Document:

THIRD RESTATED CREDIT AGREEMENT

                                      AMONG

                           CONTINENTAL RESOURCES, INC.
                           CONTINENTAL GAS, INC., AND
                     CONTINENTAL RESOURCES OF ILLINOIS, INC.

                                  AS BORROWERS

                                       AND

                                  MIDFIRST BANK

                                January 17, 2002

<PAGE>
                                Table of Contents

                                                                          Page

1.       Definitions and Other Preliminary Matters.........................2

2.       Commitments of the Bank..........................................12

3.       Notes Evidencing Loans...........................................15

4.       Interest Rates...................................................18

5.       Change of Circumstances..........................................19

6.       Collateral Security..............................................22

7.       Borrowing Base...................................................23

8.       Fees.............................................................25

9.       Prepayments......................................................25

10.      Representations and Warranties...................................26

11.      Conditions of Lending............................................30

12.      Affirmative Covenants............................................32

13.      Negative Covenants...............................................38

14.      Events of Default................................................42

15.      The Agent and the Banks..........................................44

16.      Exercise of Rights...............................................49

17.      Notices..........................................................49

18.      Expenses.........................................................49

19.      Indemnity........................................................50

20.      Governing Law....................................................50

21.      Invalid Provisions...............................................51

22.      Maximum Interest Rate............................................51

23.      Amendments.......................................................51

24.      Multiple Counterparts............................................51

25.      Conflict.........................................................52

26.      Survival.........................................................52

27.      Parties Bound....................................................52

28.      Assignments and Participations...................................52

29.      Choice of Forum: Consent to Service of Process and Jurisdiction..53

30.      Waiver of Jury Trial.............................................54

31.      Other Agreements.................................................54

32.      Financial Terms..................................................54
<PAGE>

                         THIRD RESTATED CREDIT AGREEMENT

     THIS  THIRD  RESTATED  CREDIT  AGREEMENT  (hereinafter  referred  to as the
"Agreement")  executed  as of  the  17th  day of  January,  2002  by  and  among
CONTINENTAL RESOURCES, INC., an Oklahoma corporation ("Resources"),  CONTINENTAL
GAS, INC., an Oklahoma corporation ("Gas"),  CONTINENTAL  RESOURCES OF ILLINOIS,
INC., an Oklahoma  corporation  ("Continental  Illinois")  (Resources,  Gas, and
Continental Illinois are hereinafter collectively referred to as "Borrowers" and
individually as a "Borrower") and MIDFIRST BANK, a federally  chartered  savings
association  ("MidFirst"),  and each of the  financial  institutions  which is a
party hereto (as  evidenced by the signature  pages to this  Agreement) or which
may from  time to time  become a party  hereto  pursuant  to the  provisions  of
Section 28 hereof or any successor or assignee thereof (hereinafter collectively
referred to as "Banks", and individually,  "Bank") and MidFirst,  as Agent, Lead
Arranger and Book Manager ("Agent").

                              W I T N E S S E T H:

     WHEREAS, on April 21st, 2000,  Borrowers and Bank entered into that certain
Restated Credit Agreement ("Original Agreement") whereby Bank provided Borrowers
with a  $25,000,000  revolving  credit  facility as evidenced  by a  $25,000,000
revolving note (the "Original Note");

     WHEREAS,  on August 1st,  2000 the Original  Agreement  was amended for the
first  time  (the  "First  Amendment")  in order  to,  among  other  things  not
specifically  set forth in this  recital,  add Local  Oklahoma  Bank,  N.A. as a
"Bank";

     WHEREAS, on May 31, 2001, the Original Agreement was amended for the second
time (the "Second  Amendment") in order to increase the existing  revolving line
of credit to  $33,000,000  and to increase by  $30,000,000  the dollar amount of
Senior Subordinated Notes the Borrowers are permitted to purchase, repurchase or
otherwise acquire;

     WHEREAS, on July 9, 2001, the Original Agreement as amended was amended and
restated  for the second  time (the  "Second  Restated  Agreement")  in order to
increase the then-existing  credit facility and to begin amortizing a portion of
the  outstanding  indebtedness  as  well as  other  modifications  as set  forth
therein;

     WHEREAS,  the  revolving  line of credit  described in the Second  Restated
Agreement is currently evidenced by those certain revolving  promissory notes in
the  aggregate  amount of  $33,000,000.00.  from the Borrowers in favor of Banks
dated as of July 9, 2001 (the "Former  Revolving  Notes") and those certain term
promissory notes in the aggregate  principal amount of  $27,000,000.00  from the
Borrowers  in favor of Banks dated as of July 9, 2001 (the  "Former  Term Notes"
and the Former Term Notes and the Former  Revolving  Notes shall be collectively
referred to herein as the "Former Notes").

     WHEREAS,  Borrowers  and Bank  desire to amend and restate  their  existing
credit facility for the third time to increase the Revolving Commitment from the
current  level to  $45,700,000.00  as well as other  modifications  as set forth
herein; and

     WHEREAS,  in consideration  of the mutual  covenants and agreements  herein
contained, the parties hereby agree to restate the Credit Agreement as follows:

1.  Definitions  and  Other  Preliminary  Matters.  When used  herein  the terms
"Agent", "Agreement",  "Bank", "Borrower",  "Banks",  "Borrowers",  "Continental
Illinois" "First Amendment",  "Former Notes",  "Former Revolving Notes",  "Gas",
"MidFirst",   "Original  Agreement",   "Original  Note",  "Resources",   "Second
Amendment",  and "Second Restated  Agreement" shall have the meanings  indicated
above.

     1.1  Defined  Terms.  When used herein the  following  terms shall have the
following meanings:

     "Adjusted  EBITDA"  shall mean  EBITDA as defined by GAAP plus  Exploration
Expenses.

     "Advance  or  Advances"  shall mean a  Revolving  Loan or  Revolving  Loans
hereunder.

     "Affiliate" shall mean any Person which, directly or indirectly,  controls,
is controlled by or is under common  control with the relevant  Person.  For the
purposes of this definition,  "control"  (including,  with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person,  shall mean a member of the board of  directors,  a partner or an
officer  of such  Person,  or any other  Person  with  possession,  directly  or
indirectly,  of the power to direct or cause the direction of the management and
policies of such Person,  through the  ownership (of record,  as trustee,  or by
proxy) of voting  shares,  partnership  interests  or voting  rights,  through a
management contract or otherwise.  Any Person owning or controlling  directly or
indirectly  ten percent or more of the voting shares,  partnership  interests or
voting rights,  or other equity interest of another Person shall be deemed to be
an Affiliate of such Person.

     "Assignment and Acceptance" shall mean a document substantially in the form
of Exhibit "D" hereto.

     "Available  Commitment" shall mean the lesser of (i) $45,700,000.00 or (ii)
the difference between the Total Commitment and the Total Outstandings.

     "Borrowing  Base"  shall  mean that  amount  set by the Bank as the  amount
available to Borrowers under the Loans pursuant to Section 7.2 hereof.

     "Borrowing  Date"  shall mean the date  elected by  Borrowers  pursuant  to
Section 2.2 hereof for an Advance on the Revolving Loan.

     "Business  Day" shall mean the normal  banking  hours during any day (other
than  Saturdays or Sundays) that banks are legally open for business in Oklahoma
City, Oklahoma.

     "Change of Management"  shall occur if there is any material  change in the
ownership  and/or  management  personnel  of  a  Borrower.  Notwithstanding  the
foregoing,  as long as (i) Harold Hamm owns a controlling beneficial interest or
ownership in Resources;  (ii) Harold Hamm  continues to act as CEO of Resources;
and (iii)  Resources  owns 100% of all of the issued and  outstanding  shares of
common  stock of Gas,  Borrowers  shall be  entitled  to make  changes  in their
ownership and management.  For the purposes  hereof,  "controlling  interest" is
defined as beneficial  ownership of more than 50% of the total  combined  voting
power of all  issued  and  outstanding  capital  stock  entitled  to vote in the
election of directors.

     "Claim" is used herein as defined in Section 19 hereof.

     "Collateral" is used herein as defined in Section 6.1 hereof.

     "Commitment  Percentage" shall mean for each Bank the percentage derived by
dividing its Commitment at the time of the  determination  by the Commitments of
all Banks at the time of determination.  The Commitment  Percentage of each Bank
hereunder  shall be adjusted  from time to time to reflect  assignments  made by
such Bank pursuant to Section 28 hereof.

     "Commitments"  shall  refer to (A) for all Banks  the sum of the  Revolving
Commitments and Term  Commitments  and (B) for each Bank, such Bank's  Revolving
Commitment and Term Commitment.

     "Confidential  Information"  is used  herein as  defined  in  Section  12.9
hereof.

     "Current  Assets"  shall  mean  the  total of the  Borrowers'  consolidated
current  assets  determined in accordance  with GAAP,  plus, as of any date, the
current unused availability on the Revolving Commitment.

     "Current  Liabilities"  shall  mean the  total of  Borrowers'  consolidated
current  obligations as determined in accordance with GAAP,  excluding therefrom
current maturities due on the Loans.

     "Debt"  shall  mean,  with  respect  to any  Person,  all  obligations  and
liabilities of such Person to any other Person  including,  without  limitation,
all  debts,  claims,   overdrafts,   contingent   liabilities  and  indebtedness
heretofore,  now  and/or  from time to time  hereafter  owing,  due or  payable,
however,  evidenced,  created, incurred,  acquired or owing and however arising,
whether under written or oral agreement,  operation of law or otherwise as shown
in Borrowers' Financial Statements..

     "Debt  Service  Coverage  Ratio"  shall mean the sum of (i)  quarterly  Net
Income for the  immediately  preceding  four (4) fiscal  quarters  including the
quarter then ended,  adjusted for any nonrecurring or extraordinary items, minus
any  dividends,  plus  (ii)  depreciation,  depletion  and  amortization,  lease
impairment,  interest  expense,  deferred income tax expense and  uncapitalized,
discretionary  exploration  expenses,  all as determined in accordance with GAAP
for such period, divided by (i) 1/6th of the principal balance outstanding as of
such date on the  Revolving  Loans  plus (ii)  total  interest  expense  for the
immediately preceding four (4) fiscal quarters including the quarter then ended,
plus (iii) any other current maturities of long-term debt.

     "Default" shall mean any Event of Default and the occurrence of an event or
condition which would with the giving of any requisite  notice and/or passage of
time or both constitute an Event of Default.

     "Default  Rate" shall mean a per annum  variable rate of interest  equal to
the Prime Rate as then in effect plus five percent (5%), calculated on the basis
of a year of 360 days and actual number of days elapsed (including the first day
but excluding the last day), but in no event exceeding the Maximum Rate.

     "Defaulting  Bank" shall mean the term "Defaulting Bank" as used herein and
defined in Section 3.7 hereof.

     "Delhi Lease" shall mean that pipeline lease and any and all extensions and
renewals  thereof from Delhi Gas Pipeline  Corporation to Gas covering the Delhi
Oakdale Lateral System.

     "Delhi Oakdale  Lateral  System" shall mean that portion of the Eagle Chief
Gas Gathering System leased from Delhi Gas Pipeline Corporation.

     "Delta Trust" shall mean the Harold Hamm Delta Trust, Harold Hamm, Grantor,
dated December 31, 1996.

     "Determination Date" is used herein as defined in Section 7.2 hereof.

     " Eagle Chief Gas Gathering  System" shall mean that System  located in the
State of Oklahoma and described in the Security Instruments.

     "Effective Date" shall mean the date of this Agreement.

     "Eligible  Assignee"  shall  mean any of (i) a Bank or any  Affiliate  of a
Bank; (ii) a commercial  bank organized under the laws of the United States,  or
any state  thereof,  and  having a  combined  capital  and  surplus  of at least
$100,000,000;  (iii) a  commercial  bank  organized  under the laws of any other
country  which is a member of the  Organization  for  Economic  Cooperation  and
Development,  or a  political  subdivision  of any such  country,  and  having a
combined  capital and surplus of at least  $100,000,000.00,  provided  that such
bank is acting through a branch or agency  located in the United States;  (iv) a
Person that is primarily engaged in the business of commercial  banking and that
(A) is a subsidiary of a Bank, (B) a subsidiary of a Person of which a Bank is a
subsidiary,  or (C) a Person  of  which a Bank is a  subsidiary;  (v) any  other
entity  (other than a natural  person)  which is an  "accredited  investor"  (as
defined in Regulation D under the  Securities  Act) which extends credit or buys
loans  as one of its  businesses,  including,  but  not  limited  to,  insurance
companies,  mutual funds,  investments funds and lease financing companies;  and
(vi) with  respect to any Bank that is a fund that  invests in loans,  any other
fund that invests in loans and is managed by the same investment advisor of such
Bank or by an Affiliate of such investment  advisor (and treating all such funds
so managed as a single Eligible Assignee);  provided, however, that no Affiliate
of a Borrower shall be an Eligible Assignee.

     "Engineered Value" is used herein as defined in Section 6.2 hereof.

     "Event of Default" is used herein as defined in Section 14 hereof.

     "Environmental Laws" shall mean the Comprehensive  Environmental  Response,
Compensation  and Liability Act of 1980, as amended by the Super Fund Amendments
and Reauthorization Act of 1986, 42 U.S.C.A. Section 9601, et seq., the Resource
Conservation and Recovery Act, as amended by the Hazardous Solid Waste Amendment
of 1984,  42  U.S.C.A.  Section  6901,  et seq.,  the Clean Air Act, 42 U.S.C.A.
Section 1251, et seq.,  the Toxic  Substances  Control Act, 15 U.S.C.A.  Section
2601, et seq.,  The Oil Pollution Act of 1990, 33 U.S.G.  Section 2701, et seq.,
and all other  laws,  statutes,  codes,  acts,  ordinances,  orders,  judgments,
decrees, injunctions, rules, regulations, order and restrictions of any federal,
state,  county,  municipal  and  other  governments,  departments,  commissions,
boards,  agencies,  courts,  authorities,  officials and  officers,  domestic or
foreign,  relating to air pollution,  water pollution,  noise control and/or the
handling,  discharge,  disposal or  recovery of on-site or off-site  asbestos or
"hazardous  substances"  as  defined  by 42 U.S.C.  Section  9601,  et seq.,  as
amended, as each of the foregoing may be amended from time to time.

     "Environmental Liability" shall mean any claim, demand,  obligation,  cause
of action, order, violation,  damage, injury, judgment, penalty or fine, cost of
enforcement,  cost of remedial action or any other costs or expense  whatsoever,
including  reasonable  attorneys'  fees and  disbursements,  resulting  from the
violation or alleged violation of any Environmental Law or the imposition of any
Environmental  Lien which could reasonably be expected to individually or in the
aggregate have a Material Adverse Effect.

     "Environmental Lien" shall mean a Lien in favor of any court,  governmental
agency  or  instrumentality  or any  other  Person  (i)  for  any  Environmental
Liability  or (ii) for damages  arising  from or cost  incurred by such court or
governmental  agency or instrumentality or other person in response to a release
or threatened release of asbestos or "hazardous substance" into the environment,
the  imposition  of which Lien could  reasonably  be expected to have a Material
Adverse Effect.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended.

     "Exploration  Expenses" shall mean  "Exploration  Expenses" as set forth on
Borrower's consolidated financial statement prepared in accordance with GAAP.

     "Financial  Statements"  shall  mean  balance  sheets,  income  statements,
statements of cash flow and  appropriate  footnotes  and  schedules  including a
statement of contingent liabilities,  prepared in accordance with GAAP, together
with a statement of contingent  liabilities incurred outside the ordinary course
of business in an amount in excess of $500,000.00.

     "GAAP" shall mean generally accepted  accounting  principles,  consistently
applied.

     "Indemnified Party" is used herein as defined in Section 19 hereof.

     "Interest Payment Date" shall mean the last day of the calendar month.

     "Interest  Period"  shall mean any Prime  Rate  Interest  Period,  or LIBOR
Interest Period, as applicable.

     "Leverage Ratio" shall mean that ratio calculated by dividing (i) the Total
Outstandings  plus the Senior  Subordinated  Notes by (ii) Adjusted EBITDA based
upon the immediately preceding four quarters.

     "Letters of Credit"  shall mean the term "Letters of Credit" is used herein
as defined in Section 2.4 hereof.

     "LIBOR  Interest  Period"  shall  mean with  respect  to any LIBOR Loan (i)
initially,  the period commencing on the date such LIBOR Loan is made and ending
one (1),  two (2),  three (3) or six (6) months  thereafter  as  selected by the
Borrowers pursuant to Section 4, and (ii) thereafter,  each period commencing on
the day following the last day of the next preceding  Interest Period applicable
to such  LIBOR Loan and  ending  one (1),  two (2),  three (3) or six (6) months
thereafter,  as selected by the Borrowers  pursuant to Section 4.1.2;  provided,
however,  that (i) if any LIBOR Interest Period would otherwise  expire on a day
which is not a London  Business Day,  such  Interest  Period shall expire on the
next succeeding London Business Day unless the result of such extension would be
to extend such Interest  Period into the next calendar month, in which case such
Interest Period shall end on the immediately preceding London Business Day, (ii)
if any  LIBOR  Interest  Period  begins  on the last  London  Business  Day of a
calendar month (or on a day for which there is no numerically  corresponding day
in the calendar month at the end of such Interest  Period) such Interest  Period
shall end on the last London  Business  Day of a calendar  month,  and (iii) any
LIBOR Interest Period which would otherwise expire after the Maturity Date shall
end on such Maturity Date.

     "LIBOR Loan" shall mean any loan during any period which bears  interest at
the LIBOR Rate,  or which would bear  interest at such rate if the Maximum  Rate
ceiling was not in effect at a particular time.

     "LIBOR Margin" shall be:

          (i) two percent  (2.00%) per annum whenever the Leverage Ratio, at the
     time in question, is equal to or less than 1.50:1;

          (ii) two and one quarter of one percent (2.25%) per annum whenever the
     Leverage  Ratio,  at the time in question,  is greater than 1.50:1 but less
     than 2.50:1; or

          (iii) two and one half of one percent  (2.50%) per annum  whenever the
     Leverage Ratio, at the time in question, is greater than 2.50:1

     "LIBOR Rate" with respect to each particular LIBOR Interest  Period,  shall
mean the arithmetic  average of the rate at which dollar deposits in immediately
available  funds and for a maturity equal to the  applicable  one, two, three or
six-month  period are offered or  available in the London  Interbank  Market for
Eurodollars as of 11:00 a.m.  (London time) on the date of a  determination,  as
reported in the "Money Rates" section of The Wall Street Journal or a substitute
source  reasonably  determined  by Agent in the event  such  source is no longer
available.  If more than one LIBOR Rate is published in The Wall Street  Journal
for the one, two, three or six-month  time period,  then the LIBOR Rate shall be
the highest of such published rates. The LIBOR Rate determined by Agent shall be
fixed at such rate for the duration of the associated LIBOR Interest Period.  If
Agent is unable to so determine  the LIBOR Rate for any LIBOR  Interest  Period,
Borrower shall be deemed not to have elected such LIBOR Interest Period.

     "Lien" shall mean any mortgage,  deed of trust, pledge,  security interest,
assignment,  encumbrance  or lien  (statutory  or  otherwise)  of every kind and
character.

     "Loans" shall mean the Revolving Loans and the Term Loans.

     "Loan  Documents"  shall  mean this  Agreement,  the  Notes,  the  Security
Instruments and all other documents  executed in connection with the transaction
described in this Agreement.

     "London  Business Day" shall mean a Business Day on which  dealings in U.S.
Dollar deposits are carried on in the London interbank market.

     "Majority Banks" shall mean Banks holding 60% or more of the Commitments or
if the Commitments  have been  terminated,  Banks holding 60% of the outstanding
Loans.

     "Material  Adverse Effect" shall mean any circumstance or event which could
have a material  adverse  effect on (i) the assets or  properties,  liabilities,
financial  condition,  business,  operations,  affairs  or  circumstances  of  a
Borrower, or (ii) the ability of a Borrower to carry out its respective business
as of the date of this Agreement or as proposed at the date of this Agreement to
be conducted or to meet their obligations under the Notes, this Agreement or the
other Loan Documents on a timely basis.

     "Maximum Rate" shall mean at any particular  time in question,  the maximum
non-usurious  rate of interest which under applicable law may then be charged on
the Note. If such Maximum Rate changes  after the date hereof,  the Maximum Rate
shall be  automatically  increased  or  decreased,  as the case may be,  without
notice to Borrowers from time to time as of the effective date of each change in
such Maximum Rate.

     "Net Income"  shall mean  Borrowers'  consolidated  net income after income
taxes calculated in accordance with GAAP.

     "1984 Trust" shall mean the Revocable  Inter Vivos Trust of Harold G. Hamm,
dated April 23, 1984, as amended.

     "Notes" shall mean each of (i) the Revolving  Notes,  substantially  in the
form of Exhibit  "B-1"  hereto  issued or to be issued  hereunder  to each Bank,
respectively, to evidence the indebtedness to such Bank arising by reason of the
Advances on the Revolving Loan,  together with all  modifications,  renewals and
extensions thereof or any part thereof and (ii) the Term Notes, substantially in
the form of Exhibit "B-2" hereto issued to each Bank, respectively,  to evidence
the indebtedness to such Bank arising by reason of the refinancing of the Former
Notes together with all  modifications,  renewals and extensions  thereof or any
part thereof.

     "Notice of Borrowing" is used herein as defined in Section 2.3 hereof.

     "Oil and Gas Properties" shall mean all oil, gas and mineral properties and
interests,  related personal  properties,  in which Borrowers grant to the Banks
either a first  and prior  lien and  security  interest  pursuant  to  Section 6
hereof.

     "Other Financings" shall mean the term "Other Financings" is used herein as
defined in Section 15.12 hereof.

     "Payor" is used herein as defined in Section 3.9 hereof.

     "Permitted   Liens"  shall  mean  (i)  royalties,   overriding   royalties,
reversionary  interests,  production  payments and similar  burdens;  (ii) joint
operating  agreements,  sales  contracts or other  arrangements  for the sale of
production of oil, gas or associated liquid or gaseous  hydrocarbons which would
not (when  considered  cumulatively  with the  matters  discussed  in clause (i)
above)  deprive  a  Borrower  of any  material  right  in  respect  of any  such
Borrower's  assets or  properties  (except for rights  customarily  granted with
respect to such contracts and arrangements);  (iii) statutory Liens for taxes or
other assessments that are not yet delinquent (or that, if delinquent, are being
contested in good faith by appropriate  proceedings,  levy and execution thereon
having been stayed and continue to be stayed and for which such Borrower has set
aside on its books adequate  reserves in accordance with GAAP);  (iv) easements,
rights of way, servitudes,  permits,  surface leases and other rights in respect
to surface operations,  pipelines, grazing, logging, canals, ditches, reservoirs
or the like,  conditions,  covenants  and other  restrictions,  and easements of
streets, alleys, highways, pipelines, telephone lines, power lines, railways and
other easements and rights of way on, over or in respect of a Borrower's  assets
or properties and that do not individually or in the aggregate, cause a Material
Adverse  Effect;  (v)  materialmen's,   mechanic's,   repairman's,   employee's,
warehousemen's,     landlord's,     carrier's,     pipeline's,     contractor's,
sub-contractor's,  operator's,  non-operator's (arising under operating or joint
operating agreements), and other Liens (including any financing statements filed
in  respect  thereof)  incidental  to  obligations  incurred  by a  Borrower  in
connection  with the  construction,  maintenance,  development,  transportation,
storage or operation of such  Borrower's  assets or properties to the extent not
delinquent  (or  which,  if  delinquent,  are being  contested  in good faith by
appropriate  proceedings  and for which such Borrower has set aside on its books
adequate reserves in accordance with GAAP);  (vi) all contracts,  agreements and
instruments,  and all defects and  irregularities  and other matters affecting a
Borrower's  assets  and  properties  which  were in  existence  at the time such
Borrower's  assets and properties were originally  acquired by such Borrower and
all  routine  operational  agreements  entered  into in the  ordinary  course of
business, which contracts, agreements,  instruments, defects, irregularities and
other  matters  and  routine   operational   agreements  are  not  such  as  to,
individually or in the aggregate, interfere materially with the operation, value
or use of such Borrower's  assets and  properties,  considered in the aggregate;
(vii) liens in connection with workmen's compensation, unemployment insurance or
other social security, old age pension or public liability  obligations;  (viii)
legal or equitable  encumbrances  deemed to exist by reason of the  existence of
any  litigation or other legal  proceeding or arising out of a judgment or award
with respect to which an appeal is being  prosecuted  in good faith and levy and
execution  thereon  have been  stayed and  continue  to be stayed;  (ix)  rights
reserved  to or vested in any  municipality,  governmental,  statutory  or other
public  authority to control or regulate a Borrower's  assets and  properties in
any manner,  and all  applicable  laws,  rules and orders from any  governmental
authority;  (x) landlord's  liens;  (xi) Liens incurred pursuant to the Security
Instruments or otherwise  created in favor of the Agent or the Banks pursuant to
the Loan Documents; and (xii) Liens existing at the date of this Agreement which
have been  disclosed to Banks in the  Borrowers'  September  30, 2001  Financial
Statements  or  identified  in  Schedule  "1" hereto and (xiii)  Liens  covering
properties  which are not Oil and Gas  Properties and the value of which is less
than $500,000 in the aggregate.

     "Person"  shall  mean an  individual,  a  corporation,  a  partnership,  an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.

     "Pipelines"  shall  mean and  include  Gas' gas  gathering  and/or  residue
pipeline systems in the State of Oklahoma and the State of Texas associated with
the gathering  and/or  transportation  of gas and the delivery of gas or residue
gas to purchasers or transporters  (as the same now exist or as may hereafter be
extended),  including, but not by way of limitation, the Right-Of-Way Properties
and all buildings, structures,  attachments,  fittings and fixtures, facilities,
tools,  materials,   equipment,   machinery,   appliances,   pipeline,   piping,
powerlines,   electrical   systems,   metering   and   calibration   facilities,
compressors,  dehydrators,  sponge  units,  instrument  and  equipment  housing,
equipment storage facilities,  tanks,  engines,  valves,  traps, pumps,  motors,
instruments,  fencing, office equipment,  expanders, heat exchangers,  chillers,
separators,  cooling towers, boilers and reboilers, turbines, generators, meters
and  instruments,   fractionators,   stills,  debutanizers,   heaters,  coolers,
stabilizers,  scrubbers,  absorbers,  reabsorbers, flash towers, oil reclaimers,
loading racks, injection facilities, accumulators, economizers, fans, condensers
and  valves,  and  appurtenances  of every  nature  and kind  whatsoever  now or
hereafter  forming a part of,  appertaining  to or used or for use in connection
with said Pipeline.

     "Plans" shall mean any plan subject to Title IV of ERISA and  maintained by
a Borrower,  or any such plan to which a Borrower is required to  contribute  on
behalf of its employees.

     "Plant"  shall  mean  the fee  property  and  surface  leases  in  Oklahoma
associated with the processing of hydrocarbons, together with all property, real
or  personal,   associated   therewith  including  all  buildings,   structures,
attachments,  fittings and fixtures,  facilities,  tools, materials,  equipment,
machinery,  appliances,   pipeline,  piping,  powerlines,   electrical  systems,
metering and calibration  facilities,  compressors,  dehydrators,  sponge units,
instrument and equipment housing, equipment storage facilities,  tanks, engines,
valves, traps, pumps, motors, instruments, fencing, office equipment, expanders,
heat exchangers,  chillers,  separators,  cooling towers, boilers and reboilers,
turbines,   generators,   meters   and   instruments,   fractionators,   stills,
debutanizers,  heaters, coolers, stabilizers, scrubbers, absorbers, reabsorbers,
flash towers, oil reclaimers, loading racks, injection facilities, accumulators,
economizers,  fans, condensers and valves, and appurtenances of every nature and
kind whatsoever now or hereafter forming a part of, located on,  appertaining to
or used or for use in connection with said fee property and surface leases.

     "Pre-Approved Contracts" is used herein as defined in Section 13.12 hereof.

     "Prime  Rate"  shall mean the U.S.  prime rate  reported in The Wall Street
Journal  (or the  average  prime  rate if a high and a low prime rate is therein
reported).  Each change in the Prime Rate shall become  effective  without prior
notice to Borrowers  automatically  as of the opening of business on the date of
such change in the Prime Rate.

     "Prime  Rate  Interest  Period"  shall mean with  respect to any Prime Rate
Loan, the period ending on the last day of each month,  provided,  however, that
(i) if any Prime Rate Interest Period would end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day,
and (ii) if any  Prime  Rate  Interest  Period  would  otherwise  end  after the
Maturity Date such Interest Period shall end on the Maturity Date.

     "Prime  Rate  Loans"  shall mean any loan  during any  period  which  bears
interest  based upon the Prime Rate or which would bear interest  based upon the
Prime Rate if the  Maximum  Rate  ceiling  was not in effect at that  particular
time.

     "Prime Rate Margin" shall be:

          (i) zero percent (0%) per annum  whenever the Leverage  Ratio,  at the
     time in question, is equal to or less than 1.50:1;

          (ii) zero percent (0%) per annum whenever the Leverage  Ratio,  at the
     time in question, is greater than 1.50:1 but less than 2.50:1; or

          (iii)  one  quarter  of one  percent  (.25%)  per annum  whenever  the
     Leverage Ratio, at the time in question, is greater than 2.50:1

     "Pro Rata or Pro Rata Part" shall mean for each Bank,  (i) for all purposes
where  no Loan is  outstanding,  such  Bank's  Commitment  Percentage  and  (ii)
otherwise,  the proportion  which the portion of the  outstanding  Loans owed to
such Bank bears to the aggregate outstanding Loans owed to all Banks at the time
in question.

     "Reimbursement  Obligations" shall mean at any time, the obligations of the
Borrowers  in respect of all Letters of Credit  then  outstanding  to  reimburse
amounts  actually paid by any Bank in respect of any drawing or drawings under a
Letter of Credit.

     "Required Payment" is used herein as defined in Section 3.9 hereof.

     "Revolving  Commitment"  shall  mean (A) for all  Banks,  the lesser of (i)
$45,700,000.00  or (ii) the Borrowing Base in effect from time to time minus the
principal amount outstanding of the Term Loan, in each case as reduced from time
to time  pursuant  to  Sections  2 and 7  hereof,  and (B) as to any  Bank,  its
obligation  to make  Advances  hereunder  on the  Revolving  Loan  and  purchase
participations in Letters of Credit issued hereunder by the Agent in amounts not
exceeding, in the aggregate, an amount equal to such Bank's Revolving Commitment
Percentage  times the total  Revolving  Commitment as of any date. The Revolving
Commitment of each Bank hereunder shall be adjusted from time to time to reflect
assignments  made by such Bank pursuant to Section 28 hereof.  Each reduction in
the  Revolving  Commitment  shall result in a Pro Rata  reduction in each Bank's
Revolving Commitment.

     "Revolving  Commitment  Percentage" shall mean for each Bank the percentage
derived by dividing its Revolving Commitment at the time of the determination by
the  Revolving  Commitments  of all  Banks  at the  time of  determination.  The
Revolving  Commitment  Percentage of each Bank hereunder  shall be adjusted from
time to time to reflect  assignments  made by such Bank  pursuant  to Section 28
hereof.

     "Revolving  Loan"  shall  mean  loan or  loans  made  under  the  Revolving
Commitment pursuant to Section 2 hereof.

     "Revolving  Maturity  Date"  shall mean May 31, 2003 or as such date may be
extended from time to time with the consent of all Banks.

     "Revolving  Notes" shall mean the Revolving  Notes described in Section 3.2
hereof.

     "Right-Of-Way  Properties"  shall mean and  include  all lands,  easements,
rights-of-way,  leases, surface rights,  servitudes,  grants, permits, licenses,
authorizations,  privileges, franchises, consents, prescriptive rights and other
title and  interest  now or  hereafter  owned by Borrower  and now or  hereafter
necessary or useful for the construction and operation of the Pipeline.

     "Security  Instruments"  shall  mean  this  Agreement,  all Deeds of Trust,
Mortgages,   Security  Agreements,   Assignments  of  Production  and  Financing
Statements,  and other collateral  documents covering the Oil and Gas Properties
and related personal property,  equipment, oil and gas inventory and proceeds of
the foregoing,  all such documents to be in form and substance  satisfactory  to
Agent.

     "Senior  Subordinated  Notes"  shall  mean those  certain  $150,000,000.00,
10.25% Senior Subordinated Notes due August of 2008.

     "Subsidiary" shall mean any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons  performing similar functions are at the
time directly or indirectly owned by a Borrower or another subsidiary.

     "System" shall mean and include the Pipeline, the Plants, and the contracts
and contract rights arising in connection therewith,  together with all tangible
or  intangible  property,  personal or real,  now or at any time arising out of,
relating to, located in or upon, used in connection with or obtained directly or
indirectly by virtue of the Pipeline,  the Plant or the  Contracts,  whether now
owned and existing or hereafter acquired or arising,  including,  but not by way
of  limitation,  accounts  receivable,  contract  rights,  general  intangibles,
chattel paper,  documents,  instruments,  business goodwill,  records and books,
trade names,  mineral  interests,  oil and gas  leasehold  interests,  inventory
(whether  consisting of hydrocarbons or otherwise)  supplies,  materials and any
other property.

     "Tangible  Net  Worth"  shall  mean  an  amount  equal  to  the  Borrowers'
consolidated  stockholders  equity,  as determined in accordance with GAAP, plus
any  subordinated  debt owed by any Borrower less any Affiliate  receivables and
any Intangible Assets.

     "Term Commitment" shall mean (A) for all Banks $24,300,000.00 and (B) as to
any Bank, its Term Commitment  Percentage  times the total Term Commitment as of
any date. The Term Commitment of each Bank hereunder shall be adjusted from time
to time to affect  assignments  made by each Bank pursuant to Section 28 hereof.
Each  reduction in the Term  Commitment  shall result in a Pro Rata reduction in
each Bank's Term Commitment.

     "Term  Commitment  Percentage"  shall  mean  for each  Bank the  percentage
derived by dividing its Term Commitment at the time of the  determination by the
Term Commitments of all Banks at the time of determination.  The Term Commitment
Percentage of each Bank hereunder shall be adjusted from time to time to reflect
assignments made by such Bank pursuant to Section 28 hereof.

     "Term  Loan"  shall mean that  certain  amortizing  loan made  pursuant  to
Section 2.1 hereof.

     "Term Notes" shall mean those certain  amended and restated term promissory
notes described in Section 3.1 hereof.

     "Term Maturity Date" shall mean June 30, 2006.

     "Total  Commitment" shall mean the lesser of (i) $70,000,000.00 or (ii) the
Borrowing Base in effect from time to time, in each case as reduced from time to
time pursuant to Sections 2 and 7 hereof.

     "Total  Outstandings"  shall mean as of any date,  the sum of (i) the total
principal  balance  outstanding on the Revolving Notes, plus (ii) the total face
amount of all  outstanding  Letters  of Credit,  plus (iii) the total  principal
balance outstanding on the Term Notes.

     "Tranche" shall mean a LIBOR Loan or a Prime Rate Loan.

     "Unscheduled Redetermination" shall mean a redetermination of the Borrowing
Base made at any time  other than on the dates set for the  regular  semi-annual
redetermination  of the  Borrowing  Base  which  are made (A) at the  reasonable
request of Borrowers,  (B) at any time it appears to Agent or Majority Banks, in
the exercise of their reasonable  discretion,  that either (i) there has been an
unscheduled  material  decrease in the value of the Oil and Gas  Properties,  or
(ii) an event has  occurred  which is  reasonably  expected  to have a  Material
Adverse Effect.

     "Unused Fee Rate" shall mean the  percentage  used to calculate  the Unused
Commitment Fee (as such term is defined in Section 8.1 hereof), which percentage
shall be twenty five (25) basis points per annum

     1.2 Use of Defined Terms.  Defined terms may be used in the singular or the
plural.  When used in the singular  preceded by "a",  "an", or "any",  such term
shall be taken to indicate one or more members of the relevant class.  When used
in the plural,  such term shall be taken to indicate all members of the relevant
class.  All other terms in the Agreement  shall have the same meanings when used
in the  Notes,  the  Security  Instruments,  any other  Loan  Documents,  or any
certificate  or other  document  made or delivered  pursuant  hereto.  The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement.  All article,  section,  subsection and
exhibit  references  used in this  Agreement  refer  to  this  Agreement  unless
otherwise specified.

     1.3 Incorporation of Recitals.  The Recitals  appearing at the beginning of
this Agreement are incorporated herein and expressly made a part hereof.

     1.4 Incorporation of Exhibits.  All Exhibits hereto are incorporated herein
and expressly made a part hereof.

2. Commitments of the Bank.

     2.1 Terms of Term Loan. Subject to the terms and conditions hereof, and the
terms and  conditions  of the Loan  Documents  as hereafter  defined,  each Bank
agrees to amend and  restate  its  extension  of credit to the  Borrower  to the
extent  of its Pro Rata  Part and the  Borrower  agrees  to such  amendment  and
restatement of its extension of credit from the Banks (the "Term Loan"),  in the
maximum  principal  amount of Twenty Four  Million  Three  Hundred  Thousand and
No/100  Dollars   ($24,300,000.00).   This  amount  represents  the  outstanding
principal  indebtedness  of the Former Term Notes and shall be  evidenced by the
Term Notes. The proceeds of the Term Notes shall refinance and be a continuation
of a portion of the outstanding indebtedness evidenced by the Former Term Notes.
The obligation of the Borrowers  hereunder  shall be evidenced by this Agreement
and the Term  Notes  issued in  connection  herewith,  said Term  Notes to be as
described in Section 3.1 hereof.

     2.2 Terms of  Revolving  Commitment.  Subject  to the terms and  conditions
hereof, and the terms and conditions of the Loan Documents as hereafter defined,
each Bank agrees  severally to make Advances to the Borrowers  from time to time
during the period  beginning on the  Effective  Date and ending on the Revolving
Maturity  Date in such amounts as the  Borrowers may request up to an amount not
to exceed,  in the  aggregate  principal  amount  outstanding  at any time,  the
Revolving  Commitment.  The  obligation  of the  Borrowers  hereunder  shall  be
evidenced  by this  Agreement  and the  Revolving  Notes  issued  in  connection
herewith,  said  Revolving  Notes to be as  described  in  Section  3.2  hereof.
Notwithstanding  any other  provision  of this  Agreement,  no Advance  shall be
required to be made hereunder if any Event of Default (as  hereinafter  defined)
has occurred  and is  continuing  or if any event or  condition  has occurred or
failed to occur  which with the  passage of time or service of notice,  or both,
would  constitute  an  Event  of  Default.  Each  Advance  under  the  Revolving
Commitment  shall be an aggregate  amount of at least $100,000 or a whole number
multiple thereof except an Advance of the entire remaining  unborrowed Revolving
Commitment.  Irrespective of the face amount of the Revolving Note or Notes, the
Banks shall never have the obligation to Advance any amount or amounts in excess
of the Available Commitment or to increase the Revolving  Commitment.  The total
number of Tranches  under the Revolving  Commitment  which may be outstanding at
any time hereunder shall never exceed five (5),  whether such Tranches are Prime
Rate Loans,  LIBOR Loans,  or a  combination  thereof.  Within the limit of each
Bank's Revolving Commitment,  the Borrowers may borrow, repay and reborrow under
this Section 2 prior to the Revolving Maturity Date.

     2.3  Procedure  for  Borrowing.  Whenever the  Borrowers  desire an Advance
hereunder,  they shall give Agent  telegraphic,  telex,  facsimile or telephonic
notice ("Notice of Borrowing") of such requested  Advance,  which in the case of
telephonic  notice,  shall be  promptly  confirmed  in  writing.  Each Notice of
Borrowing  shall be in the form of  Exhibit  "A"  attached  hereto  and shall be
received by Agent not later than 11:00 a.m.  Oklahoma  City,  Oklahoma time, (i)
one Business Day prior to the Borrowing Date in the case of the Prime Rate Loan,
or (ii) two London  Business  Days prior to any proposed  Borrowing  Date in the
case of LIBOR Loans.  Each Notice of Borrowing  shall  specify (i) the Borrowing
Date (which, if at Prime Rate Loan, shall be a Business Day and if a LIBOR Loan,
a London  Business  Day),  (ii) the principal  amount to be borrowed,  (iii) the
portion of the Advance constituting Prime Rate Loans and/or LIBOR Loans and (iv)
if any portion of the proposed Advance is to constitute LIBOR Loans, the initial
Interest  Period  selected  by  Borrowers  pursuant  to  Section  4 hereof to be
applicable  thereto.  Upon receipt of such Notice,  Agent shall advise each Bank
thereof; provided, that if the Banks have received at least one (1) day's notice
of such Advance prior to funding of a Prime Rate Loan, or at least two (2) days'
notice of each Advance  prior to funding in the case of a LIBOR Loan,  each Bank
shall  provide  Agent at its  office at 501 N.W.  Grand  Blvd.,  Oklahoma  City,
Oklahoma 73118, not later than 1:00 p.m.,  Oklahoma City,  Oklahoma time, on the
Borrowing  Date,  in  immediately  available  funds,  its pro rata  share of the
requested  Advance,  but the  aggregate of all such  fundings by each Bank shall
never  exceed  such  Bank's  Revolving  Commitment.  Not later  than 2:00  p.m.,
Oklahoma City,  Oklahoma time, on the Borrowing Date, Agent shall make available
to the Borrowers at the same office, in like funds, the aggregate amount of such
requested  Advance.  Neither Agent nor any Bank shall incur any liability to the
Borrowers  in acting  upon any  Notice  of  Borrowing  which  Agent or such Bank
believes in good faith to have been given by a duly authorized  officer or other
person  authorized to borrow on behalf of Borrowers or for  otherwise  acting in
good faith  under  this  Section  2.3 . Upon  funding  of  Advances  by Banks in
accordance with this Agreement, pursuant to any such Notice, the Borrowers shall
have effected Advances hereunder.

     2.4 Letters of Credit.  On the terms and conditions  hereinafter set forth,
the Agent shall from time to time during the period  beginning on the  Effective
Date and ending on the Revolving  Maturity Date upon request of Borrowers  issue
standby  and/or  commercial  Letters of Credit for the account of Borrowers (the
"Letters of Credit") in such face amounts as Borrowers  may request,  but not to
exceed  in the  aggregate  face  amount at any time  outstanding  the sum of Two
Million Dollars ($2,000,000.00). The face amount of all Letters of Credit issued
and  outstanding  hereunder  shall be considered as Advances for Borrowing  Base
purposes and all  payments  made by the Agent on such Letters of Credit shall be
considered as Advances under the Revolving  Notes.  Each Letter of Credit issued
for  the  account  of  Borrowers  hereunder  shall  (i)  be  in  favor  of  such
beneficiaries  as specifically  requested by Borrowers,  (ii) have an expiration
date not exceeding one year from the Revolving  Maturity Date, and (iii) contain
such other terms and provisions as may be reasonably required by Bank. Each Bank
(other than Agent) agrees that, upon issuance of any Letter of Credit hereunder,
it shall  automatically  acquire a participation in the Agent's  liability under
such  Letter of Credit in an amount  equal to such Bank's  Revolving  Commitment
Percentage  of such  liability,  and each Bank (other than Agent)  thereby shall
absolutely,  unconditionally  and irrevocably assume, as primary obligor and not
as surety, and shall be unconditionally  obligated to Agent to pay and discharge
when due, its Revolving  Commitment  Percentage of Agent's  liability under such
Letter  of  Credit.  The  Borrowers  hereby  unconditionally  agree  to pay  and
reimburse  the Agent for the amount of each demand for payment  under any Letter
of Credit that is in  substantial  compliance  with the  provisions  of any such
Letter of Credit at or prior to the date on which  payment  is to be made by the
Agent to the beneficiary  thereunder,  without presentment,  demand,  protest or
other  formalities of any kind.  Upon receipt from any beneficiary of any Letter
of Credit of any demand for payment under such Letter of Credit, the Agent shall
promptly notify the Borrowers of the demand and the date upon which such payment
is to be made by the  Agent  to such  beneficiary  in  respect  of such  demand.
Forthwith upon receipt of such notice from the Agent, Borrowers shall advise the
Agent  whether  or  not  they  intend  to  borrow  hereunder  to  finance  their
obligations  to reimburse the Agent,  and if so, submit a Notice of Borrowing as
provided  in  Section  2.3  hereof.  If  Borrowers  fail to so advise  Agent and
thereafter  fail to  reimburse  Agent,  the Agent shall  notify each Bank of the
demand and the failure of the  Borrowers to reimburse  the Agent,  and each Bank
shall reimburse the Agent for its Revolving  Commitment  Percentage of each such
draw paid by the Agent and unreimbursed by the Borrowers.  All such amounts paid
by Agent  and/or  reimbursed  by the Banks  shall be  treated  as an  Advance or
Advances under the Revolving Commitment, which Advances shall be immediately due
and payable and shall bear interest at the Default Rate.

     2.5  Procedure  for  Obtaining  Letters of  Credit.  The amount and date of
issuance, renewal, extension or reissuance of a Letter of Credit pursuant to the
Banks' commitment above in Section 2.4 shall be designated by Borrowers' written
request delivered to Agent at least three (3) Business Days prior to the date of
such issuance,  renewal, extension or reissuance.  Concurrently with or promptly
following  the delivery of the request for a Letter of Credit,  Borrowers  shall
execute and deliver to the Agent an  application  and agreement  with respect to
the Letters of Credit,  said application and agreement to be in the form used by
the Agent. The Agent shall not be obligated to issue,  renew,  extend or reissue
such  Letters of Credit if (A) the amount  thereon when added to the face amount
of all outstanding Letters of Credit plus any Reimbursement  Obligations exceeds
Two Million Dollars  ($2,000,000.00) or (B) the amount thereof when added to the
Revolving Loans  outstanding  would exceed the Available  Commitment.  Borrowers
agree to pay the Agent for the  benefit of the Banks the  following  commissions
and fees for  issuing  the  Letters of Credit  (calculated  separately  for each
Letter of Credit):  a fee in an amount  equal to the greater of: (i) one percent
(1%) per annum on the maximum face amount of the Letter of Credit due  quarterly
in arrears  computed on a basis of a year  containing  360 days or (ii) $500.00.
Borrowers  further  agree  to pay  Agent an  additional  fronting  fee  equal to
one-eighth  of one percent  (.125%) per annum on the maximum face amount of each
Letter of Credit  due and  payable  at the time the  Letter of Credit is issued.
Borrowers  hereby agree to pay such other amounts as are customary for letter of
credit as are published by Agent from time to time.  Such  commissions  shall be
payable  prior to the issuance of each Letter of Credit and  thereafter  on each
anniversary date of such issuance while such Letter of Credit is outstanding.

     2.6 Voluntary Reduction of Revolving  Commitment.  The Borrowers may at any
time,  or from time to time,  upon not less than three (3) Business  Days' prior
written notice to Agent, reduce or terminate the Revolving Commitment; provided,
however,  that (i) each  reduction in the  Revolving  Commitment  must be in the
amount of $500,000 or more, in  increments  of $100,000 and (ii) each  reduction
must be  accompanied  by a prepayment  of the  Revolving  Notes in the amount by
which the  outstanding  principal  balance of the  Revolving  Notes  exceeds the
Revolving Commitment as reduced pursuant to this Section 2.

     2.7 Commitment Reductions. The Borrowing Base shall be reduced from time to
time in  accordance  with  Section  7.2  hereof.  If,  as a  result  of any such
reduction  in the  Borrowing  Base,  the  Total  Outstandings  ever  exceed  the
Borrowing Base then in effect, the Borrowers shall make the mandatory prepayment
of principal required pursuant to Section 9.2 hereof.

     2.8 Several  Obligations.  The obligations of the Banks under the Revolving
Commitment and pursuant to the Term  Commitment  are several and not joint.  The
failure  of any Bank to make an  Advance  required  to be made by it  shall  not
relieve any other Bank of its obligation to make its Advance,  and no Bank shall
be responsible  for the failure of any other Bank to make the Advance to be made
by such other Bank.

3.  Notes  Evidencing  Loans.  The loans  described  above in Section 2 shall be
evidenced by promissory notes of Borrowers as follows:

     3.1 Form of Term Notes.  The Term Loan shall be evidenced by the Term Notes
in the aggregate face amount of $24,300,000, and shall be in the form of Exhibit
"B-2" hereto with appropriate insertions (each a "Term Note"). Although the Term
Notes may be dated as of the Effective  Date,  interest in respect thereof shall
be payable  only for the period  during  which the loans  evidenced  thereby are
outstanding and, although the stated amount of the Term Notes may be higher, the
Term Notes shall be  enforceable,  with respect to Borrowers'  obligation to pay
the principal amount thereof,  only to the extent of the unpaid principal amount
of the loans.  Banks shall have no  obligation to advance any  additional  funds
pursuant to the Term Loan or Term Notes.

     3.2 Form of Revolving  Notes.  The  Revolving  Loan shall be evidenced by a
Note or Notes in the aggregate face amount of  $45,700,000,  and shall be in the
form of Exhibit  "B-1"  hereto with  appropriate  insertions  (each a "Revolving
Note").  Notwithstanding  the face  amount of the  Revolving  Notes,  the actual
principal  amount due from the  Borrowers  to Banks on account of the  Revolving
Notes,  as of any date of  computation,  shall be the sum of  Advances  then and
theretofore  made on  account  thereof,  less all  principal  payments  actually
received  by Banks  in  collected  funds  with  respect  thereto.  Although  the
Revolving  Notes may be dated as of the  Effective  Date,  interest  in  respect
thereof  shall be payable only for the period  during which the loans  evidenced
thereby are outstanding  and,  although the stated amount of the Revolving Notes
may be  higher,  the  Revolving  Notes  shall be  enforceable,  with  respect to
Borrowers' obligation to pay the principal amount thereof, only to the extent of
the unpaid principal amount of the loans. Irrespective of the face amount of the
Revolving  Notes,  no Bank shall ever be obligated  to advance on the  Revolving
Commitment any amount in excess of its Revolving Commitment then in effect.

     3.3 Issuance of Additional Notes. From time to time new Notes may be issued
to other Banks as such Banks become parties to this Agreement. Upon request from
Agent,  the  Borrowers  shall  execute  and  deliver  to  Agent  any such new or
additional  Notes.  From time to time as new Notes are  issued  the Agent  shall
require  that each Bank  exchange  their Notes for newly  issued Notes to better
reflect the extent of each Bank's Commitment hereunder. The notes replaced shall
be marked to  indicate  that they have  been  replaced  and/or  returned  to the
Borrowers.

     3.4 Interest Rates.  The unpaid  principal  balance of the Notes shall bear
interest from time to time as set forth in Section 4 hereof.

     3.5  Payment of  Interest.  Interest  on the Notes shall be payable on each
Interest Payment Date.

     3.6 Payment of Principal.

          3.6.1  Beginning  March 31,2002,  and continuing on or before the last
     day of each calendar  quarter  thereafter  through the Term Maturity  Date,
     Borrower shall, in addition to the payment of interest required pursuant to
     Section 3.5 above,  make a payment of  principal  on the Term Notes for the
     ratable  benefit  of  the  Banks  in  the  amount  of  $1,350,000.00.   All
     outstanding  principal plus all accrued but unpaid interest due on the Term
     Notes shall be due and payable in full on the Term Maturity Date.

          3.6.2 Principal of the Revolving Notes shall be due and payable to the
     Agent for the ratable  benefit of the Banks on the Revolving  Maturity Date
     unless  earlier due in whole or in part as a result of an  acceleration  of
     the  amount due or  pursuant  to the  mandatory  prepayment  provisions  of
     Section 9.2 hereof.

     3.7  Payment  to  Banks.  Each  Bank's  Pro Rata  Part of each  payment  or
prepayment  of the Loans shall be directed by wire  transfer to such Bank by the
Agent at the address  provided to the Agent for such Bank for  payments no later
than 2:00 p.m., Oklahoma City, Oklahoma,  time on the Business Day such payments
or prepayments  are deemed  hereunder to have been received by Agent;  provided,
however,  in the event  that any Bank  shall  have  failed to make an Advance as
contemplated  under  Section 2 hereof  (a  "Defaulting  Bank")  and the Agent or
another Bank or Banks shall have made such  Advance,  payment  received by Agent
for the account of such  Defaulting  Bank or Banks shall not be  distributed  to
such  Defaulting  Bank or Banks until such  Advance or Advances  shall have been
repaid in full to the Bank or Banks who funded  such  Advance or  Advances.  Any
payment or prepayment  received by Agent at any time after 12:00 noon,  Oklahoma
City, Oklahoma,  time on a Business Day shall be deemed to have been received on
the next Business Day. Interest shall cease to accrue on any principal as of the
end of the  day  preceding  the  Business  Day on  which  any  such  payment  or
prepayment is deemed hereunder to have been received by Agent. If Agent fails to
transfer any principal  amount to any Bank as provided  above,  then Agent shall
promptly direct such principal amount by wire transfer to such Bank.

     3.8 Sharing of Payments, Etc. If any Bank shall obtain any payment (whether
voluntary,  involuntary,  or  otherwise)  on account  of the Loans,  (including,
without  limitation,  any  set-off)  which is in  excess of its Pro Rata Part of
payments on either of the Loans, as the case may be, obtained by all Banks, such
Bank  shall  purchase  from  the  other  Banks  such  participation  as shall be
necessary  to cause such  purchasing  Bank to share the excess  payment pro rata
with each of them;  provided  that, if all or any portion of such excess payment
is  thereafter  recovered  from such  purchasing  Bank,  the  purchase  shall be
rescinded and the purchase  price  restored to the extent of the  recovery.  The
Borrowers  agree that any Bank so purchasing a  participation  from another Bank
pursuant to this Section may, to the fullest extent  permitted by law,  exercise
all of its rights of payment  (including  the right of offset)  with  respect to
such  participation  as fully as if such Bank were the  direct  creditor  of the
Borrowers in the amount of such participation.

     3.9  Non-Receipt  of Funds by the Agent.  Unless the Agent  shall have been
notified by a Bank or the  Borrowers  (the  "Payor")  prior to the date on which
such Bank is to make  payment to the Agent of the  proceeds of a Loan to be made
by it  hereunder  or the  Borrowers  are to make a payment  to the Agent for the
account  of one or more of the  Banks,  as the case may be (such  payment  being
herein  called the  "Required  Payment"),  which notice shall be effective  upon
receipt,  that the Payor  does not  intend to make the  Required  Payment to the
Agent,  the Agent may assume that the Required Payment has been made and may, in
reliance  upon such  assumption  (but shall not be required to), make the amount
thereof  available to the intended  recipient on such date and, if the Payor has
not in fact made the  Required  Payment  to the  Agent,  the  recipient  of such
payment  shall,  on demand,  pay to the Agent the amount  made  available  to it
together with interest  thereon in respect of the period  commencing on the date
such amount was made  available  by the Agent until the date the Agent  recovers
such amount at the rate applicable to such portion of the applicable Loan.

     3.10 Capital Adequacy.  If either (i) the introduction or implementation of
or the  compliance  with or any change in or in the  interpretation  of any law,
rule  or  regulation  or  (ii)  the  introduction  or  implementation  of or the
compliance with any mandatory  request,  directive or guideline from any central
bank or other  governmental  authority  (whether or not having the force of law)
affects  or would  affect  the  amount of capital  required  or  expected  to be
maintained by any Bank or any  corporation  controlling  any Bank as a result of
maintaining its Pro Rata Part of the Revolving  Commitment,  then within fifteen
(15) days after demand by such Bank, the Borrowers  will pay to such Bank,  from
time to time as specified by such Bank, such additional  amount or amounts which
such Bank shall  reasonably  determine to be appropriate to compensate such Bank
or any corporation controlling such Bank in light of such circumstances,  to the
extent that such Bank reasonably  determines that the amount of any such capital
would be  increased,  or the rate of return on any such capital would be reduced
in whole or in part,  based on the  existence of the amount of the Loans or such
Bank's Revolving Commitment under this Agreement; provided, however, that to the
extent  such  notice  is given by any such  Bank  more  than 180 days  after the
occurrence  of the  event  giving  rise  to the  additional  costs  of the  type
described  in this  Section,  such Bank shall not be  entitled  to  compensation
pursuant to this Section for any amounts  incurred or accruing prior to the date
180 days before the giving of such notice,  except to the extent such law, rule,
regulation,  request,  directive or guideline shall have been given  retroactive
effective affecting a period beginning more than 180 days prior to such notice.

4. Interest Rates.

     4.1 Options.

          4.1.1 Prime Rate Loans. On Prime Rate Loans the Borrowers agree to pay
     interest on the Notes calculated on the basis of the actual days elapsed in
     a year consisting of 360 days with respect to the unpaid  principal  amount
     of each Prime Rate Loan from the date the proceeds  thereof are advanced to
     Borrowers  until maturity  (whether by  acceleration  or  otherwise),  at a
     varying rate per annum equal to the lesser of (i) the Maximum Rate, or (ii)
     the sum of the Prime  Rate  plus the  Prime  Rate  Margin.  Subject  to the
     provisions of this Agreement as to  prepayment,  the principal of the Notes
     representing  Prime Rate Loans shall be payable as specified in Section 3.6
     hereof and the interest in respect of each Prime Rate Loan shall be payable
     on each  Interest  Payment  Date.  Past due  principal  and,  to the extent
     permitted  by law,  past due  interest  in respect to each Prime Rate Loan,
     shall bear  interest,  payable on demand,  at a rate per annum equal to the
     Default Rate

          4.1.2 LIBOR Loans.  On LIBOR Loans the Borrowers agree to pay interest
     calculated  on the basis of a year  consisting  of 360 days with respect to
     the unpaid  principal  amount of each LIBOR Loan from the date the proceeds
     thereof are advanced to Borrowers  until maturity  (whether by acceleration
     or  otherwise),  at a varying rate per annum equal to the lesser of (i) the
     Maximum Rate, or (ii) the LIBOR Rate plus the LIBOR Margin.  Subject to the
     provisions of this Agreement  with respect to prepayment,  the principal of
     the Notes  shall be payable  as  specified  in  Section  3.6 hereof and the
     interest  with respect to each LIBOR Loan shall be payable on each Interest
     Payment Date. Past due principal and, to the extent  permitted by law, past
     due interest  shall bear interest,  payable on demand,  at a rate per annum
     equal to the Default  Rate.  Upon three (3) London  Business  Days' written
     notice  prior to the  making by the Banks of any LIBOR Loan (in the case of
     the  initial  Interest  Period  therefor)  or the  expiration  date of each
     succeeding  Interest  Period (in the case of  subsequent  Interest  Periods
     therefor),  Borrowers  shall  have the  option,  subject to  compliance  by
     Borrowers with all of the provisions of this Agreement, as long as no Event
     of Default exists, to specify whether the Interest Period commencing on any
     such date shall be a one (1), two (2),  three (3) or six (6) month  period.
     If Agent shall not have received  timely  notice of a  designation  of such
     Interest  Period  as  herein  provided,  Borrowers  shall be deemed to have
     elected to convert all maturing LIBOR Loans to Prime Rate Loans.

     4.2 Interest Rate Determination.  The Leverage Ratio shall be determined as
of the end of each fiscal quarter of the  Borrowers'  fiscal year based upon the
Borrowers' financial statements delivered pursuant to Section 12.1.2 below. Each
change in the Prime Rate Margin and the LIBOR Margin  resulting from a change in
the  Leverage  Ratio  shall be  effective  during the period  commencing  on and
including  the  date of  delivery  to the  Agent  of such  financial  statements
indicating  such  change  and  ending  on the  date  immediately  preceding  the
effective  date of the next change.  Agent shall  determine  each  interest rate
applicable  to the Loans  hereunder in  accordance  with the  provisions of this
Agreement.  The Agent shall give prompt notice to the Borrowers and the Banks of
each rate of interest  so  determined  and its  determination  thereof  shall be
conclusive absent error.

     4.3 Conversion Option. Borrowers may elect from time to time (i) to convert
all or any  part of its  LIBOR  Loans  to  Prime  Rate  Loans  by  giving  Agent
irrevocable  notice of such  election in writing  prior to 10:00 a.m.  (Oklahoma
City, Oklahoma time) on the conversion date and such conversion shall be made on
the requested conversion date, provided that any such conversion of a LIBOR Loan
shall only be made on the last day of the LIBOR  Interest  Period  with  respect
thereof,  (ii) to convert all or any part of its Prime Rate Loans to LIBOR Loans
by giving the Agent irrevocable written notice of such election three (3) London
Business Days prior to the proposed conversion and such conversion shall be made
on the requested  conversion date or, if such requested conversion date is not a
London  Business  Day or a  Business  Day,  as the  case  may  be,  on the  next
succeeding  London  Business  Day or Business  Day, as the case may be. Any such
conversion  shall  not be  deemed  to be a  prepayment  of any of the  loans for
purposes of this Agreement or the Notes.

     4.4  Recoupment.  If at any time the applicable  rate of interest  selected
pursuant to Sections 4.1.1 or 4.1.2 above shall exceed the Maximum Rate, thereby
causing the  interest on the Notes to be limited to the Maximum  Rate,  then any
subsequent  reduction in the interest rate so selected or subsequently  selected
shall not reduce the rate of interest on the Notes below the Maximum  Rate until
the total  amount of interest  accrued on the Note equals the amount of interest
which would have accrued on the Notes if the rate or rates selected  pursuant to
Sections 4.1.1 or 4.1.2, as the case may be, had at all times been in effect.

5. Change of Circumstances.

     5.1 Unavailability of Funds or Inadequacy of Pricing. In the event that, in
connection   with  any  proposed  LIBOR  Loan,  the  Agent   determines,   which
determination  shall,  absent manifest  error, be final,  conclusive and binding
upon all  parties,  due to  changes  in  circumstances  since  the date  hereof,
adequate and fair means do not exist for determining the LIBOR Rate or such rate
will not  accurately  reflect the costs to the Banks of funding  LIBOR Loans for
such LIBOR Interest Period, the Agent shall give notice of such determination to
the Borrowers and the Banks,  whereupon,  until the Agent notifies the Borrowers
and the Banks that the  circumstances  giving rise to such  suspension no longer
exist,  the  obligations  of the Banks to make,  continue or convert  Loans into
LIBOR Loans shall be suspended,  and all loans to Borrowers  shall be Prime Rate
Loans during the period of suspension.

     5.2 Change in Laws.  If at any time any new law or any  change in  existing
laws or in the interpretation of any new or existing laws shall make it unlawful
for any Bank to make or continue to maintain or fund LIBOR Loans hereunder, then
such Bank shall promptly notify Borrowers in writing and such Bank's  obligation
to make,  continue or convert Loans into LIBOR Loans under this Agreement  shall
be  suspended  until it is no longer  unlawful for such Bank to make or maintain
LIBOR  Loans.  Upon  receipt of such  notice,  Borrowers  shall either repay the
outstanding LIBOR Loans owed to the Banks,  without penalty,  on the last day of
the  current  Interest  Periods  (or, if any Bank may not  lawfully  continue to
maintain and fund such LIBOR Loans, immediately),  or Borrowers may convert such
LIBOR Loans at such appropriate time to Prime Rate Loans.

     5.3 Increased Cost or Reduced Return.

          5.3.1 If, after the date hereof,  the adoption of any applicable  law,
     rule,  or  regulation,  or any  change  in any  applicable  law,  rule,  or
     regulation,  or any change in the interpretation or administration  thereof
     by any governmental  authority,  central bank, or comparable agency charged
     with the  interpretation  or administration  thereof,  or compliance by any
     Bank with any request or directive (whether or not having the force of law)
     of any such governmental authority, central bank, or comparable agency:

               (A) shall  subject  such Bank to any tax,  duty,  or other charge
          with respect to any LIBOR Loans,  its Notes, or its obligation to make
          LIBOR Loans, or change the basis of taxation of any amounts payable to
          such Bank  under this  Agreement  or its Notes in respect of any LIBOR
          Loans (other than franchise taxes and taxes imposed on the overall net
          income of such Bank);

               (B) shall impose, modify, or deem applicable any reserve, special
          deposit,  assessment,  or  similar  requirement  (other  than  reserve
          requirements,  if any, taken into account in the  determination of the
          LIBOR Rate)  relating to any  extensions of credit or other assets of,
          or any deposits  with or other  liabilities  or  commitments  of, such
          Bank, including the Commitment of such Bank hereunder; or

               (C) shall impose on such Bank or on the London  interbank  market
          any other  condition  affecting  this Agreement or its Notes or any of
          such extensions of credit or liabilities or commitments;

               and the result of any of the foregoing is to increase the cost to
          such Bank of making,  converting into, continuing,  or maintaining any
          LIBOR Loans or to reduce any sum received or  receivable  by such Bank
          under this  Agreement  or its Notes with  respect to any LIBOR  Loans,
          then Borrowers shall pay to such Bank on demand such amount or amounts
          as will compensate such Bank for such increased cost or reduction.  If
          any Bank requests  compensation  by Borrowers  under this Section 5.3,
          Borrowers may, by notice to such Bank (with a copy to Agent),  suspend
          the  obligation  of such Bank to make or continue  LIBOR Loans,  or to
          convert all or part of the Prime Rate Loan owing to such Bank to LIBOR
          Loans, until the event or condition giving rise to such request ceases
          to be in effect (in which case the  provisions of Section 5.3 shall be
          applicable);  provided that such suspension shall not affect the right
          of such Bank to receive the compensation so requested.

          5.3.2 If, after the date hereof,  any Bank shall have  determined that
     the adoption of any applicable law, rule, or regulation  regarding  capital
     adequacy or any change therein or in the  interpretation  or administration
     thereof by any governmental  authority,  central bank, or comparable agency
     charged with the interpretation or administration  thereof,  or any request
     or directive regarding capital adequacy (whether or not having the force of
     law) of any  such  governmental  authority,  central  bank,  or  comparable
     agency,  has or would have the effect of reducing the rate of return on the
     capital  of  such  Bank  or any  corporation  controlling  such  Bank  as a
     consequence  of such  Bank's  obligations  hereunder  to a level below that
     which  such  Bank or such  corporation  could  have  achieved  but for such
     adoption,  change,  request,  or directive  (taking into  consideration its
     policies  with  respect to capital  adequacy),  then from time to time upon
     demand  Borrowers shall pay to such Bank such additional  amount or amounts
     as will compensate such Bank for such reduction.

          5.3.3 Each Bank shall promptly notify Borrowers and Agent of any event
     of which it has  knowledge,  occurring  after the date  hereof,  which will
     entitle  such  Bank to  compensation  pursuant  to this  Section  5.3  will
     designate a separate  lending office,  if applicable,  if such  designation
     will avoid the need for,  or reduce the amount of,  such  compensation  and
     will not, in the judgment of such Bank, be otherwise disadvantageous to it.
     Any Bank  claiming  compensation  under this  Section 5.3 shall  furnish to
     Borrowers  and Agent a statement  setting  forth the  additional  amount or
     amounts to be paid to it hereunder which shall be conclusive in the absence
     of  manifest  error.  In  determining  such  amount,  such Bank may use any
     reasonable averaging and attribution methods.

          5.3.4 Any Bank  giving  notice to the  Borrowers  through  the  Agent,
     pursuant to Section 5.3 shall give to the  Borrowers a statement  signed by
     an officer of such Bank setting forth in  reasonable  detail the basis for,
     and the calculation of such additional  cost,  reduced  payments or capital
     requirements,  as the case may be, and the additional  amounts  required to
     compensate such Bank therefor.

          5.3.5 Within five (5) Business  Days after receipt by the Borrowers of
     any notice referred to in Section 5.3, the Borrowers shall pay to the Agent
     for the account of the Bank issuing such notice such additional  amounts as
     are  required  to  compensate  such  Bank for the  increased  cost,  reduce
     payments or increase capital  requirements  identified therein, as the case
     may be;  provided,  that the Borrowers shall not be obligated to compensate
     such Bank for any increased costs,  reduced  payments or increased  capital
     requirements  to the extent  that such Bank incurs the same prior to a date
     six (6) months before such Bank gives the required notice.

     5.4  Discretion  of Bank  as to  Manner  of  Funding.  Notwithstanding  any
provisions  of this  Agreement to the  contrary,  each Bank shall be entitled to
fund and  maintain  its funding of all or any part of its Loans in any manner it
sees fit, it being understood,  however, that for the purposes of this Agreement
all  determinations  hereunder shall be made as if each Bank had actually funded
and  maintained  each LIBOR Loan  through  the  purchase  of  deposits  having a
maturity  corresponding to the last day of the LIBOR Interest Period  applicable
to such LIBOR Loan and bearing an interest rate to the applicable  interest rate
for such LIBOR Period.

     5.5 Breakage Fees. Without duplication under any other provision hereof, if
any Bank incurs any loss, cost or expense (including,  without  limitation,  any
loss of profit and loss, cost, expense or premium reasonably  incurred by reason
of the liquidation or  re-employment of deposits or other funds acquired by such
Bank to fund or maintain any LIBOR Loan or the relending or  reinvesting of such
deposits  or  amounts  paid or  prepaid  to the Banks) as a result of any of the
following  events  other than any such  occurrence  as a result in the change of
circumstances described in Sections 5.1 and 5.2 above:

          5.5.1 any payment,  prepayment or conversion of a LIBOR Loan on a date
     other  than  the  last  day  of  its  LIBOR  Interest  Period  (whether  by
     acceleration, prepayment or otherwise);

          5.5.2 any failure to make a  principal  payment of a LIBOR Loan on the
     due date thereof; or

          5.5.3 any  failure by the  Borrowers  to borrow,  continue,  prepay or
     convert to a LIBOR Loan on the dates  specified in a notice given  pursuant
     to Section 2.3 or 4.3 hereof;

          then  the  Borrowers  shall  pay to  such  Bank  such  amount  as will
     reimburse such Bank for such loss, cost or expense.  If any Bank makes such
     a claim  for  compensation,  it shall  furnish  to  Borrowers  and  Agent a
     statement  setting  forth  the  amount of such  loss,  cost or  expense  in
     reasonable  detail  (including  an  explanation  of the  basis  for and the
     computation  of such loss,  cost or expense) and the amounts  shown on such
     statement shall be conclusive and binding absent manifest error.

6. Collateral Security.

     6.1 Pledge of Collateral.  To secure the  performance by Borrowers of their
obligations hereunder, and under the Notes and Security Instruments, whether now
or hereafter  incurred,  matured or unmatured,  direct or  contingent,  joint or
several, or joint and several, including extensions, modifications, renewals and
increases  thereof,  and  substitutions  therefore,  Borrowers  have  heretofore
granted and assigned to Bank One-Oklahoma and/or MidFirst Bank a first and prior
lien on certain of their Oil and Gas Properties,  certain related equipment, oil
and gas inventory and the proceeds of the foregoing.  Contemporaneously with the
execution of this Agreement and the Notes,  the Borrowers shall grant and assign
to Agent for the ratable  benefit of the Banks a first and prior Lien on certain
of its Oil and Gas Properties, certain related equipment, oil and gas inventory,
certain bank accounts, the System, the Plant and proceeds of the foregoing.  The
Oil and Gas  Properties  heretofore  and  herewith  mortgaged to the Agent shall
represent not less than 70% of the Borrowers'  aggregate present worth in proved
developed  producing  properties,   as  determined  by  Borrowers'  most  recent
engineering  report dated January 1, 2002.  All Oil and Gas Properties and other
collateral in which Borrowers have heretofore granted to Bank  One-Oklahoma,  or
herewith grant or hereafter  grant to Agent for the ratable benefit of the Banks
a first and prior Lien (to the  satisfaction  of the Agent) in  accordance  with
this  Section  6,  as  such  properties  and  interests  are  from  time to time
constituted, are hereinafter collectively called the "Collateral".

     6.2  Documentation  and Title  Review.  The granting and  assigning of such
security  interests  and  Liens by  Borrowers  shall  be  pursuant  to  Security
Instruments  in  form  and  substance  reasonably  satisfactory  to  the  Agent.
Concurrently  with the delivery of each of the Security  Instruments or within a
reasonable  time  thereafter,  Borrowers shall furnish to the Agent mortgage and
title opinions and other title information satisfactory to Agent with respect to
the title and Lien status of  Borrowers'  interests  in not less than 80% of the
Engineered  Value  of the  Oil  and  Gas  Properties  covered  by  the  Security
Instruments as Agent shall have designated.  "Engineered Value" for this purpose
shall mean future net revenues discounted at the discount rate being used by the
Agent as of the date of any such determination  utilizing the pricing parameters
used in the engineering report furnished to the Agent for the ratable benefit of
the Banks,  pursuant  to  Sections 7 and 12 hereof.  Borrowers  will cause to be
executed  and  delivered  to the  Agent,  in  the  future,  additional  Security
Instruments  if  the  Agent  reasonably  deems  such  are  necessary  to  insure
perfection  or  maintenance  of  Banks'  security  interests  and  Liens  in the
Collateral or any part thereof.

     6.3 Letters in Lieu of Transfer  Orders.  The  Borrowers  shall provide the
Agent for the benefit of the Banks,  undated letters in lieu of transfer orders,
in form  and  substance  satisfactory  to  Agent,  from  the  Borrowers  to each
purchaser  of  hydrocarbons  and  disburser  proceeds of  hydrocarbons  from and
attributable  to the Oil and Gas Properties,  together with  additional  letters
with  addresses  left blank  authorizing  and directing  the  addressees to make
future payments  attributable  to  hydrocarbons  from the Oil and Gas Properties
directly to the Agent for the benefit of the Banks. The Banks agree that none of
the letters in lieu of transfer  orders  provided by the  Borrowers  pursuant to
this Section 6.3 will be sent to the address prior to the occurrence of an Event
of  Default,  at which time the Agent may,  at its option and in addition to the
exercise  of any of its  other  rights  and  remedies,  send any and all of such
letters to such addressees;  provided,  however,  that upon the occurrence of an
Event of Default other than those specified in Sections 14.6 and 14.7, the Agent
shall not send any or all of such letters until the  applicable  period to cure,
if any,  such Default has lapsed  without such  Default  being cured.  Borrowers
hereby  designate  the Agent as its agent  and  attorney-in-fact,  to act in its
name,  place and stead for the purpose of completing  and delivering any and all
letters in lieu of transfer  orders  delivered by the Borrowers to the Agent for
the benefit of the Banks  pursuant to Sections 6.3 and 12.24 hereof,  including,
without  limitation,  completing  any  blanks  contained  in  such  letters  and
attaching exhibits thereto describing the relevant Collateral.  Borrowers hereby
ratify and confirm  all that the Agent shall  lawfully do or cause to be done by
virtue of this power of attorney  and the rights  granted  with  respect to such
power of attorney.  This power of attorney is coupled with the  interests of the
Agent in the  Collateral,  shall  commence and be in full force and effect as of
the  Effective  Date and shall  remain in full  force  and  effect  and shall be
irrevocable  until  the  obligations,  if  any,  of  the  Agent  hereunder  have
terminated and the full  satisfaction  of all obligations due hereunder or under
the  Notes.  The  powers  conferred  on  Agent by this  appointment  may only be
exercised  by the Agent by execution by any Person who, at the time of exercise,
is an officer of the Agent, and are solely to protect the interests of the Agent
and the Banks  under the Loan  Documents  and shall not impose any duty upon the
Agent to  exercise  any such  powers.  The Agent shall be  accountable  only for
amounts that it actually receives or has expressly  directed that others receive
as a result of the exercise of such powers and shall not be  responsible  to the
Borrowers,  or any other  Person for any act or  failure to act with  respect to
such powers, except for gross negligence or willful misconduct.

7. Borrowing Base.

     7.1 Initial Borrowing Base. At the Effective Date, the Borrowing Base shall
be $70,000,000.00.

     7.2 Subsequent  Determinations of Borrowing Base. Subsequent determinations
of the Borrowing Base shall be made by the Banks at least semi-annually based on
engineering  reports  effectively  dated  January  1 and  July  1 of  each  year
beginning  January 1, 2002 or as otherwise  required to accommodate  Unscheduled
Redeterminations.  The Borrowers  shall furnish to the Banks as soon as possible
but in any event no later than April 1 of each  year,  beginning  April 1, 2002,
with an  engineering  report  in form and  substance  satisfactory  to the Agent
prepared  by an  independent  petroleum  engineering  firm  acceptable  to Agent
covering the Oil and Gas Properties  utilizing  economic and pricing  parameters
used by  Agent as  established  from  time to time,  together  with  such  other
information  concerning  the  value of the Oil and Gas  Properties  as the Agent
shall deem  necessary to determine the value of the Oil and Gas  Properties.  By
October 1 of each year,  or within  thirty (30) days after either (i) receipt of
notice from Agent that the Banks require an Unscheduled Redetermination, or (ii)
the  Borrowers  give  notice  to Agent of their  desire  to have an  Unscheduled
Redetermination   performed,  the  Borrowers  shall  furnish  to  the  Banks  an
engineering  report in form and  substance  satisfactory  to Agent  prepared  by
Borrowers'  in-house  engineering  staff  valuing  the Oil  and  Gas  Properties
utilizing  economic and pricing parameters used by the Agent as established from
time to time, together with such other information,  reports and data concerning
the value of the Oil and Gas Properties as Agent shall deem reasonably necessary
to determine the value of such Oil and Gas Properties.  Agent shall by notice to
the  Borrowers  no later than May 1 and  November  1 of each  year,  or within a
reasonable time thereafter (herein called the "Determination  Date"), notify the
Borrowers  of the  designation  by the Banks of the new  Borrowing  Base for the
period  beginning  on such  Determination  Date and  continuing  until,  but not
including,  the next  Determination  Date. If an Unscheduled  Redetermination is
made by the Banks, the Agent shall notify the Borrowers within a reasonable time
after receipt of all requested  information of the new Borrowing  Base, and such
new Borrowing  Base shall  continue  until the next  Determination  Date. If the
Borrowers  do not  furnish  all such  information,  reports and data by any date
specified in this Section 7.2, the Banks may nonetheless designate the Borrowing
Base at any  amount  which  the  Banks in  their  discretion  determine  and may
redesignate  the  Borrowing  Base from time to time  thereafter  until the Banks
receive  all such  information,  reports  and data,  whereupon  the Banks  shall
designate a new Borrowing Base as described above. Each Bank shall determine the
amount of the  Borrowing  Base based upon the loan value  which such Bank in its
discretion (using such methodology, assumptions and discounts rates as such Bank
customarily uses in assigning loan value to oil and gas properties,  oil and gas
gathering systems,  gas processing and plant operations) assigns to such Oil and
Gas Properties and other Collateral of the Borrowers at the time in question and
based upon such other credit factors  consistently  applied (including,  without
limitation, the assets, liabilities, cash flow, business, properties, prospects,
management  and ownership of the Borrowers  and their  affiliates)  as such Bank
customarily  considers in evaluating similar oil and gas credits,  but such Bank
in its discretion shall not be required to give any additional positive value to
any Oil and Gas Property over the current  economic and pricing  parameters used
by such Bank for such  Determination  Date  which  additional  value is  derived
directly from a hedging,  forward sale or swap  agreement  covering such Oil and
Gas  Property  as of the  date  of such  determination.  All  determinations  or
Unscheduled  Redeterminations  of the  Borrowing  Base  require the  approval of
Majority Banks; provided, however, that notwithstanding anything to the contrary
herein,  the amount of the  Borrowing  Base may not be  increased,  without  the
approval of all Banks.  If the Banks  cannot  otherwise  agree on the  Borrowing
Base, each Bank shall submit in writing to the Agent its proposed Borrowing Base
and the Borrowing Base shall be set on the basis of the weighted  average of the
Borrowing  Bases  proposed  by the Banks.  If at any time any of the Oil and Gas
Properties  are sold,  the  Borrowing  Base then in effect  may be  reduced as a
result of an Unscheduled  Redetermination . It is expressly  understood that the
Banks have no  obligation  to designate  the  Borrowing  Base at any  particular
amounts, except in the exercise of their discretion. Provided, however, that the
Banks shall not have the  obligation to designate a Borrowing  Base in an amount
in excess of the Commitment or its legal or internal  lending limits.  The Banks
shall have the right to perform an Unscheduled  Redetermination of the Borrowing
Base.

8. Fees.

     8.1 Unused Commitment Fee. The Borrowers shall pay to Agent for the ratable
benefit of the Banks an unused  commitment  fee (the  "Unused  Commitment  Fee")
equivalent to the Unused Fee Rate times the  unadvanced  amount of the Revolving
Commitment  (calculated  on a daily basis).  The Unused  Commitment Fee shall be
payable in arrears on the last Business Day of each calendar  quarter  beginning
March 31, 2002 with the final fee payment due on the Revolving Maturity Date for
any period then ending for which the Unused  Commitment  Fee shall not have been
theretofore paid. In the event the Revolving  Commitment  terminates on any date
prior to the end of any such  monthly  period,  the  Borrowers  shall pay to the
Agent for the ratable benefit of the Banks, on the date of such termination, the
total Unused Commitment Fee due for the period in which such termination occurs.

     8.2 The Letter of Credit Fee.  Borrowers  shall pay to the Agent the Letter
of Credit fees required above in Section 2.5.

     8.3 Upfront Fee.  Borrowers  shall pay to the Agent for the ratable benefit
of Lenders an upfront fee in the amount of  $50,000.00.  Lenders not  increasing
their Commitment shall not be entitled to share in the Upfront Fee.

     8.4 Other Fees. The Borrowers shall pay to the Agent such other fees as are
agreed upon by Agent and Borrowers.

9. Prepayments.

     9.1 Voluntary Prepayments. Subject to the provisions of Section 5.5 hereof,
the Borrowers may at any time and from time to time, without penalty or premium,
prepay the Notes, in whole or in part. Each such prepayment  shall be made on at
least three (3) London  Business Days' notice to Agent in the case of LIBOR Loan
Tranches and without notice in the case of Prime Rate Loan Tranches and shall be
in a minimum amount of $100,000.00 or any larger multiple  thereof or the unpaid
balance on the Notes,  whichever is less, plus accrued  interest  thereon to the
date of prepayment.

     9.2 Mandatory  Prepayment For Borrowing Base  Deficiency.  In the event the
Total  Outstandings  ever  exceed  the  Borrowing  Base as  determined  by Banks
pursuant to Section 7.2 hereof,  the  Borrowers  shall,  within thirty (30) days
after  notification  from  the  Agent,  either  (A)  by  instruments  reasonably
satisfactory  in  form  and  substance  to the  Bank,  provide  the  Agent  with
collateral with value and quality in amounts satisfactory to all of the Banks in
their  discretion in order to increase the Borrowing  Base by an amount at least
equal to such excess, or (B) prepay,  without premium or penalty,  the principal
amount of the Term Notes or the Revolving  Notes,  in Banks'  discretion,  in an
amount at least equal to such excess plus accrued  interest  thereon to the date
of prepayment.  If the Total Outstandings ever exceed the Commitment as a result
of any required reduction in the Commitment, then in such event, Borrowers shall
immediately  prepay  the  principal  amount of the Term  Notes or the  Revolving
Notes,  in Banks'  discretion,  in an amount at least  equal to such excess plus
accrued interest to the date of prepayment.

10.  Representations and Warranties.  In order to induce the Banks to enter into
this  Agreement,  the Borrowers  hereby,  jointly and  severally,  represent and
warrant to the Banks  (which  representations  and  warranties  will survive the
delivery of the Notes) that:

     10.1  Creation  and  Existence.  Borrowers  are  each  a  corporation  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  in which it was formed and is duly qualified in all  jurisdictions
wherein failure to qualify may result in a Material  Adverse  Effect.  Borrowers
each  have all power and  authority  to own its  properties  and  assets  and to
transact the business in which it is engaged.

     10.2 Power and Authority.  Borrowers are each duly authorized and empowered
to create and issue the Notes;  and Borrowers are duly  authorized and empowered
to execute, deliver and perform their respective Loan Documents,  including this
Agreement;  and all corporation action on each Borrower's part requisite for the
due creation and issuance of the Notes and for the due  execution,  delivery and
performance of the Loan Documents,  including this Agreement,  has been duly and
effectively taken.

     10.3 Binding Obligations. This Agreement does, and the Notes and other Loan
Documents upon their creation, issuance, execution and delivery will, constitute
valid and binding obligations of Borrowers, enforceable in accordance with their
respective   terms  (except  that  enforcement  may  be  subject  to  applicable
principles of equity and the effect of any applicable bankruptcy, insolvency, or
similar  debtor  relief  laws now or  hereafter  in effect  and  relating  to or
affecting the enforcement of creditors' rights generally).

     10.4 No Legal Bar or  Resultant  Lien.  The  Notes and the Loan  Documents,
including this  Agreement,  do not and will not, to the best of each  Borrower's
knowledge violate any provisions of any contract,  agreement,  law,  regulation,
order,  injunction,  judgment,  decree or writ to which any  Borrower is subject
which could reasonable be expected to have a Material Adverse Effect,  or result
in the creation or imposition of any lien or other  encumbrance  upon any assets
or properties of any Borrower, other than those contemplated by this Agreement.

     10.5 No Consent.  The execution,  delivery and performance by the Borrowers
of the  Notes and other  Loan  Documents,  including  this  Agreement,  does not
require the consent or approval of any other person or entity, including without
limitation any regulatory authority or governmental body of the United States or
any state thereof or any political subdivision of the United States or any state
thereof except for consents required for federal,  state and, in some instances,
private leases,  right of ways and other  conveyances or encumbrances of oil and
gas leases, if any, all of which consents have been obtained by the Borrowers.

     10.6 Financial  Condition.  The unaudited Financial Statements of Borrowers
dated  September 30, 2001,  which have been  delivered to Banks are complete and
correct  in all  material  respects,  and fully and  accurately  reflect  in all
material  respects the financial  condition and results of the operations of the
Borrowers on a consolidated  basis as of the date or dates and for the period or
periods  stated.  No change has since  occurred in the  condition,  financial or
otherwise,  of the  Borrowers  which is  reasonably  expected to have a Material
Adverse  Effect,  except as  disclosed  to the Banks in  Schedule  "2"  attached
hereto.

     10.7  Liabilities.  No Borrower  has any material  (individually  or in the
aggregate) liability, direct or contingent,  except as disclosed to the Banks in
the  Financial  Statements  or on Schedule  "3" attached  hereto.  No unusual or
unduly burdensome restrictions,  restraint, or hazard exists by contract, law or
governmental  regulation  or  otherwise  relative  to the  business,  assets  or
properties of Borrowers which is reasonably  expected to have a Material Adverse
Effect.

     10.8  Litigation.  Except as described in the Financial  Statements,  or as
otherwise  disclosed to the Banks in Schedule "4" attached  hereto,  there is no
litigation, legal or administrative proceeding, investigation or other action of
any nature pending or, to the knowledge of the officers of Borrowers  threatened
against or affecting Borrowers which involves the possibility of any judgment or
liability not fully covered by  insurance,  and which is reasonably  expected to
have a Material Adverse Effect.

     10.9 Taxes; Governmental Charges. Borrowers have each filed all tax returns
and reports required to be filed and has paid all taxes,  assessments,  fees and
other  governmental  charges  levied upon them or their  assets,  properties  or
income which are due and payable,  including interest and penalties, the failure
of which to pay could  reasonably be expected to have a Material Adverse Effect,
except such as are being contested in good faith by appropriate  proceedings and
for which adequate reserves for the payment thereof as required by GAAP has been
provided  and levy and  execution  thereon  have been stayed and  continue to be
stayed.

     10.10  Titles,  Etc.  Borrowers  each have  defensible  title to all of its
respective assets, including without limitation, the Oil and Gas Properties, the
Plants and the Systems, free and clear of all liens or other encumbrances except
Permitted Liens, except such failure or failures of title which in the aggregate
could not  reasonably  be  expected  to reduce the  Borrowing  Base by more than
$500,000.

     10.11 Defaults.  No Borrower is in default and no event or circumstance has
occurred  which,  but for the passage of time or the giving of notice,  or both,
would  constitute  a  default  under any loan or  credit  agreement,  indenture,
mortgage,  deed of trust, security agreement or other agreement or instrument to
which a Borrower is a party in any respect that would be reasonably  expected to
have a Material Adverse Effect.  No Event of Default  hereunder has occurred and
is continuing.

     10.12  Casualties;  Taking of  Properties.  Since  the dates of the  latest
Financial  Statements of the Borrowers delivered to Banks,  neither the business
nor the assets or properties  of Borrowers  have been affected (to the extent it
is reasonably  likely to cause a Material  Adverse  Effect),  as a result of any
fire, explosion,  earthquake,  flood, drought,  windstorm,  accident,  strike or
other  labor  disturbance,   embargo,  requisition  or  taking  of  property  or
cancellation  of contracts,  permits or  concessions  by any domestic or foreign
government or any agency  thereof,  riot,  activities of armed forces or acts of
God or of any public enemy.

     10.13 Use of Proceeds;  Margin Stock. The proceeds of the Commitment may be
used by the  Borrowers  for  the  purposes  of (i)  refinancing  existing  debt,
(ii)acquisition,  exploration  and  development  of oil  and gas  properties  or
entities  owning oil and gas  properties,  (iii)paying for the fees and expenses
incurred in connection with the refinancing of this facility, and (iv) providing
working capital and financing other general corporate  purposes.  No Borrower is
engaged  principally  or as one of its  important  activities in the business of
extending  credit for the purpose of  purchasing or carrying any "margin stock "
as defined in  Regulation  U of the Board of  Governors  of the Federal  Reserve
System (12 C.F.R.  Part 221),  or for the purpose of  reducing  or retiring  any
indebtedness  which was originally  incurred to purchase or carry a margin stock
or for any other  purpose  which might  constitute  this  transaction a "purpose
credit" within the meaning of said Regulation G or U.

     No  Borrower  nor any person or entity  acting on behalf of  Borrowers  has
taken or will take any action  which might cause the loans  hereunder  or any of
the Loan Documents,  including this Agreement,  to violate  Regulation G or U or
any other  regulation of the Board of Governors of the Federal Reserve System or
to  violate  the  Securities  Exchange  Act of  1934 or any  rule or  regulation
thereunder,  in each case as now in effect  or as the same may  hereafter  be in
effect.

     10.14 Location of Business and Offices. The principal place of business and
chief  executive  offices of the Borrowers are located at the address  stated in
Section 17 hereof.

     10.15 Compliance with the Law. To the best of each Borrower's knowledge, no
Borrower:

          (i) is in violation of any law, judgment, decree, order, ordinance, or
     governmental  rule or regulation to which a Borrower,  or any of its assets
     or properties are subject; or

          (ii) has  failed to obtain any  license,  permit,  franchise  or other
     governmental  authorization necessary to the ownership of any of its assets
     or properties or the conduct of its business;

     which  violation  or  failure  is  reasonably  expected  to have a Material
     Adverse Effect.

     10.16  No  Material  Misstatements.  No  information,   exhibit  or  report
furnished by Borrowers to the Banks in connection  with the  negotiation of this
Agreement  contained  any  material  misstatement  of fact or omitted to state a
material fact or any fact necessary to make the statement  contained therein not
materially misleading.

     10.17 ERISA. Borrowers are each in compliance in all material respects with
the applicable  provisions of ERISA, and no "reportable  event", as such term is
defined  in  Section  403 of ERISA,  has  occurred  with  respect to any Plan of
Borrowers.

     10.18  Public  Utility  Holding  Company  Act.  No  Borrower  is a "holding
company", or "subsidiary company" of a "holding company", or an "affiliate" of a
"holding  company" or of a"  subsidiary  company" of a "holding  company",  or a
"public utility" within the meaning of the Public Utility Holding Company Act of
1935, as amended.

     10.19 Investment Company Act Compliance. The Borrowers are not, nor are the
Borrowers,  or any of them,  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.

     10.20  Subsidiaries.  All of the  Borrowers'  Subsidiaries  are  listed  on
Schedule "5" hereto.

     10.21  Environmental  Matters.  Except as  disclosed  on  Schedule  "6", no
Borrower  (i) has  received  notice or  otherwise  learned of any  Environmental
Liability  which would be reasonably  likely to individually or in the aggregate
have a Material Adverse Effect arising in connection with (A) any non-compliance
with  or  violation  of the  requirements  of any  Environmental  Law or (B) the
release  or  threatened  release  of any  toxic  or  hazardous  waste  into  the
environment,  (ii) has received notice of any threatened or actual  liability in
connection with the release or notice of any threatened  release of any toxic or
hazardous  waste  into the  environment  which  would be  reasonably  likely  to
individually  or in the aggregate  have a Material  Adverse  Effect or (iii) has
received  notice or  otherwise  learned of any  federal  or state  investigation
evaluating  whether  any  remedial  action is needed to  respond to a release or
threatened  release of any toxic or  hazardous  waste into the  environment  for
which a Borrower is or may be liable which may  reasonably be expected to result
in a Material Adverse Effect.

     10.22  Liens.  Except (i) as  disclosed on Schedule "1" hereto and (ii) for
Permitted  Liens,  the assets and properties of the Borrowers are free and clear
of all liens and encumbrances.

     10.23 Gas  Contracts.  Except as  described  on Schedule  "7"  hereto,  the
Borrowers  (a) are not  obligated  in any  material  respect  by  virtue  of any
prepayment made under any contract containing a "take-or-pay,", "recoupment," or
"prepayment"  provision or under any similar  agreement to deliver  hydrocarbons
produced  from or allocated to any of the Oil and Gas  Properties at some future
date without  receiving full payment  therefor at the time of delivery,  and (b)
have not produced gas, in any material amount,  subject to, and are not, nor are
any of the Oil and Gas Properties,  subject to balancing rights of third parties
or subject to balancing  duties under  governmental  requirements,  except as to
such matters for which the Borrowers have established monetary reserves adequate
in an amount to satisfy such  obligations and have segregated such reserves from
other accounts or the Borrowers'  balancing  obligations in the aggregate  would
not reasonably be expected to have a Material Adverse Effect.

     10.24  Delhi  Oakdale  Lateral  System.  A portion  of the Eagle  Chief Gas
Gathering  System is not owned by a Borrower,  rather,  it is leased pursuant to
the Delhi Lease. The primary term of the Delhi Lease has expired,  however,  the
Borrowers'  right to use the  Delhi  Oakdale  Lateral  System  is  renewed  on a
month-to-month basis. The Delhi Oakdale Lateral System is not a critical portion
of the Eagle  Chief Gas  Gathering  System.  The Delhi  Oakdale  Lateral  System
accounts for no more than one percent (1%) of the volume of hydrocarbons flowing
through the Eagle Chief Gas Gathering System.

     10.25 Eagle Chief Gas Gathering  System.  At least ninety  percent (90%) of
the  hydrocarbons  flowing  through the Gathering  System  originate  from wells
directly  connected to the Eagle Chief Gas Gathering System or flows through the
Eagle Chief Gas Gathering  System prior to delivery to the Oklahoma  Natural Gas
Company's or other purchaser's system.

     10.26  Senior   Subordinated  Notes.  The  Senior  Subordinated  Notes  are
unsecured and are subordinate, in terms of payment and collection, to the Loan.

11. Conditions of Lending.

     11.1 The  effectiveness  of this Agreement,  and the obligation to make the
Term Loan or the initial Advance or issue any initial Letter of Credit under the
Revolving   Commitment  shall  be  subject  to  satisfaction  of  the  following
conditions precedent:

          11.1.1 Due Diligence. The Agent shall have completed its due diligence
     including,  but not  limited  to, the  receipt  and review of  information,
     satisfactory to Agent and its counsel,  regarding (i) litigation  involving
     any  Borrower,  and  (ii)  tax,  accounting,   labor,  insurance,   pension
     liabilities  (actual or  contingent),  real  estate  leases,  environmental
     matters,   material   contracts,   debt  agreements,   property  ownership,
     contingent  liabilities  and  management  pertaining  to or  involving  any
     Borrower.

          11.1.2 Execution and Delivery.  The Borrowers shall each have executed
     and delivered the Agreement,  the Notes and other required Loan  Documents,
     and the other Security Instruments,  all in form and substance satisfactory
     to the Agent;

          11.1.3 Legal  Opinion.  The Agent shall have received from  Borrowers'
     legal  counsel a favorable  legal opinion or opinions in form and substance
     satisfactory  to it as to such other  matters as Agent or its  counsel  may
     reasonably request;

          11.1.4   Corporate   Resolutions.   The  Agent  shall  have   received
     appropriate certified corporate resolutions of Borrowers;

          11.1.5  Good  Standing.  The Agent  shall have  received  evidence  of
     existence and good standing for Borrowers;

          11.1.6 Incumbency.  The Agent shall have received a signed certificate
     of Borrowers,  certifying the names of the officers of Borrowers authorized
     to sign  loan  documents  on behalf of  Borrowers,  together  with the true
     signatures of each such officer.  The Agent may  conclusively  rely on such
     certificate  until the Agent  receives a further  certificate  of Borrowers
     canceling or amending the prior  certificate  and submitting  signatures of
     the officers named in such further certificate;

          11.1.7  Certificate of Incorporation and Bylaws.  The Agent shall have
     received  copies of the Certificate of  Incorporation  of Borrowers and all
     amendments thereto, certified by the Secretary of State of the State of its
     incorporation,  and a copy of the bylaws of  Borrowers  and all  amendments
     thereto, certified by Borrowers as being true, correct and complete;

          11.1.8 Priority of Liens.  The Agent shall have received  satisfactory
     evidence of the first lien status of the Liens  granted by Borrowers to the
     Banks;

          11.1.9 Letters in Lieu. The Agent shall have received  undated letters
     in lieu of  transfer  orders,  in form and  substance  satisfactory  to the
     Agent,  from the Borrowers to each purchaser of hydrocarbons  and disburser
     of  proceeds  of  hydrocarbons  from  and  attributable  to the Oil and Gas
     Properties, together with additional letters with the addresses left blank,
     authorizing   and  directing  the   addressees  to  make  future   payments
     attributable to the hydrocarbons  from the Oil and Gas Properties  directly
     to the Agent for the  benefit of the Banks,  all as  required  by Section 6
     hereof;

          11.1.10  Payment of Fees and  Expenses.  The Agent shall have received
     payment of all fees and  expenses due from  Borrowers  as of the  Effective
     Date, including any agreed upon "agency fee";

          11.1.11   Representation  and  Warranties.   The  representations  and
     warranties  of Borrowers  under this  Agreement are true and correct in all
     material  respects as of such date,  as if then made  (except to the extent
     that such  representations  and  warranties  related  solely to an  earlier
     date);

          11.1.12 No Event of Default.  No Event of Default  shall have occurred
     and be  continuing  nor shall any event  have  occurred  or failed to occur
     which,  with the  passage  of time or service  of  notice,  or both,  would
     constitute an Event of Default;

          11.1.13  No  Judgments  of  Material  Litigation.  No  order,  decree,
     judgment,  ruling or injunction  which  restrains the  consummation of this
     transaction in the manner contemplated hereby, and no pending or threatened
     action, suit, investigation or proceeding,  which, if adversely determined,
     could materially and adversely affect the Borrowers or their  subsidiaries,
     from performing any transaction contemplated hereby or could materially and
     adversely  affect the ability of the  Borrowers and their  subsidiaries  to
     perform their or its obligations under the Loan Documents or the ability of
     the Banks to exercise their rights under the Loan Documents;

          11.1.14 No Adverse  Change.  There shall have not  occurred a material
     adverse change since the most recently ended fiscal year for which a review
     has  been  completed  in  the  business,  assets,  liabilities  (actual  or
     contingent),  operations,  or condition  (financial  or  otherwise)  of the
     Borrowers  (or any Borrower)  and their  subsidiaries,  or in the facts and
     information regarding such entities as represented to date;

          11.1.15  Borrowers'  Ability to Meet Financial  Needs.  Agent shall be
     reasonably  satisfied that the amount of committed  financing  available to
     the Borrowers  shall be sufficient to meet the ongoing  financing  needs of
     the Borrowers' and their subsidiaries;

          11.1.16  Other  Documents.   Agent  shall  have  received  such  other
     instruments  and documents  incidental and  appropriate to the  transaction
     provided for herein as Agent or its counsel may reasonably request, and all
     such documents  shall be in form and substance  reasonably  satisfactory to
     the Agent;

          11.1.17 Legal Matters Satisfactory.  All legal matters incident to the
     consummation of the  transactions  contemplated  hereby shall be reasonably
     satisfactory  to special  counsel for Agent  retained at the expense of the
     Borrowers; and

          11.1.18 Absence of Material Change in Financial  Markets.  There shall
     not  have  occurred  and be  continuing  any  material  disruption  of or a
     material adverse change in conditions in the financial, banking, or capital
     markets  which  the  Agent,  in its  sole  discretion,  deems  material  in
     connection with the syndication of this credit facility.

     11.2 The obligation of the Banks to make any Advance or issue any Letter of
Credit under the Revolving  Commitment  (including the initial Advance) shall be
subject to the following  additional  conditions  precedent that, at the date of
making each such Advance and after giving effect thereto:

          11.2.1   Representation  and  Warranties.   The   representations  and
     warranties  of Borrowers  under this  Agreement are true and correct in all
     material  respects as of such date,  as if then made  (except to the extent
     that such  representations  and  warranties  related  solely to an  earlier
     date);

          11.2.2 No Event of Default.  No Event of Default  shall have  occurred
     and be  continuing  nor shall any event  have  occurred  or failed to occur
     which,  with the  passage  of time or service  of  notice,  or both,  would
     constitute an Event of Default;

          11.2.3  Other   Documents.   Agent  shall  have  received  such  other
     instruments  and documents  incidental and  appropriate to the  transaction
     provided for herein as Agent or its counsel may reasonably request, and all
     such documents  shall be in form and substance  reasonably  satisfactory to
     the Agent; and

          11.2.4 Legal Matters  Satisfactory.  All legal matters incident to the
     consummation of the  transactions  contemplated  hereby shall be reasonably
     satisfactory  to  special  counsel  for Agent  retained  at the  expense of
     Borrowers.

12.  Affirmative  Covenants.  A deviation from the provisions of this Section 12
shall not  constitute a Default or Event of Default under this Agreement if such
deviation is consented  to in writing by the  required  percentage  of the Banks
prior to the date of deviation.  The Borrowers will at all times comply with the
covenants  contained  in this Section 12 from the date hereof and for so long as
the  Commitment  is in existence or any amount is owed to the Agent or the Banks
under this Agreement or the other Loan Documents.

     12.1 Financial Statements and Reports.  Borrowers shall promptly furnish to
the Agent from time to time upon request such information regarding the business
and affairs and financial  condition of Borrowers,  as the Agent may  reasonably
request, and will furnish to the Agent:

          12.1.1 Annual Audited Financial Statements.  As soon as available, and
     in any event  within one hundred  and twenty  (120) days after the close of
     each fiscal year  beginning  with the fiscal year ended  December 31, 2001,
     the annual audited consolidated Financial Statements of Borrowers, prepared
     in accordance with GAAP  accompanied by an unqualified  opinion rendered by
     an independent accounting firm reasonably acceptable to the Agent;

          12.1.2 Quarterly Financial  Statements.  As soon as available,  and in
     any  event  within  forty-five  (45) days  after  the end of each  calendar
     quarter  of  each  year,   the   quarterly   unaudited   consolidated   and
     consolidating Financial Statements of Borrowers prepared in accordance with
     GAAP;

          12.1.3 Report on Properties.  As soon as available and in any event on
     or before April 1 and October 1 of each  calendar  year,  and at such other
     times as any Bank, in accordance with Section 7.2 hereof, may request,  the
     engineering  reports  required  to be  furnished  to the Agent  under  such
     Section 7.2 on the Oil and Gas Properties;

          12.1.4 Quarterly Production Reports. Within forty-five (45) days after
     the end of each calendar quarter, a quarterly report, in form and substance
     satisfactory  to the Agent,  indicating the immediately  preceding  month's
     sales volume, sales revenues,  production taxes,  operating expense and net
     operating  income from or attributable  to the Oil and Gas Properties,  and
     any  material  gas  balance  liabilities  of  a  Borrower,   with  detailed
     calculations and worksheets,  and, in the case of take or pay or prepayment
     agreements  during such month,  provide copies of the same, all in form and
     substance satisfactory to Agent; and

          12.1.5 Additional Information. Promptly upon request of the Agent from
     time to time any additional financial information or other information that
     the Agent may reasonably request.

All such reports, information,  balance sheets and Financial Statements referred
to in Subsection  12.1above  shall be in such detail as the Agent may reasonably
request  and  shall be  prepared  in a  manner  consistent  with  the  Financial
Statements.

     12.2  Certificates of Compliance.  Concurrently  with the furnishing of the
annual audited Financial Statements pursuant to Subsection 12.1.1 hereof and the
quarterly  unaudited  Financial  Statements pursuant to Subsection 12.1.2 hereof
for the months coinciding with the end of each calendar quarter,  Borrowers will
furnish  or cause to be  furnished  to the  Agent a  certificate  in the form of
Exhibit "C" attached hereto,  signed by the President or Chief Financial Officer
of each  Borrower,  (i) stating that each Borrower has fulfilled in all material
respects its obligations under the Notes and the Loan Documents,  including this
Agreement,  and that all  representations and warranties made herein and therein
continue (except to the extent they relate solely to an earlier date) to be true
and correct in all material  respects (or  specifying the nature of any change),
or if a Default has occurred,  specifying  the Default and the nature and status
thereof;  (ii)  to the  extent  requested  from  time  to  time  by  the  Agent,
specifically affirming compliance of each Borrower in all material respects with
any of its  representations  (except  to the  extent  they  relate  solely to an
earlier date) or  obligations  under said  instruments;  (iii) setting forth the
computation,  in reasonable  detail as of the end of each period covered by such
certificate,  of compliance with Sections  13.1.2,  13.1.3,  and 13.1.4 and (iv)
containing or accompanied by such  financial or other details,  information  and
material as the Agent may reasonably request to evidence such compliance.

     12.3 Taxes and Other Liens.  The Borrowers will pay and discharge  promptly
all taxes,  assessments  and  governmental  charges or levies  imposed  upon the
Borrowers, or upon the income or any assets or property of Borrowers, as well as
all claims of any kind  (including  claims for labor,  materials,  supplies  and
rent) which, if unpaid, might become a Lien or other encumbrance upon any or all
of the assets or property of Borrowers and which could reasonably be expected to
result in a Material Adverse Effect;  provided,  however, that no Borrower shall
be  required  to pay any  such  tax,  assessment,  charge,  levy or claim if the
amount,  applicability  or validity thereof shall currently be contested in good
faith by  appropriate  proceedings  diligently  conducted,  levy  and  execution
thereon have been stayed and  continue to be stayed and if Borrowers  shall have
set up adequate reserves therefor, if required, under GAAP.

     12.4  Compliance  with Laws.  Borrowers  will  observe and  comply,  in all
material respects, with all applicable laws, statutes,  codes, acts, ordinances,
orders,  judgments,  decrees,  injunctions,   rules,  regulations,   orders  and
restrictions  relating  to  environmental  standards  or  controls  or to energy
regulations  of all federal,  state,  county,  municipal and other  governments,
departments,  commissions, boards, agencies, courts, authorities,  officials and
officers, domestic or foreign.

     12.5 Further  Assurances.  Upon Agent's  request,  the Borrowers  will cure
promptly any defects in the creation and issuance of the Notes and the execution
and delivery of the Notes and the Loan Documents,  including this Agreement. The
Borrowers at their sole expense will promptly  execute and deliver to Agent upon
its  reasonable  request all such other and further  documents,  agreements  and
instruments in compliance with or accomplishment of the covenants and agreements
in this  Agreement,  or to correct any  omissions  in the Notes or more fully to
state the obligations set out herein.

     12.6 Performance of Obligations. The Borrowers will pay the Notes and other
obligations incurred by it hereunder according to the reading,  tenor and effect
thereof and hereof;  and  Borrowers  will do and perform every act and discharge
all of the obligations  provided to be performed and discharged by the Borrowers
under the Loan Documents,  including this Agreement, at the time or times and in
the manner specified.

     12.7  Insurance.  The  Borrowers now maintain and will continue to maintain
insurance  with  financially  sound and  reputable  insurers with respect to its
assets against such liabilities,  fires, casualties, risks and contingencies and
in such types and amounts as is customary in the case of persons  engaged in the
same or similar  businesses and similarly  situated.  Upon request of the Agent,
the  Borrowers  will  furnish or cause to be furnished to the Agent from time to
time a summary of the  respective  insurance  coverage of  Borrowers in form and
substance  satisfactory to the Agent, and, if requested,  will furnish the Agent
copies of the applicable  policies.  Upon demand by Agent any insurance policies
covering any such  property  shall be endorsed (i) to provide that such policies
may not be  canceled,  reduced or affected in any manner for any reason  without
fifteen (15) days prior notice to Agent,  (ii) to provide for insurance  against
fire,  casualty and other hazards normally insured against, in the amount of the
full value (less a reasonable  deductible not to exceed amounts customary in the
industry  for  similarly  situated  business  and  properties)  of the  property
insured, and (iii) to provide for such other matters as the Agent may reasonably
require.  Additionally,  the  Borrowers  shall at all  times  maintain  adequate
insurance  with respect to all of its other assets and wells in accordance  with
prudent business practices.

     12.8 Accounts and Records.  Borrowers will keep books, records and accounts
in  which  full,  true  and  correct  entries  will be made of all  dealings  or
transactions  in relation to its business and  activities,  prepared in a manner
consistent  with prior years,  subject to changes  suggested by such  Borrowers'
auditors.

     12.9 Right of Inspection.  Borrowers  will permit any officer,  employee or
agent of the Banks to examine Borrowers' books,  records and accounts,  and take
copies and  extracts  therefrom,  all at such  reasonable  times  during  normal
business hours and as often as the Banks may reasonably request.  The Banks will
use best  efforts  to keep all  Confidential  Information  (as  herein  defined)
confidential and will not disclose or reveal the Confidential Information or any
part thereof other than (i) as required by law, and (ii) to the Banks',  and the
Banks'  subsidiaries',   Affiliates,  officers,  employees,  legal  counsel  and
regulatory  authorities  or  advisors  to whom it is  necessary  to reveal  such
information  for the purpose of  effectuating  the agreements  and  undertakings
specified herein or as otherwise  required in connection with the enforcement of
the Banks' and the Agent's rights and remedies  under the Notes,  this Agreement
and the other Loan Documents. As used herein,  "Confidential  Information" means
information  about the Borrowers  furnished by the  Borrowers to the Banks,  but
does not include information (i) which was publicly known, or otherwise known to
the  Banks,  at the time of the  disclosure,  (ii)  which  subsequently  becomes
publicly known through no act or omission by the Banks, or (iii) which otherwise
becomes known to the Banks, other than through disclosure by the Borrowers.

     12.10 Notice of Certain  Events.  The Borrowers  shall promptly  notify the
Agent if Borrowers learn of the occurrence of (i) any event which  constitutes a
Default or Event of Default  together with a detailed  statement by Borrowers of
the steps being taken to cure such Event of Default; (ii) any legal, judicial or
regulatory  proceedings affecting Borrowers,  or any of the assets or properties
of Borrowers  which, if adversely  determined,  could  reasonably be expected to
have a Material  Adverse  Effect;  (iii) any dispute  between  Borrowers and any
governmental  or  regulatory  body or any  other  Person  or  entity  which,  if
adversely  determined,  might reasonably be expected to cause a Material Adverse
Effect;  (iv) any event or circumstance which requires the prepayment,  purchase
or  redemption of any  outstanding  public note issue,  whether  issued prior or
subsequent to the Effective Date, with a detailed statement of steps being taken
to cure such  Default  or Event of  Default,  or (v) any other  matter  which in
Borrowers' reasonable opinion could have a Material Adverse Effect.

     12.11 ERISA Information and Compliance. The Borrowers will promptly furnish
to  the  Agent  immediately  upon  becoming  aware  of  the  occurrence  of  any
"reportable  event", as such term is defined in Section 4043 of ERISA, or of any
"prohibited  transaction",  as  such  term is  defined  in  Section  4975 of the
Internal  Revenue Code of 1954, as amended,  in connection  with any Plan or any
trust created thereunder, a written notice signed by the chief financial officer
of Borrowers specifying the nature thereof,  what action Borrowers are taking or
proposes to take with respect thereto,  and, when known, any action taken by the
Internal Revenue Service with respect thereto.

     12.12 Environmental  Reports and Notices. The Borrowers will deliver to the
Agent (i) promptly upon its becoming available,  one copy of each report sent by
Borrowers to any court,  governmental agency or instrumentality  pursuant to any
Environmental  Law  pertaining to  environmental  matters which could expose the
Borrowers or any Borrower to liability in excess of $500,000 for any  individual
occurrence  or  in  the  aggregate,  (ii)  notice,  in  writing,  promptly  upon
Borrowers' receipt of notice or otherwise learning of any claim, demand, action,
event,  condition,  report or  investigation  indicating any potential or actual
liability arising in connection with (x) the non-compliance with or violation of
the requirements of any  Environmental Law which reasonably could be expected to
have a Material  Adverse  Effect;  (y) the release or threatened  release of any
toxic or hazardous waste into the environment which reasonably could be expected
to have a Material Adverse Effect or which release Borrower would have a duty to
report  to any  court or  government  agency  or  instrumentality,  or (iii) the
existence of any  Environmental  Lien on any  properties or assets of Borrowers,
and Borrowers shall immediately deliver a copy of any such notice to Agent.

     12.13 Compliance and Maintenance. The Borrowers will (i) observe and comply
in all material respects with all Environmental Laws; (ii) except as provided in
Subsections 12.15 and 12.16 below, maintain the Oil and Gas Properties and other
assets and  properties in good and workable  condition at all times and make all
repairs,  replacements,  additions,  betterments and improvements to the Oil and
Gas  Properties and other assets and properties as are needed and proper so that
the business  carried on in connection  therewith may be conducted  properly and
efficiently  at all times in the  opinion  of the  Borrowers  exercised  in good
faith;  (iii)  take or cause to be  taken  whatever  actions  are  necessary  or
desirable to prevent an event or  condition  of default by  Borrowers  under the
provisions  of any  gas  purchase  or  sales  contract  or any  other  contract,
agreement  or lease  comprising  a part of the Oil and Gas  Properties  or other
collateral  security  hereunder  which default  could  reasonably be expected to
result in a  Material  Adverse  Effect;  and (iv)  furnish  Agent  upon  request
evidence  satisfactory to Agent that there are no Liens,  claims or encumbrances
on  the  Oil  and  Gas  Properties,  except  laborers',  vendors',  repairmen's,
mechanics',  worker's,  or  materialmen's  liens  arising by operation of law or
incident to the  construction  or  improvement  of  property if the  obligations
secured  thereby  are not yet  due or are  being  contested  in  good  faith  by
appropriate legal proceedings or Permitted Liens.

     12.14 Operation of Properties.  Except as provided in Subsection  12.15 and
12.16 below, the Borrowers will operate,  or use reasonable  efforts to cause to
be operated,  all Oil and Gas  Properties in a careful and  efficient  manner in
accordance  with the practice of the industry and in  compliance in all material
respects with all applicable laws, rules, and regulations,  and in compliance in
all material respects with all applicable proration and conservation laws of the
jurisdiction  in which the  properties are situated,  and all  applicable  laws,
rules,  and  regulations,  of every other agency and authority from time to time
constituted to regulate the  development and operation of the properties and the
production  and sale of  hydrocarbons  and other minerals  therefrom;  provided,
however,  that the  Borrowers  shall  have the right to contest in good faith by
appropriate  proceedings,  the applicability or lawfulness of any such law, rule
or regulation and pending such contest may defer compliance  therewith,  as long
as such  deferment  shall not  subject  the  properties  or any part  thereof to
foreclosure or loss.

     12.15 Compliance with Leases and Other Instruments.  The Borrowers will pay
or  cause  to be paid and  discharge  all  rentals,  delay  rentals,  royalties,
production  payment,  and  indebtedness  required  to be paid by  Borrowers  (or
required to keep unimpaired in all material  respects the rights of Borrowers in
the Oil and Gas Properties) accruing under, and perform or cause to be performed
in all  material  respects  each and every act,  matter,  or thing  required  of
Borrowers  by  each  and  all  of the  assignments,  deeds,  leases,  subleases,
contracts, and agreements in any way relating to Borrowers or any of the Oil and
Gas Properties and do all other things necessary of Borrowers to keep unimpaired
in all material  respects the rights of Borrowers  thereunder and to prevent the
forfeiture thereof or default  thereunder;  provided,  however,  that nothing in
this Agreement  shall be deemed to require  Borrowers to perpetuate or renew any
oil and gas lease or other  lease by  payment  of  rental or delay  rental or by
commencement  or  continuation  of  operations  nor to  prevent  Borrowers  from
abandoning  or  releasing  any oil and gas lease or other lease or well  thereon
when,  in any of such  events,  in the opinion of  Borrowers  exercised  in good
faith, it is not in the best interest of the Borrowers to perpetuate the same.

     12.16 Certain Additional Assurances Regarding Maintenance and Operations of
Properties.  With  respect  to those  Oil and Gas  Properties  which  are  being
operated by  operators  other than the  Borrowers,  the  Borrowers  shall not be
obligated  to  perform  any  undertakings  contemplated  by  the  covenants  and
agreement  contained  in  Subsections  12.15  and/or this 12.16 hereof which are
performable  only by such operators and are beyond the control of the Borrowers;
however,  the Borrowers agree to promptly take all reasonable  actions available
under any operating  agreements or otherwise to bring about the  performance  of
any such material undertakings required to be performed thereunder.

     12.17 Title Matters.  Within thirty (30) days after the Effective Date with
respect to the Oil and Gas Properties  listed on Schedule "8" hereto,  Borrowers
shall  furnish Agent with title  opinions  and/or title  information  reasonably
satisfactory  to Agent showing  defensible  title of the applicable  Borrower to
such Oil and Gas Properties  subject only to the Permitted  Liens. As to any Oil
and Gas Properties hereafter mortgaged to Agent, Borrowers will promptly (but in
no event more than thirty (30) days  following such  mortgaging),  furnish Agent
with title opinions and/or title  information  reasonably  satisfactory to Agent
covering a  sufficient  value of such Oil and Gas  Properties  to  maintain  the
required level of title coverage at 80% of the Engineered Value of the total Oil
and Gas Properties covered by Security Instruments. Said title information shall
show defensible title of the applicable  Borrower to such Oil and Gas Properties
subject only to Permitted Liens.

     12.18  Curative  Matters.  Within sixty (60) days after the Effective  Date
with  respect to matters  listed on Schedule "9" and,  thereafter,  within sixty
(60) days after receipt by Borrowers from Agent or its counsel of written notice
of title  defects the Agent  reasonably  requires to be cured,  Borrowers  shall
either (i) provide such curative information, in form and substance satisfactory
to  Agent,  or (ii)  substitute  Oil and Gas  Properties  of value  and  quality
satisfactory to the Agent for all of Oil and Gas Properties for which such title
curative  was  requested  but upon which  Borrowers  elected not to provide such
title curative  information,  and, within sixty (60) days of such  substitution,
provide title opinions or title  information  satisfactory to the Agent covering
the Oil and Gas Properties so substituted.

     12.19 Change of Principal Place of Business.  Borrowers shall give Agent at
least  thirty  (30)  days  prior  written  notice of its  intention  to move its
principal place of business from the address set forth in Section 17 hereof.

     12.20 Operating Accounts. Borrowers shall establish and maintain with Agent
one or more operating  accounts (the "Operating  Accounts"),  the maintenance of
each of which shall be subject to such rules and  regulations as the Agent shall
from time to time specify.  Such Operating Accounts shall be the primary oil and
gas operating  account of the  Borrowers  and such accounts  shall be maintained
with the Agent  until all amounts  due  hereunder  and under the Notes have been
paid in full. The Borrowers hereby grant a security  interest to Banks in and to
the Operating  Accounts and all checks,  drafts and other items ever received by
any Bank for  deposit  therein.  If any  Event of  Default  shall  occur  and be
continuing,  Agent  shall have the  immediate  right,  without  prior  notice or
demand, to take and apply against the Borrowers'  obligations  hereunder any and
all funds legally and beneficially  owned by the Borrowers then or thereafter on
deposit in the Operating Accounts for the ratable benefit of the Banks.

     12.21 Mortgages to Achieve Required Percentage.  To the extent Borrowers do
not have, as of the date hereof,  at least 70% of (i) the  Borrowers'  aggregate
present  worth in  proved  developed  producing  properties,  as  determined  by
Borrowers' most recent engineering report plus (ii) the properties acquired from
Farrar Oil Company, currently encumbered by a mortgage or deed of trust in favor
of Banks,  Borrower shall provide the Agent within forty-five (45) days from the
date hereof  with such  information  necessary  to prepare a mortgage or deed of
trust to encumber same and shall promptly  execute upon request any and all such
mortgages or deeds of trust as the case may be.

     12.22  Additional  Property.  Borrowers  shall,  within five (5) days after
receiving a written request thereof from Agent, execute and deliver, or cause to
be executed and delivered, such mortgages, deeds of trust, instruments, security
agreements,  assignments,  financing statements,  and other documents, as may be
reasonably necessary in the opinion of Agent and Agent's counsel, to grant Agent
valid first mortgage liens and first,  prior and perfected security interests in
and to  additional  oil and gas  properties  of such  value as Agent  shall deem
necessary  to provide  additional  security  for full and prompt  payment of all
amounts owed  hereunder  and under the Notes.  At Agent's  option and on request
therefor,  Borrowers will furnish Agent title opinions  covering such additional
oil and gas  properties  prepared by counsel not employed by Borrowers  (or such
other  evidence  to  Borrowers'  ownership  thereof and their  revenue  interest
therein or attributable  thereto as Agent may reasonably  require),  in form and
substance  satisfactory  to Agent,  subject  only to title  defects  approved by
Agent.

     12.23 Eagle Chief Gas Gathering System.  Substantially maintain the current
levels of  throughput  from  wells  directly  connected  to the Eagle  Chief Gas
Gathering System.

     12.24 Letters In Lieu of Transfer Orders. The Borrowers shall promptly upon
the  reasonable  request  of the  Agent,  at any time and from  time to time and
without limitation on the rights of Agent in accordance with Section 6.3 hereof,
execute  such  letters in lieu of  transfer  orders,  in addition to the letters
signed  by the  Borrowers  and  delivered  to the Agent in  satisfaction  of the
conditions  set forth in Sections  6.3 and 11.1.9  hereof,  as are  necessary or
appropriate  to  transfer  and deliver to the Agent for the benefit of the Banks
proceeds from or attributable  to any Oil and Gas Property or other  Collateral;
provided,  however,  that such letters shall only be delivered to the addressees
thereof in accordance with the provision of Section 6.3 hereof.

     12.25  Division  Orders.  The Borrowers  shall promptly upon request by the
Agent at any time and from time to time following the occurrence of any Event of
Default and without  limitations  on the rights of the Agent in accordance  with
Section  6.3  hereof,  execute  such  division  and/or  transfer  orders  as are
necessary  or  appropriate  to transfer and deliver to the Agent for the ratable
benefit of the Banks  proceeds from the sale of hydrocarbon  production  from or
attributable  to any Oil and Gas  Property;  provided,  however,  that the Banks
shall  only send or deliver  such  division  orders  and/or  transfer  orders in
accordance with Section 6.3 hereof.

     12.26 Take or Pay Agreement.  The Borrowers shall, in connection with their
delivery  of the  engineering  reports  required  by  Sections  7 and 12 hereof,
deliver to Agent  copies of contracts or other  agreements  concerning  "take or
pay" and "prepayment",  and provide notice of all gas balance liabilities of the
Borrowers.

13. Negative Covenants. A deviation from the provisions of this Section 13 shall
not  constitute  a Default or an Event of Default  under this  Agreement if such
deviation is consented to in writing by the Majority  Banks prior to the date of
deviation.  The Borrowers will at all times comply with the covenants  contained
in this Section 13 from the date hereof and for so long as the  Commitment is in
existence  or any amount is owed to the Agent or the Banks under this  Agreement
or the other Loan Documents.

     13.1 Negative Pledge. No Borrower shall,  without the prior written consent
of the Majority Banks:

          13.1.1  create,  incur,  assume or permit to exist any Lien,  security
     interest or other  encumbrance  on any of its assets or  properties  except
     Permitted Liens; or

          13.1.2 sell,  lease,  transfer or otherwise  dispose of, in any fiscal
     year,  any of its assets except for (A) sales,  leases,  transfers or other
     dispositions  made  in the  ordinary  course  of  Borrowers'  oil  and  gas
     businesses,  and (B) sales,  leases or transfers or other dispositions made
     by Borrowers during any fiscal year, one or any series of transactions, the
     aggregate value of which does not exceed $5,000,000.00 in any such year if,
     and only if,  such sale,  lease,  transfer  or other  disposition  does not
     result in the occurrence of a Default or Event of Default;

     13.2 Current Ratio.  Borrowers  shall not allow their ratio of consolidated
Current Assets to consolidated Current Liabilities to be less than 1.0 to 1.0 as
of the end of any fiscal quarter.

     13.3 Ratio of Debt to Minimum  Tangible Net Worth.  The Borrowers  will not
allow their ratio of  consolidated  Debt to  consolidated  Tangible Net Worth to
ever be  greater  than 1.0 to 1.0 as of the end of any fiscal  quarter.  For the
purposes of this ratio,  "Debt" is  calculated  as total  indebtedness  less the
Senior Subordinated Notes.

     13.4 Minimum  Debt  Service  Coverage  Ratio.  Beginning  with the calendar
quarter   ending   December  31,  2001,  the  Borrowers  will  not  allow  their
consolidated Debt Service Coverage Ratio to ever be less than 1.20 to 1.0.

     13.5 Consolidations and Mergers. No Borrower will consolidate or merge with
or into any other Person,  except that a Borrower may merge with another  Person
if such  Borrower is the  surviving  entity in such merger and if,  after giving
effect  thereto,  no  Default or Event of Default  shall  have  occurred  and be
continuing.

     13.6  Debts,  Guaranties  and Other  Obligations.  Without  the  consent of
Majority Banks, no Borrower will incur,  create,  assume,  suffer to exist or in
any  manner  become or be  liable in  respect  of any  indebtedness,  nor will a
Borrower  guarantee or otherwise in any manner become or be liable in respect of
any  indebtedness,  liabilities  or other  obligations  of any  other  person or
entity, whether by agreement to purchase the indebtedness of any other person or
entity or agreement  for the  furnishing  of funds to any other person or entity
through the purchase or lease of goods, supplies or services (or by way of stock
purchase,  capital  contribution,  advance or loan) for the purpose of paying or
discharging the indebtedness of any other person or entity, or otherwise, except
that the foregoing restrictions shall not apply to:

          (i)  the  Notes  and  any  renewal  or  increase  thereof,   or  other
     indebtedness  of  the  Borrowers  heretofore  disclosed  to  Banks  in  the
     Borrowers' Financial Statements or on Schedule "3" hereto; or

          (ii) taxes,  assessments or other government charges which are not yet
     due or are being  contested in good faith by  appropriate  action  promptly
     initiated and diligently conducted, if such reserve as shall be required by
     GAAP shall have been made therefor and levy and execution thereon have been
     stayed and continue to be stayed; or

          (iii)  indebtedness  (other than in connection  with a loan or lending
     transaction)  incurred in the ordinary course of business,  including,  but
     not limited to indebtedness for drilling, completing, leasing and reworking
     oil and gas wells or the treatment, distribution, transportation of sale of
     production  therefrom  and  loans or  lending  transactions  in  which  the
     outstanding  principal  balance  does not exceed  $500,000  at any time and
     which does not result in the  imposition  of a Lien other than a  Permitted
     Lien; or;

          (iv)  indebtedness   currently   outstanding  issued  pursuant  to  an
     indenture   governing   the  Senior   Subordinated   Notes  and  any  other
     indebtedness  issued  pursuant to an  indenture  providing  for the sale of
     notes to the public not exceeding the face amount of $150,000,000.00, which
     indebtedness (A) is expressly subordinated (to the satisfaction of Majority
     Banks) to all obligations owed the Banks hereunder and under the Notes, (B)
     is issued by the  Borrowers or an Affiliate  of the  Borrowers,  within one
     hundred  eighty (180) days of the Effective  Date, and (C) the net proceeds
     of which are used in part to repay or reduce the outstanding balance on the
     Notes, said indebtedness to be approved in advance by Majority Banks, which
     approval will not be unreasonably withheld; or

          (v)  other  indebtedness  owed to  Affiliates  of  Borrowers  which is
     expressly made subordinate to the indebtedness owed hereunder and under the
     Notes, which  subordination is approved in advance by Majority Banks, which
     approval will not be unreasonably withheld; or

          (vi) any renewals or  extensions  of (but not increases in) any of the
     foregoing.

     13.7  Dividends or  Distributions.  No Borrower will declare,  pay or make,
whether in cash or property  (excluding stock dividends),  or set aside or apply
any money or assets  to pay or make any  dividend  or  distribution  during  any
fiscal  year  except  the  foregoing  restriction  shall  not  apply to (i) cash
dividends  paid by Resources to its  shareholders  in amounts equal to each such
shareholders'  allocable share of federal or state income taxes  attributable to
Resources  taxable  net  income  and (ii)  dividends  made by Gas to  Resources.
Provided,  however,  that no dividend shall be made by a Borrower if an Event of
Default has occurred and is  continuing or would occur as a result of the making
of such  dividends.  Resources  shall  provide the Agent at least  annually with
sufficient  information from which Agent can verify all shareholders'  allocable
share of such income taxes.

     13.8  Loans  and  Advances.  No  Borrower  shall  make or  permit to remain
outstanding  any loans or  advances  made by a  Borrower  to or in any person or
entity, except that the foregoing restriction shall not apply to:

          (i) loans or  advances to any person,  the  material  details of which
     have been set forth in the Financial Statements of the Borrowers heretofore
     furnished to Banks; or

          (ii)  advances made in the ordinary  course of Borrowers'  oil and gas
     business; or

          (iii) loans or advances among Borrowers; or

          (iv) loans or advances not to exceed  $2,000,000  in the  aggregate to
     Affiliates of the Borrowers.

     13.9 Sale or Discount of  Receivables.  No Borrower  will  discount or sell
with  recourse,  or sell for less than the  greater of the face or market  value
thereof,  any of its notes  receivable  or accounts  receivable  except for such
discounts or sales not exceeding $250,000 in any fiscal year.

     13.10 Nature of Business. No Borrower will permit any material change to be
made in the character of its business as carried on at the date hereof.

     13.11  Transactions  with  Affiliates.  No  Borrower  will  enter  into any
transaction with any Affiliate (other than Borrower),  except  transactions upon
terms that are no less  favorable to it than would be obtained in a  transaction
negotiated at arm's length with an unrelated third party.

     13.12 Hedging  Transactions.  No Borrower  will enter into any  transaction
providing (i) for the hedging,  forward sale,  swap or any deviation  thereof of
crude  oil or  natural  gas or other  commodities,  or (ii) for a swap,  collar,
floor, cap, option,  corridor,  or other contract which is intended to reduce or
eliminate the risk of fluctuation in interest  rates, as such terms are referred
to in the capital markets,  except the foregoing prohibitions shall not apply to
(x)  transactions  consented  to in  writing  by the  Banks  which  are on terms
acceptable to the Banks, or (y) Pre-Approved  Contracts.  The term "Pre-Approved
Contracts"  as used herein shall mean any  contract or  agreement  (i) to hedge,
forward,  sell or swap crude oil or natural gas or  otherwise  sell up to 50% of
the Borrowers'  monthly  production  forecast for all of Borrowers',  proved and
producing oil and gas properties for the period covered by the proposed  hedging
transaction, and (ii) with a maturity of twelve (12) months or less.

     13.13 Investments.  No Borrower shall make any investments in any person or
entity, except such restriction shall not apply to:

          (i) investments and direct obligations of the United States of America
     or any agency thereof;

          (ii)  investments  in  certificates  of deposit issued by the Banks or
     certificates  of deposit with  maturities of less than one year,  issued by
     other  commercial  banks in the United States having capital and surplus in
     excess of $100,000,000.00; or

          (iii) investments in money market funds, LIBOR investment accounts and
     other similar  accounts at Agent or such investment with maturities of less
     than ninety (90) days at other  commercial banks having capital and surplus
     in excess of $100,000,000.00; or

          (iv) investments in oil and gas properties and Systems and Plants; or

          (v)   acquisitions  of  controlling   interests  in  entities  engaged
     primarily in owning and/or  operating oil and gas  properties not exceeding
     in the aggregate the sum of $5,000,000.00  inclusive of any amount invested
     pursuant to Section 13.1.14(iv) above; or

          (vi)  investments  by  Borrowers  and  their   Subsidiaries   made  in
     third-party  entities  by way of capital  contributions,  loans or advances
     which do not exceed $250,000 in the aggregate outstanding at any time.

     13.14 Amendment to Articles of  Incorporation  or Bylaws.  No Borrower will
permit any amendment to, or any alteration of, its Articles of  Incorporation or
Bylaws,  which  amendment or alteration  could  reasonably be expected to have a
Material Adverse Effect.

     13.15 Leases.  With the exception of the lease  agreement,  as it currently
exists, with Harold Hamm regarding The Continental Center North Building located
in Enid, Oklahoma, the Borrowers will not enter into or agree to enter into, any
rental or lease agreement resulting or which would result in aggregate rental or
lease  payments of the  Borrowers  exceeding  $250,000 in the  aggregate  in any
fiscal year of the Borrowers  under all rental or lease  agreement under which a
Borrower  is a lessee of the  property  or  assets  covered  thereby;  provided,
however,  that the foregoing restriction shall not apply to oil, gas and mineral
leases or permits or similar  agreements  entered into in the ordinary course of
business  or orders of any  governmental  authority  adjudicating  the rights or
pooling  the  interests  of the  owners  of oil  and  gas  properties  or  lease
agreements in effect as of the date hereof.

     13.16  Senior  Subordinated  Notes.  Notwithstanding  any  other  provision
contained in the  Agreement to the contrary,  the Borrowers  shall not purchase,
repurchase  or  otherwise  acquire  Senior   Subordinated  Notes  in  excess  of
$10,000,000.00  during the term hereof,  without prior  written  approval of the
Banks.

     13.17  Speculative   Trading.   The  Borrowers  shall  not  engage  in  any
speculative  trading  activity which exposes the Borrowers to risks in excess of
$1,000,000.00.

14.  Events  of  Default.  Any one or  more of the  following  events  shall  be
considered an "Event of Default" as that term is used herein:

     14.1 The Borrowers shall fail to pay when due or declared due the principal
of, and the interest on, the Notes, or any fee or any other  indebtedness of the
Borrowers  incurred  pursuant to this  Agreement or any other Loan  Document and
such failure to pay continued five (5) days after notice is given by Agent; or

     14.2 Any representation or warranty made by Borrowers under this Agreement,
or in any  certificate  or  statement  furnished  or made to the Banks  pursuant
hereto, or in connection herewith,  or in connection with any document furnished
hereunder,  shall prove to be untrue in any  material  respect as of the date on
which  such  representation  or  warranty  is  made  (or  deemed  made),  or any
representation,  statement (including financial statements), certificate, report
or other data  furnished or to be furnished or made by Borrowers  under any Loan
Document,  including this Agreement,  proves to have been untrue in any material
respect,  as of the date as of which the facts  therein set forth were stated or
certified; or

     14.3 Default shall be made in the due  observance or  performance of any of
the covenants or agreements  of the Borrowers  contained in the Loan  Documents,
including this Agreement (excluding covenants contained in Sections 12 and 13 of
the  Agreement  for  which  there is no cure  period),  and such  default  shall
continue  for more than  thirty  (30) days after  notice  thereof  from Agent to
Borrowers; or

     14.4 Default  shall be made in the due  observance  or  performance  of the
covenants of Borrowers  contained  in Sections 12 and 13 of this  Agreement  for
which it is impossible for Borrower to cure such a default; or

     14.5 Default shall be made in respect of any  obligation for borrowed money
in excess of $250,000, other than the Notes (including,  but not limited to, the
Senior  Subordinated  Notes)  for  which  Borrowers  are  liable  (directly,  by
assumption,  as  guarantor  or  otherwise),  or any  obligations  secured by any
mortgage,  pledge or other security  interest,  lien, charge or encumbrance with
respect  thereto,  on any asset or  property  of  Borrowers  in  respect  of any
agreement  relating to any such obligations  unless Borrowers are not liable for
same (i.e.,  unless remedies or recourse for failure to pay such  obligations is
limited to foreclosure of the collateral security therefor), and if such default
shall continue beyond the applicable grace period, if any; or

     14.6 Borrowers shall commence a voluntary case or other proceedings seeking
liquidation,  reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking an appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the  appointment  of or taking  possession  by any such
official in an involuntary  case or other  proceeding  commenced  against it, or
shall make a general  assignment  for the  benefit of  creditors,  or shall fail
generally  to pay its debts as they  become  due,  or shall  take any  corporate
action authorizing the foregoing; or

     14.7 An involuntary case or other  proceeding,  shall be commenced  against
Borrowers seeking liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,  custodian
or other similar  official of it or any  substantial  part of its property,  and
such involuntary case or other proceeding shall remain  undismissed and unstayed
for a period of sixty (60) days; or an order for relief shall be entered against
Borrowers under the federal bankruptcy laws as now or hereinafter in effect; or

     14.8 A final  judgment  or order  for the  payment  of money in  excess  of
$1,500,000 (or judgments or orders aggregating in excess of $1,500,000) shall be
rendered  against   Borrowers  and  such  judgments  or  orders  shall  continue
unsatisfied and unstayed for a period of thirty (30) days; or

     14.9 In the event  the  Total  Outstandings  shall at any time  exceed  the
Borrowing Base established for the Revolving Notes, and the Borrowers shall fail
to comply with the provisions of Section 9.2 hereof; or

     14.10 A Change of Management shall occur; or

     14.11 Any Security Instrument shall for any reason not, or cease to, create
valid and  perfected  first-priority  Liens against the  Collateral  purportedly
covered thereby and such occurrence would have a Material Adverse Effect; or

     14.12 The good faith  determination  by the Agent  that a Material  Adverse
Effect has  occurred or will occur or that the value of the  Collateral  has, or
will be, materially decreased.

     Upon  occurrence  of any Event of Default  specified in  Subsections  14.1,
14.2, 14.3,  14.4,  14.6, 14.7 and 14.9 hereof,  the entire principal amount due
under the Notes and all interest then accrued thereon, and any other liabilities
of the Borrowers hereunder, shall become immediately due and payable all without
notice and without presentment,  demand,  protest, notice of protest or dishonor
or any other  notice of default of any kind,  all of which are hereby  expressly
waived by the Borrowers.  In any other Event of Default, the Agent, upon request
of Majority  Banks,  shall deliver  written  notice of such Event of Default and
offer the  Borrowers  thirty  (30) days to cure said Event of Default to Agent's
satisfaction.  In the  event  the  Event  of  Default  is not  cured  after  the
expiration of this "cure" period (or upon the  occurrence of an Event of Default
for which there is no "cure" period), the Agent, upon request of Majority Banks,
shall by notice to the Borrowers declare the principal of, and all interest then
accrued on, the Notes and any other  liabilities  hereunder to be forthwith  due
and payable,  whereupon the same shall forthwith  become due and payable without
presentment,  demand,  protest,  notice  of  intent  to  accelerate,  notice  of
acceleration  or other  notice of any kind,  all of which the  Borrowers  hereby
expressly  waive,  anything  contained  herein  or in the  Note to the  contrary
notwithstanding.  Nothing  contained  in this  Section 14 shall be  construed to
limit or amend in any way the Events of Default  enumerated  in the Note, or any
other document executed in connection with the transaction contemplated herein.

     Upon the occurrence and during the continuance of any Event of Default, the
Banks are hereby authorized at any time and from time to time, without notice to
the Borrowers  (any such notice being  expressly  waived by the  Borrowers),  to
set-off and apply any and all  deposits  (general  or  special,  time or demand,
provisional or final) at any time held and other  indebtedness at any time owing
by any of the Banks to or for the credit or the account of the Borrowers against
any and all of the  indebtedness  of the Borrowers  under the Notes and the Loan
Documents,  including this  Agreement,  irrespective of whether or not the Banks
shall have made any demand under the Loan Documents, including this Agreement or
the Notes and although such indebtedness may be unmatured. Any amount set-off by
any of the Banks shall be applied against the indebtedness owed the Banks by the
Borrowers  pursuant to this Agreement and the Notes. The Banks agree promptly to
notify the Borrowers  after any such setoff and  application,  provided that the
failure to give such notice  shall not affect the  validity of such  set-off and
application.  The rights of the Bank under this Section are in addition to other
rights and remedies  (including,  without  limitation,  other rights of set-off)
which the Banks may have.

15. The Agent and the Banks.

     15.1 Appointment and Authorization.  Each Bank hereby appoints Agent as its
nominee and agent, in its name and on its behalf:  (i) to act as nominee for and
on behalf of such Bank in and under  all Loan  Documents;  (ii) to  arrange  the
means whereby the funds of Banks are to be made available to the Borrowers under
the Loan  Documents;  (iii) to take such action as may be  requested by any Bank
under the Loan Documents  (when such Bank is entitled to make such request under
the Loan Documents);  (iv) to receive all documents and items to be furnished to
Banks  under  the  Loan  Documents;  (v) to be  the  secured  party,  mortgagee,
beneficiary,  and similar  party in respect of, and to receive,  as the case may
be, any collateral for the benefit of Banks; (vi) to promptly distribute to each
Bank all material information,  requests,  documents and items received from the
Borrowers  under the Loan Documents;  (vii) to promptly  distribute to each Bank
such Bank's Pro Rata Part of each payment or prepayment (whether  voluntary,  as
proceeds of insurance thereon, or otherwise) in accordance with the terms of the
Loan  Documents  and  (viii) to  deliver to the  appropriate  Persons  requests,
demands, approvals and consents received from Banks. Each Bank hereby authorizes
Agent to take all actions and to exercise  such powers under the Loan  Documents
as are specifically delegated to Agent by the terms hereof or thereof,  together
with all  other  powers  reasonably  incidental  thereto.  With  respect  to its
commitments  hereunder and the Notes issued to it, Agent and any successor Agent
shall have the same rights  under the Loan  Documents  as any other Bank and may
exercise  the same as  though  it were not the  Agent;  and the term  "Bank"  or
"Banks"  shall,  unless  otherwise  expressly  indicated,  include Agent and any
successor Agent in its capacity as a Bank. Agent and any successor Agent and its
Affiliates  may accept  deposits  from,  lend  money to,  act as  trustee  under
indentures of and generally  engage in any kind of business with the  Borrowers,
and any person which may do business with the Borrowers, all as if Agent and any
successor Agent was not Agent hereunder and without any duty to account therefor
to the Banks;  provided that, if any payments in respect of any property (or the
proceeds  thereof) now or hereafter in the  possession or control of Agent which
may be or become security for the obligations of the Borrowers arising under the
Loan Documents by reason of the general  description of indebtedness  secured or
of property contained in any other agreements,  documents or instruments related
to any such other business  shall be applied to reduction of the  obligations of
the Borrowers arising under the Loan Documents, then each Bank shall be entitled
to share in such application  according to its pro rata part thereof. Each Bank,
upon  request  of any  other  Bank,  shall  disclose  to  all  other  Banks  all
indebtedness  and liabilities,  direct and contingent,  of the Borrowers to such
Bank as of the time of such request.

     15.2 Note Holders.  From time to time as other Banks become a party to this
Agreement,  Agent shall obtain execution by the Borrowers of additional Notes in
amounts  representing  the  Commitment of each such new Bank, up to an aggregate
face amount of all  Revolving  Notes not exceeding  $45,700,000.00  and up to an
aggregate  face  amount of all Term  Notes  not  exceeding  $24,300,000.00.  The
obligation of such Bank shall be governed by the  provisions of this  Agreement,
including  but not limited to, the  obligations  specified  in Section 2 hereof.
From time to time,  Agent may require  that the Banks  exchange  their Notes for
newly issued Notes to better  reflect the  Commitments  of the Banks.  Agent may
treat  the  payee of any Note as the  holder  thereof  until  written  notice of
transfer has been filed with it,  signed by such payee and in form  satisfactory
to Agent.

     15.3  Consultation  with  Counsel.  Banks agree that Agent may consult with
legal counsel  selected by Agent and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.

     15.4 Documents. Agent shall not be under a duty to examine or pass upon the
validity, effectiveness, enforceability, genuineness or value of any of the Loan
Documents or any other instrument or document  furnished  pursuant thereto or in
connection  therewith,  and Agent  shall be entitled to assume that the same are
valid, effective, enforceable and genuine and what they purport to be.

     15.5  Resignation  or Removal  of Agent.  Subject  to the  appointment  and
acceptance of a successor Agent as provided below,  Agent may resign at any time
by giving written  notice  thereof to Banks and the Borrowers,  and Agent may be
removed at any time with or without  cause by all Banks.  If no successor  Agent
has been so  appointed  by all Banks (and  approved  by the  Borrowers)  and has
accepted such  appointment  within 30 days after the retiring  Agent's giving of
notice of resignation or removal of the retiring Agent,  then the retiring Agent
may, on behalf of Banks,  appoint a successor Agent. Any successor Agent must be
approved by Borrowers,  which approval will not be unreasonably  withheld.  Upon
the acceptance of any appointment as Agent hereunder by a successor Agent,  such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent,  and the retiring  Agent,  shall be discharged
from  its  duties  and  obligations   hereunder.   After  any  retiring  Agent's
resignation  or removal  hereunder as Agent,  the  provisions of this Section 15
shall  continue  in effect for its  benefit in respect to any  actions  taken or
omitted to be taken by it while it was acting as Agent.  To be eligible to be an
Agent hereunder the party serving,  or to serve, in such capacity must own a Pro
Rata Part of the  Commitments  equal to the level of  Commitment  required to be
held by any Bank pursuant to Section 28 hereof.

     15.6  Responsibility  of Agent. It is expressly  understood and agreed that
the  obligations of Agent under the Loan Documents are only those  expressly set
forth in the Loan  Documents  as to each and that  Agent,  shall be  entitled to
assume  that no Default  or Event of Default  has  occurred  and is  continuing,
unless Agent has actual  knowledge  of such fact or has  received  notice from a
Bank or the Borrowers  that such Bank or the Borrowers  considers that a Default
or an Event of Default has occurred and is continuing  and specifying the nature
thereof.  Neither  Agent  nor  any  of its  directors,  officers,  attorneys  or
employees  shall be liable for any  action  taken or omitted to be taken by them
under or in  connection  with the Loan  Documents,  except  for its or their own
gross negligence or willful misconduct. Agent shall not incur liability under or
in respect of any of the Loan  Documents  by acting  upon any  notice,  consent,
certificate,  warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties,  or with respect to
anything which it may do or refrain from doing in the reasonable exercise of its
judgment, or which may seem to it to be necessary or desirable.

     Agent shall not be responsible to Banks for any of the Borrowers' recitals,
statements,   representations  or  warranties  contained  in  any  of  the  Loan
Documents,  or in any certificate or other document  referred to or provided for
in,  or  received  by any Bank  under,  the Loan  Documents,  or for the  value,
validity, effectiveness, genuineness, enforceability or sufficiency of or any of
the Loan  Documents  or for any failure by the  Borrowers  to perform any of its
obligations   hereunder   or   thereunder.   Agent   may   employ   agents   and
attorneys-in-fact and shall not be answerable,  except as to money or securities
received by it or its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care.

     The  relationship  between  Agent  and each  Bank is only that of agent and
principal  and has no  fiduciary  aspects.  Nothing  in the  Loan  Documents  or
elsewhere  shall be construed to impose on Agent any duties or  responsibilities
other than those for which express  provision is therein made. In performing its
duties and functions hereunder, Agent does not assume and shall not be deemed to
have assumed, and hereby expressly  disclaims,  any obligation or responsibility
toward or any relationship of agency or trust with or for the Borrower or any of
its beneficiaries or other creditors.  As to any matters not expressly  provided
for  by the  Loan  Documents,  Agent  shall  not be  required  to  exercise  any
discretion  or take any action,  but shall be required to act or to refrain from
acting (and shall be fully  protected  in so acting or  refraining  from acting)
upon the instructions of all Banks and such  instructions  shall be binding upon
all Banks and all holders of the Notes; provided,  however, that Agent shall not
be  required  to take any action  which is  contrary  to the Loan  Documents  or
applicable law.

     Agent shall have the right to exercise or refrain from exercising,  without
notice or  liability to the Banks,  any and all rights  afforded to Agent by the
Loan  Documents or which Agent may have as a matter of law;  provided,  however,
Agent  shall not (i) except as  provided  in Section  7.2  hereof,  without  the
consent of Majority  Banks  designate the amount of the  Borrowing  Base or (ii)
without  the  consent of Majority  Banks,  take any other  action with regard to
amending the Loan  Documents,  waiving any default  under the Loan  Documents or
taking any other  action  with  respect  to the Loan  Documents  which  requires
consent of all Banks. Provided further,  however, that no amendment,  waiver, or
other action shall be effected pursuant to the preceding clause (ii) without the
consent of the Banks which:  (i) would increase the Borrowing  Base,  (ii) would
reduce any fees  hereunder,  or the principal of, or the interest on, any Bank's
Note or Notes,  (iii) would  postpone any date fixed for any payment of any fees
hereunder,  or any principal or interest of any Bank's Note or Notes, (iv) would
materially  increase any Bank's obligations  hereunder or would materially alter
Agent's  obligations  to any Bank  hereunder,  (v) would release  Borrowers from
their  obligation  to pay any Bank's  Note or Notes or to honor the terms of any
guaranty  agreement  executed in conjunction  herewith,  (vi) release any of the
Collateral,  (vii) would change the definition of all Banks, (viii) would amend,
modify or change any  provision of this  Agreement  requiring the consent of all
the Banks,  (ix) would waive any of the  conditions  precedent to the  Effective
Date or the making of any Loan or  issuance of any Letter of Credit or (x) would
extend the  Revolving  Maturity  Date or (xi) would  amend this  sentence or the
previous sentence.  Agent shall not have liability to Banks for failure or delay
in  exercising  any  right or power  possessed  by  Agent  pursuant  to the Loan
Documents  or  otherwise  unless  such  failure  or delay is caused by the gross
negligence of the Agent, in which case only the Agent responsible for such gross
negligence shall have liability therefor to the Banks.

     15.7 Independent Investigation. Each Bank severally represents and warrants
to Agent that it has made its own  independent  investigation  and assessment of
the financial  condition  and affairs of the  Borrowers in  connection  with the
making  and  continuation  of its  participation  hereunder  and has not  relied
exclusively  on any  information  provided  to such Bank by Agent in  connection
herewith,  and each Bank  represents,  warrants and  undertakes to Agent that it
shall continue to make its own independent appraisal of the credit worthiness of
the Borrowers while the Notes are  outstanding or its commitments  hereunder are
in  force.  Agent  shall  not be  required  to keep  itself  informed  as to the
performance  or  observance  by the  Borrowers  of this  Agreement  or any other
document  referred to or provided  for herein or to inspect  the  properties  or
books of the Borrowers.  Other than as provided in this  Agreement,  Agent shall
not have any duty,  responsibility  or  liability  to provide  any Bank with any
credit or other  information  concerning  the  affairs,  financial  condition or
business of the Borrowers which may come into the possession of Agent.

     15.8 Indemnification.  Banks agree to indemnify Agent, ratably according to
their respective  Commitments on a Pro Rata basis,  from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements  of any proper and reasonable  kind or nature
whatsoever which may be imposed on, incurred by or asserted against Agent in any
way  relating to or arising  out of the Loan  Documents  or any action  taken or
omitted by Agent under the Loan Documents, provided that no Bank shall be liable
for any portion of such liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  resulting from
Agent's gross negligence or willful  misconduct.  Each Bank shall be entitled to
be  reimbursed  by the Agent for any amount  such Bank paid to Agent  under this
Section 15.8 to the extent the Agent has been  reimbursed  for such  payments by
the Borrowers or any other Person. The parties intend for the provisions of this
Section to apply to and protect the Agent from the consequences of any liability
including strict liability  imposed or threatened to be imposed on Agent as well
as from the  consequences of its own negligence,  whether or not that negligence
is the sole, contributing or concurring cause of any such liability.

     15.9 Benefit of Section 15. The agreements contained in this Section 15 are
solely for the benefit of Agent and the Banks and are not for the benefit of, or
to be relied upon by, the Borrowers, any affiliate of the Borrowers or any other
person.

     15.10 Pro Rata Treatment. Subject to the provisions of this Agreement, each
payment  (including  each  prepayment)  by the Borrowers and collection by Banks
(including offsets) on account of the principal of and interest on the Notes and
fees provided for in this Agreement,  payable by the Borrowers shall be made Pro
Rata; provided, however, in the event that any Defaulting Bank shall have failed
to make an Advance as  contemplated  under Section 3 hereof and Agent or another
Bank or Banks shall have made such  Advance,  payment  received by Agent for the
account  of such  Defaulting  Bank or Banks  shall  not be  distributed  to such
Defaulting  Bank or Banks until such Advance or Advances  shall have been repaid
in full to the Bank or Banks who funded such Advance or Advances.

     15.11  Assumption as to Payments.  Except as specifically  provided herein,
unless Agent shall have received  notice from the Borrowers prior to the date on
which any payment is due to Banks  hereunder  that the  Borrowers  will not make
such payment in full,  Agent may, but shall not be required to,  assume that the
Borrowers have made such payment in full to Agent on such date and Agent may, in
reliance upon such assumption,  cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank.  If and to the extent the
Borrowers shall not have so made such payment in full to Agent,  each Bank shall
repay to Agent forthwith on demand such amount distributed to such Bank together
with interest thereon,  for each day from the date such amount is distributed to
such Bank until the date such Bank repays such amount to Agent,  at the interest
rate applicable to such portion of the Revolving Loan.

     15.12  Other  Financings.  Without  limiting  the  rights to which any Bank
otherwise is or may become entitled, such Bank shall have no interest, by virtue
of this  Agreement  or the Loan  Documents,  in (a) any present or future  loans
from,  letters of credit issued by, or leasing or other  financial  transactions
by,  any  other  Bank to,  on behalf  of,  or with the  Borrowers  (collectively
referred to herein as "Other Financings") other than the obligations  hereunder;
(b) any  present or future  guarantees  by or for the  account of the  Borrowers
which are not  contemplated  by the Loan  Documents;  (c) any  present or future
property  taken as security for any such Other  Financings;  or (d) any property
now or hereafter in the  possession or control of any other Bank which may be or
become  security for the  obligations  of the  Borrowers  arising under any loan
document  by  reason of the  general  description  of  indebtedness  secured  or
property contained in any other agreements, documents or instruments relating to
any such Other Financings.

     15.13  Interests of Banks.  Nothing in this Agreement shall be construed to
create a  partnership  or joint venture  between  Banks for any purpose.  Agent,
Banks and the Borrowers recognize that the respective obligations of Banks under
the Commitment  shall be several and not joint and that neither Agent nor any of
Banks shall be  responsible  or liable to perform any of the  obligations of the
other under this Agreement.  Each Bank is deemed to be the owner of an undivided
interest in and to all rights,  titles,  benefits and  interests  belonging  and
accruing to Agent under the Security Instruments, including, without limitation,
liens and security  interests in any collateral,  fees and payments of principal
and interest by the Borrowers  under the  Commitment  on a Pro Rata basis.  Each
Bank shall perform all duties and  obligations  of Banks under this Agreement in
the same  proportion as its ownership  interest in the Loans  outstanding at the
date of determination thereof.

     15.14  Investments.  Whenever  Agent in good  faith  determines  that it is
uncertain  about how to distribute to Banks any funds which it has received,  or
whenever  Agent in good faith  determines  that there is any  dispute  among the
Banks  about how such  funds  should be  distributed,  Agent may choose to defer
distribution of the funds which are the subject of such  uncertainty or dispute.
If Agent in good faith  believes  that the  uncertainty  or dispute  will not be
promptly  resolved,  or if Agent is otherwise  required to invest funds  pending
distribution to the Banks, Agent may invest such funds pending  distribution (at
the  risk of the  Borrowers).  All  interest  on any  such  investment  shall be
distributed upon the distribution of such investment and in the same proportions
and to the same  Persons as such  investment.  All monies  received by Agent for
distribution to the Banks (other than to the Person who is Agent in its separate
capacity as a Bank) shall be held by the Agent pending such distribution  solely
as Agent for such Banks,  and Agent shall have no equitable title to any portion
thereof.

16. Exercise of Rights. No failure to exercise,  and no delay in exercising,  on
the part of the Agent or the  Banks,  any right  hereunder  shall  operate  as a
waiver thereof,  nor shall any single or partial  exercise  thereof preclude any
other or further exercise thereof or the exercise of any other right. The rights
of the Agent and the Banks  hereunder  shall be in addition to all other  rights
provided  by law.  No  modification  or  waiver  of any  provision  of the  Loan
Documents,  including  this  Agreement,  or the Note nor  consent  to  departure
therefrom,  shall be effective unless in writing,  and no such consent or waiver
shall  extend  beyond the  particular  case and purpose  involved.  No notice or
demand  given in any case shall  constitute  a waiver of the right to take other
action  in the same,  similar  or other  circumstances  without  such  notice or
demand.

17.  Notices.  Any notices or other  communications  required or permitted to be
given by this  Agreement  or any other  documents  and  instruments  referred to
herein must be given in writing  (which may be by  facsimile  transmission)  and
must be personally  delivered or mailed by prepaid  certified or registered mail
to the party to whom such notice or  communication is directed at the address of
such party as follows: (a) BORROWERS: c/o CONTINENTAL RESOURCES,  INC., P.O. Box
1032, Enid, Oklahoma 73702, Facsimile No.: 580/548-5281,  Attention: Harold Hamm
and Roger Clement;  (b) AGENT:  MIDFIRST BANK,  MidFirst Plaza, P.O. Box 268879,
Oklahoma City,  Oklahoma  73126,  Facsimile  No.405/767-7120,  Attention:  Shawn
Brewer,  Assistant Vice President.  Any such notice or other communication shall
be deemed to have been given (whether actually received or not) on the day it is
personally  delivered or delivered by facsimile as aforesaid  or, if mailed,  on
the third day after it is mailed as aforesaid.  Any party may change its address
for  purposes  of this  Agreement  by giving  notice of such change to the other
party pursuant to this Section 17. Any notice  required to be given to the Banks
shall be given to the Agent and distributed to all Banks by the Agent.

18.  Expenses.  The  Borrowers  shall  pay  (i)  all  reasonable  and  necessary
out-of-pocket expenses of the Banks, including reasonable fees and disbursements
of special  counsel for the Agent,  in connection  with the  preparation of this
Agreement,  any  waiver or  consent  hereunder  or any  amendment  hereof or any
default or Event of Default  or alleged  default or Event of Default  hereunder,
(ii) all reasonable and necessary out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of special counsel for the Agent in connection
with  the  preparation  of any  participation  agreement  for a  participant  or
participants  requested by the Borrowers or any amendment thereof and (iii) if a
default  or  an  Event  of  Default   occurs,   all   reasonable  and  necessary
out-of-pocket  expenses  incurred by the Banks,  including  reasonable  fees and
disbursements  of counsel,  in connection with such default and Event of Default
and  collection  and other  enforcement  proceedings  resulting  therefrom.  The
Borrowers shall indemnify the Banks against any transfer taxes,  document taxes,
assessments  or  charges  made by any  governmental  authority  by reason of the
execution,  delivery and filing of the Loan  Documents.  The obligations of this
Section 18 shall survive any  termination of this  Agreement,  the expiration of
the Loans and the  payment of all  indebtedness  of the  Borrowers  to the Banks
hereunder and under the Notes.

19. Indemnity.  The Borrowers agree to indemnify and hold harmless the Banks and
their respective  officers,  employees,  agents,  attorneys and  representatives
(singularly,   an  "Indemnified  Party",  and  collectively,   the  "Indemnified
Parties")  from and  against  any  loss,  cost,  liability,  damage  or  expense
(including  the  reasonable  fees and  out-of-pocket  expenses of counsel to the
Banks,  including all local counsel hired by such counsel) ("Claim") incurred by
the Banks in investigating  or preparing for,  defending  against,  or providing
evidence,  producing  documents  or taking  any other  action in  respect of any
commenced or threatened litigation,  administrative  proceeding or investigation
under any federal  securities law,  federal or state  environmental  law, or any
other  statute  of any  jurisdiction,  or any  regulation,  or at common  law or
otherwise, which is alleged to arise out of or is based upon any acts, practices
or omissions or alleged  acts,  practices or omissions of the Borrowers or their
agents or arises in connection  with the duties,  obligations  or performance of
the  Indemnified  Parties  in  negotiating,   preparing,  executing,  accepting,
keeping, completing,  countersigning,  issuing, selling, delivering,  releasing,
assigning,  handling,  certifying,  processing  or receiving or taking any other
action with respect to the Loan Documents and all documents, items and materials
contemplated  thereby even if any of the foregoing  arises out of an Indemnified
Party's ordinary negligence. The indemnity set forth herein shall be in addition
to any other  obligations or liabilities of the Borrowers to the Banks hereunder
or at  common  law or  otherwise,  and shall  survive  any  termination  of this
Agreement,  the expiration of the Loans and the payment of all  indebtedness  of
the  Borrowers to the Banks  hereunder  and under the Notes,  provided  that the
Borrowers  shall have no obligation  under this Section to the Bank with respect
to  any  of the  foregoing  arising  out of  the  gross  negligence  or  willful
misconduct of the Bank. If any Claim is asserted against any Indemnified  Party,
the Indemnified  Party shall endeavor to notify the Borrowers of such Claim (but
failure to do so shall not affect the indemnification  herein made except to the
extent of the actual harm caused by such failure).  The Indemnified  Party shall
have the right to employ, at the Borrowers' expense,  counsel of the Indemnified
Parties'  choosing and to control the defense of the Claim. The Borrowers may at
their own expense also participate in the defense of any Claim. Each Indemnified
Party may employ  separate  counsel in  connection  with any Claim to the extent
such  Indemnified   Party  believes  it  reasonably   prudent  to  protect  such
Indemnified  Party.  The parties  intend for the  provisions  of this Section to
apply  to and  protect  each  Indemnified  Party  from the  consequences  of any
liability  including  strict  liability  imposed or  threatened to be imposed on
Agent as well as from the  consequences  of its own  negligence,  whether or not
that negligence is the sole, contributing, or concurring cause of any Claim.

20.  Governing  Law.  THIS  AGREEMENT IS BEING  EXECUTED AND  DELIVERED,  AND IS
INTENDED TO BE PERFORMED, IN OKLAHOMA COUNTY, OKLAHOMA, AND THE SUBSTANTIVE LAWS
OF  OKLAHOMA   SHALL  GOVERN  THE  VALIDITY,   CONSTRUCTION,   ENFORCEMENT   AND
INTERPRETATION  OF  THIS  AGREEMENT  AND ALL  OTHER  DOCUMENTS  AND  INSTRUMENTS
REFERRED TO HEREIN, UNLESS OTHERWISE SPECIFIED THEREIN.

21.  Invalid  Provisions.  If any  provision  of  this  Agreement  is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Agreement,  such  provisions  shall be fully severable and this
Agreement  shall be  construed  and  enforced  as if such  illegal,  invalid  or
unenforceable  provision had never comprised a part of this  Agreement,  and the
remaining  provisions of the Agreement shall remain in full force and effect and
shall not be affected by the illegal,  invalid or unenforceable  provision or by
its severance from this Agreement.

22.  Maximum  Interest Rate. It is the intention of the parties hereto to comply
strictly with any  applicable  usury laws as in effect from time to time and, in
this regard,  there shall never be taken,  received,  contracted for, collected,
charged or received on any sums  advanced  hereunder  interest in excess of that
which would accrue at the Maximum Rate.

     If, under any  circumstances,  the  aggregate  amounts paid on the Notes or
under this Agreement or any other Loan Document include amounts which by law are
deemed interest and which would exceed the amount  permitted if the Maximum Rate
were in effect,  the Borrowers  stipulate that such payment and collection  will
have been and will be deemed to have been,  to the fullest  extent  permitted by
applicable  laws of the State of Oklahoma or the United  States of America,  the
result of mathematical error on the part of the Borrowers and the Agent; and the
Agent shall  promptly  credit the amount of such excess to the principal  amount
due on the Notes,  or if the  principal  amount due on the Notes shall have been
paid in full,  refund the amount of such excess to the  Borrowers (to the extent
only of such  interest  payments in excess of that which would have  accrued and
been payable on the basis of the Maximum  Rate) upon  discovery of such error by
the Agent or notice thereof from the Borrowers.

     If the maturity of the Notes is accelerated by reason of an election of the
Agent  resulting from any Event of Default or otherwise in accordance  with this
Agreement,  or in  the  event  any  prepayment,  then  such  consideration  that
constitutes  interest under  applicable laws may never include amounts which are
more than the Maximum Rate, and the amount of such excess,  if any, provided for
in this Agreement or otherwise shall be canceled  automatically  by the Agent as
of the date of such  acceleration or prepayment and, if theretofore  paid, shall
be credited  by the Agent on the  principal  amount due on the Notes,  or if the
principal amount due on the Notes shall have been paid in full,  refunded by the
Agent to the Borrowers.

     All sums paid, or agreed to be paid, to the Agent for the use,  forbearance
and  detention of the  proceeds of any Advance  hereunder  shall,  to the extent
permitted  by  applicable  law, be  amortized,  prorated,  allocated  and spread
throughout  the full term  hereof  until paid in full so that the actual rate of
interest  is uniform but does not exceed the Maximum  Rate  throughout  the full
term hereof.

23.  Amendments.  This Agreement may be amended only by an instrument in writing
executed by an authorized  officer of the party  against whom such  amendment is
sought to be enforced.

24.  Multiple  Counterparts.  This  Agreement  may be  executed  in a number  of
identical separate counterparts,  each of which for all purposes is to be deemed
an original, but all of which shall constitute,  collectively, one agreement. No
party to this  Agreement  shall  be bound  hereby  until a  counterpart  of this
Agreement has been executed by all parties hereto.

25. Conflict.  In the event any term or provision hereof is inconsistent with or
conflicts  with any  provision of the Loan  Documents,  the terms or  provisions
contained in this Agreement shall be controlling.

26.  Survival.  All covenants,  agreements,  undertakings,  representations  and
warranties  made in the Loan Documents,  including this Agreement,  the Notes or
other  documents and  instruments  referred to herein shall survive all closings
hereunder and shall not be affected by any investigation made by any party.

27. Parties Bound. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective  successors,  assigns,  heirs,  legal
representatives  and estates,  provided,  however,  that the  Borrowers may not,
without  the prior  written  consent  of all of the Banks,  assign  any  rights,
powers, duties or obligations hereunder.

28. Assignments and Participations.

     28.1 Each Bank shall have the right to sell,  assign or transfer all or any
part of its Note or  Notes,  its  Commitments  and its  rights  and  obligations
hereunder to one or more  Affiliates,  Banks,  financial  institutions,  pension
plans,  insurance  companies,  investment  funds,  or  similar  Persons  who are
Eligible  Assignees or to a Federal Reserve Bank;  provided,  that in connection
with each sale, assignment or transfer (other than to an Affiliate,  a Bank or a
Federal  Reserve  Bank),  the  applicable  Bank will  consider  the  opinion and
recommendation of Borrowers, which opinion and recommendation shall in no way be
binding upon such Bank, and each such sale, assignment,  or transfer (other than
to an Affiliate, a Bank or a Federal Reserve Bank), shall require the consent of
Agent,  which  consent  will not be  unreasonably  withheld,  and the  assignee,
transferee or recipient shall have, to the extent of such sale,  assignment,  or
transfer, the same rights,  benefits and obligations as it would if it were such
Bank  and a  holder  of such  Note,  Commitments  and  rights  and  obligations,
including,  without limitation, the right to vote on decisions requiring consent
or  approval  of all  Banks or  Majority  Banks and the  obligation  to fund its
Commitments; provided, further, that (1) each such sale, assignment, or transfer
(other than to an  Affiliate,  a Bank or a Federal  Reserve Bank) shall be in an
aggregate principal amount not less than $2,500,000.00,  (2) each remaining Bank
shall  at all  times  maintain  Commitments  then  outstanding  in an  aggregate
principal amount at least equal to $2,500,000.00; (3) each such sale, assignment
or transfer  shall be of a Pro Rata  portion of such Bank's  Commitment , (4) no
Bank may offer to sell its Note or Notes, Commitments, rights and obligations or
interests  therein  in  violation  of any  securities  laws;  and  (5)  no  such
assignments  (other than to a Federal Reserve Bank) shall become effective until
the  assigning  Bank  and its  assignee  delivers  to  Agent  and  Borrowers  an
Assignment and  Acceptance and the Note or Notes subject to such  assignment and
other documents evidencing any such assignment.  An assignment fee in the amount
of $5,000 for each such  assignment  (other than to an Affiliate,  a Bank or the
Federal  Reserve Bank) will be payable to Agent by assignor or assignee.  Within
five (5)  Business  Days  after its  receipt  of copies  of the  Assignment  and
Acceptance and the other documents  relating  thereto and the Note or Notes, the
Borrowers  shall  execute  and deliver to Agent (for  delivery  to the  relevant
assignee) a new Note or Notes  evidencing such assignee's  assigned  Commitments
and if  the  assignor  Bank  has  retained  a  portion  of  its  Commitments,  a
replacement  Note in the  principal  amount of the  Commitments  retained by the
assignor (except as provided in the last sentence of this Section 28.1 such Note
or Notes to be in exchange for, but not in payment of, the Note or Notes held by
such Bank).  On and after the  effective  date of an assignment  hereunder,  the
assignee shall for all purposes be a Bank, party to this Agreement and any other
Loan  Document  executed  by the  Banks  and  shall  have  all  the  rights  and
obligations of a Bank under the Loan Documents, to the same extent as if it were
an original party thereto, and no further consent or action by Borrowers,  Banks
or the Agent shall be required to release the  transferor  Bank with  respect to
its  Commitments  assigned  to such  assignee  and  the  transferor  Bank  shall
henceforth be so released.

     28.2 Each Bank shall have the right to grant  participations  in all or any
part of such  Bank's  Notes and  Commitments  hereunder  to one or more  pension
plans,  investment funds,  insurance companies,  financial institutions or other
Persons, provided, that:

          (i) each Bank granting a participation  shall retain the right to vote
     hereunder,  and no  participant  shall be  entitled  to vote  hereunder  on
     decisions  requiring  consent or approval of Bank or Majority Banks (except
     as set forth in (iii) below);

          (ii) in the  event any Bank  grants a  participation  hereunder,  such
     Bank's  obligations under the Loan Documents shall remain  unchanged,  such
     Bank shall remain solely  responsible  to the other parties  hereto for the
     performance of such  obligations,  such Bank shall remain the holder of any
     such Note or Notes for all purposes  under the Loan  Documents,  and Agent,
     each Bank and Borrowers  shall be entitled to deal with the Bank granting a
     participation in the same manner as if no  participation  had been granted;
     and

          (iii) no  participant  shall  ever  have any  right by  reason  of its
     participation to exercise any of the rights of Banks hereunder, except that
     any Bank may agree with any  participant  that such Bank will not,  without
     the consent of such  participant  (which  consent  may not be  unreasonably
     withheld)  consent to any  amendment  or waiver  requiring  approval of all
     Banks.

     28.3 It is understood and agreed that any Bank may provide to assignees and
participants and prospective  assignees and participants  financial  information
and reports and data concerning  Borrowers'  properties and operations which was
provided to such Bank pursuant to this Agreement.

     28.4 Upon the  reasonable  request of either Agent or Borrowers,  each Bank
will  identify  those to whom it has  assigned or  participated  any part of its
Notes and Commitment, and provide the amounts so assigned or participated.

29.  Choice of Forum:  Consent  to  Service of  Process  and  Jurisdiction.  THE
OBLIGATIONS OF BORROWERS  UNDER THE LOAN  DOCUMENTS ARE  PERFORMABLE IN OKLAHOMA
COUNTY,  OKLAHOMA.  ANY SUIT,  ACTION OR PROCEEDING  AGAINST THE BORROWERS  WITH
RESPECT TO THE LOAN  DOCUMENTS OR ANY  JUDGMENT  ENTERED BY ANY COURT IN RESPECT
THEREOF,  MAY BE  BROUGHT  IN THE  COURTS  OF THE STATE OF  OKLAHOMA,  COUNTY OF
OKLAHOMA,  OR IN THE UNITED STATES COURTS LOCATED IN OKLAHOMA  COUNTY,  OKLAHOMA
AND THE BORROWERS HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS
FOR THE PURPOSE OF ANY SUCH SUIT,  ACTION OR  PROCEEDING.  THE BORROWERS  HEREBY
IRREVOCABLY  CONSENT TO SERVICE OF PROCESS IN ANY SUIT,  ACTION OR PROCEEDING IN
SAID COURT BY THE  MAILING  THEREOF BY BANK BY  REGISTERED  OR  CERTIFIED  MAIL,
POSTAGE PREPAID, TO THE BORROWERS, AS APPLICABLE,  AT THE ADDRESS FOR NOTICES AS
PROVIDED IN SECTION 17. THE  BORROWERS  HEREBY  IRREVOCABLY  WAIVE ANY OBJECTION
WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,  ACTION
OR  PROCEEDING  ARISING OUT OF OR RELATING TO ANY LOAN  DOCUMENT  BROUGHT IN THE
COURTS LOCATED IN THE STATE OF OKLAHOMA,  COUNTY OF OKLAHOMA, AND HEREBY FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

30.  Waiver  of Jury  Trial.  THE  BORROWERS,  THE AGENT AND THE BANKS (BY THEIR
ACCEPTANCE   HEREOF)   HEREBY    VOLUNTARILY,    KNOWINGLY,    IRREVOCABLY   AND
UNCONDITIONALLY  WAIVE ANY RIGHT TO HAVE A JURY  PARTICIPATE  IN  RESOLVING  ANY
DISPUTE  (WHETHER BASED UPON CONTRACT,  TORT OR OTHERWISE)  BETWEEN OR AMONG THE
BORROWERS, THE AGENT AND THE BANKS, ARISING OUT OF OR IN ANY WAY RELATED TO THIS
DOCUMENT, ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP BETWEEN THE AGENT, THE
BANKS AND THE BORROWERS.  THIS  PROVISION IS A MATERIAL  INDUCEMENT TO THE AGENT
AND THE BANKS TO PROVIDE THE FINANCING DESCRIBED HEREIN .

31.  Other  Agreements.  THIS  WRITTEN  CREDIT  AGREEMENT  REPRESENTS  THE FINAL
AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS,  OR SUBSEQUENT  ORAL  AGREEMENTS  OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

32.  Financial  Terms. All accounting terms used in this Agreement which are not
specifically defined herein shall be defined in accordance with GAAP.

              The remainder of this page intentionally left blank.

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

                              BORROWERS:

                              CONTINENTAL RESOURCES, INC.
                              an Oklahoma corporation

                                       HAROLD HAMM
                              By:      Harold Hamm
                              Title:   President

                              CONTINENTAL GAS, INC.
                              an Oklahoma corporation

                                       RANDY MOEDER
                              By:      Randy Moeder
                              Title:   President

                              CONTINENTAL RESOURCES OF ILLINOIS, INC.
                              an Oklahoma corporation

                                       HAROLD HAMM
                              By:      Harold Hamm
                              Title:   President

                              BANKS:

                              MIDFIRST BANK,
                              a federally chartered savings association

                                       SHAWN D. BREWER
                              By:      Shawn D. Brewer
                              Title:   Assistant Vice President

                              BANCFIRST

                                       ARTHUR B. HOBBS
                              By:      Arthur B. Hobbs
                              Title:   Vice President

                              LOCAL OKLAHOMA BANK, N.A.

                                       JOHN K. SLAY, JR.
                              By:      John K. Slay, Jr.
                              Title:   Senior Vice President

                              GUARANTY BANK, F.S.B.

                                       RICHARD E. MENCHACA
                              By:      Richard E. Menchaca
                              Title:   Vice President

                              AGENT:

                              MIDFIRST BANK,
                              a federally chartered savings association

                                       SHAWN D. BREWER
                              By:      Shawn D. Brewer
                              Title:   Assistant Vice President

<PAGE>

                                    Exhibits

         Exhibit "A"       -        Notice of Borrowing

         Exhibit "B-1"     -        Revolving Note

         Exhibit "B-2"     -        Term Note

         Exhibit "C"       -        Certificate of Compliance

         Exhibit "D"       -        Form of Assignment and Acceptance Agreement

         Schedules

         Schedule 1        -        Liens

         Schedule 2        -        Financial Condition

         Schedule 3        -        Liabilities

         Schedule 4        -        Litigation

         Schedule 5        -        Subsidiaries

         Schedule 6        -        Environmental Matters

         Schedule 7        -        Gas Contract

         Schedule 8        -        Title Matters

         Schedule 9        -        Curative Matters

<PAGE>
                                   Exhibit "A"

                               NOTICE OF BORROWING

     The undersigned hereby certify that they are the Chief Financial Officer of
CONTINENAL  RESOURCES,  INC., an Oklahoma  corporation,  and the Chief Financial
Officer  of  CONTINENTAL  GAS,  INC.,  an  Oklahoma  corporation,  and the Chief
Financial  Officer of  CONTINENTAL  RESOURCES  OF  ILLINOIS,  INC.,  an Oklahoma
corporation  and that as such they are  authorized  to  execute  this  Notice of
Borrowing on behalf of the Borrowers (as such term is defined in the Agreement).
With  reference to that certain  Third  Restated  Credit  Agreement  dated as of
January  17,  2002 (as same may be amended,  modified,  increased,  supplemented
and/or restated from time to time, the "Agreement")  entered into by and between
Borrowers,  MIDFIRST  BANK  ("MidFirst")  and the financial  institutions  party
thereto  (the  "Banks"),  the  undersigned  further  certifies,  represents  and
warrants on behalf of the  Borrowers  that all of the foregoing  statements  are
true and correct  (each  capitalized  term used herein  having the same  meaning
given to it in the Agreement unless otherwise specified):

          (a)  Borrowers  request  that  the  Banks  advance  Borrowers  on  the
     Revolving  Loan the  aggregate  sum of  $________________  by no later than
     ______________________.  Immediately  following such Advance, the aggregate
     outstanding balance of Advances shall equal  $_____________________  on the
     Revolving Loan.

          (b) This Advance shall be a Prime Rate Loan ____, or a Eurodollar Loan
     __________________,  (if Eurodollar, please state requested Interest Period
     ____ months).

          (c) As of the  date  hereof,  and as a  result  of the  making  of the
     requested  Advance,  there does not and will not exist any Default or Event
     of Default.

          (d) Borrowers  have  performed and complied  with all  agreements  and
     conditions contained in the Agreement which are required to be performed or
     complied with by Borrowers before or on the date hereof.

          (e) The representations and warranties  contained in the Agreement are
     true and correct in all  material  respects as of the date hereof and shall
     be true and correct upon the making of the Advance, with the same force and
     effect as though made on and as of the date hereof and thereof.

          (f) No  change  that  would  cause a  Material  Adverse  Effect to the
     condition, financial or otherwise, of Borrowers has occurred since the most
     recent Financial Statement provided to the Banks.

     EXECUTED AND DELIVERED this ____ day of _______________, 2002.

                                 CONTINENTAL RESOURCES, INC.
                                 an Oklahoma corporation

                                 _________________________________________
                                 By:      Harold Hamm
                                 Title:   President

                                 CONTINENTAL GAS, INC.
                                 an Oklahoma corporation

                                 _________________________________________
                                 By:      Randy Moeder
                                 Title:   President

                                 CONTINENTAL RESOURCES OF ILLINOIS, INC.
                                 an Oklahoma corporation

                                 _________________________________________
                                 By:      Harold Hamm
                                 Title:   President

<PAGE>
                                  Exhibit "B-1"

                           REPLACEMENT REVOLVING NOTE

$__________                  Oklahoma City, Oklahoma            January 17, 2002

     FOR  VALUE  RECEIVED,  the  undersigned  CONTINENTAL  RESOURCES,  INC.,  an
Oklahoma  corporation,  CONTINENTAL  GAS,  INC.,  an Oklahoma  corporation,  and
CONTINENTAL  RESOURCES OF ILLINOIS,  INC., an Oklahoma corporation  (hereinafter
referred to as the "Borrowers"  hereby  unconditionally,  jointly and severally,
promise to pay to the order of  ____________________________  (the "Bank" at the
offices of MIDFIRST BANK (the "Agent" in Oklahoma City, Oklahoma,  the principal
sum  of  ___________________________________  ($__________________)  or so  much
thereof as shall be advanced  under the  provisions of the Credit  Agreement (as
defined  herein),  in lawful money of the United States of America together with
interest  from the date hereof  until paid at the rates  specified in the Credit
Agreement.  All payments of principal  and interest due hereunder are payable at
any office of Agent  within the State of Oklahoma,  or at such other  address as
Bank shall designate in writing to Borrowers.

     The  principal  and all  accrued  interest  on this  Note  shall be due and
payable in  accordance  with the terms and  provisions  of the Credit  Agreement
(hereafter defined).

     This Note is  executed  pursuant  to that  certain  Third  Restated  Credit
Agreement (the "Credit  Agreement") which Credit Agreement restates that certain
Second  Restated  Credit  Agreement  dated as of July 9, 2001,  which  agreement
amended and restated  that certain  Restated  Credit  Agreement  dated April 21,
2000, as amended by that certain First  Amendment to Restated  Credit  Agreement
dated as of  August  1,  2000 and as  further  amended  by that  certain  Second
Amendment  to  Restated  Credit  Agreement  dated  as of  May  31,  2001,between
Borrowers,  the Agent and Banks,  and is one of the Revolving  Notes referred to
therein.  Reference is made to the Credit  Agreement and the Loan  Documents (as
that term is defined in the Credit  Agreement)  for a statement  of  prepayment,
rights and obligations of Borrowers, for a statement of the terms and conditions
under  which the due date of this  Note may be  accelerated  and for  statements
regarding other matters  affecting this Note (including  without  limitation the
obligations  of the holder  hereof to advance  funds  hereunder,  principal  and
interest  payment due dates,  voluntary and mandatory  prepayments,  exercise of
rights and remedies,  payment of attorneys' fees, court costs and other costs of
collection  and  certain  waivers  by  Borrowers  and  others  now or  hereafter
obligated  for payment of any sums due  hereunder).  Upon the  occurrence  of an
Event of  Default,  as that term is  defined in the  Credit  Agreement  and Loan
Documents,  the holder  hereof (i) may  declare  forthwith  to be  entirely  and
immediately  due and  payable  the  principal  balance  hereof and the  interest
accrued  hereon,  and (ii) shall have all rights and  remedies of the Bank under
the Credit Agreement and Loan Documents.  This Note may be prepaid in accordance
with the terms and provisions of the Credit Agreement.

     Regardless of any provision contained in this Note, the holder hereof shall
never be entitled to receive,  collect or apply,  as interest on this Note,  any
amount in excess of the  Maximum  Rate (as such term is  defined  in the  Credit
Agreement),  and, if the holder hereof ever  receives,  collects,  or applies as
interest,  any such amount which would be excessive interest, it shall be deemed
a partial  prepayment  of principal and treated  hereunder as such;  and, if the
indebtedness  evidenced  hereby  is paid in full,  any  remaining  excess  shall
forthwith be paid to Borrowers.  In determining whether or not the interest paid
or payable, under any specific contingency,  exceeds the Maximum Rate, Borrowers
and the holder hereof shall, to the maximum extent  permitted  under  applicable
law (i) characterize  any  non-principal  payment as an expense,  fee or premium
rather than as interest,  (ii)  exclude  voluntary  prepayments  and the effects
thereof,  and (iii)  spread the total amount of interest  throughout  the entire
contemplated  term of the obligations  evidenced by this Note and/or referred to
in the Credit  Agreement so that the  interest  rate is uniform  throughout  the
entire term of this Note;  provided  that, if this Note is paid and performed in
full prior to the end of the full contemplated term thereof; and if the interest
received for the actual  period of existence  thereof  exceeds the Maximum Rate,
the holder  hereof shall refund to Borrowers the amount of such excess or credit
the amount of such excess against the  indebtedness  evidenced  hereby,  and, in
such event, the holder hereof shall not be subject to any penalties  provided by
any laws for contracting for, charging,  taking, reserving or receiving interest
in excess of the Maximum Rate.

     If any payment of  principal or interest on this Note shall become due on a
day other than a Business Day (as such term is defined in the Credit Agreement),
such  payment  shall  be made  on the  next  succeeding  Business  Day and  such
extension  of time  shall in such case be  included  in  computing  interest  in
connection with such payment.

     If this Note is placed in the hands of an attorney for collection, or if it
is collected  through any legal proceeding at law or in equity or in bankruptcy,
receivership  or other court  proceedings,  Borrowers  agree to pay all costs of
collection, including, but not limited to, court costs and reasonable attorneys'
fees.

     Borrowers and each surety, endorser,  guarantor and other party ever liable
for payment of any sums of money  payable on this Note,  jointly  and  severally
waive presentment and demand for payment,  notice of intention to accelerate the
maturity,  protest, notice of protest and nonpayment,  as to this Note and as to
each and all installments hereof, and agree that their liability under this Note
shall not be affected by any renewal or extension in the time of payment hereof,
or in any  indulgences,  or by any  release  or change in any  security  for the
payment of this Note,  and hereby  consent to any and all renewals,  extensions,
indulgences, releases or changes.

     This  Note  shall be  governed  by and  construed  in  accordance  with the
applicable  laws of the United  States of  America  and the laws of the State of
Oklahoma.

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

     This  Note is one of a series  of notes  given in  renewal,  extension  and
increase of (but not in extinguishment  of) those certain  revolving  promissory
notes in favor of MidFirst  Bank,  BancFirst,  Local Oklahoma Bank, and Guaranty
Bank. dated as of July 9, 2001 from the undersigned which such notes were in the
aggregate face amount of $33,000,000.00 executed by the undersigned.

     EXECUTED as of the date and year first above written.

                                  BORROWERS:

                                  CONTINENTAL RESOURCES, INC.
                                  an Oklahoma corporation

                                  _________________________________________
                                  By:      Roger Clement
                                  Title:   Chief Financial Officer

                                  CONTINENTAL GAS, INC.
                                  an Oklahoma corporation

                                  _________________________________________
                                  By:      Randy Moeder
                                  Title:   President

                                  CONTINENTAL RESOURCES OF
                                     ILLINOIS, INC.
                                  an Oklahoma corporation

                                  _________________________________________
                                  By:      Harold Hamm
                                  Title:   President

<PAGE>
                                  Exhibit "B-2"

                              REPLACEMENT TERM NOTE

$__________                Oklahoma City, Oklahoma              January 17, 2002

     FOR  VALUE  RECEIVED,  the  undersigned  CONTINENTAL  RESOURCES,  INC.,  an
Oklahoma  corporation,  CONTINENTAL  GAS,  INC.,  an Oklahoma  corporation,  and
CONTINENTAL  RESOURCES OF ILLINOIS,  INC., an Oklahoma corporation  (hereinafter
referred to as the "Borrowers"  hereby  unconditionally,  jointly and severally,
promise to pay to the order of  ___________________________  (the  "Bank" at the
offices of MIDFIRST BANK (the "Agent" in Oklahoma City, Oklahoma,  the principal
sum of  _____________________________  DOLLARS  ($_________________)  or so much
thereof as shall be advanced  under the  provisions of the Credit  Agreement (as
defined  herein),  in lawful money of the United States of America together with
interest  from the date hereof  until paid at the rates  specified in the Credit
Agreement.  All payments of principal  and interest due hereunder are payable at
any office of Agent  within the State of Oklahoma,  or at such other  address as
Bank shall designate in writing to Borrowers.

     The  principal  and all  accrued  interest  on this  Note  shall be due and
payable in  accordance  with the terms and  provisions  of the Credit  Agreement
(hereafter defined).

     This Note is  executed  pursuant  to that  certain  Third  Restated  Credit
Agreement dated as of January 17, 2002 (the "Credit Agreement"), which agreement
amends and restates that certain Second  Restated  Credit  Agreement dated as of
July 9, 2001 which restated that certain Credit  Agreement dated April 21, 2000,
as amended by that certain First Amendment to Restated Credit Agreement dated as
of August 1, 2000 and as further  amended by that  certain  Second  Amendment to
Restated Credit Agreement dated as of May 31, 2001 between Borrowers,  the Agent
and Banks,  and is one of the Term Notes referred to therein.  Reference is made
to the Credit  Agreement and the Loan  Documents (as that term is defined in the
Credit  Agreement)  for a statement of  prepayment,  rights and  obligations  of
Borrowers,  for a statement of the terms and conditions under which the due date
of this Note may be  accelerated  and for  statements  regarding  other  matters
affecting this Note (including without limitation principal and interest payment
due dates, voluntary and mandatory prepayments, exercise of rights and remedies,
payment of  attorneys'  fees,  court  costs and other  costs of  collection  and
certain  waivers by Borrowers and others now or hereafter  obligated for payment
of any sums due hereunder).  Upon the occurrence of an Event of Default, as that
term is defined in the Credit  Agreement and Loan  Documents,  the holder hereof
(i) may declare  forthwith  to be entirely and  immediately  due and payable the
principal  balance hereof and the interest  accrued hereon,  and (ii) shall have
all  rights  and  remedies  of the Bank  under  the  Credit  Agreement  and Loan
Documents.  This Note may be prepaid in accordance with the terms and provisions
of the Credit Agreement.

     Regardless of any provision contained in this Note, the holder hereof shall
never be entitled to receive,  collect or apply,  as interest on this Note,  any
amount in excess of the  Maximum  Rate (as such term is  defined  in the  Credit
Agreement),  and, if the holder hereof ever  receives,  collects,  or applies as
interest,  any such amount which would be excessive interest, it shall be deemed
a partial  prepayment  of principal and treated  hereunder as such;  and, if the
indebtedness  evidenced  hereby  is paid in full,  any  remaining  excess  shall
forthwith be paid to Borrowers.  In determining whether or not the interest paid
or payable, under any specific contingency,  exceeds the Maximum Rate, Borrowers
and the holder hereof shall, to the maximum extent  permitted  under  applicable
law (i) characterize  any  non-principal  payment as an expense,  fee or premium
rather than as interest,  (ii)  exclude  voluntary  prepayments  and the effects
thereof,  and (iii)  spread the total amount of interest  throughout  the entire
contemplated  term of the obligations  evidenced by this Note and/or referred to
in the Credit  Agreement so that the  interest  rate is uniform  throughout  the
entire term of this Note;  provided  that, if this Note is paid and performed in
full prior to the end of the full contemplated term thereof; and if the interest
received for the actual  period of existence  thereof  exceeds the Maximum Rate,
the holder  hereof shall refund to Borrowers the amount of such excess or credit
the amount of such excess against the  indebtedness  evidenced  hereby,  and, in
such event, the holder hereof shall not be subject to any penalties  provided by
any laws for contracting for, charging,  taking, reserving or receiving interest
in excess of the Maximum Rate.

     If any payment of  principal or interest on this Note shall become due on a
day other than a Business Day (as such term is defined in the Credit Agreement),
such  payment  shall  be made  on the  next  succeeding  Business  Day and  such
extension  of time  shall in such case be  included  in  computing  interest  in
connection with such payment.

     If this Note is placed in the hands of an attorney for collection, or if it
is collected  through any legal proceeding at law or in equity or in bankruptcy,
receivership  or other court  proceedings,  Borrowers  agree to pay all costs of
collection, including, but not limited to, court costs and reasonable attorneys'
fees.

     Borrowers and each surety, endorser,  guarantor and other party ever liable
for payment of any sums of money  payable on this Note,  jointly  and  severally
waive presentment and demand for payment,  notice of intention to accelerate the
maturity,  protest, notice of protest and nonpayment,  as to this Note and as to
each and all installments hereof, and agree that their liability under this Note
shall not be affected by any renewal or extension in the time of payment hereof,
or in any  indulgences,  or by any  release  or change in any  security  for the
payment of this Note,  and hereby  consent to any and all renewals,  extensions,
indulgences, releases or changes.

     This  Note  shall be  governed  by and  construed  in  accordance  with the
applicable  laws of the United  States of  America  and the laws of the State of
Oklahoma.

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

     This  Note is one of a series  of notes  given in  renewal,  extension  and
increase of (but not in  extinguishment  of) those certain term promissory notes
in favor of MidFirst  Bank,  BancFirst,  Local Oklahoma Bank, and Guaranty Bank.
dated as of July 9, 2001  from the  undersigned  which  such  notes  were in the
aggregate face amount of $27,000,000.00 executed by the undersigned.

     EXECUTED as of the date and year first above written.

                                      BORROWERS:

                                      CONTINENTAL RESOURCES, INC.
                                      an Oklahoma corporation

                                      _________________________________________
                                      By:      Roger Clement
                                      Title:   Chief Financial Officer

                                      CONTINENTAL GAS, INC.
                                      an Oklahoma corporation

                                      _________________________________________
                                      By:      Randy Moeder
                                      Title:   President

                                      CONTINENTAL RESOURCES OF
                                         ILLINOIS, INC.
                                      an Oklahoma corporation

                                      _________________________________________
                                      By:      Harold Hamm
                                      Title:   President

<PAGE>
                                   Exhibit "C"

                            CERTIFICATE OF COMPLIANCE

     The   undersigned    hereby   certifies   that   [he   is/they   are]   the
________________________________  of  CONTINENTAL  RESOURCES,  INC., an Oklahoma
corporation, and the _______________________________ of CONTINENTAL GAS INC., an
Oklahoma  corporation  and  the  ______________________________  of  CONTINENTAL
RESOURCES OF ILLINOIS, INC., an Oklahoma corporation (the "Borrowers"), and that
as such [he is/they are] authorized to execute this Certificate of Compliance on
behalf of the Borrowers.  With  reference to that certain Third Restated  Credit
Agreement,  dated as of January 17,  2002,  (as same may be  amended,  modified,
increased,  supplemented  and/or  restated  from time to time,  the  "Agreement)
entered into between the Borrowers, MIDFIRST BANK, as "Agent" for itself and the
Banks  signatory  thereto (the  "Banks"),  the  undersigned  further  certifies,
represents  and warrants on behalf of the  Borrowers  that all of the  following
statements  are true and correct (each  capitalized  term used herein having the
same meaning given to it in the Agreement unless otherwise specified):

          (a) The  Borrowers  have  fulfilled  in all  material  respects  their
     obligations under the Notes and Security  Instruments,  including the Third
     Restated  Credit  Agreement,  and all  representations  and warranties made
     herein and therein  continue (except to the extent they relate solely to an
     earlier  date) to be true and  correct  in all  material  respects  [if the
     representations and warranties are not true and correct,  the party signing
     this certificate shall except from the foregoing  statement the matters for
     which such  representations  and warranties are not longer true  specifying
     the nature of any such change.]

          (b) No Event of Default has occurred  under the Security  Instruments,
     including the Third Restated  Credit  Agreement [if an Event of Default has
     occurred,  the party certifying hereto shall specify the facts constituting
     the Event of Default and the nature and status thereof].

          (c) To the  extent  requested  from  time to time  by the  Agent,  the
     certifying party shall  specifically  affirm compliance of the Borrowers in
     all  material  respects  with  any of its  representations  and  warranties
     (except to the extent they relate solely to an earlier date) or obligations
     under said instruments.

          (d)     Financial     Computations     for    the    period     ending
     _______________________ (provide calculations on a consolidated basis):

               (i) Current Ratio;

               (ii) Minimum Debt Service Coverage Ratio; and

               (iii) Ratio of Debt to Tangible Net Worth.

     EXECUTED, DELIVERED AND CERTIFIED TO this ____ day of ___________, 2002.

                                CONTINENTAL RESOURCES, INC.
                                an Oklahoma corporation

                                _________________________________________
                                By:      Harold Hamm
                                Title:   President

                                CONTINENTAL GAS, INC.
                                an Oklahoma corporation

                                _________________________________________
                                By:      Randy Moeder
                                Title:   President

                                CONTINENTAL RESOURCES OF ILLINOIS, INC.
                                an Oklahoma corporation

                                _________________________________________
                                By:      Harold Hamm
                                Title:   President
<PAGE>
                                   Exhibit "D"

                   FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

     This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance")
dated  as of  January  17,  2002 is made  between  MIDFIRST  BANK,  a  federally
chartered  banking  association  ("MidFirst"),  LOCAL  OKLAHOMA  BANK,  N.A.,  a
national  banking  association   ("Local"),   BANCFIRST,   an  Oklahoma  banking
association ("BancFirst" and together with MidFirst, and Local, the "Assignors")
and GUARANTY BANK, FSB (the "Assignee").

                                    RECITALS

     WHEREAS,  The  Assignors  and Assignee are each party to that certain THIRD
RESTATED CREDIT AGREEMENT  (hereinafter referred to as the "Agreement") executed
as of the 17th day of January, 2002 , by and among CONTINENTAL RESOURCES,  INC.,
an  Oklahoma  corporation  ("Resources"),  CONTINENTAL  GAS,  INC.,  an Oklahoma
corporation  ("Gas"),  CONTINENTAL  RESOURCES  OF  ILLINOIS,  INC.,  an Oklahoma
corporation  ("Continental Illinois") (Resources,  Gas, and Continental Illinois
are hereinafter  collectively  referred to as "Borrowers" and  individually as a
"Borrower") with MidFirst as Agent (the "Credit Agreement");

     WHEREAS, as provided under the Credit Agreement, the Assignors and Assignee
have  committed to provide  Borrowers with (A) a revolving line of credit in the
amount of the lesser of (i)  $45,700,000 or (ii) the Borrowing Base in effect at
any given time and (B) an amortizing  term loan in the amount of  $24,300,000 (A
and B are referred to herein as the "Committed  Loans"),  such  Committed  Loans
being  evidenced  by  a  Replacement  Revolving  Note  in  the  face  amount  of
$9,793,510.00 in favor of each of MidFirst,  Local and BancFirst and in the face
amount of $16,319,470  in favor of Guaranty and evidenced by a Replacement  Term
Note in the  amount  of  $5,207,490  in favor of each of  MidFirst,  Local,  and
BancFirst and in the amount of  $8,677,530  in favor of Guaranty  (collectively,
the "Notes").

     WHEREAS,  each of the Assignors  wish to assign to the Assignee part of the
rights and obligations of each of such Assignors  under the Credit  Agreement in
respect of its  Commitment,  in such an  obligation of each of the Assignors and
Assignee  are equal to the face  amount  of the notes set forth the  immediately
preceding  recital  (the  "Assigned  Amount")  on the terms and  subject  to the
conditions  set forth herein,  and the Assignee  wishes to accept  assignment of
such  rights and assume  such  obligations  from the  Assignor on such terms and
subject to such conditions;

     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:

     1. Assignment and Acceptance.

          (a)  Subject  to the  term  and  conditions  of  this  Assignment  and
     Acceptance,  (i) each of the Assignors hereby sells,  transfers and assigns
     to the  Assignee,  and (ii) the  Assignee  hereby  purchases,  assigns  and
     undertakes  from  each  of the  Assignors,  without  recourse  and  without
     representation  or  warranty  (except as provided  in this  Assignment  and
     Acceptance) an aggregate and combined  amount of the obligations of each of
     the  Assignors  necessary  to achieve the note amounts set forth above (the
     "Assignee's Percentage Share") of (A) the Committed Loans of the Assignors,
     (B)  the  Notes,  and  (C)  all  related  rights,  benefits,   obligations,
     liabilities  and  indemnities  of  each  of  the  Assignors  under  and  in
     connection with the Credit Agreement and the Loan Documents.

          (b) After giving effect to the  assignment and  assumptions  set forth
     herein, on the Effective Date the Assignee's  Revolving  Commitment will be
     equal to the lesser of  $16,319,470.00 or the Borrowing Base in effect from
     time to time and its Term Commitment will be equal to $8,677,530.00.

          (c) After giving effect to the  assignment and  assumptions  set forth
     herein,  on the Effective Date  MidFirst's  Commitment will be equal to the
     lesser of  $9,793,510.00  or the Borrowing Base in effect from time to time
     and its Term Commitment will be equal to $5,207,490.00.

          (d) After giving effect to the  assignment and  assumptions  set forth
     herein,  on the  Effective  Date  Local's  Commitment  will be equal to the
     lesser of  $9,793,510.00  or the Borrowing Base in effect from time to time
     and its Term Commitment will be equal to $5,207,490.00.

          (e) After giving effect to the  assignment and  assumptions  set forth
     herein,  on the Effective Date BancFirst's  Commitment will be equal to the
     lesser of  $9,793,510.00  or the Borrowing Base in effect from time to time
     and its Term Commitment will be equal to $5,207,490.00

          2. Payments.

          As consideration for the sale, assignment and transfer contemplated in
     Section 1 hereof,  the Assignee  shall pay to MidFirst,  as Agent,  for the
     ratable  benefit of the  Assignors  on the  Effective  Date in  immediately
     available  funds such amounts as are  necessary to achieve the  Commitments
     held by each of the  Assignors  and  Assignee  set  forth in  Section 1 (b)
     through  (e)  above  representing  the  Assignee's  Pro  Rata  Share of the
     principal amount of all Committed Loans outstanding as of the date hereof.

          3.  Reallocation  of Payments.  Any interest,  fees and other payments
     accrued to the Effective Date with respect to the Commitment, the Committed
     Loans  and  the  Notes  shall  be for the  account  of the  Assignors.  Any
     interest,  fees and other payments  accrued on and after the Effective Date
     with  respect  to the  Assigned  Amount  shall  be for the  account  of the
     Assignee.  Each of the Assignors and the Assignee  agrees that it will hold
     in trust for the other party any interest,  fees and other amounts which it
     may receive to which the other party is entitled  pursuant to the preceding
     sentence and pay to the other party any such  amounts  which it may receive
     promptly upon receipt.

          4. Independent Credit Decision. The Assignee: (a) acknowledges that it
     has received a copy of the Credit  Agreement and the Schedules and Exhibits
     thereto,  together  with  copies of the most  recent  financial  statements
     referred to in Section 12 of the Credit Agreement, and such other documents
     and  information  as it has deemed  appropriate  to make its own credit and
     legal analysis and decision to enter into this  Assignment and  Acceptance;
     and (b) agrees that it will,  independently  and without  reliance upon the
     Assignors,  the Agent or any other  Bank and  based on such  documents  and
     information as it shall deem appropriate at the time,  continue to make its
     own credit and legal  decisions  in taking or not taking  action  under the
     Credit Agreement.

          5. Effective Date; Notices.

          (a) As between the Assignors and the Assignee,  the effective date for
     this  Assignment and Acceptance  shall be January 17, 2002 (the  "Effective
     Date");   provided  that  the  following  conditions  precedent  have  been
     satisfied on or before the Effective Date:

               (i)  this  Assignment  and  Acceptance   shall  be  executed  and
          delivered by each of the Assignors and the Assignee, together with the
          Notes;

               (ii)  the  consent  of  the  Agent   required  for  an  effective
          assignment  of the  Assigned  Amount by the  Assignors to the Assignee
          under Section 28 of the Credit Agreement shall have been duly obtained
          and shall be in full force and  effective  as of the  Effective  Date,
          which such consent is deemed given by virtue of  MidFirst's  execution
          of this Agreement;

               (iii) the Assignee  shall pay to the Assignors all amounts due to
          the Assignors under this Assignment and Acceptance,

               (iv) the  Assignors  shall have  assigned and the Assignee  shall
          have assumed a percentage equal to the Assignee's  Percentage Share of
          the rights and obligations of the Assignors under the Credit Agreement
          (if such agreement exists).

               (v)  Promptly  following  the  execution of this  Assignment  and
          Acceptance,   the   Assignors   shall   deliver   to  the   Agent  for
          acknowledgment by the Agent, a copy of this Assignment and Acceptance.

          6.  Withholding  Tax. The Assignee (a)  represents and warrants to the
     Banks,  the Agent and the Company that under applicable law and treaties no
     tax will be  required  to be  withheld  by the  Bank  with  respect  to any
     payments to be made to the Assignee hereunder, (b) agrees to furnish (if it
     is  organized  under the laws of any  jurisdiction  other  than the  United
     States or any State thereof) to the Agent and the Company prior to the time
     that the Agent or Company is  required  to make any  payment of  principal,
     interest or fees  hereunder,  duplicate  executed  originals of either U.S.
     Internal  Revenue Service Form 4224 or U.S.  Internal  Revenue Service Form
     101  (wherein  the  Assignee  claims  entitlement  to the benefits of a tax
     treaty that  provides for a complete  exemption  from U.S.  federal  income
     withholding tax on all payments  hereunder) and agrees to provide new Forms
     4224 or 100 1 upon  the  expiration  of any  previously  delivered  form or
     comparable   statements  in  accordance  with  applicable  U.  S.  law  and
     regulations  and  amendments  thereto,  duly  executed and completed by the
     Assignee,  and (c)  agrees  to comply  with all  applicable  U.S.  laws and
     regulations with regard to such withholding tax exemption.

          7. Representations and Warranties.

          (a) Each Assignor represents and warrants that (i) it is the legal and
     beneficial  owner of the interest  being  assigned by it hereunder and that
     such interest is free and clear of any Lien or other adverse claim, (ii) it
     is duly  organized  and existing and it has the full power and authority to
     take,  and has taken,  all action  necessary  to execute and  deliver  this
     Assignment and Acceptance and any other documents  required or permitted to
     be executed or  delivered  by it in  connection  with this  Assignment  and
     Acceptance and to fulfill its obligations  hereunder;  (iii) on notices to,
     or consents,  authorizations or approvals of any Person are required (other
     than any already  given or obtained)  for its due  execution,  delivery and
     performance  of  this  Assignment  and  Acceptance,   and  apart  from  any
     agreements or undertakings or filings required by the Credit Agreement,  no
     further  action by, or notice to, or filing with, any Person is required of
     it for such execution,  delivery or  performance;  and (iv) this Assignment
     and Acceptance  has been duly executed and delivered by it and  constitutes
     the  legal,  valid and  binding  obligation  of the  Assignor,  enforceable
     against the Assignor in  accordance  with the terms hereof  subject,  as to
     enforcement,  to bankruptcy,  insolvency,  moratorium,  reorganization  and
     other laws of  general  application  relating  to or  affecting  creditors'
     rights and to general equitable principles.

          (b)  Assignors  make no  representation  or  warranty  and  assume  no
     responsibility   with   respect   to   any   statements,    warranties   or
     representations  made in or in connection with the Credit  Agreement or the
     execution, legality, validity, enforceability,  genuineness, sufficiency or
     value of the Credit Agreement or any other instrument or document furnished
     pursuant  thereto.  The  Assignors  make no  representation  or warranty in
     connection  with,  and  assume  no  responsibility  with  respect  to,  the
     solvency,  financial  condition  or  statements  of  the  Company,  or  the
     performance  or  observance  by the  Company,  of  any  of  its  respective
     obligations  under the Credit Agreement or any other instrument or document
     furnished in connection therewith.

          (c) The Assignee represents and warrants that (i) it is duly organized
     and existing and it has the power and authority to take, and has taken, all
     action  necessary to execute and deliver this Assignment and Acceptance any
     other documents  required or permitted to be executed or delivered by it in
     connection  with  this  Assignment  and  Acceptance,  and  to  fulfill  its
     obligations hereunder,  (ii) no notices to, or consents,  authorizations or
     approvals  of any Person are  required  (other  than any  already  given or
     obtained)  for  its  due  execution,   delivery  and  performance  of  this
     Assignment and Acceptance; and apart from any agreements or undertakings or
     filings required by the Credit  Agreement,  no further action by, or notice
     to, or  filing  with,  any  Person is  required  of it for such  execution,
     delivery or performance, (iii) this Assignment and Acceptance has been duly
     executed and delivered by it and constitutes  the legal,  valid and binding
     obligation of the Assignee,  enforceable against the Assignee in accordance
     with  the  terms  hereof,  subject,  as  to  enforcement,   to  bankruptcy,
     insolvency,   moratorium,   reorganization   and  other   laws  of  general
     application  relating  to or  affecting  creditors'  rights  and to general
     equitable principles; and (iv) it is an Eligible Assignee.

          8. Further  Assurances.  The  Assignors  and the Assignee  each hereby
     agree to execute and deliver  such other  instruments,  and take such other
     action,  as any  party  may  reasonably  request  in  connection  with  the
     transactions contemplated by this Assignment and Acceptance,  including the
     delivery of any notices or other documents or instruments to the Company or
     the Agent,  which may be required in  connection  with the  assignment  and
     assumption contemplated hereby.

          9. Miscellaneous.

          (a) Any  amendment or waiver of any provision of this  Assignment  and
     Acceptance shall be in writing and signed by the parties hereto. No failure
     or delay by either party hereto in exercising  any right power or privilege
     hereunder shall operate as a waiver thereof and any waiver of any breach of
     the provisions of this Assignment and Acceptance shall be without prejudice
     to any rights with respect to any other or further breach thereof.

          (b) All payments made  hereunder  shall be made without any set-off or
     counterclaim.

          (c) Each  Assignor and the  Assignee  shall each pay its own costs and
     expenses   incurred  in  connection  with  the  negotiation,   preparation,
     execution and performance of this Assignment and Acceptance.

          (d) This  Assignment  and  Acceptance may be executed in any number of
     counterparts and any of such counterparts taken together shall be deemed to
     constitute one and the same instrument.

          (e) THIS ASSIGNMENT AND ACCEPTANCE  SHALL BE GOVERNED BY AND CONSTRUED
     IN ACCORDANCE WITH THE LAW OF THE STATE OF OKLAHOMA.  Each Assignor and the
     Assignee irrevocably submits to the non-exclusive jurisdiction of any State
     or Federal court  sitting in Oklahoma  over any suit,  action or proceeding
     arising  out  of  or  relating  to  this   Assignment  and  Acceptance  and
     irrevocably  agrees that all claim in respect of such action or  proceeding
     may be heard and determined in such Oklahoma  State or Federal court.  Each
     party to this Assignment and Acceptance hereby  irrevocably  waives, to the
     fullest  extent it may  effectively  do so, the defense of an  inconvenient
     forum to the maintenance of such action or proceeding.

          (f) THE ASSIGNORS AND THE ASSIGNEE EACH HEREBY KNOWINGLY,  VOLUNTARILY
     AND  INTENTIONALLY  WAIVE  ANY  RIGHTS  THEY MAY HAVE TO A TRIAL BY JURY IN
     RESPECT OF ANY  LITIGATION  BASED HEREON,  OR ARISING OUT OF, UNDER,  OR IN
     CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE,  THE CREDIT AGREEMENT,  ANY
     RELATED  DOCUMENTS  AND  AGREEMENTS  OR ANY  COURSE OF  CONDUCT,  COURSE OF
     DEALING OR STATEMENTS (WHETHER ORAL OR WRITTEN).

          (g) The  assignment  fee  described  in  Section  28(a) of the  Credit
     Agreement is hereby waived by the Agent.

          (h) Assignee hereby provides the  administrative  detail on Addendum I
     hereto.

     IN  WITNESS  WHEREOF,  the  Assignor  and the  Assignee  have  caused  this
Assignment and Acceptance to be executed and delivered by their duly  authorized
officers as of the data first above written.

         ASSIGNORS:

                                            MIDFIRST BANK

                                            By:      Shawn Brewer
                                            Title:   Assistant Vice President

                                            LOCAL OKLAHOMA BANK, N.A.

                                            By:      John K. Slay, Jr.
                                            Title:   Senior Vice President

                                            BANCFIRST

                                            By:      Arthur B. Hobbs
                                            Title:   Vice President

         ASSIGNEE:

                                            GUARANTY BANK, FSB

                                            By:      Richard E. Menchaca
                                            Title:   Vice President

         AGENT:
                                            MIDFIRST BANK

                                            By:      Shawn Brewer
                                            Title:   Assistant Vice President
<PAGE>
         The following administrative details apply to the Assignee:

         (A)      Notice Address:

         Assignee name:             GUARANTY BANK, FSB

          Address:                  333 Clay Street, Suite 4400
                                    Houston, Texas  77002

         Attention:                 Richard Menchaca

         Telephone:                 (713) 890-8849

         Telecopier:                (713) 890-8863

         Telex (Answerback):

         (B)      Payment Instructions:

         Account No.:

         At:

         Reference:

         Attention:<Page>

EXHIBIT 10.7

                                WAVE SYSTEM CORP.
                       1996 PERFORMANCE STOCK OPTION PLAN

I.   PURPOSE AND SCOPE OF PLAN

     Under this 1996 performance Stock Option Plan (the "Plan") of Wave Systems
Corp. (the "Company"), options shall be granted to employees of the Company or
any of its subsidiaries, consultants and others to purchase shares of the
Company's capital stock. The Plan is designed to enable the Company to attract
and retain the best available personnel, to provide additional incentive to
employees, consultants and others and to promote the success of the Company.
These objectives will be promoted through the granting to employees equity
instruments including (i) incentive stock options ("Incentive Options") which
are intended to qualify under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") and (ii) options which are not intended to so qualify
("NQSOs"). Vesting of the performance options granted under the Plan shall be in
accordance with the criteria established by the Compensation Committee (the
"Committee"), or the Board of Directors of the Company (the "Board of
Directors") if there is no Committee, as provided in Article V, Section 1 of
this Agreement.

The options offered pursuant to this Plan are a matter of separate inducement
and are not in lieu of any salary or other compensation for services.

II.  AMOUNT OF STOCK SUBJECT TO THE PLAN

     The total number of shares of common stock of the Company reserved and
available for distribution pursuant to options granted hereunder shall not
exceed, in the aggregate, 800,000 shares of the authorized Class A common stock,
$0.01 par value, per share, of the Company (the "Shares"), subject to adjustment
described below.

     Shares, which may be acquired under the Plan, may be either authorized but
unissued Shares or Shares of issued stock held in the Company's treasury, or
both, at the discretion of the Company. Whenever any outstanding option or
portion thereof expires, is canceled, if forfeited or is otherwise terminated
for any reason without having been exercised or payment having been made in
respect of the entire option, the Shares allocable to the expired, canceled,
forfeited or otherwise terminated portion of the option may again be the subject
of options granted hereunder.

         In the event of any stock dividend, stock split, combination of
exchange of Shares, recapitalization of other change in the capital structure of
the Company, corporate separation of division (including, but not limited to,
split-up, spin-off or distribution to Company shareholders other than a normal
cash dividend), sale by the Company of all or a substantial portion 9 of its
assets, rights offering, merger, consolidation, reorganization or partial or
complete liquidation, or any other corporate transaction or event having an
effect similar to any of the foregoing, the aggregate number of Shares reserved
for issuance under the Plan, the number and option price of

<Page>

Shares subject to outstanding options and any other characteristics or terms of
the options as the Committee shall deem necessary or appropriate to reflect
equitably the effects of such changes to the holders of options, shall be
appropriately substituted for new shares or adjusted, as determined by the
Committee in its discretion. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option shall comply with the rules of
Section 424(a) of the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other than an
incentive stock option for purposed of Section 422 of the Code without the
consent of the grantee.

III. ADMINISTRATION

     The Committee, or the Board of Directors if there is no Committee, will
have sole and exclusive authority to administer the Plan. The Committee shall
consist of no fewer than two (2) members of the Board of Directors, each of whom
shall be a "Non-Employee Director" within the meaning of Rule 16b-3 or any
successor rule or regulation ("Rule 16b-3") promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Committee shall
administer the Plan so as to comply at all times with Rule 16b-3. A majority of
the members of the Committee shall constitute a quorum, and the act of a
majority of the members of the Committee shall be the act of the Committee. Any
member of the Committee may be removed at any time, either with or without
cause, by resolution adopted by a majority of the Board of Directors, and any
vacancy on the Committee may at any time be filled by resolution adopted by a
majority of the Board of Directors.

     Any or all powers and functions of the Committee may at any time, and from
time to time be exercised by the Board of Directors, subject to compliance with
Rule 16b-3.

     Subject to the express provisions of the Plan, the Board of Directors or
the Committee, as the case may be, shall have authority, in its discretion, to
(i) select employees of the Company, consultants, and others as recipients of
options; (ii) determine the number and type of options to be granted; (iii)
determine the terms and conditions, not inconsistent with the terms hereof, of
any options granted; (iv) adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable; (v) interpret the terms and provisions of the Plan and any option
granted and any agreements relating thereto; and (vi) otherwise supervise the
administration of the Plan.

     The determination of the Board of Directors or the Committee, as the case
may be, on matters referred to in this Article III shall be conclusive.

     The Board of Directors or the Committee, as the case may be, may employ
such legal counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received from any such
counsel or consultant and any computation received from any such consultant or
agent. Expenses incurred by the Board of Directors or the Committee in the
engagement of such counsel, consultant or agent shall be paid by the Company. No
member or former member of the Committee or of the Board of Directors shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted hereunder.

<Page>

     The Company shall indemnify each member of the Committee for all costs and
expenses and, to the extent permitted by applicable law, any liability incurred
in connection with defending against, responding to, negotiation for the
settlement of, or otherwise dealing with any claim, cause of action or dispute
of any kind arising in connection with any actions in administering the Plan or
in authorizing or denying authorization to any transaction hereunder.

IV.  ELIGIBILITY

     Options may be granted only to employees of the Company and its
subsidiaries, consultants and others who are not members of the Committee;
provided that no person shall be eligible for any award id the granting of such
aware to such person would prevent the satisfaction by the Plan of the general
exemptive conditions of Rule 16b-3. The Plan shall not confer upon any employee,
consultant or other any right with respect to continuation of employment or
services by the Company, nor shall it interfere in any way with his or her right
or the Company's right to terminate his or her employment or services at any
time, with or without cause.

V.   STOCK OPTIONS

     1. GENERAL. Any options granted under the Plan shall be in such form as the
        Committee may from time to time approve and the provisions of the option
        grants need not be the same with respect to each optionee. Options
        granted under the Plan may be either Incentive Options or NQSOs. The
        Committee may grant to any optionee Incentive Options, NQSOs or both
        types of options.

        Options granted under the Plan shall be subject to the following terms
        and conditions and shall contain such additional terms and conditions
        not consistent with the terms of the Plan, as the Committee deems
        appropriate. Each option grant shall be evidenced by an agreement
        executed on behalf of the Company by an officer designated by the
        Committee and accepted by the optionee. Such agreement shall describe
        the options and state that such options are subject to all the terms and
        provisions of the Plan and shall contain such other terms and
        provisions, consistent with the Plan, as the Committee may approve.

     2. EXERCISE PRICE AND PAYMENT. The price per Share under any option granted
        hereunder shall be such amount as the Board of Directors or the
        Committee, as the case may be, shall determine, provided, however, that
        such price shall not be less than one hundred percent (100%) of the fair
        market value of the Shares subject to such option, as determined below,
        at the date the option is granted (110% in the case of an Incentive
        Option granted to any person who, at the time the option is granted,
        owns stock of the Company or any subsidiary or parent of the Company
        possessing more than ten percent (10%) of the total combined voting
        power of all classes of stock of the Company or of any subsidiary or
        parent of the Company (a "10% Shareholder")).

<Page>

        If the Shares are listed on a national securities exchange in the United
        States on the date any option is granted, the fair market value per
        Share shall be deemed to be the average of the high and low sale price
        on such national securities exchange in the United States on the date
        upon which the option is granted, bit if the Shares are not traded on
        such date, or such national securities exchange is not open for business
        on such date, the fair market value per Share shall be the average of
        the high and low sale price determined as of the closet preceding date
        on which such exchange shall have been open for business and the Shares
        were traded. If the Shares are listed on more than one national
        securities exchange in the United States on the date any such option is
        granted, the Board of Directors or the Committee, as the case may be,
        shall determine which national securities exchange shall be used for the
        purpose of determining the fair market value per Share. If the Shares
        are not listed on a national securities exchange, but are reported on
        the National Association of Securities Dealers, Inc. Automated Quotation
        System ("Nasdaq"), the fair market value per Share shall be deemed to be
        the average of the high bid and low sale prices on the date upon which
        the option is granted as reported by Nasdaq or, if the Shares are not
        traded on such date or Nasdaq is not open for business on such date, the
        fair market value per Share shall be the average of the high and low
        sale priced determined as of the closest preceding date on which Nasdaq
        shall have reported the Shares.

        For purposes of this Plan, the determination by the Board of Directors
        or the Committee, as the case may be, of the fair market value of a
        Share shall be conclusive.

     3. TERM OF OPTIONS AND LIMITATION ON THE RIGHT OF EXERCISE. The term of
        each option will be for such period as the Board of Directors or the
        Committee, as the case may be, shall determine, provided that, except as
        otherwise provided herein, in no event may any option granted hereunder
        be exercisable more than ten (10) years from the date of grant of such
        option (five years in the case of an Incentive Option granted to a 10%
        Shareholder). Each option shall become exercisable in such installments
        and at such times as may be designated by the Board of Directors or the
        Committee, as the case may be, and set forth in the agreement related to
        the grant of options. To the extent not exercised, installments shall
        accumulate and be exercisable, in whole or in part, at any time after
        becoming exercisable, but not later than the date the option expires.

        The Board of Directors or the Committee, as the case may be, shall have
        the right to limit, restrict or prohibit, in whole or in part, from time
        to time, conditionally or unconditionally, rights to exercise any option
        granted hereunder.

        To the extent that an option is not exercised within the period of
        exercisability specified therein, it shall expire as to the then
        unexercised part.

     4. EXERCISE OF OPTIONS. Options granted under the Plan shall be exercised
        by the optionee as to all or part of the Shares covered thereby giving
        written notice of the

<Page>

        exercise thereof to the Secretary of the Company at the principal
        business office of the Company, specifying the number of Shares to be
        purchased, accompanied by payment therefore made to the Company for the
        full purchase price of such Shares. The date of actual receipt by the
        Company o9f such notice shall be deemed the date of exercise of the
        option with respect to the Shares being purchased.

        Upon the exercise of an option granted hereunder, the Company shall
        cause the purchased Shares to be issued only when it shall have received
        the full purchase price for the Shares in cash; provided, however, that
        in lieu of cash, the holder of an option may, to the extend permitted by
        applicable law, exerciser an option in while or in part by delivering to
        the Company unrestricted Shares (in proper form for transfer and
        accompanied by all requisite stock transfer tax stamps or cash in lieu
        thereof) owned by such holder having a fair market value equal to the
        cash exercise price applicable to that portion of the option being
        exercised. The fair market value of the Shares so delivered shall be
        determined as of the date immediately preceding the date on which the
        option is exercised, or as may be required in order to comply with or
        conform to the requirements of any applicable laws or regulations. For
        purposes of this paragraph, the provisions of Section 2 hereof relating
        to the fair market value of Shares shall apply in all respects.

        Notwithstanding the foregoing, the Company, in its sole discretion, may
        establish cashless exercise procedures whereby an option holder, subject
        to the requirements of Rule 16b-3, Regulation T, federal income tax
        laws, and other federal, state and local tax and securities laws, can
        exercise an option or a portion thereof without making a direct payment
        of the option price to the Company, including a program whereby option
        shares would be sold on behalf of and at the request of an option holder
        by a designated broker and the exercise price would be satisfied out of
        the sale proceeds and delivered to the Company. If the Company so elects
        to establish a cashless exercise program, the Company shall determine,
        in its sole discretion and form time to time, such administrative
        procedures and policies as it deems appropriate and such procedures and
        policies shall be binding on any option holder wishing to utilize the
        cashless exercise program.

     5. NONTRANSFERABILITY OF OPTIONS. An option granted hereunder shall not be
        transferable, whether by operation of law or otherwise, other than by
        will or the laws of descent and distribution, and any option granted
        hereunder shall be exercisable, during the lifetime of the holder, only
        by such holder.

        The option of any person to acquire hares and all his rights thereunder
        shall terminate immediately if the holder: (a) attempts to or does sell,
        assign, transfer, pledge, hypothecate or otherwise dispose of the option
        or any rights thereunder to any other person except as permitted above;
        or (b) becomes insolvent or bankrupt or becomes involved in any manner
        so that the option or any rights thereunder becomes subject to being
        taken from him to satisfy his debt or liabilities.

<Page>

     6. TERMINATION OF EMPLOYMENT. Upon termination of employment of any option
        holder, any option previously granted to such option holder, unless
        otherwise specified by the Board of Directors or the Committee, as the
        case may be, shall, to the extent not theretofore exercised, terminate
        and become null and void three (3) months from the date of termination
        of employment, provided that:

          (a)  if the option holder shall die while in the employ of the Company
               or any subsidiary of the Company, and at a time when such
               employee, consultant or other was entitled to exercise an option
               as herein provided, his estate or the legatees or distributes of
               his estate or of the option, as the case may be, of such option
               holder, may, within one (1) year following the date of death, but
               not beyond that time and in no event later than the expiration
               date of the option, exercise such option, to the extent not
               theretofore exercised, in respect of any or all of such number of
               Shares which the option holder was entitled to purchase; and

          (b)  if the employment of any option holder to whom such option shall
               have been granted shall terminate by reason of the option
               holder's retirement on or after he reaches the age of 60 years in
               such manner as would entitle him to receive full Social Security
               benefits if he were then 65 years of age, or disability (as
               described in Section 22(e)(3) of the Code), and while such
               employee, consultant or other is entitled to exercise such option
               as herein provided, such option holder shall have the right to
               purchase under the option the number of Shares, if any, which he
               was entitled to purchase at the time of such termination, at any
               time up to and including three (3) months after the date of such
               termination of employment, but not beyond that time and in no
               event shall an option be exercised later than the expiration date
               of the option.

        In no event shall any person be entitled to exercise any option after
        the expiration of the period of exercisability of such option as
        specified therein,.

        Except as otherwise determined by the Board of Directors or the
        Committee, as the case may be, and other than as set forth above, if an
        option holder voluntarily terminates his or her employment, or is
        discharged, an option granted hereunder shall be canceled and the option
        holder shall have no further rights to exercise any such option and all
        of the option holder's rights there under shall terminate as of the
        effective date of such termination of employment.

        If an option granted hereunder shall be exercised by the legal
        representative of a deceased option holder or former option holder or by
        a person who acquired an option granted hereunder by bequest or
        inheritance or by reason of the death of an option holder or former
        option holder, written notice of such exercise shall be

<Page>

        accompanied by a certified copy of letters testamentary or equivalent
        proof of the right of such legal representative or other person to
        exercise such option.

        For the purposes of the Plan, an employment relationship shall be deemed
        to exist between an individual and a corporation if, at the time of the
        determination the individual was an "employee" of such corporation for
        purposed of Section 422(a) of the Code.

        A termination of employment shall not be deemed to occur by reason of
        (i) the transfer of an employee from employment by the Company to
        employment by a subsidiary of the Company or (ii) the transfer of an
        employee from employment by a subsidiary of the Company to employment by
        the Company or by another subsidiary of the Company.

     7. MAXIMUM ALLOTMENT OF INCENTIVE OPTIONS. If the aggregate fair market
        value of Shares with respect to which Incentive Options are exercisable
        for the first time by an employee, consultant or other during any
        calendar year (under all stock option plans of the Company and any
        parent or any subsidiary of the Company) exceeds $100,000, any options
        which otherwise qualify as Incentive Options, to the extent of the
        excess, will be treated as NQSOs.

VI.  CHANGE OF CONTROL

     Notwithstanding anything to the contrary contained herein, upon a Change
of Control (as defined below) of the Company, all options shall immediately vest
and become exercisable in full during the remaining term thereof, and shall
remain so, whether or not the option holder to whom such options have been
granted remains an employee of the Company or its subsidiaries.

     A change of Control shall be deemed to have taken place upon the occurrence
of any of the following events:

        (i)    any person (which shall mean and include an individual,
               corporation, partnership, group, association or other "person",
               as such term is used in Sections 13 and 14 of the Exchange Act)
               is, becomes, or has the right to become the beneficial owner,
               directly or indirectly, of securities of the Company representing
               30% or more of the Shares then outstanding, whether or not such
               Person continues to be the beneficial owner of securities
               representing 30% or more of such outstanding shares; or

        (ii)   as the result of, or in connection with, any tender or exchange
               offer, merger or other business combination, sales of assets or
               contested election, any announcement of an intention to make any
               of the foregoing transactions, or any combination of the
               foregoing transactions (a "Transaction"), those persons who were
               directors of the Company before the Transaction and were
               otherwise unaffiliated with any other party to the Transaction
               shall cease to constitute a majority of the Board of Directions

<Page>

               of the Company or any successor to the Company (a "Change in the
               Board"); or

        (iii)  the stockholders of the Company approve any merger,
               consolidation, reorganization, liquidation, dissolution, or sale
               of all or substantially all of the Company's assets in which
               neither the Company nor a successor resulting from a change in
               domicile or form of organization will survive as an independent,
               publicly owned corporation.

         Notwithstanding anything herein to the contrary, no Change of Control
(only with respect to the particular option holder or award grantee referred to
therein in the case of (i)(A) and (ii) below) shall be deemed to have occurred
by virtue of any event which results in any of the following:

        (i)    the acquisition, directly or indirectly, of 30% or more of the
               total outstanding shares by (A) the option holder or a person
               including the option holder, (B) the Company, (C) a subsidiary of
               the Company, or (D) any employee benefit plan of the Company or
               of a subsidiary, or any entity holding securities of the Company
               recognized, appointed, or established by the Company or by a
               subsidiary for or pursuant to the terms of such plan; or

        (ii)   a Change in the Board resulting from any Transaction in which the
               option holder or a Person including the option holder
               participates directly or indirectly with any party to the
               Transaction other than the Company.

VII. PURCHASE FOR INVESTMENT

     Except as hereafter provided, the Company may require the recipient of
Shares pursuant to an option granted hereunder, upon receipt thereof, to execute
and deliver to the Company a written statement, in form satisfactory to the
Company, in which such holder represents and warrants that such holder is
purchasing or acquiring the Shares acquired thereunder for such holder's own
account, for investment only and not with a view to the resale or distribution
thereof, and agrees that any subsequent offer for sale or sale or distribution
of any of such Shares shall be made only pursuant to either (a) a Registration
Statement on an appropriate form under the Securities Act of 1933, as amended
(the "Act"), which Registration Statement has become effective and is current
with regard to the Shares being offered or sold, or (b) a specific exemption
from the registration requirements of the Act, but in claiming such exemption
the holder shall, prior to any offer for sale or sale of such Shares, obtain a
prior favorable written opinion, in form and substance satisfactory to the
Company, from counsel f\for or approved by the Company, as to the applicability
of such exemption thereto. The foregoing restriction shall not apply to (i)
issuances by the Company so long as the Shares being issued are registered under
the Act and a prospectus in respect thereof is current or (ii) reofferings of
Shares by affiliates of the Company (as defined in Rule 405 or any successor
rule or regulation promulgated under the Act) if the Shares being reoffered are
registered under the Act and a prospectus in respect thereof is current.

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VIII.ISSUANCE OF CERTIFICATES: LEGENDS: PAYMENT OF EXPENSES

     The Company may endorse such legend or legends upon the certificates for
Shares issued pursuant to a grant hereunder and may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares, as in its
discretion, determines to be necessary or appropriate to (i) prevent a violation
of, or to perfect an exemption from, the registration requirements of the Act,
(ii) implement the provisions of the Plan and any agreement between the Company
and the optionee with respect to such Shares, or (iii) permit the Company to
determine the occurrence of a disqualifying disposition, as described in Section
421(b) of the Code, of Shares transferred upon exercise of an Incentive Option
granted under the Plan.

     The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares upon exercise of an option, as well as all fees
and expenses necessarily incurred by the Company in connection with such
issuance or transfer, except fees and expenses which may be necessitated by the
filing or amending of a Registration Statement under the Act, which fees and
expenses shall be borne by the recipient of the Shares unless such Registration
Statements has been filed by the Company for its own corporate purposes (and the
Company so states) in which event the recipient of the Shares shall bear only
such fees and expenses as are attributable solely to the inclusion of the Shares
he or she receives in the Registration Statement, provided that the Company
shall have no obligation to include any Shares in any Registration Statement.

     All Shares issued as provided herein shall be fully paid and non-assessable
to the extent permitted by law.

IX.  WITHOLDING TAXES

     The Company may require an employee, consultant or other exercising an NQSO
or disposing of Shares acquired pursuant to the exercise of an Incentive Option
in a disqualifying disposition (within the meaning of Section 421(b) of the
Code) to reimburse the Company for any taxes required by any government to be
withheld or otherwise deducted and paid by the Company in respect of the
issuance or disposition of Shares. In lieu thereof, the Company shall have the
right to withhold the amount of such taxes from any other sums due or to become
due from the Company to the employee, consultant or other upon such terms and
conditions as the Board of Directions or the Committee, as the case may be,
shall prescribe. Notwithstanding the foregoing, the Committee may, by the
adoption of rules or otherwise, modify the provisions of this Article IX or
impose such other restrictions or limitations as may be necessary to ensure that
the withholding transactions described above will be exempt transactions under
Section 16(b) of the Exchange Act.

         If an optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any Share or
Shares issued to such optionee pursuant to the exercise of an Incentive Option
within the two-year period commencing on the day after the date of the grant or
within the one-year period commencing on the day after the date of transfer of
such Share or Shares to the optionee pursuant to such exercise, the optionee
shall, within ten (10) days of such disposition, notify the Company thereof, by
delivery of written notice to the Company at its principal executive office.

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X.   LISTING OF SHARES AND RELATED MATTERS

     If at any time the Board of Directors or the Committee, as the case may be,
shall determine in its discretion that the listing, registration or
qualification of the Shares covered by the Plan upon any national securities
exchange or under any state or federal law of the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the sales or purchase of Shares under the Plan, no hares shall
be issued unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained, or otherwise provided for, free
of any conditions not acceptable to the Board of Directions or the Committee, as
the case may be.

XI.  AMENDMENT OF THE PLAN

     The Board of Directors or the Committee, as the case may be, may from time
to time, amend the Plan, provided that no amendment shall be made, without the
approval of the stockholders of the Company, that will (i) increase the total
number of Shares which may be issued under the Plan (other than an increase
resulting from an adjustment provided for in Article II), (ii) modify the
provisions of the Plan relating to eligibility, (iii) materially increase the
benefits accruing to participants under the Plan, or (iv) extend the maximum
period of the Plan. The Board of Directors or the Committee, as the case may be,
shall be authorized to amend the Plan and the awards granted hereunder to permit
the Incentive Options granted hereunder to qualify as incentive stock options
within the meaning of Section 422 of the Code. The rights and obligations under
any option or award granted before amendment of the Plan or any unexercised
portion of such option shall not be adversely affected by amendment of the Plan
or the option without the consent of the holder of the option.

XII. TERMINATION OR SUSPENSION OF THE PLAN

     The Board of Directors or the Committee, as the case be, may at any time
suspend or terminate the Plan. The Plan, unless sooner terminated by action of
the Board of Directors of the Committee, as the case may be, shall terminate at
the close of business on the tenth anniversary of the grant of an option. An
option may be granted while the Plan is suspended or after it is terminated.
Rights and obligations under any option granted while the Plan is in effect
shall not be altered or impaired by suspension or termination of the Plan,
except upon the consent of the person to whom the option was granted. The power
of the Board of Directors or the Committee, as the case may be, to construe and
administer any options granted prior to the termination or suspension of the
Plan under Article III nevertheless shall continue after such termination or
during such suspension.

XIII.GOVERNING LAW

     The Plan, such options as may be granted thereunder and all related matters
shall be governed by, and construed and enforced in accordance with the laws of
the State of Delaware.

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XIV. PARTIAL INVALIDITY

     The invalidity or illegality of any provision herein shall not be deemed to
affect the validity of any other provision.

XV.  EFFECTIVE DATE

     The Plan shall become effective upon the adoption by the Board of
Directors, subject only to the approval by the affirmative vote of the holders
of a majority of the securities of the Company present or represented, and
entitled to vote at a meeting of stockholders duly held. Grants made prior to
such stockholder approval shall be contingent on such approval.

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