advance
         being funded on such Funding Date. Notwithstanding any other provision
         hereof, no Certificate Holder shall be obligated to make available any
         Equity Amount if, after giving effect to the proposed Equity Amount,
         the outstanding aggregate amount of such Certificate Holder's Equity
         Amounts would exceed such Certificate Holder's Commitment.

         (b) LENDERS' COMMITMENT. Subject to the conditions and terms hereof,
each Lender severally shall make Loans to the Lessor at the request of the
Lessee for the purpose of financing Allocated Construction Costs from time to
time during the Commitment Period, on each Funding Date in an amount in
immediately available funds equal to each such Lender's applicable Commitment
Percentage of the amount of the Advance being funded on such Funding Date, as
provided in the Loan Agreement. Notwithstanding any other provision hereof, no
Lender shall be obligated to make any Loan if, after giving effect to the
proposed Loan, the outstanding aggregate amount of such Lender's Loans would
exceed such Lender's Commitment.

         (c) PROCEDURES FOR ADVANCES. (i) With respect to each funding of an
Advance, the Lessee shall give the Lessor and the Agent prior written notice not
later than 10:00 a.m., Chicago time, three (3) Business Days (unless waived)
prior to the proposed Funding Date and, in the case of the first Funding Date
two (2) Business Days prior to such Funding Date pursuant to an irrevocable
Funding Request substantially in the form of Exhibit I (a "FUNDING REQUEST"),
specifying the proposed Funding Date, the amount of Advance requested and such
other information and documents as required pursuant to the terms of this
Agreement. Except for the final Funding Request, each Funding Request shall be
in an amount at least equal to $1,000,000 and in multiples of $100,000 if in
excess of such amount. Lessee shall request one (1) Funding

                                                         Participation Agreement

                                       4
<PAGE>

Date per month and be allowed a maximum of 2 separate LIBOR tranches at any one
time. The proceeds of each funding will be used to pay the Construction Agent
for accrued but unpaid Allocated Construction Costs (including, without
limitation, Construction Period Interest, Construction Period Yield,
Construction Period Fees, Construction Period Indemnity Amounts and Transaction
Expenses); and the Funding Date therefor shall be a date on or before the
applicable Scheduled Payment Date; provided, however, that if the Lessee fails
to duly and timely submit a Funding Request which provides for the payment of
Construction Period Interest, Construction Period Yield, Construction Period
Fees, Construction Period Indemnity Amounts or Transaction Expenses on the
applicable Scheduled Payment Date, the Lessee hereby irrevocably authorizes and
directs the Agent (at its option) to cause the Participants to fund to the
Participants such amounts as may be necessary to pay in full all such amounts.

                  (i) Upon satisfaction or waiver of the conditions precedent to
         such Advance set forth in Section 9(c), the Lessee, as Construction
         Agent, shall pay (or cause the Operator to pay) Allocated Construction
         Costs with the funds provided by the Certificate Holders and the
         Lenders for such Advance. The transfer by any Participant of its
         portion of an Advance shall evidence such Participant's satisfaction
         that the conditions precedent to such Advance have been met or waived.
         Except as set forth above and as the parties may otherwise agree in
         writing, Advances shall be made solely to provide the Lessee or the
         Construction Agent with funds with which to pay Allocated Construction
         Costs.

                  (ii) All remittances made by the Participants for the funding
         of any Advance shall be made on the applicable Funding Date in
         immediately available Federal funds by wire transfer to the accounts
         specified in the applicable Funding Request. Subject to the prior
         satisfaction of all of the applicable conditions set forth in Section
         9, the Participants will use reasonable efforts to fund the applicable
         Advance prior to 2:00 p.m., Chicago time, on such Funding Date.

                  (iii) In no event will the total Property Balance at any time
         exceed (i) the Construction Cost as set forth in the Approved Budget,
         in the aggregate whether under construction or completed and still
         subject to the Lease, or (ii) the Fair Market Sales Value of the
         Platform expected upon Completion, as set forth in the Appraisal.

                  (iv) In no event shall the Lenders or Certificate Holders be
         required to make, and the Lenders and the Certificate Holders shall
         have no obligation to, fund any Advance or portion thereof which is to
         be allocated to Cost Overruns.

         (d) CAPITALIZATION OF CERTAIN AMOUNTS DURING CONSTRUCTION PERIOD.
During the Construction Period, on each date which is three (3) Business Days
prior to any Payment Date, Lessee shall be deemed to have requested in Advance
in an amount equal to the applicable Construction Period Interest, Construction
Period Yield, Construction Period Fees and Construction Period Indemnity and
Supplemental Rent Amounts which have accrued or are due, as the case may be. The
Funding Date with respect to each such Advance for such Construction Period
Interest, Construction Period Yield, Construction Period Fees and Construction
Period Indemnity and Supplemental Rent Amounts shall be the relevant Payment
Date (subject to the terms and conditions for an Advance set forth in this
Participation Agreement) and the proceeds of such Advance shall be applied to
pay such amounts (and will be deemed to satisfy any

                                                         Participation Agreement

                                       5
<PAGE>

corresponding Rent payment obligation). On each such Funding Date as to which
such an Advance is being made, the Construction Costs shall be increased by an
amount equal to the Construction Period Interest, the Construction Period Yield,
the Construction Period Fees and Construction Period Indemnity and Supplemental
Rent Amounts so funded; provided, however, that if any such Advance hereunder
would exceed the Available Commitment of a Participant, such Participant shall
not have any obligation to make any such Advance.

         (e) NON-FUNDING LENDER. In the event that any Lender (a "DEFAULTING
LENDER") fails to make available on a Funding Date an amount equal to such
Lender's applicable Commitment Percentage of the amount of the Advance required
by the terms hereof to be funded on such Funding Date (a "DEFAULTED AMOUNT"), or
Agent determines that a Lender will become a Defaulting Lender on the applicable
Funding Date, Agent shall promptly notify Lessee thereof and Lessee shall have
the option, except in respect of any Advance pursuant to the preceding paragraph
(d) and without in any way waiving the occurrence of any Default, to postpone
the funding of the entire Advance or the portion thereof representing the
Defaulted Amount (provided, however, that such postponement shall in no event
relieve Lessee of its obligation to pay as Rent any Break Costs suffered or
incurred by any Participant, but Lessee may offset any such costs against
amounts otherwise payable by it, under the Operative Documents or otherwise, to
the Defaulting Lender). Whether or not such option is exercised, the Agent may
elect to have the Defaulting Lender replaced with a new Lender reasonably
acceptable to Lessee, and Agent and the Defaulting Lender shall cooperate (at
the cost of the Defaulting Lender) in replacing such Defaulting Lender.
Notwithstanding the existence of any Defaulting Lender, each other Lender (each,
a "NON-DEFAULTING LENDER") shall timely fund its respective portion of the
applicable Advance as required.

         (f) NON-FUNDING CERTIFICATE HOLDER. In the event that any Certificate
Holder (a "DEFAULTING CERTIFICATE HOLDER") fails to make available on a Funding
Date an amount equal to such Certificate Holder's applicable Commitment
Percentage (also a "DEFAULTED AMOUNT"), or Agent determines that a Certificate
Holder will become a Defaulting Certificate Holder on the applicable Funding
Date, Agent shall promptly notify Lessee thereof and Lessee shall have the
option, except in respect of any Advance pursuant to the preceding paragraph (d)
and without in any way waiving the occurrence of any Default, to postpone the
funding of the entire Advance or the portion thereof representing the Defaulted
Amount (provided, however, that such postponement shall in no event relieve
Lessee of its obligation to pay as Supplemental Rent any Break Costs suffered or
incurred by any Participant, but Lessee may offset any such costs against
amounts otherwise payable by it, under the Operative Documents or otherwise, to
the Defaulting Certificate Holder). Whether or not such option is exercised,
Lessor or Agent may elect to have the Defaulting Certificate Holder replaced
with a new Certificate Holder reasonably acceptable to Lessee and Agent and the
Defaulting Certificate Holder shall cooperate (at the cost of the Defaulting
Certificate Holder), in replacing such Defaulting Certificate Holder.
Notwithstanding the existence of any Defaulting Certificate Holder, each other
Certificate Holder (each, "NON-DEFAULTING CERTIFICATE HOLDER") shall timely fund
its portion of the applicable Advance.

         (g) ADDITIONAL RIGHTS OF LESSEE. In the case of any Defaulted Amounts
Lessee shall have the additional rights provided under Section 22.

                                                         Participation Agreement

                                       6
<PAGE>

SECTION 4. YIELD; INTEREST; FACILITY FEES

         (a) YIELD. (i) The amount of the Equity Amounts outstanding from time
to time shall accrue yield ("YIELD") at the Yield Rate, calculated using the
actual number of days elapsed and, when the Yield Rate is determined by
reference to the LIBO Rate (Reserve Adjusted) or the Alternate Base Rate not
based upon the Prime Rate, a 360-day year basis and, when the Yield Rate is
determined by reference to the Alternate Base Rate based upon the Prime Rate, a
365- (or, if applicable, 366-) day year basis. If all or any portion of the
Equity Amounts, any Yield payable thereon or any other amount payable to any
Certificate Holders, Lessor or Owner Trustee hereunder shall not be paid when
due (whether at stated maturity, acceleration thereof or otherwise), such
overdue amount shall bear interest at a rate per annum which is equal to the
Overdue Rate.

                  (i) The Lessee shall, pursuant to the Assignment of Leases and
         Rents, deposit in the Account the Equity Basic Rent (determined on the
         basis of accrued Yield due in accordance with clause (i) above) and all
         other amounts due with respect to the Equity Amounts payable by the
         Lessee under the Lease from time to time.

                  (ii) During the Construction Period, subject to Section 4(c)
         and the terms and conditions set forth in this Participation Agreement
         with respect to Advances, Yield shall accrue on outstanding Equity
         Amounts and shall be funded monthly by the Lenders and the Certificate
         Holders pursuant to Section 3(a) and (b). During the Basic Term, such
         Yield shall be paid as a component of Basic Rent.

         (b) INTEREST ON LOANS

                  (i) The amount of each Loan shall accrue interest at the
         applicable rate set forth in the Loan Agreement, calculated using the
         actual number of days elapsed and, when the interest on the Loans is
         determined by reference to the LIBO Rate (Reserve Adjusted) or the
         Alternate Base Rate not based upon the Prime Rate, a 360-day year basis
         and, when such interest is determined by reference to the Alternate
         Base Rate based upon the Prime Rate, a 365- (or, if applicable, 366-)
         day year basis. If all or any portion of the Loans, any interest
         payable thereon or any other amount payable to any Lender, or the Agent
         hereunder shall not be paid when due (whether at stated maturity,
         acceleration thereof or otherwise), such overdue amount shall bear
         interest at a rate per annum which is equal to the Overdue Rate.

                  (ii) The Lessee shall, pursuant to the Assignment of Leases
         and Rents, deposit in the Account the Lender Basic Rent (determined on
         the basis of amounts due in accordance with clause (i) above) and all
         other amounts due with respect to the Loans payable by the Lessee under
         the Lease from time to time.

                  (iii) During the Construction Period, subject to Section 4(c)
         and the terms and conditions set forth in this Participation Agreement
         with respect to Advances, interest shall accrue on outstanding Loans
         and shall be paid as an Advance in accordance with the Approved Budget.
         During the Basic Term, such interest shall be paid as a component of
         Basic Rent.

                                                         Participation Agreement

                                       7
<PAGE>

         (c) PREPAYMENTS OF LOANS AND EQUITY AMOUNTS. In the event that the
Lessee pays the Property Balance to the Lessor in connection with the Lessee's
purchase of the Property in accordance with Sections 6, 11 or 16 of the Lease,
the Lessor will prepay the entire outstanding principal amount of the Loans and
Equity Amounts (or portion thereof so paid in the case of Section 11 or 6(e) of
the Lease). Each of the Participants and the Lessor hereby acknowledge that its
Loans or Equity Amounts, as the case may be, may be so prepaid without any
prepayment premium other than Break Costs and other amounts pursuant to Section
4(e)(iii).

         (d) FACILITY FEES; OTHER FEES. The Lessee agrees to pay the fees set
forth in this Section 4(d); provided that during the Construction Period such
fees shall be paid only out of the proceeds of an Advance in accordance with the
Approved Budget, and shall not represent direct recourse obligations of the
Lessee (except to the extent the Lessee is obligated to pay the Property
Balance).

                  (i) COMMITMENT FEES. The Lessee agrees to pay to each Tranche
         A Lender, each Tranche B Lender and each Certificate Holder for the
         Construction Period (including any portion of such Construction Period
         when any Participant's Commitment is suspended by reason of the
         Lessee's inability to satisfy any condition of Section 9), a facility
         fee (collectively, the "COMMITMENT FEES") at a per annum rate equal to
         the Applicable Facility Fee Percentage on each Participant's Available
         Commitment. The Commitment Fees shall be payable by the Lessee in
         arrears with respect to each monthly period (or portion thereof, for
         the first and last such periods) following the Documentation Date on
         the first day of each month (provided, however, that if such day is not
         a Business Day, such payment shall be due on the immediately preceding
         Business Day in the full amount due on such first day), commencing
         December 1, 2001 through and including the first day immediately
         following the expiration of the Construction Period, and shall be
         determined on the basis of the daily average Available Commitments
         during each such monthly period. The Commitment Fees shall be computed
         on the basis of the actual number of days (including the first day but
         excluding the last day) occurring during the period for which such
         Commitment Fees are payable over a year of 360 days.

                  (ii) OTHER FEES. The Lessee agrees to pay the following fees
         in the amounts and at the times as provided in the Fee Letter and in
         accordance with the Approved Budget: (x) to the Agent, for its own
         account, the Annual Administration Fees, (y) to the Arranger, for its
         own account, the Arrangement Fee, and (z) to the Arranger, for its own
         account, the Structuring Fee; provided, that, during the Construction
         Period, such fees shall be paid from the proceeds of Advances.

         (e) INTEREST AND YIELD PROTECTION.

                  (i) Alternate Rate of Interest. If prior to the commencement
         of any Interest Period for an Advance with interest or Yield determined
         by reference to the LIBO Rate (Reserve Adjusted):

                           (1) the Agent determines (which determination shall
                  be conclusive absent manifest error) that adequate and
                  reasonable means do not exist for

                                                         Participation Agreement

                                       8
<PAGE>

                  ascertaining the LIBO Rate (Reserve Adjusted) or the LIBO
                  Rate, as applicable, for such Interest Period; or

                           (2) the Agent is advised by any Participant or
                  Participants that because of a change in circumstances
                  affecting the eurocurrency market generally the LIBO Rate
                  (Reserve Adjusted) or the LIBO Rate, as applicable, for such
                  Interest Period will not adequately and fairly reflect the
                  cost to such Participants (or Participant) of making or
                  maintaining their Loans or Equity Amounts (or its Loan or
                  Equity Amount) for such Interest Period; then the Agent shall
                  give notice thereof to the Lessee and the Participants by
                  telephone or telecopy as promptly as practicable thereafter
                  and, until the Agent notifies the Lessee and the Participants
                  that the circumstances giving rise to such notice no longer
                  exist, (i) any Funding Request that requests the conversion or
                  continuation of an Advance with interest determined by
                  reference to the LIBO Rate (Reserve Adjusted) shall be
                  ineffective, (ii) if any Funding Request requests an Advance
                  with interest determined by reference to the LIBO Rate
                  (Reserve Adjusted), such Advance shall be made as an Alternate
                  Base Rate Advance and (iii) any Funding Request by the Lessee
                  for an Advance with interest determined by reference to the
                  LIBO Rate (Reserve Adjusted) shall be ineffective; provided,
                  however, that if the circumstances giving rise to such notice
                  do not affect all the Participants, then requests by the
                  Lessee for an Advance with interest determined by reference to
                  the LIBO Rate (Reserve Adjusted) may be made to Participants
                  that are not affected thereby.

                  (ii) Increased Costs.

                           (1) If any Change in Law shall:

                                    (a) impose, modify or deem applicable any
                           reserve, special deposit or similar requirement
                           against assets of, deposits with or for the account
                           of, or credit extended by, any Participant (except
                           any such reserve requirement reflected in the LIBO
                           Rate (Reserve Adjusted)); or

                                    (b) impose on any Participant or the London
                           interbank market any other condition affecting this
                           Agreement or Advances made by such Participant under
                           this Agreement and the result of any of the foregoing
                           shall be to increase the cost to such Participant of
                           making, funding or maintaining any such Loan or
                           Equity Amount (or of maintaining its obligation to
                           make any such Loan or Equity Amount) or to reduce the
                           amount of any sum received or receivable by such
                           Participant hereunder (whether of principal,
                           interest, Equity Amount, Yield or otherwise), then
                           the Lessee will pay to such Participant such
                           additional amount or amounts as will compensate such
                           Participant for such additional costs incurred or
                           reduction suffered.

                           (2) If any Participant determines that any Change in
                  Law regarding capital requirements has or would have the
                  effect of reducing the rate of return on such Participant's
                  capital or on the capital of such Participant's holding
                  company,

                                                         Participation Agreement

                                       9
<PAGE>

                  if any, as a consequence of this Agreement or the Loans or
                  Equity Amounts made, funded or created by, such Participant,
                  to a level below that which such Participant or such
                  Participant's holding company could have achieved but for such
                  Change in Law (taking into consideration such Participant's
                  policies and the policies of such Participant's holding
                  company with respect to capital adequacy), then from time to
                  time the Lessee will pay to such Participant such additional
                  amount or amounts as will compensate such Participant or such
                  Participant's holding company for any such reduction suffered.

                           (3) A certificate of a Participant setting forth the
                  amount or amounts necessary to compensate such Participant or
                  its holding company, as the case may be, as specified in
                  paragraph (1) or (2) of this Subsection shall be delivered to
                  the Lessee and shall be conclusive absent manifest error. The
                  Lessee shall pay such Participant the amount shown as due on
                  any such certificate within 10 days after receipt thereof.

                           (4) Failure or delay on the part of any Participant
                  to demand compensation pursuant to this Subsection shall not
                  constitute a waiver of such Participant's right to demand such
                  compensation; provided, however, that the Lessee shall not be
                  required to compensate a Participant pursuant to this
                  Subsection for any increased costs or reductions incurred more
                  than three months prior to the date that such Participant
                  notifies the Lessee of the Change in Law giving rise to such
                  increased costs or reductions and of such Participant's
                  intention to claim compensation therefor; provided further
                  that, if the Change in Law giving rise to such increased costs
                  or reductions is retroactive, then the three-month period
                  referred to above shall be extended to include the period of
                  retroactive effect thereof.

                  (iii) Break Funding Payments. In the event of (1) the payment
         of any principal of any Loan or Equity Amount other than on the last
         day of an Interest Period applicable thereto (including as result of an
         Event of Default), (2) the conversion of any Loan or Equity Amount
         other than on the last day of the Interest Period applicable thereto,
         (3) the failure to borrow, convert, continue or prepay any Loan or
         Equity Amount on the date specified in any notice delivered pursuant
         hereto (regardless of whether such notice is permitted to be revocable
         and is revoked in accordance herewith), or (4) the assignment of any
         Loan or Equity Amount other than on the last day of the Interest Period
         applicable thereto as a result of a request by Lessee then, in any such
         event, the Lessee shall compensate each Participant for the loss, costs
         and expense attributable to such event, including, without limitation,
         Break Costs and any costs associated with the termination by any
         Participant of any foreign currency exchange arrangements. The loss to
         any Participant attributable to any such event shall be deemed to
         include an amount determined by such Participant to be equal to the
         excess, if any, of (i) the amount of interest that such Participant
         would pay for a deposit equal to the principal amount of such Loan or
         Equity Amount for the period from the date of such payment, conversion,
         failure or assignment to the last day of the then current Interest
         Period for such Loan (or, in the case of a failure to borrow, convert
         or continue, the duration of the Interest Period that would have
         resulted from such borrowing, conversion or continuation) if the
         interest

                                                         Participation Agreement

                                       10
<PAGE>

         rate payable on such deposit were equal to the LIBO Rate (Reserve
         Adjusted) for such Interest Period, over (ii) the amount of interest
         that such Participant would earn on such principal amount for such
         period if such Participant were to invest such principal amount for
         such period at the interest rate that would be bid by such Participant
         (or an Affiliate of such Participant) for dollar deposits from other
         banks in an eurodollar market at the commencement of such period. A
         certificate of any Participant setting forth any amount or amounts that
         such Participant is entitled to receive pursuant to this Subsection
         shall be delivered to the Lessee and shall be conclusive absent
         manifest error. The Lessee shall pay such Participant the amount shown
         as due on any such certificate within 10 days after receipt thereof.

                           (1) Mitigation Obligations; Replacement of
                  Participants. (1) If any Participant requests compensation
                  under Section 4(e)(ii)(1), or if the Lessee is required to pay
                  any additional amount thereunder to any Participant, then such
                  Participant shall use reasonable efforts to designate a
                  different lending office for funding or booking its Loans or
                  Equity Amounts hereunder or to assign its rights and
                  obligations hereunder to another of its offices, branches or
                  affiliates, if, in the judgment of such Participant, such
                  designation or assignment (i) would eliminate or reduce
                  amounts payable pursuant to Section 4(e)(ii)(1) in the future
                  and (ii) would not subject such Participant to any
                  unreimbursed cost or expense and would not otherwise be
                  disadvantageous to such Participant. The Lessee hereby agrees
                  to pay all reasonable costs and expenses incurred by any
                  Participant in connection with any such designation or
                  assignment.

                           (2) If any Participant requests compensation under
                  Section 4(e)(ii) or if any Participant defaults in its
                  obligation to fund Loans or Equity Amounts hereunder, then the
                  Lessee may, at its sole expense and effort, upon notice to
                  such Participant and the Agent, require such Participant to
                  assign and delegate, without recourse, all its interests,
                  rights and obligations under this Agreement to an assignee
                  that shall assume such obligations (which assignee may be
                  another Participant, if a Participant accepts such
                  assignment); provided, however, that (i) the Lessee shall have
                  received the prior written consent of the Agent, which consent
                  shall not unreasonably be withheld, (ii) such Participant
                  shall have received payment of an amount equal to the
                  outstanding principal of its Loans or outstanding Equity
                  Balance (as applicable), accrued interest or Yield thereon,
                  accrued fees and all other amounts payable to it hereunder
                  (including Break Costs), from the assignee (to the extent of
                  such outstanding principal or Equity Balance and accrued
                  interest or Yield and fees) or the Lessee (in the case of all
                  other amounts) and (iii) in the case of any such assignment
                  resulting from a claim for compensation under Section
                  4(e)(ii), such assignment will result in a reduction in such
                  compensation or payments. A Participant shall not be required
                  to make any such assignment and delegation if, prior thereto,
                  as a result of a waiver by such Participant or otherwise, the
                  circumstances entitling the Lessee to require such assignment
                  and delegation cease to apply.

                  (iv) If it becomes illegal for any Participant to continue its
         participation in the transaction contemplated by the Operative
         Documents (the "OVERALL TRANSACTION"), the

                                                         Participation Agreement

                                       11
<PAGE>

         Participant shall give notice promptly to the Agent, Certificate
         Holders, Owner Trustee, each other Participant and the Lessee
         (including in such notice reasonable details as to the basis of such
         illegality). Each Participant agrees for the benefit of the Lessee and
         (in the case of a Lender) the Certificate Holders, if so required by
         the Lessee, to consult in good faith with the Lessee and such other
         parties and to use its reasonable best efforts to avoid such illegality
         (including by assigning its rights hereunder and under the other
         Operative Documents to an Affiliate or branch of the Participant, and
         providing that such Affiliate or branch shall assume its obligations
         hereunder and thereunder); provided, however, that such Participant
         shall not in this connection be obligated to take any action which
         would be materially prejudicial to the operations of the Participant;
         provided further, however, that the portion of the Loan or Equity
         Amount held by such Participant shall be prepaid on or prior to the
         date (the "ILLEGALITY PREPAYMENT DATE") which is the earlier of the
         180th day subsequent to the giving by such Participant of such notice
         and the date upon which the Participant is obligated under Applicable
         Law to terminate its participation in the Overall Transaction if such
         illegality has not been avoided or the portion of the Loan or Equity
         Amount held by such Participant has not been prepaid prior to the
         Illegality Prepayment Date.

                  (v) During the Construction Period, any amounts payable
         pursuant to this Section 4(e) will be paid only from proceeds of the
         Advances in accordance with the Approved Budget; provided, that, in
         accordance with Section 14(a)(12) hereof, the Construction Agent has
         indemnified Lessor with respect to any such amounts or costs.

         (f) NOTICE OF YIELD AND INTEREST.

                  (i) The Agent shall deliver to the Lessee from time to time
         written notice of the amount of Basic Rent and the due date therefor
         (i) promptly (and in any event within three (3) Business Days) after
         the commencement of each LIBO period, and (ii) promptly (and in any
         event within three (3) Business Days) after determination of Accrued
         Interest and Yield determined by reference to the Alternate Base Rate.

                  (ii) During the Basic Term, subject to Section 4(e) hereof, on
         or before 10:00 a.m., Chicago time, on the date that is three (3)
         Business Days prior to the expiration of any Interest Period, Lessee
         shall, from time to time, upon written notice to the Lessor and the
         Agent, select whether or not interest and Yield will accrue at the
         Alternate Base Rate or the LIBO Rate. If Lessee's selects the LIBO
         Rate, Lessee shall also select the term of the next succeeding Interest
         Period. If Lessee does not specify the length of any Interest Period as
         set forth in the immediately preceding sentence, then Lessee shall be
         deemed to have a selected the then expiring Interest Period. During the
         Construction Period, the Lessee shall be allowed to maintain a maximum
         of two (2) separate LIBOR tranches at any time; provided, that only (1)
         LIBOR tranche shall exist upon the expiration of the Construction
         Period. During the Basic Term, the Lessee shall be allowed to maintain
         only one (1) LIBOR tranche.

                                                         Participation Agreement

                                       12
<PAGE>

SECTION 5. CERTAIN INTENTIONS OF THE PARTIES; DISCLOSURE; DISTRIBUTIONS

                  (i) NATURE OF TRANSACTION. (i) The parties hereto intend that
         (1) for financial accounting purposes with respect to the Lessee, the
         Lessor will be treated as the owner and the lessor of the Property,
         including the Equipment, and the Lessee will be treated as the lessee
         of the Property, including the Equipment, and (2) for all other
         purposes, including Federal and all state and local income tax
         purposes, state real estate and commercial law, bankruptcy and
         Environmental Law purposes, (x) the Lease will be treated as a
         financing arrangement, (y) the Participants will be deemed lenders
         making loans to the Lessee in an amount equal to the sum of the Equity
         Amounts and the outstanding principal amount of the Loans, which loans
         are secured by the Property, and (z) the Lessee will be treated as the
         owner of the Property and will be entitled to all tax benefits
         ordinarily available to an owner of property like the Property for such
         tax purposes. Nevertheless, the Lessee acknowledges and agrees that
         neither the Lessor nor any of the Participants has made any
         representations or warranties to the Lessee concerning the tax,
         accounting or legal characteristics of the Operative Documents and that
         the Lessee has obtained and relied upon such tax, accounting and legal
         advice concerning the Operative Documents as it deems appropriate.

                  (ii) Specifically, without limiting the generality of clause
         (i), the parties hereto intend and agree that in the event of any
         insolvency or receivership proceedings or a petition under the United
         States bankruptcy laws or any other applicable insolvency laws or
         statute of the United States of America or any State or Commonwealth
         thereof affecting the Lessee, the Lessor or the Participants or any
         collection actions, the transactions evidenced by the Operative
         Documents are loans made to the Lessee by the Participants in each case
         as unrelated third party lenders.

         (b) AMOUNTS DUE UNDER LEASE. Anything else herein or elsewhere to the
contrary notwithstanding, it is the intention of the Lessee, the Certificate
Holders, the Owner Trustee, the Lessor and the Lenders that: (1) the amount and
timing of installments of Basic Rent due and payable from time to time from the
Lessee under the Lease shall be equal to the aggregate payments due and payable
as interest on the Loans and Yield on the Equity Amounts on each Payment Date,
subject to Section 4(c); (2) if the Lessee becomes obligated or otherwise elects
to purchase the Property under the Lease, the Loans, the Equity Amounts, all
interest, Yield and Facility Fees thereon and all other obligations of the
Lessee owing to the Lessor, the Certificate Holders, the Owner Trustee and the
Lenders shall be paid in full by the Lessor out of funds paid to the Lessor by
the Lessee; (3) if the Lessee properly elects the Sale Option with respect to
the Property, the Lessee shall only be required to pay to the Participants the
proceeds of the sale of the Property, the Final Rent Payment and any amounts due
pursuant to Sections 13 and 14 hereof and Section 6(d) of the Lease (which
aggregate amounts may be less than the Property Balance), together with any
accrued Basic Rent and Supplemental Rent then due and owing; and (4) upon an
Event of Default resulting in an acceleration of the Lessee's obligation to
purchase the Property under the Lease, the amounts then due and payable by the
Lessee under the Lease shall include all amounts necessary to pay in full the
Property Balance, plus all other amounts then due from the Lessee to the
Participants under the Operative Documents.

                                                         Participation Agreement

                                       13
<PAGE>

         (c) DISCLOSURE. The parties hereto agree that none of them is limited
in any way by an express or implied understanding or agreement with or for the
benefit of any person who would be treated as a tax shelter promoter (within the
meaning of Internal Revenue Code Section 6111(d)) (a "Promoter") from disclosure
of the structure or tax aspects (within the meaning of Treas. Reg.
Section 301.6111-2T(c)(1)) of the transaction which is the subject of this
Participation Agreement. Furthermore, no party hereto who would be treated as a
Promoter (x) claims, knows, or has reason to know, (y) knows or has reason to
know that any other person (other than the parties hereto) claims or (z) will
cause another person to claim, that the transaction which is the subject of this
Participation Agreement is proprietary to any person other than the parties
hereto or is otherwise protected from disclosure of the foregoing by others.

         (d) DISTRIBUTION.

                  (i) Subject to Section 5(d)(vii)(4), each payment of Basic
         Rent (and any payment of interest on overdue installments of Basic
         Rent) received by the Agent shall be distributed by the Agent to the
         Participants, pro rata in accordance with, and for application to, the
         Tranche A Lender Basic Rent, Tranche B Lender Basic Rent and Equity
         Basic Rent then due, as well as any overdue interest due to each such
         Participant (to the extent permitted by Applicable Law).

                  (ii) Subject to Section 5(d)(vii)(4), any payment received by
         the Lessor or the Agent as a result of:

                           (1) the purchase of any Property in connection with
                  the Lessee's exercise of its option under Section 6(b) or 6(e)
                  of the Lease (or the Construction Agent's exercise of its
                  option under Section 5.4 of the Construction Agency
                  Agreement), or

                           (2) the Lessee failing to fulfill one or more of the
                  conditions to the exercise of the Sale Option pursuant to
                  Section 6(d) of the Lease and the Lessor's receipt of the
                  Property Balance from the Lessee pursuant to Section 6(d)(3)
                  of the Lease;

shall be promptly remitted by the Lessor to the Agent (if received by the
Lessor) and in each case, shall be distributed by the Agent to pay in full the
Participant Balance of each Participant.

                  (iii) The payment by the Lessee of Final Rent Payment and all
         Supplemental Rent due in accordance with Section 6(d)(3) of the Lease
         upon the Lessee's exercise of the Sale Option and the payment by the
         Lessee of the Construction Recourse Amount in accordance with Section
         5.2 of the Construction Agency Agreement shall be promptly remitted by
         the Lessor (if received by the Lessor) to the Agent, and shall be
         distributed by the Agent in the following amounts and order of
         priority: first, so much of such payments or amounts as shall
         constitute Supplemental Rent, to the Persons entitled thereto in
         accordance with Section 5(d)(v); and second, to the Tranche A Lenders
         for application to pay in full the Tranche A Loan Balance of each
         Tranche A Lender, and in the case where the amount so distributed shall
         be insufficient to pay in full as aforesaid, then pro rata among the
         Tranche A Lenders without priority of one Tranche A Lender

                                                         Participation Agreement

                                       14
<PAGE>

         over the other in the proportion that each such Participant's Tranche A
         Loan Balance bears to the aggregate Tranche A Loan Balances of all
         Tranche A Lenders, and third, to the Tranche B Lenders for application
         to pay in full the Tranche B Loan Balance of each Tranche B Lender, and
         in the case where the amount so distributed shall be insufficient to
         pay in full as aforesaid, then pro rata among the Tranche B Lenders
         without priority of one Tranche B Lender over the other in the
         proportion that each such Participant's Tranche B Loan Balance bears to
         the aggregate Tranche B Loan Balances of all Tranche B Lenders, and
         fourth, to the Certificate Holders for application to pay in full the
         Equity Balance, and in the case where the amounts so distributed shall
         be insufficient to pay in full as aforesaid, then pro rata among
         Certificate Holders without priority of one Certificate Holder over the
         other in the proportion that each such Participant's Equity Balance
         bears to the aggregate Equity Balances of all Certificate Holders.

                  (iv) Any payments received as proceeds from the sale of the
         Property sold pursuant to the Lessee's exercise of the Sale Option
         pursuant to Section 6(c) of the Lease and any payment received as
         proceeds from the sale of the Property sold pursuant to Section 5.2 of
         the Construction Agency Agreement or sold by the Agent on behalf of the
         Participants (after netting out payment of Closing Costs and reasonable
         costs and expenses incurred by the Agent in connection with such sale
         and the payment to the then existing or prior Participants, the Lessor
         or Wilmington Trust Company of amounts payable to them pursuant to any
         expense reimbursement or indemnification provisions of the Operative
         Documents), shall be promptly remitted by the Lessor (if received by
         the Lessor) to the Agent, and shall be distributed by the Agent in the
         funds so received in the following order of priority: first, to the
         Lenders which funded any Loan Excluded Amounts, for application to pay
         in full the Loan Excluded Amounts of each such Lender, and in the case
         where the amounts so distributed shall be insufficient to pay in full
         as aforesaid, then pro rata among such Lenders without priority of one
         such Lender over the other in the proportion that each such Lender's
         portion of Loan Excluded Amounts bears to the aggregate Loan Excluded
         Amounts of all such Lenders; second, to the Tranche B Lenders for
         application to pay in full the Tranche B Loan Balance of each Tranche B
         Lender, and in the case where the amount so distributed shall be
         insufficient to pay in full as aforesaid, then pro rata among the
         Tranche B Lenders without priority of one Tranche B Lender over the
         other in the proportion that each such Participant's Tranche B Loan
         Balance bears to the aggregate Tranche B Loan Balances of all Tranche B
         Lenders, and third, to the Tranche A Lenders for application to pay in
         full the Tranche A Loan Balance of each Tranche A Lender, and in the
         case where the amount so distributed shall be insufficient to pay in
         full as aforesaid, then pro rata among the Tranche A Lenders without
         priority of one Tranche A Lender over the other in the proportion that
         each such Participant's Tranche A Loan Balance bears to the aggregate
         Tranche A Loan Balances of all Tranche A Lenders, and fourth, to the
         Certificate Holders, personally, for application to pay in full the
         Equity Balance, and in the case where the amounts so distributed shall
         be insufficient to pay in full as aforesaid, then pro rata among
         Certificate Holders without priority of one Certificate Holder over the
         other in the proportion that each such Participant's Equity Balance
         bears to the aggregate Equity Balances of all Certificate Holders and
         fifth, the balance, if any, shall be promptly distributed to, or as
         directed by, the Lessee.

                                                         Participation Agreement

                                       15
<PAGE>

                  (v) All payments of Supplemental Rent received by the Lessor
         shall promptly be remitted to the Agent. All payments of Supplemental
         Rent received by the Agent (excluding any amounts payable pursuant to
         the preceding provisions of this Section 5(d), other than clause
         "first" of Section 5(d)(iii)) shall be distributed promptly by the
         Agent upon receipt thereof to the Persons entitled thereto pursuant to
         the Operative Documents.

                  (vi) Notwithstanding any other provision of this Section 5(d),
         any Excepted Payment received at any time by the Lessor or the Agent
         shall be promptly remitted by the Lessor (if received by the Lessor) to
         the Agent, and shall be distributed by the Agent to the Person entitled
         to receive such Excepted Payment pursuant to the Operative Documents.

                           (1) (1)All amounts received by the Lessor or the
                  Agent in connection with any sale or reletting of all or any
                  part of the Property after the occurrence of a Lease Event of
                  Default shall be promptly remitted by the Lessor (if received
                  by the Lessor) to the Agent, and shall be distributed by the
                  Agent in the following order of priority: first, so much of
                  such payments or amounts as shall be required to pay the then
                  existing or prior Participants, the Lessor and Wilmington
                  Trust Company the amounts payable to them pursuant to any
                  expense reimbursement or indemnification provisions of the
                  Operative Documents and reimbursement of Costs of Carry shall
                  be distributed to each such Person without priority of one
                  over the other in accordance with the amount of such payment
                  or payments payable to each such Person; second, to the
                  Lenders which funded any Loan Excluded Amounts, for
                  application to pay in full the Loan Excluded Amounts of each
                  such Lender, and in the case where the amounts so distributed
                  shall be insufficient to pay in full as aforesaid, then pro
                  rata among such Lenders without priority of one such Lender
                  over the other in the proportion that each such Lender's
                  portion of Loan Excluded Amounts bears to the aggregate Loan
                  Excluded Amounts of all such Lenders; third, to the Tranche B
                  Lenders for application to pay in full the Tranche B Loan
                  Balance of each Tranche B Lender, and in the case where the
                  amounts so distributed shall be insufficient to pay in full as
                  aforesaid, then pro rata among the Tranche B Lenders without
                  priority of one Tranche B Lender over the other in the
                  proportion that each such Participant's Tranche B Loan Balance
                  bears to the aggregate Tranche B Loan Balances of all Tranche
                  B Lenders; fourth, to the Tranche A Lenders for application to
                  pay in full the Tranche A Loan Balance of each Tranche A
                  Lender, and in the case where the amounts so distributed shall
                  be insufficient to pay in full as aforesaid, then pro rata
                  among the Tranche A Lenders without priority of one Tranche A
                  Lender over the other in the proportion that each such
                  Participant's Tranche A Loan Balance bears to the aggregate
                  Tranche A Loan Balances of all Tranche A Lenders; fifth, to
                  the Certificate Holders for application to pay in full the
                  Equity Balance and in the case where the amounts so
                  distributed shall be insufficient to pay in full as aforesaid,
                  then pro rata among the Certificate Holders without priority
                  of one Certificate Holder over the other in the proportion
                  that each such Participant's Equity Balance bears to the
                  aggregate Equity Balances of all Certificate Holders; and
                  sixth, the balance, if any, of such payment or amounts
                  remaining thereafter shall be promptly distributed to, or as
                  directed by, (i) the Lessee for any surplus

                                                         Participation Agreement

                                       16
<PAGE>

                  realized at any foreclosure sale of the Property or otherwise
                  realized in connection with the exercise of remedies under the
                  Lease or (ii) in any other case, pro rata among the
                  Participants.

                           (2) All payments received and amounts realized by the
                  Lessor or the Agent in connection with any Casualty or
                  Condemnation after the occurrence of a Lease Event of Default
                  shall be promptly remitted by the Lessor (if received by the
                  Lessor) to the Agent and shall be distributed by the Agent in
                  accordance with Section 5(d)(vii)(3).

                           (3) All payments received and amounts realized (other
                  than payments or amounts described in clause (1) above) by the
                  Lessor or the Agent after the occurrence of a Lease Event of
                  Default shall be promptly remitted by the Lessor (if received
                  by the Lessor) to the Agent and shall be distributed by the
                  Agent in the following order of priority: first, so much of
                  such payments or amounts as shall be required to pay the then
                  existing or prior Participants, the Lessor and Wilmington
                  Trust Company the amounts payable to them pursuant to any
                  expense reimbursement or indemnification provisions of the
                  Operative Documents shall be distributed to each such
                  Participant without priority of one over the other in
                  accordance with the amount of such payment or payments payable
                  to each such Person; second, to the Tranche A Lenders, pro
                  rata in accordance with, and for application to, the Tranche A
                  Loan Balance of each Tranche A Lender (first to the payment of
                  interest (pro rata based upon the aggregate amount of interest
                  then outstanding), and then to principal, in each case pro
                  rata), and third to the Tranche B Lenders, pro rata in
                  accordance with, and for application to, the Tranche B Loan
                  Balance of each Tranche B Lender (first to the payment of
                  interest (pro rata based upon the aggregate amount of interest
                  then outstanding), and then to principal, in each case pro
                  rata), and fourth, to the Certificate Holders, pro rata in
                  accordance with, and for application to, the Equity Balance of
                  each Certificate Holder (first to the payment of Yield (pro
                  rata based upon the aggregate amount of Yield then
                  outstanding), and then to principal, in each case pro rata),
                  and fifth, after payment in full of the Participant Balances
                  and all other amounts due and owing, the balance, if any, of
                  such payment or amounts remaining thereafter shall be promptly
                  distributed to, or as directed by, the Lessee.

                           (4) During the occurrence and continuance of a Lease
                  Event of Default, all amounts (other than Excepted Payments)
                  received or realized by the Lessor or the Agent shall be
                  promptly remitted by the Lessor (if received by the Lessor) to
                  the Agent and all such amounts otherwise distributable by the
                  Agent pursuant to Sections 5(d)(i), 5(d)(ii) and 5(d)(ix)
                  shall be distributed by the Agent as provided for in clauses
                  (1), (2) and (3) above.

                           (5) (1)Subject to Sections 5(d)(viii)(2) and
                  5(d)(viii)(3), any payment received by the Lessor or the Agent
                  for which no provision as to the application thereof is made
                  in the Operative Documents or elsewhere in this Section 5(d)
                  shall be promptly remitted by the Lessor (if received by the
                  Lessor) to the Agent

                                                         Participation Agreement

                                       17
<PAGE>

                  and shall be distributed by the Agent as follows: first, to
                  the Tranche A Lenders for application to pay in full the
                  Tranche A Loan Balance of each Tranche A Lender, and in the
                  case where the amount so distributed shall be insufficient to
                  pay in full as aforesaid, then pro rata among the Tranche A
                  Lenders without priority of one Tranche A Lender over the
                  other in the proportion that each such Participant's Tranche A
                  Loan Balance bears to the aggregate Tranche A Loan Balances of
                  all Tranche A Lenders, and second, to the Tranche B Lenders
                  for application to pay in full the Tranche B Loan Balance of
                  each Tranche B Lender, and in the case where the amount so
                  distributed shall be insufficient to pay in full as aforesaid,
                  then pro rata among the Tranche B Lenders without priority of
                  one Tranche B Lender over the other in the proportion that
                  each such Participant's Tranche B Loan Balance bears to the
                  aggregate Tranche B Loan Balances of all Tranche B Lenders,
                  and third, to the Certificate Holders for application to pay
                  in full the Equity Balance, and in the case where the amounts
                  so distributed shall be insufficient to pay in full as
                  aforesaid, then pro rata among Certificate Holders without
                  priority of one Certificate Holder over the other in the
                  proportion that each such Participant's Equity Balance bears
                  to the aggregate Equity Balances of all Certificate Holders.

                           (6) Except as otherwise provided in Section
                  5(d)(vii), all payments received and amounts realized by the
                  Lessor or the Agent under the Lease or otherwise with respect
                  to the Property, or any proceeds thereof to the extent
                  received or realized at any time after an indefeasible payment
                  in full of the Participant Balances of all of the Participants
                  and any other amounts due and owing to the Participants, the
                  Lessor or Wilmington Trust Company, shall be promptly remitted
                  by the Lessor (if received by the Lessor) to the Agent and
                  shall be distributed forthwith by the Agent in the order of
                  priority set forth in Section 5(d)(vii)(3), except that such
                  payment shall be distributed omitting clause "second" of such
                  Section 5(d)(vii)(3).

                           (7) Any payment received by the Lessor or the Agent
                  for which provision as to the application thereof is made in
                  an Operative Document but not elsewhere in this Section 5(d)
                  shall be promptly remitted by the Lessor (if received by the
                  Lessor) to the Agent and shall be distributed forthwith by the
                  Agent to the Person and for the purpose for which such payment
                  was made in accordance with the terms of such Operative
                  Document.

                  (vii) Subject to Section 5(d)(vii)(4), any amounts payable to
         the Lessor or the Agent as a result of a Casualty or Condemnation
         pursuant to Section 11 of the Lease shall be promptly remitted by the
         Lessor (if received by the Lessor) to the Agent and shall be
         distributed by the Agent as follows:

                           (1) all amounts that are to be applied to the
                  purchase price of the Property in accordance with Section 11
                  and Section 6 of the Lease shall be distributed by the Agent
                  in accordance with Section 5(d)(ii).

                                                         Participation Agreement

                                       18
<PAGE>

                           (2) all amounts payable to the Lessee for the repair
                  of damage caused by such Casualty or Condemnation in
                  accordance with Section 11(b) of the Lease shall be
                  distributed to, or as directed by, the Lessee.

                  (viii) To the extent any payment made to any Participant is
         insufficient to pay in full the Participant Balance of such
         Participant, then each such payment shall first be applied to accrued
         interest or Yield and then to principal or the Equity Amounts, as
         applicable.

                  (ix) Notwithstanding anything to the contrary contained in
         this Section 5(d), any payments received by the Agent in connection
         with the Partial Option Closing pursuant to Section 24 of this
         Participation Agreement shall be distributed by the Agent in the
         following order of priority: first, an amount equal to all Other
         Amounts, all Excluded Amounts and all costs and expenses payable by or
         on behalf of Lessee pursuant to clause (z) of Section 24(a)(v) of this
         Participation Agreement shall be distributed by the Agent to the
         Persons entitled to those amounts pursuant to the Operative Documents;
         second, an amount equal to (x) the Partial Option Percentage of all
         accrued but unpaid interest on the aggregate of all Loans and (y) the
         Partial Percentage of all accrued but unpaid Yield on the aggregate of
         all Equity Amounts for the period from the last Payment Date and
         through and including the Partial Option Closing Date shall be
         distributed by the Agent to the Participants, in accordance with, and
         for application to the payment of such amounts; and third, an amount
         equal to the Partial Option Percentage of the aggregate Participant
         Balance of all Participants shall be distributed by the Agent to the
         Participants, pro rata in accordance with and for application to the
         payment of such amounts.

SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PARTICIPANTS

         (a) REPRESENTATIONS AND WARRANTIES. Each Participant hereby represents
and warrants as to itself to the other Participants and the Lessee that:

                  (i) STATUS; DUE ORGANIZATION. It (i) is either a corporation
         duly organized and validly existing in good standing under the laws of
         the State of Delaware or a commercial bank, branch or agency of a
         foreign bank or other similar financial institution, or an Affiliate
         thereof and (ii) has all requisite power and authority to enter into,
         and perform its obligations under, each of the Operative Documents to
         which it is or will become a party.

                  (ii) DUE AUTHORIZATION; ENFORCEABILITY. Each of the Operative
         Documents to which it is or will become a party has been duly
         authorized by all appropriate corporate action, and has been or will be
         executed and delivered by it, and, assuming due authorization,
         execution and delivery by the other parties thereto, constitutes or
         will constitute upon the due execution thereof the Participant's legal,
         valid and binding obligation, enforceable against it in accordance with
         its terms, except as enforceability thereof may be limited by (i)
         bankruptcy, insolvency, reorganization, moratorium or other similar
         laws affecting enforcement of creditors' rights generally and (ii)
         general

                                                         Participation Agreement

                                       19
<PAGE>

         principles of equity (regardless of whether such enforceability is
         considered in a proceeding in equity or at law).

                  (iii) NO VIOLATION. The execution and delivery by the
         Participant of each of the Operative Documents to which it is or will
         become a party are not, and the performance by the Participant of its
         obligations under each, do not and will not contravene its Organic
         Documents or any Applicable Law applicable to the Participant (it being
         understood that the Participant makes no representation or warranty
         relating to the nature of the Property or any part thereof or any
         Applicable Law relating thereto), and do not and will not contravene
         any provision of, or constitute a default under, any indenture,
         mortgage or other material contract or other instrument to which the
         Participant is a party or by which it or its property is bound or
         require the consent or approval of, the giving of notice to, the
         registration with or the taking of any action in respect of or by, any
         Governmental Authority or other Person (it being understood that the
         Participant makes no representation or warranty relating to the nature
         of the Property or any part thereof or any Applicable Law relating
         thereto), except such as have been obtained, given or accomplished.

                  (iv) NO LITIGATION. There are no pending or, to the knowledge
         of the Participant, threatened actions or proceedings by or before any
         court or administrative agency or other Governmental Authority to which
         the Participant is or will become a party which (i) involves any of the
         transactions contemplated hereunder or by any of the Operative
         Documents or (ii) if determined adversely to it, would reasonably be
         likely to materially adversely affect its ability to perform its
         obligations under each of the Operative Documents to which the
         Participant is or will become a party.

                  (v) PERFORMANCE DOES NOT CREATE LIENS. The performance by the
         Participant of its obligations under each of the Operative Documents to
         which the Participant is or will become a party do not subject the
         Trust Estate to any Lien (other than the Liens created by the Operative
         Documents) under any indenture, mortgage, contract or other instrument
         to which the Participant is a party or by which the Participant is
         bound.

                  (vi) ERISA. It is not and will not be making its Loans or
         funding Equity amounts hereunder, and is not performing its obligations
         under the Operative Documents with the assets of any "employee benefit
         plan" (as defined in Section 3(3) of ERISA) which is subject to Title I
         of ERISA or "plan" (as defined in Section 4975(e)(1) of the Code).

                  (vii) THIRD PARTY FEES. It has not authorized or employed any
         Person to act as agent, broker, finder, financial advisor or otherwise
         in connection with the transactions contemplated by the Operative
         Documents other than the Agent and its Affiliates, including the
         Arranger.

         (b) ADDITIONAL REPRESENTATIONS AND WARRANTIES. Each Certificate Holder
additionally represents, warrants and agrees:

                                                         Participation Agreement

                                       20
<PAGE>

                  (i) ACQUISITION FOR INVESTMENT. It is acquiring its interest
         in the Trust Estate, including the trust certificates, for its own
         account for investment and not with a view to, or for sale in
         connection with, any distribution thereof, but subject, nevertheless,
         to any requirement of law that the disposition of its property shall at
         all times be within its control.

                  (ii) NO OFFERING. Neither such Certificate Holder nor anyone
         acting on its behalf has offered, directly or indirectly, any interest
         in the Trust Estate, including the trust certificates, for sale to, or
         solicited any offer to acquire any of the same from, anyone (it being
         understood that neither the Lessee nor any other Person has been
         authorized to act on behalf of any Certificate Holder in connection
         with any such offer or solicitation).

                  (iii) LESSOR LIENS. The Property is free of Lessor Liens
         attributable to such Certificate Holder.

                  (iv) CONSOLIDATED CAPITALIZATION. During the Construction
         Period, such Certificate Holder has stockholders equity (or the
         equivalent) (on a consolidated basis) of at least $5,000,000.

                  (v) INVESTMENT COMPANY. Such Certificate Holder is not an
         "investment company" or a company "controlled" by an "investment
         company" within the meaning of the Investment Company Act of 1940, as
         amended.

                  (vi) TRANSFER AND ASSIGNMENTS. Any transfer or assignment of
         its interest in the Trust Estate (including the trust certificates)
         shall be subject to, and shall be effected in accordance with, the
         terms and provisions of Section 12.

                  (vii) TRANSFERS. It will not transfer its interest in the
         Trust or the Trust Estate, including the trust certificates, except as
         expressly provided in Section 8.1 of the Trust Agreement.

                  (viii) LESSOR LIENS. It will not directly or indirectly
         create, incur, assume or suffer to exist any Lessor Liens attributable
         to it on the Trust Estate. It will, at its own cost and expense,
         promptly take such action as may be necessary to discharge fully all
         such Lessor Liens on the Trust Estate, other than Lessor Liens being
         contested by a Permitted Contest. It shall make restitution to the
         Trust Estate for any diminution in the value of the Trust Estate as a
         result of its failure to discharge any such Lessor Liens. It shall
         promptly, and in no event later than thirty days after its Certificate
         Holder Officer shall have obtained actual knowledge of the attachment
         of any Lessor Lien for which it is responsible, notify the Lessee and
         the Owner Trustee of the attachment of such Lessor Lien and the
         particulars thereof. The term "CERTIFICATE HOLDER OFFICER" shall mean
         an officer of each Certificate Holder having responsibility for the
         administration of such Certificate Holder's interest in the Operative
         Documents.

                  (ix) SOURCE OF FUNDS. The investment in the Trust Estate to be
         made by such Certificate Holder will be made from equity held by such
         Certificate Holder, or if such funds are to be borrowed by such
         Certificate Holder, such borrowing is recourse to such

                                                         Participation Agreement

                                       21
<PAGE>

         Certificate Holder and such Certificate Holder's knowledge, it has
         assets (other than its interest in the Overall Transaction) to pay in
         full such debt and all amounts due with respect thereto when due.

         (c) COVENANTS OF THE PARTICIPANTS. Each of the Participants hereby
agrees as follows so long as this Participation Agreement is in effect:

                  (i) NO CREATION OF LESSOR LIENS. It will not create, incur,
         assume or suffer to exist any Lessor Lien attributable to such
         Participant upon the Lease or any of the Property;

                  (ii) REMOVAL OF LESSOR LIENS. It will remove any Lessor Lien
         created or incurred by it and use its best efforts to remove any Lessor
         Lien attributable to it assumed or suffered to exist by it upon the
         Lease or any of the Property (other than the Lender Mortgage and such
         other Liens as are contemplated by any of the Operative Documents);
         provided, however, that any action taken pursuant to this clause (ii)
         shall not limit the Lessee's rights or remedies under any of the
         Operative Documents.

                  (iii) QUIET ENJOYMENT. It will not, through its own actions or
         inactions, interfere with the peaceful and quiet enjoyment of the use
         or nonuse of the Property by the Lessee in accordance with the terms of
         the Lease, it being understood and agreed by the parties hereto that
         the rights of the Lessee under this Section 6(c)(iii) shall not be
         impaired by the Certificate Holders' breach of any covenant, agreement
         or condition contained in any Operative Document to which such Person
         is a party, or any misrepresentation or breach of warranty by such
         Person or, to the maximum extent permitted by Applicable Law, the
         bankruptcy or insolvency of any such Person or the appointment of a
         trustee, receiver, liquidator, custodian or other similar official with
         respect to such Person or any substantial part of such Person's
         property.

                  (iv) AMENDMENT. For so long as no Lease Event of Default shall
         have occurred and be continuing, it will not (and will not direct the
         Agent or the Lessor to) amend or modify any Operative Document to which
         the Lessee is not a party in a manner which is adverse to the Lessee
         without its prior consent.

         (d) COVENANTS OF THE AGENT. The Agent hereby agrees that upon repayment
in full of all Loans, the Agent shall execute and deliver to the Lessee a
release of the Lender Mortgage, releases of the Construction Agency Agreement
Assignment and Assignment of Leases and Rents and releases of all other Liens
created by the Operative Documents, and termination statements for any UCC
Financing Statements relating to the Property which are then of record naming
the Agent as secured party or assignee thereof.

         (e) COVENANTS OF THE CERTIFICATE HOLDERS. Each Certificate Holder
hereby agrees that so long as this Participation Agreement is in effect (unless
a Lease Event of Default shall have occurred and be continuing) until expiration
or earlier termination of the Lease, it will not, and will not cause or direct
the Owner Trustee to, terminate the Trust Agreement without the prior written
consent of the Lessee.

                                                         Participation Agreement

                                       22
<PAGE>

SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF WILMINGTON TRUST
           COMPANY AND OWNER TRUSTEE

         (a) WILMINGTON TRUST COMPANY REPRESENTATIONS AND WARRANTIES. Wilmington
Trust Company hereby represents and warrants in its individual capacity that:

                  (i) DUE ORGANIZATION. Wilmington Trust Company (i) is a
         Delaware banking corporation duly organized and validly existing in
         good standing under the laws of the State of Delaware, and (ii) has the
         power and authority to enter into and perform its obligations under the
         Trust Agreement and to serve as trustee thereunder.

                  (ii) TRUST AGREEMENT; PARTICIPATION AGREEMENT. Each of the
         Trust Agreement and this Participation Agreement (insofar as Wilmington
         Trust Company is a party thereto and hereto) has been duly executed and
         delivered by Wilmington Trust Company and, assuming due authorization,
         execution and delivery by the other parties thereto, the Trust
         Agreement and this Participation Agreement constitute Wilmington Trust
         Company's legal, valid and binding obligations, enforceable against it
         in accordance with their respective terms, except as enforceability
         thereof may be limited by (i) bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting enforcement of creditors'
         rights generally and (ii) general principles of equity (regardless of
         whether such enforceability is considered in a proceeding in equity or
         at law).

                  (iii) DUE AUTHORIZATION. Each Operative Document to which
         Wilmington Trust Company is or will become a party has been duly
         authorized, and has been or will be duly executed and delivered by
         Wilmington Trust Company.

                  (iv) NO VIOLATION. Assuming due authorization, execution and
         delivery of the Trust Agreement by the Certificate Holders, the
         execution and delivery by either the Owner Trustee or Wilmington Trust
         Company, of each Operative Document to which the Owner Trustee or
         Wilmington Trust Company, as the case may be, is or will become a
         party, are not, and the performance by the Owner Trustee or Wilmington
         Trust Company, as the case may be, of their obligations under each, is
         not, and will not be, inconsistent with the Organic Documents of
         Wilmington Trust Company and, taking into account the responsibilities
         of the Owner Trustee, do not and will not contravene the provisions of
         Applicable Law of the United States or Delaware (including any rules
         and regulations of governmental agencies and authorities thereto and
         therein and any judgment or order applicable to Wilmington Trust
         Company) governing the banking and trust powers of Wilmington Trust
         Company or result in any violation of or conflict with or constitute a
         default under, or subject the Trust Estate or any of the Property to
         any Lien of, any indenture, mortgage or other agreement or instrument
         to which Wilmington Trust Company is a party or by which Wilmington
         Trust Company or its properties are bound, or, taking into account the
         responsibilities of the Owner Trustee, require the consent or approval
         of, the giving of notice to, the registration with or the taking of any
         action in respect of or by, any Federal or State agency, authority or
         Person governing the banking and trust powers of Wilmington Trust
         Company or any other local Governmental Authority of the State of
         Delaware, except such as have been obtained, given or accomplished.

                                                         Participation Agreement

                                       23
<PAGE>

                  (v) NO LITIGATION. There is no action, suit, investigation or
         proceeding by or before any court, arbitrator, administrative agency or
         other Governmental Authority pending or, to the knowledge of Wilmington
         Trust Company, threatened against or affecting Wilmington Trust Company
         or any of its properties which (i) involves any of the transactions
         contemplated hereunder or by any of the Operative Documents or (ii)
         affects its ability to perform its respective obligations under the
         Operative Documents to which it is or will become a party.

                  (vi) LESSOR LIENS. There are no Lessor Liens arising by,
         through or under Wilmington Trust Company, other than relating to or in
         connection with the Operative Documents.

                  (vii) SECURITIES. Wilmington Trust Company has not offered
         directly or indirectly any interests in the Trust Estate or any part
         thereof, including the trust certificates, for issue or sale to, or
         solicited any offer to acquire any of the same from, anyone, other than
         as contemplated in the Operative Documents.

         (b) WILMINGTON TRUST COMPANY AGREEMENTS. Wilmington Trust Company
hereby agrees that:

                  (i) LESSOR LIENS. Wilmington Trust Company will not directly
         or indirectly create, incur, assume or suffer to exist any Lessor Liens
         attributable to it on the Trust Estate not resulting from or related to
         the transactions contemplated by the Operative Documents. Wilmington
         Trust Company will, at its own cost and expense, promptly take such
         action as may be necessary to discharge duly all such Lessor Liens on
         any part of the Trust Estate attributable to Wilmington Trust Company
         other than Lessor Liens being contested by a Permitted Contest.
         Wilmington Trust Company shall make restitution to the Trust Estate for
         any diminution in the value of the Trust Estate as a result of its
         failure to discharge any such Lessor Liens attributable to Wilmington
         Trust Company. It shall promptly, and in no event later than thirty
         (30) days after an Owner Trustee Officer shall have obtained actual
         knowledge of the attachment of any such Lessor Lien for which it is
         responsible, notify the Lessee and the Certificate Holders of the
         attachment of such Lien and the particulars thereof. The term "OWNER
         TRUSTEE OFFICER" shall mean an officer in the Corporate Trust
         Administration department of the Owner Trustee having responsibility
         for the administration of Wilmington Trust Company's and the Owner
         Trustee's interest in the Operative Documents.

                  (ii) NO ISSUANCE. Wilmington Trust Company agrees that neither
         Wilmington Trust Company nor anyone acting on its behalf has offered or
         will offer any interests in the Trust Estate or any part thereof
         (including the trust certificates) or any securities similar thereto
         for issue or sale to, or has solicited or will solicit any offer to
         acquire any of the same from, anyone so as to bring the issuance and
         sale of the interests in the Trust Estate (including the trust
         certificates) within the provisions of Section 5 of the Securities Act
         or any similar provisions under any applicable state "blue sky" or
         similar state securities laws.

                                                         Participation Agreement

                                       24
<PAGE>

         (c) OWNER TRUSTEE AND TRUST REPRESENTATIONS AND WARRANTIES. The Owner
Trustee and the Trust hereby represent and warrant on the date hereof that:

                  (i) DUE ORGANIZATION. Assuming the due authorization,
         execution and delivery of the Trust Agreement by the Certificate
         Holders, the Owner Trustee has the power and authority under the Trust
         Agreement to enter into and perform its obligations under each
         Operative Document to which the Owner Trustee is or will become a party

                  (ii) DUE AUTHORIZATION; ENFORCEABILITY. Assuming due
         authorization, execution and delivery of the Trust Agreement by the
         Participants and Wilmington Trust Company, each Operative Document
         (other than the Trust Agreement) to which the Trust or the Owner
         Trustee is or will become a party constitutes or will constitute upon
         the due execution thereof a legal, valid and binding obligation of the
         Owner Trustee and the Trust, enforceable against the Owner Trustee and
         the Trust, in accordance with its terms, except as enforceability
         thereof may be limited by (i) bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting enforcement of creditors'
         rights generally and (ii) general principles of equity (regardless of
         whether such enforceability is considered in a proceeding in equity or
         at law).

                  (iii) NO LIENS. On each Funding Date, the Property to be
         acquired with all or a portion of the Advances made on such Funding
         Date shall be free and clear of Lessor Liens arising by, through or
         under the Owner Trustee (other than Permitted Liens).

                  (iv) CHIEF EXECUTIVE OFFICE. The principal place of business
         and chief executive office (as such term is used in Article 9 of the
         Uniform Commercial Code) of Owner Trustee and the Trust is located in
         Wilmington, Delaware.

                  (v) DUE ORGANIZATION. The Trust has been duly formed and is
         validly existing and in good standing as a statutory business trust
         under the laws of the State of Delaware, and has the power and
         authority to enter into and perform its obligations under each of the
         Operative Documents, including this Participation Agreement and the
         Lease to which it is or is to become a party.

                  (vi) ASSIGNMENT. It has not assigned or transferred any of its
         right, title or interest in or under the Lease or the Construction
         Agency Agreement except in accordance with the Operative Documents.

                  (vii) USE OF PROCEEDS. The proceeds of the Loans and the
         Equity Amounts shall be applied by the Trust in its capacity as the
         Lessor solely in accordance with the provisions of the Operative
         Documents.

                  (viii) SECURITIES ACT. Neither the Trust in its capacity as
         the Lessor nor any Person authorized by the Trust to act on its behalf
         has offered or sold any interest in the Notes or Equity Amounts, or in
         any similar security relating to the Property, or in any security the
         offering of which for the purposes of the Securities Act of 1933, as
         amended, would be deemed to be part of the same offering as the
         offering of the aforementioned securities to, or solicited any offer to
         acquire any of the same from, any Person other than, in the case of the
         Notes, the Lenders, and neither the Trust in its capacity as the

                                                         Participation Agreement

                                       25
<PAGE>

         Lessor nor any Person authorized by the Trust to act on its behalf will
         take any action which would subject the issuance or sale of any
         interest in the Notes or Equity Amounts to the provisions of Section 5
         of the Securities Act.

                  (ix) FEDERAL RESERVE REGULATIONS. The Trust is not engaged
         principally in, and does not have as one of its important activities,
         the business of extending credit for the purpose of purchasing or
         carrying any margin stock (within the meaning of Regulation U of the
         F.R.S. Board), and no part of the proceeds of the Loans or the Equity
         Amounts will be used by it to purchase or carry any margin stock or to
         extend credit to others for the purpose of purchasing or carrying any
         such margin stock or for any purpose that violates, or is inconsistent
         with, the provisions of Regulation G, T, U or X of the F.R.S. Board.
         Terms for which meanings are provided in F.R.S. Board Regulation G, T,
         U or X or any regulations substituted therefor, as from time to time in
         effect, are used in this clause (9) with such meanings.

                  (x) INVESTMENT COMPANY ACT. The Trust is not an "investment
         company" or a company controlled by an "investment company" within the
         meaning of the Investment Company Act of 1940, as amended.

         (d) OWNER TRUSTEE AND TRUST AGREEMENTS. Owner Trustee and the Trust
agree that:

                  (i) LESSOR LIENS. The Owner Trustee and the Trust will not
         directly or indirectly create, incur, assume or suffer to exist any
         Lessor Liens arising by, through or under it on the Trust Estate. The
         Owner Trustee shall, at the cost and expense of the Trust Estate,
         promptly take such action as may be necessary to discharge duly all
         Lessor Liens attributable to it on any part of the Trust Estate, other
         than Lessor Liens being contested by a Permitted Contest. The Owner
         Trustee shall make restitution to the Trust Estate for any diminution
         in the value of the Trust Estate as a result of its failure to
         discharge any Lessor Liens attributable to it.

                  (ii) NOTICES. In the event any claim with respect to any
         liabilities is filed against the Owner Trustee or the Trust, the Owner
         Trustee shall promptly notify the Certificate Holders and the Lessee
         thereof.

                  (iii) TITLE. On the Documentation Date and each Funding Date
         the Trust will take whatever interest in the Trust Estate and whatever
         rights to and interests in the Lease as were granted or conveyed to it,
         free and clear of any Lessor Liens attributable to it.

                  (iv) INTENTIONALLY OMITTED.

                  (v) TRUST AGREEMENT. The Owner Trustee agrees that (unless a
         Lease Event of Default shall have occurred and be continuing) until
         expiration or earlier termination of the Lease, it will not terminate
         the Trust Agreement without the prior written consent of the Lessee.

                                                         Participation Agreement

                                       26
<PAGE>

SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE, CONSTRUCTION
           AGENT, GUARANTOR AND PARENT GUARANTOR

         (a) GENERAL REPRESENTATIONS AND WARRANTIES. Each of the Lessee (in its
capacity as Lessee, Construction Agent and Guarantor) and the Parent Guarantor
hereby represents and warrants to each of the other parties hereto that:

                  (i) DUE ORGANIZATION. Lessee is a corporation duly organized
         and validly existing in good standing under the laws of either the
         State of Delaware. Parent Guarantor is a corporation duly organized and
         validly existing in good standing under the laws of the State of
         Minnesota. Each of the Lessee and Parent Guarantor (i) has all
         requisite corporate power and authority to own, hold under lease and
         operate its properties and to carry on its business as now conducted
         and as presently proposed to be conducted and to enter into, and
         perform its obligations under, each of the Operative Documents to which
         it is or will become a party, and (ii) has duly qualified and is
         authorized to do business and is in good standing as a foreign
         corporation in the State of Texas and in each state or other
         jurisdiction where a failure to so qualify would have a Material
         Adverse Effect.

                  (ii) DUE AUTHORIZATION; ENFORCEABILITY. Each of the Operative
         Documents to which it is or will become a party has been or will be,
         when executed and delivered, duly authorized by all appropriate
         corporate action, and has been or will be executed and delivered by the
         Lessee or Parent Guarantor, as the case may be, and, assuming due
         authorization, execution and delivery by the other parties thereto,
         constitutes or will constitute upon the due execution thereof the
         Lessee's or Parent Guarantor's, as the case may be, legal, valid and
         binding obligation, enforceable against it in accordance with its
         terms, except as enforceability thereof may be limited by (i)
         bankruptcy, insolvency, reorganization, moratorium or other similar
         laws affecting enforcement of creditors' rights generally and (ii)
         general principles of equity (regardless of whether such enforceability
         is considered in a proceeding in equity or at law).

                  (iii) NO VIOLATION. The execution and delivery by the Lessee
         or Parent Guarantor, as the case may be, of each of the Operative
         Documents to which it is or will become a party are not, and the
         performance by each of the Lessee and Parent Guarantor of its
         obligations under each will not be, inconsistent with its Organic
         Documents, do not and will not contravene any Applicable Law of the
         United States of America, the State of Illinois, the State of Delaware
         or the State of Minnesota applicable to the Lessee or the Parent
         Guarantor, as the case may be, or the transactions contemplated by the
         Operative Documents, and do not and will not contravene any provision
         of, or constitute a default under, any indenture, mortgage or other
         material contract or other instrument to which the Lessee or Parent
         Guarantor, as the case may be, is a party or by which it or its
         property is bound or require the consent or approval of, the giving of
         notice to, the registration with or the taking of any action in respect
         of or by, any Governmental Authority or other Person, except such as
         have been obtained, given or accomplished or such as will, pursuant to
         paragraph (iv) below, be obtained, given or accomplished not later than
         the dates required by Applicable Law.

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                                       27
<PAGE>

                  (iv) GOVERNMENTAL ACTIONS. The Lessee or Parent Guarantor, as
         the case may be, has made or will make all filings, recordings and
         registrations required by any Governmental Authority in connection
         with, and has obtained or will obtain, all Governmental Actions
         necessary or appropriate for the performance by the Lessee or the
         Parent Guarantor, as the case may be, of the transactions contemplated
         hereby and by the other Operative Documents which are then or
         theretofore required by Applicable Law; the Lessee or Parent Guarantor,
         as the case may be, will make all filings, recordings and registrations
         required by any Governmental Authority in connection with, and will
         obtain, all material Governmental Actions necessary or appropriate for
         the performance by the Lessee or Parent Guarantor, as the case may be,
         of the transactions contemplated hereby and by the other Operative
         Documents not later than the dates required by Applicable Law.

                  (v) NO LITIGATION. There are no pending or, to the best
         knowledge of the Lessee or Parent Guarantor, as the case may be,
         threatened actions or proceedings by or before any court or
         administrative agency or other Governmental Authority to which the
         Lessee or Parent Guarantor, as the case may be, is or may become a
         party which (i) involves any of the transactions contemplated hereunder
         or by any of the Operative Documents or (ii) if determined adversely to
         it, would reasonably be likely to materially adversely affect the
         Lessee's or Parent Guarantor's ability to perform its obligations under
         each of the Operative Documents to which it is or will become a party.

                  (vi) PERFORMANCE. Neither the Lessee nor the Parent Guarantor
         is in violation of any Applicable Law the violation of which is
         reasonably likely materially and adversely to affect the transactions
         contemplated by this Participation Agreement and the other Operative
         Documents or which would materially adversely affect Lessee's or Parent
         Guarantor's ability to perform its obligations under each of the
         Operative Documents.

                  (vii) NO ADVERSE CONTRACTS OR APPLICABLE LAW. Neither the
         Lessee nor the Parent Guarantor is a party to, or bound by, any
         contract or agreement or instrument, or subject to any charter or other
         corporate restriction or any Applicable Laws which materially and
         adversely affects the transactions contemplated by this Participation
         Agreement or the Operative Documents or which would materially
         adversely affect its ability to perform its obligations under each of
         the Operative Documents.

                  (viii) TAXES. All tax returns required to be filed by the
         Lessee or the Parent Guarantor in any jurisdiction have been filed
         where the failure to so file would have a Material Adverse Effect, and
         all Taxes upon the Lessee or the Parent Guarantor, as the case may be,
         or upon any of its properties, income or franchises, which are shown on
         such returns to be due and payable have been paid, other than Taxes (i)
         which are being contested in good faith by appropriate proceedings
         which have the effect of staying the enforcement of the lien for such
         Taxes and the sale, forfeiture or other loss of the Property during the
         pendency of such contest, (ii) for which none of the Lessor, the Owner
         Trustee, the Agent and the Participants shall be subject to any risk of
         criminal liability or material civil liability by virtue of the matters
         being contested or such proceedings, and (iii) for which the Lessee or
         the Parent Guarantor, as the case may be, in

                                                         Participation Agreement

                                       28
<PAGE>

         accordance with prudent practice, has set aside adequate reserves for
         the payment thereof and has provided evidence reasonably acceptable to
         the Agent, the Lessor and the Participants of such reserves. No
         material controversy in respect of additional income taxes due is
         pending or, to the knowledge of the Lessee threatened, which
         controversy if determined adversely would materially and adversely
         affect the financial condition of the Lessee or the Parent Guarantor.

                  (ix) INVESTMENT COMPANY ACT. Neither the Lessee nor the Parent
         Guarantor is an "investment company" or a company "controlled" by an
         "investment company", within the meaning of the Investment Company Act
         of 1940, as amended.

                  (x) DISCLOSURE. Neither the financial statements referred to
         in Section 8(A)(XVIII) nor any written statement furnished by or on
         behalf of the Lessee or the Parent Guarantor, as the case may be, in
         connection with the negotiation of the Lease or any other Operative
         Document contains any untrue statement of a material fact or omits a
         material fact necessary to make the statements contained therein or
         herein not misleading. There is no fact known to Lessee or the Parent
         Guarantor that has not been disclosed in writing to the other parties
         hereto that materially and adversely affects the ability of Lessee or
         the Parent Guarantor to perform its obligations under the Operative
         Documents.

                  (xi) HOLDING COMPANY. Neither the Lessee nor the Parent
         Guarantor is subject to regulation as a "holding company", an
         "affiliate" of a "holding company" or a "subsidiary company" of a
         "holding company", within the meaning of the Public Utility Holding
         Company Act of 1935, as amended.

                  (xii) ERISA. The execution and delivery by the Lessee and the
         Parent Guarantor of the Operative Documents to which it is or will
         become a party, will not involve any prohibited transaction within the
         meaning of ERISA or Section 4975 of the Code. The representations by
         the Lessee and the Parent Guarantor in this paragraph is made in
         reliance upon and subject to the accuracy of the representations of the
         Participants in Section 6(a)(vi) hereof as to the source of funds for
         the Participant's Loans or Equity Amounts, as applicable.

                  (xiii) PATENTS AND TRADEMARKS. Each of the Lessee and the
         Parent Guarantor owns or possesses or has the right to use all the
         patents, patent rights, trademarks, service marks, trade names,
         copyrights, licenses and similar rights necessary for the performance
         of its obligations under the Operative Documents, without any conflict
         known to it with the actual or asserted rights of others which
         materially and adversely affect the Lessee's or the Parent Guarantor's
         ability to perform its obligations under the Operative Documents to
         which it is or will become a party. It is understood and agreed by the
         parties hereto that no interest in any trademark, trade name, copyright
         or service mark of the Lessee or an Affiliate thereof is being conveyed
         or transferred to the Owner Trustee or any other Person pursuant to any
         Operative Document.

                  (xiv) REGULATORY JURISDICTION. None of the Participants or
         Owner Trustee or Wilmington Trust Company will become, (i) solely by
         reason of entering into this

                                                         Participation Agreement

                                       29
<PAGE>

         Participation Agreement or the other Operative Documents or (except
         with respect to the exercise by any Person of any control over the
         Property upon the occurrence of a Lease Event of Default or the
         expiration or other termination of the Lease) the consummation of any
         of the transactions contemplated hereby or thereby, subject to
         regulation by any Governmental Authority which regulates or otherwise
         has jurisdiction over any facilities for the retail distribution of
         petroleum products; or (ii) except for regulation the applicability of
         which depends on the existence of facts in addition to the ownership of
         the Property upon the exercise of remedies under the Lease or upon the
         expiration of the Lease, subject to ongoing regulation of its
         operations by any Governmental Authority.

                  (xv) PRIVATE OFFERING. Neither the Lessee, the Parent
         Guarantor, nor any Person authorized to act on Lessee's or Parent
         Guarantor's behalf has offered, either directly or indirectly, the
         Notes or any interest in the Trust Estate (including the trust
         certificates) for sale to, or solicited offers to buy any thereof from
         or otherwise approached or negotiated with respect thereto with any
         prospective purchaser, other than the Participants. Neither the Lessee
         nor the Parent Guarantor has authorized or employed any Person to act
         as agent, broker, finder, financial advisor or otherwise in connection
         with the offering of interests in the Notes or the Trust Estate
         (including the trust certificates).

                  (xvi) NO DEFAULTS. No Lease Default or Lease Event of Default
         has occurred and is continuing.

                  (xvii) FEES. Neither the Lessee, the Parent Guarantor, nor any
         Person authorized or employed by the Lessee or the Parent Guarantor as
         agent or otherwise has taken any action the effect of which would be to
         cause the Certificate Holders, the Trust Estate, or the Owner Trustee
         to be liable for any brokers', finders', agents', or advisors' fees or
         commissions or costs of any nature or kind claimed by or on behalf of
         brokers, finders, agents or advisors in respect of the transactions
         contemplated by the Operative Documents.

                  (xviii) FINANCIAL STATEMENTS. The consolidated annual
         financial statements of the Parent Guarantor and its Consolidated
         Subsidiaries, certified by Arthur Andersen, independent certified
         public accountants, for the year ended December 31, 2000 and the
         consolidated un-audited financial statements of the Parent Guarantor
         and its Subsidiaries, including the Lessee, for the period from January
         1, 2001 to June 30, 2001 (collectively, the "Financial Reports")
         present fairly, in all material respects, the financial condition of
         the Parent Guarantor and its Consolidated Subsidiaries, as of the dates
         indicated therein and the results of operations and changes in
         financial position or, if applicable, changes in cash flow for the
         periods therein specified subject, in the case of interim financial
         statements, to year-end adjustment. Since June 30, 2001, there has been
         no material adverse change in the financial condition of the Lessee or
         the Parent Guarantor, as the case may be.

                  (xix) The pro forma financial statements of the Parent
         Guarantor and its Consolidated Subsidiaries, dated as of October, 2001
         present fairly on a pro forma basis the financial position of the
         Parent Guarantor and its Consolidated Subsidiaries as of such

                                                         Participation Agreement

                                       30
<PAGE>

         date and the pro forma financial results for the periods covered
         thereby, and are based on good faith assumptions believed by the
         management of the Parent Guarantor to be reasonable at the time made.

                  (xx) CHIEF EXECUTIVE OFFICE. The principal place of business
         and chief executive office (as such term is used in Article 9 of the
         Uniform Commercial Code) of the Lessee and the Parent Guarantor is
         located at 400 N Sam Houston Parkway E, Suite 400, Houston, Texas
         77060. The federal employer identification number of the Lessee is
         76-0413713 and the organizational identification number of the Lessee,
         as designated by the State of Delaware is 2310719.

                  (xxi) USE OF LOANS AND PROCEEDS. No part of any Advance will
         be used directly or indirectly for the purpose of purchasing or
         carrying, or for payment in full or in part of indebtedness that was
         incurred for the purposes of purchasing or carrying, any margin
         security as such term is defined in Section 207.2 of Regulation G of
         the F.R.S. Board (12 C.F.R., Chapter II, Part 207).

                  (xxii) REGULATIONS T, U AND X. No proceeds of any of the
         Advances will be used for a purpose which violates, or would be
         inconsistent with, F.R.S. Board Regulation T, U or X. 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 clause (xxi) with such meanings.

                  (xxiii) GOVERNMENTAL LEASES. The Governmental Leases remain in
         full force and effect and neither the Lessee nor the Parent Guarantor
         is aware of any fact or circumstance which could have a Material
         Adverse Effect on the ability of the Lessee or any licensee of same to
         exercise its rights and enjoy the benefits of such Governmental Leases
         including, without limitation, locating the Platform on the Site.

                  (xxiv) JOINT OPERATING AGREEMENT. The Joint Operating
         Agreement is in full force and effect, and the Lessee and, to Lessee's
         knowledge, Kerr-McGee Oil & Gas Corporation and Nexen Petroleum
         Offshore U.S.A. Inc., are in compliance with the terms thereof in all
         material respects. The Development Plan and the current Annual
         Operating Plan (as each of those terms are defined in the Joint
         Operating Agreement) are each in full force and effect.

                  (xxv) AMENDMENTS. Neither the Joint Operating Agreement, the
         Development Plan or the current Annual Operating Plan (as each of those
         terms are defined in the Joint Operating Agreement) has been amended
         except as expressly permitted pursuant to the terms of this Agreement.

                  (xxvi) POLICIES OF INSURANCE. All Policies of Insurance
         required to be obtained pursuant to the terms of this Agreement or the
         Lease are in full force and effect and the Lessee is in compliance with
         all Insurance Requirements in connection therewith.

                  (xxvii) PERFECTION. Lessee has taken or is in the process of
         taking all action as is necessary to cause the perfection of the
         security interest of the Lenders in the Trust Estate including the
         actions set forth in Exhibit M.

                                                         Participation Agreement

                                       31
<PAGE>

                  (xxviii) PERFECTION. INFORMATION. All Certificates, financial
         statements and other information as is required to be delivered to the
         Lessor and/or the Participants in connection with the satisfaction of
         the conditions precedent with respect to the Documentation Date is true
         and accurate in all material respects and there has been no material
         adverse change in such Certificates, financial statements or other
         information since the date thereof.

                  (xxix) INFORMATION PROVIDED TO CONSULTANTS. All information
         and materials which have been provided by the Lessee in connection with
         the Platform and the Overall Transaction to the Appraiser, the
         Construction Consultant, the Engineering Consultant, the Environmental
         Consultant, the Reserve Engineer and the Insurance Consultant in
         connection with the reports to be delivered by them is true and
         accurate in all material respects on the date as of which such
         information and materials are dated or certified and are not incomplete
         by omitting to state any fact necessary to make such information (taken
         as a whole) not misleading at such time in light of the circumstances
         under which such information was provided.

                  (xxx) OWNERSHIP OF LESSEE SHARES. Parent Guarantor owns 100%
         of the issued and outstanding stock of the Lessee.

         (b) AVAILABILITY DATE REPRESENTATIONS AND WARRANTIES. As of the
Availability Date, each of the Lessee (in its capacity as Lessee, Construction
Agent and Guarantor) and the Parent Guarantor hereby represents and warrants to
each of the other parties hereto that:

                  (i) REPRESENTATIONS AND WARRANTIES. The representations and
         warranties of the Lessee and the Parent Guarantor in the Operative
         Documents and in Section 8(a) hereof are true and accurate on and as of
         such Availability Date, as though made on and as of such Availability
         Date (or, if stated to relate to an earlier date, shall have been true
         and accurate as of such earlier date). No Event of Default has occurred
         and is continuing and no Default of which the Lessee or the Parent
         Guarantor has knowledge and that has not been previously disclosed to
         the Participants has occurred and is continuing under the Lease or the
         Construction Agency Agreement or any other Operative Document.

                  (ii) DUE AUTHORIZATION; ENFORCEABILITY. Each of the Operative
         Documents to which it is or will become a party with respect to the
         Availability Date has been or will be, when executed and delivered,
         duly authorized by all appropriate corporate action, and has been or
         will be executed and delivered by the Lessee or the Parent Guarantor,
         as the case may be, and, assuming due authorization, execution and
         delivery by the other parties thereto, constitutes or will constitute
         upon the due execution thereof the Lessee's or Parent Guarantor's, as
         the case may be, legal, valid and binding obligation, enforceable
         against it in accordance with its terms, except as enforceability
         thereof may be limited by (i) bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting enforcement of creditors'
         rights generally and (ii) general principles of equity (regardless of
         whether such enforceability is considered in a proceeding in equity or
         at law).

                  (iii) NO VIOLATION. The execution and delivery by the Lessee
         or Parent Guarantor, as the case may be, of each of the Operative
         Documents to which it is or will

                                                         Participation Agreement

                                       32
<PAGE>

         become a party with respect to the Availability Date are not, and the
         performance by the Lessee or Parent Guarantor, as the case may be, of
         its obligations under each will not be, inconsistent with its Organic
         Documents, do not and will not contravene any Applicable Law of the
         United States of America, the State of Illinois, the State of Delaware,
         the State of Minnesota or any jurisdiction applicable to the Lessee or
         the Parent Guarantor, as the case may be, or the Property or the
         transactions contemplated by the Operative Documents, and do not and
         will not contravene any provision of, or constitute a default under,
         any indenture, mortgage or other material contract or other instrument
         to which the Lessee or the Parent Guarantor, as the case may be, is a
         party or by which it or its property is bound or require the consent or
         approval of, the giving of notice to, the registration with or the
         taking of any action in respect of or by, any Governmental Authority or
         other Person, except such as have been obtained, given or accomplished
         or such as will, pursuant to paragraph (iv) below, be obtained, given
         or accomplished not later than the dates required by Applicable Law.

                  (iv) GOVERNMENTAL ACTIONS. The Lessee or the Parent Guarantor,
         as the case may be, has made or will make all filings, recordings and
         registrations required by any Governmental Authority in connection
         with, and has obtained or will obtain, all Governmental Actions
         necessary or appropriate for the construction and commercial operation
         and use of the Platform and the performance by the Lessee of the
         transactions contemplated hereby and by the other Operative Documents
         which are then or theretofore required by Applicable Law; the Lessee or
         the Parent Guarantor, as the case may be, will make all filings,
         recordings and registrations required by any Governmental Authority in
         connection with, and will obtain, all material Governmental Actions
         necessary or appropriate for the construction and commercial operation
         and use of the Platform and the performance by the Lessee or the Parent
         Guarantor, as the case may be, of the transactions contemplated hereby
         and by the other Operative Documents not later than the dates required
         by Applicable Law.

                  (v) PERFORMANCE. Neither the Lessee nor the Parent Guarantor
         is in violation of any Applicable Law the violation of which is
         reasonably likely materially and adversely to affect the Platform or
         the transactions contemplated by this Participation Agreement and the
         other Operative Documents or which would materially adversely affect
         the Lessee's or the Parent Guarantor's ability to perform its
         obligations under each of the Operative Documents.

                  (vi) CONSTRUCTION CONTRACTS. The Lessee has delivered to the
         Lessor copies of all Construction Contracts in effect as of the
         Availability Date and all such Construction Contracts do not differ
         materially from the most recent drafts of such Construction Contracts
         delivered to the Lessor.

                  (vii) APPROVED BUDGET. The Approved Budget remains in full
         force and effect, there has been no material change in the Approved
         Budget since the date of approval by the Participants, and the Lessee
         is not aware of any fact or circumstance which could have a Material
         Adverse Effect on the ability of the Construction Agent to cause the
         construction of the Platform within the parameters set forth in the
         Approved Budget.

                                                         Participation Agreement

                                       33
<PAGE>

         (c) FUNDING DATE REPRESENTATIONS AND WARRANTIES. As of each Funding
Date, on which an Advance is made and with respect to the Platform and/or the
Property, each of the Lessee (in its capacity as Lessee, Construction Agent and
Guarantor) and the Parent Guarantor represents and warrants that:

                  (i) REPRESENTATIONS AND WARRANTIES. The representations and
         warranties of the Lessee and the Parent Guarantor, as the case may be,
         in the Operative Documents and in Section 8(a) and Section 8(b) hereof
         are true and accurate on and as of such Funding Date, as though made on
         and as of such Funding Date (or, if stated to relate to an earlier
         date, shall have been true and accurate as of such earlier date). No
         Event of Default has occurred and is continuing and no Default of which
         the Lessee or the Parent Guarantor has knowledge and that has not been
         previously disclosed to the Participants has occurred and is continuing
         under the Lease or the Construction Agency Agreement or any other
         Operative Document. No Default or Event of Default under the Lease or
         the Construction Agency Agreement or, to the knowledge of the Lessee,
         any other Operative Document, will occur as a result of, or after
         giving effect to, the Advance requested by the Funding Request on such
         date.

                  (ii) SUPPORT AGREEMENTS. The ownership and use of the Property
         by the Trust, the Owner Trustee or the Certificate Holders does not
         require the execution by, or assignment to, any such party of any
         easement, utility, maintenance or other support agreements.

                  (iii) APPLICABLE LAWS. The Platform and the commercial
         operation thereof for its intended purposes and use thereof are and/or
         will be in compliance with all Applicable Laws, including, without
         limitation, zoning, planning, building, occupational safety and health
         laws and Environmental Laws of any Governmental Authority (other than
         in connection with the business of banking or which may be applicable
         to activity or transactions of the Participants not relating to the
         Operative Documents) having jurisdiction over the Platform, the
         Property, the Trust, the Owner Trustee, the Lessor or the Lessee other
         than such non-compliance that would not, individually or in the
         aggregate, (i) have a Material Adverse Effect, or (ii) impose any
         material penalty on, or result in the imposition of any criminal
         liability on, any Indemnified Person. All requirements thereof
         necessary for the use, occupancy and operation of the Platform which
         are then or theretofore required by Applicable Laws have been satisfied
         in all material respects.

                  (iv) NO TAXES. No sales, use, transfer, documentation, real
         estate or similar taxes, fees or other charges are payable with respect
         to the Platform or the Property under the laws of any State or any
         governmental subdivision thereof in which Platform or the Property is
         located in connection with (A) the entering into, or performance under,
         or enforcement of any Operative Document with respect thereto or (B)
         the lease to the Lessee of the Property, except such taxes, fees and
         other charges as have been paid or will be paid by the Lessee when due
         or are included in Estimated Allocated Construction Cost or Transaction
         Expenses.

                                                         Participation Agreement

                                       34
<PAGE>

                  (v) NO EVENTS OF LOSS. Except as disclosed in writing to the
         Certificate Holders in accordance with the Operative Documents, no
         Event of Loss with respect to the Platform has occurred and no event or
         condition has occurred which would, with the passage of time or the
         giving of notice, or both, constitute an Event of Loss with respect to
         the Platform.

                  (vi) ADVANCE. The amount of the Advance requested represents
         amounts owed by the Lessee or Construction Agent in respect of
         Allocated Construction Costs or Transaction Expenses, as the case may
         be, incurred prior to the date of such Advance and for which the Lessee
         has not previously been reimbursed by an Advance or represent amounts
         with respect to Facility Fees. The conditions precedent to such Advance
         and the related Equity Amount and Loans set forth in Section 9 have
         been satisfied or waived by the Participants.

                  (vii) CONSTRUCTION OF PROPERTY, DESCRIPTION OF AND TITLE TO
         PROPERTY. On the Funding Date, all material approvals of any
         Governmental Authority necessary for the construction operation of the
         Platform have been received and are in full force and effect with
         respect to work performed or to be performed in connection with the
         Advance to be made on such Funding Date. On each Funding Date, after
         giving effect to the transactions contemplated hereby, the Trust will
         have good and marketable title to and ownership of Property related to
         the Advance made in connection with such Funding Date, subject to no
         Title Defects, free and clear of all Liens, except Permitted Liens.

                  (viii) COMPLIANCE WITH ENVIRONMENTAL PROTECTION REQUIREMENTS.
         On the Funding Date (except as disclosed in the Environmental Audits
         delivered by Lessee to the Certificate Holders, Lessor and the Lenders)
         and during the Lease Term, the Platform is in compliance in all
         material respects with all Environmental Laws which are applicable to
         the Platform including, without limitation, Environmental Laws
         pertaining to design and performance standards and quality criteria for
         air, water and reclamation, and the use, storage, disposal and
         transportation of Hazardous Substances. Lessee shall cause asbestos to
         be abated as required in connection with its Construction of the
         Platform, as applicable.

                  (ix) INFORMATION PROVIDED TO CONSTRUCTION CONSULTANT. All
         information and materials which have been provided by the Lessee to the
         Construction Consultant in connection with the Construction Consultant
         Report delivered in connection with the Funding Date is true and
         accurate in all material respects on the date as of which such
         information and materials are dated or certified and are not incomplete
         by omitting to state any fact necessary to make such information (taken
         as a whole) not misleading at such time in light of the circumstances
         under which such information was provided.

                  (x) ENVIRONMENTAL LAWS. Except as described in the
         Environmental Audit delivered by the Lessee to the Certificate Holders,
         the Lessor and the Lenders, to the best of the Lessee's and Parent
         Guarantor's knowledge:

                           (1) there are no pending or threatened claims,
                  complaints, notices or requests for information relating to
                  the Platform or the Property received by the

                                                         Participation Agreement

                                       35
<PAGE>

                  Lessee or the Parent Guarantor with respect to any alleged
                  violation of any Environmental Law, which may reasonably be
                  expected to have a material adverse effect on the financial
                  condition, operations, assets, business or properties of the
                  Lessee or the Parent Guarantor or which may reasonably be
                  expected to have a material adverse effect on the Platform or
                  the Property, and

                           (2) there are no pending or threatened complaints,
                  notices or inquiries to the Lessee or the Parent Guarantor
                  relating to the Platform or the Property regarding potential
                  liability of the Lessee or the Parent Guarantor under any
                  Environmental Law, which may reasonably be expected to have a
                  material adverse effect on the financial condition,
                  operations, assets, business or properties of the Lessee or
                  the Parent Guarantor.

                  (xi) PLATFORM. The contemplated use of the Platform by the
         Lessee and its respective agents, assignees, employees, lessees,
         licensees and tenants will comply in all material respects with all
         Requirements of Law (including, without limitation, all zoning and land
         use laws and Environmental Laws) and Insurance Requirements.

                  (xii) PLANS AND SPECIFICATIONS. There is no action, suit or
         proceeding (including any proceeding in condemnation or eminent domain
         or under any Environmental Law) pending or, to the best knowledge of
         the Lessee or the Parent Guarantor, threatened with respect to the
         Platform which adversely affects the title to, or materially and
         adversely affects the use, operation or value of, the Platform or the
         Property. With respect to the Platform, all material licenses,
         approvals, authorizations, consents, permits (including, without
         limitation, building, demolition and environmental permits, licenses,
         approvals, authorizations and consents), easements and rights-of-way,
         including dedication, required for (x) the use, treatment, storage,
         transport, disposal or disposition of any Hazardous Substance on, at,
         under or from the Platform during the construction thereof, and (y)
         construction of such Platform in accordance with the related Plans and
         Specifications and the Construction Agency Agreement have either been
         obtained from the appropriate Governmental Authorities having
         jurisdiction or from private parties, as the case may be, or will be
         obtained from the appropriate Governmental Authorities having
         jurisdiction or from private parties, as the case may be, prior to the
         time required by such Governmental Authority or private party.

                  (xiii) INSURANCE. The Lessee has obtained insurance coverage
         covering the Property which meets the requirements of Section 12 of the
         Lease, and such coverage is in full force and effect. The Lessee
         carries insurance with reputable insurers in respect of the Property
         and its Material Assets, in such manner, in such amounts and against
         such risks as is customarily maintained by the Lessee or its Affiliates
         that own or operate similar properties.

                  (xiv) CONSTRUCTION MILESTONES. Each Construction Milestone
         required to have been completed prior to the Funding Date is
         substantially complete and each Construction Milestone required to have
         been completed in connection with previous Advances on previous Funding
         Dates remains substantially complete.

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                                       36
<PAGE>

         (d) AGREEMENTS. The Lessee hereby agrees that:

                  (i) INFORMATION. During the Lease Term, the Lessee and/or the
         Parent Guarantor, as the case may be, shall furnish to the Agent, the
         Participants and the Owner Trustee:

                           (1) promptly upon a Responsible Employee of the
                  Lessee becoming aware of the existence of a Lease Default, or
                  Lease Event of Default, written notice specifying the nature
                  of such Lease Default or Lease Event of Default and what
                  action the Lessee is taking or proposes to take with respect
                  thereto;

                           (2) within 120 days after the close of each Fiscal
                  Year of the Parent Guarantor, an audited consolidated balance
                  sheet and consolidated statements of retained earnings and
                  cash flows of the Parent Guarantor and its Consolidated
                  Subsidiaries at the end of such Fiscal Year, together with an
                  audited consolidated statement of income of the Parent
                  Guarantor and its Consolidated Subsidiaries for such Fiscal
                  Year, setting forth in each case in comparative form the
                  figures for the previous Fiscal Year and accompanied by an
                  opinion of a firm of independent certified public accountants
                  of recognized national standing stating that such audited
                  financial statements present fairly in all material respects
                  the financial condition of the companies being reported upon
                  and have been prepared in accordance with GAAP and that the
                  audit by such accountants in connection with such audited
                  financial statements has been made in accordance with
                  generally accepted auditing standards;

                           (3) within sixty (60) days after the close of each of
                  the first three quarters of each Fiscal Year of the Parent
                  Guarantor, an unaudited consolidated balance sheet and
                  consolidated statements of cash flows of the Parent Guarantor
                  and its Consolidated Subsidiaries, at and as of the end of
                  such year-to-date period, together with an unaudited
                  consolidated statement of income of the Parent Guarantor and
                  its Consolidated Subsidiaries, for such year-to-date period,
                  setting forth in each case in comparative form the amount for
                  the corresponding period of the preceding Fiscal Year (for the
                  balance sheet, the comparative period shall be the end of the
                  preceding Fiscal Year), all in reasonable detail;

                           (4) promptly upon their becoming available, one copy
                  of each financial statement, report, or proxy statement sent
                  by the Parent Guarantor to its shareholders generally, and of
                  each regular or periodic report filed by the Parent Guarantor
                  with any securities exchange or with the Securities and
                  Exchange Commission or any successor agency;

                           (5) promptly, and in any event within ten (10) days,
                  notice to the Agent of any amendment to the Joint Operating
                  Agreement;

                           (6) from time to time, such other financial
                  information as Certificate Holders, Owner Trustee or the Agent
                  may reasonably request; and

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                                       37
<PAGE>

                           (7) together with the financial statements delivered
                  pursuant to clauses (ii) and (iii) above, a certificate
                  substantially in the form of Exhibit N attached hereto (and
                  with no exceptions set forth therein other than those
                  acceptable to the Agent and the Required Participants) from
                  the Chief Financial Officer of the Parent Guarantor, which
                  shall, in addition, show a calculation of the financial
                  covenants set forth in Section 8(d)(vii);

                  (ii) PLATFORM COSTS AND ALLOCATED CONSTRUCTION COSTS; USE OF
         ADVANCES. The Lessee, as Construction Agent, will maintain a record of
         the Property Balance and the Allocated Construction Cost, and shall
         certify the same periodically to the Lessor, the Agent and the
         Participants from time to time upon request. In no event shall the
         Lessee or Construction Agent use the proceeds of the Advances for any
         purpose other than paying or reimbursing Allocated Construction Costs.

                  (iii) OFFICER'S CERTIFICATE. During the Lease Term with
         respect to the Property, within sixty (60) days after each quarterly
         period ending on each of March 31, June 30, September 30, within one
         hundred twenty (120) days after the end of each Fiscal Year of the
         Parent Guarantor and on December 31 of each year, the Lessee shall
         deliver to the Certificate Holders, the Agent and the Owner Trustee a
         certificate in the form of Exhibit C hereto of a Responsible Employee
         of the Lessee stating that such Responsible Employee has reviewed the
         required insurance coverages, the relevant terms of the Lease and the
         other Operative Documents and has made, or caused to be made, under
         such Responsible Employee's supervision, a review of the transactions
         and conditions of the Lessee from the beginning of the fiscal period
         stated in such request to the date of the certificate and (i) that such
         review has not disclosed the existence during such period of any
         condition or event which constitutes a Lease Default or Lease Event of
         Default or, if any such condition exists, specifying the nature and
         period of existence and what action the Lessee has taken or proposes to
         take with respect thereto, and (ii) certifying as to the satisfaction
         of the financial covenants set forth in (vii) below, and providing a
         schedule of the calculations and data used in determining such
         compliance.

                  (iv) DEFENSE OF TITLE. The Lessee will, at all times, at its
         own cost and expense, warrant and defend that the title of the Trust or
         the Owner Trustee, as the case may be, to the Property is free and
         clear of Liens, except for Permitted Liens.

                  (v) LIENS. The Lessee will not, directly, or indirectly,
         create, incur, assume or suffer to exist any Liens on the Property,
         except for Lessor Liens, and further except for Liens being contested
         by a Permitted Contest.

                  (vi) NON-DISCRIMINATION. The Lessee will operate and otherwise
         deal with the Platform and the Property using the Lessee's same general
         business practices as are applicable generally to its owned and leased
         properties which are similar to such Platform or such Property.

                  (vii) COVENANTS. The Parent Guarantor shall, and shall cause
         each of its Subsidiaries and the Lessee shall, and shall cause each of
         its Subsidiaries, to observe and perform the covenants set forth in
         SCHEDULE IV attached hereto.

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                                       38
<PAGE>

                  (viii) SPECIAL EVENTS. The Lessee will not permit or suffer to
         occur any Special Events.

                  (ix) ERISA. Neither the Lessee nor the Parent Guarantor will,
         in the future, cause directly or indirectly any employee benefit plan
         (other than a governmental plan) with respect to which it or one of its
         Affiliates is a party in interest, all within the meaning of ERISA, to
         become a party to any of the Operative Documents or to have any
         interest in any of the transactions contemplated thereby, directly or
         indirectly. As used in this Section, the terms "EMPLOYEE BENEFIT PLAN"
         and "PARTY IN INTEREST" shall have the meanings assigned to them in
         ERISA.

                  (x) NO ISSUANCE. The Lessee and the Parent Guarantor agree
         that neither the Lessee nor anyone acting on its behalf will offer any
         interests in the Trust Estate (including the trust certificates) or any
         part thereof or any securities similar thereto for issue or sale to, or
         solicit any offer to acquire any of the same from, anyone so as to
         bring the issuance and sale of the interests in the Trust Estate
         (including the trust certificates) within the provisions of Section 5
         of the Securities Act or any similar provisions under any applicable
         state "blue sky" or similar state securities laws.

                  (xi) GOVERNMENTAL LEASES. The Lessee agrees to duly and timely
         perform all obligations under each Governmental Lease (including,
         without limitation, the payment of all royalties or other amounts due
         thereunder from time to time) and to comply with all provisions of such
         Governmental Leases. The Lessee will forward to Lessor, and the Agent
         and the Participants all copies of all notices delivered to any party
         to the Governmental Leases within ten days of receipt or dispatch, as
         the case may be.

                  (xii) LESSEE'S COVENANT TO NOTIFY OF RELOCATION. Each of the
         Lessee and the Parent Guarantor covenants and agrees to give the Owner
         Trustee and the Certificate Holders at least 30 days' prior written
         notice of any relocation of its chief executive office, principal place
         of business or the place where its records concerning the Platform or
         the Property is located.

                  (xiii) CORPORATE FRANCHISES. Each of the Lessee and the Parent
         Guarantor covenants and agrees that it will at all times maintain its
         corporate existence and all material franchises and qualifications in
         good standing and at all times comply in all respects with any
         Applicable Law, rule, regulation, order or decree applicable to Lessee
         or its operations or properties the failure to comply with which, in
         each case or in the aggregate, would have a Material Adverse Effect
         upon Lessee.

                  (xiv) COMPLETION AND OPERATION. Lessee covenants and agrees
         that the Platform shall be operated for the use intended by the Lessee
         upon the Lessor's Completion of the Platform. Lessee shall deliver to
         the Certificate Holders and the Owner Trustee, on or before the Outside
         Completion Date applicable to the Platform, a certificate of a
         Responsible Employee of the Lessee stating that such Platform is
         operating for the use intended by the Lessee and all Construction has
         been completed on or before such date.

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                                       39
<PAGE>

                  (xv) COMPLIANCE WITH ENVIRONMENTAL PROTECTION REQUIREMENTS;
         ACCESS TO ENVIRONMENTAL AUDITS. During the Lease Term, the Lessee will
         cause the Platform to be in compliance in all material respects with
         all Environmental Laws which are applicable to the Platform including,
         without limitation, Environmental Laws pertaining to design and
         performance standards and quality criteria for air, water and
         reclamation, and the use, storage, disposal and transportation of
         Hazardous Substances. During the Lease Term, the Lessee shall furnish
         to the Agent, the Participants and the Owner Trustee, any Environmental
         Audits and all environmental reports, filings or notices (given or
         received by it) related to the Platform which are obtained or made by
         it.

                  (xvi) CREATION AND MAINTENANCE OF LIEN. The Lessee will obtain
         and maintain on behalf of the Lessor and the Lenders a first priority
         perfected security interest in the Property located on the Construction
         Sites or the Site or, to the extent practicable, while in transit
         between such locations and in the Construction Documents, subject to
         Permitted Liens. The Lessee will deliver and/or file or cause to be
         delivered and/or filed such opinions, registrations, supplements or
         other documents as shall be necessary to evidence and confirm the lien
         of the Lessor and the Lenders or as shall otherwise be reasonably
         confirmed by the Agent, including, without limitation, such
         documentation as is reasonably necessary to perfect the security
         interests of the Lessor and the Agent in the bill of lading or
         substantially equivalent document with respect to the Platform while in
         transit from Finland to Texas or Louisiana and from Texas or Louisiana
         to its intended location in Garden Banks Block 668. During the
         Construction Period, Lessee agrees that any and all filings of
         financing statements, mortgages, deeds of trust of other security
         documents shall be updated quarterly with revised schedules so as to
         reflect progress of the construction or otherwise, all of such
         documents to be in form and substance satisfactory to the Lessor, the
         Agent and the Participants.

                  (xvii) CHARACTERIZATION OF PROPERTY. The parties hereto intend
         that the Platform be characterized as personalty and not as real
         estate. The Lessee hereby agrees that it shall not contest such
         characterization in a court of law or otherwise.

                  (xviii) SUPPORT ARRANGEMENTS. If the Lease is terminated and
         the Property is not purchased by the Lessee, the Lessee will provide
         commercially reasonable and customary support to the Lessor in
         connection with Lessor's ownership of the Platform reasonably required
         by the Lessor including, without limitation, the right to access the
         Platform and the Site, all items necessary to use the Platform and
         realize value from the Platform (including pipeline access), but not
         including an obligation to (a) dedicate reserves beyond those provided
         in the amendment to the Joint Operating Agreement pertaining to the
         Platform, (b) obtain Governmental Actions which are not obtainable with
         commercially reasonable efforts or (c) provide items or service which
         are readily available to the Lessor in the market. In connection with
         items provided by Lessee, Lessor shall pay Lessee the fair market value
         of such items upon delivery. The Lessor's right to the support
         arrangements shall survive termination of the Lease and is assignable
         by the Lessor to third parties.

                  (xix) JOINT OPERATING AGREEMENT PLATFORM AMENDMENT. (a) The
         Lessee will observe and perform its obligations under the Joint
         Operating Agreement, including, (x)

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                                       40
<PAGE>

         causing an Annual Operating Plan and the Development Plan (as each of
         those terms are defined in the Joint Operating Agreement) to remain in
         full force and effect at all times and (y) complying with the terms of
         the Second Amendment to the Joint Operating Agreement pertaining to the
         Platform (commonly known as the "PLATFORM AMENDMENT") on and after the
         date such Platform Amendment is effective, (b) the Lessee will not
         waive or amend any provisions of the Joint Operating Agreement relating
         to the Platform without the written consent of the Agent and the
         Required Participants if such proposed waiver or amendment would have a
         Material Adverse Effect on their interests therein and herein, and (c)
         for the purposes of Section 14.5.1 of the Platform Amendment, voting
         rights in respect of the Operator shall be as set forth in such Section
         14.5.1.

                  (xx) INSURANCE. The Lessee will comply with the provisions
         relating to insurance set forth in the Lease and will not without the
         written consent of the Agent materially alter insurance coverage with
         respect to the Platform from that set forth in the Insurance
         Consultant's Report.

                  (xxi) OWNERSHIP OF LESSEE SHARES. The Lessee shall cause
         Parent Guarantor, and Parent Guarantor shall continue to own, 100% of
         the issued and outstanding stock of Lessee.

SECTION 9. CONDITIONS PRECEDENT TO DOCUMENTATION DATE, AVAILABILITY DATE AND
           ADVANCES

         (a) CONDITIONS PRECEDENT TO THE DOCUMENTATION DATE. The obligations of
the Lessor, the Participants and the Agent to enter into the Operative Documents
on the Documentation Date, are subject to each of the following conditions
precedent, with all documents to be in form and substance acceptable to the
Agent and the Participants:

                  (i) CORPORATE PROCEEDINGS. Each of the Participants, the
         Agent, the Owner Trustee and the Lessee shall have received evidence of
         the corporate existence and the incumbency of officers, and copies of
         such corporate resolutions and authorizations, of each of the other
         parties as each such party shall reasonably request.

                  (ii) OPINION OF COUNSEL FOR LESSEE AND PARENT GUARANTOR. Each
         of the Participants, the Agent and the Owner Trustee shall have
         received a favorable opinion, dated such date, addressed to each of
         them from Andy Becher, in-house counsel to the Lessee and Parent
         Guarantor (which opinions shall be substantially in the form of Exhibit
         D-1 and F-1, respectively), Phelps Dunbar L.L.P., special local
         Louisiana counsel of the Lessee and Parent Guarantor, Dittmar &
         Indrenius, special Finland counsel to the Lessee and Parent Guarantor
         (which opinions shall be substantially in the form of Exhibits, F-2,
         and F-3 hereto, respectively).

                  (iii) OPINION OF COUNSEL FOR OWNER TRUSTEE. Each of the
         Certificate Holders and the Lessee shall have received a favorable
         opinion, dated such date addressed to each of them from Morris, James,
         Hitchens & Williams, LLP, special counsel for Wilmington

                                                         Participation Agreement

                                       41
<PAGE>

         Trust Company and the Owner Trustee, which opinion shall be
         substantially in the form of Exhibit E hereto.

                  (iv) ILLEGALITY. There is no Applicable Law which would make
         it illegal for the Certificate Holders, the Owner Trustee, or the
         Lessee to participate in any of the transactions contemplated by the
         Operative Documents.

                  (v) DOCUMENTS IN FULL FORCE AND EFFECT. Each of this
         Participation Agreement and each of the Operative Documents delivered
         on the Documentation Date shall be in form and substance reasonably
         satisfactory to the Agent, the Lessee, the Participants and the Owner
         Trustee, shall be in full force and effect on the Documentation Date,
         and an executed counterpart of each thereof shall have been delivered
         to each such party.

                  (vi) NO DEFAULT. No Default or Event of Default shall have
         occurred and be continuing on the Documentation Date.

                  (vii) GOVERNMENTAL ACTIONS. There shall be no Governmental
         Actions by, from or with any Governmental Authority that are necessary
         or, in the reasonable opinion of the Agent, the Lessee, any Participant
         or the Owner Trustee, advisable (i) in connection with the due
         execution, delivery and performance by the parties to each of the
         Operative Documents of such Operative Documents to which it is or will
         become a party or with respect to the transactions contemplated hereby
         or thereby except for Governmental Actions which are not then required
         to be obtained under Applicable Law, and (ii) so that none of the
         Participants, the Agent, Owner Trustee or Wilmington Trust Company will
         become, (x) solely by reason of entering into this Participation
         Agreement or the other Operative Documents or (except with respect to
         the exercise by any Person of any control over the Platform or the
         Property upon the occurrence of a Lease Event of Default or the
         expiration or other termination of the Lease) the consummation of any
         of the transactions contemplated hereby or thereby, subject to
         regulation by any Governmental Authority which regulates or otherwise
         has jurisdiction over any facilities for the retail distribution of
         petroleum products; or (y) except for regulation the applicability of
         which depends on the existence of facts in addition to the ownership of
         the Platform or the Property upon the exercise of remedies under the
         Lease or upon the expiration of the Lease, subject to ongoing
         regulation of its operations by any Governmental Authority.

                  (viii) NO LITIGATION. There shall be no legal action, suit,
         investigation or proceeding by or before any Governmental Authority
         pending or threatened against or affecting each of the Lessee, Parent
         Guarantor or any of its respective properties, which materially and
         adversely affects any of the transactions contemplated by this
         Participation Agreement or the other Operative Documents or the ability
         of the Lessee or the Parent Guarantor, as the case may be, to perform
         its obligations hereunder or under the other Operative Documents.

                  (ix) NO VIOLATION. The Lessee shall be in compliance with all
         Applicable Laws the violation of which is reasonably likely to affect
         materially and adversely the

                                                         Participation Agreement

                                       42
<PAGE>

         transactions contemplated by this Participation Agreement and the other
         Operative Documents, including, without limitation, all Environmental
         Laws.

                  (x) REPRESENTATIONS AND WARRANTIES. The representations and
         warranties of each of the Participants, Wilmington Trust Company, the
         Owner Trustee and the Lessee contained herein or in any other Operative
         Document executed and delivered on or prior to such date shall be true
         and accurate on and as of the Documentation Date, as though made on and
         as of such date (or, if stated to have been made as of an earlier date,
         shall have been true and accurate as of such date).

         (b) CONDITIONS TO THE AVAILABILITY DATE. The occurrence of the
Availability Date and, therefore, the obligation of the Certificate Holders to
fund any Equity Amount and the obligation of each Lender to make any Loan, are
subject to satisfaction or waiver of the following conditions precedent, with
all documents to be in form and substance acceptable to the Agent and the
Participants:

                  (i) DOCUMENTATION DATE CONDITIONS PRECEDENT. The conditions
         precedent set forth in Section 9(a) (except Sections 9(a)(ii), (iii)
         and, except as to the Lessee, (x)) shall have been satisfied or waived
         on and as of such Availability Date it being understood that such
         conditions precedent shall be applied to the Availability Date by
         replacing the term "Documentation Date" in Section 9(a) with the term
         "Availability Date."

                  (ii) TAXES. All Taxes, if any, due and payable on or prior to
         the Availability Date in connection with the execution, delivery,
         recording and filing or performance of the Operative Documents and in
         connection with the consummation of the transactions contemplated
         thereby shall have been paid in full on or prior to the Availability
         Date.

                  (iii) APPRAISAL. The Appraisal of the Platform shall (a) be
         delivered to each Participant, the Lessor, the Agent and the Owner
         Trustee at least one (1) week prior to the Availability Date, and (b)
         be in form and substance satisfactory to the Participants.

                  (iv) RECORDATION. The Lessor, the Certificate Holders and the
         Lenders shall have received evidence reasonably satisfactory to it that
         the Lender Mortgages and, Assignment of Leases and Rents and other
         security documentation as agreed by the parties hereto have been, or
         are being, recorded (or satisfactory arrangements have been made for
         prompt recordation) in a manner sufficient to properly secure each of
         their interests therein and fees payable in connection therewith have
         been paid by Lessee.

                  (v) EVIDENCE OF INSURANCE. The Agent, the Lessor and the
         Certificate Holders shall have received evidence that the insurance
         maintained by the Lessee with respect to the Platform satisfies the
         requirements set forth in Section 12 of the Lease, setting forth the
         respective coverage, limits of liability, carrier, policy number and
         period of coverage.

                  (vi) GOVERNMENTAL LEASES. Permission is hereby granted to the
         Lessor by the Lessee to locate the Property on the Site.

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                                       43
<PAGE>

                  (vii) SUPPLEMENTAL OPINIONS OF COUNSEL OF LESSEE. On or prior
         to the applicable Availability Date, the Lessee shall have delivered to
         the Agent, each Participant and the Lessor (i) a supplement to each of
         the opinions of in-house counsel to the Lessee and Parent Guarantor,
         (ii) a supplement to the opinion of Phelps Dunbar L.L.P., special
         Louisiana counsel to the Lessee and the Parent Guarantor, (iii) a
         supplement to the opinion of Dittmar & Indrenius, special Finland
         counsel to the Lessee and the Parent Guarantor, and (iv) a supplement
         to the opinion of applicable counsel (or new opinion of applicable
         local counsel, each acceptable to the Agent and the Certificate
         Holders) hereto, which supplements, opinions and questionnaires shall
         cover matters required by the Agent.

                  (viii) UCC FINANCING STATEMENTS. Lessee and Lessor shall have
         executed and submitted for filing or recording, as applicable, Uniform
         Commercial Code financing statements (which may be in the form of
         amendments to existing financing statements) with respect to the
         Property and the Trust Estate.

                  (ix) OTHER DOCUMENTS. The Lessee shall have delivered or
         caused to be delivered such other documents as the Lessor and Agent may
         reasonably request.

                  (x) PLANS AND SPECIFICATIONS; CONSTRUCTION SCHEDULE;
         CONSTRUCTION MILESTONES. On or prior to the applicable Availability
         Date, the Lessee shall have delivered to the Agent the Plans and
         Specifications, a schedule for Construction completion for the
         Platform, and the Construction Milestones, certified by the
         Construction Agent;

                  (xi) CONSTRUCTION BUDGET. On or prior to the applicable
         Availability Date, the Lessee shall have delivered to the Agent the
         Approved Budget for the Platform, certified by the Construction Agent;
         and

                  (xii) CONSTRUCTION CONTRACT. On or prior to the applicable
         Funding Date, the Lessee shall have delivered to the Agent the
         Construction Contract and any Material Construction Contracts for the
         Construction of the Platform which are in existence, which Construction
         Contract and Material Construction Contracts and the contractors party
         thereto shall have been approved by the Required Participants, and
         under which Construction Contracts, the cost of design of the Platform,
         including, without limitation, the applicable Plans and Specifications
         and the Construction Cost of such Platform in accordance with such
         Plans and Specifications shall not exceed the Approved Budget.

                  (xiii) REPORTS. The following reports shall (a) have been
         delivered to each Participant, the Lessor, the Agent and the Owner
         Trustee at least one (1) week prior to the Availability Date, and (b)
         shall be in form and substance satisfactory to the Participants: the
         Reserve Report, a Construction Consultant's Report, the Insurance
         Consultant's Report, and the Environmental Consultant's Report and the
         Engineering Report.

                  (xiv) CONSTRUCTION CONSULTANT CERTIFICATE. The Construction
         Consultant shall deliver to the Lessor and the Agent a certificate to
         the effect that the Approved Budget, the schedule for Construction and
         the Construction Milestones conform with prudent

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                                       44
<PAGE>

         industry practice and are not unreasonable in the context of the
         construction of a production platform of a type similar to the
         Platform.

                  (xv) SECTION 8(B) REPRESENTATIONS AND WARRANTIES. The
         representations and warranties of the Lessee set forth in Section 8(b)
         shall be true and accurate on and as of such Availability Date.

                  (xvi) REPRESENTATIONS AND WARRANTIES. The representations and
         warranties of the Lessee and the Parent Guarantor contained herein or
         in any other Operative Document executed and delivered on or prior to
         such date shall be true and accurate on and as of such Availability
         Date, as though made on and as of such date (or, if stated to have been
         made as of an earlier date, shall have been true and accurate as of
         such date) and each of the Certificate Holders, Wilmington Trust
         Company, the Owner Trustee, the Agent and the lessee shall have
         received an Officer's Certificate, dated such date, to such effect from
         each of such parties. All documents and instruments required to be
         delivered on the Availability Date shall be delivered at the offices of
         Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois
         60603, or at such other location as may be determined by the Agent and
         the Lessee.

         (c) CONDITIONS PRECEDENT TO EACH ADVANCE. The obligations of the
Participants to make an Advance on each Funding Date, the obligation of the
Certificate Holders to fund the related Equity Amount on each Funding Date and
the obligation of the Lenders to make the related Loan on such Funding Date are
subject to satisfaction or waiver of the following conditions precedent, with
all documents to be in form and substance acceptable to the Agent and the
Participants:

                  (i) AVAILABILITY DATE CONDITIONS PRECEDENT. The Availability
         Date shall have occurred and the conditions precedent set forth in
         Section 9(b)(i), (ii), and, except as to the Lessee, (ix) shall have
         been satisfied or waived on as of such Funding Date, it being
         understood that such conditions precedent shall be applied to such
         Funding Date by replacing the term "Availability Date" in such Section
         9(b) with the term "Funding Date", as applicable.

                  (ii) FUNDING REQUEST. Each of the Agent and the Certificate
         Holders shall have received a fully executed counterpart of the
         applicable Funding Request, executed by the Lessee, in accordance with
         Section 3(c). Each of the delivery of a Funding Request and the
         acceptance by the Lessee of the proceeds of such Advance shall
         constitute a representation and warranty by the Lessee and the Parent
         Guarantor that on the applicable Funding Date (both immediately before
         and after giving effect to the making of such Advance and the
         application of the proceeds thereof), the statements made in Section
         8(c) are true and correct.

                  (iii) CONSTRUCTION CERTIFICATE. With respect to any Allocated
         Construction Costs to be paid or reimbursed using the proceeds of such
         Advance, the Certificate Holders and Agent shall have received, at
         least three (3) days prior to the applicable Funding Date, a
         Construction Certificate in the form of Exhibit J hereto (a
         "CONSTRUCTION CERTIFICATE"), together with all attachments thereto.

                                                         Participation Agreement

                                       45
<PAGE>

                  (iv) GOVERNMENTAL PERMITS, ETC. The Certificate Holders and
         Agent shall have received evidence satisfactory to it that all permits,
         licenses and consents required by any Governmental Authority in
         connection with the Construction for which the Advance is being
         requested have been obtained and are in full force and effect on the
         applicable Funding Date.

                  (v) FEES. The Certificate Holders shall have received all fees
         due and payable pursuant to the Fee Letter, and each Participant shall
         have received all Facility Fees due and payable pursuant to Section
         4(d).

                  (vi) EVENT OF DEFAULT. There shall not have occurred and be
         continuing any Lease Event of Default, and no Lease Event of Default
         will have occurred after giving effect to the making of the Advance
         requested by such Funding Request.

                  (vii) AVAILABLE COMMITMENTS. After giving effect to the
         applicable Advance, the condition set forth in the last sentence of
         Section 3(a) shall not be violated.

                  (viii) CONSTRUCTION COSTS. After giving effect to the
         applicable Advance, the Allocated Estimated Construction Costs as yet
         unpaid of completing the Construction pursuant to the Construction
         Documents shall not exceed the Available Commitments and shall be in
         accordance with the Approved Budget.

                  (ix) CONSTRUCTION CONSULTANT'S REPORT. The Agent and the
         Certificate Holders shall have received a Construction Consultant's
         Report in connection with such Funding Date in form and substance
         satisfactory to each of them and, if the Advance is to occur during the
         months of March, June, September and December, commencing March, 200_,
         such Consultant's Report shall include a more detailed quarterly review
         of the Construction activities and progress.

                  (x) OTHER FUNDING. Funds in respect of the aggregate amount of
         construction costs of the Platform not contemplated to be financed
         pursuant to the terms of the Operative Documents shall have been
         advanced (or otherwise provided) in an amount at least equal to the
         Allocated Construction Costs to be funded pursuant to the Advance
         requested pursuant to such Funding Request.

                  (xi) EVIDENCE AS TO COSTS AND EXPENSES. Delivery to the Agent
         and the Lessor of evidence, in form and substance satisfactory to the
         Agent and the Lessor, to support the Allocated Construction Costs and
         Transaction Expenses to be funded pursuant to such Funding Request.

SECTION 10. COMPLETION DATE CONDITIONS; APPRAISAL; TAKE-OUT

         (a) COMPLETION DATE. The Completion Date with respect to the Platform
shall be deemed to have occurred for purposes of the Operative Documents on the
earliest date on which each of the following events shall have occurred:

                                                         Participation Agreement

                                       46
<PAGE>

                           (1) the Construction relating to the Platform shall
                  have been substantially completed in accordance with the Plans
                  and Specifications and all Applicable Law;

                           (2) the Platform shall be ready for occupancy and
                  operation for its intended purpose in accordance with the
                  Plans and Specifications, as evidenced by the issuance of the
                  applicable approved "Structural Permit" and a Facilities
                  Permit" by the Minerals Management Service for the Platform
                  contemplated by the Plans and Specifications; and

                           (3) the Lessor and the Agent shall have received a
                  Completion Certificate from the Construction Agent
                  substantially in the form of Exhibit G hereto (a "COMPLETION
                  CERTIFICATE").

         (b) REAPPRAISAL UPON COMPLETION. Within sixty (60) days from the
Completion Date for the Platform, the Agent shall obtain, at Lessee's sole cost
and expense, a new Appraisal of the Property taking into account such Completion
(the "COMPLETION APPRAISAL") which Completion Appraisal shall be delivered to
the Agent within sixty (60) days after the Completion Date. Such Completion
Appraisal shall use methodology similar to that of the Appraisal delivered in
connection with the Availability Date, with appropriate changes in assumptions
and taking into account the terms of Joint Operating Agreement, as amended. In
the event such Completion Appraisal shall conclude that the Fair Market Sales
Value of the Platform upon such Completion, multiplied by Lessor's Percentage
Undivided Interest, is less than the Property Balance (such amount, a "FMV
SHORTFALL"), Lessee shall make a special lease payment of Supplemental Rent to
the Agent equal to such FMV Shortfall.

         Such Completion Appraisal shall also specify the expected Fair Market
Sales Value of the Property as of the date which is the fifth anniversary of
commencement of the Interim Term, applying a straight line depreciation method.
The excess of the Fair Market Sales Value as of the Completion Date over the
projected Fair Market Sales Value as of such fifth anniversary shall be
amortized on a straight line basis over the time period from the commencement of
the Basic Term to the Expiration Date (assuming the Lease Term is not earlier
terminated) and shall be paid annually as Supplemental Rent on each anniversary
of the Completion Date and on the last day of the Lease Term.

         (c) TAKE-OUT FINANCING. Notwithstanding anything to the contrary
contained in this Participation Agreement or the other Operative Documents, if,
on or prior to the 90th day following the Completion Date (the "TAKE-OUT DATE"),
the Lessee does not purchase the Property pursuant to and in accordance with the
provisions of Section 6(e) of the Lease, the Applicable Margins set forth in
Schedule II hereto shall be increased by 50 basis points.

SECTION 11. TRANSFERS OF LENDERS' INTERESTS

         (a) PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary course of
its business and in accordance with Applicable Law, at any time assign to one or
more banks or other entities ("Transferees") all or any part of its rights and
obligations under the Operative Documents or the Property. Such assignment shall
be substantially in the form of Exhibit L-1 or in such other form

                                                         Participation Agreement

                                       47
<PAGE>

as may be agreed to by the parties thereto. During the Construction Period, the
consent of the Lessee shall be required prior to an assignment becoming
effective with respect to a Transferee which is not a Participant or an
Affiliate thereof; provided, however, that if an Event of Default has occurred
and is continuing, the consent of the Lessee shall not be required; provided,
further, that participations in Loans shall not require the consent of the
Lessee. The consent of the Agent shall be required prior to an assignment
becoming effective with respect to a Transferee which is not a Participant or an
Affiliate thereof. The consent of Lessee and Agent shall not be unreasonably
withheld or delayed. Each such assignment with respect to a Transferee which is
not a Participant or an Affiliate thereof shall (unless each of the Lessee and
the Agent otherwise consents) be in an amount not less than the lesser of (i)
$5,000,000 or (ii) the remaining amount of the assigning Lender's Commitment
(calculated as at the date of such assignment) or outstanding Loans (if the
applicable Commitment has been terminated).

         (b) EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of an
assignment, together with any consents required by Section 11(a), and (ii)
payment of a $4,000 fee to the Agent for processing such assignment (unless such
fee is waived by the Agent), such assignment shall become effective on the
effective date specified in such assignment. The assignment shall contain a
representation by the Transferee to the effect that none of the consideration
used to make the purchase of the Commitment and Loans under the applicable
assignment agreement constitutes "plan assets" as defined under ERISA and that
the rights and interests of the Transferee in and under the Operative Documents
or the Property will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Transferee shall for all purposes be a
Lender party to this Agreement and any other Operative Document executed by or
on behalf of the Lenders and shall have all the rights and obligations of a
Lender under the Operative Documents, to the same extent as if it were an
original party hereto, and no further consent or action by the Lessee, the
Lenders or the Agent shall be required to release the transferor Lender with
respect to the percentage of the aggregate Commitments and Loans assigned to
such Transferee. Upon the consummation of any assignment to a Transferee
pursuant to this Section 11(b), the transferor Lender, the Agent and the Lessee
shall, if the transferor Lender or the Transferee desires that its Loans be
evidenced by Notes, make appropriate arrangements so that new Notes or, as
appropriate, replacement Notes are issued to such transferor Lender and new
Notes or, as appropriate, replacement Notes, are issued to such Transferee, in
each case in principal amounts reflecting their respective Commitments, as
adjusted pursuant to such assignment.

         (c) RIGHTS OF TRANSFEREES. Each of the Lessee and the Lessor
acknowledges and agrees that each Transferee, for purposes of Sections 13 and
14, shall be considered a Lender; provided, however, that each of the Lessee and
the Lessor shall have no greater liability to any Transferee than it would have
had to the applicable Lender, except as reflected in amounts necessary to
indemnify such Person on an After-Tax Basis.

                           (1) WITHHOLDING TAXES; DISCLOSURE OF INFORMATION;
                  PLEDGE UNDER REGULATION A.If any Lender (or the assignee in
                  any Note, each a "Transferee") is organized under the laws of
                  any jurisdiction other than the United States or any State
                  thereof, then such Participant or Transferee, as applicable,
                  shall (as a condition precedent to acquiring or participating
                  in such Loan and so long as it shall be legally entitled to an
                  exemption from withholding as a continuing

                                                         Participation Agreement

                                       48
<PAGE>

                  obligation to the Lessor and the Lessee), furnish on a timely
                  basis to the Agent, the Lessor and the Lessee in duplicate,
                  for each taxable year of such Lender or Transferee during the
                  Lease Term of the Lease, a properly completed and executed
                  copy of either Internal Revenue Service Form W-8ECI or
                  Internal Revenue Service Form W8-BEN or Internal Revenue
                  Service Form W-9 and any additional form (or such other form)
                  as is necessary to claim complete exemption from United States
                  withholding taxes (wherein such Lender or Transferee claims
                  entitlement to complete exemption from United States
                  withholding taxes on all payments hereunder), and provide on a
                  timely basis to the Agent, the Lessor and the Lessee a new
                  Internal Revenue Service Form W-8ECI or Internal Revenue
                  Service Form W-8BEN or Internal Revenue Service Form W-9 and
                  any such additional form (or any successor form or forms) upon
                  the expiration or obsolescence of any previously delivered
                  form and comparable statements in accordance with applicable
                  United States laws and regulations and amendments duly
                  executed and completed by such Lender or Transferee, and to
                  comply from time to time with all applicable United States
                  laws and regulations with regard to such withholding tax
                  exemption. By its acceptance of a participation or assignment
                  of a Lender's Note, each Transferee shall be deemed bound by
                  the provisions set forth in this Section 11.

                           (2) Any Lender may, in connection with any assignment
                  or participation or proposed assignment or participation
                  pursuant to this Section 11, disclose to the assignee or
                  participant or proposed assignee or participant any
                  information relating to the Lessee.

                           (3) Anything in this Section 11 to the contrary
                  notwithstanding, any Lender may assign and pledge all or any
                  portion of the Notes held by it to any Federal Reserve Bank,
                  the United States Treasury or to any other financial
                  institution as collateral security pursuant to Regulation A of
                  the F.R.S. Board and any operating circular issued by the
                  Federal Reserve System and/or the Federal Reserve Bank or
                  otherwise.

SECTION 12. TRANSFERS OF CERTIFICATE HOLDERS' INTEREST

         (a) ASSIGNMENTS. All or any part of the interest of any Certificate
Holder in, to or under this Participation Agreement, the other Operative
Documents, the Property or the Trust may be assigned or transferred by such
Certificate Holder at any time, subject, during the Construction Period, to the
consent of Lessee, which consent shall not be unreasonably withheld, to (i) any
Affiliate of such Certificate Holder, (ii) any other Participant or any
Affiliate of any such other Participant, or (iii) with the consent of the Agent
(such consent not to be unreasonably withheld), to any other Person; provided,
however, that (A) prior to a Lease Event of Default, no interest shall be
assigned to Lessee or any Affiliate of Lessee; (B) except as provided in (C)
below, each such assignment is in an amount equal to not less than twenty
percent (20%) of the sum of the aggregate amount of the Available Equity
Commitments and the outstanding Equity Amounts of all Certificate Holders (the
"PERMITTED EQUITY ASSIGNMENT AMOUNT"); (C) with respect to an assignment to a
Lender or an Affiliate of a Lender, each such assignment is in an amount equal
to not less than the product of (x) the sum of the Available Equity Commitment,
if

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                                       49
<PAGE>

any, and outstanding Equity Amounts of the assignor Certificate Holder and (y)
the fraction, expressed as a decimal, obtained by dividing the sum of the
Available Loan Commitments and outstanding principal amount of Loans of such
Lender by the sum of the aggregate amounts of the Available Loan Commitments and
Loans of all Lenders; and (D) in any event, the assignor Certificate Holder
retains an interest equal to not less than the Permitted Equity Assignment
Amount; and, provided, further, that notice is given to the Owner Trustee and
(A) each assignment or transfer shall comply with all applicable securities
laws; and (B) the assignee, if it is not a Participant immediately prior to such
assignment, will deliver to the Agent a completed administrative questionnaire
in form and substance acceptable to the Agent. Notwithstanding the above,
participations in Certificates shall not require the consent of the Lessee. The
Agent shall receive an administrative fee of $4,000 from the applicable
transferor or transferee in connection with any assignment or participation
under this Section 12. Each assignee or transferee acknowledges that the
obligations to be performed from and after the date of such transfer or
assignment under this Participation Agreement and all other Operative Documents
are its obligations, including the obligations imposed by this Section 12(a)
(and the transferor and transferee Participant shall deliver to the Lessee and
the Lessor an Assignment Agreement, in substantially the form of Exhibit L-2,
executed by the assignee or transferee) and further represents and warrants to
each Participant and the Lessee as set forth in Section 6 and that:

                  (i) it has a net worth or combined capital and surplus of not
         less than $5,000,000 (or shall provide a guaranty of its obligations
         under the Operative Documents from a Person which has such net worth or
         combined capital and surplus);

                  (ii) it has the requisite power and authority to accept such
         assignment or transfer;

                  (iii) it will not transfer any interest in the Trust unless
         the proposed transferee makes the foregoing representations and
         covenants;

                  (iv) it will not take any action with respect to such interest
         in the Trust that would violate any applicable securities laws;

                  (v) it will not assign or transfer any interest in the Trust
         except in compliance with this Section 12; and

                  (vi) it is not and will not be funding, and is not and will
         not be performing its obligations under the Operative Documents with
         the assets of any "employee benefit plan" (as defined in Section 3(3)
         of ERISA) which is subject to Title I of ERISA or "plan" (as defined in
         Section 4975(e)(1) of the Code).

         (b) RIGHTS OF TRANSFEREES. Each of the Lessee and the Lessor
acknowledges and agrees that each Transferee, for purposes of Sections 13 and
14, shall be considered a Certificate Holder and Section 13.2 of the Trust
Agreement shall be amended accordingly to reflect the notice address of such
Transferee; provided, however, that each of the Lessee and the Lessor shall have
no greater liability to any Transferee than it would have had to the applicable
Certificate Holder transferor, except as reflected in amounts necessary to
indemnify such Person on an After-Tax Basis.

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                                       50
<PAGE>

         (c) Withholding Taxes; Disclosure of Information; Pledge Under
Regulation A

                           (1) If any Certificate Holder (or the assignee of any
                  Equity Amount, each also a "TRANSFEREE") is organized under
                  the laws of any jurisdiction other than the United States or
                  any State thereof, then such Participant or Transferee, as
                  applicable, shall (as a condition precedent to acquiring or
                  participating in such Equity Amount and so long as it shall be
                  legally entitled to an exemption from withholding as a
                  continuing obligation to the Lessor and the Lessee), furnish
                  on a timely basis to the Agent, the Lessor and the Lessee in
                  duplicate, for each taxable year of such Certificate Holder or
                  Transferee during the Lease Term of the Lease, a properly
                  completed and executed copy of either Internal Revenue Service
                  Form W-8ECI or Internal Revenue Service Form W-8BEN or
                  Internal Revenue Service Form W-9 and any additional form (or
                  such other form) as is necessary to claim complete exemption
                  from United States withholding taxes (wherein such Lender, the
                  Lessor or Transferee claims entitlement to complete exemption
                  from United States withholding taxes on all payments
                  hereunder), and provide on a timely basis to the Agent, the
                  Lessor and the Lessee a new Internal Revenue Service Form
                  W-8ECI or Internal Revenue Service Form W-8BEN or Internal
                  Revenue Service Form W-9 and any such additional form (or any
                  successor form or forms) upon the expiration or obsolescence
                  of any previously delivered form and comparable statements in
                  accordance with applicable United States laws and regulations
                  and amendments duly executed and completed by such Certificate
                  Holder or Transferee, and to comply from time to time with all
                  applicable United States laws and regulations with regard to
                  such withholding tax exemption. By its acceptance of a
                  participation or assignment of all or any portion of a
                  Certificate Holder's Equity Amounts, each Transferee shall be
                  deemed bound by the provisions set forth in this Section 12.

                           (2) Any Certificate Holder may, in connection with
                  any assignment or participation or proposed assignment or
                  participation pursuant to this Section 12, disclose to the
                  assignee or participant or proposed assignee or participant
                  any information relating to the Lessee.

                           (3) Anything in this Section 12 to the contrary
                  notwithstanding, any Certificate Holder may assign and pledge
                  all or any portion of its interest in the Trust held by it to
                  any Federal Reserve Bank, the United States Treasury or to any
                  other financial institution as collateral security pursuant to
                  Regulation A of the F.R.S. Board and any operating circular
                  issued by the Federal Reserve System and/or the Federal
                  Reserve Bank or otherwise.

SECTION 13. GENERAL TAX INDEMNITY

         (a) TAX INDEMNITEE DEFINED. For purposes of this Section 13, "TAX
INDEMNITEE" means (x) each Participant, the Lessor and the Affiliates of each of
the foregoing, Wilmington Trust Company and the Owner Trustee, both in its
individual capacity and as trustee, and each of their respective successors,
assigns, servants, agents, officers, directors and employees and the Trust
Estate, and (y) except with respect to any Taxes relating to the Platform or the
Property

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                                       51
<PAGE>

during the Construction Period, each Lender and its Affiliates, and each of
their respective successors, assigns, servants, agents, officers, directors and
employees.

         (b) TAXES INDEMNIFIED. The Lessee agrees to pay promptly when due, and
will indemnify and hold harmless each Tax Indemnitee on an After-Tax Basis
against, all taxes, fees, withholdings, and governmental charges attributable to
the transactions contemplated herein including all license, recording,
documentary, registration and other fees and all taxes (including, without
limitation, income, adjusted gross income, gross receipts, franchise, net worth,
capital, sales, rental, use, value added, property (tangible and intangible), ad
valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
charges, assessments or withholdings of any nature whatsoever, together with any
assessments, penalties, fines, additions to tax or interest thereon
(individually, a "TAX" and collectively called "TAXES"), however imposed
(whether imposed upon any Tax Indemnitee, the Lessee, or all or any part of the
Platform or the Property or any payment made in connection with the transactions
contemplated hereunder), by any Federal, state or local government or taxing
authority in the United States of America, or by any government or taxing
authority of a foreign country, of any political subdivision or taxing authority
thereof or by a territory or possession of the United States of America or an
international taxing authority, upon or with respect to, based upon or measured
by:

                           (1) the Platform or the Property or any part thereof;

                           (2) the location, replacement, conditioning,
                  refinancing, control, purchase, repossession, improvement,
                  maintenance, redelivery, manufacture, acquisition, purchase,
                  ownership, acceptance, rejection, delivery, non-delivery,
                  leasing (including the Governmental Leases), subleasing,
                  transportation, insuring, inspection, registration, assembly,
                  abandonment, preparation, installation, possession, use,
                  operation, return, presence, storage, repair, transfer of
                  title, modification, rebuilding, import, export, alteration,
                  addition, replacement, assignment, overhaul, transfer or
                  registration, imposition of any lien, sale or other
                  disposition of the Platform or the Property or any part
                  thereof or interest therein;

                           (3) the rentals, receipts or earnings arising from
                  the Operative Documents or from the purchase, ownership,
                  delivery, leasing (including the Governmental Leases),
                  possession, use, operation, return, storage, transfer of
                  title, sale or other disposition of the Sites or any part
                  thereof;

                           (4) any or all of the Operative Documents;

                           (5) the income or other proceeds received with
                  respect to the Property, held by the Owner Trustee under the
                  Trust Agreement; or

                           (6) otherwise with respect to or by reason of the
                  transactions described in or contemplated by the Operative
                  Documents.

         (c) TAXES EXCLUDED. The indemnity provided for in paragraph 13(b) above
shall not extend to any of the following (in each case, except in the case of
Taxes otherwise indemnifiable under the Operative Documents, additional amounts
necessary to indemnify a Tax Indemnitee for such Taxes on an After-Tax Basis):

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                                       52
<PAGE>

                           (1) Federal income taxes;

                           (2) in the case of each Tax Indemnitee which is a
                  Lender, (i) net income taxes and (ii) other taxes that would
                  not have been incurred but for such Indemnitee or a person
                  related thereto being organized in the jurisdiction imposing
                  such taxes or conducting activities therein that are unrelated
                  to the contemplated transactions;

                           (3) in the case of each Certificate Holder, (i) net
                  income taxes other than net income taxes imposed by
                  jurisdictions in which such Indemnitee is not otherwise
                  subject to such taxes to the extent such net income taxes
                  exceed the net income taxes that would have been payable if
                  the Lease had been treated as a secured loan and (ii) other
                  taxes that would not have been incurred but for such
                  Indemnitee or a person related thereto being organized in the
                  jurisdiction imposing such taxes or conducting activities
                  therein that are unrelated to the contemplated transactions;

                           (4) in the case of the Lessor, income, franchise,
                  conduct of business or similar taxes that are imposed on the
                  Lessor and not the Certificate Holders and that, if imposed on
                  the Certificate Holders, would not have been indemnified
                  against (including all Taxes imposed on Lessor by any taxing
                  authority as a result of being treated as an entity other than
                  a "flow-through" entity or a "disregarded" entity, but subject
                  to the final "notwithstanding" provision at the end of this
                  Section 13(c));

                           (5) Taxes imposed on or measured by the net or gross
                  income, excess profits, receipts, minimum or alternative
                  minimum taxable income, capital, net worth, tax preferences,
                  accumulated earnings or capital gains of a Tax Indemnitee or
                  that are conduct of business, doing business or franchise
                  Taxes of such Tax Indemnitee (other than any Taxes which are,
                  or are in the nature of, sales, use, transfer, excise, rental,
                  license, ad valorem or property Taxes imposed by reason of the
                  location, use, operation or presence of the Property or any
                  part thereof or a Person which is the Lessee, any sublessee,
                  any sub-sublessee, assignee or any other Person using through
                  any of the foregoing (including any Affiliate of any of the
                  foregoing, but excluding the Lessor, any Participant or any
                  Affiliate of any such excluded Person) (each, a "LESSEE
                  PERSON") in such jurisdiction or the fact that any payment by
                  a Lessee Person contemplated by the Operative Documents is
                  made from such jurisdiction) ("INCOME TAXES") imposed by the
                  United States or any state or local government or taxing
                  authority within the United States or by any governmental or
                  taxing authority of a foreign country, or any political
                  subdivision or taxing authority thereof, or by any
                  international taxing authority); provided, however, provisions
                  of this clause (5) relating to Income Taxes shall not exclude
                  from the indemnity described in this Section 13 any state or
                  local Income Taxes (other than Taxes based on or measured by
                  net income) imposed by reason of the location, use, operation
                  or presence of any Improvement or any part thereof in any
                  state in which the Platform or the Property is located, other
                  than any other state which such Tax Indemnitee agrees in
                  writing (on or prior to any

                                                         Participation Agreement

                                       53
<PAGE>

                  Improvements becoming subject to the Operative Documents) is
                  excluded from the indemnity otherwise implied by the proviso
                  to this clause 5;

                           (6) Taxes arising out of or measured by acts,
                  omissions, events or periods of time (or any combination of
                  the foregoing) which occur after (and are not attributable to
                  acts, omissions or events occurring contemporaneously with or
                  prior to) the payment in full of all amounts payable by the
                  Lessee pursuant to and in accordance with the Operative
                  Documents, or the earlier discharge in full of the Lessee's
                  payment obligations under and in accordance with the Lease and
                  the other Operative Documents, and the earliest of (x) the
                  expiration of the Lease Term and return of the Property in
                  accordance with the return provisions of the Lease, (y) the
                  termination of the Lease in accordance with the applicable
                  provisions of the Lease and return or disposition of the
                  Property in accordance with the Lease, or (z) the termination
                  of the Lease in accordance with the applicable provisions of
                  the Lease and the transfer of all right, title and interest in
                  the Property to the Lessee pursuant to its exercise of any of
                  its purchase options (other than sales or other transfer taxes
                  as imposed thereon) except that, notwithstanding anything to
                  the contrary, Taxes incurred in connection with the exercise
                  of any remedies following the occurrence of a Lease Event to
                  Default shall not be excluded from the indemnity;

                           (7) Taxes imposed on a Tax Indemnitee as a result of
                  the willful misconduct or gross negligence of such Tax
                  Indemnitee (other than gross negligence or willful misconduct
                  not actually committed by but instead imputed to, such
                  Indemnitee by reason of such Tax Indemnitee's participation in
                  the transactions and entering into the Operative Documents) or
                  the breach by any Tax Indemnitee of any representation,
                  warranty or covenant set forth in the Operative Documents;

                           (8) Taxes imposed on a Tax Indemnitee which became
                  payable by reason of any transfer or disposition by such Tax
                  Indemnitee of any interest in some or all of the Platform or
                  the Property, the Operative Documents, any other Tax
                  Indemnitee or the Trust Estate other than (A) Taxes that
                  result from transfers or dispositions which occur while a
                  Lease Event of Default has occurred and is continuing or (B)
                  Taxes that result from any transfer or disposition to the
                  Lessee or at the Lessee's direction pursuant to the terms of
                  the Lease (other than Section 19(b) thereof if clause (A) of
                  this Section 13(c)(8) is not applicable);

                           (9) Taxes imposed upon the Owner Trustee with respect
                  to any trustee's fees for services rendered in its capacity as
                  trustee;

                           (10) Taxes that have been included in Allocated
                  Construction Cost or Transaction Expenses;

                           (11) Taxes that would not have been imposed but for
                  the situs of organization of a Tax Indemnitee, the place of
                  business of a Tax Indemnitee or the activities of a Tax
                  Indemnitee that are unrelated to the transactions

                                                         Participation Agreement

                                       54
<PAGE>

                  contemplated by the Operative Documents, in each case, in the
                  jurisdiction imposing such Taxes (other than any such place of
                  business or activities attributable to any Lessee Person's
                  activities or the use, location, operation or registration of
                  the Property or any part thereof in such jurisdiction);

                           (12) Taxes that result from a failure by a Tax
                  Indemnitee to comply with any certification or other procedure
                  reasonably required by any applicable law as a condition to
                  any exemption from, or reduction of, such Tax to which such
                  Tax Indemnitee would be entitled, so long as (a) Lessee shall
                  have notified such Tax Indemnitee promptly of such
                  requirement, (b) no such procedure would expose such Tax
                  Indemnitee, in its good faith determination, to any materially
                  adverse consequences and (c) such failure is not due to
                  Lessee's failure to provide information reasonably requested
                  or reasonable assistance in complying with such requirement,
                  it being understood that all certification requirements with
                  respect to United States withholding taxes shall be deemed to
                  be reasonably required and the foregoing clauses (a) through
                  (c) shall be deemed to have been satisfied by the Lessee;

                           (13) Except with respect to the additional amount
                  necessary to indemnify Taxes, otherwise required to be
                  indemnified under the Operative Documents on an After-Tax
                  Basis, on an After-Tax Basis, Taxes imposed on or against or
                  payable by a transferee of a Tax Indemnitee to the extent of
                  the excess of such Taxes over the amount of such Taxes which
                  would have been imposed and indemnified hereunder had there
                  not been a transfer by the original Tax Indemnitee from which
                  such transferee derives its interest in the Property, any part
                  thereof, such Indemnitee or the Operative Documents, other
                  than a transfer following a Lease Event of Default; and

                           (14) Taxes imposed on Lessor that arise as a result
                  of Lessor not being considered a US Person as defined in
                  7701(a)(30) of the Code, except if as a result of a change in
                  a US tax law or treaty. Notwithstanding any of the exclusions
                  otherwise set forth in Section 13(c)(1) through (14), the
                  indemnity set forth in Section 13(b) shall apply to any Texas
                  franchise taxes imposed on or with respect to the Lessor if:

                  (x) the Lessor is a Delaware business trust and (i) files its
         relevant Texas tax returns and reports in a manner consistent with such
         status or (ii) files its relevant Texas tax returns and reports in a
         manner inconsistent with such status as the result of, or in response
         to, any act, omission or breach of any representation, warranty or
         covenant of a Lessee Person;

                  (y) any Lessee Person prepares or files a Filing (within the
         meaning of Section 13(g) pursuant to Section 13(g)) in a manner
         inconsistent with the status of the Lessor as a Delaware business
         trust; or

                  (z) the Lessor changes its status from that of a Delaware
         business trust as the result of, or in response to, any act, omission
         or breach of any representation, warranty or

                                                         Participation Agreement

                                       55
<PAGE>

         covenant of a Lessee Person or in connection with the exercise of any
         remedies following the occurrence of a Lease Event of Default.

         (d) PAYMENTS TO THE LESSEE.

                           (1) If any Tax Indemnitee or any Affiliate of any Tax
                  Indemnitee actually shall realize a Tax benefit (whether by
                  way of deduction, credit, allocation or apportionment or
                  otherwise) with respect to a Tax not indemnifiable hereunder
                  which would not have been realized but for any Tax, Claim or
                  other cost or expense with respect to which Lessee has
                  reimbursed or indemnified such Tax Indemnitee on an After-Tax
                  Basis pursuant to the Operative Documents, which benefit was
                  not previously taken into account in determining the amount of
                  the Lessee's payment to such Tax Indemnitee, such Tax
                  Indemnitee shall pay to the Lessee, on an After-Tax Basis, an
                  amount equal to the amount of such Tax benefit; provided,
                  however, that no payment shall be made as long as a Payment
                  Default or a Lease Event of Default is continuing; provided
                  further, however, that no Tax Indemnitee shall be required to
                  pay to the Lessee any Tax benefit to the extent such payment
                  is greater than the amount of such Taxes, Claims, costs or
                  expenses in respect of which the reimbursement or
                  indemnification was paid by Lessee, reduced by all prior
                  payments by such Tax Indemnitee under this Section 13(d) in
                  respect of such amount; any payment to the Lessee which is so
                  limited shall, to the extent of such unpaid excess, be carried
                  over and shall be available to offset any future obligations
                  of the Lessee under this Section 13). If such repaid Tax
                  benefit is thereafter lost, the additional Tax payable shall
                  be treated as a Tax indemnifiable hereunder without regard to
                  the exclusions set forth in Section 13 (other than clause
                  (c)(7)).

                           (2) Upon receipt by a Tax Indemnitee of a refund or
                  credit of all or part of any Taxes paid or indemnified against
                  by the Lessee, which refund or credit was not previously taken
                  into account in determining the amount of the Lessee's payment
                  to such Tax Indemnitee, such Tax Indemnitee shall pay to the
                  Lessee, on an After-Tax Basis, an amount equal to the amount
                  of such refund, plus any interest received by or credited to
                  such Tax Indemnitee with respect to such refund; provided,
                  however, that no such payment shall be made as long as a
                  Payment Default or a Lease Event of Default is continuing.

                           (3) The Tax Indemnitee will, at the Lessee's expense,
                  pursue refunds and tax benefits that would result in any such
                  payments to the Lessee, but only if the Tax Indemnitee has
                  been notified in writing by the Lessee that such refunds or
                  tax benefits are available.

         (e) PROCEDURES. Any amount payable to a Tax Indemnitee pursuant to
paragraph 13(b) shall be paid within thirty (30) days after receipt of a written
demand therefor from such Tax Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the computation
of the amount so payable, provided, however, that such amount need not be paid
prior to the later of (i) the date on which such Taxes are due or (ii) in the
case of amounts which are being contested pursuant to paragraph 13(f) hereof,
the time

                                                         Participation Agreement

                                       56
<PAGE>

such contest (including all appeals permitted hereunder) is finally resolved;
provided, further, that with respect to Taxes of a recurring nature, the Tax
Indemnitee shall only be required to provide one such written notice. Any amount
payable to the Lessee pursuant to paragraph 13(d) shall be paid within twenty
(20) days of the day on which a return (including estimated tax returns) is
filed reflecting such Tax benefit or promptly after the Tax Indemnitee actually
receives a refund giving rise to a payment under paragraph 13(d), and shall be
accompanied by a written statement by the Tax Indemnitee setting forth in
reasonable detail the basis for computing the amount of such payment. Within
thirty (30) days following the Lessee's receipt of any computation from the Tax
Indemnitee, the Lessee may request that an accounting firm reasonably acceptable
to the Lessee determine whether such computations of the Tax Indemnitee are
correct. Such accounting firm shall be requested to make the determination
contemplated by this paragraph 13(e) within thirty (30) days of its selection.
In the event such accounting firm shall determine that such computations are
incorrect, such firm shall determine what it believes to be the correct
computations. The Tax Indemnitee shall cooperate with such accounting firm and
supply it with all information necessary to permit it to accomplish such
determination. The computations of such accounting firm shall be final, binding
and conclusive upon the parties and the Lessee shall have no right to inspect
the books, records or tax returns of the Tax Indemnitee to verify such
computation or for any other purpose. All fees and expenses of the accounting
firm payable under this Section 13(e) shall be borne by the Lessee, except that
if such accounting firm's computation shall result in a decrease in the amount
due from, or an increase in the amount payable to, the Lessee by more than the
greater of 5% of the amount claimed by the Tax Indemnitee or $10,000, then the
Tax Indemnitee shall bear the cost of such accounting firm.

         (f) CONTEST. If any claim shall be made against any Tax Indemnitee or
if any proceeding shall be commenced against any Tax Indemnitee (including a
written notice of such proceeding) for any Tax as to which the Lessee may have
an indemnity obligation, or if any Tax Indemnitee shall determine that any Tax
as to which the Lessee may have an indemnity obligation may be payable, such Tax
Indemnitee shall promptly notify the Lessee in writing and shall not take any
action with respect to such claim, proceeding or Tax without the consent of the
Lessee for thirty (30) days after receipt of such notice by the Lessee unless
the failure to take action could result in the imposition of penalties or fines
or material danger of sale, forfeiture or loss of, or the creation of any Lien
on, the Platform or the Property or any portion thereof or interest therein;
provided, however, that any failure to provide such notice shall not relieve the
Lessee of any obligation to indemnify any Tax Indemnitee hereunder unless the
Lessee is materially adversely affected as a result of such failure and such
failure arises out of or is caused by the misconduct or negligence (excluding
imputed negligence) of such Tax Indemnitee; provided, further, however, that if
such Tax Indemnitee shall be required by law or regulation to take action with
respect to any such claim, proceeding or Tax prior to the end of such thirty
(30) day period such Tax Indemnitee shall, in such notice to the Lessee, so
inform the Lessee and such Tax Indemnitee shall not take any action with respect
to such claim, proceeding or Tax without the consent of the Lessee before the
date on which such Tax Indemnitee shall be required to take action. If, within
thirty (30) days after its receipt of such notice (or such shorter period
referred to in the preceding sentence), the Lessee shall request in writing that
such Tax Indemnitee contest the imposition of such Tax, the Tax Indemnitee
shall, at the expense of the Lessee, in good faith contest (including by pursuit
of appeals, excluding any requirement to appeal to the U.S. Supreme Court), and
shall not settle without the Lessee's consent, or if such contest can be pursued
independently from any other proceeding involving a Tax liability of such

                                                         Participation Agreement

                                       57
<PAGE>

Tax Indemnitee (a "LESSEE-CONTROLLED CONTEST"), the Tax Indemnitee shall allow
the Lessee to contest (in its own name, if permitted by law to do so) the
validity, applicability or amount of such Tax (other than U.S. withholding or
net income Taxes indemnifiable hereunder) by, in the sole discretion of the
Person conducting such contest:

                           (1) resisting payment thereof;

                           (2) not paying the same except under protest, if
                  protest shall be necessary and proper; or

                           (3) if payment shall be made, using reasonable
                  efforts to obtain a refund thereof in appropriate
                  administrative and judicial proceedings; provided, however,
                  that in no event shall such Tax Indemnitee be required to
                  contest (or permit the Lessee to contest) the imposition of
                  any Tax for which the Lessee may be obligated unless: (t) if a
                  Payment Default or a Lease Event of a Default shall have
                  occurred and be continuing, Lessee shall either (I) provide
                  security for such tax indemnity obligations that is reasonably
                  acceptable to such Tax Indemnitee or (II) pay such Tax, (u) in
                  the case of net income Taxes indemnifiable hereunder, the
                  amount of the claim and all future related claims exceeds
                  $25,000, (v) in the case of net income and U.S. withholding
                  Taxes indemnifiable hereunder, the Lessee shall have delivered
                  to the Certificate Holders an opinion of tax counsel chosen by
                  the Lessee and reasonably acceptable to the Certificate
                  Holders to the effect that there is a reasonable basis to
                  contest such claim, (w) in the case of a Lessee-Controlled
                  Contest, the Lessee shall have acknowledged in writing its
                  liability hereunder if the contest is unsuccessful; provided
                  that such acknowledgment shall be of no force and effect if
                  the final determination of the contest clearly articulates
                  that the cause of the unfavorable disposition is one for which
                  the Lessee is not otherwise liable hereunder, (x) the Lessee
                  shall have agreed to pay such Tax Indemnitee all costs and
                  expenses that such Tax Indemnitee shall incur in connection
                  with contesting such claim (including all reasonable legal and
                  accounting fees and disbursements and internally allocated
                  time charges), (y) the Certificate Holders shall have
                  reasonably determined that action to be taken will not result
                  in any material danger of sale, forfeiture or loss of the
                  Platform or any portion thereof or interest therein, and (z)
                  if such contest shall involve payment of the claim, the Lessee
                  shall advance the amount thereof, plus interest, penalties and
                  additions to Tax with respect thereto, to such Tax Indemnitee
                  on an interest-free basis and on an After-Tax Basis to such
                  Tax Indemnitee. The party in control of any contest shall
                  consult in good faith and cooperate with the other party
                  regarding the conduct of any contest and the Tax Indemnitee
                  shall allow the Lessee to attend all hearings at which
                  unrelated issues are not discussed and to comment upon all
                  related submissions in such Tax Indemnitee-controlled contests
                  and vice versa. Notwithstanding the above, a Tax Indemnitee
                  may settle and will not be required to contest the imposition
                  of any Taxes if such Tax Indemnitee shall waive its right to
                  indemnity with respect to such Taxes and all future related
                  Taxes and shall have paid to the Lessee any and all funds paid
                  by the Lessee to such Tax Indemnitee with regard to such
                  contested amount (other than those described in clause (x) of
                  this Section 13(f)) plus any

                                                         Participation Agreement

                                       58
<PAGE>

                  interest which the Lessee paid on such funds. Any contest by
                  the Lessee or at the Lessee's request shall be subject to the
                  following requirements: (i) such contest shall be conducted in
                  good faith by appropriate proceedings which have the effect of
                  staying the enforcement of the lien for such Taxes and the
                  sale, forfeiture or other loss of the Platform during the
                  pendency of such contest, (ii) none of the Lessor, the Owner
                  Trustee, the Agent and the Participants shall be subject to
                  any risk of criminal liability or material civil liability by
                  virtue of the matters being contested or such proceedings, and
                  (iii) the Lessee, in accordance with prudent practice, has set
                  aside adequate reserves for the payment thereof and has
                  provided evidence reasonably acceptable to the Agent, the
                  Lessor and the Participants of such reserves.

         (g) REPORTS. In the event any report, return or statement or any
certification or procedure (a "FILING") with respect to Taxes is required to be
made with respect to any Tax that may be subject to indemnification under this
Section 13, the Lessee will, at the Lessee's expense, either prepare and file
such Filing or, if it shall not be permitted to file the same, it will notify
each Tax Indemnitee of such reporting requirements, prepare such Filing in such
manner as shall be reasonably satisfactory to each Tax Indemnitee and deliver
the same to each Tax Indemnitee within a reasonable period prior to the date the
same is to be filed; provided, however, that the relevant Tax Indemnitees shall
have furnished the Lessee, at the Lessee's request and expense, within a
reasonable time, with such information, not within the control of (nor
reasonably available to) the Lessee, in such Tax Indemnitee's control (or which
is reasonably available to such Tax Indemnitee) and is necessary to complete
such Filing.

         (h) NON-PARTIES. If a Tax Indemnitee is not a party to this Agreement,
Lessee may require the Tax Indemnitee to agree in writing, in a form reasonably
acceptable to Lessee, to the terms of this Section 13 prior to making any
payment to such Tax Indemnitee under this Section 13.

         (i) SURVIVAL. The provisions of this Section 13 shall continue in full
force and effect, notwithstanding the expiration or termination of any Operative
Document, until all obligations hereunder have been met and all liabilities
hereunder paid in full.

         (j) CONSTRUCTION PERIOD. Notwithstanding the foregoing, during the
Construction Period, (i) the Lessor, in lieu of the Lessee, shall indemnify all
Lender Indemnitees under this Section 13, to the same extent that the Lessee is
obligated to so indemnify such parties absent the provisions of this subsection
(j), (ii) the Lessee will indemnify the Lessor for all obligations of the Lessor
under this subsection (j), and (iii) the Lessor hereby assigns to each of the
Lender Indemnitees the Lessor's right to indemnification by the Lessee under
this subsection (j) to the extent of any claim by the respective Lender
Indemnitee under this Section 13. Any indemnification by the Lessor shall be
subject to all of the provisions of this Section 13 to the same extent as
applicable to indemnification by the Lessee under this Section 13.

SECTION 14. GENERAL INDEMNITY

         (a) INDEMNIFICATION. The Lessee does hereby assume liability for, and
does hereby agree to indemnify, defend, protect, save and keep harmless, on an
After-Tax Basis, each

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                                       59
<PAGE>

Indemnified Person from and against any and all liabilities, obligations,
losses, damages, penalties, claims (including, without limitation, claims
involving strict or absolute liability in tort, warranty claims, claims based on
negligence, products liability or statutory liability or claims for enforcement,
cleanup, removal, response, remedial or other actions or damages, contribution,
indemnification, cost recovery, compensation or injunctive relief pursuant to
any Environmental Law or alleged injury or threat of injury, to health, safety,
the environment or natural resources), actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable legal fees and expenses
and Owner Trustee's Expenses) of any kind and nature whatsoever (all of the
foregoing being referred to as "CLAIMS") which may be imposed on, incurred by or
asserted against such Indemnified Person, whether or not such Indemnified Person
shall also be indemnified as to any such Claim by any other Person, in any way
relating to or arising out of:

                           (1) this Participation Agreement or any other
                  Operative Document, or any document contemplated hereby or
                  thereby; or the execution, delivery or performance or
                  non-performance or enforcement of any of the terms of this
                  Participation Agreement or any other Operative Document by the
                  Lessee, the Parent Guarantor, the Owner Trustee or the
                  Participants or any other Person;

                           (2) the Platform, the Property or any part thereof or
                  the purchase, manufacture, design, financing, refinancing,
                  construction, acceptance, rejection, ownership, acquisition,
                  delivery, non-delivery, occupancy, lease, ground lease,
                  sublease, rental, preparation, installation, modification,
                  substitution, possession, use, non-use, operation,
                  maintenance, condition, registration, repair, transportation,
                  transfer of title, any action taken by Lessee or requested by
                  Lessee under Section 8(d) of the Lease, abandonment, rental,
                  importation, exportation, sale (including, without limitation,
                  any sale pursuant to the Lease), retirement, return, storage
                  or other disposition of the Platform, the Property or any part
                  thereof or any accident in connection therewith (including,
                  without limitation, latent and other defects, whether or not
                  discoverable, whether preexisting or not and any Claim for
                  patent, trademark or copyright infringement) or the failure of
                  the Platform to be located wholly within the Site;

                           (3) the performance of any labor or services or the
                  furnishing of any materials or other property in respect of
                  the Platform or any part thereof by or on behalf of or with
                  the knowledge of the Lessee or any Affiliate;

                           (4) any negligence or tortious acts on the part of
                  the Lessee or any Affiliate or any agents, contractors,
                  sublessee, franchisees, licensees or invitees thereof;

                           (5) any alterations, changes, modifications, new
                  construction or demolition of the Platform or any part
                  thereof;

                           (6) any violation of law; or any breach of any
                  covenant, warranty or representation in any Operative Document
                  or any certificate required to be delivered pursuant to any
                  Operative Document by the Lessee or any Affiliate;

                                                         Participation Agreement

                                       60
<PAGE>

                           (7) subject to the accuracy of any Certificate
                  Holder's representation in Section 7(b) concerning acquisition
                  for investment, to the extent permitted by Applicable Law, the
                  offer, issue, sale, purchase or delivery of any interest in
                  the Trust Estate (including the trust certificates) or the
                  Trust Agreement or any similar interest or in any way
                  resulting from or arising out of the Trust Agreement and the
                  Trust Estate (including Claims arising under or resulting from
                  applicable Federal, state or foreign securities laws or common
                  law);

                           (8) the imposition of any Lien on the Platform or the
                  Property (other than Permitted Liens or Lessor Liens) or the
                  enforcement of any agreement, restriction or legal requirement
                  affecting the Platform or the Property;

                           (9) a disposition of the Property or any part thereof
                  in connection with a termination of the Lease pursuant to
                  Section 16 of the Lease and, after the Construction Period,
                  Section 11 of the Lease;

                           (10) subject to the accuracy of any Participant's
                  representation set forth in Section 6(a)(vi) concerning ERISA,
                  as to such Participant, the transactions contemplated by the
                  Lease or by any other Operative Document, in respect of the
                  application of Parts 4 and 5 of Subtitle B of Title I of ERISA
                  and any prohibited transaction described in Section 4975(c) of
                  the Code;

                           (11) the presence, Release or threat of Release into
                  the environment of any Hazardous Substances; the presence on,
                  under or around the Property, wherever located, of any
                  Hazardous Substances, or any Releases, threats of Release or
                  discharges of any Hazardous Substances on, under, around or
                  from any Sites, irrespective of when such presence, Release,
                  threat of Release or discharge of Hazardous Substances
                  occurred or originated; any activity carried on or undertaken
                  on or off the Platform in connection with the handling,
                  treatment, removal, storage, decontamination, clean-up,
                  transport or disposal of any Hazardous Substances (including,
                  without limitation, from any corrective action plan and the
                  development and implementation thereof); any residual
                  contamination on, under, around or from the Platform and
                  affecting any natural resources or any property of others; in
                  any and all such circumstances irrespective of whether any of
                  such activities were undertaken in accordance with Applicable
                  Law, or whether claims with respect thereto are made pursuant
                  to Environmental Law;

                           (12) in its capacity as Construction Agent, the
                  amounts and costs referred to in Section 4(e)(iii); provided
                  that, in connection with the indemnification obligations
                  described in this sub-paragraph 12, Lessor also hereby
                  indemnifies the Participants on a non-recourse basis with
                  respect to such amounts or costs; or

                           (13) the misapplication of insurance or condemnation
                  proceeds by the Construction Agent, the Operator, the Lessee
                  or any other Construction Agency Person.

                                                         Participation Agreement

                                       61
<PAGE>

DURING THE LEASE TERM OF THE PROPERTY, THE LESSEE AGREES THAT NEITHER THE
CERTIFICATE HOLDERS NOR THE OWNER TRUSTEE (INCLUDING WILMINGTON TRUST COMPANY,
INDIVIDUALLY) SHALL BE LIABLE TO THE LESSEE FOR ANY CLAIM CAUSED DIRECTLY OR
INDIRECTLY BY THE INADEQUACY OF SUCH PROPERTY OR ANY PART THEREOF FOR ANY
PURPOSE OR ANY DEFICIENCY OR DEFECT THEREIN OR ANY FAILURE OF TITLE WITH RESPECT
THERETO (OTHER THAN BY VIRTUE OF LESSOR LIENS OR THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE CERTIFICATE HOLDERS OR THE OWNER TRUSTEE) OR THE USE OR
MAINTENANCE THEREOF OR ANY REPAIRS, SERVICING OR ADJUSTMENTS THERETO OR ANY
DELAY IN PROVIDING OR FAILURE TO PROVIDE ANY THEREOF OR ANY INTERRUPTION OR LOSS
OF SERVICE OR USE THEREOF OR ANY LOSS OF BUSINESS, ALL OF WHICH SHALL BE THE
RISK AND RESPONSIBILITY OF THE LESSEE.

         (b) SURVIVAL. Unless otherwise expressly provided in the Operative
Documents, the obligations, agreements, rights and liabilities of the Lessee,
the Owner Trustee and each Indemnified Person arising under this Section shall
continue in full force and effect, notwithstanding the expiration or other
termination of the Lease or this Participation Agreement. Until all obligations
have been met, all liabilities arising under this Section 14 shall be
enforceable by the Lessee, the Owner Trustee and each Indemnified Person and
their successors, assigns and agents.

         (c) CERTAIN EXCEPTIONS. Notwithstanding the foregoing, the Lessee shall
not assume liability for or indemnify, defend, protect, save and keep harmless
pursuant to Section 14(a) hereof (i) any Indemnified Person from and against any
Claims to the extent arising out of any act, occurrence or omission (other than
(x) an act or omission of, or an occurrence caused by, or attributable to, the
Lessee or (y) for the Property, if the Lessee shall duly exercise and consummate
the Sale Option with respect to the Property, occurring during or attributable
to any period ending on or before the consummation of such Sale Option) on,
under, in or from the Property after the Return Date with respect to the
Property; (ii) any Indemnified Person for any Claim that is a Tax or a loss of
Tax benefits or the costs and expenses of contesting any Tax or loss of tax
benefits, except to provide indemnification under this Section 14 on an
After-Tax Basis; (iii) any Indemnified Person for any Claim to the extent it
results from the material incorrectness of, or any failure on the part of such
Indemnified Person to comply with, any representation, warranty, agreement or
covenant of such Indemnified Person in favor of the Lessee in any Operative
Document unless such failure to comply resulted in whole or in part from any
default by the Lessee under any Operative Document; provided, however, that the
material incorrectness of, or the failure of any Indemnified Person to comply
with, any such representation, warranty, agreement or covenant shall not affect
the rights of any other Indemnified Person hereunder; (iv) any Indemnified
Person for any Claim to the extent resulting from acts which would constitute
the willful misconduct or gross negligence of such Indemnified Person or a
related Indemnified Person; (it being agreed that for purposes of this clause
(iv) the Owner Trustee shall be deemed a related Indemnified Person of the
Certificate Holders only to the extent it acts on the written instructions of
the Certificate Holders) provided that: (A) negligence or gross negligence or
willful misconduct will not be imputed to such Indemnified Person, the
Certificate Holders or any related Indemnified Person solely as a result

                                                         Participation Agreement

                                       62
<PAGE>

of the Owner Trustee's ownership the Property; (B) the willful misconduct or
gross negligence of an Indemnified Person shall not affect the rights of any
other Indemnified Person hereunder; and (C) with respect to the Owner Trustee,
it shall not constitute willful misconduct or gross negligence of Wilmington
Trust Company to rely on the written instructions of the Certificate Holders;
(v) any Indemnified Person for an offer, sale or other disposition of all or
part of an interest in the Trust Estate, any Equity Certificate or any Note by
Certificate Holders or Owner Trustee (other than to Lessee or an Affiliate of
Lessee or as the result of or during a Lease Event of Default or an Event of
Loss); (vi) any Indemnified Person for any Claim to the extent resulting from
the imposition of any Lessor Lien; or (vii) any Indemnified Person for
Transaction Costs to the extent Lessee is liable therefor under this Section 14.

         The indemnities set forth in this Section shall not constitute a
guarantee, representation or warranty to any Indemnified Person of or as to the
value or useful life of the Platform or the Property.

         (d) CLAIMS PROCEDURE. An Indemnified Person shall, after obtaining
actual knowledge thereof, promptly notify Lessee of any Claim as to which
indemnification is sought (unless Lessee theretofore has notified such
Indemnified Person of such Claim); provided, however, that the failure to give
such notice shall not release Lessee from any of its obligations under this
Section 14, except to the extent that failure to give notice of any action, suit
or proceeding against such Indemnified Person is shown to increase Lessee's
liability under such Claim from that which would have existed if the failure to
give notice had not occurred. Subject to the following paragraph, Lessee agrees
to defend such Claim and shall at its sole cost and expense be entitled to
control, and shall assume full responsibility for, the defense of such Claim;
provided, however, that Lessee shall keep the Indemnified Person that is the
subject of such proceeding fully apprised of the status of such proceeding and
shall provide such Indemnified Person with all information with respect to such
proceeding as such Indemnified Person reasonably requests; and provided,
further, that in the event Lessee fails to defend such Claim, Lessee shall pay
the reasonable costs and expenses (including reasonable legal fees and expenses)
of the Indemnified Person in defending such Claim. Where the Lessee is obligated
hereunder to pay the expenses of an Indemnified Person or Indemnified Persons,
the Lessee shall not be liable for the fees and expenses of more than one
counsel in each relevant jurisdiction for each of (A) the Certificate Holders
and (B) the Owner Trustee. Notwithstanding any of the foregoing to the contrary,
Lessee shall not be entitled to control and assume responsibility for the
defense of such Claim if (1) a Lease Default or Lease Event of Default exists,
and the Indemnified Person notifies Lessee that it is no longer permitted to
control the defense of such Claim, (2) such proceeding involves any material
danger of the sale, forfeiture or loss of, or the creation of any Lien (other
than any Permitted Lien or bonded liens which would become liens under item (vi)
of the definition of Permitted Liens) on, the Platform or the Property, (3) in
the good faith opinion of such Indemnified Person, there exists an actual or
potential conflict of interest such that it is advisable for such Indemnified
Person to retain control of such proceeding or (4) such Claim or liability
involves a risk of criminal actions or liability to such Indemnified Person. In
the circumstances described in clauses (1) through (4), the Indemnified Person
shall be entitled to control and assume responsibility for the defense of such
Claim or liability at the expense of Lessee. In addition, any Indemnified
Person, at its own expense, may (A) participate in any proceeding controlled by
Lessee pursuant to this Section 14(d) and (B) employ separate counsel. Lessee
may in any event participate in all such proceedings at its own cost. Nothing

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                                       63
<PAGE>

contained in this Section 14(d) shall be deemed to require an Indemnified Person
to contest any Claim or to assume responsibility for or control of any judicial
proceeding with respect thereto.

         (e) SUBROGATION. If a Claim indemnified by Lessee under this Section 14
is paid in full by Lessee and/or an insurer under a policy of insurance
maintained by Lessee, or if payment of the Claim has otherwise been provided for
in full in a manner reasonably satisfactory to the Indemnified Person, Lessee
and/or such insurer, as the case may be, shall be subrogated to the extent of
such payment (or provision) to the rights and remedies of the Indemnified Person
(other than under insurance policies maintained by such Indemnified Person) on
whose behalf such Claim was paid (or provided for) with respect to the act or
event giving rise to such Claim. So long as no Payment Default and no Lease
Event of Default exists, if an Indemnified Person receives any refund, in whole
or in part, with respect to any Claim paid by Lessee hereunder, it shall
promptly pay over the amount refunded (but not in excess of the amount Lessee or
any of its insurers has paid in respect of such Claim paid or payable by such
Indemnified Person on account of such refund) to Lessee; provided, however, if
any Payment Default or Lease Event of Default exists, any such refund shall be
retained by, or paid over to, the Lessor to be held and applied against amounts
payable by the Lessee hereunder and under the other Operative Documents.

         (f) INSURED CLAIMS. In the case of any Claim indemnified by the Lessee
hereunder which is covered by a policy of insurance maintained by or for the
benefit of the Lessee, each Indemnified Person agrees to cooperate, at the
expense of the Lessee, with the insurers in the exercise of their rights to
investigate, defend or compromise such Claim as may be required to retain the
benefits of such insurance with respect to such Claim (but the failure to do so
shall not relieve the Lessee of its obligation to indemnify such Indemnified
Person except to the extent that the Lessee or its insurer is materially
prejudiced as a result of such failure).

         (g) WAIVER OF CERTAIN CLAIMS. Lessee hereby waives and releases any
Claim now or hereafter existing against any Indemnified Person out of death or
personal injury to personnel of Lessee (including its directors, officers,
employees, agents and servants), loss or damage to property of Lessee or its
Affiliates, of the loss of use of any property of Lessee or its Affiliates,
which may result from or arise out of the condition, use or operation of the
Platform or the Property during the Lease Term and the Renewal Term, if any,
including, without limitation, any latent or patent defect whether or not
discoverable.

         (h) CONSENT. Unless a Lease Default or a Lease Event of Default exists,
the Lessee shall not be liable hereunder for any settlement of any loss, claim,
damage, liability or action effected without its consent.

         (i) CONSTRUCTION PERIOD. Notwithstanding the foregoing, during the
Construction Period, with respect to all matters described in Section 14(a)
other than those described in subparagraph (11) of Section 14(a):(i) the Lessor,
in lieu of the Lessee, shall indemnify all Lender Indemnitees under this Section
14, to the same extent that the Lessee is obligated to so indemnify such parties
absent the provisions of this subsection (i), (ii) the Lessee will indemnify the
Lessor for all obligations of the Lessor under this subsection (i), and (iii)
the Lessor hereby assigns to each of the Lender Indemnitees the Lessor's right
to indemnification by the Lessee under this subsection (i) to the extent of any
claim by the respective Lender Indemnitee under

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<PAGE>

this Section 14. Any indemnification by the Lessor shall be subject to all of
the provisions of this Section 14 to the same extent as applicable to
indemnification by the Lessee under this Section 14. Amounts payable during the
Construction Period in payment of the indemnifications provided by the Lessee in
Section 14(a) above (other than those described in subparagraph (11) of Section
14(a)) are limited to those matters as shall arise in connection with an act or
failure to act on the part of the Construction Agent or a Construction Agency
Person.

SECTION 15. TRANSACTION EXPENSES

         The Lessee agrees, for the benefit of the Lessor, the Certificate
Holders and the Lenders, that:

         (a) TRANSACTION EXPENSES.

                           (1) The Lessee shall pay, or cause to be paid, from
                  time to time all Transaction Expenses in respect of the
                  transactions on the Documentation Date, the Availability Date
                  and each Funding Date; provided, however, that if the Lessee
                  has not received written invoices therefor at least five (5)
                  Business Days prior to such date, such Transaction Expenses
                  shall be paid within thirty (30) days after the Lessee has
                  received written invoices therefor. Transaction Expenses may,
                  subject to the conditions hereof (including without limitation
                  the last sentence of Section 3(a)(1)), be paid with the
                  proceeds of an Advance.

                           (2) The Lessee shall pay or cause to be paid all
                  Transaction Expenses incurred by the Agent, the Lessor, any
                  Lender or any Certificate Holder in entering into any future
                  amendments or supplements with respect to any of the Operative
                  Documents, whether or not such amendments or supplements are
                  ultimately entered into, or giving or withholding of waivers
                  of consents hereto or thereto, in each case which have been
                  requested by or approved by the Lessee, all Transaction
                  Expenses incurred by the Lessee, the Lessor, the Agent, the
                  Lenders or the Certificate Holders in connection with any
                  purchase of the Property by the Lessee or other Person
                  pursuant to Section 6 of the Lease and all Transaction
                  Expenses incurred by any of the other parties hereto in
                  respect of enforcement of any of their rights or remedies
                  against the Lessee or any other Affiliate of the Lessee in
                  respect of the Operative Documents.

         (b) BROKERS' FEES AND STAMP TAXES. The Lessee shall pay or cause to be
paid any fees and any and all stamp, transfer and other similar taxes, fees and
excises, if any, including any interest and penalties, which are payable in
connection with the transactions contemplated by this Participation Agreement
and the other Operative Documents.

SECTION 16. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; SERVICE OF PROCESS

         (a) CHOICE OF LAW. The parties hereto hereby irrevocably each (i) agree
that any legal or equitable action, suit or proceeding against the Lessee
arising out of or relating to this Participation Agreement or any other
Operative Document governed by the Laws of the State of Illinois or any
transaction contemplated hereby or thereby or the subject matter of any of the

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<PAGE>

foregoing may be instituted in any state court of competent jurisdiction in the
State of Illinois or Federal court in Chicago, Illinois, (ii) to the extent
permitted by Applicable Law, waives any objection which it may now or hereafter
have to the venue of any such action, suit or proceeding, including, without
limitation, inconvenient forum and (iii) submits itself to the jurisdiction of
any state court of competent jurisdiction in the State of Illinois or Federal
court in Chicago, Illinois for purposes of any such action, suit or proceeding.
Nothing contained in this Section shall be deemed to affect the rights of the
Certificate Holders, Lenders, the Agent or the Owner Trustee to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Lessee in any other jurisdiction.

         (b) CONSENT TO JURISDICTION. THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY OPERATIVE DOCUMENTS AND SUCH PARTIES HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY OBJECTION IT
MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, ANY LENDER OR ANY CERTIFICATE HOLDER
TO BRING PROCEEDINGS AGAINST THE LESSEE OR THE CONSTRUCTION AGENT IN THE COURTS
OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE LESSEE OR THE
CONSTRUCTION AGENT AGAINST THE AGENT, ANY LENDER OR ANY CERTIFICATE HOLDER OR
ANY AFFILIATE OF THE AGENT, ANY LENDER OR ANY CERTIFICATE HOLDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY OPERATIVE DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN
CHICAGO, ILLINOIS UNLESS THE AGENT, SUCH LENDER, SUCH CERTIFICATE HOLDER OR SUCH
AFFILIATE SHALL OTHERWISE AGREE.

         (c) WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS PARTICIPATION AGREEMENT OR ANY OTHER OPERATING DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY OF THE PARTIES HEREUNTO AND THEREUNTO. THE PARTIES HEREUNTO HEREBY AGREE
THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH LITIGATION WITH ANY OTHER
LITIGATION IN WHICH A JURY TRIAL HAS NOT OR CANNOT BE WAIVED. THE PROVISIONS OF
THIS SECTION 16 HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE
SUBJECT TO NO EXCEPTIONS.

         (d) SERVICE OF PROCESS. Each of the Lessee, the Construction Agent, the
Guarantor and the Parent Guarantor hereby agrees that service of all writs,
process and summonses in any such suit, action or proceeding brought in the
State of Illinois may be made upon CT Corporation System (the "PROCESS AGENT"),
presently located at 208 South LaSalle Street, Chicago, Illinois

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<PAGE>

60604 and each of the Lessee, the Construction Agent, the Guarantor and the
Parent Guarantor hereby irrevocably appoints the Process Agent its true and
lawful attorney-in-fact in its name, place and stead to accept such service of
any and all such writs, process and summonses, and agrees that the failure of
the Process Agent to give any notice of any such service of process to the
Lessee, the Construction Agent, the Guarantor or the Parent Guarantor, as the
case may be, shall not impair or affect the validity of such service or of any
proceeding. Each of the Lessee, the Construction Agent, the Guarantor and the
Parent Guarantor hereby further irrevocably consents to the service of process
in any such suit, action or proceeding in said courts by the transmitting
thereof by the Agent, the Lenders or the Certificate Holders or their respective
assignees by facsimile, telex or telegram, to the Lessee, the Construction
Agent, the Guarantor or the Parent Guarantor, as the case may be, addressed as
provided herein if such process is actually received by such party. Nothing
herein shall in any way be deemed to limit the ability of the Agent, the Lenders
or the Certificate Holders or their respective assignees to serve any such
writs, process or summonses in any manner permitted by Applicable Law or to
obtain jurisdiction over the Lessee, the Construction Agent, the Guarantor or
the Parent Guarantor, as the case may be, in such other jurisdictions, and in
such manner, as may be permitted by Applicable Law. Each of the Lessee, the
Construction Agent, the Guarantor and the Parent Guarantor agrees that a final
judgment in any such suit, action or proceeding shall be conclusive and may be
enforced in other jurisdictions by any suit on the judgment or in any other
manner provided by Applicable Law. Each of the Lessee, the Construction Agent,
the Guarantor and the Parent Guarantor agrees to pay, as and when due, all fees
and costs of the Process Agent from time to time.

SECTION 17. LIMITATIONS OF LIABILITY OF OWNER TRUSTEE

         It is expressly understood and agreed by and among the parties hereto
that, except as otherwise expressly provided herein or therein, each of this
Participation Agreement and the other Operative Documents is executed by
Wilmington Trust Company, not individually or personally but solely as Owner
Trustee under the Trust Agreement in the exercise of the power and authority
conferred and vested in it as such Owner Trustee, that each and all of the
representations, undertakings and agreements herein or therein made on the part
of the Owner Trustee or the Trust are intended not as personal representations,
undertakings and agreements by Wilmington Trust Company, or for the purpose or
with the intention of binding Wilmington Trust Company, personally, but are made
and intended for the purpose of binding only the Trust Estate, that nothing
herein contained shall be construed as creating any liability of Wilmington
Trust Company, or any incorporator or any past, present or future subscriber to
the capital stock of, or stockholder, officer or director of Wilmington Trust
Company, to perform any covenant either express or implied contained herein or
in the other Operative Documents to which the Owner Trustee or the Trust is a
party, and that so far as Wilmington Trust Company is concerned, any Person
shall look solely to the Trust Estate for the performance of any obligation
hereunder or thereunder or under any of the instruments referred to herein or
therein; provided, however, that nothing contained in this Section shall be
construed to limit in scope or substance the general corporate liability of
Wilmington Trust Company, expressly provided (i) to the Certificate Holders
under the Trust Agreement, (ii) in respect of those representations, warranties,
agreements and covenants of Wilmington Trust Company expressly set forth in
Section 7(a) hereof or in any Operative Document to which it is a party or (iii)
pursuant to the Trust Agreement, for the gross negligence or willful misconduct
of Wilmington Trust Company

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                                       67
<PAGE>

or to exercise the same degree of care and skill as is customarily exercised by
similar institutions in the receipt and disbursement of moneys actually received
by it in accordance with terms of the Operative Documents under similar
circumstances.

SECTION 18. LIMITATION OF LIABILITY OF CERTIFICATE HOLDERS

         The Certificate Holders shall not have any obligation or duty to Owner
Trustee, the Lessee, Wilmington Trust Company or to others with respect to the
transactions contemplated hereby, or for any loss arising under the Operative
Documents in respect of a Title Defect, except those obligations or duties of
Certificate Holders expressly set forth in this Participation Agreement and the
other Operative Documents and the Certificate Holders shall not be liable for
performance by any other party of such other party's obligations or duties
hereunder or thereunder. Without limiting the generality of the foregoing, under
no circumstances whatsoever shall the Certificate Holders be liable for any
action or inaction on the part of Owner Trustee in connection with the
transactions contemplated herein, whether or not such action or inaction is
caused by the willful misconduct or gross negligence of Owner Trustee, unless
such action or inaction is taken upon the written instructions of the
Certificate Holders or in violation of the covenants of the Certificate Holders
in the Operative Documents.

SECTION 19. NOTICES

         All communications, demands, notices and consents provided for herein
shall be given in writing (either by mail, reputable overnight courier, personal
delivery or by telecopier) and shall become effective, if given by personal
delivery or telecopier, when given, if given by overnight courier, on the first
Business Day after delivery to said courier, all fees therefor prepaid, and if
given by mail, five (5) days after deposit in the United States mail, with
proper postage for first-class mail prepaid, addressed: (i) if to the
Certificate Holders, at their respective Designated Offices set forth on
Schedule III; (ii) if to the Owner Trustee, at Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890, telecopier
number (302) 651-8882 Attention: Corporate Trust Administration; (iii) if to the
Lessee or Parent Guarantor, at 400 N. Sam Houston Parkway E., Suite 400,
Houston, Texas 77060, telecopier number (281) 618-0505, Attention: Chief
Financial Officer; or (iv) if to the Agent or the Lenders at their respective
Designated Offices set forth on Schedule III, or at such other address as any
party hereto may from time to time designate by notice duly given in accordance
with the provisions of this Section to the other parties hereto. In accordance
with Section 14.5.9 of the Joint Operating Agreement, the parties hereto
acknowledge that the Agent shall give notice to the IPS Parties (as defined in
the Joint Operating Agreement) of the occurrence of an Event of Default
hereunder.

SECTION 20. SURVIVAL OF REPRESENTATIONS; BINDING EFFECT

         All agreements, representations and warranties contained in this
Participation Agreement, or in any agreement, document or certificate delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Participation Agreement and the expiration or other termination
of this Participation Agreement and shall be considered relied upon by each
other party hereto regardless of any knowledge or investigation made by or on
behalf of any such party. All agreements, representations and warranties in this
Participation Agreement shall bind

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<PAGE>

the party making the same and its successors and permitted assigns and shall
inure to the benefit of each party for whom made and all their respective
successors and permitted assigns and all Indemnified Persons.

SECTION 21. THE AGENT

         (a) APPOINTMENT; NATURE OF RELATIONSHIP. The Agent is hereby appointed
by each of the Participants as its contractual representative hereunder and
under each other Operative Document, and each of the Participants irrevocably
authorizes the Agent to act as the contractual representative of such
Participant with the rights and duties expressly set forth herein and in the
other Operative Documents. The Agent agrees to act as such contractual
representative upon the express conditions contained in this Section 21.
Notwithstanding the use of the defined term "Agent," it is expressly understood
and agreed that the Agent shall not have any fiduciary responsibilities to any
Participant by reason of this Participation Agreement or any other Operative
Document and that the Agent is merely acting as the contractual representative
of the Participants with only those duties as are expressly set forth in this
Participation Agreement and the other Operative Documents. In its capacity as
the Participants' contractual representative, the Agent (i) does not hereby
assume any fiduciary duties to any of the Participants, (ii) is a
"representative" of the Participants within the meaning of Section 9-105 of the
Uniform Commercial Code and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Operative Documents. Each of the Participants hereby
agrees to assert no claim against the Agent on any agency theory or any other
theory of liability for breach of fiduciary duty, all of which claims each
Participant hereby waives.

         (b) POWERS. The Agent shall have and may exercise such powers under the
Operative Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Participants, or any obligation to
the Participants to take any action thereunder except any action specifically
provided by the Operative Documents to be taken by the Agent.

         (c) GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Lessee, the Lessor, the
Participants or any Participant for any action taken or omitted to be taken by
it or them hereunder or under any other Operative Document or in connection
herewith or therewith except to the extent such action or inaction is determined
in a final non-appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such Person.

         (d) NO RESPONSIBILITY FOR RECITALS, ETC. Neither the Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Operative Document or any advances
thereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Operative Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Participant; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered solely to the Agent; (d) the
existence or possible existence of any Default or Event of Default; (e) the
validity, enforceability, effectiveness, sufficiency or genuineness of any

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                                       69
<PAGE>

Operative Document or any other instrument or writing furnished in connection
therewith; (f) the value, sufficiency, creation, perfection or priority of any
Lien in any collateral security; or (g) the financial condition of the Lessee or
any guarantor of any of the Obligations or of any of the Lessee's or any such
guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to
the Participants information that is not required to be furnished by the Lessee
to the Agent at such time, but is voluntarily furnished by the Lessee to the
Agent (either in its capacity as Agent or in its individual capacity).

         (e) ACTION ON INSTRUCTIONS OF PARTICIPANTS. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Operative Document in accordance with written instructions
signed by the Required Participants (or all Participants to the extent required
by Section 23(c)), and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Participants. The Participants
hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Participation Agreement or any other Operative Document unless it shall be
requested in writing to do so by the Required Participants. The Agent shall be
fully justified in failing or refusing to take any action hereunder and under
any other Operative Document unless it shall first be indemnified to its
satisfaction by the Participants pro rata against any and all liability, cost
and expense that it may incur by reason of taking or continuing to take any such
action.

         (f) EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its
duties as Agent hereunder and under any other Operative Document by or through
employees, agents, and attorneys in fact and shall not be answerable to the
Participants, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys in fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the
Participants and all matters pertaining to the Agent's duties hereunder and
under any other Operative Document.

         (g) RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.

         (h) AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Participants agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Lessee for which the Agent is entitled to reimbursement by the
Lessee under the Operative Documents, (ii) for any other expenses incurred by
the Agent on behalf of the Participants, in connection with the preparation,
execution, delivery, administration and enforcement of the Operative Documents
(including, without limitation, for any expenses incurred by the Agent in
connection with any dispute between the Agent and any Participant or between two
or more of the Participants) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of the
Operative Documents or

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<PAGE>

any other document delivered in connection therewith or the transactions
contemplated thereby (including, without limitation, for any such amounts
incurred by or asserted against the Agent in connection with any dispute between
the Agent and any Participant or between two or more of the Participants), or
the enforcement of any of the terms of the Operative Documents or of any such
other documents, provided that no Participant shall be liable for any of the
foregoing to the extent any of the foregoing is found in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Agent. The obligations of the
Participants under this Section 21(h) shall survive payment of the Obligations
and termination of this Participation Agreement.

         (i) NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received written notice from a Participant or the Lessee referring
to this Agreement describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Participants.

         (j) RIGHTS AS A PARTICIPANT. In the event the Agent is a Participant,
the Agent shall have the same rights and powers hereunder and under any other
Operative Document with respect to its Commitment and its Loans as any
Participant and may exercise the same as though it were not the Agent, and the
term "Participant" or "Participants" shall, at any time when the Agent is a
Participant, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any other
Operative Document, with the Lessee or any of its Subsidiaries in which the
Lessee or such Subsidiary is not restricted hereby from engaging with any other
Person. The Agent, in its individual capacity, is not obligated to remain a
Participant.

         (k) PARTICIPANT CREDIT DECISION. Each Participant acknowledges that it
has, independently and without reliance upon the Agent, the Arranger or any
other Participant and based on the financial statements prepared by the Lessee
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Participation Agreement and
the other Operative Documents. Each Participant also acknowledges that it will,
independently and without reliance upon the Agent, the Arranger or any other
Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Participation Agreement and the other Operative
Documents.

         (l) SUCCESSOR AGENT. The Agent may resign at any time by giving written
notice thereof to the Participants and the Lessee, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign (subject, during the Construction Period, to the consent of
the Lessee unless a Lease Event of Default or Payment or Bankruptcy Default
shall have occurred and be continuing). The Agent may be removed at any time
with or without cause by written notice received by the Agent from the Required
Participants, such removal to be effective on the date specified by the Required
Participants. Upon any such resignation or removal, the Required Participants
shall have the right to appoint, on behalf of the Lessee and the Participants, a
successor Agent. If no successor Agent shall have been so appointed by the

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<PAGE>

Required Participants within thirty days after the resigning Agent's giving
notice of its intention to resign, then the resigning Agent may appoint, on
behalf of the Lessee and the Participants, a successor Agent. Notwithstanding
the previous sentence, the Agent may at any time without the consent of the
Lessee or any Participant, appoint any of its Affiliates which is a commercial
bank as a successor Agent hereunder. If the Agent has resigned or been removed
and no successor Agent has been appointed, the Participants may perform all the
duties of the Agent hereunder and the Lessee shall make all payments in respect
of the Obligations to the applicable Participant and for all other purposes
shall deal directly with the Participants. No successor Agent shall be deemed to
be appointed hereunder until such successor Agent has accepted the appointment.
Any such successor Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning or removed Agent. Upon the effectiveness of the resignation or
removal of the Agent, the resigning or removed Agent shall be discharged from
its duties and obligations hereunder and under the Operative Documents. After
the effectiveness of the resignation or removal of an Agent, the provisions of
this Section 21 shall continue in effect for the benefit of such Agent in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent hereunder and under the other Operative Documents. In the event that
there is a successor to the Agent by merger, or the Agent assigns its duties and
obligations to an Affiliate pursuant to this Section 21(l), then the term "Prime
Rate" as used in this Agreement shall mean the prime rate, base rate or other
analogous rate of the new Agent.

         (m) AGENT'S FEE. The Lessee agrees to pay to the Agent, for its own
account, the fees agreed to by the Lessee and the Agent pursuant to the Fee
Letter and the Agent's reasonable fees, costs and expenses for the performance
of Agent's obligations hereunder; provided, that during the Construction Period
such fees, costs and expenses shall be paid only out of proceeds of an Advance
in accordance with the Approved Budget and such amounts shall not, during the
Construction Period, represent direct recourse obligations of the Lessee.

         (n) DELEGATION TO AFFILIATES. The Lessee and the Participants agree
that the Agent may delegate any of its duties under this Participation Agreement
to any of its Affiliates. Any such Affiliate (and such Affiliate's directors,
officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification, waiver
and other protective provisions to which the Agent is entitled under Section 13
and 14.

         (o) EXECUTION OF COLLATERAL DOCUMENTS. The Participants hereby empower
and authorize the Agent to execute and deliver to the Lessee on their behalf any
security documents and all related financing statements and any financing
statements, agreements, documents or instruments as shall be necessary or
appropriate to effect the purposes of the Operative Documents.

         (p) COLLATERAL RELEASES. The Participants hereby empower and authorize
the Agent to execute and deliver to the Lessee on their behalf any agreements,
documents or instruments as shall be necessary or appropriate to effect any
releases of Collateral which shall be permitted by the terms hereof or of any
other Operative Document or which shall otherwise have been

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                                       72
<PAGE>

approved by the Required Participants (or, if required by the terms of Section
22(c), all of the Participants) in writing.

SECTION 22. LESSEE DIRECTIONS; REPLACEMENT OF PARTICIPANTS

         Each of the Participants, Lessor and Lessee hereby agree that, so long
as no Default or Event of Default exists:

         (a) Agent, with the approval of Lessee (acting reasonably), shall have
the right to replace any Certificate Holder or any Lender with respect to which
(i) the right to pay interest by reference to LIBO Rate shall be suspended under
Section 4(e), or (ii) there is or could be any claim to reimbursement or
compensation under Section 4;

         (b) Agent, with the approval of Lessee (acting reasonably), shall have
the right to replace any Certificate Holder or any Lender that breached its
obligations under Section 3 to fund a Certificate Amount or make a Loan.

         (c) Agent hereby grants Lessee the right to exercise any right of
Lessor under Section 22(b) upon not less than (3) Business Days' prior written
notice from Lessee to Certificate Trustee and the Agent, unless Agent objects to
such exercise within two (2) Business Days of receipt of such notice and Lessor
agrees in its notice of objection to comply with Section 22(b); provided that
notwithstanding the exercise of rights by the Lessee under this paragraph (c),
any new Certificate Holder nominated by the Lessee is subject to the reasonable
approval of the Agent.

SECTION 23. MISCELLANEOUS

         (a) COUNTERPART EXECUTION. This Participation Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

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

         (c) AMENDMENTS, SUPPLEMENTS, WAIVERS. Neither this Participation
Agreement nor any of the terms hereof may be amended, supplemented, waived or
modified orally, or terminated in any manner whatsoever except by written
instrument signed by the Lessee (if such action adversely affects the Lessee),
the Agent, majority (by Loan Balance) of the Lenders, majority (by Tranche A
Loan Balance) of the Tranche A Lenders (if such action adversely affects the
Tranche A Lenders), majority (by Tranche B Loan Balance) of the Tranche B
Lenders (if such action adversely affects the Tranche B Lenders), majority (by
Equity Amount) of the Certificate Holders (if such action adversely affects the
Certificate Holders) and the Owner

                                                         Participation Agreement

                                       73
<PAGE>

Trustee (if such action adversely affects the Owner Trustee) and Wilmington
Trust Company (if such action adversely affects Wilmington Trust Company);
provided, however, that the following actions may not be taken without the
consent of the applicable party:

                           (1) any action which will modify the timing or amount
                  of any payment to such party;

                           (2) any action which requires the consent of such
                  party in its sole discretion if such party has not provided
                  its consent (including, without limitation, consents under the
                  provisions of Section 13(f) above and any action that will
                  result in an increase in any party's maximum Commitment);

                           (3) any action which will modify any of the
                  provisions of this Section 23(c), change the definition of
                  "Required Participants" or modify or waive any provision of
                  any Operative Document requiring action by any of the
                  foregoing, or release any collateral (except as otherwise
                  specifically provided in any Operative Document);

                           (4) any action which will reduce, modify, amend or
                  waive any indemnities in favor of any Participant, the Agent
                  or the Owner Trustee;

                           (5) modify, amend, waive or supplement any of the
                  provisions of Sections 11, 12, 14, 15 or 16 of the Lease;

                           (6) consent to any assignment of the Lease or other
                  Operative Document releasing the Lessee or Parent Guarantor
                  from its obligations thereunder or changing the absolute and
                  unconditional character of such obligations;

                           (7) permit the creation of any Lien on the Platform,
                  the Property or any part thereof except as contemplated by the
                  Operative Documents, or deprive any Participant of the benefit
                  of the security interest and lien encumbering the Platform or
                  the Property.

Notwithstanding the foregoing, whether or not a Lease Event of Default shall
have occurred and be continuing, the parties hereto agree that no modification
to an Operative Document to which the Lessee is not a party will increase the
obligations of the Lessee or of the Construction Agent without the prior written
consent of the Lessee.

         (d) HEADINGS. The headings of the sections and paragraphs of this
Participation Agreement and the table of contents have been inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Participation Agreement.

         (e) BUSINESS DAY. If the date on which any payment is to be made
pursuant to this Participation Agreement or any other Operative Document is not
a Business Day, then (except as otherwise expressly provided herein of in any
other applicable Operative Document) the payment otherwise payable on such date
shall be payable on the next succeeding Business Day, and, except as may
otherwise be required by the Lease, without any additional amount accruing

                                                         Participation Agreement

                                       74
<PAGE>

with respect thereto, with the same force and effect as if made on the date when
such payment is due.

         (f) REPRODUCTION OF DOCUMENTS. This Participation Agreement, all
documents constituting exhibits hereto, and all documents relating hereto
received by a party hereto, including, without limitation, (a) consents, waivers
and modifications that may hereafter be executed, (b) documents received by
Certificate Holders in connection with Owner Trustee's purchase of the Property,
and (c) financial statements, certificates, and other information previously or
hereafter furnished to Certificate Holders or Owner Trustee may be reproduced by
the party receiving the same by any photographic, photostatic, microfilm or
other similar process. Each party hereto agrees and stipulates that, to the
extent permitted by law, any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not such reproduction was made by such party in the regular course of business)
and that, to the extent permitted by law, any enlargement, facsimile, or further
reproduction of such reproduction shall likewise be admissible in evidence.

         (g) OPINIONS. The parties to this Participation Agreement hereby
acknowledge that they have irrevocably instructed their respective counsel to
deliver to and for the benefit of the addressees thereof, the opinions of such
counsel referred to in and required by Section 9 and Section 13(f) of this
Participation Agreement.

         (h) SURVIVAL OF AGREEMENTS. All agreements, indemnities,
representations and warranties contained in this Participation Agreement or in
any agreement, document or certificate delivered pursuant hereto following or in
connection herewith shall survive the execution and delivery of this
Participation Agreement and the expiration or other termination of this
Participation Agreement

         (i) ENFORCEMENT. Any provision of this Participation Agreement which
may be determined by competent authority to be prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Applicable Law, the Lessee hereby
waives any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.

         (j) ENTIRE AGREEMENT. This Participation Agreement, together with the
other Operative Documents, represents the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes any and all prior
understandings.

         (k) CONFIDENTIALITY. Without limiting the provisions of Section 5(c),
the Agent and the Lessee each agree that the existence of the Operative
Documents (other than the Operative Documents which are intended by the parties
to be filed of record) and the terms and conditions hereof are confidential and
may not be disclosed by either party (the "DISCLOSING PARTY") to any third party
(expressly excluding the Participants, the Owner Trustee and any other party to
any of the Operative Documents), without the other party's prior written
consent, except to the extent that such disclosure (i) is required by law,
regulation, supervisory authority, or other applicable judicial or governmental
order, (ii) was or becomes generally available to the public other than as

                                                         Participation Agreement

                                       75
<PAGE>

a result of a disclosure by the Disclosing Party, (iii) is made in connection
with the services to be provided by the Agent pursuant to the Operative
Documents, (iv) is made on a confidential basis to either party's Subsidiaries
and Affiliates and, on a need to know basis, its and their respective attorneys,
accountants, consultants and tax or other advisors (collectively, "RELATED
PARTIES") or (v) is made on a confidential basis to any assignee or potential
assignee of a Lender or Certificate Holder.

                  (i) HIGHEST LAWFUL RATE. (i) It is the intention of the
         parties hereto to conform strictly to applicable usury laws and,
         anything herein to the contrary notwithstanding, the obligations of (x)
         Lessee to Certificate Holders under this Agreement and the Lease, (y)
         Owner Trustee to the Certificate Holders under the Trust Agreement and
         the Certificates and to the Lenders under the Loan Agreement and the
         Notes and (z) either Lessee, Lessor or Owner Trustee or any other party
         under any other Operative Documents, shall be subject to the limitation
         that payments of interest or of other amounts constituting interest
         under applicable law shall not be required to the extent that receipt
         thereof would be in excess of the Highest Lawful Rate (as defined
         below), or otherwise contrary to provisions of law applicable to the
         recipient limiting rates of interest which may be charged or collected
         by the recipient. Accordingly, if the transactions or the amount paid
         or otherwise agreed to be paid for the use, forbearance or detention of
         money under this Participation Agreement, the Lease, the Trust
         Agreement, the Certificates, the Loan Agreement, the Notes or any other
         Operative Document would exceed the Highest Lawful Rate or otherwise be
         usurious under Applicable Law (including without limitation the federal
         and state laws of the United States of America, or of any other
         jurisdiction whose laws may be mandatorily applicable) with respect to
         the recipient of any such amount, then, in the event, notwithstanding
         anything to the contrary in this Participation Agreement, the Lease,
         the Trust Agreement, the Certificates, the Loan Agreement, the Notes or
         any other Operative Document, it is agreed at followings as to the
         recipient of any such amount:

                  (ii) the provisions of this Section 23(l) shall govern and
         control over any other provision in this Participation Agreement, the
         Lease, the Trust Agreement, the Certificates, the Loan Agreement, the
         Notes or any other Operative Document and each provision set forth
         therein is hereby so limited;

                  (iii) the aggregate of all consideration which constitutes
         interest under Applicable Law that is contracted for, charged or
         received under this Participation Agreement, the Lease, the Trust
         Agreement, the Certificates, the Loan Agreement, the Notes or any other
         Operative Documents shall under no circumstances exceed the maximum
         amount of interest allowed by Applicable Law (such maximum lawful
         interest rate, if any, with respect to such recipient herein called the
         "HIGHEST LAWFUL RATE"), and all amounts owed under this Participation
         Agreement, the Lease, the Trust Agreement, the Certificates, the Loan
         Agreement, the Notes or any other Operative Document shall be held
         subject to reduction and (i) the amount of interest which would
         otherwise be payable to the recipient hereunder and under the Lease,
         the Trust Agreements, the Certificates, the Loan Agreement, the Notes
         and any other Operative Documents, shall be automatically reduced to
         the amount allowed under Applicable Law and (ii) any unearned

                                                         Participation Agreement

                                       76
<PAGE>

         interest paid in excess of the Highest Lawful Rate shall be credited to
         the payor by the recipient (or, if such consideration shall have been
         paid in full, refunded to the payor);

                  (iv) all sums paid, or agreed to be paid for the use,
         forbearance and detention of the money under this Participation
         Agreement, the Lease, the Trust Agreement, the Certificates, the Loan
         Agreement, the Notes or any other Operative Documents shall, to the
         extent permitted by Applicable Law, be amortized, prorated, allocated
         and spread throughout the full term of such indebtedness until payment
         in fill so that the actual rate of interest is uniform throughout the
         full term thereof;

                  (v) if at any time the interest, together with any fees, late
         charges and other sums payable pursuant to or in connection with this
         Participation Agreement, the Lease, the Trust Agreement, the
         Certificates, the Loan Agreement, the Notes or any other Operative
         Document, and deemed interest under Applicable Law, exceeds that amount
         which would have accrued at the Highest Lawful Rate, the amount of
         interest any such fees, charges and sums to accrue to the recipient of
         such interest, fees, charges and sums pursuant to the Operative
         Documents shall be limited, notwithstanding anything to the contrary in
         the Operative Documents to that amount which would have accrued at the
         Highest Lawful Rate for the recipient, but any subsequent reductions,
         as applicable, shall not reduce the interest to accrue pursuant to the
         Operative Documents below the recipient's Highest Lawful Rate until the
         total amount of interest payable to the recipient (including all
         considerations which constitute interest) equals the amount of interest
         which would have been payable to the recipient (including all
         consideration which constitutes interest) plus the amount of fees which
         would have been received but for the effect of this Section 23(l).

         (l) ACCOUNTING CHANGES. Although neither Lessor, the Agent, any
Certificate Holder, nor any Lender makes any representation or warranty with
respect to the Lessee's accounting treatment of this transaction, in the event
that Lessee shall determine that any change in the applicable rules and
interpretations of the Financial Accounting Standards Board and/or the
Securities Exchange Commission (the "LEASE ACCOUNTING RULES") will preclude the
Lessee (or raise a substantial question as to whether the Lessee is precluded)
from continuing to account for this Lease as an operating lease with
substantially the same financial accounting benefits as before the change in
Lease Accounting Rules, then the Lessee shall so notify the Lessor and the Agent
in writing of such determination; and (i) Lessee may attempt to renegotiate the
structure of the transaction contemplated by the Operative Documents (provided
that nothing contained in this Section 23(m) shall require any Person to agree
to any new structure); or (ii) Lessee may elect (by delivery of irrevocable
written notice of such election to the Lessor and the Agent) to purchase all of
the Property or to cause all of the Property to be transferred to a third party
transferee designated by Lessee (such purchase or transfer to be consummated on
a date (the "ACCOUNTING CHANGE TRANSFER DATE") specified by Lessee in such
notice and in any event within sixty (60) days after the date of such notice).
On the Accounting Change Transfer Date (whether the Property is to be purchased
by Lessee or transferred to a third party), Lessee shall pay or cause to be paid
to Lessor an amount equal to the Property Balance. Upon receipt of such amount,
Lessor shall transfer to Lessee (or to the third party designated by Lessee) all
of Lessor's right, title and interest in and to the Property in accordance with
the Transfer Protocol and the Expiration Date shall be deemed to have occurred
on the date of such transfer.

                                                         Participation Agreement

                                       77
<PAGE>

SECTION 24. PARTIAL PURCHASE OPTION. Notwithstanding any other provision to the
contrary contained in the Operative Documents and subject to the fulfillment of
each of the conditions set forth in Section 24(a) below, Lessee shall have the
one (1) time option (the "Partial Purchase Option") to cause to be purchased by
a third party purchaser which is not an Affiliate of the Lessee (the "Partial
Option Purchaser") up to (but not more than) 50% of the Property for an amount
equal to the portion (expressed as a percentage of the Property) (the "Partial
Option Percentage") of the Property that Lessee has elected to purchase pursuant
to the Partial Purchase Option (the "Partial Option Property") multiplied by the
Property Balance as of Partial Option Closing Date (the "Partial Option Purchase
Price").

         (a) The Lessee's effective exercise and consummation of the Partial
Purchase Option shall be subject to the due and timely fulfillment of each of
the following conditions:

                  (i) The Lessee shall provide the Agent with a written notice
         of its election to exercise the Partial Purchase Option which notice
         shall specify (x) the date (the "Partial Option Closing Date") upon
         which the Partial Purchase Option is expected to be consummated (the
         "Partial Option Closing"); (y) the identity of the Partial Option
         Purchaser; and (z) the Partial Option Property; provided, that (i) the
         Partial Purchase Option must be consummated prior to the date that is
         365 days prior to the Lease Termination Date; and (ii) the Partial
         Option Closing Date shall not be less than thirty (30) days nor more
         than ninety (90) days after the date that Agent receives Lessee's
         written notice of its election to exercise the Partial Purchase Option;

                  (ii) No Event of Default or Default shall exist on the date of
         the exercise of the Partial Purchase Option, and no Default or Event of
         Default shall exist at any time between the date of such exercise and
         the Partial Option Closing;

                  (iii) The Lessee shall have provided to the Agent a true,
         correct and complete copy of the agreement of purchase and sale (the
         "Partial Option Purchase Agreement"), pursuant to which Lessee has
         agreed to cause to be sold to the Partial Option Purchaser and such
         Partial Option Purchaser has agreed to purchase, the Partial Option
         Property;

                  (iv) The Lessee shall have provided the Agent with evidence
         that Kerr-McGee and Nexen Petroleum Offshore U.S.A., Inc. have each
         consented to (i) the Partial Option Purchase Agreement and the
         transaction contemplated by the Partial Option Purchase Agreement and
         (ii) the admission of the Partial Option Purchaser as a party to the
         Joint Operating Agreement;

                  (v) The Lessee shall have paid or caused to be paid to the
         Agent (for distribution pursuant to Section 5(d)(xi)), out of Lessee's
         or the Partial Option Purchaser's funds (and not from Advances), the
         sum of (x) the Partial Option Purchase Price, (y) all Excluded Amounts
         and (z) all costs and expenses incurred by the Agent, the Lessor, the
         Owner Trustee and the Participants in connection with the Partial
         Option Closing and the preparation, execution and delivery of the
         documents evidencing Partial Purchase Option transaction (including the
         matters described in Section 24(a)(vi) and Section 24(b), including,
         all reasonable attorneys' fees and expenses incurred in connection with
         such transaction; and

                                                         Participation Agreement

                                       78
<PAGE>

                  (vi) The Lessee shall have provided the Agent with such other
         documents, instruments, information, agreements, consents, opinions of
         counsel and assurances, including, without limitation, any amendments
         to the Joint Operating Agreement or any of the Construction Documents,
         as may from time to time be reasonably requested by the Agent in
         connection with the Partial Purchase Option.

         (b) Subject to the satisfaction of each of the conditions set forth in
Section 24(a), at the Closing, the Lessor shall transfer to the Partial Option
Purchaser by a quitclaim bill of sale, all of the Lessor's right, title and
interest in and to the Partial Option Property on an "as is" "where is" and
"with all faults" basis, without representation or warranty. Lessor and the
Agent, as appropriate, shall also execute and deliver any appropriate and
required partial releases of the Liens of (v) the Assignment of Leases and
Rents, (w) the Lender Mortgage, (x) the Memorandum of Lease, (y) related UCC
Financing Statements and (z) such other Operative Documents as Lessee shall
reasonably require. Each of the foregoing documents and instruments shall be
acceptable, in form and substance, to the Lessor and the Agent.

         (c) Lessee acknowledges and agrees that if for any reason the Partial
Purchase Option Closing is not consummated on the Partial Option Closing Date
then, the portion of the Property Balance equal to the Partial Option Purchase
Price will accrue interest or Yield, as the case may be, at the Alternate Base
Rate until such time as Lessee elects or is otherwise able to convert such rate
of interest or Yield to the LIBO Rate pursuant to the Operative Documents.

SECTION 25. SALE OF WORKING INTEREST. Lessee covenants and agrees that it shall
not directly or indirectly sell, convey, assign, transfer, encumber, or alienate
all or any portion of its Working Interest (as defined in the Joint Operating
Agreement); provided, that: (a) Lessee may sell a portion of its Working
Interest to the Partial Option Purchaser in conjunction with the consummation of
the Partial Purchase Option under Section 24 of this Participation Agreement (it
being understood and agreed that Lessee shall only be entitled to sell to the
Partial Option Purchaser a percentage of its Working Interest that is equal to
and in the same proportion as the Partial Option Percentage); and (b) Lessee may
sell its Working Interest contemporaneously with its purchase of the Property
pursuant to Section 6(e) of the Lease.

                            [SIGNATURE PAGE FOLLOWS]

                                                         Participation Agreement

                                       79
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have each caused this
Participation Agreement to be duly executed by their respective officers
hereunto duly authorized as of the date first above written.

                                       ENERGY RESOURCE TECHNOLOGY, INC., a
                                       Delaware corporation, as Lessee,
                                       Construction Agent and Guarantor

                                       BY:
                                          --------------------------------------
                                       NAME:
                                            ------------------------------------
                                       TITLE:
                                             -----------------------------------

                                       CAL DIVE INTERNATIONAL, INC., a Minnesota
                                       corporation, as Parent Guarantor

                                       BY:
                                          --------------------------------------
                                       NAME:
                                            ------------------------------------
                                       TITLE:
                                             -----------------------------------

                                                         Participation Agreement

<PAGE>

                                       CAL DIVE/GUNNISON BUSINESS TRUST NO.
                                       2001-1-1, a Delaware business trust, as
                                       Lessor and Owner Trustee

                                       BY:
                                          --------------------------------------
                                       NAME:
                                            ------------------------------------
                                       TITLE:
                                             -----------------------------------

                                       Wilmington Trust Company, not in its
                                       individual capacity, but solely as
                                       trustee of CAL DIVE/GUNNISON Business
                                       Trust No. 2001-1-1

                                       BY:
                                          --------------------------------------
                                       NAME:
                                            ------------------------------------
                                       TITLE:
                                             -----------------------------------

                                       WILMINGTON TRUST COMPANY, a Delaware
                                       banking corporation, not in its
                                       individual capacity, except to the extent
                                       expressly provided herein, but solely as
                                       Owner Trustee

                                       BY:
                                          --------------------------------------
                                       NAME:
                                            ------------------------------------
                                       TITLE:
                                             -----------------------------------

                                                         Participation Agreement

<PAGE>

                                       BANK ONE, NA, as a Lender and as Agent
                                       for the Lenders

                                       BY:
                                          --------------------------------------
                                                 Ken Fatur
                                                 Director, Capital Markets

                                       BANC ONE LEASING SERVICES CORP., as a
                                       Certificate Holder

                                       BY:
                                          --------------------------------------
                                                 William Lacy
                                                 President

                                                         Participation Agreement

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