Document:

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                                                                  Exhibit 10(iv)

                                KCS Energy, Inc.

                          Savings and Investment Plan
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                             BASIC PLAN DOCUMENT 04
                               TABLE OF CONTENTS

SECTION ONE DEFINITIONS........................................................1
   1.01 ADOPTION AGREEMENT.....................................................1
   1.02 BASIC PLAN DOCUMENT....................................................1
   1.03 BENEFICIARY............................................................1
   1.04 BREAK IN ELIGIBILITY SERVICE...........................................1
   1.05 BREAK IN VESTING SERVICE...............................................1
   1.06 CODE...................................................................1
   1.07 COMPENSATION...........................................................1
   1.08 CUSTODIAN..............................................................3
   1.09 DISABILITY.............................................................3
   1.10 EARLY RETIREMENT AGE...................................................3
   1.11 EARNED INCOME..........................................................3
   1.12 EFFECTIVE DATE.........................................................3
   1.13 ELIGIBILITY COMPUTATION PERIOD.........................................3
   1.14 EMPLOYEE...............................................................3
   1.15 EMPLOYER...............................................................3
   1.16 EMPLOYER CONTRIBUTION..................................................3
   1.17 EMPLOYMENT COMMENCEMENT DATE...........................................3
   1.18 EMPLOYER PROFIT SHARING CONTRIBUTION...................................3
   1.19 ENTRY DATES............................................................4
   1.20 ERISA..................................................................4
   1.21 FORFEITURE.............................................................4
   1.22 FUND...................................................................4
   1.23 HIGHLY COMPENSATED EMPLOYEE............................................4
   1.24 HOURS OF SERVICE-Means.................................................4
   1.25 INDIVIDUAL ACCOUNT.....................................................5
   1.26 INVESTMENT FUND........................................................5
   1.27 KEY EMPLOYEE...........................................................5
   1.28 LEASED EMPLOYEE........................................................5
   1.29 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS...................................5
   1.30 NORMAL RETIREMENT AGE..................................................6
   1.31 OWNER-EMPLOYEE.........................................................6
   1.32 PARTICIPANT............................................................6
   1.33 PLAN...................................................................6
   1.34 PLAN ADMINISTRATOR.....................................................6
   1.35 PLAN YEAR..............................................................6
   1.36 PRIOR PLAN.............................................................6
   1.37 PROTOTYPE SPONSOR......................................................6
   1.38 QUALIFYING PARTICIPANT.................................................6
   1.39 RELATED EMPLOYER.......................................................6
   1.40 RELATED EMPLOYER PARTICIPATION AGREEMENT...............................6
   1.41 SELF-EMPLOYED INDIVIDUAL...............................................6
   1.42 SEPARATE FUND..........................................................6
   1.43 TAXABLE WAGE BASE......................................................6
   1.44 TERMINATION OF EMPLOYMENT..............................................6

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<S>                                                                                          <C>

     1.45 TOP-HEAVY PLAN.......................................................................7
     1.46 TRUSTEE..............................................................................7
     1.47 VALUATION DATE.......................................................................7
     1.48 VESTED...............................................................................7
     1.49 YEAR OF ELIGIBILITY SERVICE..........................................................7
     1.50 YEAR OF VESTING SERVICE..............................................................7
SECTION TWO ELIGIBILITY AND PARTICIPATION......................................................7
     2.01 ELIGIBILITY TO PARTICIPATE...........................................................7
     2.02 PLAN ENTRY...........................................................................7
     2.03 TRANSFER TO OR FROM INELIGIBLE CLASS.................................................8
     2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE...........................8
     2.05 DETERMINATIONS UNDER THIS SECTION....................................................8
     2.06 TERMS OF EMPLOYMENT..................................................................8
     2.07 SPECIAL RULES WHERE ELAPSED TIME METHOD IS BEING USED................................8
     2.08 ELECTION NOT TO PARTICIPATE..........................................................9
SECTION THREE CONTRIBUTIONS....................................................................9
     3.01 EMPLOYER CONTRIBUTIONS...............................................................9
     3.02 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS................................................12
     3.03 ROLLOVER CONTRIBUTIONS..............................................................12
     3.04 TRANSFER CONTRIBUTIONS..............................................................12
     3.05 LIMITATION ON ALLOCATIONS...........................................................12
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION................................16
     4.01 INDIVIDUAL ACCOUNTS.................................................................16
     4.02 VALUATION OF FUND...................................................................16
     4.03 VALUATION OF INDIVIDUAL ACCOUNTS....................................................16
     4.04 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS..............................18
     4.05 SEGREGATION OF ASSETS...............................................................18
     4.06 STATEMENT OF INDIVIDUAL ACCOUNTS....................................................18
SECTION FIVE TRUSTEE OR CUSTODIAN.............................................................18
     5.01 CREATION OF FUND....................................................................18
     5.02 INVESTMENT AUTHORITY................................................................18
     5.03 FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST POWERS...............18
     5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND INDIVIDUAL TRUSTEE........19
     5.05 DIVISION OF FUND INTO INVESTMENT FUNDS..............................................20
     5.06 COMPENSATION AND EXPENSES...........................................................20
     5.07 NOT OBLIGATED TO QUESTION DATA......................................................21
     5.08 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS..........................................21
     5.09 RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)....................................21
     5.10 DEGREE OF CARE-LIMITATIONS OF LIABILITY.............................................21
     5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR CUSTODIAN).....................22
     5.12 INVESTMENT MANAGERS.................................................................22
     5.13 MATTERS RELATING TO INSURANCE.......................................................22
     5.14 DIRECTION OF INVESTMENTS BY PARTICIPANT.............................................23
SECTION SIX VESTING AND DISTRIBUTION..........................................................23
     6.01 DISTRIBUTION TO PARTICIPANT.........................................................23
     6.02 FORM OF DISTRIBUTION TO A PARTICIPANT...............................................26
     6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT.......................................27
     6.04 FORM OF DISTRIBUTION TO BENEFICIARY.................................................28
     6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS.............................................28
     6.06 DISTRIBUTION REQUIREMENTS...........................................................31

</Table>
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6.07 ANNUITY CONTRACTS........................................................................ 35
6.08 LOANS TO PARTICIPANTS.................................................................... 35
6.09 DISTRIBUTION IN KIND..................................................................... 36
6.10 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS...................................... 36
6.11 PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES...................................... 36
SECTION SEVEN CLAIMS PROCEDURE................................................................ 36
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS.................................................... 36
7.02 DENIAL OF CLAIM.......................................................................... 37
7.03 REMEDIES AVAILABLE....................................................................... 37
SECTION EIGHT PLAN ADMINISTRATOR.............................................................. 37
8.01 EMPLOYER IS PLAN ADMINISTRATOR........................................................... 37
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR.............................................. 37
8.03 EXPENSES AND COMPENSATION................................................................ 38
8.04 INFORMATION FROM EMPLOYER................................................................ 38
SECTION NINE AMENDMENT AND TERMINATION........................................................ 38
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN............................................. 38
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN...................................................... 38
9.03 LIMITATION ON POWER TO AMEND............................................................. 39
9.04 AMENDMENT OF VESTING SCHEDULE............................................................ 39
9.05 PERMANENCY............................................................................... 39
9.06 METHOD AND PROCEDURE FOR TERMINATION..................................................... 39
9.07 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER................................................ 39
9.08 FAILURE OF PLAN QUALIFICATION............................................................ 39
SECTION TEN MISCELLANEOUS..................................................................... 40
10.01 STATE COMMUNITY PROPERTY LAWS........................................................... 40
10.02 HEADINGS................................................................................ 40
10.03 GENDER AND NUMBER....................................................................... 40
10.04 PLAN MERGER OR CONSOLIDATION............................................................ 40
10.05 STANDARD OF FIDUCIARY CONDUCT........................................................... 40
10.06 GENERAL UNDERTAKING OF ALL PARTIES...................................................... 40
10.07 AGREEMENT BINDS HEIRS, ETC.............................................................. 40
10.08 DETERMINATION OF TOP-HEAVY STATUS....................................................... 40
10.09 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES................................................. 42
10.10 INALIENABILITY OF BENEFITS.............................................................. 42
10.11 CANNOT ELIMINATE PROTECTED BENEFITS..................................................... 42
SECTION ELEVEN 401(K) PROVISIONS.............................................................. 43
11.100 DEFINITIONS............................................................................ 43
11.101 ACTUAL DEFERRAL PERCENTAGE (ADP)....................................................... 43
11.102 AGGREGATE LIMIT........................................................................ 43
11.103 AVERAGE CONTRIBUTION PERCENTAGE (ACP).................................................. 43
11.104 CONTRIBUTING PARTICIPANT............................................................... 43
11.105 CONTRIBUTION PERCENTAGE................................................................ 43
11.106 CONTRIBUTION PERCENTAGE AMOUNTS........................................................ 43
11.107 ELECTIVE DEFERRALS..................................................................... 43
11.108 ELIGIBLE PARTICIPANT................................................................... 44
11.109 EXCESS AGGREGATE CONTRIBUTIONS......................................................... 44
11.110 EXCESS CONTRIBUTIONS................................................................... 44
11.111 EXCESS ELECTIVE DEFERRALS.............................................................. 44
11.112 MATCHING CONTRIBUTION.................................................................. 44
11.113 QUALIFIED NONELECTIVE CONTRIBUTIONS.................................................... 44
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<S>       <C>                                                                             <C>
11.114    QUALIFIED MATCHING CONTRIBUTIONS................................................44
11.115    QUALIFYING CONTRIBUTING PARTICIPANT.............................................45
11.200    CONTRIBUTING PARTICIPANT........................................................45
11.201    REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT............................45
11.202    CHANGING ELECTIVE DEFERRAL AMOUNTS..............................................45
11.203    CEASING ELECTIVE DEFERRALS......................................................45
11.204    RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE DEFERRALS...........45
11.205    CERTAIN ONE-TIME IRREVOCABLE ELECTIONS..........................................45
11.300    CONTRIBUTIONS...................................................................45
11.301    CONTRIBUTIONS BY EMPLOYER.......................................................45
11.302    MATCHING CONTRIBUTIONS..........................................................45
11.303    QUALIFIED NONELECTIVE CONTRIBUTIONS.............................................46
11.304    QUALIFIED MATCHING CONTRIBUTIONS................................................46
11.305    NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS............................................46
11.400    NONDISCRIMINATION TESTING.......................................................46
11.401    ACTUAL DEFERRAL PERCENTAGE TEST (ADP)...........................................46
11.402    LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS.......47
11.500    DISTRIBUTION PROVISIONS.........................................................48
11.501    GENERAL RULE....................................................................48
11.502    DISTRIBUTION REQUIREMENTS.......................................................48
11.503    HARDSHIP DISTRIBUTION...........................................................49
11.504    DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS.......................................49
11.505    DISTRIBUTION OF EXCESS CONTRIBUTIONS............................................50
11.506    DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS..................................50
11.507    RECHARACTERIZATION..............................................................51
11.508    DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS...................51
11.600    VESTING.........................................................................51
11.601    100% VESTING ON CERTAIN CONTRIBUTIONS...........................................51
11.602    FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS...............................51
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QUALIFIED RETIREMENT PLAN AND TRUST
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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SECTION ONE    DEFINITIONS
               The following words and phrases when used in the Plan with
               initial capital letters shall, for the purpose of this Plan, have
               the meanings set forth below unless the context indicates that
               other meanings are intended:

       1.01    ADOPTION AGREEMENT
               Means the document executed by the Employer through which it
               adopts the Plan and Trust and thereby agrees to be bound by all
               terms and conditions of the Plan and Trust.

       1.02    BASIC PLAN DOCUMENT
               Means this prototype Plan and Trust document.

       1.03    BENEFICIARY
               Means the individual or individuals designated pursuant to
               Section 6.03(A) of the Plan.

       1.04    BREAK IN ELIGIBILITY SERVICE
               Means a 12 consecutive month period which coincides with an
               Eligibility Computation Period during which an Employee fails to
               complete more than 500 Hours of Service (or such lesser number of
               Hours of Service specified in the Adoption Agreement for this
               purpose).

       1.05    BREAK IN VESTING SERVICE
               Means a Plan Year (or other vesting computation period described
               in Section 1.50) during which an Employee fails to complete more
               than 500 Hours of Service (or such lesser number of Hours of
               Service specified in the Adoption Agreement for this purpose).

       1.06    CODE
               Means the Internal Revenue Code of 1986 as amended from
               time-to-time.

       1.07    COMPENSATION

               A.   Basic Definition
                    For Plan Years beginning on or after January 1, 1989, the
                    following definition of Compensation shall apply:

                    As elected by the Employer in the Adoption Agreement (and if
                    no election is made, W-2 wages will be deemed to have been
                    selected). Compensation shall mean one of the following:

                    1.   W-2 wages. Compensation is defined as information
                         required to be reported under Section 6041 and 6051,
                         and 6052 of the Code (Wages, tips and other
                         compensation as reported on Form W-2). Compensation is
                         defined as wages within the meaning of Section 3401(a)
                         of the Code and all other payments of compensation to
                         an Employee by the Employer (in the course of the
                         Employer's trade or business) for which the Employer is
                         required to furnish the Employee a written statement
                         under Section 6041(d) and 6051(a)(3), and 6052 of the
                         Code. Compensation must be determined without regard to
                         any rules under Section 3401(a) that limit the
                         remuneration included in wages based on the nature or
                         location of the employment or the services performed
                         (such as the exception for agricultural labor in
                         Section 3401(a)(2)).

                    2.   Section 3401(a) wages. Compensation is defined as wages
                         within the meaning of Section 3401(a) of the Code, for
                         the purposes of income tax withholding at the source
                         but determined without regard to any rules that limit
                         the remuneration included in wages based on the nature
                         or location of the employment or the services performed
                         (such as the exception for agricultural labor in
                         Section 3401(a)(2)).

                    3.   415 safe-harbor compensation. Compensation is defined
                         as wages, salaries, and fees for professional services
                         and other amounts received (without regard to whether
                         or not an amount is paid in cash) for personal services
                         actually rendered in the course of employment with the
                         Employer maintaining the Plan to the extent that the
                         amounts are includible in gross income (including, but
                         not limited to, commissions paid salesmen, compensation
                         for services on the basis of a percentage of profits,
                         commissions on insurance premiums, tips, bonuses,
                         fringe benefits, and reimbursements or other expense
                         allowances under a nonaccountable plan (as described in
                         1.62-2(c)), and excluding the following:

                                       1
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          a.   Employer contributions to a plan of deferred compensation which
               are not includible in the Employee's gross income for the
               taxable year in which contributed, or employer contributions
               under a simplified employee pension plan to the extent such
               contributions are deductible by the Employee, or any
               distributions from a plan of deferred compensation;

          b.   Amounts realized from the exercise of a nonqualified stock
               option, or when restricted stock (or property) held by the
               Employee either becomes freely transferable or is no longer
               subject to a substantial risk of forfeiture;

          c.   Amounts realized from the sale, exchange or other disposition of
               stock acquired under a qualified stock option; and

          d.   Other amounts which received special tax benefits, or
               contributions made by the Employee (whether or not under a salary
               reduction agreement) towards the purchase of an annuity contract
               described in Section 403(b) of the Code (whether or not the
               contributions are actually excludable from the gross income of
               the Employee).

     For any Self-Employed Individual covered under the Plan, Compensation will
     mean Earned Income

B.   Determination Period And Other Rules
     Compensation shall include only that Compensation which is actually paid to
     the Participant during the determination period. Except as provided
     elsewhere in this Plan, the determination period shall be the Plan Year
     unless the Employer has selected another period in the Adoption Agreement.
     If the Employer makes no election, the determination period shall be the
     Plan Year.

     Unless otherwise indicated in the Adoption Agreement, Compensation shall
     include any amount which is contributed by the Employer pursuant to a
     salary reduction agreement and which is not includible in the gross income
     of the Employee under Sections 125, 402(e)(3), 402(1)(B) or 403(b) of the
     Code.

     Where this Plan is being adopted as an amendment and restatement to bring a
     Prior Plan into compliance with the Tax Reform Act of 1986, such Prior
     Plan's definition of Compensation shall apply for Plan Years beginning
     before January 1, 1989.

C.   Limits On Compensation
     For years beginning after December 31, 1988 and before January 1, 1994, the
     annual Compensation of each Participant taken into account for determining
     all benefits provided under the Plan for any determination period shall not
     exceed $200,000. This limitation shall be adjusted by the Secretary at the
     same time and in the same manner as under Section 415(d) of the Code,
     except that the dollar increase in effect on January 1 of any calender year
     is effective for Plan Years beginning in such calender year and the first
     adjustment to the $200,000 limitation is effective on January 1, 1990.

     For Plan Years beginning on or after January 1, 1994, the annual
     Compensation of each Participant taken into account for determining all
     benefits provided under the Plan for any Plan Year shall not exceed
     $150,000, as adjusted for increases in the cost-of-living in accordance
     with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
     adjustment in effect for a calendar year applies to any determination
     period beginning in such calender year.

     If the period for determining Compensation used in calculating an
     Employee's allocation for a determination period is a short Plan Year
     (i.e., shorter than 12 months), the annual Compensation limit is an amount
     equal to the otherwise applicable annual Compensation limit multiplied by a
     fraction, the numerator of which is the number of months in the short Plan
     Year, and the denominator of which is 12.

     In determining the Compensation of a Participant for purposes of this
     limitation, the rules of Section 414(q)(6) of the Code shall apply, except
     in applying such rules, the term "family" shall include only the spouse of
     the Participant and any lineal descendants of the Participant who have not
     atained age 19 before the close of the year. If, as a result of the
     application of such rules the adjusted $200,000 limitation is exceeded,
     then (except for purposes of determining the portion of Compensation up to
     the integration level, if this Plan provides for permitted disparity). the
     limitation shall be prorated among the affected individuals in proportion
     to each such individual's Compensation as determined under this Section
     prior to the application of this limitation.

     If Compensation for any prior determination period is taken into account
     in determining an Employee's allocations or benefits for the current
     determination period, the Compensation for such prior determination period
     is subject to the applicable annual Compensation limit in effect for that
     prior period. For this purpose, in determining allocations in Plan Years
     beginning on or after January 1, 1989, the annual Compensation limit in
     effect for determination periods beginning before that date is $200,000. In
     addition, in determining allocations in Plan Years beginning on or after
     January 1, 1994, the annual Compensation limit in effect for determination
     periods beginning before that date is $150,000.

                                      -2-
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1.08      CUSTODIAN
          Means an enity specified in the Adoption Agreement as Custodian or any
          duly appointed successor as provided in Section 5.09.

1.09      DISABILITY
          Unless the Employer has elected a different definition in the Adoption
          Agreement, Disability means the inability to engage in any
          substantial, gainful activity by reason of any medically determinable
          physical or mental impairment that can be expected to result in death
          or which has lasted or can be expected to last for a continuous period
          of not less than 12 months. The permanence and degree of such
          impairment shall be supported by medical evidence.

1.10      EARLY RETIREMENT AGE
          Means the age specified in the Adoption Agreement. The Plan will not
          have an Early Retirement Age if none is specified in the Adoption
          Agreement.

1.11      EARNED INCOME
          Means the net earnings from self-employment in the trade or business
          with respect to which the Plan is established, for which personal
          services of the individual are a material income-producing factor. Net
          earnings will be determined without regard to items not included in
          gross income and the deductions allocable to such items. Net earnings
          are reduced by contributions by the Employer to a qualified plan to
          the extent deductible under Section 404 of the Code.

          Net earnings shall be determined with regard to the deduction allowed
          to the Employer by Section 164(f) of the Code for taxable years
          beginning after December 31, 1989.

1.12      EFFECTIVE DATE
          Means the date the Plan becomes effective as indicated in the Adoption
          Agreement. However, as indicated in the Adoption Agreement, certain
          provisions may have specific effective dates. Further, where a
          separate date is stated in the Plan as of which a particular Plan
          provision becomes effective, such date will control with respect to
          that provision.

1.13      ELIGIBILITY COMPUTATION PERIOD
          An Employee's initial Eligibility Computation Period shall be the 12
          consecutive month period commencing on the Employee's Employment
          Commencement Date. The Employee's subsequent Eligibility Computation
          Periods shall be the 12 consecutive month periods commencing on the
          anniversaries of his or her Employment Commencement Date; provided,
          however, if pursuant to the Adoption Agreement, an Employee is
          required to complete one or less Years of Eligibility Service to
          become a Participant, then his or her subsequent Eligibility
          Computation Periods shall be the Plan Years commencing with the Plan
          Year beginning during his or her initial Eligibility Computation
          Period. An Employee does not complete a Year of Eligibility Service
          before the end of the 12 consecutive month period regardless of when
          during such period the Employee completes the required number of Hours
          of Service.

1.14      EMPLOYEE
          Means any person employed by an Employer maintaining the Plan or of
          any other employer required to be aggregated with such Employer under
          Sections 414(b), (c), (m) or (o) of the Code.

          The term Employee shall also include any Leased Employee deemed to be
          an Employee of any Employer described in the previous paragraph as
          provided in Section 414(n) or (o) of the Code.

1.15      EMPLOYER
          Means any corporation, partnership, sole-proprietorship or other
          entity named in the Adoption Agreement and any successor who by
          merger, consolidation, purchase or otherwise assumes the obligations
          of the Plan. A partnership is considered to be the Employer of each of
          the partners and a sole-proprietorship is considered to be the
          Employer of a sole proprietor. Where this Plan is being maintained by
          a union or other entity that represents its member Employees in the
          negotiation of collective bargaining agreements, the term Employer
          shall mean such union or other entity.

1.16      EMPLOYER CONTRIBUTION
          Means the amount contributed by the Employer each year as determined
          under this Plan.

1.17      EMPLOYMENT COMMENCEMENT DATE
          An Employee's Employment Commencement date means the date the
          Employee first performs an Hour of Service for the Employer.

1.18      EMPLOYER PROFIT SHARING CONTRIBUTION
          Means an Employer Contribution made pursuant to the Section of the
          Adoption Agreement titled "Employer Profit Sharing Contributions." The
          Employer may make Employer Profit Sharing Contributions without regard
          to current or accumulated earnings or profits.

                                      -3-

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1.19      ENTRY DATES
          Means the first day of the Plan Year and the first day of
          the seventh month of the Plan Year, unless the Employer has specified
          different dates in the Adoption Agreement.

1.20      ERISA
          Means the Employee Retirement Income Security Act of 1974 as amended
          from time-to-time.

1.21      FORFEITURE
          Means that portion of a Participant's Individual Account derived from
          Employer Contributions which he or she is not entitled to receive
          (i.e., the nonvested portion).

1.22      FUND
          Means the Plan assets held by the Trustee for the Participants'
          exclusive benefit.

1.23      HIGHLY COMPENSATED EMPLOYEE
          The term Highly Compensated Employee includes highly compensated
          active employees and highly compensated former employees.

          A highly compensated active employee includes any Employee who
          performs service for the Employer during the determination year and
          who, during the look-back year: (a) received Compensation from the
          Employer in excess of $75,000 (as adjusted pursuant to Section 415(d)
          of the Code); (b) received Compensation from the Employer in excess
          of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and
          was a member of the top-paid group for such year; or (c) was an
          officer of the Employer and received Compensation during such year
          that is greater than 50% of the dollar limitation in effect under
          Section 415(b)(I)(A) of the Code. The term Highly Compensated
          Employee also includes: (a) Employees who are both described in the
          preceding sentence if the term "determination year" is substituted
          for the term "look-back year" and the Employee is one of the 100
          Employees who received the most Compensation from the Employer during
          the determination year; and (b) Employees who are 5% owners at any
          time during the look-back year or determination year.

          If no officer has satisfied the Compensation requirement of (c) above
          during either a determination year or look-back year, the highest
          paid officer for such year shall be treated as a Highly Compensated
          Employee.

          For this purpose, the determination year shall be the Plan Year. The
          look-back year shall be the 12 month period immediately preceding the
          determination year.

          A highly compensated former employee includes any Employee who
          separated from service (or was deemed to have separated) prior to the
          determination year, performs no service for the Employer during the
          determination year, and was a highly compensated active employee for
          either the separation year or any determination year ending on or
          after the Employee's 55th birthday.

          If an Employee is, during a determination year or look-back year, a
          family member of either a 5% owner who is an active or former
          Employee or a Highly Compensated Employee who is one of the 10 most
          Highly Compensated Employees ranked on the basis of Compensation paid
          by the Employer during such year, then the family member and the 5%
          owner or top 10 Highly Compensated Employee shall be aggregated. In
          such case, the family member and 5% owner or top 10 Highly Compensated
          Employee shall be treated as a single Employee receiving Compensation
          and Plan contributions or benefits equal to the sum of such
          Compensation and contributions or benefits of the family member and 5%
          owner or top 10 Highly Compensated Employee. For purposes of this
          Section, family member includes the spouse, lineal ascendants and
          descendants of the Employee or former Employee and the spouses of such
          lineal ascendants and descendants.

          The determination of who is a Highly Compensated Employee, including
          the determinations of the number and identity of Employees in the
          top-paid group, the top 100 Employees, the number of Employees
          treated as officers and the Compensation that is considered, will be
          made in accordance with Section 414(q) of the Code and the regulations
          thereunder.

1.24      HOURS OF SERVICE - Means

          A.  Each hour for which an Employee is paid, or entitled to
              payment, for the performance of duties for the Employer. These
              hours will be credited to the Employee for the computation period
              in which the duties are performed; and

          B.  Each hour for which an Employee is paid, or entitled to payment,
              by the Employer on account of a period of time during which no
              duties are performed (irrespective of whether the employment
              relationship has terminated) due to vacation, holiday, illness,
              incapacity (including disability), layoff, jury duty, military
              duty or leave of absence. No more than 501 Hours of Service will
              be credited under this paragraph for any single continuous period
              (whether not such period occurs in a single computation period).
              Hours under this paragraph shall be calculated and credited
              pursuant to Section 2530.200b-2 of the Department of Labor
              Regulations which is incorporated herein by this reference; and

                                       4
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     C.   Each hour for which back pay, irrespective of mitigation of damages,
          is either awarded or agreed to by the Employer. The same Hours of
          Service will not be credited both under paragraph (A) or paragraph
          (B), as the case may be, and under this paragraph (C). These hours
          will be credited to the Employee for the computation period or periods
          to which the award or agreement pertains rather than the computation
          period in which the award, agreement, or payment is made.

     D.   Solely for purposes of determining whether a Break in Eligibility
          Service or a Break in Vesting Service has occurred in a computation
          period (the computation period for purposes of determining whether a
          Break in Vesting Service has occurred is the Plan Year or other
          vesting computation period described in Section 1.50), an individual
          who is absent from work for maternity or paternity reasons shall
          receive credit for the Hours of Service which would otherwise have
          been credited to such individual but for such absence, or in any case
          in which such hours cannot be determined, 8 Hours of Service per day
          of such absence. For purposes of this paragraph, an absence from work
          for maternity or paternity reasons means an absence (1) by reason of
          the pregnancy of the individual, (2) by reason of a birth of a child
          of the individual, (3) by reason of the placement of a child with the
          individual in connection with the adoption of such child by such
          individual, or (4) for purposes of caring for such child for a period
          beginning immediately following such birth or placement. The Hours of
          Service credited under this paragraph shall be credited (1) in the
          Eligibility Computation Period or Plan Year or other vesting
          computation period described in Section 1.50 in which the absence
          begins if the crediting is necessary to prevent a Break in Eligibility
          Service or a Break in Vesting Service in the applicable period, or (2)
          in all other cases, in the following Eligibility Computation Period or
          Plan Year or other vesting computation period described in Section
          1.50.

     E.   Hours of Service will be credited for employment with other members of
          an affiliated service group (under Section 414(m) of the Code), a
          controlled group of corporations (under Section 414(b) of the Code),
          or a group of trades or businesses under common control (under Section
          414(c) of the Code) of which the adopting Employer is a member, and
          any other entity required to be aggregated with the Employer pursuant
          to Section 414(o) of the Code and the regulations thereunder.

          Hours of Service will also be credited for any individual considered
          an Employee for purposes of this Plan under Code Sections 414(n) or
          414(o) and the regulations thereunder.

     F.   Where the Employer maintains the plan of a predecessor employer,
          service for such predecessor employer shall be treated as service for
          the Employer.

     G.   The above method for determining Hours of Service may be altered as
          specified in the Adoption Agreement.

1.25 INDIVIDUAL ACCOUNT
     Means the account established and maintained under this Plan for each
     Participant in accordance with Section 4.01.

1.26 INVESTMENT FUND
     Means a subdivision of the Fund established pursuant to Section 5.05.

1.27 KEY EMPLOYEE
     Means any person who is determined to be a Key Employee under Section
     10.08.

1.28 LEASED EMPLOYEE
     Means any person (other then an Employee of the recipient) who pursuant to
     an agreement between the recipient and any other person ("leasing
     organization") has performed services for the recipient (or for the
     recipient and related persons determined in accordance with Section
     414(n)(6) of the Code) on a substantially full time basis for a period of
     at least one year, and such services are of a type historically performed
     by Employees in the business field of the recipient Employer. Contributions
     or benefits provided a Leased Employee by the leasing organization which
     are attributable to services performed for the recipient Employer shall be
     treated as provided by the recipient Employer.

     A Leased Employee shall not be considered an Employee of the recipient if:
     (1) such employee is covered by a money purchase pension plan providing:
     (a) a nonintegrated employer contribution rate of at least 10% of
     compensation, as defined in Section 415(c)(3) of the Code, but including
     amounts contributed pursuant to a salary reduction agreement which are
     excludable from the employee's gross income under Section 125, Section
     402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code, (b)
     immediate participation, and (c) full and immediate vesting; and (2) Leased
     Employees do not constitute more than 20% of the recipient's nonhighly
     compensated work force.

1.29 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS Means any contribution made to the
     Plan by or on behalf of a Participant that is included in the Participant's
     gross income in the year in which made and that is maintained under a
     separate account to which earnings and losses are allocated.

                                       5
<PAGE>
1.30 NORMAL RETIREMENT AGE
     Means the age specified in the Adoption Agreement. However, if the Employer
     enforces a mandatory retirement age which is less than the Normal
     Retirement Age, such mandatory age is deemed to be the Normal Retirement
     Age. If no age is specified in the Adoption Agreement, the Normal
     Retirement Age shall be age 65.

1.31 OWNER-EMPLOYEE
     Means an individual who is a sole proprietor, or who is a partner owning
     more than 10% of either the capital or profits interest of the partnership.

1.32 PARTICIPANT
     Means any Employee or former Employee of the Employer who has met the
     Plan's eligibility requirements, has entered the Plan and who is or may
     become eligible to receive a benefit of any type from this Plan or whose
     Beneficiary may be eligible to receive any such benefit.

1.33 PLAN
     Means the prototype defined contribution plan adopted by the Employer. The
     Plan consists of this Basic Plan Document plus the corresponding Adoption
     Agreement as completed and signed by the Employer.

1.34 PLAN ADMINISTRATOR
     Means the person or persons determined to be the Plan Administrator in
     accordance with Section 8.01.

1.35 PLAN YEAR
     Means the 12 consecutive month period which coincides with the Employer's
     fiscal year or such other 12 consecutive month period as is designated in
     the Adoption Agreement.

1.36 PRIOR PLAN
     Means a plan which was amended or replaced by adoption of this Plan
     document as indicated in the Adoption Agreement.

1.37 PROTOTYPE SPONSOR
     Means the entity specified in the Adoption Agreement that makes this
     prototype plan available to employers for adoption.

1.38 QUALIFYING PARTICIPANT
     Means a Participant who has satisfied the requirements described in Section
     3.01(B)(2) to be entitled to share in any Employer Contribution (and
     Forfeitures, if applicable) for a Plan Year.

1.39 RELATED EMPLOYER
     Means an employer that may be required to be aggregated with the Employer
     adopting this Plan for certain qualification requirements under Sections
     414(b), (c), (m) or (o) of the Code (or any other employer that has
     ownership in common with the Employer). A Related Employer may participate
     in this Plan if so indicated in the Section of the Adoption Agreement
     titled "Employer Information" or if such Related Employer executes a
     Related Employer Participation Agreement.

1.40 RELATED EMPLOYER PARTICIPATION AGREEMENT
     Means the agreement under this prototype Plan that a Related Employer may
     execute to participate in this Plan.

1.41 SELF-EMPLOYED INDIVIDUAL
     Means an individual who has Earned Income for the taxable year from the
     trade or business for which the Plan is established; also, an individual
     who would have had Earned Income but for the fact that the trade or
     business had no net profits for the taxable year.

1.42 SEPARATE FUND
     Means a subdivision of the Fund held in the name of a particular
     Participant representing certain assets held for that Participant. The
     assets which comprise a Participant's Separate Fund are those assets
     earmarked for him or her and those assets subject to the Participant's
     individual direction pursuant to Section 5.14.

1.43 TAXABLE WAGE BASE
     Means, with respect to any taxable year, the contribution and benefit base
     in effect under Section 230 of the Social Security Act at the beginning of
     the Plan Year.

1.44 TERMINATION OF EMPLOYMENT
     A Termination of Employment of an Employee of an Employer shall occur
     whenever his or her status as an Employee of such Employer ceases for any
     reason other than death. An Employee who does not return to work for the
     Employer on before the expiration of an authorized leave of absence from
     such Employer shall be deemed to have incurred a Termination of Employment
     when such leave ends.

                                       6
<PAGE>

          1.45      TOP-HEAVY PLAN
                    This Plan is a Top-Heavy Plan for any Plan Year if it is
                    determined to be such pursuant to Section 10.08

          1.46      TRUSTEE
                    Means an individual, individuals or corporation specified
                    in the Adoption Agreement as Trustee or any duly appointed
                    successor as provided in Section 5.09. Trustee shall mean
                    Custodian in the event the financial organization named
                    as Trustee does not have full trust powers.

          1.47      VALUATION DATE
                    Means the date or dates as specified in the Adoption
                    Agreement. If no date is specified in the Adoption
                    Agreement, the Valuation Date shall be the last day of the
                    Plan Year and each other date designated by the Plan
                    Administrator which is selected in a uniform and
                    nondiscriminatory manner when the assets of the Fund are
                    valued at their then fair market value.

          1.48      VESTED
                    Means nonforfeitable, that is, a claim which is
                    unconditional and legally enforceable against the Plan
                    obtained by a Participant or the Participant's Beneficiary
                    to that part of an immediate or deferred benefit under the
                    Plan which arises from a Participant's Years of Vesting
                    Service.

          1.49      YEAR OF ELIGIBILITY SERVICE
                    Means a 12 consecutive month period which coincides with an
                    Eligibility Computation Period during which an Employee
                    completes at least 1,000 Hours of Service (or such lesser
                    number of Hours of Service specified in the Adoption
                    Agreement for this purpose). An Employee does not complete a
                    Year of Eligibility Service before the end of the 12
                    consecutive month period regardless of when during such
                    period the Employee completes the required number of Hours
                    of Service.

          1.50      YEAR OF VESTING SERVICE
                    Means a Plan Year during which an Employee completes at
                    least 1,000 Hours of Service (or such lesser number of
                    Hours of Service specified in the Adoption Agreement for
                    this purpose). Notwithstanding the preceding sentence,
                    where the Employer so indicates in the Adoption Agreement,
                    vesting shall be computed by reference to the 12
                    consecutive month period beginning with the Employee's
                    Employment Commencement Date and each successive 12 month
                    period commencing on the anniversaries thereof.

                    In the case of a Participant who has 5 or more consecutive
                    Breaks in Vesting Service, all Years of Vesting Service
                    after such Breaks in Vesting Service will be disregarded
                    for the purpose of determining the Vested portion of his or
                    her Individual Account derived from Employer Contributions
                    that accrued before such breaks. Such Participant's
                    prebreak service will count in vesting the postbreak
                    Individual Account derived from Employer Contributions only
                    if either:

                    (A)  such Participant had any Vested right to any portion of
                         his or her Individual Account derived from Employer
                         Contributions at the time of his or her Termination of
                         Employment; or

                    (B)  upon returning to service, the number of consecutive
                         Breaks in Vesting Service is less than his or her
                         number of Years of Vesting Service before such breaks.

                    Separate subaccounts will be maintained for the
                    Participant's prebreak and postbreak portions of his or
                    her Individual Account derived from Employer Contributions.
                    Both subaccounts will share in the gains and losses of the
                    Fund.

                    Years of Vesting Service shall not include any period of
                    time excluded from Years of Vesting Service in the Adoption
                    Agreement.

                    In the event the Plan Year is changed to a new 12-month
                    period, Employees shall receive credit for Years of Vesting
                    Service, in accordance with the preceding provisions of
                    this definition, for each of the Plan Years (the old and
                    new Plan Years) which overlap as a result of such change.

   SECTION TWO      ELIGIBILITY AND PARTICIPATION

          2.01      ELIGIBILITY TO PARTICIPATE
                    Each Employee of the Employer, except those Employees who
                    belong to a class of Employees which is excluded from
                    participation as indicated in the Adoption Agreement, shall
                    be eligible to participate in this Plan upon the
                    satisfaction of the age and Years of Eligibility Service
                    requirements specified in the Adoption Agreement.

          2.02      PLAN ENTRY

                    A.  If this Plan is a replacement of a Prior Plan by
                        amendment or restatement, each Employee of the Employer
                        who was a Participant in said Prior Plan before the
                        Effective Date shall continue to be a Participant in
                        this Plan.

                                       7
<PAGE>
          B.   An Employee will become a Participant in the Plan as of the
               Effective Date if the Employee has met the eligibility
               requirements of Section 2.01 as of such date. After the Effective
               Date, each Employee shall become a Participant on the first Entry
               Date following the date the Employee satisfies the eligibility
               requirements of Section 2.01 unless otherwise indicated in the
               Adoption Agreement.

          C.   The Plan Administrator shall notify each Employee who becomes
               eligible to be a Participant under this Plan and shall furnish
               the Employee with the application form, enrollment forms or other
               documents which are required of Participants. The eligible
               Employee shall execute such forms or documents and make available
               such information as may be required in the administration of the
               Plan.

2.03      TRANSFER TO OR FROM INELIGIBLE CLASS

          If an Employee who had been a Participant becomes ineligible to
          participate because he or she is no longer a member of an eligible
          class of Employees, but has not incurred a Break in Eligibility
          Service, such Employee shall participate immediately upon his or her
          return to an eligible class of Employees. If such Employee incurs a
          Break in Eligibility Service, his or her eligibility to participate
          shall be determined by Section 2.04.

          An Employee who is not a member of the eligible class of Employees
          will become a Participant immediately upon becoming a member of the
          eligible class provided such Employee has satisfied the age and Years
          of Eligibility Service requirements. If such Employee has not
          satisfied the age and Years of Eligibility Service requirements as of
          the date he or she becomes a member of the eligible class, such
          Employee shall become a Participant on the first Entry Date following
          the date he or she satisfies those requirements unless otherwise
          indicated in the Adoption Agreement.

2.04      RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE

          A.   Employee Not Participant Before Break-If an Employee incurs a
               Break in Eligibility Service before satisfying the Plan's
               eligibility requirements, such Employee's Years of Eligibility
               Service before such Break in Eligibility Service will not be
               taken into account.

          B.   Nonvested Participants-In the case of a Participant who does not
               have a Vested interest in his or her Individual Account derived
               from Employer Contributions. Years of Eligibility Service before
               a period of consecutive Breaks in Eligibility Service will not
               be taken into account for eligibility purposes if the number of
               consecutive Breaks in Eligibility Service in such period equals
               or exceeds the greater of 5 or the aggregate number of Years of
               Eligibility Service before such break. Such aggregate number of
               Years of Eligibility Service will not include any Years of
               Eligibility Service disregarded under the preceding sentence by
               reason of prior breaks.

          C.   If a Participant's Years of Eligibility Service are disregarded
               pursuant to the preceding paragraph, such Participant will be
               treated as a new Employee for eligibility purposes. If a
               Participant's Years of Eligibility Service may not be disregarded
               pursuant to the preceding paragraph, such Participant shall
               continue to participate in the Plan, or, if terminated, shall
               participate immediately upon reemployment.

               Vested Participants - A Participant who has sustained a Break in
               Eligibility Service and who had a Vested interest in all or a
               portion of his or her Individual Account derived from Employer
               Contributions shall continue to participate in the Plan, or, if
               terminated, shall participate immediately upon reemployment.

2.05      DETERMINATIONS UNDER THIS SECTION

          The Plan Administrator shall determine the eligibility of each
          Employee to be a Participant. This determination shall be conclusive
          and binding upon all persons except as otherwise provided herein or by
          law.

2.06      TERMS OF EMPLOYMENT

          Neither the fact of the establishment of the Plan nor the fact that a
          common law Employee has become a Participant shall give to that common
          law Employee any right to continued employment; nor shall either fact
          limit the right of the Employer to discharge or to deal otherwise with
          a common law Employee without regard to the effect such treatment may
          have upon the Employee's rights under the Plan.

2.07      SPECIAL RULES WHERE ELAPSED TIME METHOD IS BEING USED

          This Section 2.07 shall apply where the Employer has indicated in the
          Adoption Agreement that the elapsed time method will be used. When
          this Section applies, the definitions of year of service, break in
          service and hour of service in this Section will replace the
          definitions of Year of Eligibility Service, Year of Vesting Service,
          Break in Eligibility Service, Break in Vesting Service and Hours of
          Service found in the Definitions Section of the Plan (Section One).

          For purposes of determining an Employee's initial or continued
          eligibility to participate in the Plan or the Vested interest in the
          Participant's Individual Account balance derived from Employer
          Contributions, (except for periods of service which may be disregarded
          on account of the "rule of parity" described in Sections 1.50 and
          2.04) an Employee will receive credit for the aggregate of all time
          period(s) commencing with the Employee's first day of employment or
          reemployment and ending on the date a break in service begins. The
          first day of employment or reemployment is the first day the Employee
          performs an hour of service. An Employee will also receive credit for
          any period of severance of less than 12 consecutive months. Fractional
          periods of a year will be expressed in terms of days.

                                       8

<PAGE>
                For purposes of this Section, hour of service will mean each
                hour for which an Employee is paid or entitled to payment for
                the performance of duties for the Employer. Break in service is
                a period of severance of at least 12 consecutive months. Period
                of severance is a continuous period of time during which the
                Employee is not employed by the Employer. Such period begins on
                the date the employee retires, quits or is discharged, or if
                earlier, the 12 month anniversary of the date on which the
                Employee was otherwise first absent from service.

                In the case of an individual who is absent from work for
                maternity or paternity reasons, the 12 consecutive month period
                beginning on the first anniversary of the first date of such
                absence shall not constitute a break in service. For purposes of
                this paragraph, an absence from work for maternity or paternity
                reasons means an absence (1) by reason of the pregnancy of the
                individual, (2) by reason of the birth of a child of the
                individual, (3) by reason of the placement of a child with the
                individual in connection with the adoption of such child by such
                individual, or (4) for purposes of caring for such child for a
                period beginning immediately following such birth or placement.

                Each Employee will share in Employer Contributions for the
                period beginning on the date the Employee commences
                participation under the Plan and ending on the date on which
                such Employee severs employment with the Employer or is no
                longer a member of an eligible class of Employees.

                If the Employee is a member of an affiliated service group
                (under Sections 414(m) of the Code), a controlled group of
                corporations (under Section 414(b) of the Code), a group of
                trades or businesses under common control (under Section 414(c)
                of the Code), or any other entity required to be aggregated with
                the Employer pursuant to Section 414(o) of the Code, service
                will be credited for any employment for any period of time for
                any other member of such group. Service will also be credited
                for any individual required under Section 414(n) or Section
                414(o) to be considered an Employee of any Employer aggregated
                under Section 414(b), (c), or (m) of the Code.

        2.08    ELECTION NOT TO PARTICIPATE

                This Section 2.08 will apply if this Plan is a nonstandardized
                plan and the Adoption Agreement so provides. If this Section
                applies, then an Employee or a Participant may elect not to
                participate in the Plan for one or more Plan Years. The Employer
                may not contribute for an Employee or Participant for any Plan
                Year during which such Employee's or Participant's election not
                to participate is in effect. Any election not to participate
                must be in writing and filed with the Plan Administrator.

                The Plan Administrator shall establish such uniform and
                nondiscriminatory rules as it deems necessary or advisable to
                carry out the terms of this Section, including, but not limited
                to, rules prescribing the timing of the filing of elections not
                to participate and the procedures for electing to re-participate
                in the Plan.

                An Employee or Participant continues to earn credit for vesting
                and eligibility purposes for each Year of Vesting Service or
                Year of Eligibility Service he or she completes and his or her
                Individual Account (if any) will share in the gains or losses of
                the Fund during the periods he or she elects not to participate.

SECTION THREE   CONTRIBUTIONS

        3.01    EMPLOYER CONTRIBUTIONS

                A.  Obligation to Contribute - The Employer shall make
                    contributions to the Plan in accordance with the
                    contribution formula specified in the Adoption Agreement. If
                    this Plan is a profit sharing plan, the Employer shall, in
                    its sole discretion, make contributions without regard to
                    current or accumulated earnings or profits.

                B.  Allocation Formula and the Right to Share in the Employer
                    Contribution -

                    1. General - The Employer Contribution for any Plan Year
                       will be allocated or contributed to the Individual
                       Accounts of Qualifying Participants in accordance with
                       the allocation or contribution formula specified in the
                       Adoption Agreement. The Employer Contribution for any
                       Plan Year will be allocated to each Participant's
                       Individual Account as of the last day of that Plan Year.

                       Any Employer Contribution for a Plan Year must satisfy
                       Section 401(a)(4) and the regulations thereunder for such
                       Plan Year.

                    2. Qualifying Participants - A Participant is a Qualifying
                       Participant and is entitled to share in the Employer
                       Contribution for any Plan Year if the Participant was a
                       Participant on at least one day during the Plan Year and
                       satisfies any additional conditions specified in the
                       Adoption Agreement. If this Plan is a standardized plan,
                       unless the Employer specifies more favorable conditions
                       in the Adoption Agreement, a Participant will not be a
                       qualifying Participant for a Plan Year if he or she
                       incurs a Termination of Employment during such Plan Year
                       with not more than 500 Hours of Service if he or she is
                       not an Employee on the last day of the Plan Year. The
                       determination of whether a Participant is entitled to
                       share in the Employee Contribution shall be made as of
                       the last day of each Plan Year.

                                       9
<PAGE>
     3.   Special Rules for Integrated Plans - This Plan may not allocate
          contributions based on an integrated formula if the Employer maintains
          any other plan that provides for allocation of contributions based on
          an integrated formula that benefits any of the same Participants. If
          the Employer has selected the integrated contribution or allocation
          formula in the Adoption Agreement, then the maximum disparity rate
          shall be determined in accordance with the following table.

                             MAXIMUM DISPARITY RATE

<Table>
<Caption>
<S>                           <C>               <C>                <C>
                                                   Top-Heavy           Nonstandardized and
Integration Level             Money Purchase    Profit Sharing     Non-Top-Heavy Profit Sharing
-----------------------------------------------------------------------------------------------
Taxable Wage Base (TWB)            5.7%              2.7%                     5.7%

More than $0 but not more
than 20% of TWB                    5.7%              2.7%                     5.7%

More than 20% of TWB but
not more than 80% of TWB           4.3%              1.3%                     4.3%

More than 80% of TWB but
not more than TWB                  5.4%              2.4%                     5.4%

</Table>

C.   Allocation of Forfeitures - Forfeitures for a Plan Year which arise as a
     result of the application of Section 6.01(D) shall be allocated as follows:

     1.   Profit Sharing Plan - If this is a profit sharing plan, unless the
          Adoption Agreement indicates otherwise, Forfeitures shall be allocated
          in the manner provided in Section 3.01(B) (for Employer Contributions)
          to the Individual Accounts of Qualifying Participants who are entitled
          to share in the Employer Contribution for such Plan Year. Forfeitures
          shall be allocated as of the last day of the Plan Year during which
          the Forfeiture arose (or any subsequent Plan Year if indicated in the
          Adoption Agreement).

     2.   Money Purchase Pension and Target Benefit Plan - If this Plan is a
          money purchase plan or a target benefit plan, unless the Adoption
          Agreement indicates otherwise, Forfeitures shall be applied towards
          the reduction of Employer Contributions to the Plan. Forfeitures shall
          be allocated as of the last day of the Plan Year during which the
          Forfeiture arose (or any subsequent Plan Year if indicated in the
          Adoption Agreement).

D.   Timing of Employer Contribution - The Employer Contribution for each Plan
     Year shall be delivered to the Trustee (or Custodian, if applicable) not
     later than the due date for filing the Employer's income tax return for its
     fiscal year in which the Plan Year ends, including extensions thereof.

E.   Minimum Allocation for Top-Heavy Plans - The contribution and allocation
     provisions of this Section 3.01(E) shall apply for any Plan Year with
     respect to which this Plan is a Top-Heavy Plan.

     1.   Except as otherwise provided in (3) and (4) below, the Employer
          Contributions and Forfeitures allocated on behalf of any Participant
          who is not a Key Employee shall not be less than the lesser of 3% of
          such Participant's Compensation or (in the case where the Employer has
          no defined benefit plan which designates this Plan to satisfy Section
          401 of the Code) the largest percentage of Employer Contributions and
          Forfeitures, as a percentage of the first $200,000 ($150,000 for Plan
          Years beginning after December 31, 1993), (increased by any cost of
          living adjustment made by the Secretary of Treasury or the Secretary's
          delegate) of the Key Employee's Compensation, allocated on behalf of
          any Key Employee for that year. The minimum allocation is determined
          without regard to any Social Security contribution. The Employer may,
          in the Adoption Agreement, limit the Participants who are entitled to
          receive the minimum allocation. This minimum allocation shall be made
          even though under other Plan provisions, the Participant would not
          otherwise be entitled to receive an allocation, or would have received
          a lesser allocation for the year because of (a) the Participant's
          failure to complete 1,000 Hours of Service (or any equivalent provided
          in the Plan), or (b) the Participant's failure to make mandatory
          Nondeductible Employee Contributions to the Plan, or (c) Compensation
          less than a stated amount.

     2.   For purposes of computing the minimum allocation, Compensation shall
          mean Compensation as defined in Section 1.07 of the Plan and shall
          exclude any amounts contributed by the Employer pursuant to a salary
          reduction agreement and which is not includible in the gross income of
          the Employee under Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of
          the Code even if the Employer has elected to include such
          contributions in the definition of Compensation used for other
          purposes under the Plan.

                                       10

<PAGE>
     3.   The provision in (1) above shall not apply to any Participant who was
          not employed by the Employer on the last day of the Plan Year.

     4.   The provision in (1) above shall not apply to any Participant to the
          extent the Participant is covered under any other plan or plans of the
          Employer and the Employer has provided in the adoption agreement that
          the minimum allocation or benefit requirement applicable to Top-Heavy
          Plans will be met in the other plan or plans.

     5.   The minimum allocation required under this Section 3.01(E) and Section
          3.01(F)(1) (to the extent required to be nonforfeitable under Code
          Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B)
          or 411(a)(3)(D).

F.   Special Requirements for Paired Plans - The Employer maintains paired plans
     if the Employer has adopted both a standardized profit sharing plan and a
     standardized money purchase pension plan using this Basic Plan Document.

     1.   Minimum Allocation - When the paired plans are top-heavy, the
          top-heavy requirements set forth in Section 3.01(E)(1) of the Plan
          shall apply.

          a.   Same eligibility requirements. In satisfying the top-heavy
               minimum allocation requirements set forth in Section 3.01(E) of
               the Plan, if the Employees benefiting under each of the paired
               plan are identical, the top-heavy minimum allocation shall be
               made to the money purchase pension plan.

          b.   Different eligibility requirements. In satisfying the top-heavy
               minimum allocation requirements set forth in Section 3.01(E) of
               the Plan, if the Employees benefiting under each of the paired
               plans are not identical, the top-heavy minimum allocation will be
               made to both of the paired plans.

          A Participant is treated as benefiting under the Plan for any Plan
          Year during which the Participant received or is deemed to receive an
          allocation in accordance with Section 1.410(b)-3(a).

     2.   Only One Plan Can Be Integrated - If the Employer maintains paired
          plans, only one of the Plans may provide for the disparity in
          contributions which is permitted under Section 401(1) of the Code. In
          the event that both Adoption Agreements provide for such integration,
          only the money purchase pension plan shall be deemed to be integrated.

G.   Return of the Employer Contribution to the Employer Under Special
     Circumstances - Any contribution made by the Employer because of a mistake
     of fact must be returned to the Employer within one year of the
     contribution.

     In the event that the Commissioner of Internal Revenue determines that the
     Plan is not initially qualified under the Code, any contributions made
     incident to that initial qualification by the Employer must be returned to
     the Employer within one year after the date that initial qualification is
     denied, but only if the application for qualification is made by the time
     prescribed by law for filing the Employer's return for the taxable year in
     which the Plan is adopted, or such later date as the Secretary of the
     Treasury may prescribe.

     In the event that a contribution made by the Employer under this Plan is
     conditioned on deductibility and is not deductible under Code Section 404,
     the contribution, to the extent of the amount disallowed, must be returned
     to the Employer within one year after the deduction is disallowed.

H.   Omission of Participant

     1.   If the Plan is a money purchase plan or a target benefit plan and, if
          in any Plan Year, any Employee who should be included as a Participant
          is erroneously omitted and discovery of such omission is not made
          until after a contribution by the Employer for the year has been made
          and allocated, the Employer shall make a subsequent contribution to
          include earnings thereon, with respect to the omitted Employee in the
          amount which the Employer would have contributed with respect to that
          Employee had he or she not been omitted.

     2.   If the Plan is a profit sharing plan, and if in any Plan Year, any
          Employee who should be included as a Participant is erroneously
          omitted and discovery of such omission is not made until after the
          Employer Contribution has been made and allocated, then the Plan
          Administrator must re-do the allocation (if a correction can be made)
          and inform the Employee. Alternatively, the Employer may choose to
          contribute for the omitted Employee the amount to include earnings
          thereon, which the Employer would have contributed for the Employee.

                                       11
<PAGE>
3.02      NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
          This Plan will not accept Nondeductible Employee Contributions and
          matching contributions for Plan Years beginning after the Plan Year in
          which this Plan is adopted by the Employer. Nondeductible Employee
          Contributions for Plan Years beginning after December 31, 1986,
          together with any matching contributions as defined in Section 401(m)
          of the Code will be limited so as to meet the nondiscrimination test
          of Section 401(m) of the Code.
          A separate account will be maintained by the Plan Administrator for
          the Nondeductible Employee Contributions of each Participant.

          A Participant may, upon a written request submitted to the Plan
          Administrator withdraw the lesser of the portion of his or her
          Individual Account attributable to his or her Nondeductible Employee
          Contributions or the amount he or she contributed as Nondeductible
          Employee Contributions.

          Nondeductible Employee Contributions and earnings thereon will be
          nonforfeitable at all times. No Forfeiture will occur solely as a
          result of an Employee's withdrawal of Nondeductible Employee
          Contributions.

          The Plan Administrator will not accept deductible employee
          contributions which are made for a taxable year beginning after
          December 31, 1986. Contributions made prior to that date will be
          maintained in a separate account which will be nonforfeitable at all
          times. The account will share in the gains and losses of the Fund in
          the same manner as described in Section 4.03 of the Plan. No part of
          the deductible employee contribution account will be used to purchase
          life insurance. Subject to Section 6.05, joint and survivor annuity
          requirements (if applicable), the Participant may withdraw any part of
          the deductible employee contribution account by making a written
          application to the Plan Administrator.

3.03      ROLLOVER CONTRIBUTIONS
          If so indicated in the Adoption Agreement, an Employee may contribute
          a rollover contribution to the Plan. The Plan Administrator may
          require the Employee to submit a written certification that the
          contribution qualifies as a rollover contribution under the applicable
          provisions of the Code. If it is later determined that all or part of
          a rollover contribution was ineligible to be rolled into the Plan, the
          Plan Administrator shall direct that any ineligible amounts, plus
          earnings attributable thereto, be distributed from the Plan to the
          Employee as soon as administratively feasible.

          A separate account shall be maintained by the Plan Administrator for
          each Employee's rollover contributions which will be nonforfeitable at
          all times. Such account will share in the income and gains and losses
          of the Fund in the manner described in Section 4.03 and shall be
          subject to the Plan's provisions governing distributions.

          The Employer may, in a uniform and nondiscriminatory manner, only
          allow Employees who have become Participants in the Plan to make
          rollover contributions.

3.04      TRANSFER CONTRIBUTIONS
          If so indicated in the Adoption Agreement, the Trustee (or Custodian,
          if applicable) may receive any amounts transferred to it from the
          trustee or custodian of another plan qualified under Code Section
          401(a). If it is later determined that all or part of a transfer
          contribution was ineligible to be transferred into the Plan, the Plan
          Administrator shall direct that any ineligible amounts, plus earnings
          attributable thereto, be distributed from the Plan to the Employee as
          soon as administratively feasible.

          A separate account shall be maintained by the Plan Administrator for
          each Employee's transfer contributions which will be nonforfeitable at
          all times. Such account will share in the income and gains and losses
          of the Fund in the manner described in Section 4.03 and shall be
          subject to the Plan's provisions governing distributions.
          Notwithstanding any provisions of this Plan to the contrary, to the
          extent that any optional form of benefit under this Plan permits a
          distribution prior to the Employee's retirement, death, Disability, or
          severance from employment, and prior to Plan termination, the optional
          form of benefit is not available with respect to benefits attributable
          to assets (including the post-transfer earnings thereon) and
          liabilities that are transferred, within the meaning of Section 414(l)
          of the Internal Revenue Code, to this Plan from a money purchase
          pension plan qualified under Section 401(a) of the Internal Revenue
          Code (other than any portion of those assets and liabilities
          attributable to voluntary employee contributions).

          The Employer may, in a uniform and nondiscriminatory manner, only
          allow Employees who have become Participants in the Plan to make
          transfer contributions.

3.05      LIMITATION ON ALLOCATIONS

          A.   If the Participant does not participate in, and has never
               participated in another qualified plan maintained by the Employer
               or a welfare benefit fund, as defined in Section 419(e) of the
               Code maintained by the Employer, or an individual medical
               account, as defined in Section 415(l)(2) of the Code, or a
               simplified employee pension plan, as defined in Section 408(k) of
               the Code, maintained by the Employer, which provides an annual
               addition as defined Section 3.08(E)(1), the following rules shall
               apply:

               1.   The amount of annual additions which may be credited to the
                    Participant's Individual Account for any limitation year
                    will not exceed the lesser of the maximum permissible amount
                    or any other limitation contained in this Plan. If the
                    Employer Contribution that would otherwise be contributed or
                    allocated to the Participant's

                                       12
<PAGE>
          Individual Account would cause the annual additions for the limitation
          year to exceed the maximum permissible amount, the amount contributed
          or allocated will be reduced so that the annual additions for the
          limitation year will equal the maximum permissible amount.

     2.   Prior to determining the Participant's actual Compensation for the
          limitation year, the Employer may determine the maximum permissible
          amount for a Participant on the basis of a reasonable estimation of
          the Participant's Compensation for the limitation year, uniformly
          determined for all Participants similarly situated.

     3.   As soon as is administratively feasible after the end of the
          limitation year, the maximum permissible amount for the limitation
          year will be determined on the basis of the Participant's actual
          Compensation for the limitation year.

     4.   If pursuant to Section 3.05(A)(3) or as a result of the allocation of
          Forfeitures there is an excess amount, the excess will be disposed of
          as follows:

          a.   Any Nondeductible Employee Contributions, to the extent they
               would reduce the excess amount, will be returned to the
               Participant;

          b.   If after the application of paragraph (a) an excess amount still
               exists, and the Participant is covered by the Plan at the end of
               the limitation year, the excess amount in the Participant's
               Individual Account will be used to reduce Employer Contributions
               (including any allocation of Forfeitures) for such Participant in
               the next limitation year, and each succeeding limitation year if
               necessary;

          c.   If after the application of paragraph (b) an excess amount still
               exists, and the Participant is not covered by the Plan at the end
               of a limitation year, the excess amount will be held unallocated
               in a suspense account. The suspense account will be applied to
               reduce future Employer Contributions (including allocation of any
               Forfeitures) for all remaining Participants in the next
               limitation year, and each succeeding limitation year if
               necessary;

          d.   If a suspense account is in existence at any time during a
               limitation year pursuant to this Section, it will not participate
               in the allocation of the Fund's investment gains and losses. If a
               suspense account is in existence at any time during a particular
               limitation year, all amounts in the suspense account must be
               allocated and reallocated to Participants' Individual Accounts
               before any Employer Contributions or any Nondeductible Employee
               Contributions may be made to the Plan for that limitations year.
               Excess amounts may not be distributed to Participants or former
               Participants.

B.   If, in addition to this Plan, the Participant is covered under another
     qualified matter or prototype defined contribution plan maintained by the
     Employer, a welfare benefit fund maintained by the Employer, an individual
     medical account maintained by the Employer, or a simplified employee
     pension maintained by the Employer that provides an annual addition as
     defined in Section 3.05(E)(1), during any limitation year, the following
     rules apply:

     1.   The annual additions which may be credited to a Participant's
          Individual Account under this Plan for any such limitation year will
          not exceed the maximum permissible amount reduced by the annual
          additions credited to a Participant's Individual Account under the
          other qualified master or prototype plans, welfare benefit funds,
          individual medical accounts and simplified employee pensions for the
          same limitation year. If the annual additions with respect to the
          Participant under other qualified master or prototype defined
          contribution plans, welfare benefit funds, individual medical accounts
          and simplified employee pensions maintained by the Employer are less
          than the maximum permissible amount and the Employer Contribution that
          would otherwise be contributed or allocated to the Participant's
          Individual Account under this Plan would cause the annual additions
          for the limitation year to exceed this limitation, the amount
          contributed or allocated will be reduced so that the annual additions
          under all such plans and funds for the limitation year will equal the
          maximum permissible amount. If the annual additions with respect to
          the Participant under such other qualified master or prototype defined
          contribution plans, welfare benefit funds, individual medical accounts
          and simplified employee pensions in the aggregate are equal to or
          greater than the maximum permissible amount, no amount will be
          contributed or allocated to the Participant's Individual Account under
          this Plan for the limitation year.

     2.   Prior to determining the Participant's actual Compensation for the
          limitation year, the Employer may determine the maximum permissible
          amount for a Participant in the manner described in Section
          3.05(A)(2).

     3.   As soon as is administratively feasible after the end of the
          limitation year, the maximum permissible amount for the limitation
          year will be determined on the basis of the Participant's actual
          Compensation for the limitation year.

     4.   If, pursuant to Section 3.05(B)(3) or as a result of the allocation of
          Forfeitures a Participant's annual additions under this Plan and such
          other plans would result in an excess amount for a limitation year,
          the excess amount will be deemed to consist of the annual additions
          last allocated, except that annual additions attributable to a

                                       13
<PAGE>
          simplified employee pension will be deemed to have been allocated
          first, followed by annual additions to a welfare benefit fund or
          individual medical account, regardless of the actual allocation date.

     5.   If an excess amount was allocated to a Participant on an allocation
          date of this Plan which coincides with an allocation date of another
          plan, the excess amount attributed to this Plan will be the product
          of,

          a.   the total excess amount allocated as of such date, times

          b.   the ratio of (i) the annual additions allocated to the
               Participant for the limitation year as of such date under this
               Plan to (ii) the total annual additions allocated to the
               Participant for the limitation year as of such date under this
               and all the other qualified prototype defined contribution plans.

     6.   Any excess amount attributed to this Plan will be disposed in the
          manner described in Section 3.05(A)(4).

C.   If the Participant is covered under another qualified defined contribution
     plan maintained by the Employer which is not a master or prototype plan,
     annual additions which may be credited to the Participant's Individual
     Account under this Plan for any limitation year will be limited in
     accordance with Sections 3.05(B)(1) through 3.05(B)(6) as though the other
     plan were a master or prototype plan unless the Employer provides other
     limitations in the Section of the Adoption Agreement titled "Limitation on
     Allocation - More Than One Plan."

D.   If the Employer maintains, or at any time maintained, a qualified defined
     benefit plan covering any Participant in this Plan, the sum of the
     Participant's defined benefit plan fraction and defined contribution plan
     fraction will not exceed 1.0 in any limitation year. The annual additions
     which may be credited to the Participant's Individual Account under this
     Plan for any limitation year will be limited in accordance with the Section
     of the Adoption Agreement titled "Limitation on Allocation - More Than One
     Plan."

E.   The following terms shall have the following meanings when used in this
     Section 3.05:

     1.   Annual additions: The sum of the following amounts credited to a
          Participant's Individual Account for the limitation year:

          a.   Employer Contributions,

          b.   Nondeductible Employee Contributions,

          c.   Forfeitures,

          d.   amounts allocated, after March 31, 1984, to an individual medical
               account, as defined in Section 415(l)(2) of the Code, which is
               part of a pension or annuity plan maintained by the Employer are
               treated as annual additions to a defined contribution plan. Also
               amounts derived from contributions paid or accrued after December
               31, 1985, in taxable years ending after such date, which are
               attributable to post-retirement medical benefits, allocated to
               the separate account of a key employee, as defined in Section
               419A(d)(3) of the Code, under a welfare benefit fund, as defined
               in Section 419(e) of the Code, maintained by the Employer are
               treated as annual additions to a defined contribution plan, and

          e.   allocations under a simplified employee pension.

          For this purpose, any excess amount applied under Section 3.05(A)(4)
          or 3.05(B)(6) in the limitation year to reduce Employer Contributions
          will be considered annual additions for such limitation year.

     2.   Compensation: Means Compensation as defined in Section 1.07 of the
          Plan except that Compensation for purposes of this Section 3.05 shall
          not include any amounts contributed by the Employer pursuant to a
          salary reduction agreement and which is not includible in the gross
          income of the Employee under Sections 125, 402(e)(3), 402(h)(l)(B) or
          403(b) of the Code even if the Employer has elected to include such
          contributions in the definition of Compensation used for other
          purposes under the Plan. Further, any other exclusion the Employer has
          elected (such as the exclusion of certain types of pay or pay earned
          before the Employee enters the Plan) will not apply for purposes of
          this Section.

          Notwithstanding the preceding sentence, Compensation for a Participant
          in a defined contribution plan who is permanently and totally disabled
          (as defined in Section 22(e)(3) of the Code) is the Compensation such
          Participant would have received for the limitation year if the
          Participant had been paid at the rate of Compensation paid immediately
          before becoming permanently and totally disabled; such imputed
          Compensation for the disabled Participant may be taken into account
          only if the Participant is not a Highly Compensated Employee (as
          defined in Section 414(q) of the Code) and contributions made on
          behalf of such Participant are nonforfeitable when made.

                                       14

<PAGE>
3.   Defined benefit fraction: A fraction, the numerator of which is the sum of
     the Participant's projected annual benefits under all the defined benefit
     plans (whether or not terminated) maintained by the Employer, and the
     denominator of which is the lesser of 125% of the dollar limitation
     determined for the limitation year under Section 415(b) and (d) of the Code
     or 140% of the highest average compensation, including any adjustments
     under Section 415(b) of the Code.

     Notwithstanding the above, if the Participant was a Participant as of the
     first day of the first limitation year beginning after December 31, 1986,
     in one or more defined benefit plans maintained by the Employer which were
     in existence on May 6, 1986, the denominator of this fraction will not be
     less than 125% of the sum of the annual benefits under such plans which the
     Participant had accrued as of the close of the last limitation year
     beginning before January 1, 1987, disregarding any changes in the terms and
     conditions of the plan after May 5, 1986. The preceding sentence applies
     only if the defined benefit plans individually and in the aggregate
     satisfied the requirements of Section 415 of the Code for all limitation
     years beginning before January 1, 1987.

4.   Defined contribution dollar limitation: $30,000 or if greater, one-fourth
     of the defined benefit dollar limitation set forth in Section 415(b)(1) of
     the Code as in effect for the limitation year.

5.   Defined contribution fraction: A fraction, the numerator of which is the
     sum of the annual additions to the Participant's account under all the
     defined contribution plans (whether or not terminated) maintained by the
     Employer for the current and all prior limitation years (including the
     annual additions attributable to the Participant's nondeductible employee
     contributions to all defined benefit plans, whether or not terminated,
     maintained by the Employer, and the annual additions attributable to all
     welfare benefit funds, as defined in Section 419(e) of the Code, individual
     medical accounts, and simplified employee pensions, maintained by the
     Employer), and the denominator of which is the sum of the maximum aggregate
     amounts for the current and all prior limitation years of service with the
     Employer (regardless of whether a defined contribution plan was maintained
     by the Employer). The maximum aggregate amount in any limitation year is
     the lesser of 125% of the dollar limitation determined under Section 415(b)
     and (d) of the Code in effect under Section 415(c)(1)(A) of the Code or 35%
     of the Participant's Compensation for such year.

     If the Employee was a Participant as of the end of the first day of the
     first limitation year beginning after December 31, 1986, in one or more
     defined contribution plans maintained by the Employer which were in
     existence on May 6, 1986, the numerator of this fraction will be adjusted
     if the sum of this fraction and the defined benefit fraction would
     otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an
     amount equal to the product of (1) the excess of the sum of the fractions
     over 1.0 times (2) the denominator of this fraction, will be permanently
     subtracted from the numerator of this fraction. The adjustment is
     calculated using the fractions as they would be computed as of the end of
     the last limitation year beginning before January 1, 1987, and disregarding
     any changes in the terms and conditions of the Plan made after May 5, 1986,
     but using the Section 415 limitation applicable to the first limitation
     year beginning on or after January 1, 1987.

     The annual addition for any limitation year beginning before January 1,
     1987, shall not be recomputed to treat all Nondeductible Employee
     Contributions as annual additions.

6.   Employer: For purposes of this Section 3.05, Employer shall mean the
     Employer that adopts this Plan, and all members of a controlled group of
     corporations (as defined in Section 414(b) of the Code as modified by
     Section 415(h)), all commonly controlled trades or businesses (as defined
     in Section 414(c) as modified by Section 415(h)) or affiliated service
     groups (as defined in Section 414(m)) of which the adopting Employer is a
     part, and any other entity required to be aggregated with the Employer
     pursuant to regulations under Section 414(o) of the Code.

7.   Excess amount: The excess of the Participant's annual additions for the
     limitation year over the maximum permissible amount.

8.   Highest average compensation: The average compensation for the three
     consecutive years of service with the Employer that produces the highest
     average.

9.   Limitation year: A calendar year, or the 12-consecutive month period
     elected by the Employer in the Adoption Agreement. All qualified plans
     maintained by the Employer must use the same limitation year. If the
     limitation year is amended to a different 12-consecutive month period, the
     new limitation year must begin on a date within the limitation year in
     which the amendment is made.

10.  Master or prototype plan: A plan the form of which is the subject of a
     favorable opinion letter from the Internal Revenue Service.

11.  Maximum permissible amount: The maximum annual addition that may be
     contributed or allocated to a Participant's Individual Account under the
     Plan for any limitation year shall not exceed the lesser of:

     a.   the defined contribution dollar limitation, or

                                       15

<PAGE>
          b. 25% of the Participant's Compensation for the limitation year.

             The compensation limitation referred to in (b) shall not apply to
             any contribution for medical benefits (within the meaning of
             Section 401(h) or Section 419A(f)(2) of the Code) which is
             otherwise treated as an annual addition under Section 415(l)(1) or
             419A(d)(2) of the Code.

             If a short limitation year is created because of an amendment
             changing the limitation year to a different 12-consecutive month
             period, the maximum permissible amount will not exceed the defined
             contribution dollar limitation multiplied by the following
             fraction:

                 Number of months in the short limitation year
                                       12

     12.  Projected annual benefit: The annual retirement benefit (adjusted to
          an actuarially equivalent straight life annuity if such benefit is
          expressed in a form other than a straight life annuity or qualified
          joint and survivor annuity) to which the Participant would be entitled
          under the terms of the Plan assuming:

          a. the Participant will continue employment until Normal Retirement
             Age under the Plan (or current age, if later), and

          b. the Participant's Compensation for the current limitation year and
             all other relevant factors used to determine benefits under the
             Plan will remain constant for all future limitation years.

             Straight life annuity means an annuity payable in equal
             installments for the life of the Participant that terminates upon
             the Participant's death.

SECTION FOUR  INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION

        4.01  INDIVIDUAL ACCOUNTS

              A. The Plan Administrator shall establish and maintain an
                 Individual Account in the name of each Participant to reflect
                 the total value of his or her interest in the Fund. Each
                 Individual Account established hereunder shall consist of such
                 subaccounts as may be needed for each Participant including:

                 1. a subaccount to reflect Employer Contributions and
                    Forfeitures allocated on behalf of a Participant;

                 2. a subaccount to reflect a Participant's rollover
                    contributions;

                 3. a subaccount to reflect a Participant's transfer
                    contributions;

                 4. a subaccount to reflect a Participant's Nondeductible
                    Employee Contributions; and

                 5. a subaccount to reflect a Participant's deductible employee
                    contributions.

              B. The Plan Administrator may establish additional accounts as it
                 may deem necessary for the proper administration of the Plan,
                 including, but not limited to, a suspense account for
                 Forfeitures as required pursuant to Section 6.01(D).

        4.02  VALUATION OF FUND

              The Fund will be valued each Valuation Date at fair market value.

        4.03  VALUATION OF INDIVIDUAL ACCOUNTS

              A. Where all or a portion of the assets of a Participant's
                 Individual Account are invested in a Separate Fund for the
                 Participant, then the value of that portion of such
                 Participant's Individual Account at any relevant time equals
                 the sum of the fair market values of the assets in such
                 Separate Fund, less any applicable charges or penalties.

              B. The fair market value of the remainder of each Individual
                 Account is determined in the following manner:

                 1. First, the portion of the Individual Account invested in
                    each Investment Fund as of the previous Valuation Date is
                    determined. Each such portion is reduced by any withdrawal
                    made from the applicable Investment Fund to or for the
                    benefit of a Participant or the Participant's Beneficiary,
                    further reduced by any amounts forfeited by the Participant
                    pursuant to Section 6.01(D) and further reduced by any
                    transfer to another Investment Fund since the previous
                    Valuation Date and is increased by any amount transferred
                    from another Investment Fund since the previous Valuation
                    Date. The resulting amounts are the net Individual Account
                    portions invested in the Investment Funds.

                 2. Secondly, the net Individual Account portions invested in
                    each Investment Fund are adjusted upwards or downwards, pro
                    rata (i.e., ratio of each net Individual Account portion to
                    the sum of all net Individual Account portions) so that the
                    sum of all the net Individual Account portions invested in
                    an Investment Fund will equal the then fair market value of
                    the Investment Fund. Notwithstanding the previous sentence,
                    for the first Plan

                                       16

<PAGE>
Year only, the net Individual Account portions shall be the sum of all
contributions made to each Participant's Individual Account during the first
Plan Year.

                                       17
<PAGE>
                    3.   Thirdly, any contributions to the Plan and Forfeitures
                         are allocated in accordance with the appropriate
                         allocation provisions of Section 3. For purposes of
                         Section 4, contributions made by the Employer for any
                         Plan Year but after that Plan Year will be considered
                         to have been made on the last day of that Plan Year
                         regardless of when paid to the Trustee (or Custodian,
                         if applicable).

                         Amounts contributed between Valuation Dates will not be
                         credited with investment gains or losses until the next
                         following Valuation Date.

                    4.   Finally, the portions of the Individual Account
                         invested in each Investment Fund (determined in
                         accordance with (1), (2) and (3) above) are added
                         together.

     4.04      MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
               If necessary or appropriate, the Plan Administrator may establish
               different or additional procedures (which shall be uniform and
               nondiscriminatory) for determining the fair market value of the
               Individual Accounts.

     4.05      SEGREGATION OF ASSETS
               If a Participant elects a mode of distribution other than a lump
               sum, the Plan Administrator may place that Participant's account
               balance into a segregated Investment Fund for the purpose of
               maintaining the necessary liquidity to provide benefit
               installments on a periodic basis.

     4.06      STATEMENT OF INDIVIDUAL ACCOUNTS
               No later than 270 days after the close of each Plan Year, the
               Plan Administrator shall furnish a statement to each Participant
               indicating the Individual Account balances of such Participant as
               of the last Valuation Date in such Plan Year.

SECTION FIVE   TRUSTEE OR CUSTODIAN

     5.01      CREATION OF FUND
               By adopting this Plan, the Employer establishes the Fund which
               shall consist of the assets of the Plan held by the Trustee (or
               Custodian, if applicable) pursuant to this Section 5. Assets
               within the Fund may be pooled on behalf of all Participants,
               earmarked on behalf of each Participant or be a combination of
               pooled and earmarked. To the extent that assets are earmarked for
               a particular Participant, they will be held in a Separate Fund
               for that Participant.

               No part of the corpus or income of the Fund may be used for, or
               diverted to, purposes other than for the exclusive bene    of
               Participants or their Beneficiaries.

     5.02      INVESTMENT AUTHORITY
               Except as provided in Section 5.14 (relating to individual
               direction of investments by Participants), the Employer, not the
               Trustee (or Custodian, if applicable), shall have exclusive
               management and control over the investment of the Fund into any
               permitted investment. Notwithstanding the preceding sentence, a
               Trustee may make an agreement with the Employer whereby the
               Trustee will manage the investment of all or a portion of the
               Fund. Any such agreement shall be in writing and set forth such
               matters as the Trustee deems necessary or desirable.

     5.03      FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST
               POWERS
               This Section 5.03 applies where a financial organization has
               indicated in the Adoption Agreement that it will serve, with
               respect to this Plan, as Custodian or as Trustee without full
               trust powers (under applicable law). Hereinafter, a financial
               organization Trustee without full trust powers (under applicable
               law) shall be referred to as a Custodian. The Custodian shall
               have no discretionary authority with respect to the management of
               the Plan or the Fund but will act only as directed by the entity
               who has such authority.

                    A.   Permissible Investments - The assets of the Plan shall
                    be invested only in those investments which are available
                    through the Custodian in the ordinary course of business
                    which the Custodian may legally hold in a qualified plan and
                    which the Custodian chooses to make available to Employers
                    for qualified plan investments. Notwithstanding the
                    preceding sentence, the Prototype Sponsor may, as a
                    condition of making the Plan available to the Employer,
                    limit the types of property in which the assets of the Plan
                    may be invested.

               B.   Responsibilities of the Custodian - The responsibilities of
                    the Custodian shall be limited to the following:

                    1.   To receive Plan contributions and to hold, invest and
                         reinvest the Fund without distinction between principal
                         and interest; provided, however, that nothing in this
                         Plan shall require the Custodian to maintain physical
                         custody of stock certificates (or other indicia of
                         ownership of any type of asset) representing assets
                         within the Fund;

                    2.   To maintain accurate records of contributions,
                         earnings, withdrawals and other information the
                         Custodian deems relevant with respect to the Plan;

                    3.   To make disbursements from the Fund to Participants or
                         Beneficiaries upon the proper authorization of the Plan
                         Administrator; and

                                       18
<PAGE>
          4.   To furnish to the Plan Administrator a statement which reflects
               the value of the investments in the hands of the Custodian as of
               the end of each Plan Year and as of any other times as the
               Custodian and Plan Administrator may agree.

     C.   Powers of the Custodian -- Except as otherwise provided in this Plan,
          the Custodian shall have the power to take any action with respect to
          the Fund which it deems necessary or advisable to discharge its
          responsibilities under this Plan including, but not limited to, the
          following powers:

          1.   To invest all or a portion of the Fund (including idle cash
               balances) in time deposits, savings accounts, money market
               accounts or similar investments bearing a reasonable rate of
               interest in the Custodian's own savings department or the savings
               department of another financial organization;

          2.   To vote upon any stocks, bonds, or other securities; to give
               general or special proxies or powers of attorney with or without
               power of substitution; to exercise any conversion privileges or
               subscription rights and to make any payments incidental thereto;
               to oppose, or to consent to, or otherwise participate in,
               corporate reorganizations or other changes affecting corporate
               securities, and to pay any assessment or charges in connection
               therewith; and generally to exercise any of the powers of an
               owner with respect to stocks, bonds, securities or other
               property;

          3.   To hold securities or other property of the Fund in its own name,
               in the name of its nominee or in bearer form; and

          4.   To make, execute, acknowledge, and deliver any and all documents
               of transfer and conveyance and any and all other instruments that
               may be necessary or appropriate to carry out the powers herein
               granted.

5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND INDIVIDUAL
     TRUSTEE
     This Section 5.04 applies where a financial organization has indicated in
     the Adoption Agreement that it will serve as Trustee with full trust
     powers. This Section also applies where one or more individuals are named
     in the Adoption Agreement to serve as Trustee(s).

     A.   Permissible Investments -- The Trustee may invest the assets of the
          Plan in property of any character, real or personal, including, but
          not limited to the following: stocks, including shares of open-end
          investment companies (mutual funds); bonds; notes; debentures;
          options; limited partnership interests; mortgages; real estate or any
          interests therein; unit investment trusts; Treasury Bills, and other
          U.S. Government obligations; common trust funds, combined investment
          trusts, collective trust funds or commingled funds maintained by a
          bank or similar financial organization (whether or not the Trustee
          hereunder); savings accounts, time deposits or money market accounts
          of a bank or similar financial organization (whether or not the
          Trustee hereunder); annuity contracts; life insurance policies; or in
          such other investments as is deemed proper without regard to
          investments authorized by statute or rule of law governing the
          investment of trust funds but with regard to ERISA and this Plan.

          Notwithstanding the preceding sentence, the Prototype Sponsor may, as
          a condition of making the Plan available to the Employer, limit the
          types of property in which the assets of the Plan may be invested.

     B.   Responsibilities of the Trustee -- The responsibilities of the Trustee
          shall be limited to the following:

          1.   To receive Plan contributions and to hold, invest and reinvest
               the Fund without distinction between principal and interest;
               provided, however, that nothing in this Plan shall require the
               Trustee to maintain physical custody of stock certificates (or
               other indicia of ownership) representing assets within the Fund;

          2.   To maintain accurate records of contributions, earnings,
               withdrawals and other information the Trustee deems relevant with
               respect to the Plan;

          3.   To make disbursements from the Fund to Participants or
               Beneficiaries upon the proper authorization of the Plan
               Administrator; and

          4.   To furnish to the Plan Administrator a statement which reflects
               the value of the investments in the hands of the Trustee as of
               the end of each Plan Year and as of any other times as the
               Trustee and Plan Administrator may agree.

     C.   Powers of the Trustee -- Except as otherwise provided in this Plan,
          the Trustee shall have the power to take any action with respect to
          the Fund which it deems necessary or advisable to discharge its
          responsibilities under this Plan including, but not limited to, the
          following powers:

          1.   To hold any securities or other property of the Fund in its own
               name, in the name of its nominee or in bearer form;

                                       19

<PAGE>
          2.   To purchase or subscribe for securities issued, or real property
               owned, by the Employer or any trade or business under common
               control with the Employer but only if the prudent investment and
               diversification requirements of ERISA are satisfied;

          3.   To sell, exchange, convey, transfer or otherwise dispose of any
               securities or other property held by the Trustee, by private
               contract or at public auction. No person dealing with the Trustee
               shall be bound to see to the application of the purchase money or
               to inquire into the validity, expediency, or propriety of any
               such sale or other disposition, with or without advertisement;

          4.   To vote upon any stocks, bonds, or other securities; to give
               general or special proxies or powers of attorney with or without
               power of substitution; to exercise any conversion privileges or
               subscription rights and to make any payments incidental thereto;
               to oppose, or to consent to, or otherwise participate in,
               corporate reorganizations or other changes affecting corporate
               securities, and to delegate discretionary powers, and to pay any
               assessments or charges in connection therewith; and generally to
               exercise any of the powers of an owner with respect to stocks,
               bonds, securities or other property;

          5.   To invest any part or all of the Fund (including idle cash
               balances) in certificates of deposit, demand or time deposits,
               savings accounts, money market accounts or similar investments of
               the Trustee (if the Trustee is a bank or similar financial
               organization), the Prototype Sponsor or any affiliate of such
               Trustee or Prototype Sponsor, which bear a reasonable rate of
               interest;

          6.   To provide sweep services without the receipt by the Trustee of
               additional compensation or other consideration (other than
               reimbursement of direct expenses properly and actually incurred
               in the performance of such services);

          7.   To hold in the form of cash for distribution or investment such
               portion of the Fund as, at any time and from time-to-time, the
               Trustee shall deem prudent and deposit such cash in interest
               bearing or noninterest bearing accounts;

          8.   To make, execute, acknowledge, and deliver any and all documents
               of transfer and conveyance and any and all other instruments that
               may be necessary or appropriate to carry out the powers herein
               granted;

          9.   To settle, compromise, or submit to arbitration any claims,
               debts, or damages due or owing to or from the Plan, to commence
               or defend suits or legal or administrative proceedings, and to
               represent the Plan in all suits and legal and administrative
               proceedings;

          10.  To employ suitable agents and counsel, to contract with agents to
               perform administrative and recordkeeping duties and to pay their
               reasonable expenses, fees and compensation, and such agent or
               counsel may or may not be agent or counsel for the Employer;

          11.  To cause any part or all of the Fund, without limitation as to
               amount, to be commingled with the funds of other trusts
               (including trusts for qualified employee benefit plans) by
               causing such money to be invested as a part of any pooled,
               common, collective or commingled trust fund (including any such
               fund described in the Adoption Agreement) heretofore or hereafter
               created by any Trustee (if the Trustee is a bank), by the
               Prototype Sponsor, by any affiliate bank of such a Trustee or by
               such a Trustee or the Prototype Sponsor, or by such an affiliate
               in participation with others; the instrument or instruments
               establishing such trust fund or funds, as amended, being made
               part of this Plan and trust so long as any portion of the Fund
               shall be invested through the medium thereof; and

          12.  Generally to do all such acts, execute all such instruments,
               initiate such proceedings, and exercise all such rights and
               privileges with relation to property constituting the Fund as if
               the Trustee were the absolute owner thereof.

 5.05     DIVISION OF FUND INTO INVESTMENT FUNDS
          The Employer may direct   the  Trustee (or Custodian)
          from time-to-time to divide and redivide the Fund into
          one or more Investment Funds. Such Investment Funds may
          include, but not be limited to, Investment Funds representing the
          assets under the control of an investment manager pursuant to Section
          5.12 and Investment Funds representing investment options available
          for individual direction by Participants pursuant to Section 5.14.
          Upon each division or redivision, the Employer may specify the part of
          the Fund to be allocated to each such Investment Fund and the terms
          and conditions, if any, under which the assets in such Investment Fund
          shall be invested.

5.06      COMPENSATION AND EXPENSES
          The Trustee (or Custodian, if applicable) shall receive
          such reasonable compensation as may be agreed upon by
          the Trustee (or Custodian) and the Employer. The Trustee (or
          Custodian) shall be entitled to reimbursement by the Employer for all
          proper expenses incurred in carrying out his or her duties under this
          Plan, including reasonable legal, accounting and actuarial expenses.
          If not paid by the Employer, such compensation and expenses may be
          charged against the Fund.

          All taxes of any kind that may be levied or assessed under existing
          or future laws upon, or in respect of, the Fund or the income thereof
          shall be paid from the Fund.

                                       20
<PAGE>
     5.07      NOT OBLIGATED TO QUESTION DATA
               The Employer shall furnish the Trustee (or Custodian, if
               applicable) and Plan Administrator the information which each
               party deems necessary for the administration of the Plan
               including, but not limited to, changes in a Participant's status,
               eligibility, mailing addresses and other such data as may be
               required. The Trustee (or Custodian) and  Plan Administrator
               shall be entitled to act on such information as is supplied them
               and shall have no duty or responsibility to further verify or
               question such information.

     5.08      LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
               The Plan Administrator shall be responsible for withholding
               federal income taxes from distributions from the Plan, unless the
               Participant (or Beneficiary, where applicable) elects not to
               have such taxes withheld. The Trustee (or Custodian) or other
               payor may act as agent for the Plan Administrator to withhold
               such taxes and to make the appropriate distribution reports, if
               the Plan Administrator furnishes all the information to the
               Trustee (or Custodian) or other payor it may need to do
               withholding and reporting.

     5.09      RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)
               The Trustee (or Custodian, if applicable) may resign at any time
               by giving 30 days advance written notice to the Employer. The
               resignation shall become effective 30 days after receipt of such
               notice unless a shorter period is agreed upon.

               The Employer may remove any Trustee (or Custodian) at any time by
               giving written notice to such Trustee (or Custodian) and such
               removal shall be effective 30 days after receipt of such notice
               unless a shorter period is agreed upon. The Employer shall have
               the power to appoint a successor Trustee (or Custodian).

               Upon such resignation or removal, if the resigning or removed
               Trustee (or Custodian) is the sole Trustee (or Custodian), he or
               she shall transfer all of the assets of the Fund then held by
               such Trustee (or Custodian) as expeditiously as possible to the
               successor Trustee (or Custodian) after paying or reserving such
               reasonable amount as he or she shall deem necessary to provide
               for the expense in the settlement of the accounts and the amount
               of any compensation due him or her and any sums chargeable
               against the Fund for which he or she may be liable. If the Funds
               as reserved are not sufficient for such propose, then he or she
               shall be entitled to reimbursement from the successor Trustee (or
               Custodian) out of the assets in the successor Trustee's (or
               Custodian's) hands under this Plan. If the amount reserved shall
               be in excess of the amount actually needed, the former Trustee
               (or Custodian) shall return such excess to the successor Trustee
               (or Custodian).

               Upon receipt of the transferred assets, the successor Trustee (or
               Custodian) shall thereupon succeed to all the powers and
               responsibilities given to the Trustee (or Custodian) by this
               Plan.

               The resigning or removed Trustee (or Custodian) shall render an
               accounting to the Employer and unless objected to by the Employer
               within 30 days of its receipt, the accounting shall be deemed to
               have been approved and the resigning or removed Trustee (or
               Custodian) shall be released and discharged as to all matters set
               forth in the accounting. Where a financial organization is
               serving as Trustee (or Custodian) and it is merged with or
               bought by another organization (or comes under the control of
               any federal or state agency), that organization shall serve as
               the successor Trustee (or Custodian) of this Plan, but only if it
               is the type of organization that can so serve under applicable
               law.

               Where the Trustee or Custodian is serving as a nonbank trustee or
               custodian pursuant to Section 1.401-12(n) of the Income Tax
               Regulations, the Employer will appoint a successor Trustee (or
               Custodian) upon notification by the Commissioner of Internal
               Revenue that such substitution is required because the Trustee
               (or Custodian) has failed to comply with the requirements of
               Section 1.401-12(n) or is not keeping such records or making such
               returns or rendering such statements as are required by forms or
               regulations.

     5.10      DEGREE OF CARE - LIMITATIONS OF LIABILITY
               The Trustee (or Custodian) shall not be liable for any losses
               incurred by the Fund by any direction to invest communicated by
               the Employer, Plan Administrator, investment manager appointed
               pursuant to Section 5.12 or any Participant or Beneficiary. The
               Trustee (or Custodian) shall be under no liability for
               distributions made or other action taken or not taken at the
               written direction of the Plan Administrator. It is specifically
               understood that the Trustee (or Custodian) shall have no duty or
               responsibility with respect to the determination of matters
               pertaining to the eligibility of any Employee to become a
               Participant or remain a Participant hereunder, the amount of
               benefit to which a Participant or Beneficiary shall be entitled
               to receive hereunder, whether a distribution to Participant or
               Beneficiary is appropriate under the terms of the Plan or the
               size and type of any policy to be purchased from any insurer for
               any Participant hereunder or similar matters; it being understood
               that all such responsibilities under the Plan are vested in the
               Plan Administrator.

                                       21
<PAGE>
5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR CUSTODIAN)
     Notwithstanding any other provision herein, and except as may be otherwise
     provided by ERISA, the Employer shall indemnify and hold harmless the
     Trustee (or Custodian, if applicable) and the Prototype Sponsor, their
     officers, directors, employees, agents, their heirs, executors, successors
     and assigns, from and against any and all liabilities, damages, judgments,
     settlements, losses, costs, charges, or expenses (including legal expenses)
     at any time arising out of or incurred in connection with any action taken
     by such parties in the performance of their duties with respect to this
     Plan, unless there has been a final adjudication of gross negligence or
     willful misconduct in the performance of such duties.

     Further, except as may be otherwise provided by ERISA, the Employer will
     indemnify the Trustee (or Custodian) and Prototype Sponsor from any
     liability, claim or expense (including legal expense) which the Trustee (or
     Custodian) and Prototype Sponsor shall incur by reason of or which results,
     in whole or in part, from the Trustee's (or Custodian's) or Prototype
     Sponsor's reliance on the facts and other directions and elections the
     Employer communicates or fails to communicate

5.12 INVESTMENT MANAGERS

     A.   Definition of Investment Manager - The Employer may appoint one or
          more investment managers to make investment decisions with respect to
          all or a portion of the Fund. The investment manager shall be any firm
          or individual registered as an investment adviser under the Investment
          Advisers Act of 1940, a bank as defined in said Act or an insurance
          company qualified under the laws of more than one state to perform
          services consisting of the management, acquisition or disposition of
          any assets of the Plan.

     B.   Investment Manager's Authority - A separate Investment Fund shall be
          established representing the assets of the Fund invested at the
          direction of the investment manager. The investment manager so
          appointed shall direct the Trustee (or Custodian, applicable) with
          respect to the investment of such Investment Fund. The investments
          which may be acquired at the direction of the investment manager are
          those described in Section 5.03(A) (for Custodians) or Section 5.04(A)
          (for Trustees).

     C.   Written Agreement - The appointment of any investment manager shall be
          by written agreement between the Employer and the investment manager
          and a copy of such agreement (and any modification or termination
          thereof) must be given to the Trustee (or Custodian).

          The agreement shall set forth, among other matters, the effective date
          of the investment manager's appointment and an acknowledgment by the
          investment manager that it is a fiduciary of the Plan under ERISA.

     D.   Concerning the Trustee (or Custodian) - Written notice of each
          appointment of an investment manager shall be given to the Trustee (or
          Custodian) in advance of the effective date of such appointment. Such
          notice shall specify which portion of the Fund will constitute the
          Investment Fund subject to the investment manager's direction. The
          Trustee (or Custodian) shall comply with the investment direction
          given to it by the investment manager and will not be liable for any
          loss which may result by reason of any action (or inaction) it takes
          at the direction of the investment manager.

5.13 MATTERS RELATING TO INSURANCE

     A.   If a life insurance policy is to be purchased for a Participant, the
          aggregate premium for certain life insurance for each Participant must
          be less than a certain percentage of the aggregate Employer
          Contributions and Forfeitures allocated to a Participant's Individual
          Account at any particular time as follows:

          1.   Ordinary Life Insurance - For purposes of these Incidental
               Insurance provisions, ordinary life insurance contracts are
               contracts with both nondecreasing death benefits and
               nonincreasing premiums. If such contracts are purchased, less
               than 50% of the aggregate Employer Contributions and Forfeitures
               allocated to any Participant's Individual Account will be used to
               pay the premiums attributable to them.

          2.   Term and Universal Life Insurance - No more than 25% of the
               aggregate Employer Contributions and Forfeitures allocated to any
               Participant's Individual Account will be used to pay the premiums
               on term life insurance contracts, universal life insurance
               contracts, and all other life insurance contracts which are not
               ordinary life.

          3.   Combination - The sum of 50% of the ordinary life insurance
               premiums and all other life insurance premiums will not exceed
               25% of the aggregate Employer Contributions and Forfeitures
               allocated to any Participant's Individual Account.

          If this Plan is a profit sharing plan, the above incidental benefits
          limits do not apply to life insurance contracts purchased with
          Employer Contributions and Forfeitures that have been in the
          Participant's Individual Account for at least 2 full Plan Years,
          measured from the date such contributions were allocated.

                                       22
<PAGE>
          B.   Any dividends or credits earned on insurance contracts for a
               Participant shall be allocated to such Participant's Individual
               Account.

          C.   Subject to Section 6.05, the contracts on a Participant's
               life will be converted to cash or an annuity or distributed to
               the Participant upon commencement of benefits.

          D.   The Trustee (or Custodian, if applicable) shall apply for
               and will be the owner of any insurance contract(s) purchased
               under the terms of this Plan. The insurance contract(s) must
               provide that proceeds will be payable to the Trustee (or
               Custodian), however, the Trustee (or Custodian) shall be required
               to pay over all proceeds of the contract(s) to the Participant's
               designated Beneficiary in accordance with the distribution
               provisions of this Plan. A Participant's spouse will be the
               designated Beneficiary of the proceeds in all circumstances
               unless a qualified election has been made in accordance with
               Section 6.05. Under no circumstances shall the Fund retain any
               part of the proceeds. In the event of any conflict between the
               terms of this Plan and the terms of any insurance contract
               purchased hereunder, the Plan provisions shall control.

          E.   The Plan Administrator may direct the Trustee (or Custodian) to
               sell and distribute insurance or annuity contracts to a
               Participant (or other party as may be permitted) in accordance
               with applicable law or regulations.

  5.14    DIRECTION OF INVESTMENTS BY PARTICIPANT
          If so indicated in the Adoption Agreement, each Participant may
          individually direct the Trustee (or Custodian, if applicable)
          regarding the investment of part or all of his or her Individual
          Account. To the extent so directed, the Employer, Plan Administrator,
          Trustee (or Custodian) and all other fiduciaries are relieved of their
          fiduciary responsibility under Section 404 of ERISA.

          The Plan Administrator shall direct that a Separate Fund be
          established in the name of each Participant who directs the investment
          of part or all of his or her Individual Account. Each Separate Fund
          shall be charged or credited (as appropriate) with the earnings,
          gains, losses or expenses attributable to such Separate Fund. No
          fiduciary shall be liable for any loss which results from a
          Participant's individual direction. The assets subject to individual
          direction shall not be invested in collectibles as that term is
          defined in Section 408(m) of the Code.

          The Plan Administrator shall establish such uniform and
          nondiscriminatory rules relating to individual direction as it deems
          necessary or advisable including, but not limited to, rules describing
          (1) which portions of Participant's Individual Account can be
          individually directed; (2) the frequency of investment changes; (3)
          the forms and procedures for making investment changes; and (4) the
          effect of a Participant's failure to make a valid direction.

          The Plan Administrator may, in a uniform and nondiscriminatory manner,
          limit the available investments for Participants' individual direction
          to certain specified investment options (including, but not limited
          to, certain mutual funds, investment contracts, deposit accounts and
          group trusts). The Plan Administrator may permit, in a uniform and
          nondiscriminatory manner, a Beneficiary of a deceased Participant or
          the alternate payee under a qualified domestic relations order (as
          defined in Section 414(p) of the Code) to individually direct in
          accordance with this Section.

SECTION SIX VESTING AND DISTRIBUTION

  6.01    DISTRIBUTION TO PARTICIPANT

          A.   Distributable Events

               1.   Entitlement to Distribution - The Vested portion of a
                    Participant's Individual Account shall be distributable to
                    the Participant upon (1) the occurrence of any of the
                    distributable events specified in the Adoption Agreement;
                    (2) the Participant's Termination of Employment after
                    attaining Normal Retirement Age; (3) the termination of the
                    Plan; and (4) the Participant's Termination of Employment
                    after satisfying any Early Retirement Age conditions.

                    If a Participant separates from service before satisfying
                    the Early Retirement Age requirement, but has satisfied the
                    service requirement, the Participant will be entitled to
                    elect an early retirement benefit upon satisfaction of such
                    age requirement.

               2.   Written Request:  When Distributed - A Participant
                    entitled to distribution who wishes to receive a
                    distribution must submit a written request to the Plan
                    Administrator. Such request shall be made upon a form
                    provided by the Plan Administrator. Upon a valid request,
                    the Plan Administrator shall direct the Trustee (or
                    Custodian, if applicable) to commence distribution no later
                    than the time specified in the Adoption Agreement for this
                    purpose and, if not specified in the Adoption Agreement,
                    then no later than 90 days following the later of:

                    a.   the close of the Plan Year within which the event
                         occurs which entitles the Participant to distribution;
                         or

                    b.   the close of the Plan Year in which the request is
                         received.

                                       23

<PAGE>
3.   Special Rules for Withdrawals During Service - If this is a profit sharing
     plan and the Adoption Agreement so provides, a Participant may elect to
     receive a distribution of all or part of the Vested portion of his or her
     Individual Account, subject to the requirements of Section 6.05 and further
     subject to the following limits:

     a.   Participant for 5 or more years. An Employee who has been a
          Participant in the Plan for 5 or more years may withdraw up to the
          entire Vested portion of his or her Individual Account.

     b.   Participant for less than 5 years. An Employee who has been a
          Participant in the Plan for less than 5 years may withdraw only the
          amount which has been in his or her Individual Account attributable to
          Employer Contributions for at least 2 full Plan Years, measured from
          the date such contributions were allocated. However, if the
          distribution is on account of hardship, the Participant may withdraw
          up to his or her entire Vested portion of the Participant's Individual
          Account. For this purpose, hardship shall have the meaning set forth
          in Section 6.01(A)(4) of the Code.

4.   Special Rules for Hardship Withdrawals - If this is a profit sharing plan
     and the Adoption Agreement so provides, a Participant may elect to receive
     a hardship distribution of all or part of the Vested portion of his or her
     Individual Account, subject to the requirements of Section 6.05 and further
     subject to the following limits:

     a.   Participant for 5 or more years. An Employee who has been a
          Participant in the Plan for 5 or more years may withdraw up to the
          entire Vested portion of his or her Individual Account.

     b.   Participant for less than 5 years. An Employee who has been a
          Participant in the Plan for less than 5 years may withdraw only the
          amount which has been in his or her Individual Account attributable to
          Employer Contributions for at least 2 full Plan Years, measured from
          the date such contributions were allocated.

          For purposes of this Section 6.01(A)(4) and Section 6.01(A)(3)
          hardship is defined as an immediate and heavy financial need of the
          Participant where such Participant lacks other available resources.
          the following are the only financial needs considered immediate and
          heavy: expenses incurred or necessary for medical care, described in
          Section 213(d) of the Code, of the Employee, the Employee's spouse or
          dependents; the purchase (excluding mortgage payments) of a principal
          residence for the Employee; payments of tuition and related
          educational fees for the next 12 months of post-secondary education
          for the Employee, the Employee's spouse, children or dependents; or
          the need to prevent eviction of the Employee from, or a foreclosure on
          the mortgage of the Employee's principal residence.

          A distribution will be considered as necessary to satisfy an immediate
          and heavy financial need of the Employee only if:

          1) The employee has obtained all distributions, other than hardship
             distributions, and all nontaxable loans under all plans maintained
             by the Employer; 2) The distribution is not in excess of the amount
             of an immediate and heavy financial need (including amounts
             necessary to pay any federal, state or local income taxes or
             penalties reasonably anticipated to result from the distribution).

5.   One-Time In-Service Withdrawal Option - If this is a profit sharing plan
     and the Employer has elected the one-time in-service withdrawal option in
     the Adoption Agreement, then Participants will be permitted only one
     in-service withdrawal during the course of such Participants employment
     with the Employer. The amount which the Participant can withdraw will be
     limited to the lesser of the amount determined under the limits set forth
     in Section 6.01(A)(3) or the percentage of the Participant's Individual
     Account specified by the Employer in the Adoption Agreement. Distributions
     under this Section will be subject to the requirements of Section 6.05.

6.   Commencement of Benefits - Notwithstanding any other provision, unless the
     Participant elects otherwise, distribution of benefits will begin no later
     than the 60th day after the latest of the close of the Plan Year in which:

     a.   the Participant attains Normal Retirement Age;

     b.   occurs the 10th anniversary of the year in which the Participant
          commenced participation in the Plan; or

     c.   the Participant incurs a Termination of Employment.

     Notwithstanding the foregoing, the failure of a Participant and spouse to
     consent to a distribution while a benefit is immediately distributable,
     within the meaning of Section 6.02(B) of the Plan, shall be deemed to be an
     election to defer commencement of payment of any benefit sufficient to
     satisfy this Section.

B.   Determining the Vested Portion - In determining the Vested portion of a
     Participant's Individual Account, the following roles apply:

                                       24
<PAGE>
     1.   Employer Contributions and Forfeitures - The Vested portion of a
          Participant's Individual Account derived from Employer Contributions
          and Forfeitures is determined by applying the vesting schedule
          selected in the Adoption Agreement (or the vesting schedule described
          in Section 6.01(C) if the Plan is a Top-Heavy Plan).

     2.   Rollover and Transfer Contributions - A Participant is fully Vested in
          his or her rollover contributions and transfer contributions.

     3.   Fully Vested Under Certain Circumstances - A Participant is fully
          Vested in his or her Individual Account if any of the following
          occurs:

          a.   the Participant reaches Normal Retirement Age;

          b.   the Plan is terminated or partially terminated; or

          c.   there exists a complete discontinuance of contributions under the
               Plan.

          Further, unless otherwise indicated in the Adoption Agreement, a
          Participant is fully Vested if the Participant dies, incurs a
          Disability, or satisfies the conditions for Early Retirement Age (if
          applicable).

     4.   Participants in a Prior Plan - If a Participant was a participant in a
          Prior Plan on the Effective Date, his or her Vested percentage shall
          not be less than it would have been under such Prior Plan as computed
          on the Effective Date.

C.   Minimum Vesting Schedule for Top-Heavy Plans - The following vesting
     provisions apply for any Plan Year in which this Plan is a Top-Heavy Plan.

     Notwithstanding the other provisions of this Section 6.01 or the vesting
     schedule selected in the Adoption Agreement (unless those provisions or
     that schedule provide for more rapid vesting), a Participant's Vested
     portion of his or her Individual Account attributable to Employer
     Contributions and Forfeiture shall be determined in accordance with the
     vesting schedule elected by the Employer in the Adoption Agreement (and if
     no election is made the 6 year graded schedule will be deemed to have been
     elected) as described below:

<Table>
<Caption>

          6 YEAR GRADED                              3 YEAR CLIFF

  Years of                                 Years of
Vesting Service     Vested Percentage     Vesting Service      Vested Percentage
---------------     -----------------     ---------------      -----------------
    <S>                  <C>                  <C>                  <C>
     1                     0                    1                     0
     2                    20                    2                     0
     3                    40                    3                   100
     4                    60
     5                    80
     6                   100
</Table>

          This minimum vesting schedule applies to all benefits within the
          meaning of Section 411(a)(7) of the Code, except those attributable to
          Nondeductible Employee Contributions including benefits accrued before
          the effective date of Section 416 of the Code and benefits accrued
          before the Plan became a Top-Heavy Plan. Further, no decrease in a
          Participant's Vested percentage may occur in the event the Plan's
          status as a Top-Heavy Plan changes for any Plan Year. However, this
          Section 6.01(C) does not apply to the Individual Account of any
          Employee who does not have an Hour of Service after the Plan has
          initially become a Top-Heavy Plan and such Employee's Individual
          Account attributable to Employer Contributions and Forfeitures will be
          determined without regard to this Section.

          If this Plan ceases to be a Top-Heavy Plan, then in accordance with
          the above restrictions, the vesting schedule as selected in the
          Adoption Agreement will govern. If the vesting schedule under the Plan
          shifts in or out of top-heavy status, such shift is an amendment to
          the vesting schedule and the election in Section 9.04 applies.

     D.   Break in Vesting Service and Forfeitures - If a Participant incurs a
          Termination of Employment, any portion of his or her Individual
          Account which is not Vested shall be held in a suspense account. Such
          suspense account shall share in any increase or decrease in the fair
          market value of the assets of the Fund in accordance with Section 4 of
          the Plan. The disposition of such suspense account shall be as
          follows:

          1.   Breaks in Vesting Service - If a Participant neither receives nor
               is deemed to receive a distribution pursuant to Section
               6.01(D)(3) or (4) and the Participant returns to the service of
               the Employer before incurring 5 consecutive Breaks in Vesting
               Service, there shall be no Forfeiture and the amount in such
               suspense account shall be recredited to such Participant's
               Individual Account.

          2.   Five Consecutive Breaks in Vesting Service - If a Participant
               neither receives nor is deemed to receive a distribution pursuant
               to Section 6.01(D)(3) or (4) and the Participant does not return
               to the service of the

                                       25

<PAGE>
               Employer before incurring 5 consecutive Breaks in Vesting
               Service, the portion of the Participant's Individual Account
               which is not Vested shall be treated as a Forfeiture and
               allocated in accordance with Section 3.01(C).

          3.   Cash-out of Certain Participants - If the value of the Vested
               portion of such Participant's Individual Account derived from
               Nondeductible Employee Contributions and Employer Contributions
               does not exceed $3,500, Participant shall receive a distribution
               of the entire Vested portion of such Individual Account and the
               portion which is not Vested shall be treated as a Forfeiture and
               allocated in accordance with Section 3.01(C). For purposes of
               this Section, if the value of the Vested portion of a
               Participant's Individual Account is zero, the Participant shall
               be deemed to have received a distribution of such Vested
               Individual Account. A Participant's Vested Individual Account
               balance shall not include accumulated deductible employee
               contributions within the meaning of Section 72(o)(5)(B) of the
               Code for Plan Years beginning prior to January 1, 1989.

          4.   Participants Who Elect to Receive Distributions - If such
               Participant elects to receive a distribution, in accordance with
               Section 6.02(B), of the value of the Vested portion of his or her
               Individual Account derived from Nondeductible Employee
               Contributions and Employer Contributions, the portion which is
               not Vested shall be treated as a Forfeiture and allocated in
               accordance with Section 3.01(C).

          5.   Re-employed Participants - If a Participant receives or is deemed
               to receive a distribution pursuant to Section 6.01(D)(3) or (4)
               above and the Participant resumes employment covered under this
               Plan, the Participant's Employer-derived Individual Account
               balance will be restored to the amount on the date of
               distribution if the Participant repays to the Plan the full
               amount of the distribution attributable to Employer Contributions
               before the earlier of 5 years after the first date on which the
               Participant is subsequently re-employed by the Employer, or the
               date the Participant incurs 5 consecutive Breaks in Vesting
               Service following the date of the distribution.

               Any restoration of a Participant's Individual Account pursuant
               to Section 6.01(D)(5) shall be made from other Forfeitures,
               income or gain to the Fund or contributions made by the Employer.

     E.   Distribution Prior to Full Vesting - If a distribution is made to a
          Participant who was not then fully Vested in his or her Individual
          Account derived from Employer Contributions and the Participant may
          increase his or her Vested percentage in his or her Individual
          Account, then the following rules shall apply:

          1.   a separate account will be established for the Participant's
               interest in the Plan as of the time of the distribution, and

          2.   at any relevant time the Participant's Vested portion of the
               separate account will be equal to an amount ("X") determined by
               the formula: X=P (AB + (R x D)) - (R x D) where "P" is the Vested
               percentage at the relevant time, "AB" is the separate account
               balance at the relevant time; "D" is the amount of the
               distribution; and "R" is the ratio of the separate account
               balance at the relevant time to the separate account balance
               after distribution.

6.02 FORM OF DISTRIBUTION TO A PARTICIPANT

     A.   Value of Individual Account Does Not Exceed $3,500 - If the value of
          the Vested portion of a Participant's Individual Account derived from
          Nondeductible Employee Contributions and Employer Contributions does
          not exceed $3,500, distribution from the Plan shall be made to the
          Participant in a single lump sum in lieu of all other forms of
          distribution from the Plan as soon as administratively feasible.

     B.   Value of Individual Account Exceeds $3,500

          1.   If the value of the Vested portion of a Participant's Individual
               Account derived from Nondeductible Employee Contributions and
               Employer Contributions exceeds (or at the time of any prior
               distribution exceeded) $3,500, and the Individual Account is
               immediately distributable, the Participant and the Participant's
               spouse (or where either the Participant or the spouse died, the
               survivor) must consent to any distribution of such Individual
               Account. The consent of the Participant and the Participant's
               spouse shall be obtained in writing within the 90-day period
               ending on the annuity starting date. The annuity starting date is
               the first day of the first period for which an amount is paid as
               an annuity or any other form. The Plan Administrator shall notify
               the Participant and the Participant's spouse of the right to
               defer any distribution until the Participant's Individual Account
               is no longer immediately distributable. Such notification shall
               include a general description of the material features, and an
               explanation of the relative values of, the optional forms of
               benefit available under the Plan in a manner that would satisfy
               the notice requirements of Section 417(a)(3) of the Code, and
               shall be provided no less than 30 days and no more than 90 days
               prior to the annuity starting date.

               If a distribution is one to which Sections 401(a)(11) and 417 of
               the Internal Revenue Code do not apply, such distribution may
               commence less than 30 days after the notice required under
               Section 1.411(a)-11(c) of the Income Tax Regulations is given,
               provided that:

                                       26

<PAGE>
               a.   the Plan Administrator clearly informs the Participant that
                    the Participant has a right to a period of at least 30 days
                    after receiving the notice to consider the decision of
                    whether or not to elect a distribution (and, if applicable,
                    a particular distribution option), and

               b.   the Participant, after receiving the notice, affirmatively
                    elects a distribution.

               Notwithstanding the foregoing, only the Participant need consent
               to the commencement of a distribution in the form of a qualified
               joint and survivor annuity while the Individual Account is
               immediately distributable. Neither the consent of the Participant
               nor the Participant's spouse shall be required to the extent that
               a distribution is required to satisfy Section 401(a)(9) or
               Section 415 of the Code. In addition, upon termination of this
               Plan if the Plan does not offer an annuity option (purchased from
               a commercial provider), the Participant's Individual Account may,
               without the Participant's consent, be distributed to the
               Participant or transferred to another defined contribution plan
               (other than an employee stock ownership plan as defined in
               Section 4975(e)(7) of the Code) within the same controlled group.

               An Individual Account is immediately distributable if any part of
               the Individual Account could be distributed to the Participant
               (or surviving spouse) before the Participant attains or would
               have attained (if not deceased) the later of Normal Retirement
               Age or age 62.

          2.   For purposes of determining the applicability of the foregoing
               consent requirements to distributions made before the first day
               of the first Plan Year beginning after December 31, 1988, the
               Vested portion of a Participant's Individual Account shall not
               include amounts attributable to accumulated deductible employee
               contributions within the meaning of Section 72(o)(5)(B) of the
               Code.

     C.   Other Forms of Distribution to Participant - If the value of the
          Vested portion of a Participant's Individual Account exceeds $3,500
          and the Participant has properly waived the joint and survivor
          annuity, as described in Section 6.05, the Participant may request in
          writing that the Vested portion of his or her Individual Account be
          paid to him or her in one or more of the following forms of payment:
          (1) in a lump sum; (2) in installment payments over a period not to
          exceed the life expectancy of the Participant or the joint and last
          survivor life expectancy of the Participant and his or her designated
          Beneficiary; or (3) applied to the purchase of an annuity contract.

          Notwithstanding anything in this Section 6.02 to the contrary, a
          Participant cannot elect payments in the form of an annuity if the
          Retirement Equity Act safe harbor rules of Section 6.05(F) apply.

6.03      DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT

          A.   Designation of Beneficiary - Spousal Consent - Each Participant
               may designate, upon a form provided by and delivered to the Plan
               Administrator, one or more primary and contingent Beneficiaries
               to receive all or a specified portion of the Participant's
               Individual Account in the event of his or her death. A
               Participant may change or revoke such Beneficiary designation
               from time to time by completing and delivering the proper form
               to the Plan Administrator.

               In the event that a Participant wishes to designate a primary
               Beneficiary who is not his or her spouse, his or her spouse must
               consent in writing to such designation, and the spouse's consent
               must acknowledge the effect of such designation and be witnessed
               by a notary public or plan representative. Notwithstanding this
               consent requirement, if the Participant established to the
               satisfaction of the Plan Administrator that such written consent
               may not be obtained because there is no spouse or the spouse
               cannot be located, no consent shall be required. Any change of
               Beneficiary will require a new spousal consent.

          B.   Payment to Beneficiary - If a Participant dies before the
               Participant's entire Individual Account has been paid to him or
               her, such deceased Participant's Individual Account shall be
               payable to any surviving Beneficiary designated by the
               Participant, or, if no Beneficiary survives the Participant, to
               the Participant's estate.

          C.   Written Request: When Distributed - A Beneficiary of a deceased
               Participant entitled to a distribution who wishes to receive a
               distribution must submit a written request to the Plan
               Administrator. Such request shall be made upon a form provided by
               the Plan Administrator. Upon a valid request, the Plan
               Administrator shall direct the Trustee (or Custodian) to commence
               distribution no later than the time specified in the Adoption
               Agreement for this purpose and if not specified in the Adoption
               Agreement, then no later than 90 days following the later of:

               1.   the close of the Plan Year within which the Participant
                    dies; or

               2.   the close of the Plan Year in which the request is received.

                                       27
<PAGE>
6.04 FORM OF DISTRIBUTION TO BENEFICIARY

     A.   Value of Individual Account Does Not Exceed $3,500 -- If the value of
          the Participant's Individual Account derived from Nondeductible
          Employee Contributions and Employer Contributions does not exceed
          $3,500, the Plan Administrator shall direct the Trustee (or Custodian,
          if applicable) to make a distribution to the Beneficiary in a single
          lump sum in lieu of all other forms of distribution from the Plan.

     B.   Value of Individual Account Exceeds $3,500 -- If the value of a
          Participant's Individual Account derived from Nondeductible Employee
          Contributions and Employer Contributions exceeds $3,500 the
          preretirement survivor annuity requirements of Section 6.05 shall
          apply unless waived in accordance with that Section or unless the
          Retirement Equity Act safe harbor rules of Section 6.05(F) apply.
          However, a surviving spouse Beneficiary may elect any form of payment
          allowable under the Plan in lieu of the preretirement survivor
          annuity. Any such payment to the surviving spouse must meet the
          requirements of Section 6.06.

     C.   Other Forms of Distribution to Beneficiary -- If the value of a
          Participant's Individual Account exceeds $3,500 and the Participant
          has properly waived the preretirement survivor annuity, as described
          in Section 6.05 (if applicable) or if the Beneficiary is the
          Participant's surviving spouse, the Beneficiary may, subject to the
          requirements of Section 6.06, request in writing that the
          Participant's Individual Account be paid as follows: (1) in a lump
          sum; or (2) in installment payments over a period not to exceed the
          life expectancy of such Beneficiary.

6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS

     A.   The provisions of this Section shall apply to any Participant who is
          credited with at least one Hour of Eligibility Service with the
          Employer on or after August 23, 1984, and such other Participants as
          provided in Section 6.05(G).

     B.   Qualified Joint and Survivor Annuity -- Unless an optional form of
          benefit is selected pursuant to a qualified election within the 90-day
          period ending on the annuity starting date, a married Participant's
          Vested account balance will be paid in the form of a qualified joint
          and survivor annuity and an unmarried Participant's Vested account
          balance will be paid in the form of a life annuity. The Participant
          may elect to have such annuity distributed upon attainment of the
          earliest retirement age under the Plan.

     C.   Qualified Preretirement Survivor Annuity -- Unless an optional form of
          benefit has been selected within the election period pursuant to a
          qualified election, if a Participant dies before the annuity starting
          date then the Participant's Vested account balance shall be applied
          toward the purchase of an annuity for the life of the surviving
          spouse. The surviving spouse may elect to have such annuity
          distributed within a reasonable period after the Participant's death.

     D.   Definitions

          1.   Election Period -- The period which begins on the first day of
               the Plan Year in which the Participant attains age 35 and ends on
               the date of the Participant's death. If a Participant separates
               from service prior to the first day of the Plan Year in which age
               35 is attained, with respect to the account balance as of the
               date of separation, the election period shall begin on the date
               of separation.

               Pre-age 35 waiver -- A Participant who will not yet attain age
               35 as of the end of any current Plan Year may make special
               qualified election to waive the qualified preretirement survivor
               annuity for the period beginning on the date of such election and
               ending on the first day of the Plan Year in which the Participant
               will attain age 35. Such election shall not be valid unless the
               Participant receives a written explanation of the qualified
               preretirement survivor annuity in such terms as are comparable to
               the explanation required under Section 6.05(E)(1). Qualified
               preretirement survivor annuity coverage will be automatically
               reinstated as of the first day of the Plan Year in which the
               Participant attains age 35. Any new waiver on or after such date
               shall be subject to the full requirements of this Section 6.05.

          2.   Earliest Retirement Age -- The earliest date on which, under the
               Plan, the Participant could elect to receive retirement benefits.

          3.   Qualified Election -- A waiver of a qualified joint and survivor
               annuity or a qualified preretirement survivor annuity. Any waiver
               of a qualified joint and survivor annuity or a qualified
               preretirement survivor annuity shall not be effective unless: (a)
               the Participant's spouse consents in writing to the election, (b)
               the election designates a specific Beneficiary, including any
               class of beneficiaries or any contingent beneficiaries, which may
               not be changed without spousal consent (or the spouse expressly
               permits designations by the Participant without any further
               spousal consent); (c) the spouse's consent acknowledges the
               effect of the election; and (d) the spouse's consent is witnessed
               by a plan representative or notary public. Additionally, a
               Participant's waiver of the qualified joint and survivor annuity
               shall not be effective unless the election designates a form of
               benefit payment which may not be changed without spousal consent
               (or the spouse expressly permits designations by the Participant
               without any further spousal consent). If it is established to the
               satisfaction of a plan representative that there is no spouse or
               that the spouse cannot be located, a waiver will be deemed a
               qualified election.

                                       28
<PAGE>
                    Any consent by a spouse obtained under this provision (or
                    establishment that the consent of a spouse may not be
                    obtained) shall be effective only with respect to such
                    spouse. A consent that permits designations by the
                    Participant without any requirement of further consent by
                    such spouse must acknowledge that the spouse has the right
                    to limit consent to a specific Beneficiary, and a specific
                    form of benefit where applicable, and that the spouse
                    voluntarily elects to relinquish either or both of such
                    rights. A revocation of a prior waiver may be made by a
                    Participant without the consent of the spouse at any time
                    before the commencement of benefits. The number of
                    revocations shall not be limited. No consent obtained under
                    this provision shall be valid unless the Participant has
                    received notice as provided in Section 6.05(E) below.

               4.   Qualified Joint and Survivor Annuity - An immediate annuity
                    for the life of the Participant with a survivor annuity for
                    the life of the spouse which is not less than 50% and not
                    more than 100% of the amount of the annuity which is payable
                    during the joint lives of the Participant and the spouse and
                    which is the amount of benefit which can be purchased with
                    the Participant's vested account balance. The percentage of
                    the survivor annuity under the Plan shall be 50% (unless a
                    different percentage is elected by the Employer in the
                    Adoption Agreement).

               5.   Spouse (surviving spouse) - The spouse or surviving spouse
                    of the Participant, provided that a former spouse will be
                    treated as the spouse or surviving spouse and a current
                    spouse will not be treated as the spouse or surviving spouse
                    to the extent provided under a qualified domestic relations
                    order as described in Section 414(p) of the Code.

               6.   Annuity Starting Date - The first day of the first period
                    for which an amount is paid as an annuity or any other form.

               7.   Vested Account Balance - The aggregate value of the
                    Participant's Vested account balances derived from Employer
                    and Nondeductible Employee Contributions (including
                    rollovers), whether Vested before or upon death, including
                    the proceeds of insurance contracts, if any, on the
                    Participant's life. The provisions of this Section 6.05
                    shall apply to a Participant who is Vested in amounts
                    attributable to Employer Contributions, Nondeductible
                    Employee Contributions (or both) at the time of death or
                    distribution.

          E.   Notice Requirements

               1.   In the case of a qualified joint and survivor annuity, the
                    Plan Administrator shall no less then 30 days and not more
                    than 90 days prior to the annuity starting date provide each
                    Participant a written explanation of: (a) the terms and
                    conditions of a qualified joint and survivor annuity; (b)
                    the Participant's right to make and the effect of an
                    election to waive the qualified joint and survivor annuity
                    form of benefit; (c) the rights of a Participant's spouse;
                    and (d) the right to make, and the effect of, a revocation
                    of a previous election to waive the qualified joint and
                    survivor annuity.

               2.   In the case of a qualified preretirement annuity as
                    described in Section 6.05(C), the Plan Administrator shall
                    provide each Participant within the applicable period for
                    such Participant a written explanation of the qualified
                    preretirement survivor annuity in such terms and in such
                    manner as would be comparable to the explanation provided
                    for meeting the requirements of Section 6.05(E)(1)
                    applicable to a qualified joint and survivor annuity.

                    The applicable period for a Participant is whichever of the
                    following periods ends last: (a) the period beginning with
                    the first day of the Plan Year in which the Participant
                    attains age 32 and ending with the close of the Plan Year
                    preceding the Plan Year in which the Participant attains age
                    35; (b) a reasonable period ending after the individual
                    becomes a Participant; (c) a reasonable period ending after
                    Section 6.05(E)(3) ceases to apply to the Participant; and
                    (d) a reasonable period ending after this Section 6.05 first
                    applies to the Participant. Notwithstanding the foregoing,
                    notice must be provided within a reasonable period ending
                    after separation from service in the case of a Participant
                    who separates from service before attaining age 35.

                    For purposes of applying the preceding paragraph, a
                    reasonable period ending after the enumerated events
                    described in (b), (c) and (d) is the end of the two-year
                    period beginning one year prior to the date the applicable
                    event occurs, and ending one year after that date. In the
                    case of a Participant who separates from service before the
                    Plan Year in which age 35 is attained, notice shall be
                    provided within the two-year period beginning one year prior
                    to separation and ending one year after separation. If such
                    a Participant thereafter returns to employment with the
                    Employer, the applicable period for such Participant shall
                    be redetermined.

               3.   Notwithstanding the other requirements of this Section
                    6.05(E), the respective notices prescribed by this Section
                    6.05(E), need not be given to a Participant if (a) the Plan
                    "fully subsidizes" the costs of a qualified joint and
                    survivor annuity or qualified preretirement survivor
                    annuity, and (b) the Plan does not allow the Participant to
                    waive the qualified joint and survivor annuity or qualified
                    preretirement survivor annuity and does not allow a married
                    Participant to designate a nonspouse beneficiary. For
                    purposes of this Section

                                       29
<PAGE>
          6.05(E)(3), a plan fully subsidizes the costs of a benefit if no
          increase in cost, or decrease in benefits to the Participant may
          result from the Participant's failure to elect another benefit.

F.   Retirement Equity Act Safe Harbor Rules

     1.   If the Employer so indicates in the Adoption Agreement, this Section
          6.05(F) shall apply to a Participant in profit sharing plan, and shall
          always apply to any distribution, made on or after the first day of
          the first Plan Year beginning after December 31, 1988, from or under a
          separate account attributable solely to accumulated deductible
          employee contributions, as defined in Section 72(o)(5)(B) of the Code,
          and maintained on behalf of a Participant in a money purchase pension
          plan, (including a target benefit plan) if the following conditions
          are satisfied:

          a.   the Participant does not or cannot elect payments in the form of
               a life annuity; and

          b.   on the death of a Participant, the Participant's Vested account
               balance will be paid to the Participant's surviving spouse, but
               if there is no surviving spouse, or if the surviving spouse has
               consented in a manner conforming to a qualified election, then to
               the Participant's designated Beneficiary. The surviving spouse
               may elect to have distribution of the Vested account balance
               commence within the 90-day period following the date of the
               Participant's death. The account balance shall be adjusted for
               gains or losses occurring after the Participant's death in
               accordance with the provisions of the Plan governing the
               adjustment of account balances for other types of distributions.
               This Section 6.05(F) shall not be operative with respect to a
               Participant in a profit sharing plan if the plan is a direct or
               indirect transferee of a defined benefit plan, money purchase
               plan, a target benefit plan, stock bonus, or profit sharing plan
               which is subject to the survivor annuity requirements of Section
               401(a)(11) and Section 417 of the code. If this Section 6.05(F)
               is operative, then the provisions of this Section 6.05 other than
               Section 6.05(G) shall be inoperative.

     2.   The Participant may waive the spousal death benefit described in this
          Section 6.05(F) at any time provided that no such waiver shall be
          effective unless it satisfies the conditions of Section 6.05(D)(3)
          (other than the notification requirement referred to therein) that
          would apply to the Participant's waiver of the qualified preretirement
          survivor annuity.

     3.   For purposes of this Section 6.05(F), Vested account balance shall
          mean, in the case of a money purchase pension plan or a target benefit
          plan, the Participant's separate account balance attributable solely
          to accumulated deductible employee contributions within the meaning of
          Section 72(o)(5)(B) of the Code. In the case of a profit sharing plan,
          Vested account balance shall have the same meaning as provided in
          Section 6.05(D)(7).

G.   Transitional Rules

     1.   Any living Participant not receiving benefits on August 23, 1984, who
          would otherwise not receive the benefits prescribed by the previous
          subsections of this Section 6.05 must be given the opportunity to
          elect to have the prior subsections of this Section apply if such
          Participant is credited with at least one Hour of Service under this
          Plan or a predecessor plan in a Plan Year beginning on or after
          January 1, 1976, and such Participant had at least 10 Years of Vesting
          Service when he or she separated from service.

     2.   Any living Participant not receiving benefits on August 23, 1984, who
          was credited with at least one Hour of Service under this Plan or a
          predecessor plan on or after September 2, 1974, and who is not
          otherwise credited with any service in a Plan Year beginning on or
          after January 1, 1976, must be given the opportunity to have his or
          her benefits paid in accordance with Section 6.05(G)(4).

     3.   The respective opportunities to elect (as described in Section
          6.05(G)(1) and (2) above) must be afforded to the appropriate
          Participants during the period commencing on August 23, 1984, and
          ending on the date benefits would otherwise commence to said
          Participants.

     4.   Any Participant who has elected pursuant to Section 6.05(G)(2) and any
          Participant who does not elect under Section 6.05(G)(1) or who meets
          the requirements of Section 6.05(G)(1) except that such Participant
          does not have at least 10 Years of Vesting Service when he or she
          separates from service, shall have his or her benefits distributed in
          accordance with all of the following requirements if benefits would
          have been payable in the form of a life annuity:

          a.   Automatic Joint and Survivor Annuity - If benefits in the form of
               a life annuity become payable to a married Participant who:

               (1)  begins to receive payments under the Plan on or after Normal
                    Retirement Age; or

               (2)  dies on or after Normal Retirement Age while still working
                    for the Employer; or

                                       30
<PAGE>
               (3) begins to receive payments on or after the qualified early
                   retirement age; or

               (4) separates from service on or after attaining Normal
                   Retirement Age (or the qualified early retirement age) and
                   after satisfying the eligibility requirements for the payment
                   of benefits under the Plan and thereafter dies before
                   beginning to receive such benefits:

                   then such benefits will be received under this Plan in the
                   form of a qualified joint and survivor annuity, unless the
                   Participant has elected otherwise during the election period.
                   The election period must begin at least 6 months before the
                   Participant attains qualified early retirement age and ends
                   not more than 90 days before the commencement of benefits.
                   Any election hereunder will be in writing and may be changed
                   by the Participant at any time.

          b. Election of Early Survivor Amunity -- A Participant who is employed
             after attaining the qualified early retirement age will be given
             the opportunity to elect, during the election period, to have a
             survivor annuity payable on death. If the Participant elects the
             survivor annuity, payments under such annuity must not be less than
             the payments which would have been made to the spouse under the
             qualified joint and survivor annuity if the Participant had retired
             on the day before his or her death. Any election under this
             provision will be in writing and may be changed by the Participant
             at any time. The election period begins on the later of (1) the
             90th day before the Participant attains the qualified early
             retirement age, or (2) the date on which participation begins, and
             ends on the date the Participant terminates employment.

          c. For purposes of Section 6.05(G)(4):

             1. Qualified early retirement age is the latest of:

                a. the earliest date, under the Plan, on which the Participant
                   may elect to receive retirement benefits,

                b. the first day of the 120th month beginning before the
                   Participant reaches Normal Retirement Act, or

                c. the date the Participant begins participation.

             2. Qualified joint and survivor annuity is an annuity for the life
                of the Participant with a survivor annuity for the life of the
                spouse as described in Section 6.05(D)(4) of this Plan.

6.06 DISTRIBUTION REQUIREMENTS

     A. General Rules

        1. Subject to Section 6.05 Joint and Survivor Annuity Requirements, the
           requirements of this Section shall apply to any distribution of a
           Participant's Interest and will take precedence over any inconsistent
           provisions of this Plan. Unless otherwise specified, the provisions
           of this Section 6.06 apply to calendar years beginning after December
           31, 1984.

        2. All distributions required under this Section 6.06 shall be
           determined and made in accordance with the Income Tax Regulations
           under Section 401(a)(9), including the minimum distribution
           incidental benefit requirement of Section 1.401(a)(9)-2 of the
           proposed regulations.

     B. Required Beginning Date -- The entire interest of a Participant must be
        distributed or begin to be distributed no later than the Participant's
        required beginning date.

     C. Limits on Distribution Periods -- As of the first distribution calendar
        year, distributions, if not made in a single sum, may only be made over
        one of the following periods (or a combination thereof):

        1. the life of the Participant,

        2. the life of the Participant and a designated Beneficiary,

        3. a period certain not extending beyond the life expectancy of the
           Participant, or

        4. a period certain not extending beyond the joint and last survivor
           expectancy of the Participant and a designated Beneficiary.

                                       31
<PAGE>
D.   Determination of Amount to be Distributed Each Year - If the Participant's
     interest is to be distributed in other than a single sum, the following
     minimum distribution rules shall apply on or after the required beginning
     date:

     1.   Individual Account

          a.   If a Participant's benefit is to be distributed over (1) a period
               not extending beyond the life expectancy the Participant or the
               joint life and last survivor expectancy of the Participant and
               the Participant's designated Beneficiary or (2) a period not
               extending beyond the life expectancy of the designated
               Beneficiary, the amount required to be distributed for each
               calendar year, beginning with distributions for the first
               distribution calendar year, must at least equal the quotient
               obtained by dividing the Participant's benefit by the applicable
               life expectancy.

          b.   For calendar years beginning before January 1, 1989, if the
               Participant's spouse is not the designated Beneficiary, the
               method of distribution selected must assure that at least 50% of
               the present value of the amount available for distribution is
               paid within the life expectancy of the Participant.

          c.   For calendar years beginning after December 31, 1988, the amount
               to be distributed each year, beginning with distributions for the
               first distribution calendar year shall not be less than the
               quotient obtained by dividing the Participant's benefit by the
               lesser of (1) the applicable life expectancy or (2) if the
               Participant's spouse is not the designated Beneficiary, the
               applicable divisor determined from the table set forth in Q&A-4
               of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
               Distributions after the death of the Participant shall be
               distributed using the applicable life expectancy in Section
               6.05(D)(1)(a) above as the relevant divisor without regard to
               proposed regulations 1.401(a)(9)-2.

          d.   The minimum distribution required for the Participant's first
               distribution calendar year must be made on or before the
               Participant's required beginning date. The minimum distribution
               for other calendar years, including the minimum distribution for
               the distribution calendar year in which the Employee's required
               beginning date occurs, must be made on or before December 31 of
               that distribution calendar year.

     2.   Other Forms - If the Participant's benefit is distributed in the form
          of an annuity purchased from an insurance company, distributions
          thereunder shall be made in accordance with the requirements of
          Section 401(a)(9) of the Code and the regulations thereunder.

E.   Death Distribution Provisions

     1.   Distribution Beginning Before Death - If the Participant dies after
          distribution of his or her interest has begun, the remaining portion
          of such interest will continue to be distributed at least as rapidly
          as under the method of distribution being used prior to the
          Participant's death.

     2.   Distribution Beginning After Death - If the Participant dies before
          distribution of his or her interest begins, distribution of the
          Participant's entire interest shall be completed by December 31 of the
          calendar year containing the fifth anniversary of the Participant's
          death except to the extent that an election is made to receive
          distributions in accordance with (a) or (b) below:

          a.   if any portion of the Participant's interest is payable to a
               designated Beneficiary, distributions may be made over the life
               or over a period certain not greater than the life expectancy of
               the designated Beneficiary commencing on or before December 31 of
               the calendar year immediately following the calendar year in
               which the Participant died;

          b.   if the designated Beneficiary is the Participant's surviving
               spouse, the date distributions are required to begin in
               accordance with (a) above shall not be earlier than the later of
               (1) December 31 of the calendar year immediately following the
               calendar year in which the Participant dies or (2) December 31 of
               the calendar year in which the Participant would have attained
               age 70 1/2.

               If the Participant has not made an election pursuant to this
               Section 6.05(E)(2) by the time of his or her death, the
               Participant's designated Beneficiary must elect the method of
               distribution no later than the earlier of (1) December 31 of the
               calendar year in which distributions would be required to begin
               under this Section 6.05(E)(2), or (2) December 31 of the calendar
               year which contains the fifth anniversary of the date of death of
               the Participant. If the Participant has no designated
               Beneficiary, or if the designated Beneficiary does not elect a
               method of distribution, distribution of the Participant's entire
               interest must be completed by December 31 of the calendar year
               containing the fifth anniversary of the Participants's death.

     3.   For purposes of Section 6.06(E)(2) above, if the surviving spouse dies
          after the Participant, but before payments to such spouse begin, the
          provisions of Section 6.06(E)(2), with the exception of paragraph (b)
          therein, shall be applied as if the surviving spouse were the
          Participant.

                                       32

<PAGE>
     4.   For purposes of this Section 6.06(E), any amount paid to a child of
          the Participant will be treated as if it had been paid to the
          surviving spouse if the amount becomes payable to the surviving
          spouse when the child reaches the age of majority.

     5.   For purposes of this Section 6.06(E), distribution of a Participant's
          interest is considered to begin on the Participant's required
          beginning date (or, if Section 6.06(E)(3) above is applicable, the
          date distribution is required to begin to the surviving spouse
          pursuant to Section 6.06(E)(2) above). If distribution in the form of
          an annuity irrevocably commences to the Participant before the
          required beginning date, the date distribution is considered to begin
          is the date distribution actually commences.

F.   Definitions

     1.   Applicable Life Expectancy -- The life expectancy (or joint and last
          survivor expectancy) calculated using the attained age of the
          Participant (or designated Beneficiary) as of the Participant's (or
          designated Beneficiary's) birthday in the applicable calendar year
          reduced by one for each calendar year which has elapsed since the
          date life expectancy was first calculated. If life expectancy is
          being recalculated, the applicable life expectancy shall be the life
          expectancy as so recalculated. The applicable calendar year shall be
          the first distribution calendar year, and if life expectancy is being
          recalculated such succeeding calendar year.

     2.   Designated Beneficiary -- The individual who is designated as the
          Beneficiary under the Plan in accordance with Section 401(a)(9) of
          the Code and the regulations thereunder.

     3.   Distribution Calendar Year -- A calender year for which a minimum
          distribution is required. For distributions beginning before the
          Participant's death, the first distribution calendar year is the
          calendar year immediately preceding the calendar year which contains
          the Participant's required beginning date. For distributions
          beginning after the Participant's death, the first distribution
          calendar year is the calendar year in which distributions are required
          to begin pursuant to Section 6.05(E) above.

     4.   Life Expectancy -- Life expectancy and joint and last survivor
          expectancy are computed by use of the expected return multiples in
          Tables V and VI of Section 1.72-9 of the Income Tax Regulations.

          Unless otherwise elected by the Participant (or spouse, in the case
          of distributions described in Section 6.05(E)(2)(b) above) by the
          time distributions are required to begin, life expectancies shall be
          recalculated annually. Such election shall be irrevocable as to the
          Participant (or spouse) and shall apply to all subsequent years. The
          life expectancy of a nonspouse Beneficiary may not be recalculated.

     5.   Participant's Benefit

          a.   The account balance as of the last valuation date in the
               valuation calendar year (the calendar year immediately preceding
               the distribution calendar year) increased by the amount of any
               Contributions or Forfeitures allocated to the account balance as
               of dates in the valuation calendar year after the valuation date
               and decreased by distributions made in the valuation calendar
               year after the valuation date.

          b.   Exception for second distribution calendar year. For purposes of
               paragraph (a) above, if any portion of the minimum distribution
               for the first distribution calendar year is made in the second
               distribution calendar year on or before the required beginning
               date, the amount of the minimum distribution made in the second
               distribution calendar year shall be treated as if it had been
               made in the immediately preceding distribution calendar year.

     6.   Required Beginning Date

          a.   General Rule -- The required beginning date of a Participant is
               the first day of April of the calendar year following the
               calendar year in which the Participant attains age 70 1/2.

          b.   Transitional Rules -- The required beginning date of a
               Participant who attains age 70 1/2 before January 1, 1988, shall
               be determined in accordance with (1) or (2) below:

               (1)   Non 5% Owners -- The required beginning date of a
                     Participant who is not a 5% owner is the first day of April
                     of the calendar year following the calendar year in which
                     the later of retirement or attainment of age 70 1/2 occurs.

               (2)   5% Owners -- The required beginning date of a Participant
                     who is a 5% owner during any year beginning after December
                     31, 1979, is the first day of April following the later
                     of:

                     (a)  the calendar year in which the Participant attains age
                          70 1/2, or

                                       33
<PAGE>
                    (b)  the earlier of the calendar year with or within which
                         ends the Plan Year in which the Participant becomes a
                         5% owner, or the calendar year in which the Participant
                         retires.

                    The required beginning date of a Participant who is not a 5%
                    owner who attains age 70 1/2 during 1988 and who has not
                    retired as of January 1, 1989, is April 1, 1990.

               c.   5% Owner -- A Participant is treated as a 5% owner for
                    purposes of this Section 6.06(F)(6) if such Participant is
                    a 5% owner as defined in Section 416(i) of the Code
                    (determined in accordance with Section 416 but without
                    regard to whether the Plan is top-heavy) at any time during
                    the Plan Year ending with or within the calendar year in
                    which such owner attains age 66 1/2 or any subsequent Plan
                    Year.

               d.   Once distributions have begun to a 5% owner under this
                    Section 6.06(F)(6) they must continue to be distributed,
                    even if the Participant ceases to be a 5% owner in a
                    subsequent year.

     G.   Transitional Rule

          1.   Notwithstanding the other requirements of this Section 6.06 and
               subject to the requirements of Section 6.05, Joint and Survivor
               Annuity Requirements, distribution on behalf of any Employee,
               including a 5% owner, may be made in accordance with all of the
               following requirements (regardless of when such distribution
               commences):

               a.   The distribution by the Fund is one which would not have
                    qualified such Fund under Section 401(a)(9) of the Code as
                    in effect prior to amendment by the Deficit Reduction Act
                    of 1984.

               b.   The distribution is in accordance with a method of
                    distribution designated by the Employee whose interest in
                    the Fund is being distributed or, if the Employee is
                    deceased, by a Beneficiary of such Employee.

               c.   Such designation was in writing, was signed by the Employee
                    or the Beneficiary, and was made before January 1, 1984.

               d.   The Employee had accrued a benefit under the Plan as of
                    December 31, 1983.

               e.   The method of distribution designated by the Employee or
                    the Beneficiary specifies the time at which distribution
                    will commence, the period over which distributions will be
                    made, and in the case of any distribution upon the
                    Employee's death, the Beneficiaries of the Employee listed
                    in order of priority.

          2.   A distribution upon death will not be covered by this
               transitional rule unless the information in the designation
               contains the required information described above with respect
               to the distributions to be made upon the death of the Employee.

          3.   For any distribution which commences before January 1, 1984, but
               continues after December 31, 1983, the Employee, or the
               Beneficiary, to whom such distribution is being made, will be
               presumed to have designated the method of distribution under
               which the distribution is being made if the method of
               distribution was specified in writing and the distribution
               satisfies the requirements in Sections 6.06(G)(1)(a) and (e).

          4.   If a designation is revoked, any subsequent distribution must
               satisfy the requirements of Section 1.401(a)(9) of the Code and
               the regulations thereunder. If a designation is revoked
               subsequent to the date distributions are required to begin, the
               Plan must distribute by the end of the calendar year following
               the calendar year in which the revocation occurs the total amount
               not yet distributed which would have been required to have been
               distributed to satisfy Section 1.401(a)(9) of the Code and the
               regulations thereunder, but for the Section 242(b)(2) election.
               For calendar years beginning after December 31, 1988, such
               distributions must meet the minimum distribution incidental
               benefit requirements in Section 1.401(a)(9)-2 of the Proposed
               Income Tax Regulations. Any changes in the designation will be
               considered to be a revocation of the designation. However, the
               mere substitution or addition of another Beneficiary (one not
               named in the designation) under the designation will not be
               considered to be a revocation of the designation, so long as
               such substitution or addition does not alter the period over
               which distributions are to be made under the designation,
               directly or indirectly (for example, by altering the relevant
               measuring life). In the case in which an amount is transferred
               or rolled over from one plan to another plan, the rules in Q&A
               J-2 and Q&A J-3 shall apply.

                                       34
<PAGE>
6.07      ANNUITY CONTRACTS

          Any annuity contract distributed under the Plan (if permitted or
          required by this Section 6) must be nontransferable. The terms of any
          annuity contract purchased and distributed by the Plan to a
          Participant or spouse shall comply with the requirements of the Plan.

6.08      LOANS TO PARTICIPANTS

          If the Adoption Agreement so indicates, a Participant may receive a
          loan from the Fund, subject to the following rules:

          A.   Loans shall be made available to all Participants on a reasonably
               equivalent basis.

          B.   Loans shall not be made available to Highly Compensated Employees
               (as defined in Section 414(q) of the Code) in an amount greater
               than the amount made available to other Employees.

          C.   Loans must be adequately secured and bear a reasonable interest
               rate.

          D.   No Participant loan shall exceed the present value of the Vested
               portion of a Participant's Individual Account.

          E.   A Participant must obtain the consent of his or her spouse, if
               any, to the use of the Individual Account as security for the
               loan. Spousal consent shall be obtained no earlier than the
               beginning of the 90 day period that ends on the date on which the
               loan is to be so secured. The consent must be in writing, must
               acknowledge the effect of the loan, and must be witnessed by a
               plan representative or notary public. Such consent shall
               thereafter be binding with respect to the consenting spouse or
               any subsequent spouse with respect to that loan. A new consent
               shall be required if the account balance is used for
               renegotiation, extension, renewal, or other revision of the loan.
               Notwithstanding the foregoing, no spousal consent is necessary
               if, at the time the loan is secured, no consent would be required
               for a distribution under Section 417(a)(2)(B). In addition,
               spousal consent is not required if the Plan or the Participant is
               not subject to Section 401(a)(11) at the time the Individual
               Account is used as security, or if the total Individual Account
               subject to the security is less than or equal to $3,500.

          F.   In the event of default, foreclosure on the note and attachment
               of security will not occur until a distributable event occurs in
               the Plan. Notwithstanding the preceding sentence, a Participant's
               default on a loan will be treated as a distributable event and as
               soon as administratively feasible after the default, the
               Participant's Vested Individual Account will be reduced by the
               lesser of the amount in default (plus accrued interest) or the
               amount secured. If this Plan is a 401(k) plan, then to the extent
               the loan is attributable to a Participant's Elective Deferrals,
               Qualified Nonelective Contributions or Qualified Matching
               Contributions, the Participant's Individual Account will not be
               reduced unless the Participant has attained age 59 1/2 or has
               another distributable event. A Participant will be deemed to have
               consented to the provision at the time the loan is made to the
               Participant.

          G.   No loans will be made to any shareholder-employee or
               Owner-Employee. For purposes of this requirement, a
               shareholder-employee means an employee or officer of an electing
               small business (Subchapter S) corporation who owns (or is
               considered as owning within the meaning of Section 318(a)(1) of
               the Code), on any day during the taxable year of such
               corporation, more than 5% of the outstanding stock of the
               corporation.

          If a valid spousal consent has been obtained in accordance with
          6.08(E), then, notwithstanding any other provisions of this Plan, the
          portion of the Participant's Vested Individual Account used as a
          security interest held by the Plan by reason of a loan outstanding
          to the Participant shall be taken into account for purposes of
          determining the amount of the account balance payable at the time of
          death or distribution, but only if the reduction is used as repayment
          of the loan. If less than 100% of the Participant's Vested Individual
          Account (determined without regard to the preceding sentence) is
          payable to the surviving spouse, then the account balance shall be
          adjusted by first reducing the Vested Individual Account by the amount
          of the security used as repayment of the loan, and then determining
          the benefit payable to the surviving spouse.

          To avoid taxation to the Participant, no loan to any Participant can
          be made to the extent that such loan when added to the outstanding
          balance of all other loans to the Participant would exceed the lesser
          of (a) $50,000 reduced by the excess (if any) of the highest
          outstanding balance of loans during the one year period ending on the
          day before the loan is made, over the outstanding balance of loans
          from the Plan on the date the loan is made, or (b) 50% of the present
          value of the nonforfeitable Individual Account of the Participant or,
          if greater, the total Individual Account up to $10,000. For the
          purpose of the above limitation, all loans from all plans of the
          Employer and other members of a group of employers described in
          Section 414(b), 414(c), and 414(m) of the Code are aggregated.
          Furthermore, any loan shall by its terms require that repayment
          (principal and interest) be amortized in level payments, not less
          frequently than quarterly, over a period not extending beyond 5 years
          from the date of the loan, unless such loan is used to acquire a
          dwelling unit which within a reasonable time (determined at the time
          the loan is made) will be used as the principal residence of the
          Participant. An assignment or pledge of any portion of the
          Participant's interest in the Plan and a loan, pledge, or assignment
          with respect to any insurance contract purchased under the Plan, will
          be treated as a loan under this paragraph.

          The Plan Administrator shall administer the loan program in accordance
          with a written document. Such written document shall include, at a
          minimum, the following: (i) the identity of the person or positions
          authorized to administer the Participant loan program; (ii) the
          procedure for applying for loans; (iii) the basis on which loans will
          be approved or denied; (iv) limitations (if any) on the types and
          amounts of loans offered; (v) the procedure under the program for

                                       35

<PAGE>
          determining a reasonable rate of interest; (vi) the types of
          collateral which may secure a Participant loan; and (vii) the events
          constituting default and the steps that will be taken to preserve
          Plan assets in the event of such default.

6.09      DISTRIBUTION IN KIND
          The Plan Administrator may cause any distribution under this Plan to
          be made either in a form actually held in the Fund or in cash by
          converting assets other than cash into cash, or in any combination of
          the two foregoing ways.

6.10      DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS

          A.   Direct Rollover Option
               This Section applies to distributions made on or after January 1,
               1993. Notwithstanding any provision of the Plan to the contrary
               that would otherwise limit a distributee's election under this
               Section, a distributee may elect, at the time and in the manner
               prescribed by the Plan Administrator, to have any portion of an
               eligible rollover distribution that is equal to at least $500
               paid directly to an eligible retirement plan specified by the
               distributee in a direct rollover.

          B.   Definitions

               1.   Eligible rollover distribution - An eligible rollover
                    distribution is any distribution of all or any portion of
                    the balance to the credit of the distributee, except that an
                    eligible rollover distribution does not include:

                    a.   any distribution that is one of a series of
                         substantially equal periodic payments (not less
                         frequently than annually) made for the life (or life
                         expectancy) of the distributee or the joint lives (or
                         joint life expectancies) of the distributee and the
                         distributee's designated Beneficiary, or for a
                         specified period of ten years or more;

                    b.   any distribution to the extent such distribution is
                         required under Section 401(a)(9) of the Code;

                    c.   the portion of any other distribution that is not
                         includible in gross income (determined without regard
                         to the exclusion for net unrealized appreciation with
                         respect to employer securities); and

                    d.   any other distribution(s) that is reasonably expected
                         to total less than $200 during a year.

               2.   Eligible retirement plan - An eligible retirement plan is an
                    individual retirement account described in Section 408(a) of
                    the Code, an individual retirement annuity described in
                    Section 406(b) of the Code, an annuity plan described in
                    Section 403(a) of the Code, or a qualified trust described
                    in Section 401(a) of the Code, that accepts the
                    distributee's eligible rollover distribution. However, in
                    the case of an eligible rollover distribution to the
                    surviving spouse, an eligible retirement plan is an
                    individual retirement account or individual retirement
                    annuity.

               3.   Distributee - A distributee includes an Employee or former
                    Employee. In addition, the Employee's or former Employee's
                    surviving spouse and the Employee's or former Employee's
                    spouse or former spouse who is the alternate payee under a
                    qualified domestic relations order, as defined in Section
                    414(p) of the Code, are distributees with regard to the
                    interest of the spouse or former spouse.

               4.   Direct rollover - A direct rollover is a payment by the Plan
                    to the eligible retirement plan specified by the
                    distributee.

6.11      PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES
          The Plan Administrator must use all reasonable measures to locate
          Participants or Beneficiaries who are entitled to distributions from
          the Plan. In the event that the Plan Administrator cannot locate a
          Participant or Beneficiary who is entitled to a distribution from the
          Plan after using all reasonable measures to locate him or her, the
          Plan Administrator may, consistent with applicable laws, regulations
          and other pronouncements under ERISA, use any reasonable procedure to
          dispose of distributable plan assets, including any of the following:
          (1) establish a bank account for and in the name of the Participant or
          Beneficiary and transfer the assets to such bank account, (2) purchase
          an annuity contract with the assets in the name of the Participant or
          Beneficiary, or (3) after the expiration of 5 years after the benefit
          becomes payable, treat the amount distributable as a Forfeiture and
          allocate it in accordance with the terms of the Plan and if the
          Participant or Beneficiary is later located, restore such benefit to
          the Plan.

SECTION SEVEN  CLAIMS PROCEDURE

7.01      FILING A CLAIM FOR PLAN DISTRIBUTIONS
          A Participant or Beneficiary who desires to make a claim for the
          Vested portion of the Participant's Individual Account shall file a
          written request with the Plan Administrator on a form to be furnished
          to him or her by the Plan Administrator for such purpose. The request
          shall set forth the basis of the claim. The Plan Administrator is
          authorized to conduct such examinations as may be necessary to
          facilitate the payment of any benefits to which the Participant or
          Beneficiary may be entitled under the terms of the Plan.

                                      -36-
<PAGE>
     7.02 DENIAL OF CLAIM
          Whenever a claim for a Plan distribution by any Participant or
          Beneficiary has been wholly or partially denied, the Plan
          Administrator must furnish such Participant or Beneficiary written
          notice of the denial within 60 days of the date the original claim was
          filed. This notice shall set forth the specific reasons for the
          denial, specific reference to the pertinent Plan provisions on which
          the denial is based, a description of any additional information or
          material needed to perfect the claim, an explanation of why such
          additional information or material is necessary and an explanation of
          the procedures for appeal.

     7.03 REMEDIES AVAILABLE
          The Participant or Beneficiary shall have 60 days from receipt of the
          denial notice in which to make written application for review by the
          Plan Administrator. The Participant or Beneficiary may request that
          the review be in the nature of a hearing. The Participant or
          Beneficiary shall have the right to representation, to review
          pertinent documents and to submit comments in writing. The Plan
          Administrator shall issue a decision on such review within 60 days
          after receipt of an application for review as provided for in Section
          7.02. Upon a decision unfavorable to the Participant or Beneficiary,
          such Participant or Beneficiary shall be entitled to bring such
          actions in law or equity as may be necessary or appropriate to protect
          or clarify his or her right to benefits under this Plan.

SECTION EIGHT  PLAN ADMINISTRATOR

     8.01      EMPLOYER IS PLAN ADMINISTRATOR

               A.   The Employer shall be the Plan Administrator unless the
                    managing body of the Employer designates a person or persons
                    other than the Employer as the Plan Administrator and so
                    notifies the Trustee (or Custodian, if applicable). The
                    Employer shall also be the Plan Administrator if the person
                    or persons so designated cease to be the Plan Administrator.
                    The Employer may establish an administrative committee that
                    will carry out the Plan Administrator's duties. Members of
                    the administrative committee may allocate the Plan
                    Administrator's duties among themselves.

               B.   If the managing body of the Employer designates a person or
                    persons other than the Employer as Plan Administrator, such
                    person or persons shall serve at the pleasure of the
                    Employer and shall serve pursuant to such procedures as such
                    managing body may provide. Each such person shall be bonded
                    as may be required by law.

     8.02      POWERS AND DUTIES OF THE PLAN ADMINISTRATOR

               A.   The Plan Administrator may, by appointment, allocate the
                    duties of the Plan Administrator among several individuals
                    or entities. Such appointments shall not be effective until
                    the party designated accepts such appointment in writing.

               B.   The Plan Administrator shall have the authority to control
                    and manage the operation and administration of the Plan. The
                    Plan Administrator shall administer the Plan for the
                    exclusive benefit of the Participants and their
                    Beneficiaries in accordance with the specific terms of the
                    Plan.

               C.   The Plan Administrator shall be charged with the duties of
                    the general administration of the Plan, including, but not
                    limited to, the following:

                    1.   To determine all questions of interpretation or policy
                         in a manner consistent with the Plan's documents and
                         the Plan Administrator's construction or determination
                         in good faith shall be conclusive and binding on all
                         persons except as otherwise provided herein or by law.
                         Any interpretation or construction shall be done in a
                         nondiscriminatory manner and shall be consistent with
                         the intent that the Plan shall continue to be deemed a
                         qualified plan under the terms of Section 401(a) of the
                         Code, as amended from time-to-time, and shall comply
                         with the terms of ERISA, as amended from time-to-time;

                    2.   To determine all questions relating to the eligibility
                         of Employees to become or remain Participants
                         hereunder;

                    3.   To compute the amounts necessary or desirable to be
                         contributed to the Plan;

                    4.   To compute the amount and kind of benefits to which a
                         Participant or Beneficiary shall be entitled under the
                         Plan and to direct the Trustee (or Custodian, if
                         applicable) with respect to all disbursements under the
                         Plan, and, when requested by the Trustee (or
                         Custodian), to furnish the Trustee (or Custodian) with
                         instructions, in writing, on matters pertaining to the
                         Plan and the Trustee (or Custodian) may rely and act
                         thereon;

                    5.   To maintain all records necessary for the
                         administration of the Plan;

                    6.   To be responsible for preparing and filing such
                         disclosure and tax forms as may be required from
                         time-to-time by the Secretary of Labor or the Secretary
                         of the Treasury; and

                                       37

<PAGE>
               7.   To furnish each Employee, Participant or Beneficiary such
                    notices, information and reports under such circumstances as
                    may be required by law.

          D.   The Plan Administrator shall have all of the powers necessary or
               appropriate to accomplish his or her duties under the Plan,
               including, but not limited to, the following:

               1.   To appoint and retain such persons as may be necessary to
                    carry out the functions of the Plan Administrator;

               2.   To appoint and retain counsel, specialists or other persons
                    as the Plan Administrator deems necessary or advisable in
                    the administration of the Plan;

               3.   To resolve all questions of administration of the Plan;

               4.   To establish such uniform and nondiscriminatory rules which
                    it deems necessary to carry out the terms of the Plan;

               5.   To make any adjustments in a uniform and nondiscriminatory
                    manner which it deems necessary to correct any arithmetical
                    or accounting errors which may have been made for any Plan
                    Year; and

               6.   To correct any defect, supply any omission or reconcile any
                    inconsistency in such manner and to such extent as shall be
                    deemed necessary or advisable to carry out the purpose of
                    the Plan.

     8.03      EXPENSES AND COMPENSATION

               All reasonable expenses of administration including, but not
               limited to, those involved in retaining necessary professional
               assistance may be paid from the assets of the Fund.
               Alternatively, the Employer may, in its discretion, pay any or
               all such expenses. Pursuant to uniform and nondiscriminatory
               rules that the Plan Administrator may establish from
               time-to-time, administrative expenses and expenses unique to a
               particular Participant may be charged to a Participant's
               Individual Account or the Plan Administrator may allow
               Participants to pay such fees outside of the Plan. The Employer
               shall furnish the Plan Administrator with such clerical and other
               assistance as the Plan Administrator may need in the performance
               of his or her duties.

     8.04      INFORMATION FROM EMPLOYER

               To enable the Plan Administrator to perform his or her duties,
               the Employer shall supply full and timely information to the Plan
               Administrator (or his or her designated agents) on all matters
               relating to the Compensation of all Participants, their regular
               employment, retirement, death, Disability or Termination of
               Employment, and such other pertinent facts as the Plan
               Administrator (or his or her agents) may require. The Plan
               Administrator shall advise the Trustee (or Custodian, if
               applicable) of such of the foregoing facts as may be pertinent
               to the Trustee's (or Custodian's) duties under the Plan. The Plan
               Administrator (or his or her agents) is entitled to rely on such
               information as is supplied by the Employer and shall have no duty
               or responsibility to verify such information.

SECTION NINE   AMENDMENT AND TERMINATION

     9.01      RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN

               A.   The Employer, by adopting the Plan, expressly delegates to
                    the Prototype Sponsor the power, but not the duty, to amend
                    the Plan without any further action or consent of the
                    Employer as the Prototype Sponsor deems necessary for the
                    purpose of adjusting the Plan to comply with all laws and
                    regulations governing pension or profit sharing plans.
                    Specifically, it is understood that the amendments may be
                    made unilaterally by the Prototype Sponsor. However, it
                    shall be understood that the Prototype Sponsor shall be
                    under no obligation to amend the Plan documents and
                    the Employer expressly waives any rights or claims against
                    the Prototype Sponsor for not exercising this power to
                    amend. For purposes of Prototype Sponsor amendments, the
                    mass submitter shall be recognized as the agent of the
                    Prototype Sponsor. If the Prototype Sponsor does not adopt
                    the amendments made by the mass submitter, it will no longer
                    be identical to or a minor modifier of the mass submitter
                    plan.

               B.   An amendment by the Prototype Sponsor shall be accomplished
                    by giving written notice to the Employer of the amendment to
                    be made. The notice shall set forth the text of such
                    amendment and the date such amendment is to be effective.
                    Such amendment shall take effect unless within the 30 day
                    period after such notice is provided, or within such shorter
                    period as the notice may specify, the Employer gives the
                    Prototype Sponsor written notice of refusal to consent to
                    the amendment. Such written notice of refusal shall have the
                    effect of withdrawing the Plan as a prototype plan and shall
                    cause the Plan to be considered an individually designed
                    plan. The right of the Prototype Sponsor to cause the Plan
                    to be amended shall terminate should the Plan cease to
                    conform as a prototype plan as provided in this or any other
                    section.

     9.02      RIGHT OF EMPLOYER TO AMEND THE PLAN

               The Employer may (1) change the choice of options in the Adoption
               Agreement; (2) add overriding language in the Adoption Agreement
               when such language is necessary to satisfy Section 415 or Section
               416 of the Code because of the required aggregation of multiple
               plans; and (3) add certain model amendments published by the
               Internal Revenue Service

                                       38

<PAGE>
      which specifically provide that their adoption will not cause the Plan to
      be treated as individually designed. An Employer that amends the Plan for
      any other reason, including a waiver of the minimum funding requirement
      under Section 412(d) of the Code, will no longer participate in this
      prototype plan and will be considered to have an individually designed
      plan.

      An Employer who wishes to amend the Plan to change the options it has
      chosen in the Adoption Agreement must complete and deliver a new Adoption
      Agreement to the Prototype Sponsor and Trustee (or Custodian, if
      applicable). Such amendment shall become effective upon execution by the
      Employer and Trustee (or Custodian).

      The Employer further reserves the right to replace the Plan in its
      entirety by adopting another retirement plan which the Employer designates
      as a replacement plan.

9.03  LIMITATION ON POWER TO AMEND
      No amendment to the Plan shall be effective to the extent that it has the
      effect of decreasing a Participant's accrued benefit. Notwithstanding the
      preceding sentence, a Participant's Individual Account may be reduced to
      the extent permitted under Section 412(c)(8) of the Code. For purposes of
      this paragraph, a plan amendment which has the effect of decreasing a
      Participant's Individual Account or eliminating an optional form of
      benefit with respect to benefits attributable to service before the
      amendment shall be treated as reducing an accrued benefit. Furthermore, if
      the vesting schedule of a Plan is amended, in the case of an Employee who
      is a Participant as of the later of the date such amendment is adopted or
      the date it becomes effective, the Vested percentage (determined as of
      such date) of such Employee's Individual Account derived from Employer
      Contributions will not be less than the percentage computed under the Plan
      without regard to such amendment.

9.04  AMENDMENT OF VESTING SCHEDULE
      If the Plan's vesting schedule is amended, or the Plan is amended in any
      way that directly or indirectly affects the computation of the
      Participant's Vested percentage, or if the Plan is deemed amended by an
      automatic change to or from a top-heavy vesting schedule, each Participant
      with at least 3 Years of Vesting Service with the Employer may elect,
      within the time set forth below, to have the Vested percentage computed
      under the Plan without regard to such amendment.

      For Participants who do not have at least 1 Hour of Service in any Plan
      Year beginning after December 31, 1988, the preceding sentence shall be
      applied by substituting "5 Years of Vesting Service" for "3 Years of
      Vesting Service" where such language appears.
      The Period during which the election may be made shall commence with the
      date the amendment is adopted or deemed to be made and shall end the later
      of:

      A.  60 days after the amendment is adopted;

      B.  60 days after the amendment becomes effective; or

      C.  60 days after the Participant is issued written notice of the
      amendment by the Employer or Plan Administrator.

9.05  PERMANENCY
      The Employer expects to continue this Plan and make the necessary
      contributions thereto indefinitely, but such continuance and payment is
      not assumed as a contractual obligation. Neither the Adoption Agreement
      nor the Plan nor any amendment or modification thereof nor the making of
      contributions hereunder shall be construed as giving any Participant or
      any person whomsoever any legal or equitable right against the Employer,
      the Trustee (or Custodian, if applicable) the Plan Administrator or the
      Prototype Sponsor except as specifically provided herein, or as provided
      by law.

9.06  METHOD AND PROCEDURE FOR TERMINATION
      The Plan may be terminated by the Employer at any time by appropriate
      action of its managing body. Such termination shall be effective on the
      date specified by the Employer. The Plan shall terminate if the Employer
      shall be dissolved, terminated, or declared bankrupt. Written notice of
      the termination and effective date thereof shall be given to the Trustee
      (or Custodian), Plan Administrator, Prototype Sponsor, Participants and
      Beneficiaries of deceased Participants, and the required filings (such as
      the Form 5500 series and others) must be made with the Internal Revenue
      Service and any other regulatory body as required by current laws and
      regulations. Until all of the assets have been distributed from the Fund,
      the Employer must keep the Plan in compliance with current laws and
      regulations by (a) making appropriate amendments to the Plan and (b)
      taking such other measures as may be required.

9.07  CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
      Notwithstanding the preceding Section 9.06, a successor of the Employer
      may continue the Plan and be substituted in the place of the present
      Employer. The successor and the present Employer (or, if deceased, the
      executor of the estate of a deceased Self-Employed Individual who was the
      Employer) must execute a written instrument authorizing such substitution
      and the successor must complete and sign a new plan document.

9.08  FAILURE OF PLAN QUALIFICATION

                                      -39

<PAGE>
               If the Plan fails to retain its qualified status, the Plan will
               no longer be considered to be part of a prototype plan, and such
               Employer can no longer participate under this prototype. In such
               event, the Plan will be considered an individually designed plan.

SECTION TEN    MISCELLANEOUS

       10.01   STATE COMMUNITY PROPERTY LAWS
               The terms and conditions of this Plan shall be applicable
               without regard to the community property laws of any state.

       10.02   HEADINGS
               The headings of the Plan have been inserted for convenience of
               reference only and are to be ignored in any construction of the
               provisions hereof.

       10.03   GENDER AND NUMBER
               Whenever any words are used herein in the masculine gender they
               shall be construed as though they were also used in the feminine
               gender in all cases where they would so apply, and whenever any
               words are used herein in the singular form they shall be
               construed as though they were also used in the plural form in all
               cases where they would so apply.

       10.04   PLAN MERGER OR CONSOLIDATION
               In the case of any merger or consolidation of the Plan with, or
               transfer of assets or liabilities of such Plan to, any other
               plan, each Participant shall be entitled to received benefits
               immediately after the merger, consolidation, or transfer (if the
               Plan had then terminated) which are qual to or greater than the
               benefits he or she would have been entitled to receive
               immediately before the merger, consolidation, or transfer (if the
               Plan had then terminated). The Trustee (or Custodian) has the
               authority to enter into merger agreements or agreements to
               directly transfer the assets of this Plan but only if such
               agreements are made with trustees or custodians of other
               retirement plans described in Section 401(a) of the Code.

       10.05   STANDARD OF FIDUCIARY CONDUCT
               The Employer, Plan Administrator, Trustee and any other fiduciary
               under this Plan shall discharge their duties with respect to this
               Plan solely in the interests of Participants and their
               Beneficiaries and with the care, skill, prudence and diligence
               under the circumstances then prevailing that a prudent man acting
               in like capacity and familiar with such matters would use in the
               conduct of an enterprise of a like character and with like aims.
               No fiduciary shall cause the Plan to engage in any transaction
               known as a "prohibited transaction" under ERISA.

       10.06   GENERAL UNDERTAKING OF ALL PARTIES
               All parties to this Plan and all persons claiming any interest
               whatsoever hereunder agree to perform any and all acts and
               execute any and all documents and papers which may be necessary
               or desirable for the carrying out of this Plan and any of its
               provisions.

       10.07   AGREEMENT BINDS HEIRS, ETC.
               This Plan shall be binding upon the heirs, executors,
               administrators, successors and assigns, as those terms shall
               apply to any and all parties hereto, present and future.

       10.08   DETERMINATION OF TOP-HEAVY STATUS

               A.   For any Plan Year beginning after December 31, 1983,
                    this Plan is a Top-Heavy Plan if any of the following
                    conditions exist:

                    1.   If the top-heavy ratio for this Plan exceeds 60%
                         and this Plan is not part of any required aggregation
                         group or permissive aggregation group of plans.

                    2.   If this Plan is part of a required aggregation group
                         of plans but not part of a permissive aggregation group
                         and the top-heavy ratio for the group of plans exceeds
                         60%.

                    3.   If this Plan is a part of a required aggregation
                         group and part of a permissive aggregation group of
                         plans and the top-heavy ratio for the permissive
                         aggregation group exceeds 60%.

                    For purposes of this Section 10.08, the following terms
                    shall have the meanings indicated below:

               B.   Key Employee -- Any Employee or former Employee (and
                    the Beneficiaries of such Employee) who at any time during
                    the determination period was an officer of the Employer if
                    such individual's annual compensation exceeds 50% of the
                    dollar limitation under Section 415(b)(1)(A) of the Code, an
                    owner (or considered an owner under Section 318 of the Code)
                    of one of the 10 largest interests in the Employer if such
                    individual's compensation exceeds 100% of the dollar
                    limitation under Section 415(c)(1)(A) of the Code, a 5%
                    owner of the Employer, or a 1% owner of the Employer who has
                    an annual compensation of more than $150,000. Annual
                    compensation means compensation as defined in Section
                    415(c)(3) of the Code, but including amounts contributed by
                    the Employer pursuant to a salary reduction agreement which
                    are excludable from the Employee's gross income under
                    Section

                                      -40

<PAGE>
     125, Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code.
     The determination period is the Plan Year containing the determination date
     and the 4 preceding Plan Years.

     The determination of who is a Key Employee will be made in accordance with
     Section 416(i)(1) of the Code and the regulations thereunder.

C.   Top-heavy ratio

     1.   If the Employer maintains one or more defined contribution plans
          (including any simplified employee pension plan) and the Employer has
          not maintained any defined benefit plan which during the 5-year period
          ending on the determination date(s) has or has had accrued benefits,
          the top-heavy ratio for this Plan alone or for the required or
          permissive aggregation group as appropriate is a fraction, the
          numerator of which is the sum of the account balances of all Key
          Employees as of the determination date(s) (including any part of any
          account balance distributed in the 5-year period ending on the
          determination date(s)), and the denominator of which is the sum of all
          account balances (including any part of any account balance
          distributed in the 5-year period ending on the determination date(s)),
          both computed in accordance with Section 416 of the Code and the
          regulations thereunder. Both the numerator and the denominator of the
          top-heavy ratio are increased to reflect any contribution not actually
          made as of the determination date, but which is required to be taken
          into account on that date under Section 416 of the Code and the
          regulations thereunder.

     2.   If the Employer maintains one or more defined contribution plans
          (including any simplified employee pension plan) and the Employer
          maintains or has maintained one or more defined benefit plans which
          during the 5-year period ending on the determination date(s) has or
          has had any accrued benefits, the top-heavy ratio for any required or
          permissive aggregation group as appropriate is a fraction, the
          numerator of which is the sum of account balances under the
          aggregated defined contribution plan or plans for all Key Employees,
          determined in accordance with (1) above, and the present value of
          accrued benefits under the aggregated defined benefit plan or plans
          for all Key Employees as of the determination date(s), and the
          denominator of which is the sum of the account balances under the
          aggregated defined contribution plan or plans for all Participants,
          determined in accordance with (1) above, and the present value of
          accrued benefits under the defined benefit plan or plans for all
          Participants as of the determination date(s), all determined in
          accordance with Section 416 of the Code and the regulations
          thereunder. The accrued benefits under a defined benefit plan in both
          the numerator and denominator of the top-heavy ratio are increased
          for any distribution of an accrued benefit made in the 5-year period
          ending on the determination date.

     3.   For purposes of (1) and (2) above, the value of account balances and
          the present value of accrued benefits will be determined as of the
          most recent valuation date that falls within or ends with the
          12-month period ending on the determination date, except as provided
          in Section 416 of the Code and the regulations thereunder for the
          first and second plan years of a defined benefit plan. The account
          balances and accrued benefits of a Participant (a) who is not a Key
          Employee but who was a Key Employee in a Prior Year, or (b) who has
          not been credited with at least one Hour of Service with any employer
          maintaining the plan at any time during the 5-year period ending on
          the determination date will be disregarded. The calculation of the
          top-heavy ratio, and the extent to which distributions, rollovers,
          and transfers are taken into account will be made in accordance with
          Section 416 of the Code and the regulations thereunder. Deductible
          employee contributions will not be taken into account for purposes of
          computing the top-heavy ratio. When aggregating plans the value of
          account balances and accrued benefits will be calculated with
          reference to the determination dates that fall within the same
          calendar year.

          The accrued benefit of a Participant other than a Key Employee shall
          be determined under (a) the method, if any, that uniformly applies
          for accrual purposes under all defined benefit plans maintained by
          the Employer, or (b) if there is no such method, as if such benefit
          accrued not more rapidly than the slowest accrual rate permitted
          under the fractional rule of Section 411(b)(1)(C) of the Code.

     4.   Permissive aggregation group: The required aggregation group of plans
          plus any other plan or plans of the Employer which, when considered
          as a group with the required aggregation group, would continue to
          satisfy the requirements of Sections 401(a)(4) and 410 of the Code.

     5.   Required aggregation group: (a) Each qualified plan of the Employer
          in which at least one Key Employee participates or participated at
          any time during the determination period (regardless of whether the
          Plan has terminated), and (b) any other qualified plan of the
          Employer which enables a plan described in (a) to meet the
          requirements of Sections 401(a)(4) or 410 of the Code.

     6.   Determination date: For any Plan Year subsequent to the first Plan
          Year, the last day of the preceding Plan Year. For the first Plan
          Year of the Plan, the last day of that year.

     7.   Valuation date: For purposes of calculating the top-heavy ratio, the
          valuation date shall be the last day of each Plan Year.

                                       41
<PAGE>
          8.   Present value: For purposes of establishing the "present value"
               of benefits under a defined benefit plan to compute the top-heavy
               ratio, any benefit shall be discounted only for mortality and
               interest based on the interest rate and mortality table specified
               for this purpose in the defined benefit plan, unless otherwise
               indicated in the Adoption Agreement.

10.09     SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES
          If this Plan provides contributions or benefits for one or more
          Owner-Employees who control both the business for which this Plan is
          established and one or more other trades or businesses, this Plan and
          the plan established for other trades or businesses must, when looked
          at as a single plan, satisfy Sections 401(a) and (d) of the Code for
          the employees of those trades or businesses.

          If the Plan provides contributions or benefits for one or more
          Owner-Employees who control one or more other trades or businesses,
          the employees of the other trades or businesses must be included in a
          plan which satisfies Sections 401(a) and (d) of the Code and which
          provides contributions and benefits not less favorable than provided
          for Owner-Employees under this Plan.

          If an individual is covered as an Owner-Employee under the plans of
          two or more trades or businesses which are not controlled and the
          individual controls a trade or business, then the contributions or
          benefits of the employees under the plan of the trade or business
          which is controlled must be as favorable as those provided for him or
          her under the most favorable plan of the trade or business which is
          not controlled.

          For purposes of the preceding paragraphs, an Owner-Employee, or two or
          more Owner-Employees, will be considered to control a trade or
          business if the Owner-Employee, or two or more Owner-Employees,
          together:

          A.   own the entire interest in a unincorporated trade or business, or

          B.   in the case of a partnership, own more than 50% of either the
               capital interest or the profit interest in the partnership.

          For purposes of the preceding sentence, an Owner-Employee, or two or
          more Owner-Employees, shall be treated as owning any interest in a
          partnership which is owned, directly or indirectly by a partnership
          which such Owner-Employee, or such two or more Owner-Employees, are
          considered to control within the meaning of the preceding sentence.

10.10     INALIENABILITY OF BENEFITS
          No benefit or interest available hereunder will be subject to
          assignment or alienation, either voluntarily or involuntarily. The
          preceding sentence shall also apply to the creation, assignment, or
          recognition of a right to any benefit payable with respect to a
          Participant pursuant to a domestic relations order, unless such order
          is determined to be a qualified domestic relations order, as defined
          in Section 414(p) of the Code.

          Generally, a domestic relations order cannot be a qualified domestic
          relations order until January 1, 1985. However, in the case of a
          domestic relations order entered before such date, the Plan
          Administrator:

          (1)  shall treat such order as a qualified domestic relations order if
               such Plan Administrator is paying benefits pursuant to such order
               on such date, and

          (2)  may treat any other such order entered before such date as a
               qualified domestic relations order even if such order does not
               meet the requirements of Section 414(p) of the Code.

          Notwithstanding any provision of the Plan to the contrary, a
          distribution to an alternate payee under a qualified domestic
          relations order shall be permitted even if the Participant affected by
          such order is not otherwise entitled to a distribution and even if
          such Participant has not attained earliest retirement age as defined
          in Section 414(p) of the Code.

10.11     CANNOT ELIMINATE PROTECTED BENEFITS
          Pursuant to Section 411(d)(6) of the Code, and the regulations
          thereunder, the Employer cannot reduce, eliminate or make subject to
          Employer discretion any Section 411(d)(6) protected benefit. Where
          this Plan document is being adopted to amend another plan that
          contains a protected benefit not provided for in this document, the
          Employer may attach a supplement to the Adoption Agreement that
          describes such protected benefit which shall become part of the Plan.

                                       42
<PAGE>
SECTION ELEVEN 401(k) PROVISIONS

               In addition to Sections 1 through 10, the provisions of this
               Section 11 shall apply if the Employer has established a 401(k)
               cash or deferred arrangement (CODA) by completing and signing the
               appropriate Adoption Agreement.

     11.100    DEFINITIONS
               The following words and phrases when used in the Plan with
               initial capital letters shall, for the purposes of this Plan,
               have the meanings set forth below unless the context indicates
               that other meanings are intended.

     11.101    ACTUAL DEFERRAL PERCENTAGE (ADP)
               Means, for a specified group of Participants for a Plan Year, the
               average of the ratios (calculated separately for each Participant
               in such group) of (1) the amount of Employer Contributions
               actually paid over to the Fund on behalf of such Participant for
               the Plan Year to (2) the Participant's Compensation for such Plan
               Year (taking into account only that Compensation paid to the
               Employee during the portion of the Plan Year he or she was an
               eligible Participant, unless otherwise indicated in the Adoption
               Agreement). For purposes of calculating the ADP, Employer
               Contributions on behalf of any Participant shall include: (1) any
               Elective Deferrals made pursuant to the Participant's deferral
               election, (including Excess Elective Deferrals of Highly
               Compensated Employees), but excluding (a) Excess Elective
               Deferrals of Non-highly Compensated Employees that arise solely
               from Elective Deferrals made under the Plan or plans of this
               Employer and (b) Elective Deferrals that are taken into account
               in the Contribution Percentage test (provided the ADP test is
               satisfied both with and without exclusion of these Elective
               Deferrals); and (2) at the election of the Employer, Qualified
               Nonelective Contributions and Qualified Matching Contributions.
               For purposes of computing Actual Deferral Percentages, an
               Employee who would be a Participant but for the failure to make
               Elective Deferrals shall be treated as a Participant on whose
               behalf no Elective Deferrals are made.

     11.102    AGGREGATE LIMIT
               Means the sum of (1) 125% of the greater of the ADP of the
               Participants who are not Highly Compensated Employees for the
               Plan Year or the ACP of the Participants who are not Highly
               Compensated Employees under the Plan subject to Code Section
               401(m) for the Plan Year beginning with or within the Plan Year
               of the CODA; and (2) the lesser of 200% or two plus the lesser of
               such ADP or ACP. "Lesser" is substituted for "greater" in "(1)"
               above, and "greater" is substituted for "lesser" after "two plus
               the" in "(2)" if it would result in a larger Aggregate Limit.

     11.103    AVERAGE CONTRIBUTION PERCENTAGE (ACP)
               Means the average of the Contribution Percentages of the
               Eligible Participants in a group.

     11.104    CONTRIBUTING PARTICIPANT
               Means a Participant who has enrolled as a Contributing
               Participant pursuant to Section 11.201 and on whose behalf the
               Employer is contributing Elective Deferrals to the Plan (or is
               making Nondeductible Employee Contributions).

     11.105    CONTRIBUTION PERCENTAGE
               Means the ratio (expressed as a percentage) of the Participant's
               Contribution Percentage Amounts to the Participant's Compensation
               for the Plan Year (taking into account only the Compensation paid
               to the Employee during the portion of the Plan Year he or she was
               an eligible Participant, unless otherwise indicated in the
               Adoption Agreement).

     11.106    CONTRIBUTION PERCENTAGE AMOUNTS
               Means the sum of the Nondeductible Employee Contributions,
               Matching Contributions, and Qualified Matching Contributions made
               under the Plan on behalf of the Participant for the Plan Year.
               Such Contribution Percentage Amounts shall not include Matching
               Contributions that are forfeited either to correct Excess
               Aggregate Contributions or because the contributions to which
               they relate are Excess Deferrals, Excess Contributions, Excess
               Aggregate Contributions or excess annual additions which are
               distributed pursuant to Section 11.508. If so elected in the
               Adoption Agreement, the Employer may include Qualified
               Nonelective Contributions in the Contribution Percentage Amount.
               The Employer also may elect to use Elective Deferrals in the
               Contribution Percentage Amounts so long as the ADP test is met
               before the Elective Deferrals are used in the ACP test and
               continues to be met following the exclusion of those Elective
               Deferrals that are used to meet the ACP test.

     11.107    ELECTIVE DEFERRALS
               Means any Employer Contributions made to the Plan at the election
               of the Participant, in lieu of cash compensation, and shall
               include contributions made pursuant to a salary reduction
               agreement or other deferral mechanism. With respect to any
               taxable year, a Participant's Elective Deferral is the sum of all
               Employer contributions made on behalf of such Participant
               pursuant to an election to defer under any qualified CODA as
               described in Section 401(k) of the Code, any simplified employee
               pension cash or deferred arrangement as described in Section
               402(h)(1)(B), any eligible deferred compensation plan under
               Section 457, any plan as described under Section 501(c)(18), and
               any Employer contributions made on behalf of a Participant for
               the purchase of an annuity contract under Section 403(b) pursuant
               to a salary reduction agreement. Elective Deferrals shall not
               include any deferrals properly distributed as excess annual
               additions.

               No Participant shall be permitted to have Elective Deferrals made
               under this Plan, or any other qualified plan maintained by the
               Employer, during any taxable year, in excess of the dollar
               limitation contained in Section 402(g) of the Code in effect at
               the beginning of such taxable year.

                                       43

<PAGE>
            Elective Deferrals may not be taken into account for purposes of
            satisfying the minimum allocation requirement applicable to
            Top-Heavy Plans described in Section 3.01(E).

     11.108 ELIGIBLE PARTICIPANT
            Means any Employee who is eligible to make a Nondeductible Employee
            Contribution or an Elective Deferral (if the Employer takes such
            contributions into account in the calculation of the Contribution
            Percentage), or to receive a Matching Contribution (including
            Forfeitures thereof) or a Qualified Matching Contribution.

            If a Nondeductible Employee Contribution is required as a condition
            of participation in the Plan, any Employee who would be a
            Participant in the Plan if such Employee made such a contribution
            shall be treated as an Eligible Participant on behalf of whom no
            Nondeductible Employee Contributions are made.

     11.109 EXCESS AGGREGATE CONTRIBUTIONS
            Means, with respect to any Plan Year, the excess of:

            A. The aggregate Contribution Percentage Amounts taken into account
               in computing the numerator of the Contribution Percentage
               actually made on behalf of Highly Compensated Employees for such
               Plan Year, over

            B. The maximum Contribution Percentage Amounts permitted by the ACP
               test (determined by reducing contributions made on behalf of
               Highly Compensated Employees in order of their Contribution
               Percentages beginning with the highest of such percentages).

               Such determination shall be made after first determining Excess
               Elective Deferrals pursuant to Section 11.111 and then
               determining Excess Contributions pursuant to Section 11.110

     11.110 EXCESS CONTRIBUTIONS
            Means, with respect to any Plan Year, the excess of:

            A. The aggregate amount of Employer Contributions actually taken
               into account in computing the ADP of Highly Compensated Employees
               for such Plan Year, over

            B. The maximum amount of such contributions permitted by the ADP
               test (determined by reducing contributions made on behalf of
               Highly Compensated Employees in order of the ADPs, beginning with
               the highest of such percents).

     11.111 EXCESS ELECTIVE DEFERRALS
            Means those Elective Deferrals that are includible in a
            Participant's gross income under Section 402(g) of the Code to the
            extent such Participant's Elective Deferrals for a taxable year
            exceed the dollar limitation under such Code section. Excess
            Elective Deferrals shall be treated as annual additions under the
            Plan, unless such amounts are distributed no later than the first
            April 15 following the close of the Participant's taxable year.

     11.112 MATCHING CONTRIBUTION
            Means an Employer Contribution made to this or any other defined
            contribution plan on behalf of a Participant on account of an
            Elective Deferral or a Nondeductible Employee Contribution made by
            such Participant under a plan maintained by the Employer.

            Matching Contributions may not be taken into account for purposes
            of satisfying the minimum allocation requirement applicable to
            Top-Heavy Plans described in Section 3.01(E).

     11.113 QUALIFIED NONELECTIVE CONTRIBUTIONS
            Means contributions (other than Matching Contributions or Qualified
            Matching Contributions) made by the Employer and allocated to
            Participants' Individual Accounts that the Participants may not
            elect to receive in cash until distributed from the Plan; that are
            nonforfeitable when made; and that are distributable only in
            accordance with the distribution provisions that are applicable to
            Elective Deferrals and Qualified Matching Contributions.

            Qualified Nonelective Contribution may be taken into account for
            purposes of satisfying the minimum allocation requirement applicable
            to Top-Heavy Plans described in Section 3.01(E).

     11.114 QUALIFIED MATCHING CONTRIBUTIONS
            Means Matching Contributions which are subject to the distribution
            and nonforfeitability requirements under Section 401(k) of the Code
            when made.

                                       44
<PAGE>
11.115    QUALIFYING CONTRIBUTING PARTICIPANT

          Means a Contributing Participant who satisfies the requirements
          described in Section 11.302 to be entitled to receive a Matching
          Contribution (and Forfeitures, if applicable) for a Plan Year.

11.200    CONTRIBUTING PARTICIPANT

11.201    REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT

          A.   Each Employee who satisfies the eligibility requirements
               specified in the Adoption Agreement may enroll as a Contributing
               Participant as of any subsequent Entry Date (or earlier if
               required by Section 2.03) specified in the Adoption Agreement for
               this purpose. A Participant who wishes to enroll as a
               Contributing Participant must complete, sign and file a salary
               reduction agreement (or agreement to make Nondeductible Employee
               Contributions) with the Plan Administrator.

          B.   Notwithstanding the times set forth in Section 11.201(A) as of
               which a Participant may enroll as a Contributing Participant, the
               Plan Administrator shall have the authority to designate, in a
               nondiscriminatory manner, additional enrollment times during the
               12 month period beginning on the Effective Date (or the date that
               Elective Deferrals may commence, if later) in order that an
               orderly first enrollment might be completed. In addition, if the
               Employer has indicated in the Adoption Agreement that Elective
               Deferrals may be based on bonuses, then Participants shall be
               afforded a reasonable period of time prior to the issuance of
               such bonuses to elect to defer them into the Plan.

11.202    CHANGING ELECTIVE DEFERRAL AMOUNTS

          A Contributing Participant may modify his or her salary reduction
          agreement (or agreement to make Nondeductible Employee Contributions)
          to increase or decrease (within the limits placed on Elective
          Deferrals (or Nondeductible Employee Contributions) in the Adoption
          Agreement) the amount of his or her Compensation deferred into the
          Plan. Such modification may only be made as of the dates specified in
          the Adoption Agreement for this purpose, or as of any other more
          frequent date(s) if the Plan Administrator permits in a uniform and
          nondiscriminatory manner. A Contributing Participant who desires to
          make such a modification shall complete, sign and file a new salary
          reduction agreement (or agreement to make Nondeductible Employee
          Contribution) with the Plan Administrator. The Plan Administrator may
          prescribe such uniform and nondiscriminatory rules it deems
          appropriate to carry out the terms of this Section.

11.203    CEASING ELECTIVE DEFERRALS

          A Participant may cease Elective Deferrals (or Nondeductible Employee
          Contributions) and thus withdraw as a Contributing Participant as of
          the dates specified in the Adoption Agreement for this purpose (or as
          of any other date if the Plan Administrator so permits in a uniform
          and nondiscriminatory manner) by revoking the authorization to the
          Employer to make Elective Deferrals (or Nondeductible Employee
          Contributions) on his or her behalf. A Participant who desires to
          withdraw as a Contributing Participant shall give written notice of
          withdrawal to the Plan Administrator at least thirty days (or such
          lesser period of days as the Plan Administrator shall permit in a
          uniform and nondiscriminatory manner) before the effective date of
          withdrawal. A Participant shall cease to be a Contributing Participant
          upon his or her Termination of Employment, or an account of
          termination of the Plan.

11.204    RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE DEFERRALS

          A Participant who has withdrawn as a Contributing Participant under
          Section 11.203 (or because the Participant has taken a hardship
          withdrawal pursuant to Section 11.503) may not again become a
          Contributing Participant until the dates set forth in the Adoption
          Agreement for this purpose, unless the Plan Administrator, in a
          uniform and nondiscriminatory manner, permits withdrawing Participants
          to resume their status as Contributing Participants sooner.

11.205    CERTAIN ONE-TIME IRREVOCABLE ELECTIONS

          This Section 11.205 applies where the Employer has indicated in the
          Adoption Agreement that an Employee may make a one-time irrevocable
          election to have the Employer make contributions to the Plan on such
          Employee's behalf. In such event, an Employee may elect, upon the
          Employee's first becoming eligible to participate in the Plan, to have
          contributions equal to a specified amount or percentage of the
          Employee's Compensation (including no amount of Compensation) made by
          the Employer on the Employee's behalf to the Plan (and to any other
          plan of the Employer) for the duration of the Employee's employment
          with the Employer. Any contributions made pursuant to a one-time
          irrevocable election described in this Section are not treated as made
          pursuant to a cash or deferred election, are not Elective Deferrals
          and are not includible in an Employee's gross income.

          The Plan Administrator shall establish such uniform and
          nondiscriminatory procedures as it deems necessary or advisable to
          administer this provision.

11.300    CONTRIBUTIONS

11.301    CONTRIBUTIONS BY EMPLOYER

          The Employer shall make contributions to the Plan in accordance with
          the contribution formulas specified in the Adoption Agreement.

11.302    MATCHING CONTRIBUTIONS

                                       45
<PAGE>
          The Employer may elect to make Matching Contributions under the Plan
          on behalf of Qualifying Contributing Participants as provided in the
          Adoption Agreement. To be a Qualifying Contributing Participant for a
          Plan Year, the Participant must make Elective Deferrals (or
          Nondeductible Employee Contributions, if the Employer has agreed to
          match such contributions) for the Plan Year, satisfy any age and Years
          of Eligibility Service requirements that are specified for Matching
          Contributions in the Adoption Agreement and also satisfy any
          additional conditions set forth in the Adoption Agreement for this
          purpose. In a uniform and nondiscriminatory manner, the Employer may
          make Matching Contributions at the same time as it contributes
          Elective Deferrals or at any other time as permitted by laws and
          regulations.

11.303    QUALIFIED NONELECTIVE CONTRIBUTIONS
          The Employer may elect to make Qualified Nonelective Contributions
          under the Plan on behalf of Participants as provided in the Adoption
          Agreement.

          In addition, in lieu of distributing Excess Contributions as provided
          in Section 11.505 of the Plan, or Excess Aggregate Contributions as
          provided in Section 11.506 of the Plan, and to the extent elected by
          the Employer in the Adoption Agreement, the Employer may make
          Qualified Nonelective Contributions on behalf of Participants who are
          not Highly Compensated Employees that are sufficient to satisfy either
          the Actual Deferral Percentage test or the Average Contribution
          Percentage test, or both, pursuant to regulations under the Code.

11.304    QUALIFIED MATCHING CONTRIBUTIONS
          The Employer may elect to make Qualified Matching Contributions under
          the Plan on behalf of Participants as provided in the Adoption
          Agreement.

11.305    NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
          Notwithstanding Section 3.02, if the Employer so allows in the
          Adoption Agreement, a Participant may contribute Nondeductible
          Employee Contributions to the Plan.

          If the Employer has indicated in the Adoption Agreement that
          Nondeductible Employee Contributions will be mandatory, then the
          Employer shall establish uniform and nondiscriminatory rules and
          procedures for Nondeductible Employee Contributions as it deems
          necessary and advisable including, but not limited to, rules
          describing in amounts or percentages of Compensation Participants may
          or must contribute to the Plan.

          A separate account will be maintained by the Plan Administrator for
          the Nondeductible Employee Contributions for each Participant.

          A Participant may, upon a written request submitted to the Plan
          Administrator, withdraw the lesser of the portion of his or her
          Individual Account attributable to his or her Nondeductible Employee
          Contributions or the amount he or she contributed as Nondeductible
          Employee Contributions.

          Nondeductible Employee Contributions and earnings thereon will be
          nonforfeitable at all times. No Forfeiture will occur solely as a
          result of an Employee's withdrawal of Nondeductible Employee
          Contributions.

11.400    NONDISCRIMINATION TESTING

11.401    ACTUAL DEFERRAL PERCENTAGE TEST (ADP)

          A.   Limits on Highly Compensated Employees - The Actual Deferral
               Percentage (hereinafter "ADP") for Participants who are Highly
               Compensated Employees for each Plan Year and the ADP for
               Participants who are not Highly Compensated Employees for the
               same Plan Year must satisfy one of the following tests:

               1.   The ADP for Participants who are Highly Compensated
                    Employees for the Plan Year shall not exceed the ADP for
                    Participants who are not Highly Compensated Employees for
                    the same Plan Year multiplied by 1.25; or

               2.   The ADP for Participants who are Highly Compensated
                    Employees for the Plan Year shall not exceed the ADP for
                    Participants who are not Highly Compensated Employees for
                    the same Plan Year multiplied by 2.0 provided that the ADP
                    for Participants who are Highly Compensated Employees does
                    not exceed the ADP for Participants who are not Highly
                    Compensated Employees by more than 2 percentage points.

          B.   Special Rules

               1.   The ADP for any Participant who is a Highly Compensated
                    Employee for the Plan Year and who is eligible to have
                    Elective Deferrals (and Qualified Nonelective Contributions
                    or Qualified Matching Contributions, or both, if treated as
                    Elective Deferrals for purposes of the ADP test) allocated
                    to his or her Individual Account under two or more
                    arrangements described in Section 401(k) of the Code, that
                    are maintained by the Employer, shall be determined as if
                    such Elective Deferrals (and, if applicable, such Qualified
                    Nonelective Contributions or Qualified Matching
                    Contributions, or both) were made under a single
                    arrangement. If a Highly Compensated Employee participates
                    in two or more cash or deferred arrangements that have
                    different

                                       46

<PAGE>
                    Plan Years, all cash or deferred arrangements ending with or
                    within the same calendar year shall be treated as a single
                    arrangement. Notwithstanding the foregoing, certain plans
                    shall be treated as separate if mandatorily disaggregated
                    under regulations under Section 401(k) of the Code.

               2.   In the event that this Plan satisfies the requirements of
                    Sections 401(k), 401(a)(4), or 410(b) of the Code only if
                    aggregated with one or more other plans, or if one or more
                    other plans satisfy the requirements of such sections of the
                    Code only if aggregated with this Plan, then this Section
                    11.401 shall be applied by determining the ADP of Employees
                    as if all such plans were a single plan. For Plan Years
                    beginning after December 31, 1989, plans may be aggregated
                    in order to satisfy Section 401(k) of the Code only if they
                    have the same Plan Year.

               3.   For purposes of determining the ADP of a Participant who is
                    a 5% owner or one of the 10 most highly paid Highly
                    Compensated Employees, the Elective Deferrals (and Qualified
                    Nonelective Contributions or Qualified Matching
                    Contributions, or both, if treated as Elective Deferrals for
                    purposes of the ADP test) and Compensation of such
                    Participant shall include the Elective Deferrals (and, if
                    applicable, Qualified Nonelective Contributions and
                    Qualified Matching Contributions, or both) and Compensation
                    for the Plan Year of family members (as defined in Section
                    414(q)(6) of the Code). Family members, with respect to such
                    Highly Compensated Employees, shall be disregarded as
                    separate Employees in determining the ADP both for
                    Participants who are not Highly Compensated Employees and
                    for Participants who are Highly Compensated Employees.

               4.   For purposes of determining the ADP test, Elective
                    Deferrals, Qualified Nonelective Contributions and Qualified
                    Matching Contributions must be made before the last day of
                    the 12 month period immediately following the Plan Year to
                    which contributions relate.

               5.   The Employer shall maintain records sufficient to
                    demonstrate satisfaction of the ADP test and the amount of
                    Qualified Nonelective Contributions or Qualified Matching
                    Contributions, or both, used in such test.

               6.   The determination and treatment of the ADP amounts of any
                    Participant shall satisfy such other requirements as may be
                    prescribed by the Secretary of the Treasury.

               7.   If the Employer elects to take Qualified Matching
                    Contributions into account as Elective Deferrals for
                    purposes of the ADP test, then (subject to such other
                    requirements as may be prescribed by the Secretary of the
                    Treasury) unless otherwise indicated in the Adoption
                    Agreement, only the amount of such Qualified Matching
                    Contributions that are needed to meet the ADP test shall be
                    taken into account.

               8.   In the event that the Plan Administrator determines that it
                    is not likely that the ADP test will be satisfied for a
                    particular Plan Year unless certain steps are taken prior to
                    the end of such Plan Year, the Plan Administrator may
                    require Contributing Participants who are Highly Compensated
                    Employees to reduce their Elective Deferrals for such Plan
                    Year in order to satisfy that requirement. Said reduction
                    shall also be required by the Plan Administrator in the
                    event that the Plan Administrator anticipates that the
                    Employer will not be able to deduct all Employer
                    Contributions from its income for Federal income tax
                    purposes.

11.402    LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING
          CONTRIBUTIONS

          A.   LIMITS ON HIGHLY COMPENSATED EMPLOYEES - The Average Contribution
               Percentage (hereinafter "ACP") for Participants who are Highly
               Compensated Employees for each Plan Year and the ACP for
               Participants who are not Highly Compensated Employees for the
               same Plan Year must satisfy one of the following tests:

               1.   The ACP for Participants who are Highly Compensated
                    Employees for the Plan Year shall not exceed the ACP for
                    Participants who are not Highly Compensated Employees for
                    the same Plan Year multiplied by 1.25; or

               2.   The ACP for Participants who are Highly Compensated
                    Employees for the Plan Year shall not exceed the ACP for
                    Participants who are not Highly Compensated Employees for
                    the same Plan Year multiplied by 2, provided that the ACP
                    for the Participants who are Highly Compensated Employees
                    does not exceed the ACP for Participants who are not Highly
                    Compensated Employees by more than 2 percentage points.

          B.   SPECIAL RULES

               1.   MULTIPLE USE - If one or more Highly Compensated Employees
                    participate in both a CODA and a plan subject to the ACP
                    test maintained by the Employer and the sum of the ADP and
                    ACP of those Highly Compensated Employees subject to either
                    or both tests exceeds the Aggregate Limit, then, as elected
                    in the Adoption Agreement, the ACP or the ADP of those
                    Highly Compensated Employees who also participate in a CODA
                    will be reduced (beginning with such Highly Compensated
                    Employee whose ACP (or ADP, if elected) is the highest) so
                    that the limit is not exceeded. The amount by which each
                    Highly Compensated Employee's Contribution Percentage
                    Amounts (or ADP, if elected) is reduced shall be treated as
                    an Excess Aggregate Contribution (or Excess Contribution, if
                    elected). The ADP or ACP of the Highly Compensated Employees

                                       47
<PAGE>
                    are determined after any corrections required to meet the
                    ADP and ACP tests. Multiple use does not occur if the ADP
                    and ACP of the Highly Compensated Employees does not exceed
                    1.25 multiplied by the ADP and ACP of the Participants who
                    are not Highly Compensated Employees.

               2.   For purposes of this Section 11.402, the Contribution
                    Percentage for any Participant who is a Highly Compensated
                    Employee and who is eligible to have Contribution Percentage
                    Amounts allocated to his or her Individual Account under two
                    or more plans described in Section 401(a) of the Code, or
                    arrangements described in Section 401(k) of the Code that
                    are maintained by the Employer, shall be determined as if
                    the total of such Contribution Percentage Amounts was made
                    under each plan. If a Highly Compensated Employee
                    participates in two or more cash or deferred arrangements
                    that have different plan years, all cash or deferred
                    arrangements ending with or within the same calendar year
                    shall be treated as a single arrangement. Notwithstanding
                    the foregoing, certain plans shall be treated as separate if
                    mandatorily disaggregated under regulations under Section
                    401(m) of the Code.

               3.   In the event that this Plan satisfies the requirements of
                    Sections 401(m), 401(a)(4) or 410(b) of the Code only if
                    aggregated with one or more other plans, or if one or more
                    other plans satisfy the requirements of such Sections of the
                    Code only if aggregated with this Plan, then this Section
                    shall be applied by determining the Contribution Percentage
                    of Employees as if all such plans were a single plan. For
                    Plan Years beginning after December 31, 1989, plans may be
                    aggregated in order to satisfy Section 401(m) of the Code
                    only if they have the same Plan Year.

               4.   For purposes of determining the Contribution Percentage of
                    a Participant who is a 5% owner or one of the 10 most highly
                    paid Highly Compensated Employees, the Contribution
                    Percentage Amounts and Compensation of such Participant
                    shall include the Contribution Percentage Amounts and
                    Compensation for the Plan Year of family members, (as
                    defined in Section 414(q)(6) of the Code.) Family members,
                    with respect to Highly Compensated Employees, shall be
                    disregarded as separate Employees in determining the
                    Contribution Percentage both for Participants who are not
                    Highly Compensated Employees and for Participants who are
                    Highly Compensated Employees.

               5.   For purposes of determining the Contribution Percentage
                    test, Nondeductible Employee Contributions are considered to
                    have been made in the Plan Year in which contributed to the
                    Fund. Matching Contributions and Qualified Nonelective
                    Contributions will be considered made for a Plan Year if
                    made no later than the end of the 12 month period beginning
                    on the day after the close of the Plan Year.

               6.   The Employer shall maintain records sufficient to
                    demonstrate satisfaction of the ACP test and the amount of
                    Qualified Nonelective Contributions or Qualified Matching
                    Contributions, or both, used in such test.

               7.   The determination and treatment of the Contribution
                    Percentage of any Participant shall satisfy such other
                    requirements as may be prescribed by the Secretary of the
                    Treasury.

               8.   If the Employer elects to take Qualified Nonelective
                    Contributions into account as Contribution Percentage
                    Amounts for purposes of the ACP test, then (subject to such
                    other requirements as may be prescribed by the Secretary of
                    the Treasury) unless otherwise indicated in the Adoption
                    Agreement, only the amount of such Qualified Nonelective
                    Contributions that are needed to meet the ACP test shall be
                    taken into account.

               9.   If the Employer elects to take Elective Deferrals into
                    account as Contribution Percentage Amounts for purposes of
                    the ACP test, then (subject to such other requirements as
                    may be prescribed by the Secretary of the Treasury) unless
                    otherwise indicated in the Adoption Agreement, only the
                    amount of such Elective Deferrals that are needed to meet
                    the ACP test shall be taken into account.

11.500    DISTRIBUTION PROVISIONS

11.501    GENERAL RULE
          Distributions from the Plan are subject to the provisions of Section
          6 and the provisions of this Section 11. In the event of a conflict
          between the provisions of Section 6 and Section 11, the provisions of
          Section 11 shall control.

11.502    DISTRIBUTION REQUIREMENTS
          Elective Deferrals, Qualified Nonelective Contributions, and
          Qualified Matching Contributions, and income allocable to each are not
          distributable to a Participant or his or her Beneficiary or
          Beneficiaries, in accordance with such Participant's or Beneficiary or
          Beneficiaries' election, earlier than upon separation from service,
          death or disability.

          Such amounts may also be distributed upon:

          A.   Termination of the Plan without the establishment of another
               defined contribution plan, other than an employee stock ownership
               plan (as defined in Section 4975(e) or Section 409 of the Code)
               or a simplified employee pension plan as defined in Section
               408(k).

                                       48
<PAGE>
     B.   The disposition by a corporation to an unrelated corporation of
          substantially all of the assets (within the meaning of Section
          409(d)(2) of the Code) used in a trade or business of such corporation
          if such corporation continues to maintain this Plan after the
          disposition, but only with respect to Employees who continue
          employment with the corporation acquiring such assets.

     C.   The disposition by a corporation to an unrelated entity of such
          corporation's interest in a subsidiary (within the meaning of Section
          409(d)(3) of the Code) if such corporation continues to maintain this
          Plan, but only with respect to Employees who continue employment with
          such subsidiary.

     D.   The attainment of age 59 1/2 in the case of a profit sharing plan.

     E.   If the Employer has so elected in the Adoption Agreement, the
          hardship of the Participant as described in Section 11.503.

          All distributions that may be made pursuant to one or more of the
          foregoing distributable events are subject to the spousal and
          Participant consent requirements (if applicable) contained in Section
          401(a)(11) and 417 of the Code. In addition, distributions after March
          31, 1988, that are triggered by any of the first three events
          enumerated above must be made in a lump sum.

11.503    HARDSHIP DISTRIBUTION

          A.   GENERAL -- If the Employer has so elected in the Adoption
               Agreement, distribution of Elective Deferrals (and any earnings
               credited to a Participant's account as of the end of the last
               Plan Year, ending before July 1, 1989) may be made to a
               Participant in the event of hardship. For the purposes of this
               Section, hardship is defined as an immediate and heavy financial
               need of the Employee where such Employee lacks other available
               resources. Hardship distributions are subject to the spousal
               consent requirements contained in Sections 401(a)(11) and 417 of
               the Code.

          B.   SPECIAL RULES

               1.   The following are the only financial needs considered
                    immediate and heavy: expenses incurred or necessary for
                    medical care, described in Section 213(d) of the Code, of
                    the Employee, the Employee's spouse or dependents; the
                    purchase (excluding mortgage payments) of a principal
                    residence for the Employee; payment of tuition and related
                    education fees for the next 12 months of post-secondary
                    education for the Employee, the Employee's spouse, children
                    or dependents; or the need to prevent the eviction of the
                    Employee from, or a foreclosure on the mortgage of, the
                    Employee's principal residence.

               2.   A distribution will be considered as necessary to
                    satisfy an immediate and heavy financial need of the
                    Employee only if:

                    a.   The Employee has obtained all distributions, other
                         than hardship distributions, and all nontaxable loans
                         under all plans maintained by the Employer;

                    b.   All plans maintained by the Employer provide that
                         the Employee's Elective Deferrals (and Nondeductible
                         Employee Contributions) will be suspended for 12 months
                         after the receipt of the hardship distribution;

                    c.   The distribution is not in excess of the amount of
                         an immediate and heavy financial need (including
                         amounts necessary to pay any Federal, state or local
                         income taxes or penalties reasonably anticipated to
                         result from the distribution); and

                    d.   All plans maintained by the Employer provide that
                         the Employee may not make Elective Deferrals for the
                         Employee's taxable year immediately following the
                         taxable year of the hardship distribution in excess of
                         the applicable limit under Section 402(g) of the Code
                         for such taxable year less the amount of such
                         Employee's Elective Deferrals for the taxable year of
                         the hardship distribution.

11.504    DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS

          A.   GENERAL RULE -- A Participant may assign to this Plan any
               Excess Elective Deferrals made during a taxable year of the
               Participant by notifying the Plan Administrator on or before the
               date specified in the Adoption Agreement of the amount of the
               Excess Elective Deferrals to be assigned to the Plan. A
               Participant is deemed to notify the Plan Administrator of any
               Excess Elective Deferrals that arise by taking into account only
               those Elective Deferrals made to this Plan and any other plans of
               the Employer.

               Notwithstanding any other provision of the Plan, Excess Elective
               Deferrals, plus any income and minus any loss allocable thereto,
               shall be distributed no later than April 15 to any Participant to
               whose Individual Account Excess Elective Deferrals were assigned
               for the preceding year and who claims Excess Elective Deferrals
               for such taxable year.

                                      -49

<PAGE>
          B.   DETERMINATION OF INCOME OR LOSS - Excess Elective Deferrals shall
               be adjusted for any income or loss up to the date of
               distribution. The income or loss allocable to Excess Elective
               Deferrals is the sum of: (1) income or loss allocable to the
               Participant's Elective Deferral account for the taxable year
               multiplied by a fraction, the numerator of which is such
               Participant's Elective Deferrals for the year and the denominator
               is the Participant's Individual Account balance attributable to
               Elective Deferrals without regard to any income or loss occurring
               during such taxable year; and (2) 10% of the amount determined
               under (1) multiplied by the number of whole calendar months
               between the end of the Participant's taxable year and the date of
               distribution, counting the month of distribution if distribution
               occurs after the 15th of such month. Notwithstanding the
               preceding sentence, the Plan Administrator may compute the income
               or loss allocable to Excess Elective Deferrals in the manner
               described in Section 4 (i.e., the usual manner used by the Plan
               for allocating income or loss to Participants' Individual
               Accounts), provided such method is used consistently for all
               Participants and for all corrective distributions under the Plan
               for the Plan Year.

11.505    DISTRIBUTION OF EXCESS CONTRIBUTIONS

          A.   GENERAL RULE - Notwithstanding any other provision of this Plan,
               Excess Contributions, plus any income and minus any loss
               allocable thereto, shall be distributed no later than the last
               day of each Plan Year to Participants to whose Individual
               Accounts such Excess Contributions were allocated for the
               preceding Plan Year. If such excess amounts are distributed more
               than 2 1/2 months after the last day of the Plan Year in which
               such excess amounts arose, a 10% excise tax will be imposed on
               the Employer maintaining the Plan with respect to such amounts.
               Such distributions shall be made to Highly Compensated Employees
               on the basis of the respective portions of the Excess
               Contributions attributable to each of such Employees. Excess
               Contributions of Participants who are subject to the family
               member aggregation rules shall be allocated among the family
               members in proportion to the Elective Deferrals (and amounts
               treated as Elective Deferrals) of each family member that is
               combined to determine the combined ADP.

               Excess contributions (including the amounts recharacterized)
               shall be treated as annual additions under the Plan.

          B.   DETERMINATION OF INCOME OR LOSS - Excess Contributions shall be
               adjusted for any income or loss up to the date of distribution.
               The income or loss allocable to Excess Contributions is the sum
               of: (1) income or loss allocable to Participant's Elective
               Deferral account (and, if applicable, the Qualified Nonelective
               Contribution account or the Qualified Matching Contributions
               account or both) for the Plan Year multiplied by a fraction, the
               numerator of which is such Participant's Excess Contributions for
               the year and the denominator is the Participant's Individual
               Account balance attributable to Elective Deferrals (and Qualified
               Nonelective Contributions or Qualified Matching Contributions, or
               both, if any of such contributions are included in the ADP test)
               without regard to any income or loss occurring during such Plan
               Year; and (2) 10% of the amount determined under (1) multiplied
               by the number of whole calendar months between the end of the
               Plan Year and the date of distribution, counting the month of
               distribution if distribution occurs after the 15th of such month.
               Notwithstanding the preceding sentence, the Plan Administrator
               may compute the income or loss allocable to Excess Contributions
               in the manner described in Section 4 (i.e., the usual manner used
               by the Plan for allocating income or loss to Participants'
               Individual Accounts), provided such method is used consistently
               for all Participants and for all corrective distributions under
               the Plan for the Plan Year.

          C.   ACCOUNTING FOR EXCESS CONTRIBUTIONS - Excess Contributions shall
               be distributed from the Participant's Elective Deferral account
               and Qualified Matching Contribution account (if applicable) in
               proportion to the Participant's Elective Deferrals and Qualified
               Matching Contributions (to the extent used in the ADP test) for
               the Plan Year. Excess Contributions shall be distributed from the
               Participant's Qualified Nonelective Contribution account only to
               the extent that such Excess Contributions exceed the balance in
               the Participant's Elective Deferral account and Qualified
               Matching Contribution account.

11.506    DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS

          A.   GENERAL RULE - Notwithstanding any other provision of this Plan,
               Excess Aggregate Contributions, plus any income and minus any
               loss allocable thereto, shall be forfeited, if forfeitable, or if
               not forfeitable, distributed no later than the last day of each
               Plan Year to Participants to whose accounts such Excess Aggregate
               Contributions were allocated for the preceding Plan Year. Excess
               Aggregate Contributions of Participants who are subject to the
               family member aggregation rules shall be allocated among the
               family members in proportion to the Employee and Matching
               Contributions (or amounts treated as Matching Contributions) of
               each family member that is combined to determine the combined
               ACP. If such Excess Aggregate Contributions are distributed more
               than 2 1/2 months after the last day of the Plan Year in which
               such excess amounts arose, a 10% excise tax will be imposed on
               the Employer maintaining the Plan with respect to those amounts.

               Excess Aggregate Contributions shall be treated as annual
               additions under the Plan.

          B.   DETERMINATION OF INCOME OR LOSS - Excess Aggregate Contributions
               shall be adjusted for any income or loss up to the date of
               distribution. The income or loss allocable to Excess Aggregate
               Contributions is the sum of: (1) income or loss allocable to the
               Participant's Nondeductible Employee Contribution account,
               Matching Contribution account (if any, and if all amounts therein
               are not used in the ADP test) and, if applicable, Qualified
               Nonelective

                                       50

<PAGE>
     Contribution account and Elective Deferral account for the Plan Year
     multiplied by a fraction, the numerator of which is such Participant's
     Excess Aggregate Contributions for the year and the denominator is the
     Participant's Individual Account balance(s) attributable to Contribution
     Percentage Amounts without regard to any income or loss, occurring during
     such Plan Year; and (2) 10% of the amount determined under (1) multiplied
     by the number of whole calendar months between the end of the Plan Year and
     the date of distribution, counting the month of distribution if
     distribution occurs after the 15th of such month. Notwithstanding the
     preceding sentence, the Plan Administrator may compute the income or loss
     allocable to Excess Aggregate Contributions in the manner described in
     Section 4 (i.e., the usual manner used by the Plan for allocating income or
     loss to Participants' Individual Accounts), provided such method is used
     consistently for all Participants and for all corrective distributions
     under the Plan for the Plan Year.

     C. FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS - Forfeitures of Excess
        Aggregate Contributions may either be reallocated to the accounts of
        Contributing Participants who are not Highly Compensated Employees or
        applied to reduce Employer Contributions, as elected by the Employer in
        the Adoption Agreement.

     D. ACCOUNTING FOR EXCESS AGGREGATE CONTRIBUTIONS - Excess Aggregate
        Contributions shall be forfeited, if forfeitable or distributed on a pro
        rata basis from the Participant's Nondeductible Employee Contribution
        account, Matching Contribution account, and Qualified Matching
        Contribution account (and, if applicable, the Participant's Qualified
        Nonelective Contribution account or Elective Deferral account, or both).

11.507  RECHARACTERIZATION

        A Participant may treat his or her Excess Contributions as an amount
        distributed to the Participant and then contributed by the Participant
        to the Plan. Recharacterized amounts will remain nonforfeitable and
        subject to the same distribution requirements as Elective Deferrals.
        Amounts may not be recharacterized by a Highly Compensated Employee to
        the extent that such amount in combination with other Nondeductible
        Employee Contributions made by that Employee would exceed any stated
        limit under the Plan on Nondeductible Employee Contributions.

        Recharacterization must occur no later than two and one-half months
        after the last day of the Plan Year in which such Excess Contributions
        arose and is deemed to occur no earlier than the date the last Highly
        Compensated Employee is informed in writing of the amount
        recharacterized and the consequences thereof. Recharacterized amounts
        will be taxable to the Participant for the Participant's tax year in
        which the Participant would have received them in cash.

11.508  DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS

        Notwithstanding any other provision of the Plan, a Participant's
        Elective Deferrals shall be distributed to him or her to the extent that
        the distribution will reduce an excess annual addition (as that term is
        described in Section 3.05 of the Plan).

11.600  VESTING

11.601  100% VESTING ON CERTAIN CONTRIBUTIONS

        The Participant's accrued benefit derived from Elective Deferrals,
        Qualified Nonelective Contributions, Nondeductible Employee
        Contributions, and Qualified Matching Contributions is nonforfeitable.
        Separate accounts for Elective Deferrals, Qualified Nonelective
        Contributions, Nondeductible Employee Contributions, Matching
        Contributions, and Qualified Matching Contributions will be maintained
        for each Participant. Each account will be credited with the applicable
        contributions and earnings thereon.

11.602  FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS

        Matching Contributions shall be Vested in accordance with the vesting
        schedule for Matching Contributions in the Adoption Agreement. In any
        event, Matching Contributions shall be fully Vested at Normal Retirement
        Age, upon the complete or partial termination of the profit sharing
        plan, or upon the complete discontinuance of Employer Contributions.
        Notwithstanding any other provisions of the Plan, Matching Contributions
        or Qualified Matching Contributions must be forfeited if the
        contributions to which they relate are Excess Elective Deferrals, Excess
        Contributions, Excess Aggregate Contributions or excess annual additions
        which are distributed pursuant to Section 11.508. Such Forfeitures shall
        be allocated in accordance with Section 3.01(C).

        When a Participant incurs a Termination of Employment, whether a
        Forfeiture arises with respect to Matching Contributions shall be
        determined in accordance with Section 6.01(D).

                                       51
<PAGE>
FLEXIBLE NONSTANDARDIZED SAFE HARBOR 401(k) PROFIT SHARING PLAN
ADOPTION AGREEMENT
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                      SECTION 1.     EMPLOYER INFORMATION
-------------------------------------------------------------------------------
Name of Employer   KCS Energy, Inc.
                 --------------------------------------------------------------
Address     5555 San Felipe, Suite 1200
        -----------------------------------------------------------------------
City     Houston                    State    TX           Zip    77056
     -------------------------            -------              ----------------
Telephone 713-964-4881  Employer's Federal Tax Identification Number  22-2889589
          ------------                                                ----------
Type of Business(Check only one)
 [ ] Sole Proprietorship [ ] Partnership   [X] C Corporation  [ ] S Corporation

 [ ] Other (Specify)
                    ------------------------------------------------------------

 [ ] Check here if Related Employers may participate in this Plan and attach a
     Related Employer Participation Agreement for each Related Employer who will
     participate in this Plan.

Business Code
             ----------

Name of Plan  KCS Energy, Inc. Savings and Investment Plan
              -----------------------------------------------------------------
Name of Trust (if different from Plan name)
                                           ------------------------------------

Plan Sequence Number 001 (Enter 001 if this is the first qualified plan the
                          Employer has ever maintained, enter 002 if it is the
                          second, etc.)
Trust Identification Number (if applicable)
                                           ----------
 Account Number (Optional)      60300
                            ---------------------------------------------------
-------------------------------------------------------------------------------
                         SECTION 2.     EFFECTIVE DATES
                                 Complete Parts A and B
-------------------------------------------------------------------------------
PART A.   GENERAL EFFECTIVE DATES (Check and Complete Option 1 or 2):
          Option 1:  [ ] This is the initial adoption of a profit sharing plan
                         by the Employer.
                         The Effective Date of this Plan is --------------.
                         NOTE: The effective date is usually the first day of
                               the Plan Year in which this Adoption Agreement
                               is signed.
          Option 2.  [X] This is an amendment and restatement of an existing
                         profit sharing plan (a Prior Plan).
                         The Prior Plan was initially effective on 6-01-1988
                                                                   ---------
                         The Effective Date of this amendment and restatement
                         is 01-01-2001.
                         --------------
                         NOTE:  The effective date is usually the first day of
                                the Plan Year in which this Adoption Agreement
                                is signed.

PART B.   COMMENCEMENT OF ELECTIVE DEFERRALS:
          Elective Deferrals may commence on                .
                                             ---------------
          NOTE:  This date may be no earlier than the date this Adoption
                 Agreement is signed because Elective Deferrals cannot be
                 made retroactively.
-------------------------------------------------------------------------------
                      SECTION 3.     RELEVANT TIME PERIODS
                              Complete Parts A through C
-------------------------------------------------------------------------------
PART A.   EMPLOYER'S FISCAL YEAR:
          The Employer's fiscal year ends (Specify month and date)    12-31
                                                                   ------------
PART B.   PLAN YEAR MEANS:
          Option 1:[ ] The 12-consecutive month period which coincides with the
                       Employer's fiscal year.
          Option 2:[X] The calendar year.

          Option 3:[ ] Other 12-consecutive month period (Specify)
                                                                   ------------
          NOTE:  If no option is selected, Option 1 will be deemed to be
                 selected.
                 If the initial Plan Year is less than 12 months (a short Plan
                 Year) specify such Plan Year's beginning and ending dates
          ---------------------------------------------------------------------

F4006 (8/94) F94             (C)1998 Universal Pensions Inc., Brainerd, MN 56401
<PAGE>
                                                                          Page 2

Part C.   Limitation Year Means:
          Option 1:[X]  The Plan Year.
          Option 2:[_]   The calendar year.
          Option 3:[_]   Other 12-consecutive month period (Specify)____________
          NOTE: If no option is selected, Option 1 will be deemed to be
                selected.
-------------------------------------------------------------------------------
                      SECTION 4.  ELIGIBILITY REQUIREMENTS
                                Complete Parts A through G
-----------------------------------------------------------------------------
PART A.   YEARS OF ELIGIBILITY SERVICE REQUIREMENT:

          1.   Elective Deferrals.
               An Employee will be eligible to become a Contributing
               Participant in the Plan (and thus be eligible to make
               Elective Deferrals) and receive Matching Contributions
               (including Qualified Matching Contributions, if applicable)
               after completing 0 (enter 0, 1 or any fraction less than 1)
               Years of Eligibility Service.

          2.   Employer Profit Sharing Contributions.
               An employee will be eligible to become a Participant in the Plan
               for purposes of receiving an allocation of any Employer Profit
               Sharing Contribution made pursuant to Section 10 of the Adoption
               Agreement after completing 0 (enter 0, 1, 2 or any fraction less
               than 2) Years of Eligibility Service.
          NOTE: If more than 1 year is selected for Item 2, the immediate 100%
          vesting schedule of Section 12 will automatically apply for
          contributions described in such item. If either item is left blank,
          the Years of Eligibility Service required for such item will be
          deemed to be 0. If a fraction is selected, an Employee will not be
          required to complete any specified number of Hours of Service to
          receive credit for a fractional year. If a single Entry Date is
          selected in Section 4, Part G for an item, the Years of Eligibility
          Service required for such item cannot exceed 1.5 (.5 for Elective
          Deferrals).

PART B.  AGE REQUIREMENT:

          1.   Elective Deferrals.
               An Employee will be eligible to become a Contributing Participant
               (and thus be eligible to make Elective Deferrals) and receive
               Matching Contributions (including Qualified Matching
               Contributions, if applicable) after attaining age 21 (no more
               than 21).

          2.   Employer Profit Sharing Contributions.
               An Employee will be eligible to become a Participant in the Plan
               for purposes of receiving an allocation of any Employer Profit
               Sharing Contribution made pursuant to Section 10 of the Adoption
               Agreement after attaining age 21 (no more than 21).

          NOTE: If either of the above items in this Section 4, Part B is left
          blank, it will be deemed there is no age requirement for such item. If
          a single Entry Date is selected in Section 4, Part G for an item, no
          age requirement can exceed 20.5 for such item.

PART C.   EMPLOYEES EMPLOYED AS OF EFFECTIVE DATE:

          Will all Employees employed as of the Effective Date of this Plan who
          have not otherwise met the requirements of Part A or Part B above be
          considered to have met those requirements as of the Effective Date?
          [ ]Yes [X]No

          NOTE: If a box is not checked in this Section 4, Part C, "NO" will be
          deemed to be selected.

PART D.   EXCLUSION OF CERTAIN CLASSES OF EMPLOYEES:

          All Employees will be eligible to become Participants in the Plan
          except:
          a.  [X]   Those Employees included in a unit of Employees covered by
                    a collective bargaining agreement between the Employer
                    and Employee representative, if retirement benefits were
                    the subject of good faith bargaining and if two percent or
                    less of the Employees who are covered pursuant to that
                    agreement are professionals as defined in Section 1.410(b)
                    -9 of the regulations. For this purpose, the term "employee
                    representatives" does not include any organization more than
                    half of whose members are Employees who are owners,
                    officers, or executives of the Employer.
           b.  [X]  Those Employees who are non-resident aliens (within the
                    meaning of Section 7701(b)(l)(B) of the Code) and who
                    received no earned income (within the meaning of Section
                    911 (d)(2)of the Code) from the Employer which constitutes
                    income from sources within the United States (within the
                    meaning of Section 861(a)(3) of the Code).

           C.  [ ]  Those Employees of a Related Employer that has not executed
                    a Related Employer Participation Agreement.
           d.  [X]  Other (Define)____________________________________________
                    __________________________________________________________

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401

<PAGE>
                                                                          Page 3
PART E.   ELECTION NOT TO PARTICIPATE:
          May an Employee or Participant elect not to participate in this Plan
          pursuant to Section 2.08 of the Plan?

          Option 1:[ ]    Yes.

          Option 2:[X]    No.

          NOTE: If no option is selected, Option 2 will be deemed to be
          selected.

PART F.   HOURS REQUIRED FOR ELIGIBILITY PURPOSES:

          1. 1000 Hours of Service (no more than 1,000) shall be required to
             constitute a Year of Eligibility Service.

          2. 500 Hours of Service  (no more than 500 but less than the number
             specified in Section 4, Part F, Item 1, above) must be exceeded
             to avoid a Break in Eligibility Service.

          3. For purposes of determining Years of Eligibility Service,
             Employees shall be given credit for Hours of Service with the
             following predecessor employer(s): (Complete if applicable)

             _______________________________________________________________
             _______________________________________________________________

PART G.   ENTRY DATES:

          The Entry Dates for participation shall be (Choose One):

          Option 1: [ ]  The first day of the Plan Year and the first day of
                         the seventh month of the Plan Year.

          Option 2: [X]  Other (Specify) the first day of each quarter

          NOTE: If no option is selected, Option 1 will be deemed to be
          selected. Option 2 can be selected only if the eligibility
          requirements and Entry Dates are coordinated such that each Employee
          will become a Participant in the Plan no later than the earlier of:
          (1) the first day of the Plan Year beginning after the date the
          Employee satisfies the age and service requirements of Section 410(a)
          of the Code; or (2) 6 months after the date the Employee satisfies
          such requirements.

                    SECTION 5. METHOD OF DETERMINING SERVICE
                              Complete Part A or B

PART A.   HOURS OF SERVICE EQUIVALENCIES:

          Service will be determined on the basis of the method selected below.
          Only one method may be selected. The method selected will be applied
          to all Employees covered under the Plan. (Choose one):

          Option 1:[X]   On the basis of actual hours for which an Employee is
                         paid or entitled to payment.

          Option 2:[ ]   On the basis of days worked. An Employee will be
                         credited with 10 Hours of Service if under Section 1.24
                         of the Plan such Employee would be credited with at
                         least 1 Hour of Service during the day.

          Option 3:[ ]   On the basis of weeks worked. An Employee will be
                         credited  with 45 Hours of Service if under Section
                         1.24 of the Plan such Employee would be credited with
                         at least 1 Hour of Service during the week.

          Option 4:[ ]   On the basis of months worked. An Employee will be
                         credited with 190 Hours of Service if under Section
                         1.24 of the Plan such Employee would be credited with
                         at least 1 Hour of Service during the month.

          NOTE: If no option is selected, Option 1 will be deemed to be
          selected. This Section 5, Part A will not apply if the Elapsed Time
          Method of Section 5, Part B is selected.

PART B.   ELAPSED TIME METHOD:

          In lieu of tracking Hours of Service of Employees, will the elapsed
          time method described in Section 2.07 of the Plan be used? (Choose
          One)

          Option 1: [ ]  No.

          Option 2: [ ]  Yes.

          Note: If no option is selected, Option 1 will be deemed to be
          selected.

F4006 (8/94) F94            (c) 1998 Universal Pensions Inc., Brainerd, MN 56401
<PAGE>
                                                                         Page 4

                         SECTION 6. ELECTIVE DEFERRALS

PART A.  AUTHORIZATION OF ELECTIVE DEFERRALS:

         Will Elective Deferrals be permitted under this Plan? (Choose one)

         Option 1: [X] Yes

         Option 2: [ ] No

         NOTE: If no option is selected, Option 1 will be deemed to be
         selected. Complete the remainder of Section 6 only if Option 1 is
         selected.

PART B.  LIMITS ON ELECTIVE DEFERRALS:

         If Elective Deferrals are permitted under the Plan, a Contributing
         Participant may elect under a salary reduction agreement to have his or
         her Compensation reduced by an amount as described below (Choose one):

         Option 1: [X] An amount equal to a percentage of the Contributing
                       Participant's Compensation from     1% to    16% in
                       increments of    1%.

         Option 2: [ ] An amount of the Contributing Participant's Compensation
                       not less than ________ and not more than ________.

         The amount of such reduction shall be contributed to the Plan by the
         Employer on behalf of the Contributing Participant. For any taxable
         year, a Contributing Participant's Elective Deferrals shall not exceed
         the limit contained in Section 402(g) of the Code in effect at the
         beginning of such taxable year.

PART C.  ELECTIVE DEFERRALS BASED ON BONUSES:

         Instead of or in addition to making Elective Deferrals through payroll
         deduction, may a Contributing Participant elect to contribute to the
         Plan, as an Elective Deferral, part or all of a bonus rather than
         receive such bonus in cash? (Choose one)

         Option 1: [ ] Yes.

         Option 2: [X] No.

         Note: If no option is selected, Option 2 will be deemed to be selected.

PART D.  RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE DEFERRALS:

         A Participant who ceases Elective Deferrals by revoking a salary
         reduction agreement may return as a Contributing Participant as of such
         times established by the Plan Administrator in a uniform and
         nondiscriminatory manner.

PART E.  CHANGING ELECTIVE DEFERRAL AMOUNTS:

         A Contributing Participant may modify a salary reduction agreement to
         prospectively increase or decrease the amount of his or her Elective
         Deferrals as of such times established by the Plan Administrator in a
         uniform and nondiscriminatory manner.

PART F.  CLAIMING EXCESS ELECTIVE DEFERRALS:

         Participants who claim Excess Elective Deferrals for the preceding
         calendar year must submit their claims in writing to the Plan
         Administrator by (Choose one):

         Option 1: [X] March 1.

         Option 2: [ ] Other (Specify a date not later than April 15) ________

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>
                                                                          Page 5

                       SECTION 7. MATCHING CONTRIBUTIONS

PART A.   AUTHORIZATION OF MATCHING CONTRIBUTIONS:

          Will the Employer make Matching Contributions to the Plan on
          behalf of Qualifying Contributing Participants?
          (Choose one)

          Option 1: [X]  Yes, but only with respect to a Contributing
          participant's Elective Deferrals.

          Option 2: [ ]  Yes, but only with respect to a Participant's
          Nondeductible Employee Contributions.

          Option 3: [ ]  Yes, with respect to both Elective Deferrals and
          Nondeductible Employee Contributions.

          Option 4: [ ]  No.

          NOTE: If no option is selected, Option 4 will be deemed to be
          selected. Complete the remainder of Section 7 only if Option 1, 2 or
          3 is selected.

PART B.   MATCHING CONTRIBUTION FORMULA:

          If the Employer will make Matching Contributions, then the amount
          of such Matching Contributions made on behalf of a Qualifying
          Contributing Participant each Plan Year shall be (Choose one):

          Option 1: [x]  An amount equal to 50% of such Contributing
          Participant's Elective Deferral (and/or Nondeductible Employee
          Contribution, if applicable).

          Option 2: [ ]  An amount equal to the sum of __% of the portion of
          such Contributing Participant's Elective Deferral (and/or
          Nondeductible Employee Contribution, if applicable) which does not
          exceed __% of the Contributing Participant's Compensation plus __%
          of the portion of such Contributing Participant's Elective Deferral
          (and/or Nondeductible Employee Contribution, if applicable) which
          exceeds __% of the Contributing Participant's Compensation.

          Option 3: [ ]  Such amount, if any, equal to that percentage of
          each Contributing Participant's Elective Deferral (and/or
          Nondeductible Employee Contribution, if applicable) which the
          Employer, in its sole discretion, determines from year to year.

          Option 4: [ ]  Other Formula. (Specify)____________________________
                                                 ____________________________

          NOTE: If Option 4 is selected, the formula specified can only allow
          Matching Contributions to be made with respect to a Contributing
          Participant's Elective Deferrals (and/or Nondeductible Employee
          Contribution, if applicable).

PART C.   LIMIT ON MATCHING CONTRIBUTIONS:

          Notwithstanding the Matching Contribution formula specified above,
          no Matching Contribution will be made with respect to a Contributing
          Participant's Elective Deferrals (and/or Nondeductible Employee
          Contributions, if applicable) in excess of ___ or 6% of such
          Contributing Participant's Compensation.

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>

                                                                          Page 6

PART D.   QUALIFYING CONTRIBUTING PARTICIPANTS:

          A Contributing Participant who satisfies the eligibility
          requirements described in Section 4 will be a Qualifying
          Contributing Participant and thus entitled to share in Matching
          Contributions for any Plan Year only if the Participant is a
          Contributing Participant and satisfies the following additional
          conditions (Check one or more Options):

          Option 1: [x]  No Additional Conditions.

          Option 2: [ ]  Hours of Service Requirement. The Contributing
          Participant completes at least __ Hours of Service during the
          Plan Year. However, this condition will be waived for the
          following reasons (Check at least one):

                         [ ]  The Contributing Participant's Death.

                         [ ]  The Contributing Participant's Termination of
                              Employment after having incurred a Disability.

                         [ ]  The Contributing Participant's Termination of
                              Employment after having reached Normal
                              Retirement Age.

                         [ ]  This condition will not be waived.

          Option 3: [ ]  Last Day Requirement. The Participant is an Employee
          of the Employer on the last day of the Plan Year. However, this
          condition will be waived for the following reasons (Check at least
          one):

                         [ ]  The Contributing Participant's Death.

                         [ ]  The Contributing Participant's Termination of
                              Employment after having incurred a Disability.

                         [ ]  The Contributing Participant's Termination of
                              Employment after having reached Normal
                              Retirement Age.

                         [ ]  This condition will not be waived.

          NOTE: If no option is selected, Option 1 will be deemed to be
          selected.

                 SECTION 8. QUALIFIED NONELECTIVE CONTRIBUTIONS

PART A.   AUTHORIZATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS:

          Will the Employer make Qualified Nonelective Contributions to the
          Plan? (Choose One)

          Option 1: [ ]  Yes.

          Option 2: [x]  No.

          If the Employer elects to make Qualified Nonelective Contributions,
          then the amount, if any, of such contribution to the Plan for each
          Plan Year shall be an amount determined by the Employer.

          NOTE: If no option is selected, Option 1 will be deemed to be
          selected. Complete the remainder of Section 8 only if Option 1 is
          selected.

PART B.   PARTICIPANTS ENTITLED TO QUALIFIED NONELECTIVE CONTRIBUTIONS:

          Allocation of Qualified Nonelective Contributions shall be made to
          the Individual Accounts of (Choose one):

          Option 1: [ ]  Only Participants who are not Highly Compensated
          Employees.

          Option 2: [ ]  All Participants.

          NOTE: If no option is selected, Option 1 will be deemed to be
          selected.

PART C.   ALLOCATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS:

          Allocation of Qualified Nonelective Contributions to Participants
          entitled thereto shall be made (Choose one):

          Option 1: [ ]  In the ratio which each Participant's Compensation
          for the Plan Year bears to the total Compensation of all
          Participants for such Plan Year.

          Option 2: [ ]  In the ratio which each Participant's Compensation
          not in excess of ___ for the Plan Year bears to the total
          Compensation of all Participants not in excess of ___ for such
          Plan Year.

          NOTE: If no option is selected, Option 1 will be deemed to be
          selected.

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>
                                                                          Page 7

                  SECTION 9. QUALIFIED MATCHING CONTRIBUTIONS

PART A.  AUTHORIZATION OF QUALIFIED MATCHING CONTRIBUTIONS:

         Will the Employer make Qualified Matching Contributions to the Plan on
         behalf of Qualifying Contributing Participants? (Choose One)

         OPTION 1: [ ]  Yes, but only with respect to a Contributing
                        Participant's Elective Deferrals.

         OPTION 2: [ ]  Yes, but only with respect to a Participant's
                        Nondeductible Employee Contributions.

         OPTION 3: [ ]  Yes, with respect to both Elective Deferrals and
                        Nondeductible Employee Contributions.

         OPTION 4: [X]  No.

         NOTE: If no option is selected, Option 3 will be deemed to be selected.
         Complete the remainder of Section 9 only if Option 1, 2 or 3 is
         selected.

PART B.  QUALIFIED MATCHING CONTRIBUTION FORMULA:

         If the Employer will make Qualified Matching Contributions, then the
         amount of such Qualified Matching Contributions made on behalf of a
         Qualifying Contributing Participant each Plan Year shall be (Choose
         one):

         OPTION 1: [ ]  An amount equal to ______% of such Contributing
                        Participant's Elective Deferral (and/or Nondeductible
                        Employee Contribution, if applicable).

         OPTION 2: [ ]  An amount equal to the sum of ______% of the portion of
                        such Contributing Participant's Elective Deferral
                        (and/or Nondeductible Employee Contribution, if
                        applicable) which does not exceed ______% of the
                        Contributing Participant's Compensation plus ______% of
                        the portion of such Contributing Participant's Elective
                        Deferral (and/or Nondeductible Employee Contribution, if
                        applicable) which exceeds ______% of the Contributing
                        Participant's Compensation.

         OPTION 3: [ ]  Such amount, if any, as determined by the Employer in
                        its sole discretion, equal to that percentage of the
                        Elective Deferrals (and/or Nondeductible Employee
                        Contribution, if applicable) of each Contributing
                        Participant entitled thereto which would be sufficient
                        to cause the Plan to satisfy the Actual Contribution
                        Percentage tests (described in Section 11.402 of the
                        Plan) for the Plan Year.

         OPTION 4: [ ]  Other Formula. (Specify) _______________________________
                                                 _______________________________

         NOTE: If no option is selected, Option 3 will be deemed to be selected.

PART C.  PARTICIPANTS ENTITLED TO QUALIFIED MATCHING CONTRIBUTIONS:

         Qualified Matching Contributions, if made to the Plan, will be made on
         behalf of (Choose one):

         OPTION 1: [ ]  Only Contributing Participants who make Elective
                        Deferrals who are not Highly Compensated Employees.

         OPTION 2: [ ]  All Contributing Participants who make Elective
                        Deferrals.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

PART D.  LIMIT ON QUALIFIED MATCHING CONTRIBUTIONS:

         Notwithstanding the Qualified Matching Contribution formula specified
         above, the Employer will not match a Contributing Participant's
         Elective Deferrals (and/or Nondeductible Employee Contribution, if
         applicable) in excess of ________ or ______% of such Contributing
         Participant's Compensation.

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>
                                                                          Page 8

               SECTION 10. EMPLOYER PROFIT SHARING CONTRIBUTIONS

                           Complete Parts A, B and C

PART A.   CONTRIBUTION FORMULA:

          For each Plan Year the Employer will contribute an Amount to be
          determined from year to year.

PART B.   ALLOCATION FORMULA (Choose one):

          OPTION 1: [x] Pro Rata Formula. Employer Profit Sharing Contributions
                        shall be allocated to the Individual Accounts of
                        Qualifying Participants in the ratio that each
                        Qualifying Participant's Compensation for the Plan Year
                        bears to the total Compensation of all Qualifying
                        Participants for the Plan Year.

          OPTION 2: [ ] Integrated Formula. Employer Profit Sharing
                        Contributions shall be allocated as follows (Start with
                        Step 3 if this Plan is not a Top-Heavy Plan):

                        Step 1.    Employer Profit Sharing Contributions shall
                                   first be allocated pro rata to Qualifying
                                   Participants in the manner described in
                                   Section 10, Part B, Option 1. The percent so
                                   allocated shall not exceed 3% of each
                                   Qualifying Participant's Compensation.

                        Step 2.    Any Employer Profit Sharing Contributions
                                   remaining after the allocation in Step 1
                                   shall be allocated to each Qualifying
                                   Participant's Individual Account in the ratio
                                   that each Qualifying Participant's
                                   Compensation for the Plan Year in excess of
                                   the integration level bears to all Qualifying
                                   Participants' Compensation in excess of the
                                   integration level, but not in excess of 3%.

                        Step 3.    Any Employer Profit Sharing Contributions
                                   remaining after the allocation in Step 2
                                   shall be allocated to each Qualifying
                                   Participant's Individual Account in the ratio
                                   that the sum of each Qualifying Participant's
                                   total Compensation and Compensation in excess
                                   of the integration level bears to the sum of
                                   all Qualifying Participants' total
                                   Compensation and Compensation in excess of
                                   the integration level, but not in excess of
                                   the profit sharing maximum disparity rate as
                                   described in Section 3.01(B)(3) of the Plan.

                        Step 4.    Any Employer Profit Sharing Contributions
                                   remaining after the allocation in Step 3
                                   shall be allocated pro rata to Qualifying
                                   Participants in the manner described in
                                   Section 10, Part B, Option 1.

<Table>
<Caption>

                        The integration level shall be (Choose one):
                        <S>            <C> <C>
                        Suboption (a): [ ] The Taxable Wage Base.
                        Suboption (b): [ ] ____________ (a dollar amount less than the Taxable Wage Base).
                        Suboption (c): [ ] ________ % (not more than 100%) of the Taxable Wage Base.
                        NOTE: If no option is selected, Suboption (a) will be deemed to be selected.
          NOTE: If no option is selected, Option 1 will be deemed to be selected.
</Table>

Part C.   QUALIFYING PARTICIPANTS:
          A Participant will be a Qualifying Participant and thus entitled to
          share in the Employer Profit Sharing Contribution for any Plan Year
          only if the Participant is a Participant on at least one day of such
          Plan Year and satisfies the following additional conditions (Check one
          or more Options):

          Option 1: [ ] No Additional Conditions.

          Option 2: [X] Hours of Service Requirement. The Participant completes
                        at least 1000 Hours of Service during the Plan Year.
                        However, this condition will be waived for the following
                        reasons (Check at least one):

                        [X] The Participant's Death.

                        [X] The Participant's Termination of Employment after
                            having incurred a Disability.

                        [X] The Participant's Termination of Employment after
                            having reached Normal Retirement Age.

                        [ ] This condition will not be waived.

          Option 3: [X] Last Day Requirement. The Participant is an Employee of
                        the Employer on the last day of the Plan Year. However,
                        this condition will be waived for the following reasons
                        (Check at least one):

                        [X] The Participant's Death.

                        [X] The Participant's Termination of Employment after
                            having Incurred a Disability.

                        [X] The Participant's Termination of Employment after
                            having reached Normal Retirement Age.

                        [ ] This condition will not be waived.

          NOTE: If no option is selected, Option 1 will be deemed to be
                selected.

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>
                                                                          Page 9
--------------------------------------------------------------------------------
                            SECTION 11. COMPENSATION
                           Complete Parts A through E
--------------------------------------------------------------------------------

PART A.   BASIC DEFINITION:
          Compensation will mean all of each Participant's (Choose one):
          OPTION 1:  [X]  W-2 wages.
          OPTION 2:  [ ]  Section 3401(a) wages.
          OPTION 3:  [ ]  415 safe-harbor compensation.
          NOTE: If no option is selected, Option 1 will be deemed to be
                selected.

PART B.   MEASURING PERIOD FOR COMPENSATION:
          Compensation shall be determined over the following applicable period
          (Choose one):
          OPTION 1:  [X]  The Plan Year.
          OPTION 2:  [ ]  The calendar year ending with or within the Plan Year.
          NOTE: If no option is selected, Option 1 will be deemed to be
                selected.

PART C.   INCLUSION OF ELECTIVE DEFERRALS:
          Does Compensation include Employer Contributions made pursuant to a
          salary reduction agreement which are not includible in the gross
          income of the Employee under Sections 125, 402(e)(3), 402(h)(1)(B) and
          403(b) of the Code?
          [X]  Yes   [ ]  No
          NOTE: If neither box is checked, "Yes" will be deemed to be selected.

PART D.   PRE-ENTRY DATE COMPENSATION:
          For the Plan Year in which an Employee enters the Plan, the
          Employee's Compensation which shall be taken into account for purposes
          of the Plan shall be (Choose one):
          OPTION 1:  [ ]  The Employee's Compensation only from the time the
                          Employee became a Participant in the Plan.
          OPTION 2:  [X]  The Employee's Compensation for the whole of such
                          Plan Year.
          NOTE: If no option is selected, Option 1 will be deemed to be
                selected.

PART E.   EXCLUSIONS FROM COMPENSATION:
          Compensation shall not include the following (Check any that apply):
          [ ]  Bonuses             [ ]  Commissions
          [ ]  Overtime            [X]  Other (Specify)
                                        reimbursements, fringe benefits,
                                        ---------------------------------------
                                        expense allowance
                                        ---------------------------------------
          NOTE: No exclusions from Compensation are permitted if the integrated
                allocation formula in Section 10, Part B is selected.

--------------------------------------------------------------------------------
                      SECTION 12. VESTING AND FORFEITURES
                           Complete Parts A through G
--------------------------------------------------------------------------------

PART A.   VESTING SCHEDULE FOR EMPLOYER PROFIT SHARING CONTRIBUTIONS. A
          Participant shall become Vested in his or her Individual Account
          derived from Profit Sharing Contributions made pursuant to Section 10
          of the Adoption Agreement as follows (Choose one):
<Table>
<Caption>
------------------------------------------------------------------------------------------------------------------

   YEARS OF                                             VESTED PERCENTAGE
VESTING SERVICE    Option 1 [ ]     Option 2 [ ]   Option 3 [ ]   Option 4 [ ]   Option 5 [X] (Complete if Chosen)
------------------------------------------------------------------------------------------------------------------
<S>                 <C>              <C>            <C>            <C>           <C>
       1                 0%               0%            100%            0%             0%
       2                 0%              20%            100%            0%            50%
       3                 0%              40%            100%           20%            75% (not less than 20%)
       4                 0%              60%            100%           40%           100% (not less than 40%)
       5               100%              80%            100%           60%           100% (not less than 60%)
       6               100%             100%            100%           80%           100% (not less than 80%)
       7               100%             100%            100%          100%           100% (not less than 100%)

NOTE: If no option is selected, Option 3 will be deemed to be selected.
------------------------------------------------------------------------------------------------------------------
</Table>

F4006 (8/94) F94           (c) 1998 Universal Pensions, Inc., Brainerd, MN 56401

<PAGE>
                                                                         Page 10

Part B.  VESTING SCHEDULE FOR MATCHING CONTRIBUTIONS. A Participant shall become
         Vested in his or her Individual Account derived from Matching
         Contributions made pursuant to Section 7 of the Adoption Agreement as
         follows (Choose one):

<Table>
<Caption>
------------------------------------------------------------------------------------------------------------------------------------
   YEARS OF                                                  VESTED PERCENTAGE
VESTING SERVICE      Option 1 [ ]      Option 2 [ ]      Option 3 [ ]      Option 4 [ ]      Option 5 [X]      (Complete if Chosen)
------------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>               <C>               <C>               <C>           <C>               <C>
      1                    0%                0%              100%                0%                0    %
                                                                                             -----------
      2                    0%               20%              100%                0%               50    %
                                                                                             -----------
      3                    0%               40%              100%               20%               75    %      (not less than 20%)
                                                                                             -----------
      4                    0%               60%              100%               40%              100    %      (not less than 40%)
                                                                                             -----------
      5                  100%               80%              100%               60%              100    %      (not less than 60%)
                                                                                             -----------
      6                  100%              100%              100%               80%              100    %      (not less than 80%)
                                                                                             -----------
      7                  100%              100%              100%              100%              100    %      (not less than 100%)
                                                                                             -----------
NOTE: If no option is selected, Option 3 will be deemed to be selected.
------------------------------------------------------------------------------------------------------------------------------------
</Table>

Part C.  HOURS REQUIRED FOR VESTING PURPOSES:

         1.   1000    Hours of Service (no more than 1,000) shall be required to
            --------  constitute a Year of Vesting Service.
         2.    500    Hours of Service (no more than 500 but less than the
            --------  number specified in Section 12, Part C, Item 1. above)
                      must be exceeded to avoid a Break in Vesting Service.
         3. For purposes of determining Years of Vesting Service, Employees
            shall be given credit for Hours of Service with the following
            predecessor employer(s): (Complete if applicable)
            Intercoast Energy Company, Intercoast Gas & Services Company,
            -------------------------------------------------------------
            NUI Corporation
            -------------------------------------------------------------

Part D.  EXCLUSION OF CERTAIN YEARS OF VESTING SERVICE:

         All of an Employee's Years of Vesting Service with the Employer are
         counted to determine the vesting percentage in the Participant's
         Individual Account except (Check any that apply):
         [ ] Years of Vesting Service before the Employee reaches age 18.
         [ ] Years of Vesting Service before the Employer maintained this Plan
             or a predecessor plan.

Part E.  ALLOCATION OF FORFEITURES OF EMPLOYER PROFIT SHARING CONTRIBUTIONS:

         Forfeitures of Employer Profit Sharing Contributions shall be (Choose
         one):

         OPTION 1: [ ] Allocated to the Individual Accounts of the Participants
                       specified below in the manner as described in Section 10,
                       Part B (for Employer Profit Sharing Contributions)

                       The Participants entitled to receive allocations of such
                       Forfeitures shall be (Choose one):

                       SUBOPTION (a): [ ] Only Qualifying Participants.
                       SUBOPTION (b): [ ] All Participants.

         OPTION 2: [ ] Applied to reduce Employer Profit Sharing Contributions
                       (Choose one):

                       SUBOPTION (a): [ ] For the Plan Year for which the
                                          Forfeiture arises.
                       SUBOPTION (b): [ ] For any Plan Year subsequent to the
                                          Plan Year for which the Forfeiture
                                          arises.

         OPTION 3: [X] Applied first to the payment of the Plan's administrative
                       expenses and any excess applied to reduce Employer Profit
                       Sharing Contributions (Choose one):

                       SUBOPTION (a): [ ] For the Plan Year for which the
                                          Forfeiture arises.
                       SUBOPTION (b): [X] For any Plan Year subsequent to the
                                          Plan Year for which the Forfeitures
                                          arises.

         NOTE: If no option is selected, Option 1 and Suboption (a) will be
               deemed to be selected.

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>

                                                                         Page 11

PART F.  ALLOCATION OF FORFEITURES OF MATCHING CONTRIBUTIONS:

     Forfeitures of Matching Contributions shall be (Choose one):

     OPTION 1: / / Allocated, after all other Forfeitures under the Plan, to
                   each Participant's Individual Account in the ratio which each
                   Participant's Compensation for the Plan Year bears to the
                   total Compensation of all Participants for such Plan Year.

                   The Participants entitled to receive allocations of such
                   Forfeitures shall be (Choose one):

                   SUBOPTION (a): / / Only Qualifying Contributing Participants.

                   SUBOPTION (b): / / Only Qualifying Participants.

                   SUBOPTION (c): / / All Participants.

     OPTION 2: / / Applied to reduce Matching Contributions (Choose one):

                   SUBOPTION (a): / / For the Plan Year for which the Forfeiture
                                      arises.

                   SUBOPTION (b): / / For any Plan Year subsequent to the Plan
                                      Year for which the Forfeiture arises.

     OPTION 3: /X/ Applied first to the payment of the Plan's administrative
                   expenses and any excess applied to reduce Matching
                   Contributions (Choose one):

                   SUBOPTION (a): / / For the Plan Year for which the Forfeiture
                                      arises.

                   SUBOPTION (b): /X/ For any Plan Year subsequent to the Plan
                                      Year for which the Forfeiture arises.

     NOTE: If no option is selected, Option 1 and Suboption (a) will be deemed
           to be selected.

PART G. ALLOCATION OF FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS:

     Forfeitures of Excess Aggregate Contributions shall be (Choose one):

     OPTION 1: / / Allocated, after all other Forfeitures under the Plan, to
                   each Contributing Participant's Matching Contribution account
                   in the ratio which each Contributing Participant's
                   Compensation for the Plan Year bears to the total
                   Compensation of all Contributing Participants for such Plan
                   Year. Such Forfeitures will not be allocated to the account
                   of any Highly Compensated Employee.

     OPTION 2: / / Applied to reduce Matching Contributions (Choose one):

                   SUBOPTION (a): / / For the Plan Year for which the Forfeiture
                                      arises.

                   SUBOPTION (b): / / For any Plan Year subsequent to the Plan
                                      Year for which the Forfeiture arises.

     OPTION 3: /X/ Applied first to the payment of the Plan's administrative
                   expenses and any excess applied to reduce Matching
                   Contributions (Choose one):

                   SUBOPTION (a): / / For the Plan Year for which the Forfeiture
                                      arises.

                   SUBOPTION (b): /X/ For any Plan Year subsequent to the Plan
                                      Year for which the Forfeiture arises.

     NOTE: If no option is selected, Option 2 and Suboption (a) will be deemed
           to be selected.

           SECTION 13. NORMAL RETIREMENT AGE AND EARLY RETIREMENT AGE

PART A. THE NORMAL RETIREMENT AGE UNDER THE PLAN SHALL BE (Check and complete
        one option):

     OPTION 1: /X/ Age 65.

     OPTION 2: / / Age    (not to exceed 65).

     OPTION 3: / / The later of age    (not to exceed 65) or the     (not to
                   exceed 5th) anniversary of the first day of the first Plan
                   Year in which the Participant commenced participation in the
                   Plan.

     NOTE: If no option is selected, Option 1 will be deemed to be selected.

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>
                                                                         Page 12

PART B. EARLY RETIREMENT AGE (Choose one option):

        OPTION 1: [ ] An Early Retirement Age is not applicable under the Plan.

        OPTION 2: [X] Age 55 (not less than 55 nor more than 65).

        OPTION 3: [ ] A Participant satisfies the Plan's Early Retirement Age
                      conditions by attaining age ___ (not less than 55) and
                      completing ____ Years of Vesting Service.

        NOTE: If no option is selected, Option 1 will be deemed to be selected.

--------------------------------------------------------------------------------
                           SECTION 14. DISTRIBUTIONS
--------------------------------------------------------------------------------

DISTRIBUTABLE EVENTS. ANSWER EACH OF THE FOLLOWING ITEMS.

A. Termination of Employment Before Normal Retirement Age. May
   a Participant who has not reached Normal Retirement Age
   request a distribution from the Plan?                        [x] Yes   [ ] No

B. Disability. May a Participant who has incurred a Disability
   request a distribution from the Plan?                        [x] Yes   [ ] No

C. Attainment of Normal Retirement Age. May a Participant who
   has attained Normal Retirement Age but has not incurred a
   Termination of Employment request a distribution from the
   Plan?                                                        [x] Yes   [ ] No

D. Attainment of Age 59 1/2. Will Participants who have
   attained age 59 1/2 be permitted to withdraw Elective
   Deferrals while still employed by the Employer?              [x] Yes   [ ] No

E. Hardship Withdrawals of Elective Deferrals. Will
   Participants be permitted to withdraw Elective Deferrals
   on account of hardship pursuant to Section 11.503 of the
   Plan?                                                        [x] Yes   [ ] No

F. In-Service Withdrawals. Will Participants be permitted to
   request a distribution during service pursuant to Section
   6.01(A)(3) of the Plan?                                      [ ] Yes   [X] No

G. Hardship Withdrawals. Will Participants be permitted to
   make hardship withdrawals pursuant to Section 6.01(A)(4) of
   the Plan?                                                    [ ] Yes   [x] No

H. Withdrawals of Rollover or Transfer Contributions. Will
   Employees be permitted to withdraw their Rollover or
   Transfer Contributions at any time?                          [x] Yes   [ ] No

NOTE: If a box is not checked for an item, "Yes" will be deemed to be selected
for that item. Section 411(d)(6) of the Code prohibits the elimination of
protected benefits. In general, protected benefits include the forms and timing
of payout options. If the Plan is being adopted to amend and replace a Prior
Plan that permitted a distribution option described above, you must answer "Yes"
to that item.

--------------------------------------------------------------------------------
                     SECTION 15. JOINT AND SURVIVOR ANNUITY
--------------------------------------------------------------------------------

PART A. RETIREMENT EQUITY ACT SAFE HARBOR:

        Will the safe harbor provisions of Section 6.05(F) of the Plan apply?
        (Choose only one option)

        OPTION 1: [ ] Yes.

        OPTION 2: [X] No.

        NOTE: You must select "No" if you are adopting this Plan as an amendment
        and restatement of a Prior Plan that was subject to the joint and
        survivor annuity requirements.

PART B. SURVIVOR ANNUITY PERCENTAGE: (Complete only if your answer in Section
        15, Part A is "No.")

The survivor annuity portion of the Joint and Survivor Annuity shall be a
percentage equal to 50% (at least 50% but no more than 100%) of the amount paid
to the Participant prior to his or her death.

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>
                                                                         Page 13

                           SECTION 16. OTHER OPTIONS
            Answer "Yes" or "No" to each of the following questions
                        by checking the appropriate box.
 If a box is not checked for a question, the answer will be deemed to be "No."

<Table>
<C> <S>                                                                                   <C>                <C>
A.  Loans: Will loans to Participants pursuant to Section 6.08 of the Plan be permitted?   [X] Yes            [ ] No

B.  Insurance: Will the Plan allow for the investment in insurance policies pursuant to
    Section 5.13 of the Plan?                                                              [ ] Yes            [X] No

C.  Employer Securities: Will the Plan allow for the investment in qualifying Employer
    securities or qualifying Employer real property?                                       [X] Yes            [ ] No

D.  Rollover Contributions: Will Employees be permitted to make rollover contributions
    to the Plan pursuant to Section 3.03 of the Plan?                                      [X] Yes            [ ] No
                                                                                           [ ] Yes, but only after
                                                                                               becoming a Participant.

E.  Transfer Contributions: Will Employees be permitted to make transfer contributions
    to the Plan pursuant to Section 3.04 of the Plan?                                      [ ] Yes            [X] No
                                                                                           [ ] Yes, but only after
                                                                                               becoming a Participant.

F.  Nondeductible Employee Contributions: Will Employees be permitted to make
    Nondeductible Employee Contributions pursuant to Section 11.305 of the Plan?           [ ] Yes            [X] No
    Check here if such contributions will be mandatory. [ ]

G.  Will Participants be permitted to direct the investment of their Plan assets
    pursuant to Section 5.14 of the Plan?                                                  [X] Yes            [ ] No
</Table>

                     SECTION 17. LIMITATION ON ALLOCATIONS
                               More Than One Plan

If you maintain or ever maintained another qualified plan in which any
Participant in this Plan is (or was) a Participant or could become a
Participant, you must complete this section. You must also complete this
section if you maintain a welfare benefit fund, as defined in Section 419(e) of
the Code, or an individual medical account, as defined in Section 415(l)(2) of
the Code, under which amounts are treated as annual additions with respect to
any Participant in this Plan.

PART A.  INDIVIDUALLY DESIGNED DEFINED CONTRIBUTION PLAN:

         If the Participant is covered under another qualified defined
         contribution plan maintained by the Employer, other than a master or
         prototype plan:

         1. [ ] The provisions of Section 3.05(B)(1) through 3.05(B)(6) of the
                Plan will apply as if the other plan were a master or prototype
                plan.

         2. [ ] Other method. (Provide the method under which the plans will
                limit total annual additions to the maximum permissible amount,
                and will properly reduce any excess amounts, in a manner that
                precludes Employer discretion.)

                ----------------------------------------------------------------

                ----------------------------------------------------------------

                ----------------------------------------------------------------

PART B.  DEFINED BENEFIT PLAN:

         If the Participant is or has ever been a participant in a defined
         benefit plan maintained by the Employer, the Employer will provide
         below the language which will satisfy the 1.0 limitation of Section
         415(e) of the Code.

         1. [ ] If the projected annual addition to this Plan to the account of
                a Participant for any limitation year would cause the 1.0
                limitation of Section 415(e) of the Code to be exceeded, the
                annual benefit of the defined benefit plan for such limitation
                year shall be reduced so that the 1.0 limitation shall be
                satisfied.

                If it is not possible to reduce the annual benefit of the
                defined benefit plan and the projected annual addition to this
                Plan to the account of a Participant for a limitation year would
                cause the 1.0 limitation to be exceeded, the Employer shall
                reduce the Employer Contribution which is to be allocated to
                this Plan on behalf of such Participant so that the 1.0
                limitation will be satisfied. (The provisions of Section 415(e)
                of the Code are incorporated herein by reference under the
                authority of Section 1106(h) of the Tax Reform Act of 1986.)

         2. [ ] Other method. (Provide language describing another method. Such
                language must preclude Employer discretion.)

                ----------------------------------------------------------------

                ----------------------------------------------------------------

                ----------------------------------------------------------------

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>
                                                                         Page 14

                         SECTION 18. TOP-HEAVY MINIMUM
                             Complete Parts A and B

PART A. MINIMUM ALLOCATION OR BENEFIT:

        For any Plan Year with respect to which this Plan is a Top-Heavy Plan,
        any minimum allocation required pursuant to Section 3.01(E) of the Plan
        shall be made (Choose one):

        Option 1: [X] To this Plan.
        Option 2: [ ] To the following other plan maintained by the Employer
        (Specify name and plan number of plan)
        ______________________________________________________________________
        ______________________________________________________________________

        Option 3: [ ] In accordance with the method described on an attachment
        to this Adoption Agreement. (Attach language describing the method that
        will be used to satisfy Section 416 of the Code. Such method must
        preclude Employer discretion.)

        Note: If no option is selected, Option 1 will be deemed to be selected.

PART B. TOP-HEAVY VESTING SCHEDULE:

        Pursuant to Section 6.01(C) of the Plan, the vesting schedule that will
        apply when this Plan is a Top-Heavy Plan (unless the Plan's regular
        vesting schedule provides for more rapid vesting) shall be (Choose one):

        Option 1: [ ] 6 Year Graded.
        Option 2: [ ] 3 Year Cliff.

        NOTE: If no option is selected, Option 1 will be deemed to be selected.

                         SECTION 19. PROTOTYPE SPONSOR.

        Name of Prototype Sponsor Travelers Insurance Company

        Address One Tower Square, Hartford, CT 06183

        Telephone Number 888-822-4710

        Permissible Investments

        The assets of the Plan shall be invested only in those investments
        described below (To be completed by the Prototype Sponsor):

               Assorted mutual funds, brokerage accounts and related
        investments.
        ______________________________________________________________________
        ______________________________________________________________________
        ______________________________________________________________________
        ______________________________________________________________________

                        SECTION 20. TRUSTEE OR CUSTODIAN

        Option A: [X] Financial Organization as Trustee or Custodian

        Check One: [ ] Custodian, [X] Trustee without full trust powers, or
                   [ ] Trustee with full trust powers

        Financial Organization See attached addendum

        Signature_____________________________________________________________

        Type Name_____________________________________________________________

        Collective or Commingled Funds

        List any collective or commingled funds maintained by the financial
        organization Trustee in which assets of the Plan may be invested

        (Complete if applicable). Collective trust funds of Salomon Smith Barney
                                  and/or The Travelers.
                                  ______________________________________________

        Option B: [ ] Individual Trustee(s)

        Signature___________________________ Signature________________________
        Type Name___________________________ Type Name________________________
        Signature___________________________ Signature________________________
        Type Name___________________________ Type Name________________________

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401
<PAGE>
                                                                         Page 15

--------------------------------------------------------------------------------
                              SECTION 21. RELIANCE
--------------------------------------------------------------------------------

The Employer may not rely on an opinion letter issued by the National Office of
the Internal Revenue Service as evidence that the Plan is qualified under
Section 401 of the Internal Revenue Code. In order to obtain reliance with
respect to plan qualification, the Employer must apply to the appropriate Key
District office for a determination letter.

This Adoption Agreement may be used only in conjunction with Basic Plan
Document No. 04.

--------------------------------------------------------------------------------
                         SECTION 22. EMPLOYER SIGNATURE
                     Important: Please read before signing
--------------------------------------------------------------------------------

I am an authorized representative of the Employer named above and I state the
following:

1.   I acknowledge that I have relied upon my own advisors regarding the
     completion of this Adoption Agreement and the legal tax implications of
     adopting this Plan.

2.   I understand that my failure to properly complete this Adoption Agreement
     may result in disqualification of the Plan.

3.   I understand that the Prototype Sponsor will inform me of any amendments
     made to the Plan and will notify me should it discontinue or abandon the
     Plan.

4.   I have received a copy of this Adoption Agreement and the corresponding
     Basic Plan Document.

Signature for Employer   /s/  William N. Hahne     Dated Signed   10/26/00
                       --------------------------                ---------------

Type Name   William N. Hahne                       Title Chief Operating Officer
          ---------------------------------------        -----------------------

F4006 (8/94) F94             (C)1998 Universal Pension Inc., Brainerd, MN 56401<PAGE>
                                                                  EXHIBIT 10(vi)

                                  $100,000,000
                                CREDIT AGREEMENT

                          DATED AS OF NOVEMBER 28, 2001

                                      AMONG

                       KCS ENERGY, INC., AS THE BORROWER,
                          THE LENDERS SIGNATORY HERETO

                       CANADIAN IMPERIAL BANK OF COMMERCE,
                           NEW YORK AGENCY, AS AGENT,

                         CIBC INC., AS COLLATERAL AGENT,

           CIBC WORLD MARKETS CORP., AS ARRANGER AND SOLE BOOK RUNNER,

                          GUARANTY BANK, AS CO-ARRANGER
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>                                                                                                  <C>
ARTICLE I. DEFINITIONS AND INTERPRETATION........................................................      1

     1.1      Terms Defined Above................................................................      1

     1.2      Additional Defined Terms...........................................................      1

     1.3      Undefined Financial Accounting Terms...............................................     20

     1.4      References.........................................................................     20

     1.5      Articles and Sections..............................................................     20

     1.6      Number and Gender..................................................................     20

     1.7      Incorporation of Exhibits..........................................................     21

     1.8      Knowledge..........................................................................     21

ARTICLE II. TERMS OF FACILITIES..................................................................     21

     2.1      Loans..............................................................................     21

     2.2      Letters of Credit..................................................................     22

     2.3      [Intentionally Blank]..............................................................     25

     2.4      Limitations on Interest Periods....................................................     25

     2.5      Limitation on Types of Loans.......................................................     25

     2.6      Use of Loan Proceeds and Letters of Credit.........................................     25

     2.7      Interest...........................................................................     26

     2.8      Repayment of Loans and Interest....................................................     26

     2.9      General Terms......................................................................     26

     2.10     Time, Place, and Method of Payments................................................     27

     2.11     Pro Rata Treatment: Adjustments....................................................     27

     2.12     Borrowing Base Determinations......................................................     29

     2.13     Mandatory Prepayments..............................................................     31
</TABLE>

                                       i
<PAGE>
<TABLE>
<S>                                                                                                   <C>
     2.14     Voluntary Prepayments and Conversions of Loans.....................................     31

     2.15     Commitment Fees and Usage Fee......................................................     31

     2.16     Letter of Credit Fee...............................................................     32

     2.17     Intentionally Blank................................................................     32

     2.18     Intentionally Blank................................................................     32

     2.19     Right of Offset....................................................................     32

     2.20     Maximum Interest...................................................................     32

     2.21     Obligations Absolute...............................................................     33

     2.22     Yield Protection...................................................................     34

     2.23     Illegality.........................................................................     36

     2.24     Taxes..............................................................................     36

     2.25     Replacement or Additional Lenders..................................................     37

ARTICLE III. CONDITIONS..........................................................................     39

     3.1      Conditions Precedent to Initial Loan or Letter of Credit...........................     39

     3.2      Conditions Precedent to Each Loan..................................................     42

     3.3      Conditions Precedent to Issuance of Letters of Credit..............................     43

ARTICLE IV. REPRESENTATIONS AND WARRANTIES.......................................................     44

     4.1      Due Authorization..................................................................     44

     4.2      Corporate Existence................................................................     44

     4.3      Valid and Binding Obligations......................................................     44

     4.4      Existing Indebtedness..............................................................     45

     4.5      Security Instruments...............................................................     45

     4.6      Title to Assets....................................................................     45

     4.7      Scope and Accuracy of Financial Statements and Reserve Reports.....................     45

     4.8      No Material Misstatements..........................................................     45
</TABLE>

                                       ii
<PAGE>
<TABLE>
<S>                                                                                                   <C>
     4.9      Liabilities and Litigation.........................................................     46

     4.10     Authorizations; Consents...........................................................     46

     4.11     Compliance with Laws...............................................................     46

     4.12     Default............................................................................     46

     4.13     ERISA..............................................................................     47

     4.14     Environmental Laws.................................................................     47

     4.15     Compliance with Federal Reserve Regulations........................................     48

     4.16     Investment Company Act Compliance..................................................     48

     4.17     Public Utility Holding Company Act Compliance......................................     48

     4.18     Proper Filing of Tax Returns; Payment of Taxes Due.................................     48

     4.19     Refunds............................................................................     48

     4.20     Gas Contracts......................................................................     49

     4.21     Intellectual Property..............................................................     49

     4.22     Labor Matters......................................................................     49

     4.23     Casualties or Taking of Property...................................................     49

     4.24     Locations of Borrower..............................................................     49

     4.25     Subsidiaries.......................................................................     50

     4.26     Good Standing......................................................................     50

ARTICLE V. AFFIRMATIVE COVENANTS.................................................................     50

     5.1      Maintenance and Access to Records..................................................     50

     5.2      Quarterly Financial Statements; Compliance Certificates............................     50

     5.3      Annual Financial Statements........................................................     50

     5.4      Oil and Gas Reserve Reports........................................................     50

     5.5      Title Opinions; Title Defects......................................................     51

     5.6      Notices of Certain Events..........................................................     52
</TABLE>

                                       iii
<PAGE>
<TABLE>
<S>                                                                                                   <C>
     5.7      Additional Information.............................................................     52

     5.8      Compliance with Laws...............................................................     53

     5.9      Payment of Assessments and Charges.................................................     53

     5.10     Maintenance of Corporate Existence and Good Standing...............................     53

     5.11     Payment of Notes; Performance of Obligations.......................................     53

     5.12     Further Assurances.................................................................     53

     5.13     Fees and Expenses..................................................................     54

     5.14     Operation of Oil and Gas Properties................................................     55

     5.15     Maintenance and Inspection of Properties...........................................     55

     5.16     Maintenance of Insurance...........................................................     55

     5.17     Indemnification....................................................................     55

     5.18     Liens on Material Properties; Additional Guaranties and Mortgages..................     56

     5.19     Maintenance of Agreements, etc.....................................................     59

     5.20     Hedging............................................................................     59

ARTICLE VI. NEGATIVE COVENANTS...................................................................     59

     6.1      Indebtedness.......................................................................     59

     6.2      Contingent Obligations.............................................................     60

     6.3      Liens..............................................................................     60

     6.4      Negative Pledge Agreements.........................................................     60

     6.5      Sales of Assets....................................................................     61

     6.6      Leasebacks.........................................................................     61

     6.7      Loans; Advances; Investments.......................................................     61

     6.8      Dividends and Distributions........................................................     62

     6.9      Environmental Matters..............................................................     62

     6.10     Merger, etc.; Changes in Corporate Structure.......................................     63
</TABLE>

                                       iv
<PAGE>
<TABLE>
<S>                                                                                                   <C>
     6.11     Transactions with Affiliates.......................................................     63

     6.12     Lines of Business..................................................................     63

     6.13     ERISA Compliance...................................................................     63

     6.14     Subordinated Indebtedness; Production Payments.....................................     63

     6.15     Use of Proceeds....................................................................     64

     6.16     Intentionally Blank................................................................     64

     6.17     Change of Ownership................................................................     64

     6.18     Capital Expenditures...............................................................     64

     6.19     Working Capital....................................................................     64

     6.20     Interest Coverage Ratio............................................................     64

     6.21     Debt to Adjusted EBITDA Ratio......................................................     64

ARTICLE VII. EVENTS OF DEFAULT...................................................................     64

     7.1      Enumeration of Events of Default...................................................     64

     7.2      Remedies...........................................................................     67

ARTICLE VIII. THE AGENTS AND THE ARRANGER........................................................     68

     8.1      Appointment........................................................................     68

     8.2      Delegation of Duties...............................................................     68

     8.3      Exculpatory Provisions.............................................................     68

     8.4      Reliance by Agent..................................................................     69

     8.5      Notice of Default..................................................................     69

     8.6      Non-Reliance on Agent and Other Lenders............................................     70

     8.7      Indemnification....................................................................     70

     8.8      Restitution........................................................................     71

     8.9      Agents in Individual Capacity......................................................     71

     8.10     Successor Agent....................................................................     72
</TABLE>

                                       v
<PAGE>
<TABLE>
<S>                                                                                                   <C>
     8.11     Applicable Parties.................................................................     72

ARTICLE IX. MISCELLANEOUS........................................................................     72

     9.1      Assignments; Participations........................................................     72

     9.2      Survival of Representations, Warranties, and Covenants.............................     74

     9.3      Notices and Other Communications...................................................     75

     9.4      Parties in Interest................................................................     75

     9.5      Rights of Third Parties............................................................     75

     9.6      No Waiver; Rights Cumulative.......................................................     75

     9.7      Severability.......................................................................     75

     9.8      Amendments; Waivers................................................................     75

     9.9      Confidentiality....................................................................     76

     9.10     Governing Law......................................................................     77

     9.11     Jurisdiction and Venue.............................................................     77

     9.12     Appointment of Agent for Service of Process........................................     77

     9.13     Waiver of Rights to Jury Trial.....................................................     78

     9.14     Integration........................................................................     78

     9.15     Counterparts.......................................................................     78

     9.16     L/C Documents......................................................................     78
</TABLE>

                                       vi
<PAGE>
                                LIST OF EXHIBITS

Exhibit I     -   Form of Note
Exhibit II    -   Form of Subordination
Exhibit III   -   Form of Assignment Agreement
Exhibit IV    -   Form of Borrowing Request
Exhibit V     -   Schedule of Jurisdictions Where Qualified to Do Business
Exhibit VI    -   Facility Amounts
Exhibit VII   -   Form of Compliance Certificate
Exhibit VIII  -   Form of Opinion of Borrower' Counsel
Exhibit IX    -   Form of Opinion of Local Counsel
Exhibit X     -   Disclosures
Exhibit XI    -   Specified Assets
Exhibit XII   -   Form of Pledge Agreement
Exhibit XIII  -   [Intentionally Blank]
Exhibit XIV   -   Form of Subsidiary Guaranty

                                      vii
<PAGE>
                                CREDIT AGREEMENT

      THIS CREDIT AGREEMENT is made and entered into effective as of November
28, 2001, by and among KCS ENERGY, INC., a Delaware corporation (the
"Borrower"); each lender that is a signatory hereto or becomes a party hereto as
provided in Sections 9.1 or 2.25 (individually, together with its successors and
such assigns, a "Lender" and, collectively, together with their respective
successors and such assigns, the "Lenders"); CANADIAN IMPERIAL BANK OF COMMERCE,
a Canadian chartered bank, acting through its New York Agency (in its individual
capacity, "CIBC"), as agent for the Lenders (in such capacity, together with its
successors in such capacity pursuant to the terms hereof, the "Agent"); CIBC
INC., a Delaware corporation (in its individual capacity, "CIBC Inc."), as
collateral agent for the Lender Parties (as herein defined; CIBC Inc. in such
capacity, together with its successors in such capacity pursuant to the terms
hereof, the "Collateral Agent"); CIBC World Markets Corp., as Arranger and Sole
Book Runner (the "Arranger"); and Guaranty Bank as Co-Arranger and Documentation
Agent (the "Co-Arranger").

                              W I T N E S S E T H:

      WHEREAS, the Borrower would like to obtain credit from the Lenders and the
Lenders are willing to provide such credit on the terms, and subject to the
conditions herein set forth;

      NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:

                                   ARTICLE I.

                         DEFINITIONS AND INTERPRETATION

      1.1 Terms Defined Above. As used in this Agreement, the terms "Agent,"
"Arranger," "Borrower," "CIBC," "CIBC Inc.," "Collateral Agent," "Lender," and
"Lenders" shall have the meanings assigned to them hereinabove.

      1.2 Additional Defined Terms. As used in this Agreement, each of the
following terms shall have the meaning assigned thereto in this Section, unless
the context otherwise requires:

            "Acquired Property" shall have the meaning specified in Section
      5.18(c).

            "Acquisition Indebtedness" shall have the meaning specified in
      Section 5.18(c).

            "Additional Costs" shall mean actual costs which the Agent or any
      Lender reasonably determines have been incurred and are attributable to
      its obligation to make or its making or maintaining any LIBO Rate Loan or
      issuing or participating in Letters of Credit, or any reduction in any
      amount receivable by the Agent or such Lender in respect of any such
      obligation or any LIBO Rate Loan or Letter of Credit, in each case
      resulting from any Regulatory Change which (a) changes the basis of
      taxation of any amounts payable to the Agent or such Lender under this
      Agreement or any Note in respect of any
<PAGE>
      LIBO Rate Loan or Letter of Credit (other than taxes imposed on or
      calculated on the basis of the overall net income, capital or profit of
      the Agent or such Lender or its Applicable Lending Office for any such
      LIBO Rate Loan or for issuing or participating in any Letter of Credit),
      (b) imposes or modifies any reserve, special deposit, minimum capital,
      capital ratio, or similar requirements (other than the Reserve Requirement
      utilized in the determination of the Adjusted LIBO Rate for such Loan)
      relating to any extensions of credit or other assets of, or any deposits
      with or other liabilities of, such Lender (including LIBO Rate Loans and
      Dollar deposits in the London interbank market in connection with LIBO
      Rate Loans), or the Commitment of such Lender, or (c) imposes any other
      condition affecting this Agreement or any Note or any of such extensions
      of credit, liabilities, or Commitments.

            "Adjusted Base Rate" shall mean, for any day and any Base Rate Loan,
      an interest rate per annum equal to the sum of (a) the greater of (i) the
      Federal Funds Rate for such day plus one percent (1%), or (ii) the Base
      Rate for such day plus (b) the Applicable Margin for such Base Rate Loan,
      such rate to be computed on the basis of a year of 365 or 366 days, as the
      case may be, and actual days elapsed (including the first day but
      excluding the last day) during the period for which payable, but in no
      event shall such rate exceed the Highest Lawful Rate.

            "Adjusted EBITDA" shall mean EBITDA less the amortization of
      deferred revenue attributable to the Production Payment 2001 Facility.

            "Adjusted LIBO Rate" shall mean, for any Interest Period for any
      LIBO Rate Loan, an interest rate per annum (rounded upwards, if necessary,
      to the nearest 1/100th of 1%) determined by the Agent to be equal to the
      sum of (a) the quotient of (i) the LIBO Rate for such Interest Period for
      such LIBO Rate Loan divided by (ii) a percentage (expressed as a decimal)
      equal to 100% minus the Reserve Requirement for such Loan for such
      Interest Period plus (b) the Applicable Margin for such LIBO Rate Loan,
      such rate to be computed on the basis of a year of 360 days and actual
      days elapsed (including the first day but excluding the last day) during
      the period for which payable, but in no event shall such rate exceed the
      Highest Lawful Rate.

            "Affiliate" shall mean with respect to any Person, any other Person
      directly or indirectly controlled by, controlling, or under common control
      with, such Person and any "affiliate" of such Person within the meaning of
      Reg. Section 240.12b-2 of the Securities Exchange Act of 1934, as amended,
      with "control," as used in this definition, meaning possession, directly
      or indirectly, of the power (a) to vote fifteen percent (15%) or more of
      the securities (on a fully diluted basis) having ordinary voting power for
      the election of directors or managing members or managing general partners
      or (b) to direct or cause the direction of management, policies or action
      through ownership of voting securities, a voting trust, or membership in
      management or in the group appointing or electing management or by
      contract or otherwise through formal or informal arrangements or business
      relationships.

            "Agreement" shall mean this Credit Agreement, as the same may from
      time to time be amended, supplemented, restated or otherwise modified.

                                       2
<PAGE>
            "Applicable Lending Office" shall mean, for each Lender and type of
      Loan, the lending office of such Lender (or an Affiliate of such Lender)
      designated for such type of Loan on the signature pages hereof or such
      other office of such Lender (or an Affiliate of such Lender) as such
      Lender may from time to time specify to the Agent and the Borrower as the
      office by which its Loans of such type are to be made and maintained.

            "Applicable Margin" shall mean as to each Base Rate Loan and each
      LIBO Rate Loan, an amount equal to the percentage set forth in the grid
      below for such type of Loan, as such percentage may be modified pursuant
      to the terms set forth below:

<TABLE>
<CAPTION>
      % that Obligations then Outstanding                Applicable Margin
         with respect to Loans and L/C            -----------------------------
        Exposure Bear to Borrowing Base           Base Rate           LIBO Rate
      -----------------------------------         ---------           ---------
<S>                                               <C>                 <C>
      Less than or equal to 33.333%                  0.00%               2.0%

      Greater than 33.333% but less than             0.50%               2.5%
      or equal to 66.667%

      Greater than 66.667%                            1.0%               3.0%
</TABLE>

            "Assignment Agreement" shall mean an Assignment Agreement,
      substantially in the form of Exhibit III, with appropriate insertions.

            "Available Commitment" shall mean, at any time, an amount equal to
      the remainder, if any, of (a) the lesser of the Commitment Amount or the
      Borrowing Base in effect at such time minus (b) Obligations in respect of
      the outstanding principal amount of the Loans and L/C Exposure at such
      time.

            "Base Rate" shall mean the interest rate most recently announced by
      CIBC at its New York, New York office as its prime rate for Dollar loans.
      The Base Rate shall change simultaneously with each change in such
      announced interest rate and such Base Rate may not be the lowest interest
      rate charged by CIBC in connection with extensions of credit.

            "Base Rate Loan" shall mean any Loan which the Borrower has
      requested in writing to bear interest at the Adjusted Base Rate or which,
      pursuant to the terms hereof, is otherwise required to bear interest at
      the Adjusted Base Rate.

            "Benefited Lender" shall have the meanings assigned to such term in
      Section 2.11(c).

            "Borrowing Base" shall mean, at any time, the amount determined in
      accordance with Section 2.12(a), (b), (c) and (d).

                                       3
<PAGE>
            "Borrowing Request" shall mean each written request, in
      substantially the form attached hereto as Exhibit IV, by the Borrower to
      the Agent for a borrowing or conversion pursuant to Sections 2.1 or 2.14,
      each of which shall:

                  (a) be signed by a Responsible Officer of the Borrower;

                  (b) specify the amount and type of Loan requested or to be
            made or converted and the date of the borrowing or conversion (which
            shall be a Business Day);

                  (c) when requesting the making of or a conversion into a Base
            Rate Loan, be delivered to the Agent no later than 11:00 a.m., New
            York, New York time, on the Business Day of the requested borrowing
            or conversion; and

                  (d) when requesting the making or continuation of or a
            conversion into a LIBO Rate Loan, be delivered to the Agent no later
            than 12 noon, New York, New York time, the third Business Day prior
            to the requested borrowing or conversion and designate the Interest
            Period requested with respect to such Loan.

            "Business Day" shall mean a day other than a day when commercial
      banks are authorized or required to close in the State of New York and,
      with respect to all requests, notices, and determinations in connection
      with, and payments of principal and interest on, LIBO Rate Loans, which is
      also a day for trading by and between banks in Dollar deposits in the
      London interbank market.

            "Capitalized Lease Liabilities" shall mean all monetary obligations
      of the Borrower or any of its Subsidiaries under any leasing or similar
      arrangement which, in accordance with GAAP, would be classified as
      capitalized leases, and, for purposes of this Agreement and each other
      Loan Document, the amount of such obligations shall be the capitalized
      amount thereof, determined in accordance with GAAP, and the stated
      maturity thereof shall be the date of the last payment of rent or any
      other amount due under such lease prior to the first date upon which such
      lease may be terminated by the lessee without payment of a penalty.

            "Change of Control" means

                  (a) the acquisition by any Person, or two or more Persons
            acting in concert, of beneficial ownership (within the meaning of
            Rule 13d-3 of the Securities and Exchange Commission under the
            Securities Exchange Act of 1934) of 20% or more of the outstanding
            shares of voting stock of the Borrower; provided, however, that for
            purposes hereof, the acquisition by a Qualified Purchaser or by any
            Person or Persons who are as of the date of this Agreement executive
            officers or directors, or both, of the Borrower of such beneficial
            ownership shall not be a Change of Control; or

                  (b) a change shall occur in the Board of Directors of the
            Borrower so that a majority of the members of the Board of Directors
            of the Borrower ceases to include individuals who were members of
            the Board of Directors of the

                                       4
<PAGE>
            Borrower on the Closing Date (or individuals whose election or
            nomination for election was approved by a vote of at least a
            majority of the directors then in office who either were directors
            on the Closing Date or whose election or nomination for election was
            previously so approved).

            "Closing Date" shall mean November 28, 2001.

            "Code" shall mean the United States Internal Revenue Code of 1986,
      as amended from time to time.

            "Collateral" shall mean the Mortgaged Properties, the Properties
      described in the Security Instruments referenced in Section 3.1 hereof,
      and any other Property now or at any time subject to a Lien to secure the
      payment or performance of all or any portion of the Obligations.

            "Commitment" shall mean, relative to any Lender, such Lender's
      obligations to make Loans and participate in Letters of Credit pursuant to
      Sections 2.1 and 2.2 and "Commitments" shall mean the several obligations
      of the Lenders to make Loans and participate in Letters of Credit.

            "Commitment Amount" shall mean an amount equal to $100,000,000, as
      such amount may be changed from time to time pursuant to the terms of this
      Agreement.

            "Commitment Period" shall mean the period from and including the
      Closing Date to but not including the Commitment Termination Date.

            "Commitment Termination Date" shall mean the date of Final Maturity.

            "Commodity Hedging Agreement" shall mean any swap agreement, cap,
      floor, collar, exchange transaction, forward agreement, or other exchange
      or protection agreement relating to hydrocarbons, whether in effect on the
      date hereof or hereafter entered into by the Borrower or any option with
      respect to any such transaction.

            "Commonly Controlled Entity" shall mean any Person which is under
      common control with the Borrower, within the meaning of Section 4001 of
      ERISA.

            "Compliance Certificate" shall mean each certificate, substantially
      in the form attached hereto as Exhibit VII, executed by a Responsible
      Officer of the Borrower, and furnished to the Agent from time to time in
      accordance with the terms hereof.

            "Contingent Obligation" shall mean, as to any Person, any obligation
      of such Person guaranteeing or in effect guaranteeing any Indebtedness,
      leases, dividends, or other obligations of any other Person (for purposes
      of this definition, a "primary obligation") in any manner, whether
      directly or indirectly, including any obligation of such Person,
      regardless of whether such obligation is contingent, (a) to purchase any
      primary obligation or any Property constituting direct or indirect
      security therefor, (b) to advance or supply funds (i) for the purchase or
      payment of any primary obligation, or (ii) to maintain working or equity
      capital of any other Person in respect of any primary

                                       5
<PAGE>
      obligation, or otherwise to maintain the net worth or solvency of any
      other Person, (c) to purchase Property, securities or services primarily
      for the purpose of assuring the owner of any primary obligation of the
      ability of the Person primarily liable for such primary obligation to make
      payment thereof, or (d) otherwise to assure or hold harmless the owner of
      any such primary obligation against loss in respect thereof, with the
      amount of any Contingent Obligation being deemed to be equal to the stated
      or determinable amount of the primary obligation in respect of which such
      Contingent Obligation is made or, if not stated or determinable, the
      maximum reasonably anticipated liability in respect thereof as determined
      by such Person in good faith.

            "Debt" shall mean Indebtedness of the Borrower and its Subsidiaries,
      on a consolidated basis, other than Indebtedness of the type described in
      clause (a) of the definition of Indebtedness to the extent such
      Indebtedness so described in clause (a) thereof is not included within
      clauses (b) through (f) thereof, and other than the Production Payment
      2001 Obligations.

            "Default" shall mean any event or occurrence which with the lapse of
      time or the giving of notice or both would become an Event of Default.

            "Default Rate" shall mean a per annum interest rate equal to the
      Adjusted Base Rate from time to time in effect plus two percent (2%), such
      rate to be computed on the basis of a year of 365 or 366 days, as the case
      may be, and actual days elapsed (including the first day but excluding the
      last day) during the period for which payable, but in no event shall such
      rate exceed the Highest Lawful Rate.

            "Deferred Revenue Amortization" shall mean the amortization of
      deferred revenue in accordance with GAAP attributable to the Production
      Payment 2001 Facility.

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

            "EBITDA" shall mean, for any period, Net Income for such period plus
      Interest Expense, federal and state income taxes, depreciation,
      amortization, Reorganization Expenses and other non-cash expenses for such
      period deducted in the determination of Net Income for such period.

            "Eligible Assignee" means at any time any Lender, bank, finance
      company, insurance company, savings and loan association, savings bank,
      other financial institution, Person or fund that is regularly engaged in
      making or purchasing loans.

            "Energy Marketing" means KCS Energy Marketing, Inc., a New Jersey
      corporation.

            "Environmental Complaint" shall mean any written or oral complaint,
      order, directive, claim, citation, notice of environmental report or
      investigation by any Governmental Authority or any other Person with
      respect to (a) air emissions from any Property at any time owned, leased
      or operated by the Borrower or any Subsidiary of the Borrower, (b) spills,
      releases, or discharges of Hazardous Substances to soils, any

                                       6
<PAGE>
      improvements located thereon, surface water, groundwater, or the sewer,
      septic, waste treatment, storage, or disposal systems servicing any
      Property at any time owned, leased or operated by the Borrower or any of
      its Subsidiaries, (c) solid or liquid waste disposal of Hazardous
      Substances at any Property at any time owned, leased or operated by the
      Borrower or any of its Subsidiaries or affecting any Property of the
      Borrower or any of its Subsidiaries or the facilities located and or the
      operations conducted on any real Property of the Borrower or any of its
      Subsidiaries, (d) the use, generation, storage, transportation, or
      disposal of any Hazardous Substance by the Borrower or any of its
      Subsidiaries or affecting any Property of the Borrower or any of its
      Subsidiaries or the facilities located and the operations conducted on any
      real Property of the Borrower or any of its Subsidiaries, or (e) other
      environmental, health, or safety matters affecting any Property at any
      time owned, leased or operated by the Borrower or any of its Subsidiaries,
      the business conducted thereon or (f) any violation or alleged violation
      of Environmental Laws.

            "Environmental Laws" shall mean (a) the following federal laws as
      they may be cited, referenced, and amended from time to time: the Clean
      Air Act, the Clean Water Act, the Comprehensive Environmental Response,
      Compensation and Liability Act, the Endangered Species Act, the Hazardous
      Materials Transportation Act of 1986, the Occupational Safety and Health
      Act, the Oil Pollution Act of 1990, the Resource Conservation and Recovery
      Act of 1976, the Safe Drinking Water Act, the Superfund Amendments and
      Reauthorization Act, and the Toxic Substances Control Act; (b) any and all
      equivalent environmental statutes of any state in which Property at any
      time owned, leased or operated by the Borrower or any of its Subsidiaries
      is situated, as they may be cited, referenced and amended from time to
      time; (c) any rules or regulations promulgated under or adopted pursuant
      to the above federal and state laws; and (d) any other equivalent federal,
      state, or local statute or any requirement, rule, regulation, code,
      ordinance, or order adopted pursuant thereto, including those relating to
      the generation, transportation, treatment, storage, recycling, disposal,
      handling, or release of Hazardous Substances or relating to public health
      and safety and protection of the environment.

            "ERISA" shall mean the Employee Retirement Income Security Act of
      1974, as amended from time to time, and the regulations thereunder and
      published interpretations thereof.

            "Event of Default" shall mean any of the events specified in Section
      7.1.

            "Facility Amount" shall mean, for each Lender, the amount set forth
      opposite the name of such Lender on Exhibit VI under the caption "Facility
      Amount," as modified to reflect assignments permitted by Sections 9.1 and
      2.25 or otherwise pursuant to the terms hereof.

            "Federal Funds Rate" shall mean, for any day, a rate of interest per
      annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
      the weighted average of the rates on overnight federal funds transactions
      with members of the Federal Reserve System arranged by federal funds
      brokers on such day, as published by the Federal Reserve Bank of New York,
      on the Business Day next succeeding such day,

                                       7
<PAGE>
      provided that (a) if the day for which such rate is to be determined is
      not a Business Day, the Federal Funds Rate for such day shall be such rate
      on such transactions on the next preceding Business Day as so published on
      the next succeeding Business Day, and (b) if such rate is not so published
      for any day, the Federal Funds Rate for such day shall be the average rate
      charged to the Agent on such day on such transactions as determined in
      good faith by the Agent.

            "Fee Letter" shall mean that letter agreement dated as of June 29,
      2001, between the Agent and the Borrower.

            "Final Maturity" shall mean November 28, 2004 unless the Liquidity
      Condition shall not have been satisfied by November 15, 2002, in which
      event it shall mean November 15, 2002.

            "Financial Statements" shall mean statements of the financial
      condition as at the point in time and for the period indicated and
      consisting in all cases of at least a balance sheet and related statements
      of operations and cash flows, and in each year-end financial statement a
      statement of common stock and other stockholders' or partners' equity,
      and, when required by applicable provisions of this Agreement to be
      audited, accompanied by the unqualified certification of a nationally
      recognized firm of independent certified public accountants or other
      independent certified public accountants reasonably acceptable to the
      Agent and footnotes to any of the foregoing, all of which, unless
      otherwise indicated, shall be prepared in accordance with GAAP
      consistently applied (subject to normal year-end audit adjustments with
      respect to Financial Statements prepared as at a point in time other than
      year-end) and in comparative form with respect to the corresponding period
      of the preceding fiscal period.

            "GAAP" shall mean generally accepted accounting principles
      established by the Financial Accounting Standards Board or the American
      Institute of Certified Public Accountants and, unless the context requires
      use of a specified date, in effect in the United States from time to time.

            "Gas Services" means Medallion Gas Services, Inc., an Oklahoma
      corporation.

            "Governmental Authority" shall mean any nation, country,
      commonwealth, territory, government, state, county, parish, municipality,
      or other political subdivision and any entity exercising executive,
      legislative, judicial, regulatory, or administrative functions of or
      pertaining to government.

            "Hazardous Substances" shall mean flammables, explosives,
      radioactive materials, hazardous wastes, asbestos or any material
      containing asbestos, polychlorinated biphenyls (PCBs), petroleum,
      petroleum products, associated oil or natural gas exploration, production,
      and development wastes, or any substances defined as "hazardous
      substances," "hazardous materials," "hazardous wastes," or "toxic
      substances" under the Comprehensive Environmental Response, Compensation
      and Liability Act, as amended, the Superfund Amendments and
      Reauthorization Act, as amended, the Hazardous Materials Transportation
      Act, as amended, the Resource

                                       8
<PAGE>
      Conservation and Recovery Act, as amended, the Toxic Substances Control
      Act, as amended, or any other Requirement of Law.

            "Hedging Agreement" shall mean any Interest Hedging Agreement or any
      Commodity Hedging Agreement whether in effect as of the date hereof or
      hereafter entered into by the Borrower, including any Secured Hedging
      Agreement.

            "Highest Lawful Rate" shall mean, with respect to each Lender, the
      maximum non-usurious interest rate, if any (or, if the context so
      requires, an amount calculated at such rate), that at any time or from
      time to time may be contracted for, taken, reserved, charged, or received
      under laws applicable to such Lender, as such laws are presently in effect
      or, to the extent allowed by applicable law, as such laws may hereafter be
      in effect and which allow a higher maximum non-usurious interest rate than
      such laws now allow.

            "Indebtedness" shall mean, as to any Person, without duplication,
      (a) all liabilities (excluding reserves for deferred income taxes,
      deferred compensation liabilities, and other deferred liabilities and
      credits) which in accordance with GAAP would be included in determining
      total liabilities as shown on the liability side of a balance sheet, (b)
      all obligations of such Person evidenced by bonds, debentures, promissory
      notes, or similar evidences of indebtedness, (c) all other indebtedness of
      such Person for borrowed money, (d) Capitalized Lease Liabilities, (e) the
      Production Payment 2001 Obligations, (f) all obligations of others, to the
      extent any such obligation is secured by a Lien on the assets of such
      Person (whether or not such Person has assumed or become liable for the
      obligation secured by such Lien), (g) all guaranties of such Person of
      obligations and liabilities of the type described in the foregoing clauses
      (a) through (d).

            "Insolvency Proceeding" shall mean application (whether voluntary or
      instituted by another Person) for or the consent to the appointment of a
      receiver, trustee, conservator, custodian, or liquidator of any Person or
      of all or a substantial part of the Property of such Person, or the filing
      of a petition (whether voluntary or instituted by another Person)
      commencing a case under Title 11 of the United States Code, seeking
      liquidation, reorganization, or rearrangement or taking advantage of any
      bankruptcy, insolvency, debtor's relief, or other similar law of the
      United States or any other jurisdiction.

            "Insolvent" or "Insolvency" shall mean, with respect to any
      Multiemployer Plan, that such Plan is insolvent within the meaning of such
      term as used in Section 4245 of ERISA.

            "Intellectual Property" shall mean patents, patent applications,
      trademarks, trade names, copyrights, technology, trade secrets know-how,
      and processes.

            "Interest Expense" shall mean, for any period, the total interest
      expense (including interest expense attributable to capitalized leases) of
      the Borrower and its Subsidiaries, for such period, determined on a
      consolidated basis and in accordance with GAAP and shall include preferred
      stock dividends paid in cash, but shall exclude non- cash amortization of
      debt expense.

                                       9
<PAGE>
            "Interest Hedging Agreement" shall mean any interest rate swap, rate
      cap, rate floor, rate collar, forward agreement, or other exchange or rate
      protection agreement, entered into by the Borrower or any option with
      respect to any such transaction.

            "Interest Period" shall mean, subject to the limitations set forth
      in Section 2.4, with respect to any LIBO Rate Loan, a period commencing on
      the date such Loan is made or converted from a Loan of another type
      pursuant to this Agreement or the last day of the next preceding Interest
      Period with respect to such Loan and ending on the numerically
      corresponding day in the calendar month that is one, two, three or six
      months thereafter, as the Borrower may request in the Borrowing Request
      for such Loan.

            "Investment" shall mean, as to any Person, any stock, bond, note or
      other evidence of Debt or any other security (other than current trade and
      customer accounts) of, investment or partnership interest in or loan to,
      such Person.

            "L/C Exposure" shall mean, at any time, the aggregate maximum amount
      available to be drawn under outstanding Letters of Credit at such time.

            "Lender Party" shall mean any of the Collateral Agent, the Agent,
      each Lender and each Lender or Affiliate of a Lender which is a
      counterparty to a Secured Hedging Agreement with the Borrower.

            "Letter of Credit" shall mean any standby letter of credit issued
      for the account of the Borrower pursuant to Section 2.2.

            "Letter of Credit Application" shall mean the standard letter of
      credit application employed by the Agent, as the issuer of the Letters of
      Credit, from time to time in connection with letters of credit.

            "Letter of Credit Payment" shall mean any payment made by the Agent
      on behalf of the Lenders under a Letter of Credit, to the extent that such
      payment has not been repaid by the Borrower.

            "LIBO Rate" shall mean, with respect to any Interest Period for any
      LIBO Rate Loan, the interest rate equal to (a) the rate per annum (rounded
      upwards, if necessary, to the nearest 1/100 of 1%) determined on the basis
      of the rate for deposits in Dollars for a period equal to such Interest
      Period commencing on the first day of such Interest Period and appearing
      on Telerate Page 3750 at or about 11:00 a.m., London time, on the day two
      Business Days prior to the commencement of such Interest Period or (b) if
      such a rate does not appear on Telerate Page 3750, the average of the
      rates per annum (rounded upward, if necessary, to the nearest 1/100 of 1%)
      at which Dollar deposits in immediately available funds are offered to
      CIBC in the interbank LIBOR market at or about 11:00 a.m. (New York City
      time) two Business Days prior to the beginning of such Interest Period,
      and for a period approximately equal to such Interest Period.

            "LIBO Rate Loan" shall mean any Loan which the Borrower has
      requested in writing to bear interest at the Adjusted LIBO Rate and which
      is permitted by the terms hereof to bear interest at the Adjusted LIBO
      Rate.

                                       10
<PAGE>
            "Lien" shall mean any interest in Property securing an obligation
      owed to, or constituting a claim by, a Person other than the owner of such
      Property, whether such interest is based on common law, statute, or
      contract, and including the lien or security interest arising from a
      mortgage, ship mortgage, encumbrance, pledge, security agreement,
      conditional sale or trust receipt, margin agreement, or a lease,
      consignment, or bailment for security purposes (other than true leases or
      true consignments), liens of mechanics, materialmen, and artisans,
      maritime liens and reservations, exceptions, encroachments, easements,
      rights of way, covenants, conditions, restrictions, leases, and other
      Title exceptions and encumbrances affecting Property which secure an
      obligation owed to, or constitute a claim by, a Person other than the
      owner of such Property (for the purpose of this Agreement, a Person shall
      be deemed to be the owner of any Property which it has acquired or holds
      subject to a conditional sale agreement, financing lease, or other
      arrangement pursuant to which Title to the Property has been retained by
      or vested in some other Person for security purposes), and the filing or
      recording of any financing statement or other security instrument in any
      public office.

            "Loan" shall mean a Base Rate Loan or a LIBO Rate Loan made by any
      Lender to or for the benefit of the Borrower pursuant to this Agreement,
      each of which is a "type" of Loan hereunder and, without duplication, any
      payment made by the Agent as the issuing bank under a Letter of Credit
      and, without duplication, any payment made by a Lender to the Agent by
      reason of a Letter of Credit Payment.

            "Liquidity Condition" shall mean that (i) less than $20,000,000 in
      principal amount of the Borrower's Senior Notes are outstanding on August
      31, 2002 and (ii) the Borrower shall have cash plus Available Commitment
      of not less than the then outstanding principal amount of the Senior Notes
      on August 31, 2002; provided, however, that if the Borrower fails to
      satisfy one or both of clause (i) and (ii) on August 31, 2002, the
      Borrower shall have a seventy- five (75) day period in which to remedy
      such failure.

            "Loan Balance" shall mean, at any time, the aggregate outstanding
      principal balance of the Loans at such time.

            "Loan Documents" shall mean this Agreement, the Notes, the Fee
      Letter, any Subsidiary Guaranty, any Secured Hedging Agreement, the Letter
      of Credit Applications, the Letters of Credit, the Security Instruments,
      and all other documents and instruments now or hereafter delivered by the
      Borrower, any Mortgagor, any Subsidiary Guarantor or any of their
      respective Affiliates in favor or for the benefit of the Agent, the
      Collateral Agent, or any Lender Party pursuant to the terms of or in
      connection with this Agreement, the Notes, a Subsidiary Guaranty, any
      Secured Hedging Agreement, the Letter of Credit Applications, the Letters
      of Credit, or the Security Instruments, and all renewals, extensions,
      amendments, supplements, and restatements thereof.

            "Material Adverse Effect" shall mean in the reasonable determination
      of the Required Lenders, the occurrence or existence of any material
      adverse effect on the business, operations, Properties, condition
      (financial or otherwise), or prospects of the Borrower and the Subsidiary
      Guarantors or upon the ability of the

                                       11
<PAGE>
      Borrower and the Subsidiary Guarantors to perform their obligations under
      the Loan Documents.

            "Material Properties" shall mean, at any time, collectively (a) Oil
      and Gas Properties of the Borrower or any Subsidiary of the Borrower which
      constitute sixty- five percent (65%) of the net present value (determined
      in accordance with the most recent Reserve Reports provided to the Agent
      in accordance with Section 5.4) of all Oil and Gas Properties owned by
      such Persons (other than those described in the following clause (b))
      after giving effect, if applicable, to any secured Acquisition
      Indebtedness in respect of any such Property constituting Acquired
      Property (which Oil and Gas Properties, as of the Closing Date, are listed
      in the Reserve Report dated September 30, 2001 prepared by the Borrower,
      copies of which have been delivered to the Agent) but in any event, Oil
      and Gas Properties (other than those described in the following clause
      (b)) which at all times and from time to time have a Risk Adjusted Present
      Value equal to at least one hundred fifty percent (150%) of the sum of the
      principal amount of outstanding Loans plus L/C Exposure and (b) those
      Properties of the Borrower or any of its Subsidiaries from time to time
      subject to the Production Payment 2001 Facility. Notwithstanding the
      above, the value of the Material Properties not subject to the Production
      Payment 2001 Facility shall be equal to at least 90% of the Risk Adjusted
      Present Value of the properties not subject to the Production Payment 2001
      Facility.

            "Material Subsidiary" shall mean any direct or indirect Subsidiary
      of the Borrower other than a Subsidiary which engages in no commercial
      activities or a Subsidiary that has assets with a value of $1,000,000 or
      less.

            "Maximum Borrowing Base Amount" shall, so long as any Senior Notes
      are outstanding, mean, on the date of any Loan or issuance of a Letter of
      Credit, the greater of (i) $165,000,000 plus an amount to secure hedging
      obligations or (ii) fifteen percent (15%) of Adjusted Consolidated Net
      Tangible Assets (as defined in the indenture referred to in clause (i) of
      the definition of Public Debt), but not to exceed $190,000,000 prior to
      December 31, 2001, or $155,000,000 after December 31, 2001, less, in both
      cases, the remaining Production Payment 2001 Obligations; provided,
      however that, at any time when the aggregate principal amount of Loans of
      all Lenders outstanding hereunder plus the L/C Exposure exceeds
      $15,000,000, in no event shall the amount determined under clause (i) or
      (ii) above, on the date of any Loan or issuance of a Letter of Credit,
      exceed the amount of indebtedness constituting "Permitted Indebtedness"
      (as defined therein) under the further proviso of clause (i) of the
      definition of Permitted Indebtedness in the indenture referred to in
      clause (i) of the definition of Public Debt.

            "Medallion" means KCS Medallion Resources, Inc., a Delaware
      corporation.

            "Michigan Resources" means KCS Michigan Resources, Inc., a Delaware
      corporation.

            "Mortgage" shall mean any (a) Act of Mortgage and Security Agreement
      Securing Future Obligations or (b) any Open-End Line of Credit Mortgage,
      Deed of Trust, Indenture, Security Agreement, Financing Statement and
      Assignment of

                                       12
<PAGE>
      Production or any other mortgage or deed of trust or similar instrument
      executed by the Borrower or any Subsidiary of the Borrower in favor of the
      Collateral Agent for the benefit of the Lender Parties and creating a Lien
      on real property and other related assets of the Borrower or such
      Subsidiary of the Borrower, in each case as such may from time to time be
      amended, supplemented, restated or otherwise modified.

            "Mortgagor" shall mean the Borrower or any Subsidiary of the
      Borrower which is party to a Mortgage in favor of the Collateral Agent for
      the benefit of the Lender Parties.

            "Mortgaged Properties" shall mean all Oil and Gas Properties of the
      Borrower or any Subsidiary of the Borrower purported to be subject to a
      Lien in favor of the Collateral Agent to secure the Obligations.

            "Multiemployer Plan" shall mean a Plan which is a multiemployer plan
      as defined in Section 4001(a)(3) of ERISA.

            "National Enerdrill" means National Enerdrill Corporation, a New
      Jersey corporation.

            "Net Cash Proceeds" means, for any issuance of equity securities,
      the cash proceeds (including any cash payments actually received as a
      deferred payment of principal pursuant to a note, installment receivable,
      purchase price adjustment receivable or otherwise) of such issuance of
      equity securities net of (i) legal fees, accountant fees, investment
      banking fees, brokerage fees, finders fees, survey costs, Title insurance
      premiums, and other customary fees, costs and expenses actually incurred,
      paid or payable in connection therewith, (ii) taxes or other governmental
      fees or charges paid or payable as a result thereof and (iii) reasonable
      reserves for purchase price adjustments.

            "Net Income" shall mean, for any period, the net income (or loss) of
      the Borrower and its Subsidiaries for such period, determined on a
      consolidated basis and in accordance with GAAP.

            "Notes" shall mean certain promissory notes of the Borrower referred
      to in Section 2.1(c) payable to a Lender in the amount of the Facility
      Amount of such Lender in the form attached hereto as Exhibit I with
      appropriate insertions together with all renewals, extensions for any
      period, increases and rearrangements thereof.

            "Notice of Termination" shall have the meaning assigned to such term
      in Section 2.25.

            "NYMEX" shall mean the New York Mercantile Exchange.

            "Obligations" shall mean, without duplication, (a) all Indebtedness
      evidenced by the Notes, (b) the obligation of the Borrower to pay or
      reimburse the Agent, as the issuer of Letters of Credit, or the Lenders,
      as the case may be, for, amounts payable, paid (or deemed paid), or
      incurred with respect to Letters of Credit and amounts required to be paid
      pursuant to Section 2.2(e) or 2.13, (c) the undrawn, unexpired amount of
      all outstanding Letters of Credit, (d) the obligation of the Borrower for
      the payment of fees

                                       13
<PAGE>
      and expenses pursuant to the Loan Documents, (e) the obligations of each
      Subsidiary Guarantor under its Subsidiary Guaranty, (f) all amounts owing
      or to be owing by the Borrower under any Hedging Agreement with any Lender
      Party (including any Secured Hedging Agreement) now or hereafter arising,
      and (g) all other obligations and liabilities of the Borrower or its
      Subsidiaries to any of the Lender Parties, now existing or hereafter
      incurred, under, arising out of or in connection with any Loan Document,
      and to the extent that any of the foregoing includes or refers to the
      payment of amounts deemed or constituting interest, only so much thereof
      as shall have accrued, been earned and which remains unpaid at each
      relevant time of determination.

            "Oil and Gas Properties" shall mean fee, leasehold, or other
      interests in or under mineral estates or oil, gas, and other liquid or
      gaseous hydrocarbon leases with respect to Properties situated in the
      United States or offshore from any State of the United States, including
      overriding royalty and royalty interests, leasehold estate interests, net
      profits interests, production payment interests, and mineral fee
      interests, together with contracts executed in connection therewith and
      all tenements, hereditaments, appurtenances, and Properties appertaining,
      belonging, affixed, or incidental thereto.

            "PBGC" shall mean the Pension Benefit Guaranty Corporation
      established pursuant to SubTitle A of Title IV of ERISA or any entity
      succeeding to any or all of its functions under ERISA.

            "Percentage Share" shall mean, as to each Lender, the percentage
      such Lender's Facility Amount constitutes of the aggregate Facility Amount
      of all Lenders.

            "Permitted Liens" shall mean (a) Liens for taxes, assessments, or
      other governmental charges or levies not yet due or which (if foreclosure,
      distraint, sale, or other similar proceedings shall not have been
      initiated) are being contested in good faith by appropriate proceedings,
      and such reserve as may be required by GAAP shall have been made therefor,
      (b) Liens in connection with workers' compensation, unemployment insurance
      or other social security (other than Liens created by Section 302(f) or
      Section 4068 of ERISA), old-age pension, or public liability obligations
      which are not yet due or which are being contested in good faith by
      appropriate proceedings, if such reserve as may be required by GAAP shall
      have been made therefor, (c) Liens in favor of Governmental Authorities,
      vendors, carriers, warehousemen, repairmen, mechanics, workmen, and
      materialmen, and construction or similar Liens arising by operation of law
      (including Liens securing statutory or regulatory obligations) in the
      ordinary course of business in respect of obligations that are not
      past-due or which are being contested in good faith by appropriate
      proceedings, if such reserve as may be required by GAAP shall have been
      made therefor, (d) Liens in favor of operators and non-operators under
      joint operating agreements or similar contractual arrangements arising in
      the ordinary course of the business of the Borrower or any of its
      Subsidiaries to secure amounts owing, which amounts are not yet due or are
      being contested in good faith by appropriate proceedings, if such reserve
      as may be required by GAAP shall have been made therefor, (e) Liens under
      production sales agreements, division orders, operating agreements,
      unitization and pooling orders, and other agreements customary in the oil
      and gas business for processing, producing, transporting, marketing, and
      exchanging produced hydrocarbons

                                       14
<PAGE>
      securing obligations not constituting Indebtedness and provided that such
      Liens do not secure obligations to deliver hydrocarbons at some future
      date without receiving full payment therefor within 90 days of delivery,
      (f) the terms of the instruments evidencing the Oil and Gas Properties of
      the Borrower or any of its Subsidiaries, the Star Production Payments, the
      Production Payment 2001 Lien and documents listed and matters described
      under the heading "Permitted Encumbrances" or "Permitted Liens" in an
      exhibit to the Security Instruments, (g) easements, rights of way,
      restrictions, encumbrances and minor defects in the chain of Title which
      are customarily accepted in the oil and gas industry none of which
      materially interfere with the ordinary conduct of the business of the
      Borrower or any of its Subsidiaries or materially detract from the value
      or use of the Property to which they apply, (h) Liens in favor of the
      Collateral Agent for the benefit of any Lender Party and other Liens
      expressly permitted under the Security Instruments, and judgment Liens
      arising by operation of law or as the result of the abstracting of a
      judgment or similar action under the laws of any jurisdiction and not
      giving rise to an Event of Default, in respect of judgments that are not
      final and non-appealable judgments, so long as any appropriate legal
      proceedings which may have been duly initiated for the review of such
      judgment shall not have been finally terminated or the period within which
      such proceeding may be initiated shall not have expired.

            "Person" shall mean an individual, corporation, partnership, trust,
      unincorporated organization, limited liability company, government, any
      agency or political subdivision of any government, or any other form of
      entity.

            "Plan" shall mean, at any time, any employee benefit plan which is
      covered by ERISA and in respect of which the Borrower, any of the
      Subsidiaries of the Borrower or any Commonly Controlled Entity is (or, if
      such plan were terminated at such time, would under Section 4069 of ERISA
      be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

            "Pledge Agreement" means any of the Pledge Agreements executed by
      the Borrower or a Subsidiary of the Borrower in favor of the Collateral
      Agent for the benefit of the Lender Parties substantially in the form of
      Exhibit XII hereto or any similar agreement creating a Lien on equity
      interests in a Subsidiary of the Borrower in favor of the Collateral Agent
      for the benefit of the Lender Parties and in notes (excluding intercompany
      notes) payable to the Borrower or a Subsidiary of the Borrower, in each
      case as such may be amended, supplemented, restated or otherwise modified
      from time to time.

            "Preferred Stock" shall mean the Borrower's 5% Convertible Preferred
      Stock, par value $.01 per share.

            "Principal Office" shall mean the principal office of the Agent in
      New York, New York, presently located at 425 Lexington Avenue, 7th Floor,
      New York, New York 10017.

            "Production Payment 2001 Facility" means the transactions
      contemplated by the Purchase and Sale Agreement dated February 14, 2001,
      among KCS Resources, Inc.,

                                       15
<PAGE>
      KCS Energy Services, Inc., KCS Michigan Resources, Inc. and KCS Medallion
      Resources, Inc. and Star VPP, LP as in effect on August 1, 2001 providing
      for the sale by certain of the Borrower's Subsidiaries of the Star
      Production Payments.

            "Production Payment 2001 Lien" means collectively the Liens granted
      by Borrower's Subsidiaries pursuant to Section 16 of the two Production
      and Delivery Agreements dated effective as of February 1, 2001 in favor of
      Star VPP, LP, as Grantee.

            "Production Payment 2001 Obligations" means, as of any date on which
      the amount thereof is to be determined, the obligations of the Borrower or
      any of its Subsidiaries under the Production Payment 2001 Facility either
      recorded as liabilities in accordance with GAAP or as deferred revenues in
      accordance with GAAP.

            "Prohibited Transaction" shall have the meaning assigned to such
      term in Section 406 of ERISA or Section 4975 of the Code.

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

            "Public Debt" shall mean the obligations of the Borrower and its
      Subsidiaries under or in connection with (i) the Indenture dated as of
      January 15, 1996, by and among the Borrower, the Subsidiary Guarantors (as
      such term is defined therein) named therein, and Fleet National Bank of
      Connecticut, as Trustee, relating to the sale by the Borrower of its 11%
      Senior Notes due 2003, as amended by a First Supplemental Indenture dated
      as of December 2, 1996, Second Supplemental Indenture dated January 3,
      1997 and Third Supplemental Indenture dated as of February 20, 2001, and
      as hereinafter amended from time to time as permitted hereby and (ii) the
      Indenture dated as of January 15, 1998, by and among the Borrower, the
      Subsidiary Guarantors (as such term is defined therein) named therein, and
      State Street Bank and Trust Company, as Trustee, relating to the sale by
      the Borrower of its eight and seven-eighths percent (8 7/8%) Senior
      Subordinated Notes due 2006, as amended by a First Supplemental Indenture
      dated as of February 20, 2001 and as hereinafter amended from time to time
      as permitted hereby.

            "Qualified Purchaser" shall mean any domestic pension or publically
      traded mutual fund.

            "Qualified Swap Counterparty" shall mean (a) any of the Agent, the
      Collateral Agent, a Lender or any Affiliate of any of the foregoing, or
      (b) any other Person with a rating on its unsecured, long-term debt of BBB
      or better from Standard & Poor's and Baa2 or better from Moody's.

            "Regulation D" shall mean Regulation D of the Board of Governors of
      the Federal Reserve System (or any successor), as amended or supplemented
      from time to time.

            "Regulatory Change" shall mean, with respect to any Lender, the
      passage, adoption, institution, or modification of any federal, state,
      local, or foreign Requirement of Law (including Regulation D), or any
      interpretation, directive, or request (whether or

                                       16
<PAGE>
      not having the force of law) of any Governmental Authority or monetary
      authority charged with the enforcement, interpretation, or administration
      thereof, occurring after the Closing Date and applying to a class of
      lenders including such Lender or its Applicable Lending Office.

            "Release of Hazardous Substances" shall mean any emission, spill,
      release, disposal, or discharge, except in accordance with a valid permit,
      license, certificate, or approval of the relevant Governmental Authority,
      of any Hazardous Substance into or upon (a) the air, (b) soils or any
      improvements located thereon, (c) surface water or groundwater, or (d) the
      sewer or septic system, or the waste treatment, storage, or disposal
      system servicing any Property at any time owned, leased or operated by the
      Borrower or any Subsidiary of the Borrower.

            "Reorganization" shall mean, with respect to any Multiemployer Plan,
      that such Plan is in reorganization within the meaning of such term in
      Section 4241 of ERISA.

            "Reorganization Expenses" shall mean non-recurring expenses not to
      exceed $8,500,000 in the aggregate for purposes hereof incurred in
      connection with the Borrower's confirmed plan of reorganization pursuant
      to its Fourth Amended Joint Plan of Reorganization which was approved in
      the order dated January 30, 2001 of the United States Bankruptcy Court for
      the District of Delaware.

            "Replacement Lenders" shall have the meaning assigned to such term
      in Section 2.25.

            "Reportable Event" shall mean any of the events set forth in Section
      4043(b) of ERISA, other than those events as to which the thirty-day
      notice requirement under ERISA is waived in regulations issued by the
      PBGC.

            "Required Lenders" shall mean, at any time when no Loans are
      outstanding and L/C Exposure is zero, Lenders whose Percentage Shares of
      all Commitments total at least sixty-six and two-thirds percent (66 2/3%)
      of all such Commitments, and at any other time when any Loans are
      outstanding or L/C Exposure is greater than zero, or both, Lenders holding
      at least sixty-six and two-thirds percent (66 2/3%) of the aggregate
      principal amount of all Loans outstanding (without regard to any sale of a
      participation in any Loan) and L/C Exposure.

            "Required Payment" shall have the meaning assigned to such term in
      Section 2.9.

            "Requirement of Law" shall mean, as to any Person, any applicable
      law, treaty, ordinance, order, judgment, rule, decree, regulation, or
      determination of an arbitrator, court, or other Governmental Authority,
      including rules, regulations, orders, and requirements for permits,
      licenses, registrations, approvals, or authorizations, in each case as
      such now exist or may be hereafter amended and are applicable to or
      binding upon such Person or any of its Property or to which such Person or
      any of its Property is subject.

                                       17
<PAGE>
            "Reserve Report" shall mean each report provided by the Borrower
      pursuant to Section 5.4.

            "Reserve Requirement" shall mean, for any date on which the LIBO
      Rate is determined, the maximum aggregate rate (expressed as a percentage)
      of all reserves (including all basic, marginal, supplemental, emergency
      and other reserves and taking into account any transitional adjustments or
      other scheduled changes in reserve requirements) which are applicable to
      any Lender on such date of determination under regulations issued by the
      Federal Reserve System Board in respect of "Eurocurrency Liabilities" (as
      such term is used in Regulation D of the Federal Reserve System Board) or
      any successor category of such liabilities under Regulation D or any
      successor regulation. Each determination by the Agent of the applicable
      Reserve Requirement shall, in the absence of manifest error, be conclusive
      and binding.

            "Responsible Officer" shall mean, as to the Borrower or any
      Subsidiary of the Borrower, any of the following officers: Chief Executive
      Officer, Chairman, Chief Operating Officer, Chief Financial Officer,
      Treasurer or Secretary; and in any event, shall mean no other Person or
      Persons except as modified pursuant to a certificate accepted by the
      Agent.

            "Risk Adjusted Present Value" shall mean a net present value of the
      applicable Oil and Gas Properties after giving effect, if applicable, to
      any secured Acquisition Indebtedness in respect of any such Property
      constituting Acquired Property based on standard parameters determined in
      good faith by the Agent and Co-Arranger in their discretion in accordance
      with its customary standards for borrowing base credits.

            "Sales Period" shall mean each successive six- month period during
      the term hereof, commencing with the six- month period beginning October
      1, 2001.

            "Secured Hedging Agreement" shall have the meaning given it in
      Section 5.20.

            "Security Instruments" shall mean the security instruments executed
      and delivered in satisfaction of the condition set forth in Section
      3.1(f), and all other documents and instruments at any time executed as
      security for all or any portion of the Obligations, including without
      limitation security instruments executed pursuant to Section 2.13 or 5.18,
      as such instruments may be amended, restated, supplemented or otherwise
      modified from time to time.

            "Senior Notes" shall mean the Debt issued under the indenture
      referred to in clause (i) of the definition of Public Debt.

            "Single Employer Plan" shall mean any Plan which is covered by Title
      IV of ERISA, but which is not a Multiemployer Plan.

            "Specified Assets" shall mean certain assets of the Borrower and its
      Subsidiaries, which assets include certain Oil and Gas Properties located
      in the States of Colorado, Montana and Wyoming, all as described on
      Exhibit XI.

                                       18
<PAGE>
            "Star Production Payments" means collectively the term overriding
      royalty interest and the production payment conveyed to Star VPP, LP,
      pursuant to the Production Payment 2001 Facility.

            "Subordinated Indebtedness" shall mean Indebtedness of the Borrower
      having terms of payment which are subordinated to payment of the
      Obligations pursuant to terms and conditions and tenor that are no less
      favorable to the Lenders than those described on Exhibit II or that are
      approved in writing by the Required Lenders, and otherwise permitted
      pursuant to the provisions of this Agreement and includes the Indebtedness
      referred to in clause (ii) of the definition of the Public Debt.

            "Subsidiary" shall mean, with respect to any Person (the "parent")
      at any date, any corporation, limited liability company, partnership,
      trust, association or other entity the accounts of which would be
      consolidated with those of the parent in the parent's consolidated
      financial statements if such financial statements were prepared in
      accordance with GAAP as of such date, as well as any other corporation,
      limited liability company, partnership, trust, association or other entity
      (a) of which securities or other ownership interests representing more
      than 50% of the equity or more than 50% of the ordinary voting power or,
      in the case of a partnership, more than 50% of the general partnership
      interests are, as of such date, owned, controlled or held by the parent or
      one or more subsidiaries of the parent, or (b) that is, as of such date,
      otherwise controlled, by the parent or one or more subsidiaries of the
      parent, or (c) of which securities or other ownership interests are, as of
      such date owned, controlled or held by the parent or one or more
      subsidiaries of the parent and either (i) which together with its
      Subsidiaries during any quarter has more than 10% of the Net Income or
      Adjusted EBITDA of the parent or (ii) holds, directly or indirectly, 10%
      of the consolidated assets of the parent and its subsidiaries.

            "Subsidiary Guarantor" shall mean any Subsidiary of the Borrower
      which executes a Subsidiary Guaranty.

            "Subsidiary Guaranty" shall mean any guaranty in favor of each of
      the Lender Parties substantially in the form of Exhibit XIV, delivered
      pursuant to Section 3.1(a) or Section 5.18, in each case as the same may
      be amended, supplemented, restated or otherwise modified.

            "Sufficient Copies" shall mean that number of copies as shall
      reasonably be requested from time to time by the Agent.

            "Superfund Site" shall mean those sites listed on the Environmental
      Protection Agency National Priority List and eligible for remedial action
      or any comparable state registries or list in any state of the United
      States.

            "Taxes" shall have the meaning assigned to such term in Section
      2.24.

            "Terminated Lender" shall have the meaning assigned to such term in
      Section 2.25.

                                       19
<PAGE>
            "Termination Date" shall have the meaning assigned to such term in
      Section 2.25.

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

            "VPP Subsidiaries" shall mean one or more Subsidiaries of the
      Borrower formed for the purpose of acquiring one or more production
      payment or term overriding royalty interest investments from any oil and
      gas producer.

            "VPP Subsidiaries Investment" shall mean the investment by Borrower
      or its Subsidiaries of up to $20,000,000, in the aggregate, of capital in
      one or more VPP Subsidiaries.

            "Working Capital" shall mean for any day the difference between the
      Borrower's current assets and current liabilities on a consolidated basis,
      each as stated on the Borrower's consolidated balance sheet on each day;
      provided, that for purposes hereof, current assets shall be deemed to
      include the then Available Commitment and current liabilities shall be
      deemed not to include the current portion, if any, of the Notes, the L/C
      Exposure or the Senior Notes.

      1.3 Undefined Financial Accounting Terms. Undefined financial accounting
terms used in this Agreement shall be defined according to GAAP at the time in
effect.

      1.4 References. References in this Agreement to Exhibit, Article, or
Section numbers shall be to Exhibits, Articles, or Sections of this Agreement,
unless expressly stated to the contrary. References in this Agreement to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears. References in this Agreement to "includes" or
"including" shall mean "includes, without limitation," or "including, without
limitation," as the case may be. References in this Agreement to statutes,
sections, or regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending, replacing, succeeding or
supplementing such statutes, sections, or regulations. Items within a
disjunctive clause containing the disjunction "or" are not exclusive of other
items in such disjunctive clause.

      1.5 Articles and Sections. This Agreement, for convenience only, has been
divided into Articles and Sections; and it is understood that the rights and
other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.

      1.6 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate.

                                       20
<PAGE>
      1.7 Incorporation of Exhibits. The Exhibits attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for all
purposes.

      1.8 Knowledge. As used herein "knowledge" or "knowledge and belief" of the
Borrower or any Subsidiary of the Borrower shall mean the knowledge of any
executive officer of the Borrower or such Subsidiary; provided, however, that in
the case of any matter covered by Sections 4.14 and 5.6 relating to an Oil and
Gas Property of the Borrower or a Subsidiary of the Borrower, such "knowledge"
or "knowledge and belief" shall mean (a) in the case of an Oil and Gas Property
operated by the Borrower or a Subsidiary of the Borrower, the knowledge of the
highest ranking field personnel of the Borrower or such Subsidiary assigned to
such Property and (b) in the case of an Oil and Gas Property of the Borrower or
a Subsidiary of the Borrower that is not operated by the Borrower or such
Subsidiary, the knowledge of an operations manager having responsibility for
such Property.

                                  ARTICLE II.

                               TERMS OF FACILITIES

      2.1 Loans.

                  (a) Upon the terms and conditions and relying on the
            representations and warranties contained in this Agreement and the
            other Loan Documents, each Lender severally agrees to make Loans
            during the Commitment Period on a revolving basis to or for the
            benefit of the Borrower, in an aggregate principal amount not to
            exceed at any time outstanding the lesser of the Facility Amount of
            such Lender or the Percentage Share of such Lender of the Borrowing
            Base then in effect; provided, however, that notwithstanding the
            foregoing (i) the outstanding principal balance of all Loans of all
            Lenders plus the L/C Exposure shall not exceed the lesser of the
            Commitment Amount or the Borrowing Base at any time or, if any
            Senior Notes are outstanding, the Maximum Borrowing Base Amount in
            effect on the date of any such loan, and (ii) the sum of the
            outstanding principal balance of all Loans by any Lender plus the
            Percentage Share of such Lender of the L/C Exposure shall not exceed
            an amount equal to the Percentage Share of such Lender multiplied by
            the lesser of the Commitment Amount or the Borrowing Base at any
            time or, if any Senior Notes are outstanding, the Maximum Borrowing
            Base Amount in effect on the date of any such loan. Loans shall be
            made from time to time on any Business Day designated by the
            Borrower in a Borrowing Request.

                  (b) Subject to the terms of this Agreement, during the
            Commitment Period, the Borrower may borrow, repay, and reborrow and
            convert Loans of one type or with one Interest Period into Loans of
            another type or with a different Interest Period. Except for
            prepayments made pursuant to Section 2.13, each borrowing,
            conversion, and prepayment of principal, in the case of Base Rate
            Loans, shall be in an amount at least equal to $100,000 and in
            multiples of $100,000 thereafter and, in the case of LIBO Rate
            Loans, shall be in an amount at least equal to $1,000,000 and in
            multiples of $100,000 thereafter. Each

                                       21
<PAGE>
            borrowing, prepayment, or conversion of or into a Loan of a
            different type or, in the case of a LIBO Rate Loan, having a
            different Interest Period, shall be deemed a separate borrowing,
            conversion, and prepayment for purposes of the foregoing, one for
            each type of Loan or Interest Period. Anything in this Agreement to
            the contrary notwithstanding, the aggregate principal amount of LIBO
            Rate Loans by all of the Lenders having the same Interest Period
            shall be at least equal to $1,000,000; and if any borrowing of LIBO
            Rate Loans having the same interest period would otherwise be in a
            lesser principal amount, such Loans shall be Base Rate Loans during
            such period.

                  (c) Not later than 1:00 p.m. New York, New York time, on the
            date specified for each borrowing of a Loan, each Lender shall make
            available to the Agent an amount equal to the Percentage Share of
            such Lender of the borrowing to be made on such date, at an account
            designated by the Age nt, for the account of the Borrower. The
            amount so received by the Agent shall, subject to the terms and
            conditions hereof, be made available to the Borrower in immediately
            available funds, in an account designated from time to time by the
            Borrower. All Loans by each Lender shall be maintained at the
            Applicable Lending Office of such Lender and shall be evidenced by
            the Note of such Lender.

                  (d) The failure of any Lender to make any Loan required to be
            made by it hereunder shall not relieve any other Lender of its
            obligation to make any Loan required to be made by it, and no Lender
            shall be responsible for the failure of any other Lender to make any
            Loan.

      2.2 Letters of Credit.

                  (a) Upon the terms and conditions and relying on the
            representations and warranties contained in this Agreement, the
            Agent, as issuing bank for the Lenders, agrees, from the date of
            this Agreement until the date which is 30 days prior to the
            Commitment Termination Date, to issue, on behalf of the Lenders in
            their respective Percentage Shares, Letters of Credit for the
            account of the Borrower and to renew and extend such Letters of
            Credit. Letters of Credit shall be issued, renewed, or extended from
            time to time on any Business Day designated by the Borrower
            following the receipt in accordance with the terms hereof by the
            Agent of the written request by a Responsible Officer of the
            Borrower and a Letter of Credit Application. Letters of Credit shall
            be issued in such amounts as the Borrower may request; provided,
            however, that (i) no Letter of Credit shall have an expiration date
            which is (1) more than 365 days after the issuance thereof or (2)
            subsequent to one Business Day prior to the Commitment Termination
            Date or, in the case of standby Letters of Credit posted to secure
            workman's compensation or replugging obligations or environmental
            remediation, subsequent to the Commitment Termination Date, (ii) the
            outstanding principal balance of all Loans of all Lenders plus the
            L/C Exposure shall not exceed the lesser of the Commitment Amount or
            the Borrowing Base at any time or, if any Senior Notes are
            outstanding, the Maximum Borrowing Base Amount in effect on the date
            of issuance of such Letter of Credit, (iii) the L/C

                                       22
<PAGE>
            Exposure shall not exceed on the date of issuance of any Letter of
            Credit the product of 0.20 times the then Borrowing Base, and (iv)
            no Letter of Credit shall be issued in an amount less than $50,000.

                  (b) Upon the issuance of any Letter of Credit, each Lender
            shall be deemed to purchase a participation from the Agent in the
            relevant Letter of Credit in an amount equal to the Percentage Share
            of such Lender of the maximum amount which is or at any time may
            become available to be drawn thereunder.

                  (c) Each Lender shall be unconditionally and irrevocably
            liable, without regard to the occurrence of any Default or Event of
            Default, to the extent of the Percentage Share of such Lender, to
            reimburse, on demand, the Agent, as the issuer of such Letter of
            Credit, for the amount of each Letter of Credit Payment under such
            Letter of Credit. Each Letter of Credit Payment shall be deemed to
            be a Base Rate Loan by each Lender with respect to such Lender's
            Percentage Share of such Letter of Credit Payment and shall to such
            extent be deemed a Base Rate Loan under and shall be evidenced by
            the Note of such Lender. In the event that a Default has occurred
            and is continuing under Sections 7.1(f) or (g), an amount equal to
            any Letter of Credit Payment made after the occurrence and during
            the continuance of such Default shall be payable by the Borrower
            upon demand by the Agent. Notwithstanding anything contained herein
            or any other Loan Document (including any Letter of Credit
            Application), but subject to the provisions of Section 2.13, neither
            the Agent as the issuing bank nor any such Lender shall have any
            right to require the Borrower to prepay any amounts for which the
            Agent as the issuing bank or any Lender might become liable under
            any Letter of Credit.

                  (d) EACH LENDER AGREES TO INDEMNIFY THE AGENT, AS THE ISSUER
            OF EACH LETTER OF CREDIT, AND THE OFFICERS, DIRECTORS, EMPLOYEES,
            AGENTS, ATTORNEYS-IN-FACT AND AFFILIATES OF THE AGENT (TO THE EXTENT
            NOT REIMBURSED BY THE BORROWER AND WITHOUT LIMITING THE OBLIGATION
            OF THE BORROWER TO DO SO), RATABLY ACCORDING TO THE PERCENTAGE SHARE
            OF SUCH LENDER, FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
            OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
            COSTS, EXPENSES AND DISBURSEMENTS OF ANYKIND WHATSOEVER WHICH MAY AT
            ANY TIME (INCLUDING ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE
            OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT) BE IMPOSED
            ON, INCURRED BY OR ASSERTED AGAINST THE AGENT AS THE ISSUER OF SUCH
            LETTER OF CREDIT OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES,
            AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES IN ANY WAY RELATING TO OR
            ARISING OUT OF THIS AGREEMENT OR SUCH LETTER OF CREDIT OR ANY ACTION
            TAKEN OR OMITTED BY THE AGENT AS THE ISSUER OF SUCH LETTER OF CREDIT
            OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
            ATTORNEYS-IN-FACT OR AFFILIATES UNDER OR IN CONNECTION WITH ANY OF
            THE FOREGOING, INCLUDING ANY LIABILITIES, CLAIMS, OBLIGATIONS,
            LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
            EXPENSES AND DISBURSEMENTS IMPOSED, INCURRED OR ASSERTED AS A RESULT
            OF THE NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT

                                       23
<PAGE>
            AS THE ISSUER OF SUCH LETTER OF CREDIT OR ANY OF ITS OFFICERS,
            DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES;
            PROVIDED THAT NO LENDER (OTHER THAN THE AGENT AS THE ISSUER OF A
            LETTER OF CREDIT) SHALL BE LIABLE FOR THE PAYMENT OF ANY PORTION OF
            SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
            JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING SOLELY
            FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT AS THE
            ISSUER OF A LETTER OF CREDIT. THE AGREEMENTS IN THIS SECTION 2.2(D)
            SHALL SURVIVE THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND THE
            TERMINATION OF THIS AGREEMENT.

                  (e) Upon the occurrence and during the continuance of an Event
            of Default, an amount equal to the amount of the then contingent
            liability of the Agent as Letter of Credit issuer and the other
            Lenders under each outstanding Letter of Credit shall, at the option
            of the Agent and without demand upon or notice to the Borrower, be
            deemed (as between the Borrower and the Agent) to have been paid or
            disbursed by the Agent under such Letter of Credit (notwithstanding
            that such amount may not in fact have been so paid or disbursed),
            and the Borrower shall be obligated (i) forthwith to reimburse the
            Agent for the amount deemed to have been so paid or disbursed by the
            Agent, and (ii) if the Agent, in its discretion, so demands, to pay
            to the Agent, forthwith on demand, such additional amounts as may be
            required so that the aggregate of all amounts previously paid by the
            Borrower to the Agent under this Section 2.2(e) and Sections 2.13
            and 6.5, and not theretofore applied to the payment of amounts due
            and payable by the Borrower to the Agent with respect to such Letter
            of Credit shall equal the amount of the then contingent liability of
            the Agent (and the other Lender Parties) under such Letter of
            Credit. Any amounts so received by the Agent pursuant to the
            provisions of the preceding sentence shall be held as collateral
            security for: first, the repayment, as and when payable hereunder,
            of the Borrower's Obligations in connection with such Letter of
            Credit; and second, all other Obligations. The cash collateral so
            held may, if the Agent agrees in its sole discretion, at the written
            request of the Borrower, be invested as set forth in Section 2.13;
            provided that the Agent, on behalf of the Lenders, shall have a
            perfected security interest in such investment at all times. Any
            losses of such investments shall be charged against the principal
            amount invested. Neither the Agent nor any Lender shall be liable
            for any loss resulting from any investment of such cash collateral
            at the Borrower's request. The Agent is not obligated hereby, or by
            any other Loan Document, to make or maintain any investment except
            upon timely written request of an officer of the Borrower. If and to
            the extent that (a) all Obligations then due and payable of the
            Borrower have been fully paid and satisfied, and the commitments and
            obligations of the Agent (and the other Lender Parties) under such
            Letter of Credit and related documents and all Loan Documents have
            terminated or (b) no Event of Default shall any longer be
            continuing, in the case of payments made under this Section 2.2(e),
            the Agent shall pay to the Borrower, upon the Borrower's request
            therefor, all amounts previously paid to the Agent by the Borrower
            pursuant to this Section 2.2(e), 2.13 or 6.5 and not theretofore
            applied by the Agent to reduce Obligations then due and payable.

                                       24
<PAGE>
      2.3 [Intentionally Blank].

      2.4 Limitations on Interest Periods. Each Interest Period for LIBO Rate
Loans selected by the Borrower (a) which commences on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar month
shall end on the last Business Day of the appropriate subsequent calendar month,
(b) which would otherwise end on a day which is not a Business Day shall end on
the next succeeding Business Day (or, if such next succeeding Business Day falls
in the next succeeding calendar month, on the next preceding Business Day), (c)
which would otherwise end after the Final Maturity then in effect, shall end on
the Final Maturity then in effect, and (d) shall have a duration of not less
than one month and, if any Interest Period would otherwise be a shorter period,
the relevant Loan shall be a Base Rate Loan during such period.

      2.5 Limitation on Types of Loans. Borrowings of Loans may be outstanding
as either Base Rate Loans or LIBO Rate Loans as selected by the Borrower.
Anything herein to the contrary notwithstanding, no more than ten (10) separate
Loans shall be outstanding at any one time, with, for purposes of this Section,
all Base Rate Loans constituting one Loan, and all LIBO Rate Loans for the same
Interest Period constituting one Loan. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any borrowing of LIBO Rate Loans for any Interest Period therefor:

                  (a) the Agent determines (which determination shall be
            conclusive, absent manifest error) that quotations of interest rates
            for the deposits referred to in the definition of "LIBO Rate" in
            Section 1.2 are not being provided in the relevant amounts or for
            the relevant maturities for purposes of determining the rate of
            interest for such Loan as provided in this Agreement; or

                  (b) the Agent or the Required Lenders determine (which
            determination shall be conclusive, absent manifest error) that the
            rates of interest referred to in the definition of "LIBO Rate" in
            Section 1.2 upon the basis of which the rate of interest for such
            Loan for such Interest Period is to be determined do not adequately
            cover the cost to the Lenders of making or maintaining such Loans
            for such Interest Period, then the Agent shall give the Borrower and
            the Lenders prompt notice thereof; and so long as such condition
            remains in effect, the Lenders shall be under no obligation to make
            LIBO Rate Loans or to convert Base Rate Loans into LIBO Rate Loans,
            and the Borrower shall, on the last day of the then current Interest
            Period for each outstanding LIBO Rate Loan, either prepay such LIBO
            Rate Loan or convert such Loan into a Base Rate Loan in accordance
            with Section 2.14.

      2.6 Use of Loan Proceeds and Letters of Credit.

      Proceeds of all Loans and Letters of Credit shall be used solely by the
Borrower for general corporate purposes of the Borrower or its Subsidiaries as
they relate to the acquisition, development and production of Oil and Gas
Properties and the repurchase and retirement of Senior Notes and Working
Capital.

                                       25
<PAGE>
      2.7 Interest. Subject to the terms of this Agreement (including Section
2.20), interest on the Loans shall accrue and be payable at a rate per annum
equal to the lesser of (a) the Highest Lawful Rate or (b) the Adjusted Base Rate
for each Base Rate Loan or the Adjusted LIBO Rate for each LIBO Rate Loan.
Notwithstanding the foregoing, interest on outstanding principal amounts of the
Loans and, to the extent permitted by applicable law, interest on past- due
interest, fees and other Obligations, shall accrue at the Default Rate upon
maturity and during the continuance of an Event of Default and shall be payable
upon demand by the Agent at any time as to all or any portion of such interest.
In the event that the Borrower fails to select the duration of any Interest
Period for any Loan comprised of a LIBO Rate Loan within the time period and
otherwise as provided herein, such Loan (if outstanding as a LIBO Rate Loan)
will be automatically converted into a Base Rate Loan on the last day of the
then current Interest Period for such Loan or (if outstanding as a Base Rate
Loan) will remain as, or (if not then outstanding will be made as, a Base Rate
Loan. Interest provided for herein shall be calculated on unpaid sums actually
advanced and outstanding pursuant to the terms of this Agreement and only for
the period from the date or dates of such advances until repayment.

      2.8 Repayment of Loans and Interest.

                  (a) Accrued and unpaid interest on each outstanding Base Rate
            Loan shall be due and payable quarterly commencing on the 31st day
            of December, 2001, and on the last Business Day of each third
            calendar month thereafter while any Base Rate Loan remains
            outstanding, the payment in each instance to be the amount of
            interest which has accrued and remains unpaid in respect of the
            relevant Loan. Accrued and unpaid interest on each outstanding LIBO
            Rate Loan shall be due and payable on the last day of the Interest
            Period for such LIBO Rate Loan and, in the case of any Interest
            Period in excess of three months, on the day of the third calendar
            month following the commencement of such Interest Period
            corresponding to the day of the calendar month on which such
            Interest Period commenced or if there is no such corresponding day,
            on the last Business Day of the month, the payment in each instance
            to be the amount of interest which has accrued and remains unpaid in
            respect of the relevant Loan.

                  (b) The outstanding principal balance of all Loans, together
            with all accrued and unpaid interest thereon, shall be due and
            payable at Final Maturity.

      2.9 General Terms.

                  (a) The outstanding principal balance of the Notes of each
            Lender reflected in the records of such Lender shall be deemed
            rebuttably presumptive evidence of the principal amount owing on
            such Notes. The liability for payment of principal and interest
            evidenced by each such Note shall be limited to principal amounts
            actually advanced and outstanding pursuant to this Agreement and
            interest on such amounts calculated in accordance with this
            Agreement.

                  (b) Unless the Agent shall have been notified by a Lender or
            the Borrower prior to the date on which any of them is scheduled to
            make payment to the Agent of (in the case of a Lender) the proceeds
            of a Loan to be made by such

                                       26
<PAGE>
            Lender hereunder or (in the case of the Borrower) a payment to the
            Agent for the account of one or more of the Lenders hereunder (such
            payment, in either case, being herein called the "Required
            Payment"), which notice shall be effective upon receipt, that it
            does not intend to make the Required Payment to the Agent, the Agent
            may assume that the Required Payment has been made and, in reliance
            upon such assumption, may (but shall not be required to) make the
            amount thereof available to the intended recipient on such date. If
            such Lender or the Borrower, as the case may be, have not in fact
            made the Required Payment to the Agent, the recipient of such
            payment shall, on demand, repay to the Agent for its account the
            amount so made available together with interest thereon in respect
            of each day during the period commencing on the date such amount was
            so made available by the Agent until the date the Agent recovers
            such amount at a rate per annum equal to, in the case of a Lender as
            recipient, the Federal Funds Rate or, in the case of the Borrower as
            recipient, the Adjusted Base Rate.

      2.10 Time, Place, and Method of Payments. All payments required pursuant
to this Agreement or the Notes shall be made without set-off or counterclaim in
U.S. Dollars and in immediately available funds. All payments by the Borrower
shall be deemed received on the next Business Day following receipt if such
receipt is after 2:00 p.m., Eastern Standard or Daylight Saving Time, as the
case may be, on any Business Day, and shall be made to the Agent at the
Principal Office. Except as provided to the contrary herein, if the due date of
any payment hereunder or under any Note would otherwise fall on a day which is
not a Business Day, such date shall be extended to the next succeeding Business
Day, and interest shall be payable for any principal so extended for the period
of such extension.

      2.11 Pro Rata Treatment: Adjustments.

                  (a) Except to the extent otherwise expressly provided herein,
            (i) each borrowing of Loans pursuant to this Agreement shall be made
            from the Lenders pro rata in accordance with their respective
            Percentage Shares, (ii) each payment by the Borrower of fees payable
            by the Borrower in respect of Loans shall be made for the account of
            the Lenders pro rata in accordance with their respective Percentage
            Shares, (iii) each payment of principal of Loans shall be made for
            the account of the Lenders pro rata in accordance with their
            respective shares of the Loan Balance, (iv) each payment of interest
            on Loans shall be made for the account of the Lenders pro rata in
            accordance with their respective Percentage Shares of the aggregate
            amount of such interest due and payable to the Lenders, (v) each
            payment by the Borrower of fees payable by the Borrower in respect
            of Letters of Credit (other than the fronting fee payable to the
            Agent or any transactional fees and expenses, including amendment
            fees or issuance fees payable to the Agent) shall be made for the
            account of the Lenders pro rata in accordance with their respective
            Percentage Shares.

                  (b) Subject to clause (e) below, the Agent shall distribute
            all payments for the account of the Lenders with respect to the
            Loans and the Letters of Credit to the Lenders promptly upon receipt
            in like funds as received. In the event that any payments made
            hereunder by the Borrower at any particular time are

                                       27
<PAGE>
            insufficient to satisfy in full the Obligations due and payable at
            such time, such payments shall be applied (i) first, to fees and
            expenses due pursuant to the terms of this Agreement or any other
            Loan Document, allocated pro rata to each of the Lender Parties in
            accordance with the fees and expenses due and payable to it as a
            percentage of the aggregate fees and expenses due and payable by the
            Borrower, (ii) second, to accrued interest pro rata based on the
            accrued interest due and payable to each Lender as a percentage of
            the aggregate interest due and payable by the Borrower on such date,
            (iii) third, pro rata (x) to the Loan Balance, which shall be
            applied to the principal of the Loans then due and payable in the
            order which the Borrower specifies or, if the Borrower shall not so
            specify or if an Event of Default has occurred and is continuing, as
            the Required Lenders shall determine in their sole discretion and
            (y) to the payment of Obligations pursuant to the Secured Hedging
            Agreements to the extent such are due and payable as of such date,
            and (iv) last, to any other Obligations then due and payable.

                  (c) If any Lender (or any Affiliate of any Lender in the case
            of any Obligation in respect of a Secured Hedging Agreement) (for
            purposes of this Section, a "Benefitted Lender") shall at any time
            receive any payment of all or part of its portion of the
            Obligations, or receive any Collateral in respect of its
            Obligations, or any proceeds by realization on or with respect to
            any Collateral securing any of such Obligations (whether voluntarily
            or involuntarily, by set-off, pursuant to events or proceedings of
            the nature referred to in Sections 7.1(f) or 7.1(g), or otherwise)
            in an amount greater than such Lender (or Affiliate, if applicable)
            was entitled to receive with respect to its Obligations pursuant to
            the terms hereof and of the other Loan Documents, such Benefitted
            Lender shall purchase for cash from the other Lenders (or Affiliates
            thereof, if applicable) such portion of the Obligations of such
            other Lenders (or Affiliates thereof, if applicable), or shall
            provide such other Lenders (or Affiliates thereof, if applicable)
            with the benefits of any such Collateral or the proceeds thereof, as
            shall be necessary to cause such Benefitted Lender to share the
            excess payment or benefits of such Collateral or proceeds with each
            of the Lenders (or Affiliates, if applicable) according to the terms
            hereof. If all or any portion of such excess payment or benefits is
            thereafter recovered from such Benefitted Lender, such purchase
            shall be rescinded and the purchase price and benefits returned by
            such Lenders (or Affiliates thereof, if applicable), to the extent
            of such recovery, but without interest. The Borrower agrees that
            each such Lender (or Affiliate thereof, if applicable) so purchasing
            a portion of the Obligations of another Lender (or Affiliate of such
            Lender, if applicable) may exercise all rights of payment (including
            rights of set-off) with respect to such portion as fully as if such
            Lender (or Affiliate thereof, if applicable) were the direct holder
            of such portion. If any Lender (or Affiliate thereof, if applicable)
            ever receives, by voluntary payment, exercise of rights of set-off
            or banker's lien, counterclaim, cross-action or otherwise, any funds
            of the Borrower to be applied to the Obligations, or receives any
            proceeds by realization on or with respect to any Collateral, all
            such funds and proceeds shall be forwarded immediately to the Agent
            for distribution in accordance with the terms of this Agreement.

                                       28
<PAGE>
                  (d) [Intentionally Blank]

                  (e) Notwithstanding any of the provisions of this Section
            2.11, (i) after the occurrence and during the continuance of an
            Event of Default, the Lenders may apply payments in respect of the
            Obligations then due and payable in such manner as the Required
            Lenders shall determine in their sole discretion.

      2.12 Borrowing Base Determinations.

                  (a) The Borrowing Base as of the Closing Date is agreed by the
            Borrower and the Lenders to be $32,500,000; provided that
            notwithstanding the foregoing, in the event that prior to the
            initial redetermination of the Borrowing Base pursuant to the
            provisions of this Section 2.12 (other than pursuant to this clause
            (a)) one or more additional Lenders shall become party to this
            Agreement and as a result the aggregate Facility Amounts of all of
            the Lenders shall be in excess of $32,500,000, then, for purposes of
            this Agreement, the Borrowing Base shall automatically increase by
            an amount equal to the lesser of $2,500,000 or the amount by which
            the aggregate Facility Amounts of all of the Lenders including such
            additional Lenders is in excess of $32,500,000.

                  (b) The Borrowing Base shall be redetermined by the Agent,
            with the consent of the Lenders, semi-annually effective as of each
            April 1 and October 1, commencing April 1, 2002, on the basis of
            information supplied by the Borrower in compliance with the
            provisions of this Agreement, including Reserve Reports, and all
            other information available to the Agent and the Lenders. In
            addition, the Agent, with the consent of the Lenders, shall, in the
            normal course of business following a request of the Borrower,
            redetermine the Borrowing Base; provided, however, (i) the Agent and
            the Lenders shall not be obligated to respond to more than one (1)
            such request during any calendar year in addition to each scheduled
            semi-annual redetermination provided for above and (ii) no such
            discretionary redetermination of the Borrowing Base shall be
            permitted prior to January 1, 2002. Notwithstanding the foregoing,
            the Agent, with the consent of the Lenders, may at its discretion
            redetermine the Borrowing Base at any other time and from time to
            time; provided that, the Agent and the Lenders may not redetermine
            the Borrowing Base more that one (1) time during any calendar year
            and no discretionary redetermination of the Borrowing Base by the
            Agent and the Lenders shall be permitted prior to January 1, 2002.

                  (c) In accordance with the preceding subparagraph (b), a
            preliminary determination of the Borrowing Base shall be made by the
            Agent within thirty (30) days of the Agent's receiving all of the
            information required under this Agreement in connection therewith
            and, upon making such initial determination (which preliminary
            determination may not exceed the Maximum Borrowing Base then in
            effect), the Agent shall notify the Lenders of such preliminary
            Borrowing Base determination. The Lenders, as required below, shall
            approve such determination by written notice to the Agent within ten
            (10) Business Days of the giving of notice of such determination by
            the Agent to such Lenders; provided,

                                       29
<PAGE>
            however that failure by any Lender to confirm in writing the Agent's
            determination of the Borrowing Base shall be, and shall be deemed, a
            rejection of such determination. Any change in the Borrowing Base
            (other than the automatic increase provided in clause (a) of this
            Section 2.12) shall be subject to the credit approval processes of
            the Lenders then in effect for loans of this type. If the Lenders or
            Required Lenders, as the case may be, fail to approve such
            preliminary determination of the Borrowing Base made by the Agent
            pursuant to this Section 2.12 during such ten (10) Business Day
            period, then the Lenders shall as soon as practicable, but in no
            event later than sixty (60) days after the expiration of such ten
            (10) Business Day period, make a determination of the Borrowing Base
            based on their sole discretion in accordance with their respective
            customary practices and standards for oil and gas loans and in
            accordance with the succeeding subparagraph (d). Upon agreement by
            the Agent and the Lenders as so required of the amount of credit to
            be made available to the Borrower hereunder, the Agent shall, by
            written notice to the Borrower and the Lenders, designate the new
            Borrowing Base available to the Borrower. During such 60-day period,
            the Borrowing Base theretofore in effect shall remain in effect. Any
            increase in the Borrowing Base shall require the consent of all of
            the Lenders. Any decrease in the Borrowing Base and any continuation
            of the Borrowing Base at the same level shall require the consent of
            the Required Lenders.

                  (d) In connection with any determination or redetermination of
            the Borrowing Base, the Agent and each Lender shall evaluate the Oil
            and Gas Properties in accordance with their then existing customary
            lending procedures for evaluating oil and gas reserves and related
            assets for loans of this type and in making such determination, the
            Agent and the Lenders shall consider reserve/engineering
            information, location of Oil and Gas Properties, total indebtedness
            of the Borrower and its Subsidiaries (and the terms of such
            Indebtedness), financial reports, commodity price forecasts, reserve
            adjustment factors, the discount rate used in calculating the
            Borrowing Base and any other information and factors deemed
            pertinent by the Agent and the Lenders for loans of this type made
            to similar borrowers, in their sole discretion from time to time in
            each case in accordance with their then existing respective
            customary lending practices for evaluating oil and gas reserves and
            related assets. Notwithstanding the foregoing provisions of this
            Section if at any time the preliminary Borrowing Base
            redetermination by the Agent results in an increase in the Borrowing
            Base and such Borrowing Base is not approved unanimously by all the
            Lenders, then, in such event, during the next 60 day period the
            Borrower may, at its election, terminate the Commitments of such
            dissenting Lenders pursuant to the procedures set forth in Section
            2.25. At the end of such 60 day period, the Borrowing Base shall be
            an amount agreed to by the Agent and all of the Lenders.
            Furthermore, the Borrower acknowledges that the Agent and the
            Lenders have no obligation to increase the Borrowing Base and may
            reduce the Borrowing Base, in either case, at any time as provided
            herein or as a result of any circumstance, and further acknowledges
            that the determination of the Borrowing Base contains an equity
            cushion (market value in excess of loan value), which is
            acknowledged by the Borrower to be essential for the adequate
            protection of the Lenders.

                                       30
<PAGE>
      2.13 Mandatory Prepayments. If at any time the sum of the Loan Balance
plus the L/C Exposure exceeds the lesser of the Commitment Amount or the
Borrowing Base then in effect, the Borrower shall, within 120 days of notice
from the Agent of such occurrence, (i) prepay, or make arrangements acceptable
to the Required Lenders for the prepayment of, the amount of such excess for
application on the Loan Balance, (ii) provide additional collateral, of
character and value satisfactory to the Required Lenders in their sole
discretion (which value may be in excess of the value of the Material
Properties), to secure the Obligations by the execution and delivery to the
Agent of Security Instruments in form and substance satisfactory to the Agent
acting reasonably, or (iii) effect any combination of the alternatives described
in clauses (i) and (ii) of this Section 2.13 and acceptable to the Required
Lenders. In the event that a mandatory prepayment is required under this Section
2.13 and the amount required to be prepaid exceeds the Loan Balance, the
Borrower shall repay the entire Loan Balance together with accrued interest,
and, in accordance with the provisions of the relevant Letter of Credit
Applications executed by the Borrower or otherwise to the satisfaction of the
Agent, deliver to the Agent, as additional collateral securing the Obligations,
an amount of cash, in immediately available funds, equal to such excess. So long
as no Event of Default shall have occurred and be continuing, the excess cash
held by the Agent in satisfaction of the requirement provided in this Section
2.13, if requested by the Borrower, may be invested in cash equivalent short
term investments available through the Agent. Any losses on such investment
shall be for the account of the Borrower.

      2.14 Voluntary Prepayments and Conversions of Loans.

                  (a) Subject to applicable provisions of this Agreement, the
            Borrower shall have the right at any time or from time to time to
            prepay Loans.

                  (b) The Borrower may convert Loans of one type or with one
            Interest Period into Loans of another type or with a different
            Interest Period; provided, however, that (i) the Borrower shall give
            the Agent notice of each such conversion into all or any portion of
            a LIBO Rate Loan no less than three Business Days prior to
            conversion, (ii) any LIBO Rate Loan may be prepaid or converted only
            on the last day of an Interest Period for such Loan, unless the
            Borrower pays, within the time period set forth therefor in Section
            2.22(e), the amount, if any, required to be paid under Section
            2.22(e), (iii) each prepayment, in the case of Base Rate Loans,
            shall be in an amount not less than $100,000 or incremental amounts
            of $100,000 in excess thereof or the Loan Balance of such Loans and,
            in the case of LIBO Rate Loans, shall be in an amount not less than
            $1,000,000 or incremental amounts of $100,000 in excess thereof or
            the Loan Balance of such Loans, (iv) the Borrower shall pay all
            accrued and unpaid interest on the amounts prepaid or converted, and
            (v) no such prepayment or conversion shall serve to postpone the
            repayment when due of any Obligation except as set forth in clause
            (a) above.

      2.15 Commitment Fees and Usage Fee. To compensate the Lenders for
maintaining funds available under the Commitment, the Borrower shall pay to the
Agent for the account of such Lenders a fee equal to (i) at all times the
Commitments are outstanding and existing, one-half of one percent (0.50%) per
annum times the average daily amount of the Available Commitment during the
immediately preceding fiscal quarter just ended (or shorter period

                                       31
<PAGE>
thereof in the case of the fee for the period from the date of this Agreement
and ending December 31, 2001 or the period ending on the Commitment Termination
Date), calculated on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed (including the first day but excluding the last day);
such accrued commitment fees shall be payable in arrears on the 31st day of
December, 2001, the last Business Day of each third calendar month thereafter
during the Commitment Period, and on the Commitment Termination Date.

      2.16 Letter of Credit Fee. The Borrower shall pay to the Agent for the
account of the Lenders a letter of credit fee in the amount equal to the
Applicable Margin for LIBO Rate Loans in effect at such time per annum,
calculated on the basis of a year of 360 days and actual days the Letter of
Credit is outstanding (including the first day but excluding the last day),
times the average daily amount of the L/C Exposure during the immediately
preceding fiscal quarter then ended (or shorter period, as applicable). Accrued
letter of credit fees shall be payable quarterly in arrears on the 31st day of
December, 2001, the last Business Day of each third calendar month thereafter
during the Commitment Period, and at Final Maturity. The Borrower shall pay to
the Agent for its own account as the issuer of each Letter of Credit, on the
date of issuance or renewal of each Letter of Credit, an issuing fee equal to
one-eighth of one percent (.125%) per annum, calculated on the basis of a year
of 365 or 366 days, as the case may be, and actual days the Letter of Credit is
outstanding (including the first day but excluding the last day), on the face
amount of such Letter of Credit during the period for which such Letter of
Credit is issued or renewed. The Borrower also agrees to pay on demand to the
Agent for its own account as the issuer of the Letters of Credit its customary
letter of credit transactional fees and expenses, including amendment fees,
payable with respect to each Letter of Credit.

      2.17 Intentionally Blank.

      2.18 Intentionally Blank.

      2.19 Right of Offset. The Borrower hereby grants to the Agent and each
Lender (for the benefit of all Lenders) the right, exercisable at such time as
any Event of Default shall occur and be continuing, of offset or banker's lien
against all funds of the Borrower now or hereafter or from time to time on
deposit with the Agent or such Lender, regardless of whether the exercise of any
such remedy would result in any penalty or loss of interest or profit with
respect to any withdrawal of funds deposited in a time deposit account prior to
the maturity thereof

      2.20 Maximum Interest. 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 the Borrower or any Subsidiary Guarantor to
each Lender Party under this Agreement shall be subject to the limitation that
payments of interest shall not be required to the extent that contracting
therefor or the payment, collection, charging or receipt thereof would be
contrary to provisions of law applicable to such Lender Party limiting rates of
interest which may be extracted for, payed to or received, charged or collected
by such Lender Party. Accordingly, if the transactions contemplated hereby would
be usurious under applicable law (including the Federal and state laws of the
United States of America, or of any other jurisdiction whose laws may be
mandatorily applicable to any Lender) with respect to a Lender Party then, in
that event, notwithstanding anything to the contrary in this Agreement, it is
agreed as follows: (a) the provisions of this Section 2.20 shall govern and
control; (b) the aggregate of all consideration

                                       32
<PAGE>
which constitutes interest under applicable law that is contracted for, charged
or received under this Agreement or any other Loan Document, or under any of the
other aforesaid agreements or otherwise in connection with this Agreement or any
extension of credit hereunder or thereunder by such Lender Party 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 Lender Party
herein called the "Highest Lawful Rate"), and any excess shall be credited to
the Borrower or such Subsidiary Guarantor by such Lender Party (or, if such
consideration shall have been paid in full, such excess promptly refunded to the
Borrower or such Subsidiary Guarantor); (c) all sums paid, or agreed to be paid,
to such Lender Party for the use, forbearance and detention of the indebtedness
of the Borrower or such other Subsidiary Guarantor to such Lender Party
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the actual rate of interest is uniform throughout
the full term thereof; and (d) if at any time the interest otherwise provided
pursuant to Section 2.7 together with any other fees payable pursuant to this
Agreement and the other Loan Documents and deemed interest under applicable law,
exceeds that amount which would have accrued at the Highest Lawful Rate, the
amount of interest and any such fees to accrue to such Lender Party pursuant to
this Agreement shall be limited, notwithstanding anything to the contrary in
this Agreement or any other Loan Document to that amount which would have
accrued at the Highest Lawful Rate, but any subsequent reductions, as
applicable, shall, to the extent permitted by law, not reduce the interest to
accrue to such Lender Party pursuant to this Agreement below the Highest Lawful
Rate until the total amount of interest accrued pursuant to this Agreement and
such fees deemed to be interest equals the amount of interest which would have
accrued to such Lender if a varying rate per annum equal to the interest
otherwise provided pursuant to Section 2.7 had at all times been in effect, plus
the amount of fees which would have been received but for the effect of this
Section 2.20. For purposes of Chapter 303 of the Texas Finance Code, as amended
(formerly Chapter 1D of Article 5069 of the Texas Credit Title, Title 79,
Vernon's Texas Civil Statutes, as amended), to the extent, if any, applicable to
a Lender Party, each Borrower agrees that the Highest Lawful Rate shall be the
"weekly ceiling" as defined in said Chapter, provided that such Lender Party may
also rely, to the extent permitted by applicable laws, on alternative maximum
rates of interest under other laws applicable to such Lender Party, if greater.
Chapter 346 of the Texas Finance Code (formerly Tex. Rev. Civ. Stat. Ann. Art.
5069, Ch. 15 and which regulates certain revolving credit loan accounts and
revolving tri-party accounts) shall not apply to this Agreement or the Notes.

      2.21 Obligations Absolute. Subject to the further provisions of this
Section, the Obligations of the Borrower under this Article shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim, or defense to payment or performance which the Borrower
may have or have had against the Agent, any Lender, or any other Lender Party,
or any beneficiary of any Letter of Credit. The Borrower agrees that none of the
Agent or the Lenders or any other Lender Party shall be responsible for, nor
shall the Obligations be affected by, among other things, (a) the validity or
genuineness of documents or any endorsements thereon presented in connection
with any Letter of Credit, even if such documents shall in fact prove to be in
any and all respects invalid, fraudulent or forged, AND EVEN IF DUE TO THE
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT OR ANY LENDER OR ANY OTHER
LENDER PARTY, or (b) any dispute between or among the Borrower or any other
Person and any beneficiary or beneficiaries of any Letter of

                                       33
<PAGE>
Credit or any other party to which any Letter of Credit may be transferred, or
any claims whatsoever of the Borrower or any other Person against any
beneficiary of any Letter of Credit or any such transferee, EVEN IF DUE TO THE
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT OR ANY LENDER OR ANY OTHER
LENDER PARTY; provided, in all respects, that the Agent, as the issuer of
Letters of Credit, shall be liable to the Borrower to the extent, but only to
the extent, of any damages (other than punitive damages) suffered by the
Borrower as a result of the willful misconduct or gross negligence of the Agent
as the issuer of Letters of Credit in determining whether documents presented
under a Letter of Credit complied with the terms of such Letter of Credit that
resulted in either a wrongful payment under such Letter of Credit or a wrongful
dishonor of a claim or draft properly presented under such Letter of Credit. In
the absence of gross negligence or willful misconduct by the Agent as the issuer
of Letters of Credit, the Agent shall not be liable for any error, omission,
interruption or delay, EVEN IF DUE TO THE NEGLIGENCE, WHETHER SOLE OR
CONCURRENT, OF THE AGENT OR ANY OTHER LENDER PARTY, in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit. The Agent, the Lenders, the other Lender Parties, and the
Borrower agree that any action taken or omitted by the Agent, as issuer of any
Letter of Credit, under or in connection with any Letter of Credit or the
related drafts or documents, EVEN IF DUE TO THE NEGLIGENCE, WHETHER SOLE OR
CONCURRENT, OF THE AGENT OR ANY LENDER OR ANY OTHER LENDER PARTY, if done in the
absence of gross negligence or willful misconduct, shall be binding as among the
Agent, as issuer of such Letter of Credit or otherwise, the Lenders, the Lender
Parties, and the Borrower and shall not put the Agent, as issuer of such Letter
of Credit or otherwise, or any Lender or other Lender Party under any liability
to the Borrower; provided, however, that no such action taken or omitted to be
taken by the Agent shall be binding upon the Borrower as against any Person
other than the Agent and the Lenders and the other Lender Parties.

      2.22 Yield Protection.

                  (a) Without limiting the effect of the other provisions of
            this Section (but without duplication), the Borrower shall pay to
            the Agent and each Lender from time to time, within five (5)
            Business Days of receipt of the certificate provided for in Section
            2.22(c), such amounts as the Agent or such Lender may reasonably
            determine are necessary to compensate it for any Additional Costs
            incurred by the Agent or such Lender.

                  (b) Without limiting the effect of the other provisions of
            this Section (but without duplication), the Borrower shall pay to
            each Lender from time to time, within five Business Days of receipt
            of the certificate provided for in Section 2.22(e), such amounts as
            such Lender may determine are necessary to compensate such Lender
            for any actual costs incurred by such Lender attributable to the
            maintenance by such Lender (or any Applicable Lending Office),
            pursuant to any Regulatory Change, of capital (other than the
            Reserve Requirement utilized in the determination of any Adjusted
            LIBO Rate) in respect of its Commitments, such compensation to
            include an amount equal to any reduction of the rate of return on
            assets or equity of such Lender (or any Applicable Lending Office)
            to a

                                       34
<PAGE>
            level below that which such Lender (or any Applicable Lending
            Office) could have achieved but for such Regulatory Change.

                  (c) Without limiting the effect of the other provisions of
            this Sectio n (but without duplication), in the event that any
            Regulatory Change or the compliance by the Agent or any Lender
            therewith shall (i) impose, modify, or hold applicable any reserve,
            special deposit, or similar requirement against any Letter of Credit
            or obligation to issue Letters of Credit, or (ii) impose upon the
            Agent or such Lender any other condition regarding any Letter of
            Credit or obligation to issue Letters of Credit, and the result of
            any such event shall be to increase the cost to the Agent or such
            Lender of issuing or maintaining any Letter of Credit or obligation
            to issue Letters of Credit or any liability with respect to Letter
            of Credit Payments, or to reduce any amount receivable in connection
            therewith, then, within five Business Days of receipt of the
            certificate provided for in Section 2.22(e), the Borrower shall pay
            to the Agent or such Lender, as the case may be, from time to time
            as specified by the Agent or such Lender, the additional amounts
            indicated in such certificate as sufficient to compensate the Agent
            or such Lender for such increased cost or reduced amount receivable.

                  (d) Without limiting the effect of the other provisions of
            this Section (but without duplication), the Borrower shall pay to
            the Agent and each Lender, within five Business Days of receipt of
            the certificate provided for in Section 2.22(e), such amounts as
            shall be indicated in such certificate as sufficient to compensate
            them for any loss, cost, or expense incurred by and as a result of
            (i) any payment, prepayment, or conversion by the Borrower of a LIBO
            Rate Loan on a date other than the last day of an Interest Period
            for such Loan; or (ii) any failure by the Borrower to borrow a LIBO
            Rate Loan or to convert a Base Rate Loan into a LIBO Rate Loan on
            the date for such borrowing or conversion specified in the relevant
            Borrowing Request or (iii) with respect to a LIBO Rate Loan, the
            replacement of a Lender pursuant to Section 2.25 other than on the
            last day of the Interest Period for such Loan.

                  (e) Determinations by the Agent or any Lender for purposes of
            this Section of the effect of any Regulatory Change on capital
            maintained, its costs or rate of return, maintaining Loans, issuing
            Letters of Credit, its obligation to make Loans and issue Letters of
            Credit, or on amounts receivable by it in respect of Loans, Letters
            of Credit or such obligations, and the additional amounts required
            to compensate the Agent and such Lender under this Section shall be
            conclusive, absent manifest error, provided that such determinations
            are made on a reasonable basis. The Agent or the relevant Lender
            shall furnish the Borrower with a certificate setting forth in
            reasonable detail the basis and amount of increased costs incurred
            or reduced amounts receivable as a result of any such event, and the
            statements set forth therein shall be conclusive, absent manifest
            error. The Agent or the relevant Lender shall (i) notify the
            Borrower, as promptly as practicable after the Agent or such Lender
            obtains knowledge of any Additional Costs or other sums payable
            pursuant to this Section and determines to request compensation
            therefor, in respect of any event occurring after the Closing Date

                                       35
<PAGE>
            which will entitle the Agent or such Lender to compensation pursuant
            to this Section; provided that the Borrower shall not be obligated
            for the payment of any Additional Costs or other sums payable
            pursuant to this Section to the extent such Additional Costs or
            other sums accrued more than 90 days prior to the date upon which
            the Borrower was given such notice; and (ii) designate a different
            Applicable Lending Office for the Loans affected by such event if
            such designation will avoid the need for or reduce the amount of
            such compensation and will not, in the sole opinion of the Agent or
            such Lender, be disadvantageous to the Agent or such Lender. Any
            compensation requested by the Agent or any Lender pursuant to this
            Section shall be due and payable within five Business Days of
            delivery of any such notice to the Borrower.

      2.23 Illegality. Notwithstanding any other provision of this Agreement, in
the event that (a) it becomes unlawful for any Lender or its Applicable Lending
Office to (i) honor its obligation to make LIBO Rate Loans, or (ii) maintain
LIBO Rate Loans, or (b) the Agent or any Lender becomes subject to restrictions
on the amount of a category of liabilities or assets which it may hold, then
such Agent or Lender shall promptly notify the Agent and the Borrower thereof.
The obligation of such Lender to make LIBO Rate Loans and convert Base Rate
Loans into LIBO Rate Loans shall then be suspended until such time as such
Lender may again make and maintain LIBO Rate Loans or is not subject to such
restrictions, as the case may be, and the outstanding LIBO Rate Loans of such
Lender shall, to the extent permitted by law, be converted into Base Rate Loans
in accordance with Section 2.14; provided, however, each Lender shall use
reasonable efforts to designate a different Applicable Lending Office with
respect to any LIBO Rate Loan affected by the matters or circumstances described
in this Section to avoid the results provided in this Section if possible, so
long as such designation is not disadvantageous to such Lender as determined by
it in its sole discretion.

      2.24 Taxes.

                  (a) All payments made by or on behalf of the Borrower under
            this Agreement and under the other Loan Documents shall be made free
            and clear of, and without reduction or withholding for or on account
            of, present or future income, stamp or other taxes, levies, imposts,
            duties, charges, fees, deductions or withholdings, hereafter
            imposed, levied, collected, withheld or assessed by any Governmental
            Authority on the basis of any applicable treaty, law, rule,
            guideline or regulations or in the interpretation or administration
            thereof, excluding, in the case of the Agent and each Lender, income
            and franchise taxes (whether based upon net income, capital or
            profits) imposed on the Agent or such Lender (all such non-excluded
            taxes, levies, imposts, deductions, charges or withholdings being
            hereinafter called "Taxes"). If any Taxes are required to be
            withheld from any amounts payable to the Agent or any Lender Party
            hereunder or under any other Loan Document, the amounts so payable
            to the Agent or such Lender Party shall be increased to the extent
            necessary to yield to the Agent or such Lender Party (after payment
            of all Taxes) interest or any such other amounts payable hereunder
            at the rates or in the amounts specified in this Agreement and the
            other Loan Documents. Whenever any Taxes are payable by the
            Borrower, promptly thereafter the Borrower shall send to the Agent
            for its own account or for the

                                       36
<PAGE>
            account of such Lender Party, as the case may be, a certified copy
            of an original official receipt received by the Borrower showing
            payment thereof. If the Borrower fails to pay any Taxes when due to
            the appropriate taxing authority or fails to remit to the Agent the
            required receipts or other required documentary evidence, the
            Borrower shall indemnify the Agent and the Lenders and the other
            Lender Parties for any incremental taxes, interest or penalties that
            may become payable by the Agent or any Lender Party as a result of
            any such failure. The agreements in this Section shall survive the
            termination of this Agreement and the payment of all Obligations.

                  (b) Each Lender that is not incorporated under the laws of the
            United States of America or a state thereof agrees that, on the date
            hereof or, if it becomes a Lender in accordance with Section 9.1, on
            the date of the applicable Assignment Agreement, it will, to the
            extent it may lawfully do so, deliver to the Borrower and the Agent
            two duly completed copies of United States Internal Revenue Service
            Form W-8 BEN, or Form W- 8ECI or any other applicable form, as the
            case may be, certifying in each case that such Lender is entitled to
            receive payments under any Loan Document, without deduction or
            withholding of any United States federal income taxes. Each Lender
            which delivers to the Borrower and the Agent a form pursuant to the
            preceding sentence further undertakes to deliver to the Borrower and
            the Agent two further copies of such form, or successor applicable
            forms, or other manner of certification, as the case may be, on or
            before the date that any such letter or form expires or becomes
            obsolete or after the occurrence of any event requiring a change in
            the most recent form previously delivered by it to the Borrower, and
            such extensions or renewals thereof as may reasonably be requested
            by the Borrower, certifying in the case of each such form that such
            Lender is entitled to receive payments under any Loan Document
            without deduction or withholding of any United States federal income
            taxes, unless in any such case, an event (including any change in
            treaty, law or regulation) has occurred prior to the date on which
            any such delivery would otherwise be required which renders all such
            forms inapplicable or which would prevent such Lender from duly
            completing and delivering any such form with respect to it and such
            Lender advises the Borrower that it is not capable of receiving
            payments without any deduction or withholding of United States
            federal income tax.

      2.25 Replacement or Additional Lenders.

                  (a) If any Lender (i) has notified the Borrower of its
            incurring additional costs under Section 2.22 or the illegality of
            LIBO Rate Loans under Section 2.23, (ii) has required the Borrower
            to make payments for Taxes under Section 2.24, or (iii) has informed
            any Borrower of a Regulatory Change in accordance with Section 2.26,
            or if a Lender is not in agreement with the amount of any Borrowing
            Base redetermination which a group of Lenders constituting at least
            the Required Lenders has approved, then in any such event the
            Borrower may, unless such Lender has notified the Borrower that the
            circumstances giving rise to such notice no longer apply, terminate,
            in whole but not in part, the

                                       37
<PAGE>
            Commitments of such Lender (other than the Agent) (the "Terminated
            Lender") at any time upon five Business Days' prior written notice
            to the Terminated Lender and the Agent (such notice referred to
            herein as a "Notice of Termination").

                  (b) In order to effect the termination of the Commitments of
            the Terminated Lender, the Borrower shall (i) obtain an agreement
            with one or more Lenders to increase their Commitments or (ii)
            request any one or more Eligible Assignees to become a "Lender" in
            place and instead of such Terminated Lender and agree to accept its
            Commitment; provided, however, that such one or more other Eligible
            Assignees are reasonably acceptable to the Agent and become parties
            by executing an Assignment Agreement (the Lenders or other
            institutions that agree to accept in whole or in part the Commitment
            of the Terminated Lender being referred to herein as the
            "Replacement Lenders"), such that the aggregate increased and/or
            accepted Facility Amounts of the Replacement Lenders under clauses
            (i) and (ii) above equal the Facility Amount of the Terminated
            Lender.

                  (c) The Notice of Termination shall include the name of the
            Terminated Lender, the date the termination will occur (the
            "Termination Date"), the Replacement Lender or Replacement Lenders
            to which the Terminated Lender will assign its Commitment, and, if
            there will be more than one Replacement Lender, the portion of the
            Terminated Lender's Commitment to be assigned to each Replacement
            Lender.

                  (d) On the Termination Date, (i) the Terminated Lender shall
            by execution and delivery of an Assignment Agreement assign its
            Commitment to the Replacement Lender or Replacement Lenders (pro
            rata, if there is more than one Replacement Lender, in proportion to
            the portion of the Terminated Lender's Commitment to be assigned to
            each Replacement Lender) indicated in the Notice of Termination and
            shall assign to the Replacement Lender or Replacement Lenders its
            Loans (if any) so assigned then outstanding pro rata as aforesaid),
            (ii) the Terminated Lender shall endorse its applicable Note(s),
            payable without recourse, representation or warranty to the order of
            the Replacement Lender or Replacement Lenders (pro rata as
            aforesaid), (iii) the Replacement Lender or Replacement Lenders
            shall purchase the Note(s) held by the Terminated Lender (pro rata
            as aforesaid) at a price equal to the unpaid principal amount
            thereof plus interest and fees accrued and unpaid to the Termination
            Date, (iv) the Borrower shall, upon request, execute and deliver, at
            its own expense, new Notes to the Replacement Lenders in accordance
            with their respective interests, (v) the Borrower shall, upon
            request, pay any compensation due to the Terminated Lender pursuant
            to Section 2.22, of which the Borrower shall have received notice
            pursuant to Section 2.22(e) from the Terminated Lender within three
            (3) Business Days of receipt by such Terminated Lender of a Notice
            of Termination, and (vi) the Replacement Lender or Replacement
            Lenders will thereupon (pro rata as aforesaid) succeed to and be
            substituted in all respects for the Terminated Lender to the extent
            of such assignment from and after such date with like effect as if
            becoming a Lender pursuant to the terms of Section 9.1(b), and the
            Terminated Lender will have the rights and benefits of an assignor
            under Section 9.1(b). To

                                       38
<PAGE>
            the extent not in conflict, the terms of Section 9.1(b) shall
            supplement the provisions of this Section.

                  (e) Any additional Lender becoming a party to this Agreement
            as contemplated by Section 2.12(a) shall execute and deliver to the
            Agent and the Borrower a statement of accession setting forth its
            Facility Amount and otherwise in form and substance reasonably
            satisfactory to the Agent, evidencing its agreement to be bound as a
            Lender by all of the provisions of this Agreement and the other Loan
            Documents, and upon such execution and delivery thereof, such Person
            shall be a "Lender" for all purposes of this Agreement and the other
            Loan Documents.

                                  ARTICLE III.

                                   CONDITIONS

      3.1 Conditions Precedent to Initial Loan or Letter of Credit. The Lenders
shall have no obligation to make the initial Loans or issue or participate in
the initial Letter of Credit on or after the Closing Date unless and until all
matters incident to the consummation of the transactions contemplated herein,
including the review by the Agent or its counsel of the title, as set forth in
clause (i), of the Borrower and the Subsidiary Guarantors or any other Person
party to a Security Instrument, to the Mortgaged Properties, shall be
satisfactory to the Agent, and (to the extent not previously received to the
satisfaction of the Agent in its sole determination) the Agent shall have
received, reviewed, and approved the following documents and other items,
appropriately executed when necessary and, where applicable, acknowledged by one
or more authorized officers of the Borrower or the respective Subsidiary
Guarantor, as the case may be, all in form and substance satisfactory to the
Agent and dated, where applicable, of even date herewith or a date prior thereto
and acceptable to the Agent :

                  (a) multiple counterparts of this Agreement and each
            Subsidiary Guaranty, as requested by the Agent;

                  (b) the Notes;

                  (c) copies of the Articles of Incorporation or Certificate of
            Incorporation and all amendments thereto and the bylaws and all
            amendments thereto of the Borrower and each Subsidiary Guarantor
            (other than Energy Marketing, Gas Services, Michigan Resources and
            Medallion), accompanied by a certificate issued by the secretary or
            an assistant secretary of the Borrower and each Subsidiary Guarantor
            (other than Energy Marketing, Gas Services, Michigan Resources and
            Medallion), as the case may be, to the effect that each such copy is
            correct and complete;

                  (d) certificates of incumbency and signatures of all officers
            of the Borrower and each Subsidiary Guarantor (other than Energy
            Marketing, Gas Services, Michigan Resources and Medallion) who are
            authorized to execute Loan Documents on behalf of such entities,
            each such certificate being executed

                                       39
<PAGE>
            by the secretary or an assistant secretary of the Borrower or such
            Subsidiary Guarantor, as the case may be;

                  (e) copies of corporate resolutions approving the Loan
            Documents and authorizing the transactions contemplated herein and
            therein, duly adopted by the boards of directors of the Borrower and
            each Subsidiary Guarantor (other than Energy Marketing, Gas
            Services, Michigan Resources and Medallion) accompanied by
            certificates of the secretary or an assistant secretary of the
            Borrower or such Subsidiary Guarantor, as the case may be, to the
            effect that such copies are true and correct copies of resolutions
            duly adopted at a meeting or by unanimous consent of the board of
            directors of the Borrower or such Subsidiary Guarantor, as the case
            may be, and that such resolutions constitute all the resolutions
            adopted with respect to such transactions, have not been amended,
            modified, or revoked in any respect, and are in full force and
            effect as of the date of such certificate;

                  (f) multiple counterparts, as requested by the Agent, of the
            following documents (together with any and all supplements or
            amendments thereto required by the Collateral Agent pursuant to this
            Agreement and the Loan Documents), creating, evidencing, perfecting,
            and otherwise establishing Liens in favor of the Collateral Agent in
            and to the Collateral:

                        (i) the Mortgage from the Borrower and each Mortgagor
                  (or other similar security instrument, agreement or assignment
                  required to perfect a Lien in and to the Mortgaged Properties
                  in the State where such Property is located) covering the
                  Material Properties and all improvements, personal property,
                  and fixtures related thereto, together with ratifications and
                  amendments in form satisfactory to the Collateral Agent
                  relating to each of the Security Instruments executed and
                  delivered by the Borrower or Subsidiary Guarantor prior to the
                  Closing Date;

                        (ii) a Pledge Agreement (together with stock powers and
                  endorsed notes as required thereby) from the Borrower or a
                  Subsidiary of the Borrower, as the case may be, creating a
                  Lien on the equity interests in each Subsidiary of the
                  Borrower (other than Energy Marketing and National Enerdrill),
                  whether held directly or indirectly, and on notes payable to
                  the Borrower or a Subsidiary of the Borrower (excluding
                  intercompany notes), in favor of the Collateral Agent for the
                  benefit of the Lender Parties; and

                        (iii) Financing Statements from the Borrower and each
                  Subsidiary Guarantor as debtor, constituent to the instrument
                  relating to the Mortgage Properties described in clause (i)
                  above and the equity interests and notes described in clause
                  (ii) above;

                  (g) certificates dated as of a recent date from the Secretary
            of State or other appropriate Governmental Authority evidencing the
            existence or

                                       40
<PAGE>
            qualification and good standing of the Borrower and each Subsidiary
            Guarantor (other than Energy Marketing, Gas Services, Michigan
            Resources and Medallion) in their respective jurisdictions of
            organization and in any other jurisdictions where any of them is
            qualified to do business or, in the case of the Obligors set forth
            in Exhibit X under the heading "Good Standing", a certificate of an
            officer of the Borrower attaching copies of the tax returns and
            other forms filed or to be filed within thirty (30) days of the date
            hereof by such Obligors with the appropriate Governmental Authority
            in the respective jurisdictions of organization and other
            jurisdictions where such Obligor has filed to qualify to do business
            in such jurisdictions;

                  (h) results of searches of the UCC Records of all States where
            any Collateral is located from a source acceptable to the Agent and
            reflecting no Liens against any of the Collateral other than Liens
            in favor of the Agent or the Collateral Agent, other Permitted Liens
            and Liens permitted under Section 6.3;

                  (i) Title opinions and other information reasonably acceptable
            to the Agent covering the Oil and Gas Properties contemplated by
            Section 5.5, of the Title of the Borrower and any Mortgagor to the
            Mortgaged Properties warranted to be owned by it, free and clear of
            Liens other than Permitted Liens and Liens permitted under Section
            6.3;

                  (j) results satisfactory to the Agent in its discretion of a
            review of the environmental reports furnished to the Agent by the
            Borrower in connection with the Mortgaged Property;

                  (k) Intentionally Blank;

                  (l) engineering reports as of December 31, 2000, covering the
            Oil and Gas Properties of the Borrower and its Subsidiaries prepared
            by Netherland, Sewell and Associates or other independent engineer
            and engineering reports dated as of June 30, 2001 prepared by or
            under the supervision of the chief petroleum engineer of the
            Borrower evaluating the Oil and Gas Properties of the Borrower and
            its Subsidiaries as of such date, in each case acceptable to the
            Agent in its sole discretion;

                  (m) the opinion of counsel to the Borrower and the Subsidiary
            Guarantors, in the form attached hereto as Exhibit VIII, with such
            changes thereto as may be approved by the Agent;

                  (n) the opinion of special counsel in each State where any
            Collateral is located in the form attached hereto as Exhibit IX,
            relating to the Mortgaged Properties, with such changes thereto as
            may be approved by the Agent;

                  (o) certificates evidencing the insurance coverage required
            pursuant to Section 5.16;

                  (p) [Intentionally Blank];

                                       41
<PAGE>
                  (q) [Intentionally Blank];

                  (r) no change has occurred with respect to the Borrower or any
            of its Subsidiaries which could reasonably be expected to have a
            Material Adverse Effect;

                  (s) copies of (i) the indentures for the Public Debt, which
            indentures shall permit the guaranties from the Subsidiary
            Guarantors and the Liens under the Security Instruments and the
            Subsidiary Guaranties and (ii) the agreements and other documents
            related to the Production Payment 2001 Facility, in each case
            satisfactory to the Agent and Certified by the Borrower as being
            true, correct and complete;

                  (t) such other agreements, documents, instruments, opinions,
            certificates, waivers, consents, and evidence as the Agent or any
            Lender may reasonably request; and

                  (u) results reasonably satisfactory to the Agent of a review
            of the commodity price-risk hedging policies and programs of the
            Borrower and the Subsidiary Guarantors.

      3.2 Conditions Precedent to Each Loan. The obligations of the Lenders to
make each Loan are subject to the satisfaction of the following additional
conditions precedent except that items (b), (c) and (d) below shall not be
applicable to continuations or conversions into Base Rate Loans where no new
funds are advanced:

                  (a) the Borrower shall have delivered to the Agent a Borrowing
            Request at least the requisite time prior to the requested date or
            time for the relevant Loan; and each statement or certification made
            in such Borrowing Request shall be true and correct in all material
            respects on the requested date for such Loan;

                  (b) no Default or Event of Default shall exist or will occur
            as a result of the making of the requested Loan;

                  (c) no Material Adverse Effect shall have occurred;

                  (d) each of the representations and warranties contained in
            this Agreement and the other Loan Documents shall be true and
            correct and shall be deemed to be repeated by the Borrower or the
            relevant Subsidiary Guarantor, as the case may be, as if made on the
            requested date for such Loan, except for any such representations
            and warranties as are expressly stated to be made as of a particular
            date which shall remain true and correct as of the date made;

                  (e) the Subsidiary Guaranties and all of the Security
            Instruments shall be in full force and effect and provide to the
            Lenders the security intended thereby;

                                       42
<PAGE>
                  (f) neither the consummation of the transactions contemplated
            hereby nor the making or incurrence of such Loan shall contravene,
            violate, or conflict with any Requirement of Law or the indenture,
            as amended or modified from time to time, of any of the Public Debt;
            and

                  (g) the Agent and each Lender shall have received the payment
            of all fees due and payable by the Borrower hereunder and under the
            other Loan Documents and the Agent shall have received reimbursement
            from the Borrower, or special legal counsel for the Agent shall have
            received payment from the Borrower, for (i) all reasonable fees and
            expenses of counsel to the Agent for which the Borrower is
            responsible pursuant to applicable provisions of this Agreement and
            for which invoices have been presented as of or prior to the date of
            the relevant Loan, and (ii) estimated fees charged by filing
            officers and other public officials incurred or to be incurred in
            connection with the filing and recordation of any Security
            Instruments, for which invoices have been presented as of or prior
            to the date of the requested Loan.

      3.3 Conditions Precedent to Issuance of Letters of Credit. The obligation
of the Agent, as the issuer of the Letters of Credit, to issue, renew, or extend
any Letter of Credit is subject to the satisfaction of the following additional
conditions precedent:

                  (a) the Borrower shall have delivered to the Agent a Letter of
            Credit Application at least three Business Days prior to the
            requested issuance date; and each statement or certification made in
            such Letter of Credit Application shall be true and correct in all
            material respects on the requested date for the issuance of such
            Letter of Credit;

                  (b) no Default or Event of Default shall exist or will occur
            as a result of the issuance, renewal, or extension of such Letter of
            Credit;

                  (c) the terms and provisions of the Letter of Credit or such
            renewal or extension shall be reasonably satisfactory to the Agent,
            as the issuer of the Letters of Credit;

                  (d) the conditions precedent set forth in clauses (c) through
            (g) of Section 3.2 shall be satisfied; provided that for purposes of
            this Section 3.3, (i) the references in clause (d) of Section 3.2 to
            "the requested date for such Loan" shall be deemed to be a reference
            to "the requested date for such "Letter of Credit"; (ii) the
            reference in clause (f) of Section 3.2 to "the making of such Loan"
            shall be deemed to be a reference to "the issuance of such Letter of
            Credit"; (iii) the reference in clause (g)(ii) of Section 3.2 to
            "the date of the requested Loan" shall be deemed to be a reference
            to "the date of the requested Letter of Credit" and (iv) the
            reference in clause (g) of Section 3.2 to the "fees due and payable
            by the Borrower hereunder" shall include, without limitation, the
            issuing fee payable pursuant to Section 2.16 on the date of issuance
            or renewal; and

                                       43
<PAGE>
                  (e) the Borrowers shall have delivered to the Agent an opinion
            of counsel for the Borrowers or other evidence satisfactory to the
            Agent and the Lenders that the granting of the Liens pursuant to the
            Security Instruments does not violate the indentures for the Public
            Debt.

                                  ARTICLE IV.

                         REPRESENTATIONS AND WARRANTIES

      To induce the Agent and the Lenders to enter into this Agreement and to
extend credit to the Borrower, the Borrower represents and warrants to the Agent
and each Lender Party (which representations and warranties shall survive the
delivery of the Notes) that:

      4.1 Due Authorization. The execution and delivery by the Borrower of this
Agreement, the borrowings hereunder, the execution and delivery by the Borrower
and each of the Subsidiary Guarantors of the Notes and the other Loan Documents,
the repayment of the Notes and interest and fees provided for in the Notes and
this Agreement, and the granting of the Liens and the performance of all
obligations of the Borrower and each of the Subsidiary Guarantors under the Loan
Documents are within the power of the Borrower or the Subsidiary Guarantor, as
the case may be, have been duly authorized by all necessary corporate action by
the Borrower or the Subsidiary Guarantor, as the case may be, and do not and
will not (a) require the consent of any Governmental Authority to be obtained by
the Borrower or such Subsidiary Guarantor, as applicable, (b) contravene or
conflict with any Requirement of Law applicable to the Borrower or the
Subsidiary Guarantor, as the case may be, or the articles or certificate of
incorporation, bylaws, or other organizational or governing documents of the
Borrower or such Subsidiary Guarantor, as the case may be, (c) contravene or
conflict with any material indenture, instrument, or other agreement, including,
without limitation, the indentures for the Public Debt or any other indenture,
instrument, or other agreement that, when aggregated with other such agreements,
is material, to which the Borrower or the Subsidiary Guarantor, as the case may
be, is a party or by which any Property of the Borrower or the Subsidiary
Guarantor, as the case may be, may be bound or encumbered, except as could not
reasonably be expected to have a Material Adverse Effect, (d) contravene or
conflict with any indenture, instrument, or other agreement by which any item of
Collateral is bound or to which any such item of Collateral is subject, except
as could not reasonably be expected to have a Material Adverse Effect, or (e)
result in or require the creation or imposition of any Lien in, upon or of any
Property of the Borrower or the Subsidiary Guarantor, as the case may be, under
any such indenture, instrument, or other agreement, other than the Loan
Documents.

      4.2 Corporate Existence. The Borrower and each Subsidiary of the Borrower
is a Person duly organized, legally existing, and in good standing under the
laws of its state of organization and is duly qualified as a foreign entity and
is in good standing in all jurisdictions wherein the ownership of Property or
the operation of its business necessitates same, other than those jurisdictions
wherein the failure to so qualify will not have a Material Adverse Effect.

      4.3 Valid and Binding Obligations. All Loan Documents to which the
Borrower or the Subsidiary Guarantor, as the case may be, is a party, when duly
executed and delivered by the Borrower or the Subsidiary Guarantor which is a
party thereto, will be the legal, valid, and

                                       44
<PAGE>
binding obligations of the Borrower or the Subsidiary Guarantor which is a party
thereto, enforceable against the Borrower or the Subsidiary Guarantor, as the
case may be, in accordance with its respective terms except as limited by
bankruptcy, insolvency or similar laws affecting generally the rights of
creditors and general principles of equity, whether applied by a court of law or
equity.

      4.4 Existing Indebtedness. As of the date hereof, the Borrower and its
Subsidiaries have Indebtedness in the aggregate principal amounts set forth in
Exhibit X under the heading "Existing Indebtedness."

      4.5 Security Instruments. The provisions of each Security Instrument
executed by the Borrower, or any Subsidiary Guarantor are effective to create in
favor of the Agent or the Collateral Agent, a legal, valid, and enforceable Lien
in all right, title, and interest of such Person in the Collateral described
therein, which Liens, assuming the accomplishment of recording and filing in
accordance with applicable laws prior to the intervention of rights of other
Persons, shall constitute fully perfected first-priority Liens on all right,
title, and interest of such Person in the Collateral described therein except
for Permitted Liens and other Liens permitted by Section 6.3 and except that in
the case of the Collateral subject to the Production Payment 2001 Lien and in
the case of Collateral subject to a Lien securing Acquisition Indebtedness for
such Collateral as described in Section 5.18(c), such Liens shall constitute
fully perfected second-priority Liens (except for Permitted Liens and other
Liens permitted by Section 6.3) rather than first-priority Liens.

      4.6 Title to Assets. Except as heretofore disclosed to the Agent in
writing, insofar as such Property constitutes real property or interests in real
property, the Borrower and each Subsidiary Guarantor has good and indefeasible
Title to all of its Mortgaged Properties and all of its other Properties which
are material, free and clear of Liens, except Permitted Liens. With respect to
Property which does not constitute real property or an interest in real
property, the Borrower and each Subsidiary Guarantor owns all such other
Properties which are material, free and clear of all Liens, except Permitted
Liens and Liens otherwise permitted under Section 6.3.

      4.7 Scope and Accuracy of Financial Statements and Reserve Reports. The
Financial Statements of the Borrower and its Subsidiaries as of December 31,
2000 and June 30, 2001 (subject, in the case of the Financial Statements as of
June 30, 2001, to normal year-end audit adjustments), present fairly the
financial position and results of operations and cash flows of the Borrower and
its Subsidiaries in accordance with GAAP as at the relevant point in time or for
the period indicated, as applicable. No event or circumstance has occurred since
June 30, 2001, except for fluctuations of oil and gas prices, which could
reasonably be expected to have a Material Adverse Effect. The Reserve Reports
dated December 31, 2000 and June 30, 2001 and delivered by Borrower pursuant to
Section 5.4 present fairly the reserve position of the Borrower and its
Subsidiaries as at the relevant point in time.

      4.8 No Material Misstatements. All written estimates, projections and
forecasts furnished by or on behalf of the Borrower or any Subsidiary of the
Borrower to the Agent or any of the Lenders for purposes of or in connection
with this Agreement, or in connection with any extension of credit hereunder,
were and will be prepared on the basis of the good faith estimate of the
Borrower's senior management concerning probable financial condition and
performance

                                       45
<PAGE>
based on assumptions, data, tests or conditions believed to be reasonable or to
represent industry conditions existing at the time such estimates, projections
or forecasts were made. No other information, exhibit, statement, or report
furnished to the Agent or any Lender by or at the direction of the Borrower or
any Subsidiary of the Borrower in connection with this Agreement contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading as of the date made or
deemed made.

      4.9 Liabilities and Litigation. Except as set forth under the heading
"Litigation" in Exhibit X, none of the Borrower or any Subsidiary Guarantor has
any liabilities, direct, or contingent, which could reasonably be expected to
have a Material Adverse Effect. None of the Borrower or any Subsidiary of the
Borrower has (a) any unfunded pension liability; Contingent Obligation (other
than Contingent Obligations pursuant to this Agreement or the Public Debt) or,
(c) except as set forth under the heading "Litigation" on Exhibit X, any
litigation or other action of any nature pending before any Governmental
Authority or, to the best knowledge of the Borrower, (i) threatened, against or
affecting any Collateral, or, in the case of Environmental Laws, any Property of
the Borrower or any Subsidiary of the Borrower, or the facilities located and
the operations conducted thereon, or (ii) threatened against or affecting the
Borrower or any Subsidiary of the Borrower which, in the case of any such
pending litigation or other action and in each case as described in subclauses
(i) or (ii), could reasonably be expected to result in any judgment or
liability, individually or when aggregated with all other such judgments or
liabilities, as described in clauses (a), (b), or (c), could reasonably be
expected to result in aggregate payments or liabilities in excess of the greater
of $1,000,000 or 5% of the then Borrowing Base, after giving effect to
reasonably expected insurance proceeds and cash reserves established therefor.
None of the Borrower or any of its Subsidiaries has any litigation or other
action of any nature pending before any Governmental Authority or, to the best
knowledge of the Borrower, threatened against or affecting the ability of the
Borrower and its Subsidiaries to enter into, execute, deliver or, taken as a
whole, perform in any material respect their obligations under the Loan
Documents.

      4.10 Authorizations; Consents. Except as expressly contemplated by this
Agreement, no authorization, consent, approval, exemption, franchise, permit, or
license of, or filing with, any Governmental Authority or any other Person is
required to be obtained by the Borrower or any Subsidiary of the Borrower to
authorize, or is otherwise required in connection with, the valid execution and
delivery by the Borrower or any such Subsidiary of the Loan Documents or any
instrument contemplated hereby, the repayment by the Borrower of the Notes and
interest and fees provided in the Notes and this Agreement, or the performance
by the Borrower and its Subsidiaries of the Obligations.

      4.11 Compliance with Laws. The Property of the Borrower and each of its
Subsidiaries is in compliance with all applicable Requirements of Law, including
Environmental Laws, the Natural Gas Policy Act of 1978, as amended, and ERISA,
other than any Requirements of Laws the failure with which to comply,
individually or in the aggregate, could not reasonably be expected to cause a
Material Adverse Effect.

      4.12 Default. Neither the Borrower nor any Subsidiary of the Borrower is
in default of, and no event has occurred which, with the lapse of time or giving
of notice, or both, could

                                       46
<PAGE>
result in such a default of, (i) any charter document or bylaws of the Borrower
or any Subsidiary of the Borrower, or (ii) any agreement or obligation other
than an agreement or obligation evidencing or relating to Indebtedness to which
the Borrower or any Subsidiary of the Borrower is a party or by which any
Property of the Borrower or any Subsidiary of the Borrower may be bound,
pursuant to which the obligations of the Borrower and the Subsidiaries of the
Borrower in the aggregate under any such agreement or obligation, or the
obligations secured thereby, exceed $1,500,000, except such as are being
contested in good faith and as to which such reserve as may be required by GAAP
shall have been made therefore.

      4.13 ERISA. (a) The Borrower does not, and will not for the term of any
Loan, hold "plan assets" of any employee benefit plan subject to Title I of
ERISA or any plan subject to Section 4975 of the Code under circumstances that
would contravene the requirements of regulatory authority issued under such
provisions of the Code or ERISA by the appropriate regulatory authorities. (b)
No Reportable Event has occurred with respect to any Single Employer Plan, and
each Single Employer Plan has complied with and been administered in all
material respects in accordance with applicable provisions of ERISA and the
Code. To the best knowledge of the Borrower, (a) no Reportable Event has
occurred with respect to any Multiemployer Plan, and (b) each Multiemployer Plan
has complied with and been administered in all material respects with applicable
provisions of ERISA and the Code. Each Plan satisfied the minimum funding
requirements under ERISA and the Code as of the last annual valuation date
applicable thereto. Neither the Borrower nor any Commonly Controlled Entity has
had a complete or partial withdrawal from any Multiemployer Plan for which there
is any withdrawal liability. As of the most recent valuation date applicable to
any Multiemployer Plan, neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or such
Commonly Controlled Entity were to withdraw completely from such Multiemployer
Plan. Neither the Borrower nor any Commonly Controlled Entity has received
notice that any Multiemployer Plan is Insolvent or in Reorganization. To the
best knowledge of the Borrower, no such Insolvency or Reorganization which could
reasonably be expected to create a liability (after expected insurance payments)
in excess of $1,000,000 is likely to occur. Based upon GAAP existing as of the
date of this Agreement and current factual circumstances, the Borrower has no
reason to believe that the annual cost during the term of this Agreement to the
Borrower and all Commonly Controlled Entities for post-retirement benefits to be
provided to the current and former employees of the Borrower and all Commonly
Controlled Entities under Plans which are welfare benefit plans (as defined in
Section 3(l) of ERISA) will, in the aggregate, have a Material Adverse Effect.

      4.14 Environmental Laws. To the best knowledge and belief of the Borrower,
except for matters listed below in this Section 4.14 which could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect, and except as described on Exhibit X under the heading "Environmental
Matters:"

                  (a) no Property of the Borrower or of a Subsidiary of the
            Borrower is currently on or has ever been on, any federal or state
            list of Superfund Sites;

                  (b) no Hazardous Substances have been generated, transported,
            and/or disposed of by the Borrower or any Subsidiary of the Borrower
            at a site which

                                       47
<PAGE>
            was, at the time of such generation, transportation, and/or
            disposal, or has since become, a Superfund Site;

                  (c) except in accordance with applicable Requirements of Law
            or the terms of a valid permit, license, certificate, or approval of
            the relevant Governmental Authority, no Release of Hazardous
            Substances has occurred because of or been caused by the Borrower or
            any Subsidiary of the Borrower from, affecting, or related to any
            Property of the Borrower or any Subsidiary of the Borrower or the
            facilities located and the operations conducted thereon;

                  (d) no Environmental Complaint has been received by the
            Borrower or any Subsidiary of the Borrower;

                  (e) all facilities and property (including underlying
            groundwater) owned or leased by the Borrower or any of its
            Subsidiaries have been, and continue to be, owned or leased by the
            Borrower and its Subsidiaries in material compliance with all
            Environmental Laws; and

                  (f) the Borrower and its Subsidiaries have been issued and are
            in material compliance with all permits, certificates, approvals,
            licenses and other authorizations relating to environmental matters
            and necessary for their businesses.

      4.15 Compliance with Federal Reserve Regulations. No transaction
contemplated by the Loan Documents is in violation of any "margin stock"
regulations promulgated by the Board of Governors of the Federal Reserve System,
including Regulations T, U, or X.

      4.16 Investment Company Act Compliance. Neither the Borrower nor any
Subsidiary Guarantor is, or is directly or indirectly controlled by or acting on
behalf of any Person which is, an "investment company" or an "affiliated person"
of an "investment company" within the meaning of the Investment Company Act of
1940, as amended.

      4.17 Public Utility Holding Company Act Compliance. Neither the Borrower
nor any Subsidiary Guarantor is a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

      4.18 Proper Filing of Tax Returns; Payment of Taxes Due. The Borrower and
each Subsidiary of the Borrower has duly and properly filed its United States
income tax returns and all other tax returns which are required to be filed and
has paid all taxes shown to be due thereon, except such as are being contested
in good faith and as to which adequate provisions and disclosures have been made
and except such returns of which the failure to file has not had or would not
have a Material Adverse Effect. The respective charges and reserves on the books
of the Borrower with respect to taxes and other governmental charges are
adequate.

      4.19 Refunds. Except as described on Exhibit X under the heading
"Refunds," to the best knowledge and belief of the Borrower, no orders of,
proceedings pending before, or other requirements of, the Federal Energy
Regulatory Commission or any other Governmental

                                       48
<PAGE>
Authority exist which could reasonably be expected to result in the Borrower or
any Subsidiary of the Borrower being required to refund any material portion of
the proceeds received or to be received from the sale of hydrocarbons
constituting part of the Mortgaged Property.

      4.20 Gas Contracts. Except as described on Exhibit X under the heading
"Gas Contracts," as of the Closing Date, (a) the Borrower is not obligated, and
no Subsidiary of the Borrower is obligated, in any material respect, by virtue
of any prepayment made under any contract containing a "take-or-pay" or
"prepayment" provision or under any similar agreement to deliver hydrocarbons
produced from or allocated to any of the Mortgaged Property at some future date
without receiving full payment therefor within 90 days of delivery, and (b) none
of the Borrower or any Subsidiary of the Borrower has produced gas, in any
material amount, subject to, and none of the Borrower, any Subsidiary of the
Borrower or any of the Mortgaged Properties is subject to, balancing rights of
third parties or subject to balancing duties under governmental requirements,
except as to such matters for which the Borrower or such Subsidiary of the
Borrower has established monetary reserves adequate in amount to satisfy such
obligations.

      4.21 Intellectual Property. The Borrower and each Subsidiary of the
Borrower owns or is licensed to use all Intellectual Property necessary to
conduct all business material to its condition (financial or otherwise),
business, or operations as such business is currently conducted. No claim has
been asserted or is pending by any Person with respect to the use of any such
Intellectual Property or challenging or questioning the validity or
effectiveness of any such Intellectual Property; and the Borrower knows of no
valid basis for any such claim, and the use of such Intellectual Property by the
Borrower and each Subsidiary of the Borrower does not infringe on the rights of
any Person, except, in each case, for such claims and infringements as are not,
in the aggregate, likely to have a Material Adverse Effect.

      4.22 Labor Matters. Except as disclosed on Exhibit X under the heading
"Labor Matters," as of the Closing Date there are no collective bargaining
agreements covering the employees of the Borrower or any Affiliates of the
Borrower. None of such Persons has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five years, other
than those which could not reasonably be expected to have a Material Adverse
Effect.

      4.23 Casualties or Taking of Property. Except as disclosed on Exhibit X
under the heading "Casualties," since June 30, 2001, no Material Adverse Effect
has occurred with respect to the business nor any Property of the Borrower or
any Subsidiary of the Borrower as a result of any fire, explosion, earthquake,
flood, drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property, or cancellation of contracts, permits, or
concessions by any Governmental Authority, riot, activities of armed forces, or
acts of God.

      4.24 Locations of Borrower. The principal place of business and chief
executive office of the Borrower is located at the address of the Borrower set
forth on the signature pages hereof or at such other location as the Borrower
may have, by proper written notice hereunder, advised the Agent, provided that
such other location is within a state in which appropriate financing statements
from the Borrower in favor of the Agent have been filed.

                                       49
<PAGE>
      4.25 Subsidiaries. As of the date hereof, the Borrower has no Subsidiaries
other than those described on Exhibit X under the heading "Subsidiaries." As of
the date hereof, none of the Borrower or any Subsidiary of the Borrower is a
general partner or joint venturer or has partnership or joint venture interests
in any Person other than those described in Exhibit X.

      4.26 Good Standing. Borrower and all other Obligors set forth in Exhibit X
under the heading "Good Standing" have filed, or will have filed within thirty
(30) days of the date hereof, to qualify to do business in the respective
jurisdictions of organization and other jurisdictions as set forth in Exhibit X,
including filing all tax returns and other forms necessary to file with the
appropriate Governmental Authority in such jurisdictions.

                                   ARTICLE V.

                              AFFIRMATIVE COVENANTS

      So long as any Obligation remains outstanding or unpaid or any Commitments
exist, the Borrower shall and shall cause its Material Subsidiaries to:

      5.1 Maintenance and Access to Records. Keep adequate records, in
accordance with GAAP, of all Borrower's and of its Subsidiaries' transactions so
that at any time, and from time to time, their true and complete financial
condition may be readily determined, and promptly following the reasonable
request of the Agent or any Lender, make such records available at the
Borrower's or its Subsidiaries' place of business upon reasonable prior notice,
during normal business hours, for inspection by the Agent or any Lender and, at
the expense of the Borrower, allow the Agent or, at the expense of the Borrower
during the occurrence of any Event of Default, any Lender to make and take away
copies thereof.

      5.2 Quarterly Financial Statements; Compliance Certificates. Deliver to
each of the Lenders, on or before the 50th day after the close of each of the
first three quarterly periods of each fiscal year of the Borrower, Sufficient
Copies of the unaudited consolidated and consolidating Financial Statements of
the Borrower and its Subsidiaries as at the close of such quarterly period and
from the beginning of such fiscal year to the end of such period, such Financial
Statements to be certified by a Responsible Officer of the Borrower as having
been prepared in accordance with GAAP consistently applied and as a fair
presentation of the condition of the Borrower and its Subsidiaries, subject to
changes resulting from normal year-end audit adjustments, and a Compliance
Certificate.

      5.3 Annual Financial Statements. Deliver to each of the Lenders, on or
before the 100th day after the close of each fiscal year of the Borrower, the
annual audited consolidated Financial Statements and unaudited consolidating
Financial Statements of the Borrower and its Subsidiaries, and a Compliance
Certificate.

      5.4 Oil and Gas Reserve Reports.

                  (a) Deliver to the Agent and each of the Lenders no later than
            seventy five (75) days after the end of each fiscal year during the
            term of this Agreement, Sufficient Copies of engineering reports in
            form and substance reasonably satisfactory to the Agent, certified
            by any of the Persons listed under the heading

                                       50
<PAGE>
            "Approved Petroleum Engineers" on Exhibit X or any other nationally
            or regionally- recognized independent consulting petroleum engineers
            reasonably acceptable to the Agent as fairly and accurately setting
            forth, in accordance with the principles set forth in the Standards
            Pertaining to the Estimating and Auditing of Oil and Gas Reserves as
            at the time are promulgated by the Society of Petroleum Engineers,
            (i) the proven and producing, shut- in, behind-pipe, and undeveloped
            oil and gas reserves (separately classified as such) attributable to
            the Oil and Gas Properties of the Borrower and its Subsidiaries as
            of December 31 of the year for which such reserve reports are
            furnished, (ii) the aggregate present value of the future net income
            with respect to such Oil and Gas Properties, discounted at a stated
            per annum discount rate of proven and producing reserves, (iii)
            projections of the annual rate of production, gross income, and net
            income with respect to such proven and producing reserves, and (iv)
            information with respect to the "take-or-pay," "prepayment," and
            material gas-balancing liabilities of the Borrower or any other
            Mortgagor.

                  (b) Deliver to the Agent and each of the Lenders no later than
            fifty (50) days after the end of each second quarterly period of
            each fiscal year during the term of this Agreement, Sufficient
            Copies of engineering reports in form and substance reasonably
            satisfactory to the Agent prepared by or under the supervision of
            the chief petroleum engineer of the Borrower evaluating the Oil and
            Gas Properties of the Borrower and its Subsidiaries as of June 30 of
            the year for which such reserve reports are furnished and updating
            the information provided in the reports pursuant to Section 5.4(a).

                  (c) Each of the reports provided pursuant to this Section
            shall be submitted to the Agent and the Lenders together with such
            additional data concerning pricing, quantities of production from
            the Borrower's or any Mortgagor's or any other of the Borrower's
            Subsidiary's Oil and Gas Properties, volumes of production sold,
            hedging positions, purchasers of production, gross revenues,
            expenses, and such other information and engineering and geological
            data with respect thereto as the Agent may reasonably request.

      5.5 Title Opinions; Title Defects. Promptly upon the written request of
the Agent made no more than once in any calendar year commencing with 2002,
furnish to the Agent confirmation of Title reasonably acceptable to the Agent,
covering Oil and Gas Properties constituting not less than 81% of the then Risk
Adjusted Present Value of the Material Properties described in clause (a) of the
definition thereof and 80% of the then net present value of the Material
Properties described in clause (b) of the definition thereof, determined in
accordance with the most recent Reserve Reports provided to the Agent in
accordance with Section 5.4; and promptly, but in any event within 60 days after
notice by the Agent of any defect which is material (in the reasonable opinion
of the Agent) in value, in the Title of the Borrower or any Subsidiary Guarantor
to any of such Oil and Gas Properties, clear such Title defects. In the event
any such Title defects are not cured in a timely manner, the value of the
affected Oil and Gas Properties shall be excluded from the Borrowing Base, or at
the Borrower's election, the Borrower shall pay all related costs and fees
incurred by the Agent to cure such Title defects.

                                       51
<PAGE>
      5.6 Notices of Certain Events. Deliver to the Agent promptly upon having
knowledge of the occurrence of any of the following events or circumstances, a
written statement with respect thereto, signed by a Responsible Officer of the
Borrower and setting forth the relevant event or circumstance and the steps
being taken by the Borrower or the Borrower's Subsidiary with respect to such
event or circumstance:

                  (a) any Default or Event of Default;

                  (b) any default or event of default under any contractual
            obligation of the Borrower or any Subsidiary of the Borrower or any
            litigation, investigation, or proceeding between the Borrower or any
            Subsidiary of the Borrower and any Governmental Authority which, in
            either case, (and if not cured in the case of any such default or
            event of default, as the case may be) could reasonably be expected
            to have a Material Adverse Effect;

                  (c) any litigation or proceeding involving the Borrower or any
            Subsidiary of the Borrower as a defendant or in which any Property
            of the Borrower or any Subsidiary of the Borrower is subject to a
            claim and in which the amount of the claim against the Borrower or
            any Subsidiary of the Borrower is $1,000,000 or more and which is
            not covered by insurance or in which injunctive or similar relief is
            sought;

                  (d) [Intentionally blank];

                  (e) [Intentionally blank];

                  (f) [Intentionally blank];

                  (g) any Reportable Event or imminently expected Reportable
            Event with respect to any Plan; any withdrawal from, or the
            termination, Reorganization or Insolvency of, any Multiemployer
            Plan; the institution of proceedings or the taking of any other
            action by the PBGC, the Borrower or any Commonly Controlled Entity
            or Multiemployer Plan with respect to the withdrawal from, or the
            termination, Reorganization or Insolvency of, any Single Employer
            Plan or Multiemployer Plan; or any Prohibited Transaction in
            connection with any Plan or any trust created thereunder and the
            action being taken by the Internal Revenue Service with respect
            thereto; and

                  (h) any other event or condition which could reasonably be
            expected to have a Material Adverse Effect.

      5.7 Additional Information. Furnish to the Agent, (a) within five Business
Days after any material report (other than financial statements) or other
communication is sent by the Borrower to its stockholders or filed by the
Borrower with the Securities and Exchange Commission or any successor or
analogous Governmental Authority, Sufficient Copies of such report or
communication and, promptly upon the request of the Agent, (b) such additional
financial or other information concerning the assets, liabilities, operations,
and transactions of the Borrower and its Subsidiaries as the Agent may from time
to time reasonably request

                                       52
<PAGE>
including without limitation, all such information that the Borrower or any
Subsidiary of the Borrower may have or receive with respect to the Collateral
and (c) notice not less than ten (10) Business Days prior to the occurrence of
any condition or event that may change the proper location for the filing of any
financing statement or other public notice or recording for the purpose of
perfecting a Lien in any Collateral, including any change in its name or the
location of its principal place of business or chief executive office; and upon
the request of the Agent, execute such additional Security Instruments as may be
necessary or appropriate in connection therewith.

      5.8 Compliance with Laws. Except to the extent the failure to comply or
cause compliance would not have a Material Adverse Effect, (a) comply with all
Requirements of Law applicable to the Borrower or any Subsidiary, including (i)
the Natural Gas Policy Act of 1978, as amended, (ii) ERISA, (iii) Environmental
Laws, and (iv) all permits, licenses, registrations, approvals, and
authorizations (A) related to any natural or environmental resource or media
located on, above, within, in the vicinity of, related to or affected by any
Property of the Borrower or any Subsidiary, (B) required for the performance of
the operations of the Borrower or any Subsidiary, or (C) applicable to the use,
generation, handling, storage, treatment, transport, or disposal of any
Hazardous Substances; and (b) require that all employees, crew members, agents,
contractors, subcontractors, and future lessees (pursuant to appropriate lease
and other contractual provisions) of the Borrower or any Subsidiary, while such
Persons are acting within the scope of their relationship with the Borrower or
any Subsidiary, comply with all such Requirements of Law as may be necessary or
appropriate to enable the Borrower or any Subsidiary to so comply. For purposes
of this Section 5.8, "Subsidiary" means a Subsidiary of the Borrower.

      5.9 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against the Property of the Borrower or any Subsidiary of the
Borrower, except any of the foregoing being contested in good faith and as to
which adequate reserve in accordance with GAAP has been established or unless
failure to pay would not have a Material Adverse Effect.

      5.10 Maintenance of Corporate Existence and Good Standing. (a) Maintain
its existence and good standing in its jurisdiction of organization and (b)
maintain its corporate qualification and good standing in all jurisdictions
wherein the Property now owned or hereafter acquired or business now or
hereafter conducted by the Borrower or any Subsidiary of the Borrower
necessitates same, unless the failure to do so would not have a Material Adverse
Effect.

      5.11 Payment of Notes; Performance of Obligations. Pay the Notes according
to the reading, tenor, and effect thereof, as modified hereby, and do and
perform every act and discharge all of its other Obligations.

      5.12 Further Assurances. Promptly after discovery thereof cure any
defects, errors, or omissions in the execution and delivery of any of the Loan
Documents required to be executed by the Borrower or any of the Subsidiary
Guarantors and execute, acknowledge, and deliver to the Agent such other
assurances and instruments as shall, in the reasonable opinion of the Agent, be
necessary to fulfill the terms of the Loan Documents.

                                       53
<PAGE>
      5.13 Fees and Expenses.

                  (a) Upon request by the Agent, promptly pay to or reimburse
            the Agent or the Collateral Agent, as applicable, for all reasonable
            third-party fees, out-of-pocket costs and expenses of the Agent and
            the Collateral Agent in connection with the preparation,
            negotiation, execution, delivery and enforcement of this Agreement
            and the other Loan Documents, and any and all amendments,
            restatements and supplements thereof and thereto, the filing and
            recordation of the Security Instruments, and the consummation of the
            transactions contemplated by the Loan Documents, including
            reasonable fees and expenses of legal counsel and, to the extent
            retained after an Event of Default in connection with "workout" or
            enforcement of this Agreement and the other Loan Documents, auditors
            and accountants acting for both the Agent and the Collateral Agent.

                  (b) Upon request by the Agent (which shall be made promptly
            after any request by the Collateral Agent or any Lender), promptly
            pay (to the fullest extent permitted by law) for all amounts
            reasonably expended, advanced, or incurred during the continuance of
            an Event of Default by or on behalf of the Agent, the Collateral
            Agent or any other Lender Party: (i) to satisfy any obligation of
            the Borrower or any Subsidiary of the Borrower under any of the Loan
            Documents; (ii) to collect the Obligations; (iii) to enforce the
            rights of the Agent, the Collateral Agent, and the Lender Parties
            under any of the Loan Documents, whether or not in an Insolvency
            Proceeding; (iv) to protect the Properties or business of the
            Borrower and any Subsidiary of the Borrower including the
            Collateral, which amounts shall be deemed compensatory in nature and
            liquidated as to amount upon notice to the Borrower by the Agent and
            which amounts shall include all court costs and reasonable fees and
            expenses of legal counsel, auditors and accountants, petroleum
            engineers, and environmental and insurance consultants; (v) in
            connection with the participation by the Agent and the Lenders as
            members of the creditors' committee in a case commenced under any
            Insolvency Proceeding; (vi) in connection with lifting the automatic
            stay prescribed in Section 362 Title II of the United States Code;
            and (vii) in connection with any action pursuant to Section 1129
            Title II of the United States Code, all as shall be reasonably
            incurred by the Agent, the Collateral Agent, and the Lender Parties
            during the continuance of an Event of Default in connection with the
            collection of any sums due under the Loan Documents, together with
            interest at the per annum interest rate equal to the Default Rate on
            each such amount from the date of notification that the same was
            expended, advanced, or incurred by the Agent, the Collateral Agent,
            or any Lender Party until the date it is repaid to the Agent, the
            Collateral Agent, or such Lender Party, with the obligations under
            this Section, to the extent permitted by law, surviving the
            non-assumption of this Agreement in a case commenced under any
            Insolvency Proceeding and being binding upon the Borrower and each
            Subsidiary Guarantor and/or a trustee, receiver, custodian, or
            liquidator of such Borrower and each Subsidiary Guarantor appointed
            in any such case.

                                       54
<PAGE>
      5.14 Operation of Oil and Gas Properties. Develop, maintain, and operate
its Oil and Gas Properties in a prudent and workmanlike manner in accordance
with industry standards or make reasonable and customary efforts to cause such
Properties to be so operated.

      5.15 Maintenance and Inspection of Properties. Use reasonable and
customary efforts to maintain or cause to be maintained all of its material
tangible Property in good repair and condition, ordinary wear and tear excepted;
make all reasonably necessary replacements thereof and permit any authorized
representative of the Agent, the Collateral Agent or any Lender to visit and
inspect at any reasonable time and upon reasonable notice any tangible Property
of the Borrower or any Subsidiary of the Borrower; provided, however, that any
expenses incurred in connection with any such visit or inspection shall be
reimbursed by the Borrower if required under Section 5.13.

      5.16 Maintenance of Insurance. Maintain insurance with respect to its
Property and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
reasonably acceptable to the Required Lenders and, within 30 days of the Closing
Date furnish the Collateral Agent evidence of maintenance of property damage
insurance covering Collateral which names the Collateral Agent as a loss payee
and as additional insured as its interest may appear, and, upon any renewal of
any such insurance and at other times upon reasonable request by the Collateral
Agent, furnish to the Collateral Agent evidence, reasonably satisfactory to the
Collateral Agent, of the maintenance of such insurance. The Collateral Agent
shall have the right to collect, and the Borrower hereby assigns and the
Subsidiary Guarantors pursuant to the other Loan Documents have assigned to the
Collateral Agent, any and all monies that may become payable under any policies
of insurance by reason of damage, loss, or destruction of any of the Collateral.
In the event of any damage, loss, or destruction of Collateral at such time as a
Default or an Event of Default has occurred and is continuing, the Collateral
Agent may, at its option, apply all or a portion of any insurance proceeds
received by it toward the payment of the Obligations, whether matured or
unmatured, application to be made first to interest and then to principal, and
shall deliver to the Borrower the balance, if any, after such application has
been made. The prepayment of any LIBO Rate Loan by the application of such
insurance proceeds shall not require the Borrower to pay any penalty or premium,
including any yield protection amounts which otherwise would be payable upon
such prepayment under Section 2.22. In the event of any such damage, loss, or
destruction of Collateral at a time when no Default or Event of Default has
occurred and is continuing, the Collateral Agent shall deliver any such proceeds
received by it to the Borrower. In the event the Collateral Agent receives
insurance proceeds not attributable to Collateral, the Collateral Agent shall
deliver any such proceeds to the Borrower.

5.17 Indemnification. INDEMNIFY AND HOLD THE AGENT, THE COLLATERAL AGENT, THE
ARRANGER AND EACH OF THE LENDERS AND EACH OF THE OTHER LENDER PARTIES AND THEIR
RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, AND AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE AGENT,
THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE CO-ARRANGER, THE ARRANGER AND
THE OTHER LENDERS AND LENDER PARTIES UNDER ANY SECURITY INSTRUMENT HARMLESS FROM
AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES,
CHARGES, ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL
ACTIONS, REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY

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KIND, AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH (INCLUDING
REASONABLE ATTORNEYS' FEES AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, FROM (a) THE PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER,
OR FROM ANY PROPERTY OF THE BORROWER OR ANY SUBSIDIARY OF BORROWER, WHETHER
PRIOR TO OR DURING THE TERM HEREOF OR THE FAILURE OR ALLEGED FAILURE OF THE
BORROWER OR ANY SUBSIDIARY OF THE BORROWER TO COMPLY WITH ENVIRONMENTAL LAWS,
(b) ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF ANY PROPERTY OF THE BORROWER
OR ANY SUBSIDIARY OF BORROWER, WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND
WHETHER BY THE BORROWER OR ANY SUBSIDIARY OF BORROWER OR ANY PREDECESSOR IN
TITLE, EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR ANY
SUBSIDIARY OF BORROWER OR ANY OTHER PERSON AT ANY TIME OCCUPYING OR PRESENT ON
SUCH PROPERTY, IN CONNECTION WITH THE HANDLING, TREATMENT, REMOVAL, STORAGE,
DECONTAMINATION, CLEANUP, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR UNDER SUCH PROPERTY, (c) ANY
RESIDUAL CONTAMINATION OF ANY HAZARDOUS SUBSTANCE ON OR UNDER ANY PROPERTY OF
THE BORROWER OR ANY SUBSIDIARY OF BORROWER, (d) ANY CONTAMINATION OF ANY
PROPERTY OR NATURAL RESOURCES ARISING IN CONNECTION WITH THE GENERATION, USE,
HANDLING, STORAGE, TRANSPORTATION OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE
BORROWER OR ANY SUBSIDIARY OF THE BORROWER OR ANY EMPLOYEE, AGENT, CONTRACTOR,
OR SUBCONTRACTOR OF THE BORROWER OR ANY SUBSIDIARY OF BORROWER WHILE SUCH
PERSONS ARE ACTING WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH THE BORROWER OR
ANY SUBSIDIARY OF BORROWER, IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE
OR WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE REQUIREMENTS OF LAW, OR (e)
THE PERFORMANCE AND ENFORCEMENT OF ANY LOAN DOCUMENT, ANY ALLEGATION BY ANY
BENEFICIARY OF A LETTER OF CREDIT OF A WRONGFUL DISHONOR BY THE AGENT OF A CLAIM
OR DRAFT PRESENTED THEREUNDER WHERE SUCH CLAIM OR DRAFT CONFORMED ON ITS FACE TO
SUCH LETTER OF CREDIT, OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR
RELATED TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
ANY OF THE FOREGOING IN THIS SECTION ARISING FROM NEGLIGENCE, WHETHER SOLE OR
CONCURRENT, ON THE PART OF THE AGENT, THE COLLATERAL AGENT, THE ARRANGER OR ANY
LENDER OR LENDER PARTY OR ANY OF THEIR RESPECTIVE SHAREHOLDERS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, OR AFFILIATES OR ANY TRUSTEE
FOR THE BENEFIT OF THE AGENT, THE COLLATERAL AGENT, THE ARRANGER OR THE LENDERS
OR ANY OTHER LENDER PARTY UNDER ANY SECURITY INSTRUMENT; PROVIDED, HOWEVER, THE
FOREGOING CLAUSES (a) THROUGH (e) SHALL NOT APPLY TO ANY CLAIM, LOSS, DAMAGE,
LIABILITY, FINE, PENALTY, CHARGE, PROCEEDING, ORDER, JUDGMENT, ACTION OR
REQUIREMENT ATTRIBUTABLE TO (i) THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
ANY PERSON TO BE INDEMNIFIED OR (ii) ANY ACTION OR INACTION OF ANY PERSON TO BE
INDEMNIFIED SUBSEQUENT TO THE EXERCISE OF OWNERSHIP RIGHTS AFTER ANY FORECLOSURE
ACTION WITH RESPECT TO ANY OF THE COLLATERAL TO THE EXTENT, WITH RESPECT TO SUCH
COLLATERAL, SUCH CLAIM, LOSS, DAMAGE, LIABILITY, FINE, PENALTY, CHARGE,
PROCEEDING, ORDER, JUDGMENT, ACTION OR REQUIREMENT ARISES SUBSEQUENT TO THE
EXERCISE OF OWNERSHIP RIGHTS AFTER ANY FORECLOSURE ACTION WITH RESPECT TO SUCH
COLLATERAL, AND TO THE EXTENT SUCH PERSON IS A "PERSON IN CONTROL" UNDER ANY
ENVIRONMENTAL LAW. THE FOREGOING INDEMNITY SHALL SURVIVE SATISFACTION OF ALL
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT, UNLESS ALL SUCH OBLIGATIONS
HAVE BEEN SATISFIED WHOLLY AND INDEFEASIBLY IN CASH FROM THE BORROWER OR A
SUBSIDIARY GUARANTOR AND NOT BY WAY OF REALIZATION AGAINST ANY COLLATERAL OR THE
CONVEYANCE OF ANY PROPERTY IN LIEU THEREOF.

      5.18 Liens on Material Properties; Additional Guaranties and Mortgages.

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                  (a) Cooperate in good faith with the Agent to execute from
            time to time such documents and instruments as the Agent may
            reasonably request and (ii) execute and deliver and cause to be
            executed and delivered instruments and documents, in each case, to
            assure that Properties constituting Material Properties are at all
            times subject to a first priority Lien (or, in the case of the
            Properties subject to the Production Payment 2001 Lien or Acquired
            Property, a second priority Lien subordinate to the Production
            Payment 2001 Lien or the Lien securing such Acquisition
            Indebtedness, as the case may be) in favor of the Collateral Agent
            (subject to Permitted Liens and Liens permitted under Section 6.3)
            to secure the Obligations (other than Hedging Obligations, if any,
            which are not Secured Hedging Obligations).

                  (b) If after the date hereof, the Borrower, or any Subsidiary
            of the Borrower, shall form or acquire any Subsidiary, including a
            VPP Subsidiary, or any such Subsidiary of the Borrower or a
            Subsidiary of the Borrower shall begin commercial operations, the
            Borrower shall execute, or cause its relevant Subsidiary to execute,
            a Pledge Agreement substantially in the form of those delivered
            pursuant to Section 3.1(f)(ii) pledging the equity interest of the
            Borrower or such Subsidiary of the Borrower in such Subsidiary and
            any notes (excluding intercompany notes) payable to such Subsidiary
            to the Collateral Agent for the benefit of the Lender Parties to
            secure the Obligations (other than Hedging Obligations, if any,
            which are not Secured Hedging Obligations) of the Borrower and its
            Subsidiaries pursuant to this Agreement and the Loan Documents;
            shall execute or cause its Subsidiary to execute and deliver to the
            Collateral Agent all other documents and instruments (including
            UCC-1 Financing Statements) and take all other actions with respect
            to the creation and maintenance of such Lien as the Agent or
            Collateral Agent may reasonably request; and shall deliver to the
            Agent and the other Lender Parties such opinions of counsel
            satisfactory to the Agent with respect to such Pledge Agreement,
            which opinions shall be in form and substance reasonably
            satisfactory to the Agent, as the Collateral Agent or Agent may
            reasonably request; provided, however, that notwithstanding the
            foregoing, the Borrower and its Subsidiaries shall not be obligated
            to pledge the equity interests of the Borrower and its Subsidiaries
            in any VPP Subsidiary to the Collateral Agent if (i) such pledge is
            prohibited under the terms of such VPP Subsidiary's organizational
            documents, (ii) such equity interests are held by a Subsidiary of
            the Borrower which only business or activity is owning, either
            directly or through another Subsidiary, equity interests in VPP
            Subsidiaries, and which only Properties consist of such equity
            interests (such Person a "VPP SPV") or are held by a Subsidiary of
            the Borrower all of the outstanding capital stock of which is held
            by a VPP SPV and (iii) the equity in such VPP SPV is pledged as
            provided in this clause (b).

                  (c) The Borrower shall also cause any Subsidiary (whether
            owned, formed or acquired) of the Borrower (other than a VPP
            Subsidiary) which has or which acquires Property such that its
            Property has a value in excess of $1,000,000 or which begins
            commercial operations to become a Subsidiary Guarantor with respect
            to, and jointly and severally liable with all other Subsidiary
            Guarantors

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            for, all the Obligations (other than Hedging Obligations, if any,
            which are not Secured Hedging Obligations) of the Borrower under
            this Agreement and all other Loan Documents by executing and
            delivering to the Agent for the benefit of the Lender Parties a
            Subsidiary Guaranty substantially in the form of Exhibit XIV; to
            execute and deliver to the Collateral Agent a Mortgage substantially
            in the form of those delivered pursuant to Section 3.1(f)(i) (with
            such changes as the Collateral Agent may reasonably request)
            creating a first priority Lien in favor of the Collateral Agent for
            the benefit of the Lender Parties (subject to Permitted Liens and
            Liens permitted under Section 6.3) securing all the Obligations
            (other than Hedging Obligations, if any, which are not Secured
            Hedging Obligations) of the Borrower and such Subsidiary under this
            Agreement, the Subsidiary Guaranty and any other Loan Document as
            may be requested to assure that Properties constituting Material
            Properties are subject to a Lien in favor of the Collateral Agent
            securing the Obligations; to execute and deliver to the Collateral
            Agent all other documents and instruments (including UCC-1 Financing
            Statements) and take all other actions with respect to the creation
            and maintenance of such Lien as the Agent or Collateral Agent may
            reasonably request; and to deliver to the Agent and the other Lender
            Parties such opinions of counsel satisfactory to the Agent with
            respect to such Security Instruments, which opinions shall be in
            form and substance satisfactory to the Agent, as the Collateral
            Agent or Agent may reasonably request; provided, that
            notwithstanding the foregoing, to the extent that such Subsidiary
            shall acquire such Property with the proceeds of Indebtedness of the
            type described in Section 6.1(g) or (h) (such Property herein
            "Acquired Property" and such Indebtedness herein "Acquisition
            Indebtedness"), the Liens required pursuant to this Section 5.18(c)
            with respect to such Property may be a second priority Lien behind a
            Lien securing such Acquisition Indebtedness rather than a first
            priority lien and, provided further, that to the extent such
            Acquisition Indebtedness prohibits the granting of a second priority
            Lien, the Borrower shall, in lieu of taking the action set forth
            above in this clause (c), cause the Acquired Property to be acquired
            by a special purpose acquisition Subsidiary of the Borrower which
            only business or activity is owning, operating, producing, drilling
            and/or developing such Acquired Property and shall cause such
            Subsidiary to execute a Pledge Agreement and take the other actions
            contemplated by clause (b) above.

                  (d) If, after the date hereof, the Borrower or any Subsidiary
            of the Borrower (i) sells, transfers or otherwise disposes of, in a
            transaction permitted under Section 6.5 hereof, any assets subject
            to a Lien in favor of the Collateral Agent, all of the capital stock
            owned by it of a Subsidiary Guarantor or any equity that is pledged
            pursuant to a Pledge Agreement or (ii) enters into any transaction
            permitted under the proviso of the first sentence of Section 6.10
            hereof, (1) the Liens with respect to any such assets so sold,
            transferred or disposed of shall automatically be deemed to have
            been released, (2) any Pledge Agreements executed by the holder of
            any equity that is the subject of a transaction permitted under
            Section 6.5(f) to the extent such Pledge Agreement relates to such
            equity shall automatically be deemed to have been terminated, (3)
            any Subsidiary Guaranty executed by the issuer of any equity that is
            the subject of a transaction

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<PAGE>
            permitted under Section 6.5(f) shall automatically be deemed to have
            been terminated and (4) any Pledge Agreements applicable to the
            equity of a Subsidiary that is a party to a transaction permitted
            under the proviso of the first sentence of Section 6.10 to the
            extent such Pledge Agreement relates to such equity shall
            automatically be deemed to have been terminated, and the Collateral
            Agent shall at the expense of the Borrower execute all such
            documents and instruments (including UCC-3 Financing Statements) and
            take all such other actions as may be reasonably necessary to effect
            the foregoing. Each Lender Party hereby authorizes the Collateral
            Agent to take the actions contemplated by this clause (d).

                  (e) If on or after January 1, 2002 (i) any or all of
            Medallion, Gas Services or Michigan Resources shall not have been
            merged into KCS Resources, Inc. or (ii) Energy Marketing shall not
            have been merged into KCS Energy Services, Inc., then the Borrower
            shall no later than January 15, 2002 cause to be delivered to the
            Agent with respect to any of Medallion, Gas Services, Michigan
            Resources and Energy Marketing which is not merged as aforesaid,
            certificates of secretaries or assistant secretaries thereof, board
            resolutions, good standing certificates, and opinions of counsel,
            satisfactory to the Agent, with respect to such Subsidiary's
            Subsidiary Guaranty and such Subsidiary as the Agent may reasonably
            request, including certificates and opinions to the effect of the
            certificates and opinions delivered pursuant to clauses (c), (d),
            (e), (g), (m) and (t) of Section 3.1

      5.19 Maintenance of Agreements, etc. Take all commercially reasonable
efforts to maintain all rights and privileges useful or necessary in the conduct
of its business.

      5.20 Hedging. Each Hedging Agreement shall have as parties the Borrower or
a Subsidiary Guarantor and a Qualified Swap Counterparty at the time such
Hedging Agreement is entered into. The obligations of the Borrower pursuant to
any Hedging Agreement of the Borrower entered into, in the Borrower's
discretion, with any Lender or an Affiliate of a Lender may, if so elected by
such Lender or Affiliate of a Lender, be secured by the Collateral pursuant to
the Security Instruments (each such Hedging Agreement, a "Secured Hedging
Agreement"); all other Hedging Agreements shall be unsecured.

                                  ARTICLE VI.

                               NEGATIVE COVENANTS

      So long as any Obligation remains outstanding or unpaid or any Commitments
exist, the Borrower will not and will not permit any Material Subsidiary (or in
the case of Section 6.1, any Subsidiary) of the Borrower to:

      6.1 Indebtedness. Create, incur, assume, or suffer to exist any
Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to the Obligations, (b) unsecured accounts
payable incurred in the ordinary course of business, which are not unpaid in
excess of 60 days beyond invoice date or are being contested in good faith and

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as to which such reserve as is required by GAAP has been made, (c) up to
$80,000,000 in the aggregate of Senior Notes, (d) up to $125,000,000 in the
aggregate of the notes issued pursuant to the indenture described in clause (ii)
of the definition of Public Debt, (e) up to $80,000,000 in the aggregate of
Subordinated Indebtedness other than that described in clause above; provided
that at no time shall the face principal amount of such other Subordinated
Indebtedness plus the principal amount of the then outstanding Senior Notes
exceed $80,000,000 in the aggregate, (f) the Production Payment 2001
Obligations, (g) Indebtedness, the proceeds of which is used by the Borrower and
the Subsidiary Guarantors to acquire Oil and Gas Properties, provided that (i)
such Indebtedness is either borrowed from the Lenders or is otherwise acceptable
to the Agent and the Lenders acting reasonably and (ii) after giving effect to
the incurrence thereof, no Default or Event or Default shall have occurred and
be continuing, Indebtedness of Subsidiaries of the Borrower other than
Subsidiary Guarantors which is not recourse directly or indirectly to the
Borrower and its other Subsidiary Guarantors; provided such Indebtedness is
acceptable to the Agent acting reasonably and (ii) after giving effect to the
incurrence thereof, no Default or Event of Default shall have occurred and be
continuing and Indebtedness not otherwise permitted under this Section 6.1 which
does not exceed at any one time the aggregate principal amount of $1,000,000.

      6.2 Contingent Obligations. Create, incur, assume, or suffer to exist any
Contingent Obligation; provided, however, the foregoing restriction shall not
apply to (a) performance guaranties and performance surety or other bonds
provided in the ordinary course of business, including guaranties and letters of
credit supporting such performance obligations, (b) trade credit incurred or
operating leases entered into in the ordinary course of business, (c) guaranties
and contribution obligations under the Public Debt (d) endorsements of
instruments for deposit or collection in the ordinary course of business (e)
guaranties of any other Indebtedness permitted under Section 6.1(c) through (e)
or Section 6.1(g) or Section 6.1(i), and (f) Contingent Obligations in favor of
any Lender Party in its capacity as such; provided, however, that nothing herein
shall restrict the existence and performance by the Borrower or any Material
Subsidiary of the Production Payment 2001 Facility or the Production Payment
2001 Obligations.

      6.3 Liens. Create, incur, assume, or suffer to exist any Lien on any of
its Oil and Gas Properties or any other Property, whether now owned or hereafter
acquired; provided, however, the foregoing restrictions shall not apply to (a)
Permitted Liens, (b) landlord's Liens in any Property which is not Collateral,
(c) Liens existing on cash deposits in connection with the defeasance of
Indebtedness permitted in Section 6.1(d), (d) Liens incurred in the ordinary
course of business covering deposit accounts in favor of the depository
institution holding such accounts and arising in connection with obligations of
the Borrower or any Subsidiary Guarantor arising from any such accounts, (e)
Liens securing the payment or performance of tenders, statutory or regulatory
obligations, surety and appeal bonds, bids, government contracts and leases,
performance and return of money bonds and similar obligations (other than for
payment of Debt) and covering Property which is not Collateral, (f) Liens on
Acquired Property securing Acquisition Indebtedness related thereto to the
extent permitted pursuant to the proviso of Section 5.18(c), and (g) Liens
described on Exhibit X under the heading "Liens".

      6.4 Negative Pledge Agreements. Create, enter into, execute, incur, assume
or permit to exist, any contract, agreement or understanding (other than the
Loan Documents) which in any manner grants, conveys, creates or imposes, or
which in any way prohibits or restricts the

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granting, conveying, creation or imposition of, any Lien on any Property of the
Borrower, or which requires the consent of, or notice to, other Persons in
connection therewith; provided, however, the foregoing restrictions shall not
apply to (a) any of the foregoing as may be required under any Indebtedness
permitted under Section 6.1, and (b) any of the foregoing with respect to any
Liens permitted pursuant to Section 6.3.

      6.5 Sales of Assets. Sell, transfer, or otherwise dispose of, in one or
any series of transactions, assets, whether now owned or hereafter acquired or
enter into any agreement to do so; provided, however, the foregoing restriction
shall not apply to (a) the sale of hydrocarbons or inventory in the ordinary
course of business other than the sale of a production payment and provided that
no contract for the sale of hydrocarbons shall obligate the Borrower or its
Subsidiary, as the case may be, to deliver hydrocarbons produced from any of the
Mortgaged Property at some future date without receiving full payment therefor
within 90 days of delivery, the sale or other disposition of Property destroyed,
lost, worn out, damaged, or having only salvage value or no longer used or
useful in the business of such Borrower, (c) the sale of Specified Assets on or
before April 1, 2002, (d) the sale of emission credits relating to any Oil and
Gas Property; provided such emission credits are not necessary for the efficient
operation of such Oil and Gas Property and will not increase the cost of
operating such Oil and Gas Property as contemplated by the most recent Reserve
Report delivered pursuant hereto, will not change the value of such Oil and Gas
Property and will not increase the Borrower's or the Borrower's Subsidiary's, as
the case may be, operational risk, (e) in addition to sales permitted by clauses
(a), (b), (c) and (d) above arms- length sales of assets in any Sales Period
having in the aggregate a value not in excess of $1,000,000, or (f) the capital
stock of any Subsidiary of the Borrower where the only assets of such Subsidiary
consist of assets the sale of which would be permitted under one or more of the
preceding clauses (a) through (e) of this Section 6.5. For purposes of this
Section 6.5, the value of any Property shall be the discounted present value of
such Property as shown on the most recent Reserve Report delivered to the Agent
pursuant to this Agreement. Cash proceeds received by the Borrower or any of its
Subsidiaries from the sales of assets permitted hereby (other than the Specified
Assets) shall either be (i) reinvested in substantially similar assets within
120 days after such sale or (ii) used for general corporate purposes, subject to
a concurrent adjustment of the Borrowing Base to eliminate the amount
attributable by the Required Lenders to the sold assets in the most recent
Borrowing Base determination under Section 2.12 and repayment within thirty days
of any amounts required pursuant to Section 2.13 as a result of such
redetermination. Sale of any asset not expressly permitted in this Section 6.5
shall require prior approval by the consent of the Agent and the Required
Lenders. Net proceeds received from the sales of Specified Assets not reinvested
or used as provided in the second next preceding sentence shall be applied
promptly to payment of outstanding Loans and to secure L/C Exposure of the
Borrower.

      6.6 Leasebacks. Enter into any agreement to sell or transfer any Property
and thereafter rent or lease as lessee such Property or other Property intended
for the same use or purpose as the Property sold or transferred; provided that
the foregoing restrictions of this Section 6.6 shall not apply to Property
(which Property is not Oil and Gas Property) with a fair market value not in
excess of $500,000.

      6.7 Loans; Advances; Investments. Except as permitted by Section 6.1, make
or agree to make or allow to remain outstanding any loans or advances to or
acquire Investments in,

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guaranty the Indebtedness of, or purchase or otherwise acquire all or
substantially all of the assets of any Person; provided, however, the foregoing
restrictions shall not apply to (a) advances or extensions of credit in the form
of accounts receivable incurred in the ordinary course of business and upon
terms common in the industry for such accounts receivable, (b) advances to
employees of the Borrower for the payment of expenses in the ordinary course of
business, (c) the purchase or acquisition of Oil and Gas Properties located in
or offshore North America, (d) Investments in the form of (i) debt securities
issued or directly and fully guaranteed or insured by the United States
Government or any agency or instrumentality thereof, with maturities of no more
than one year from the date of acquisition, (ii) commercial paper of a domestic
issuer rated at the date of acquisition at least P-1 by Moody's Investor
Service, Inc. or A-1 by Standard & Poor's Corporation and with maturities of no
more than one year from the date of acquisition, and (iii) repurchase agreements
covering debt securities or commercial paper of the type permitted in this
Section, certificates of deposit, demand deposits, eurodollar time deposits,
overnight bank deposits and bankers' acceptances, with maturities of no more
than one year from the date of acquisition, issued by or acquired from or
through the Agent, any Lender, or any bank or trust company organized under the
laws of the United States or any state thereof and having capital surplus and
undivided profits aggregating at least $500,000,000, (e) other short-term
Investments similar in nature and degree of risk to those described in clause
(d) of this Section, (f) the VPP Subsidiaries Investment and (g) Investments by
the Borrower or any Subsidiary of the Borrower in the Borrower or any of its
Subsidiaries; provided, that notwithstanding the foregoing clause (g),
Investments by the Borrower or any Subsidiary of the Borrower in any
Subsidiaries that are not Subsidiary Guarantors shall not exceed $750,000 in the
aggregate for all such Investments in all such Subsidiaries which are not
Subsidiary Guarantors. Notwithstanding the foregoing clause (f), Borrower shall
be permitted to make the VPP Subsidiaries Investment only if (i) the applicable
VPP Subsidiary agrees with the Lenders in writing to incur only non-recourse
Indebtedness and (ii) the Borrower pledges or causes to be pledged its direct or
indirect equity interest in the VPP Subsidiary to the Collateral Agent for the
benefit of the Lender Parties as additional security for the Borrower's
obligations under this Agreement in accordance with, and if required under,
Section 5.18(b) hereof.

      6.8 Dividends and Distributions. Declare, pay, or make, whether in cash or
Property of the Borrower, any dividend or distribution on or purchase, redeem,
or otherwise acquire for value, any share of any class of its capital stock;
provided, however, the foregoing restriction shall not apply to (i) dividends
paid in or other payments made in capital stock of the Borrower or options,
interests or other rights to purchase any such capital stock or (ii) the direct
conversion of the Preferred Stock to Common Stock of the Borrower pursuant to
the Borrower's articles of incorporation, (iii) the prepayment, purchase or
redemption of Preferred Stock using the Net Cash Proceeds from the issuance of
equity securities for such prepayment, purchase or redemption, or (iv) the
payment of cash dividends on the Preferred Stock in accordance with the
Borrower's articles of incorporation as in effect on the date hereof.

      6.9 Environmental Matters. Cause or permit any of its Property to be in
violation of any Environmental Law or do anything or permit anything to be done
that would subject any of its Property to be subject to any remedial obligations
under any Environmental Law, assuming disclosure to applicable Governmental
Authorities of all relevant facts, conditions, and circumstances, except where
the foregoing would not have a Material Adverse Effect.

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      6.10 Merger, etc.; Changes in Corporate Structure. Enter into any
transaction of consolidation, merger, or amalgamation; liquidate, wind up, or
dissolve (or suffer any liquidation or dissolution) other than the merger of
Subsidiaries; provided, however, the foregoing restriction shall not apply to
any such consolidation, merger, amalgamation, liquidation, winding up, or
dissolution involving a Subsidiary having only assets the sale of which would be
permitted under Section 6.5 hereof. The Borrower will not, nor will it permit
any Subsidiary of the Borrower to amend or otherwise modify its organizational
documents or its structure, activities or nature, as applicable, in any manner
that could reasonably be expected to have a Material Adverse Effect.

      6.11 Transactions with Affiliates. Directly or indirectly, enter into any
transaction (including the sale, lease, or exchange of Property or the rendering
of service) not otherwise permitted by this Agreement with any of its
Affiliates, other than upon fair and reasonable terms no less favorable than
could be obtained in an arm's length transaction with a Person which was not an
Affiliate.

      6.12 Lines of Business. Expand, on its own or through any Subsidiary, into
any line of business other than those in which the Borrower is engaged as of the
date hereof and those reasonably and directly related thereto.

      6.13 ERISA Compliance. Permit the Borrower to hold "plan assets" of any
employee benefit plan subject to Title I of ERISA or any plan subject to Section
4975 of the Code under circumstances that would contravene the requirements of
regulatory authority issued under such provisions of the Code or ERISA by the
appropriate regulatory authorities, or permit any Plan maintained by it or any
Commonly Controlled Entity to (a) engage in any Prohibited Transaction, (b)
incur any "accumulated funding deficiency," as such term is defined in Section
302 of ERISA, or (c) terminate in a manner which could result in the imposition
of a Lien on any Property of the Borrower pursuant to Section 4068 of ERISA; or
assume an obligation to contribute to any Multiemployer Plan; or acquire any
Person or all or substantially all of the assets of any Person which has now or
has had at any time an obligation to contribute to any Multiemployer Plan.

      6.14 Subordinated Indebtedness; Production Payments. Materially amend or
modify any of the terms or provisions of any documents, notes, or agreements
governing or evidencing the Subordinated Indebtedness or the Senior Notes,
including any term or provision which accelerates or increases the Subordinated
Indebtedness or the Senior Notes, or, at any time following the occurrence and
during the continuance of any Event of Default, make any payments, whether in
cash or other Property, on or with respect to the Subordinated Indebtedness
except payments (but not prepayments or defeasance) of interest and principal in
accordance with the terms of such Subordinated Indebtedness; provided, however,
the foregoing restriction shall not prevent the renewal or extension of the
Subordinated Indebtedness or the Senior Notes so long as no other terms are
materially amended or modified. The Borrower shall not prepay, redeem, purchase
or defease any Subordinated Indebtedness or renew, rearrange or materially amend
or modify the Production Payment 2001 Facility other than prepayments thereof
and other than immaterial modifications to the terms and delivery schedules
thereof; provided such modifications shall not alter the then remaining weighted
average life of such scheduled amounts of production.

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      6.15 Use of Proceeds. Permit the proceeds of any Loan or any Letter of
Credit to be used for any purpose other than as expressly permitted in Section
2.6.

      6.16 Intentionally Blank.

      6.17 Change of Ownership. Allow a Change of Control to occur.

      6.18 Capital Expenditures. Make any capital expenses except for (i)
expenditures associated with proved, non-producing and development reserves, the
replacement of production, acquisitions, investments in volumetric production
payments, exploration and (ii) other expenditures of $500,000 or less in any
Sales Period.

      6.19 Working Capital. Permit Working Capital to be at any time less than
the sum of $1 plus the greater of $7,000,000 and an amount equal to 10% of the
Borrowing Base at such time.

      6.20 Interest Coverage Ratio. Permit, as of the close of any fiscal
quarter, the ratio of Adjusted EBITDA for the preceding four fiscal quarters
(including the quarter most recently ended) to (b) Interest Expense for the
preceding four fiscal quarters to be less than 2.75 to 1.0.

      6.21 Debt to Adjusted EBITDA Ratio. Permit, as of the close of any fiscal
quarter the ratio of (a) Debt to (b) Adjusted EBITDA for the preceding four
fiscal quarters to be more than 3.5 to 1.0.

                                  ARTICLE VII.

                                EVENTS OF DEFAULT

      7.1 Enumeration of Events of Default. Any of the following events shall
constitute an Event of Default:

                  (a) (i) default shall be made in any payment of principal when
            due under this Agreement or the Notes at Final Maturity or pursuant
            to Section 2.13(a)(i), or (ii) default shall be made in the payment
            when due of any other sums, including, without limitation, interest,
            payable under any Loan Document other than as set forth under clause
            (i) hereof and such failure shall continue unremedied for a period
            of five (5) days;

                  (b) default shall be made in the due observance or performance
            of any obligation under Section 6.10, 6.17, 6.20, or 6.21 of this
            Agreement.

                  (c) default shall be made by the Borrower or a Subsidiary
            Guarantor in the due observance or performance of any of their
            respective obligations under the Loan Documents other than as
            described in Section 7.1(a) or 7.1(b) and such default shall not
            have been remedied within 30 days after the earlier of (i) receipt
            of written notice thereof by the Borrower from the Agent, or (ii)
            any Borrower or Subsidiary Guarantor having or obtaining knowledge
            thereof;

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<PAGE>
                  (d) any representation or warranty made by any Borrower or any
            Subsidiary Guarantor in any of the Loan Documents proves to have
            been untrue in any material respect as of the date the facts therein
            set forth were stated or certified or deemed stated or certified;

                  (e) default(s) shall be made by the Borrower or any Subsidiary
            Guarantor (as principal or guarantor or other surety) in the payment
            or performance of any Indebtedness in an aggregate amount equal to
            or exceeding $1,500,000, and such default(s) shall remain unremedied
            for in excess of the period of grace, if any, with respect thereto
            if the effect of such default is that such Indebtedness becomes, or
            if such default permits the holder of such Indebtedness to declare
            it to be, immediately due and payable;

                  (f) the Borrower or any Subsidiary Guarantor shall (i) apply
            for or consent to the appointment of a receiver, trustee, or
            liquidator of it or all or a substantial part of its assets, (ii)
            file a voluntary petition commencing an Insolvency Proceeding, (iii)
            make a general assignment for the benefit of creditors, (iv) admit
            in writing its inability to pay, or generally not be paying, its
            debts as they become due, or (v) file an answer admitting the
            material allegations of a petition filed against it in any
            Insolvency Proceeding;

                  (g) an order, judgment, or decree shall be entered against the
            Borrower or any Subsidiary Guarantor by any court of competent
            jurisdiction or by any other duly authorized authority, on the
            petition of a creditor or otherwise, granting relief in any
            Insolvency Proceeding, or approving a petition seeking
            reorganization or an arrangement of its debts or appointing a
            receiver, trustee, conservator, custodian, or liquidator of it or
            all or any substantial part of its assets, and such order, judgment,
            or decree shall not be dismissed or stayed within 60 days;

                  (h) the levy against any significant portion of the Property
            of the Borrower or any Subsidiary Guarantor execution, garnishment,
            attachment, sequestration, or other writ or similar proceeding
            involving an amount which, if paid, would have a Material Adverse
            Effect and which is not permanently dismissed, discharged or bonded
            within 30 days after the levy;

                  (i) a final and non-appealable order, judgment, or decree
            shall be entered against the Borrower or any Subsidiary Guarantor
            for money damages and/or Indebtedness due in an aggregate amount in
            excess of $1,500,000 and which is not covered by independent
            third-party insurance as to which the insurer does not dispute
            coverage, and such order, judgment, or decree shall not be paid,
            dismissed or stayed fifteen (15) days before the date on which
            execution on any Property of the Borrower or Subsidiary Guarantor
            may be issued;

                  (j) any charges are filed or any other action or proceeding is
            instituted by any Governmental Authority against the Borrower or any
            Subsidiary Guarantor under the Racketeering Influence and Corrupt
            Organizations Statute

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<PAGE>
            (18 U.S.C. Section 1961 et seq.), the result of which could
            reasonably be expected to be the forfeiture or transfer of any
            material Property of the Borrower or a Subsidiary Guarantor subject
            to a Lien in favor of the Agent without (i) satisfaction or
            provision for satisfaction of such Lien, or (ii) such forfeiture or
            transfer of such Property being expressly made subject to such Lien;

                  (k) the Borrower or any Subsidiary Guarantor shall have
            concealed, removed, or diverted, or permitted to be concealed,
            removed, or diverted, any material part of its Property, with intent
            to hinder, delay, or defraud its creditors or any of them;

                  (l) the Borrower shall hold "plan assets" of any employee
            benefit plan subject to Title I of ERISA or any plan subject to
            Section 4975 of the Code under circumstances that would contravene
            the requirements of regulatory authority issued under such
            provisions of the Code or ERISA by the appropriate regulatory
            authorities, or any Person shall engage in any Prohibited
            Transaction involving any Plan; any "accumulated funding deficiency"
            (as defined in Section 302 of ERISA), whether or not waived, shall
            exist with respect to any Plan for which an excise tax is due or
            would be due in the absence of a waiver; a Reportable Event shall
            occur with respect to, or proceedings shall commence to have a
            trustee appointed, or a trustee shall be appointed, to administer or
            to terminate, any Single Employer Plan, which Reportable Event or
            commencement of proceedings or appointment of a trustee is, in the
            reasonable opinion of the Agent, likely to result in the termination
            of such Plan for purposes of Title IV of ERISA; any Single Employer
            Plan shall terminate for purposes of Title IV of ERISA; the
            Borrower, any Subsidiary Guarantor, or any Commonly Controlled
            Entity shall incur, or in the reasonable opinion of the Agent, be
            likely to incur any liability in connection with a withdrawal from,
            or the Insolvency or Reorganization of, a Multiemployer Plan; or any
            other event or condition shall occur or exist with respect to a Plan
            and the result of such events or conditions referred to in this
            Section 7.1(l) could reasonably be expected to subject the Borrower,
            any Subsidiary Guarantor or any Commonly Controlled Entity to any
            tax (other than an excise tax under Section 4980 of the Code),
            penalty or other liabilities which taken in the aggregate would have
            a Material Adverse Effect and any such circumstance shall exist for
            in excess of 30 days;

                  (m) any Security Instrument shall for any reason not, or shall
            cease to, create valid and perfected first-priority Liens (or, in
            the case of the Properties subject to the Production Payment 2001
            Facility, a second priority Lien behind the Production Payment 2001
            Lien or in the case of Acquired Property subject to a Lien to secure
            Acquisition Indebtedness as provided in Section 5.18(c), a second
            priority lien behind such Lien) against the Collateral purportedly
            covered thereby, subject to Permitted Lie ns and Liens permitted
            under Section 6.3, and which Collateral has a value greater than
            $1,000,000 in the aggregate for all such Collateral, unless the
            Borrower has provided the Collateral Agent, within 30 days, with
            additional Collateral having at least an equivalent value to the
            Collateral

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            affected by such failure and otherwise reasonably satisfactory to
            the Required Lenders; and

                  (n) the Borrower or any of its Subsidiaries shall fail to
            deliver all of the Scheduled Amounts (as defined in the Production
            Payment 2001 Facility) for any two consecutive months or shall owe
            Monthly Adjustment Amounts (as defined in the Production Payment
            2001 Facility) for any period of more than four months.

      7.2 Remedies.

                  (a) Upon the occurrence of an Event of Default specified in
            Sections 7.1(f) or 7.1(g), immediately and without notice, (i) all
            Obligations shall automatically become immediately due and payable,
            including all Obligations to pay cash collateral as set forth in
            Section 2.2(e) and Section 2.13, without presentment, demand,
            protest, notice of protest, default, or dishonor, notice of intent
            to accelerate maturity, notice of acceleration of maturity, or other
            notice of any kind, except as may be provided to the contrary
            elsewhere herein, all of which are hereby expressly waived by the
            Borrower; (ii) the Commitments shall immediately cease and terminate
            unless and until reinstated by the Agent and the Lenders in writing;
            and (iii) with the oral consent of the Required Lenders (confirmed
            promptly in writing), the Agent and each Lender is 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) held by the Agent or such Lender and any and
            all other indebtedness at any time owing by the Agent or such Lender
            to or for the credit or account of the Borrower against any and all
            of the Obligations due and payable in such manner as the Lenders
            determine in their sole discretion.

                  (b) Upon the occurrence of any Event of Default other than
            those specified in Sections 7.1(f) or 7.1(g), (i) the Agent may and,
            upon the request of the Required Lenders shall, by notice to the
            Borrower, declare all Obligations hereunder and under the Notes
            immediately due and payable, including all Obligations to pay cash
            collateral as set forth in Section 2.2(e) and Section 2.13, without
            presentment, demand, protest, notice of protest, default, or
            dishonor, notice of intent to accelerate maturity, notice of
            acceleration of maturity, or other notice of any kind, except as may
            be provided to the contrary elsewhere herein, all of which are
            hereby expressly waived by the Borrower; (ii) the Agent may and,
            upon the request of the Required Lenders, shall, declare the
            Commitments terminated, whereupon the Commitments shall immediately
            cease and terminate unless and until reinstated by the Agent and the
            Lenders in writing; and (iii) with the oral consent of the Required
            Lenders (confirmed promptly in writing), the Agent and each Lender
            is hereby authorized at any time and from time to time, without
            notice to the Borrower (any such notice being expressly waived by
            each Borrower), to set-off and apply any and all deposits (general
            or special, time or demand, provisional or final) held by the Agent
            or such Lender and any and all

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<PAGE>
            other indebtedness at any time owing by the Agent or such Lender to
            or for the credit or account of the Borrower against any and all of
            the Obligations due and payable in such manner as the Lenders
            determine in their sole discretion.

                  (c) Upon the occurrence of any Event of Default, the Lenders,
            with the oral consent of the Required Lenders (confirmed promptly in
            writing), and the Agent, in accordance with the terms hereof, may,
            in addition to the foregoing in this Section 7.2, exercise any or
            all of their rights and remedies provided by law or pursuant to the
            Loan Documents in such manner as the Lenders determine in their sole
            discretion.

                                 ARTICLE VIII.

                           THE AGENTS AND THE ARRANGER

      8.1 Appointment. Each Lender hereby designates and appoints CIBC as the
Agent, CIBC Inc. as the Collateral Agent and the Agent as Letter of Credit
issuing bank under this Agreement and the other Loan Documents. Each Lender
authorizes the Agent and the Collateral Agent to take such action on behalf of
such Lender under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Agent and the Collateral Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement or in any other Loan Document, none of the Agent or the
Collateral Agent shall have any duties or responsibilities except those
expressly set forth herein or in any other Loan Document or any fiduciary
relationship with any Lender and none of the Documentation Agent, the
Co-Arranger or the Arranger shall have any duties or responsibilities whatsoever
in such capacities or any fiduciary relationship with any Lender; and no implied
covenants, functions, responsibilities, duties, obligations, or liabilities on
the part of the Agent, the Collateral Agent, the Documentation Agent, the
Co-Arranger or the Arranger shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent, the Collateral Agent, the
Documentation Agent, the Co-Arranger or the Arranger.

      8.2 Delegation of Duties. Each of the Agent and the Collateral Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. None of the Agent or
the Collateral Agent shall be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.

      8.3 Exculpatory Provisions. None of the Agent or the Collateral Agent or
any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be required to initiate or conduct any
litigation or collection proceedings hereunder, except with the concurrence of
the Required Lenders and contribution by each Lender of its Percentage Share of
costs reasonably expected by the Agent or the Collateral Agent to be incurred in
connection therewith, (b) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for gross negligence or willful misconduct of the
Agent or the Collateral Agent or such Person), or

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<PAGE>
responsible in any manner to any Lender for any recitals, statements,
representations or warranties made by the Borrower or any Subsidiary of Borrower
or any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agent or the Collateral Agent under or in connection
with, this Agreement or any other Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of the Borrower or any Subsidiary of
Guarantor to perform its obligations hereunder or thereunder. None of the Agent
or the Collateral Agent shall be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower.

      8.4 Reliance by Agent. Each of the Agent and the Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Agent or the Collateral Agent.
Each of the Agent and the Collateral Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless and until a written notice of
assignment, negotiation, or transfer thereof shall have been received by the
Agent. Each of the Agent and the Collateral Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or of all of the Lenders if required by
any provision of this Agreement and contribution by each Lender of its
Percentage Share of costs reasonably expected by the Agent or the Collateral
Agent, as the case may be, to be incurred in connection therewith. Each of the
Agent and the Collateral Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders. Such request and any
action taken or failure to act pursuant thereto shall be binding upon the
Lenders and all future holders of the Notes. In no event shall the Agent or the
Collateral Agent be required to take any action that exposes such agent to
personal liability or that is contrary to any Loan Document or applicable
Requirement of Law.

      8.5 Notice of Default. Neither the Agent nor the Collateral Agent shall be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless such agent has received notice from a Lender or the Borrower
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 an agent
receives such a notice, such agent shall promptly give notice thereof to the
Lenders. The Agent and the Collateral Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by the
Required Lenders; provided that unless and until the Agent and the Collateral
Agent shall have received such directions, subject to the provisions of Section
7.2, each of the Agent and the Collateral Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders. In the event that the officer of the Agent or the Collateral Agent
primarily responsible for the lending relationship with the Borrower or the
officer of any Lender primarily responsible for the lending relationship

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with the Borrower becomes aware that a Default or Event of Default has occurred
and is continuing, such agent or such Lender, as the case may be, shall use its
good faith efforts to inform the other Lenders and/or the other agent, as the
case may be, promptly of such occurrence. Notwithstanding the preceding
sentence, failure to comply with the preceding sentence shall not result in any
liability to the Agent, the Collateral Agent, or any Lender.

      8.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that none of the Agent, the Collateral Agent, the Documentation
Agent, the Co-Arranger, the Arranger, any other Lender or any of their
respective officers, directors, employees, agents, attorneys-in- fact or
affiliates has made any representation or warranty to such Lender and that no
act by the Agent, the Collateral Agent, the Documentation Agent, the
Co-Arranger, the Arranger, or any other Lender hereafter taken, including any
review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent, the Collateral Agent, the Documentation
Agent, the Co-Arranger, the Arranger, or any Lender to any other Lender. Each
Lender represents to the Agent, the Collateral Agent, the Documentation Agent,
the Co-Arranger and the Arranger that it has, independently and without reliance
upon the Agent, the Collateral Agent, the Documentation Agent, the Co-Arranger,
the Arranger, or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, condition (financial and otherwise) and
creditworthiness of the Borrower and the value of the Collateral and other
Properties of the Borrower and has made its own decision to enter into this
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Agent, the Collateral Agent, the Documentation Agent, the
Co-Arranger, the Arranger, or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
condition (financial and otherwise) and creditworthiness of the Borrower and the
value of the Collateral and other Properties of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent or the Collateral Agent hereunder, none of the Agent, the
Collateral Agent, the Documentation Agent, the Co-Arranger or the Arranger shall
have any duty or ability to provide any Lender with any credit or other
information concerning the business, response operations, property, condition
(financial and otherwise), or creditworthiness of the Borrower or the value of
the Collateral or other Properties of the Borrower which may come into the
possession of the Agent, the Collateral Agent, the Documentation Agent, the
Co-Arranger, the Arranger or any of their respective officers, directors,
employees, agents, attorneys- in- fact or affiliates.

      8.7 Indemnification. EACH LENDER AGREES TO INDEMNIFY THE AGENT, THE
COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE CO-ARRANGER AND THE ARRANGER AND
EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES (TO THE EXTENT NOT REIMBURSED BY THE BORROWER
AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWER TO DO SO), RATABLY ACCORDING
TO THE PERCENTAGE SHARE OF SUCH LENDER, FROM AND AGAINST ANY AND ALL
LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH
MAY AT ANY TIME (INCLUDING ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE OF ALL
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT) BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE AGENT,

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THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE CO-ARRANGER, THE ARRANGER OR
ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT OR AFFILIATES IN ANY WAY RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OTHER DOCUMENT CONTEMPLATED OR
REFERRED TO HEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION TAKEN
OR OMITTED BY THE AGENT, THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE
CO-ARRANGER, THE ARRANGER OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES UNDER OR IN CONNECTION WITH
ANY OF THE FOREGOING, INCLUDING ANY LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS
IMPOSED, INCURRED OR ASSERTED AS A RESULT OF THE NEGLIGENCE, WHETHER SOLE OR
CONCURRENT, OF THE AGENT, THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE
CO-ARRANGER, THE ARRANGER OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES; PROVIDED THAT NO LENDER
SHALL BE LIABLE FOR THE PAYMENT OF ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF THE AGENT, THE COLLATERAL AGENT, THE DOCUMENTATION AGENT, THE CO-ARRANGER,
THE ARRANGER OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT OR AFFILIATES. THE AGREEMENTS IN THIS SECTION SHALL SURVIVE
THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND THE TERMINATION OF THIS
AGREEMENT.

      8.8 Restitution. Should the right of the Agent, the Collateral Agent or
any Lender to realize funds with respect to the Obligations be challenged and
any application of such funds to the Obligations be reversed, whether by
Governmental Authority or otherwise, or should the Borrower otherwise be
entitled to a refund or return of funds distributed to the Lenders in connection
with the Obligations, the Agent, the Collateral Agent or such Lender, as the
case may be, shall promptly notify the Lenders of such fact. Not later than
Noon, Eastern Standard or Daylight Saving Time, as the case may be, of the
Business Day following such notice, each Lender shall pay to the Agent an amount
equal to the ratable share of such Lender of the funds required to be returned
to the Borrower. The ratable share of each Lender shall be determined on the
basis of the percentage of the payment all or a portion of which is required to
be refunded originally distributed to such Lender, if such percentage can be
determined, or, if such percentage cannot be determined, on the basis of the
Percentage Share of such Lender. The Agent shall forward such funds to the
Borrower or to the Lender required to return such funds. If any such amount due
to the Agent is made available by any Lender after Noon, Eastern Standard or
Daylight Saving Time, as the case may be, of the Business Day following such
notice, such Lender shall pay to the Agent (or the Lender required to return
funds to the Borrower, as the case may be) for its own account interest on such
amount at a rate equal to the Federal Funds Rate for the period from and
including the date on which restitution to the Borrower is made by the Agent (or
the Lender required to return funds to the Borrower, as the case may be) to but
not including the date on which such Lender failing to timely forward its share
of funds required to be returned to the Borrower shall have made its ratable
share of such funds available.

      8.9 Agents in Individual Capacity. Each of the Agent, the Documentation
Agent and the Collateral Agent and their Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower and
any Subsidiary of Borrower as though the Agent and the Collateral Agent were not
agents hereunder. With respect to any Note issued to

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the Lender serving as the Collateral Agent, the Collateral Agent shall have the
same rights and powers under this Agreement as a Lender and may exercise such
rights and powers as though it were not the Collateral Agent. The terms "Lend
er" and "Lenders" shall include the Collateral Agent in its individual capacity.

      8.10 Successor Agent. Provided that a successor agent has been appointed
and has accepted such appointment as provided below, the Agent or the Collateral
Agent may resign upon 30 days' notice to the Lenders and the Borrower. If the
Agent or the Collateral Agent shall resign as an agent under this Agreement and
the other Loan Documents, Lenders for which the Percentage Shares of Commitments
aggregate at least sixty-six and two-thirds percent (66 2/3%) shall appoint from
among the Lenders a successor agent or collateral agent, as the case may be, for
the Lenders, whereupon such successor agent or collateral agent shall succeed to
the rights, powers and duties of such agent. The term "Agent" or "Collateral
Agent" shall mean such successor agent effective upon its appointment. Upon
written acceptance by such successor agent (a copy of which shall be furnished
to the Borrower), the rights, powers, and duties of the former agent as Agent or
Collateral Agent shall be terminated, without any other or further act or deed
on the part of such former agent or any of the parties to this Agreement or any
holders of the Notes. After the resignation of the Agent or the Collateral Agent
hereunder as an agent, the provisions of this Article VIII and Sections 5.13 and
5.17 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was an agent under this Agreement and the other Loan Documents.

      8.11 Applicable Parties. The provisions of Sections 8.1 through 8.9 of
this Article are solely for the benefit of the Agent, the Collateral Agent, the
Documentation Agent, the Co-Arranger, the Arranger and the Lenders, and neither
the Borrower nor any Subsidiary of Borrower shall have any rights as a third
party beneficiary or otherwise or any obligations under any of the provisions of
this Article. In performing functions and duties hereunder and under the other
Loan Documents, the Agent and the Collateral Agent shall act solely as the agent
of the Lenders and do not assume, nor shall either be deemed to have assumed,
any obligation or relationship of trust or agency with or for the Borrower or
any Subsidiary of Borrower or any legal representative, successor, or assign of
the Borrower or any Subsidiary of Borrower.

                                   ARTICLE IX.

                                  MISCELLANEOUS

      9.1 Assignments; Participations.

                  (a) The Borrower may not assign any of its rights or
            obligations under any Loan Documents without the prior consent of
            the Agent and the Lenders and may not in any event assign such
            rights and obligations to any entity holding "plan assets" of any
            employee benefit plan subject to Title I of ERISA or any plan
            subject to Section 4975 of the Code.

                  (b) With the written consent of the Agent, and so long as no
            Event of Default shall have occurred, and be continuing, the
            Borrower (which consents shall not be unreasonably withheld), any
            Lender may assign to one or more

                                       72
<PAGE>
            Eligible Assignees all or a portion of its rights and obligations
            under this Agreement pursuant to an Assignment Agreement; provided
            that, no Lender may assign any of its rights and obligations under
            this Agreement prior to the completion of the primary syndication.
            Except with the consent of the Agent, and, so long as no Event of
            Default shall have occurred and be continuing, the Borrower (which
            consents shall not be unreasonably withheld), in the case of any
            assignment of any Loans and/or Commitment, any such assignment shall
            be in the amount of at least $5,000,000 (or any whole multiple of
            $1,000,000 in excess thereof). The assignee shall pay to the Agent a
            transfer fee in the amount of $3,500 for each such assignment. Any
            such assignment shall become effective upon the execution and
            delivery to the Agent of, and as of the effective date of, the
            Assignment Agreement and the consent of the Agent, and, so long as
            no Event of Default shall have occurred and be continuing, the
            Borrower. Promptly following receipt of an executed Assignment
            Agreement, the Agent shall send to the Borrower a copy of such
            executed Assignment Agreement. Promptly following receipt of such
            executed Assignment Agreement, the Borrower shall execute and
            deliver, at its own expense, new Notes to the assignee and, if
            applicable, the assignor, in accordance with their respective
            interests, whereupon the prior Notes of the assignor and, if
            applicable, the assignee, shall be canceled and returned to the
            Borrower. Upon the effectiveness of any assignment pursuant to this
            Section 9.1(b) the assignee shall become a "Lender," if not already
            a "Lender," for all purposes of the Loan Documents, and the assignor
            shall be relieved of its obligations hereunder from and after the
            date of such assignment to the extent of such assignment. If the
            assignor no longer holds any rights or obligations under this
            Agreement, such assignor shall cease to be a "Lender" hereunder,
            except that its rights under Section 5.17 shall not be affected.

                  (c) With the written consent of the Agent, and so long as no
            Event of Default shall have occurred, and be continuing, the
            Borrower (which consents shall not be unreasonably withheld), each
            Lender may transfer, grant, or assign Participations in all or any
            portion of its interests hereunder to any Person pursuant to this
            Section 9.1(c), provided that such Lender shall remain a "Lender"
            for all purposes of this Agreement and the transferee of such
            participation shall not constitute a "Lender" hereunder.
            Notwithstanding the preceding, no Lender may transfer, grant or
            assign Participations in all or any portion of its interests
            hereunder to any Person prior to the completion of the primary
            syndication. In the case of any such participation, the participant
            shall not have any rights under any Loan Document, the rights of the
            participant in respect of such participation to be against the
            granting Lender as set forth in the agreement with such Lender
            creating such participation, and all amounts payable by the Borrower
            hereunder shall be determined as if such Lender had not sold such
            participation. Each participation agreement shall provide that the
            Lender that has sold or granted the participation shall retain the
            sole right to take or refrain from taking any action under the Loan
            Documents, except that such participation agreement may provide that
            such Lender shall not, without the consent of the participant, agree
            to any amendment or waiver that would have the effect, to the extent
            any such amendment or waiver pertains to the type of Commitment(s)
            or Loan(s) of such

                                       73
<PAGE>
            participant so that such participant would be affected thereby, of
            (i) increasing the Commitment of such Lender, (ii) extending the
            Commitment Termination Date, (iii) reducing the principal on the
            Loans of such Lender, (iv) reducing the rate of interest on the
            Loans or the Notes of such Lender, (v) reducing the amount of such
            Lender's participation in any fees payable pursuant to Sections 2.15
            or 2.16, (vi) extending the time of scheduled payment of any
            Obligation in which such participation has been granted, or (vii)
            releasing any Subsidiary Guaranty other than in accordance with
            Section 5.18 of this Agreement. All amounts payable to any Lender
            under Article 2 shall be determined as if such Lender had not sold
            any participations. Each agreement creating a participation must be
            in writing and include an agreement by the participant to be bound
            by the provisions of Section 9.9.

                  (d) The Lenders may furnish any information concerning the
            Borrower or its Subsidiaries in the possession of the Lenders from
            time to time to assignees and participants and prospective assignees
            and participants, provided that such Persons agree in writing to be
            bound by the provisions of Section 9.9.

                  (e) Notwithstanding anything in this Section to the contrary,
            any Lender may assign and pledge all or any of its Notes or any
            interest therein to any Federal Reserve Bank or the United States
            Treasury as collateral security. No such assignment or pledge shall
            release the assigning or pledging Lender from its obligations
            hereunder.

                  (f) Each Lender party to this Agreement represents, and each
            additional Lender which becomes a party to this Agreement shall be
            deemed to have represented to the Borrower that it is an Eligible
            Assignee. Each Lender Party to this Agreement represents to the
            Borrower that, and each person that becomes a Lender pursuant to an
            Assignment Agreement or otherwise in accordance with Section 2.25
            shall be deemed to have represented to the Borrower upon becoming a
            Lender that it is acquiring its interest in the Loan(s) and/or
            Note(s) with assets that are either (i) not assets of any employee
            benefit plan (or its related trust) which is subject to Title I of
            ERISA or Section 4975 of the Code or (ii) assets of any employee
            benefit plan (or its related trust) which is subject to Title I of
            ERISA or Section 4975 of the Code, but there is available an
            exemption from the prohibited transaction rules under Section 406(a)
            of ERISA and Section 4975 of the Code and such exemption is
            immediately applicable to each transaction contemplated by the Loan
            Documents to the extent that any party to such transaction is a
            "party in interest" as defined in Section 3(14) of ERISA or a
            "disqualified person" as defined in Section 4975 of the Code, with
            respect to such plan assets.

      9.2 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Borrower and all covenants and agreements
herein and in the other Loan Documents made shall survive the execution and
delivery of the Notes and the Security Instruments and shall remain in force and
effect so long as any Obligation is outstanding or any Commitments exist.

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<PAGE>
      9.3 Notices and Other Communications. Except as to oral notices expressly
authorized herein, which oral notices shall be promptly confirmed in writing,
all notices, requests, and communications hereunder or in connection herewith or
with any other Loan Document shall be in writing (including by telecopy but
excluding electronic e- mail). Unless otherwise expressly provided herein, any
such notice, request, demand, or other communication shall be deemed to have
been duly given or made when delivered by hand, or, in the case of delivery by
mail, two Business Days after deposited in the mail, certified mail, return
receipt requested, postage prepaid, or, in the case of telecopy notice, when
receipt thereof is acknowledged orally or by written confirmation report,
addressed to each party at the "Address for Notices" specified below its name on
the signature pages hereof or at such other address within the United States as
shall be designated by such party in a notice given to the Agent and the
Borrower.

      9.4 Parties in Interest. All covenants and agreements herein made or
entered into by or on behalf of the Borrower, the Agent, the Collateral Agent or
the Lenders shall be binding upon and inure to the benefit of the Borrower, the
Agent, the Collateral Agent or the Lenders, as the case may be, and their
respective legal representatives, successors, and permitted assigns. Nothing
herein shall be deemed to give the Agent a right to assign its obligations or to
merge into or with any other entity except as permitted hereby. 9.5 Rights of
Third Parties. All provisions herein are imposed solely and exclusively for the
benefit of the Agent, the Collateral Agent, the Lenders and the Borrower and
their successors and permitted assigns. No other Person shall have any right,
benefit, priority, or interest hereunder or as a result hereof or have standing
to require satisfaction of provisions hereof in accordance with their terms.

      9.6 No Waiver; Rights Cumulative. No course of dealing on the part of the
Agent, the Collateral Agent or the Lenders or their officers or employees, nor
any failure or delay by the Agent, the Collateral Agent or the Lenders with
respect to exercising any of their rights under any Loan Document shall operate
as a waiver thereof. The rights of the Agent, the Collateral Agent and the
Lenders under the Loan Documents shall be cumulative and the exercise or partial
exercise of any such right shall not preclude the exercise of any other right.
Neither the making of any Loan nor the issuance of a Letter of Credit shall
constitute a waiver of any of the covenants, warranties, or conditions of the
Borrower contained herein. In the event any Borrower is unable to satisfy any
such covenant, warranty, or condition, neither the making of any Loan nor the
issuance of a Letter of Credit shall have the effect of precluding the Agent or
the Lenders from thereafter declaring such inability to be an Event of Default
as hereinabove provided.

      9.7 Severability. In the event any one or more of the provisions contained
in any of the Loan Documents shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of any Loan Document.

      9.8 Amendments; Waivers. Neither this Agreement nor any of the other Loan
Documents nor any terms hereof or thereof may be amended, supplemented,
modified, or waived except in writing and in accordance with the provisions of
this Section. The Agent and the

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<PAGE>
Borrower may, from time to time with the written consent of the Required
Lenders, enter into written amendments, supplements, or modifications to the
Loan Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or the
Borrower hereunder or thereunder or waiving, on such terms and conditions as the
Agent may specify in such instrument, any of the requirements of this Agreement
or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such amendment, supplement,
modification, or waiver shall (a) except as provided in clause (c) below or in
Section 5.18, extend the time of scheduled payment of any Obligation, change the
rate of interest thereon, extend the Commitment Termination Date, extend the
Final Maturity, reduce any fee payable for the account of the Lenders hereunder,
release any, all or substantially all of the Collateral, release any Subsidiary
Guaranty, reduce the amount of any Obligation, increase the Commitment Amount,
except in accordance with Section 2.12 change the Borrowing Base or any other
provision applicable to the determination of the Borrowing Base or amend,
modify, or waive any provision of this Section or Sections 2.12, 5.13, 5.17 or
8.10, change the percentage specified in the definition of the Required Lenders,
or consent to the assignment or transfer by the Borrower or any Subsidiary
Guarantor of any of their rights or obligations under this Agreement or the
other Loan Documents, in any such case without the written consent of all
Lenders, (b) amend, modify, or waive any provision of Article VIII or the rights
or obligations of the Agent (including its rights and obligations as issuer of
the Letters of Credit), or the Collateral Agent without the written consent of
such agent, or (c) amend, modify, or waive any provision relating to any Hedging
Agreement without the written consent of the Lender party thereto or whose
Affiliate is a party thereto. Any such amendment, supplement modification, or
waiver shall apply equally to each of the Lenders and shall be binding upon the
Borrower, the Lenders, the Lender Parties, the Agent, and the Collateral Agent
and all future holders of the Notes. Notwithstanding the foregoing, during each
Sales Period, the Collateral Agent may release items of Collateral sold by the
Borrower or any Subsidiary of the Borrower in accordance with Section 5.18. In
the event of any waiver, the Borrower, the Lenders, the Agent, and the
Collateral Agent shall be restored to their respective former positions and
rights hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right with respect thereto.

      9.9 Confidentiality. In the event that the Borrower or any Subsidiary of
Borrower provides to the Agent, the Collateral Agent or the Lenders information
belonging to any Borrower or any Affiliate of the Borrower, the Age nt, the
Collateral Agent and the Lenders and each other Lender Party shall thereafter
maintain such information in confidence. This obligation of confidence shall not
apply to such portions of the information which (i) are in the public domain,
(ii) hereafter become part of the public domain without the Agent, the
Collateral Agent or the Lenders or any Lender Party breaching their obligation
of confidence herein or in any other Loan Document, (iii) are previously known
by the Agent, the Collateral Agent or the Lenders or any Lender Party from some
source other than the Borrower or any Affiliate of the Borrower not known to
have a duty of confidentiality to the Borrower, (iv) are hereafter developed by
the Agent, the Collateral Agent or the Lenders or any Lender Party without using
the information thus provided, (v) are hereafter obtained by or available to the
Agent, the Collateral Agent or the Lenders or any Lender Party from a third
party who owes no obligation of confidence to the Borrower or any Subsidiary of
the Borrower with respect to such

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<PAGE>
information or through any other means other than through disclosure by the
Borrower or any Affiliate of the Borrower to the Agent, the Collateral Agent or
the Lenders or any Lender Party, (vi) are disclosed with the Borrower's consent,
(vii) must be disclosed pursuant to any Requirement of Law, (viii) as may be
required by law or regulation or order of any Governmental Authority in any
judicial, arbitration or governmental proceeding or (ix) as may be requested by
any Governmental Authority pursuant to any bank examination or audit; provided,
however, that to the extent practicable and unless otherwise prohibited by any
Requirement of Law, any Person disclosing any non-public information pursuant to
clauses (vii) or (viii) shall endeavor in good faith to give the Borrower at
least five (5) days' prior written notice of such disclosure. Further, the
Agent, the Collateral Agent or a Lender may disclose any such information to any
other Lender or successor agent, any independent petroleum engineers or
consultants, any independent certified public accountants, any legal counsel
employed by such Person in connection with this Agreement or any other Loan
Document, including the enforcement or exercise of all rights and remedies
hereunder or thereunder, or any assignee or participant (including prospective
assignees and participants) in the Loans; provided, however, that the Agent, the
Collateral Agent or the Lenders impose on the Person to whom such information is
disclosed the same obligation to maintain the confidentiality of such
information as is imposed upon it hereunder and such Person agrees in writing to
be bound by the terms hereof.

      9.10 Governing Law. THIS AGREEMENT AND THE NOTES AND EACH SUBSIDIARY
GUARANTY SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

      9.11 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF THE AGENT OR THE COLLATERAL AGENT, IN THE COURTS OF
THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK. THE BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO
TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST
IT BY THE AGENT, THE COLLATERAL AGENT OR ANY LENDER IN ACCORDANCE WITH THIS
SECTION.

      9.12 Appointment of Agent for Service of Process. The Borrower hereby
irrevocably designates CT Corporation System, or such other corporate process
agent as is acceptable to the Agent, as the designee, appointee and agent of
such Borrower to receive, for and on behalf of such Borrower, service of process
out of any of the aforementioned courts in any legal action or proceeding with
respect to this Agreement, any other Loan Document or any document related
thereto. It is understood that a copy of such process served by such agent will
be promptly forwarded by mail to the Borrower at its address specified below its
name on the signature pages hereof, but the failure of the Borrower to receive
such copy shall not affect in any way the service of such process. The Borrower
further irrevocably consents to the service of process of any of the courts
mentioned in Section 9.11 in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Borrower
at such address, such service to become effective four days after mailing.
Nothing herein shall affect the right of the Agent or any Lender to serve
process in any other manner permitted by law.

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<PAGE>
      9.13 Waiver of Rights to Jury Trial. THE BORROWER, THE AGENT, THE
COLLATERAL AGENT, AND EACH LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
IRREVOCABLY, AND UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR
ARISES OUT OF ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR
OMISSIONS OF THE AGENT, THE COLLATERAL AGENT OR ANY LENDER IN THE ENFORCEMENT OF
ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT FOR THE AGENT, THE COLLATERAL AGENT AND THE LENDERS ENTERING INTO
THIS AGREEMENT.

      9.14 Integration. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE ANY
PRIOR AGREEMENT BETWEEN OR AMONG THE PARTIES, WHETHER WRITTEN OR ORAL, RELATING
TO THE SUBJECT HEREOF. FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER
WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

      9.15 Counterparts. For the convenience of the parties, this Agreement may
be executed in multiple counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same agreement.

      9.16 L/C Documents. In the event of a direct conflict between an express
provision of this Agreement and an express provision of any other Loan Document,
this Agreement shall control with respect to such express provision. Without
limiting the generality of the foregoing, no provision of any Letter of Credit
Application or any other document or instrument executed in connection with any
Letter of Credit shall give the Agent or the issuer of such Letter of Credit
greater rights than such Persons have under this Agreement with respect to the
same subject matter.

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<PAGE>
      IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first above written.

                                        BORROWER:

                                        KCS ENERGY, INC.

                                        By:_____________________________________

Address for Notices:
Principal Place of Business
and Chief Executive Office:

5555 San Felipe
Suite 1200
Houston, Texas 77056
Attention: President

                                      S-1
<PAGE>
                                        AGENT:

                                        CANADIAN IMPERIAL BANK OF
                                        COMMERCE, NEW YORK AGENCY

                                        By:_____________________________________

Address for Notices:

425 Lexington Avenue,
7th Floor New York, New York 10017
Attention: Marybeth Ross
           Syndications Group
Telecopy: (212) 856-3763

with copies to:

CANADIAN IMPERIAL BANK OF COMMERCE
1600 Smith Street, Suite 3000
Houston, Texas 77002
Attention: Mark Wolf
Telecopy: (713) 650-2588

                                        2
<PAGE>
                                        COLLATERAL AGENT AND A LENDER:

                                        CIBC INC.

                                        By:_____________________________________

Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:

425 Lexington Avenue, 7th Floor
New York, New York 10017

Address for Notices:

425 Lexington Avenue,
7th Floor New York, New York 10017
Attention: Marybeth Ross
Telecopy:  (212) 856-3763

with copies to:

CIBC INC.
909 Fannin, Suite 1200
Houston, Texas 77010
Attention: Mark Wolf
Telecopy:  (713) 650-2588

                                       3
<PAGE>
                                        LENDER:

                                        GUARANTY BANK

                                        By:_____________________________________
Applicable Lending Office
for Base Rate Loans and
LIBO Rate Loans:

333 Clay Street
Suite 4430
Houston, Texas 77002
Attention: Richard Menchaca
Telecopy:  (713) 890-8869

Address for Notices:

333 Clay Street
Suite 4430
Houston, Texas 77002
Attention: Richard Menchaca
Telecopy:  (713) 890-8869

                                       4

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