Document:

AGREEMENT OF SALE AND PURCHASE
                         ------------------------------

         This  Agreement  dated  as of  October  16,  2000,  by and  between  JN
EXPLORATION & PRODUCTION  LIMITED  PARTNERSHIP,  a Delaware limited  partnership
("JN E&P"),  COLT RESOURCES  CORPORATION,  a Delaware  corporation  ("Colt") and
PRINCEPS PARTNERS,  INC., a Colorado corporation  ("Princeps") (JN E&P, Colt and
Princeps being hereinafter called the "JN Group"), THE WILLIAM G. HELIS COMPANY,
L.L.C., a Louisiana limited liability company ("Helis"), (the JN Group and Helis
being hereinafter  called "Sellers") and ST. MARY LAND & EXPLORATION  COMPANY, a
Delaware corporation (hereinafter called "Buyer").

                              W I T N E S S E T H:

1. Property to be Sold and Purchased. Sellers agree to sell and convey and Buyer
agrees to purchase, for the consideration  hereinafter set forth, and subject to
the terms and provisions herein contained,  the following described  properties,
rights and interests:

(a)      All of Sellers' right, title and interest in and to the oil, gas and/or
         mineral  leases  described  in Exhibit A hereto (and any  ratifications
         and/or amendments to such leases,  whether or not such ratifications or
         amendments are described in Exhibit A) (the "Leases"); and

(b)      Without  limitation  of the  foregoing,  all  other  right,  title  and
         interest (of whatever  kind or  character,  whether legal or equitable,
         and whether vested or contingent) of Sellers in and to the oil, gas and
         other  minerals in and under or that may be produced from the lands and
         depths  described in Exhibit A hereto or described in any of the Leases
         (including,  without  limitation,  interests in oil, gas and/or mineral
         leases covering such lands and depths, overriding royalties, production
         payments  and net  profits  interests  in such lands and depths or such
         leases,  and fee mineral  interests,  fee royalty  interests  and other
         interests in such oil, gas and other  minerals),  even though  Sellers'
         interest  in  such  oil,  gas and  other  minerals  may be  incorrectly
         described in, or omitted from, such Exhibit A; and

(c)      All right,  title and  interest  of  Sellers  in and to all  materials,
         supplies,  machinery,   equipment,   improvements  and  other  personal
         property and fixtures,  including,  but not by way of  limitation,  all
         wells and Sellers' ownership interest therein as set forth on Exhibit B
         (the  "Wells"),  together  with  the  production  therefrom,   wellhead
         equipment,  pumping  units,  flowlines,  tanks,  buildings,   injection
         facilities,  saltwater  disposal  facilities,  compression  facilities,
         gathering  systems,  and  other  equipment,  which are  located  on the
         properties  described in subsections (a), (b) and (d) in this Section 1
         and used in connection with the exploration,  development, operation or
         maintenance thereof; and

(d)      All  right,  title and  interest  of  Sellers  in and to, or  otherwise
         derived from, all presently  existing and valid oil, gas and/or mineral
         unitization,  pooling, and/or communitization agreements,  declarations
         and/or orders,  including,  without limitation,  all units formed under
         orders,  rules,  regulations,  or other  official  acts of any federal,
         state,  or  other   authority   having   jurisdiction,   and  voluntary
         unitization agreements,  designations and/or declarations,  relating to
         the properties  described in subsections (a), (b) and (c) above, to the
         extent, and only to the extent,  such rights,  titles and interests are
         attributable  to the properties  described in subsections  (a), (b) and
         (c) above; and

                                       1
<PAGE>

(e)       All right,  title and  interest  of  Sellers  in and to all  presently
          existing  permits,  licenses,  servitudes,   rights-of-way,   division
          orders,  gas  purchase  and sale  agreements  (wherein any Seller is a
          selling party),  crude oil purchase and sale  agreements  (wherein any
          Seller is a selling party), surface leases, farmin agreements, farmout
          agreements,  bottomhole agreements,  acreage contribution  agreements,
          operating agreements, unit agreements,  processing agreements, and all
          other  contracts or agreements that are appurtenant to or used or held
          for use in connection  with the operation of the leases,  which relate
          to any of the properties  described in  subsections  (a), (b), (c) and
          (d) above, to the extent, and only to the extent, such rights,  titles
          and  interests  are  attributable  to  the  properties   described  in
          subsections (a), (b), (c) and (d) above; and

(f)      All of  Sellers'  original  title,  contract  and  lease  files,  title
         opinions,  abstracts and other title information,  production  records,
         well files,  accounting  records (but not including  general  financial
         accounting or tax accounting records), all technical information in the
         possession  of Sellers,  seismic  records and surveys,  electric  logs,
         geological or geophysical  data and records (to the extent that Sellers
         have the legal right to transfer such  technical  information,  seismic
         records  and other  geological  and  geophysical  data and  records  to
         Buyer),  and  other  files  and  copies of  Sellers'  computer  records
         relating  or  pertaining  to the Leases,  lands,  wells,  equipment  or
         contracts  which affect or relate to the  Properties  described  above,
         documents and records which directly relate to the properties described
         above.

         The  properties  and interests  specified in the foregoing  subsections
(a),  (b) and (c) are  herein  sometimes  collectively  called  the "Oil and Gas
Properties,"  and  the  properties  and  interests  specified  in the  foregoing
subsections  (a), (b), (c), (d), (e) and (f) are herein  sometimes  collectively
called the "Properties".

2. Purchase Price.  The purchase price for the Properties  shall be Thirty-Seven
Million,  Two Hundred  Thousand Dollars  ($37,200,000)  (herein called the "Base
Purchase  Price").  Such Base  Purchase  Price may be  adjusted  as  hereinafter
provided (the Base Purchase Price, as so adjusted, and as the same may otherwise
be  adjusted  by mutual  agreement  of the  parties,  being  herein  called  the
"Purchase  Price").  The Purchase  Price shall be paid in cash at the Closing as
hereinafter provided, to the Sellers in the proportions set forth on Exhibit B-1
attached hereto and made a part hereof.

3. Deposit.  Contemporaneously  with the execution of this Agreement,  Buyer has
paid to Sellers  the  amount of Three  Million  Seven  Hundred  Twenty  Thousand
Dollars  ($3,720,000.00)   (hereinafter  called  the  "Deposit").  If  the  sale
hereunder is consummated in accordance with the terms hereof,  the Deposit shall
be  applied to the  Purchase  Price to be paid by Buyer at the  Closing.  In the
event this  Agreement is terminated  by Buyer or Sellers in accordance  with the
terms  hereof,  or in the  event  the  transaction  contemplated  hereby  is not
consummated due to a default by Sellers which occurs in the absence of a default
by Buyer,  then the  Deposit  shall be  promptly  returned  to Buyer.  Except as
provided in the preceding sentence,  if Buyer fails or refuses to consummate the
transaction  contemplated  by this  Agreement  and in the  absence of default by
Sellers,  Sellers shall retain the Deposit as liquidated damages and Buyer shall
have no further  liability  hereunder  except as set forth in Sections  6(a) and
20(e).  The  parties  agree  that  damages in such an event  would be  extremely
difficult  to  determine,  that the  Deposit  represents  a fair and  reasonable
estimate of such damages under the  circumstances,  and that such a retention of
the Deposit does not constitute a Penalty.

                                       2
<PAGE>

4.       Representations  and  Warranties  of  Sellers.  Each  Seller  severally
and  individually  (and not jointly and  severally)  represents  and warrants to
Buyer that:

(a)      Such Seller is an entity duly  formed and  legally  existing  under the
         laws of the state of its formation,  and is qualified to do business in
         and in good  standing  under (to the extent  that the law of such state
         provide  therefor)  each state in which its Oil and Gas  Properties are
         located  where the laws of such state require such an entity owning the
         Oil and Gas Properties to qualify to do business;

(b)      Such Seller has full power under the  provisions of  applicable  law to
         enter into and perform its  obligations  under this  Agreement  and has
         taken all proper action to authorize  entering into this  Agreement and
         performance of its obligations hereunder;

(c)      Other than requirements (if any)  that  there be obtained  consents  to
         assignment  or  waivers of  preferential  rights to purchase from third
         parties, and  except for approvals ("Routine  Governmental  Approvals")
         required to  be obtained  from  governmental  entities  who are lessors
         under  leases  forming  a  part of the Oil and Gas  Properties  (or who
         administer   such  leases  on  behalf  of  such  lessors)   which   are
         customarily obtained post-closing,  neither  the execution and delivery
         of   this  Agreement,   nor  the   consummation  of  the   transactions
         contemplated  hereby,  nor  the compliance with the terms hereof,  will
         violate or result in  any default  under any agreement or instrument to
         which such Seller is  a party or by which such Seller or the Properties
         are bound, or violate  any order, writ, judgment,  injunction,  decree,
         statute,  rule  or  regulation  applicable  to such  Seller  or  to the
         Properties  or result in a lien,  charge or other  encumbrance  on  the
         Properties;

(d)      This Agreement constitutes,  and the Conveyance and all other documents
         required to be delivered at Closing will,  when executed and delivered,
         constitute,  the legal,  valid and binding  obligation  of such Seller,
         enforceable  in  accordance  with  its  terms,  except  as  limited  by
         bankruptcy or other laws applicable  generally to creditor's rights and
         as limited by general equitable principles;

(e)      Except as disclosed in Exhibit D to this Agreement, to the knowledge of
         the  officers  (or other  similar  representatives)  of such Seller set
         forth on Exhibit  "G"  hereto  (the  knowledge  of such  persons  being
         hereinafter called "Seller's Knowledge"),  there is no written claim or
         demand or pending lawsuit, nor any compliance order, notice of probable
         violation or similar governmental action,  pending or threatened before
         any court or governmental agency that (i) would result in an impairment
         or loss of title  to any part of the  Property,  or  impairment  of the
         value  thereof,  (ii)  would  hinder or  impede  the  operation  of the
         Property,  or  (iii)  seeks  to  restrain  or  prohibit,  or to  obtain
         substantial damages from such Seller, with respect to this Agreement or
         the  consummation  of all or part of the  transactions  contemplated in
         this Agreement;

                                       3
<PAGE>

(f)      To Seller's  Knowledge and subject to the provisions of this paragraph,
         the  historical  production and expense data described on  the Albrecht
         ARIES  Engineering  disk and in  the JN Resources,  Inc/The  William G.
         Helis  Company,  L.L.C.  Summary  Brochure  and  Detail  Brochure - Mid
         Continent"  which  were  provided  on behalf of  Sellers to  Buyer (the
         "Information"), and any supplement thereto, was substantially  complete
         and  correct as of the date of such  delivery.  Except as set forth  in
         this paragraph 4(f) no representation or warranty of any  kind are made
         by  Sellers as to the  Information  or with respect to the interests to
         which  the  Information  relates  and Buyer  expressly  agrees that any
         conclusions drawn therefrom shall  be the result of its own independent
         review and judgment.  The representations  contained in  this paragraph
         shall  apply  only  to  matters  of fact,  and  shall  not apply to any
         information,    data,    printouts,    extrapolations,     projections,
         documentation,  maps, graphs, charts, or tables which  reflect, depict,
         present,  portray,  or  represent,  or which are based  upon or derived
         from,  in  whole  or  in   part,   interpretation  of  the  Information
         including,  but  not limited to,  matters of  geological,  geophysical,
         engineering, or scientific interpretation;

(g)      The transfer of the  Properties to Buyer does not violate any covenants
         or  restrictions  imposed on such Seller by any bank or other financial
         institution  under any mortgage or other similar  instrument,  and will
         not result in the  creation or  imposition  of a lien on any portion of
         the Properties;

(h)      Except as disclosed by such Seller in writing,  to Seller's  Knowledge,
         such  Seller  is  in  material   compliance   with  all  laws,   rules,
         regulations,  ordinances,  codes,  orders,  licenses,  concessions  and
         permits  pertaining  to the  Properties.  The  representation  in  this
         paragraph 4(h) does not extend to compliance with  environmental  laws,
         rules, regulations, or permits pertaining to the ownership or operation
         of the Properties, which is separately addressed in other provisions of
         this Agreement;

(i)      To Seller's  Knowledge,  (i) such Seller has all material  governmental
         licenses  and  permits  and has  properly  made all  material  filings,
         necessary or  appropriate  to obtain those  licenses and permits to own
         and operate the Properties, (ii) such licenses, permits and filings are
         in full force and effect, (iii) no material violations exist in respect
         of any such  licenses,  permits or filings,  and (iv) no  proceeding is
         pending or has been threatened in writing  challenging,  or seeking the
         revocation or limitation of any such licenses, permits or filings;

(j)      To Seller's  Knowledge,  and except with respect to matters that would
         not have a  material adverse effect on the Oil and Gas Properties taken
         as a whole (a "Material  Adverse Effect") (i) the  terms of the Leases,
         operating agreements,  production sales contracts,  farmout  agreements
         and  other  contracts or agreements  respecting  the  Properties can be
         found  either of  record in the  counties in which the  Properties  are
         located or are reflected  or referenced in Sellers' files, and (ii) the
         Leases and  the  contracts  affecting  the Leases are currently in full
         force and effect  in  accordance  with  their  applicable  terms.  Such
         Seller has  not  received any written  notice  asserting a claim of any
         defaults,  offsets,  or cancellations from  any lessors with respect to
         the  Leases,  or  from any other party  under any of the  contracts  or
         agreements  to which  such  Seller  is a party  and  which  affect  the
         Properties,  which  would  reasonably  be  expected to have a  Material
         Adverse Effect;

                                       4
<PAGE>

(k)      To  Seller's  Knowledge,  and  except as  described  on Exhibit E, such
         Seller is not obligated by virtue of any prepayment  arrangement  under
         any  contract  for the sale of  hydrocarbons,  including  "take or pay"
         obligation,  hedging or forward sale agreements,  or similar provisions
         or  a  production   payment  or  any  other   arrangement   to  deliver
         hydrocarbons  from the  Properties  at some future time without then or
         thereafter receiving full payment therefor;

(l)      To Seller's  Knowledge,  there are no surface use or access  agreements
         currently in force and effect that materially interfere with the manner
         in which  oil and gas  operations  are  currently  taking  place on the
         Leases;

(m)      To Seller's Knowledge, none of the Wells included within the Properties
         has been represented by its operator,  either in a pending AFE or other
         written  proposal,  to  other  well  participants  as  being  currently
         required to be plugged and abandoned;

(n)      All ad valorem, property,  production,  severance and similar taxes and
         assessments  based on or measured by the  ownership  of property or the
         production of  hydrocarbons  or the receipt of proceeds  therefrom with
         respect to the  Properties  for all periods prior to the Effective Date
         have been properly paid and all such taxes and  assessments  which must
         be paid prior to the Closing shall have been properly paid by Seller;

(o)      To Seller's  Knowledge,  the oil and gas operations  being  conducted
         on the  Properties  do  not  violate  any  Federal,  state,  or  local,
         (including  common law),  ordinance,  rule, standard,  prohibition,  or
         regulation relating to health,  safety, or  the environment  including,
         without   limitation,   the   Comprehensive   Environmental   Response,
         Compensation  and  Liability  Act  42 U.S.C.  9601 et seq.,  as amended
         ("CERCLA"),  the Resource Conservation  and Recovery Act ("RCRA"),  the
         Clean Air Act, the Clean  Water Act and the Safe Drinking Water Act, or
         any  other  pertinent  rule,  order,  regulation,  or statute,  whether
         state,  federal or local, and pertaining  to  environmental  matters as
         the same exist as of  the Effective Date  (collectively  "Environmental
         Laws").  To  Seller's  Knowledge,  such  Seller  has  timely  filed all
         required  reports,  obtained  all required  approvals and permits,  and
         generated and  maintained all required data,  documentation and records
         which  such   Seller  is   required   to  file  under  any   applicable
         Environmental Laws;

(p)      To Seller's  Knowledge,  there has not been, and is not occurring,  any
         discharge or release of any "Hazardous Substances" in, on or around any
         of the  Properties  of  Sellers  in  amounts  or  concentrations  which
         reasonably could be expected to give rise to liabilities or obligations
         exceeding  $50,000  in  any  instance  or  exceeding  $150,000  in  the
         aggregate  (net to the  interests  of Sellers  therein) and such Seller
         warrants  that Buyer does not,  and after  Closing  will not,  have any
         liabilities  or  obligations  in excess of the  aforesaid  amounts with
         respect  to  the   introduction   of  Hazardous   Substances  into  the
         environment for activities  relating to the operation of the Properties
         prior to Closing.  For purposes of this Agreement,  the term "Hazardous
         Substances"  shall mean any material  regulated as such or addressed as
         such under any Environmental Laws;

                                       5
<PAGE>

(q)      Such Seller has not sent Hazardous  Substances to a site which pursuant
         to  CERCLA,  RCRA,  or any  similar  state law has been  placed,  or is
         proposed to be placed,  on the  "National  Priority  List" of hazardous
         waste sites or which is subject to a claim, an administrative  order or
         other request to take any cleanup,  removal,  or remedial  action or to
         pay for any costs relating to such site;

(r)      To  Seller's  Knowledge,  there  is  no  existing  naturally  occurring
         radioactive  material  (NORM) within the Properties in excess of levels
         permitted by applicable Environmental Laws;
(s)      To Seller's Knowledge there are no pending or threatened claims nor any
         basis for claims against such Seller  relating to the Properties  under
         Environmental  Laws  which  would  reasonably  be  expected  to  have a
         Material Adverse Effect;

(t)      Such Seller has not constructed, placed, deposited, stored, disposed of
         nor located on the Properties any polychlorinated  biphenyls (PCBs) nor
         transformers, compressors nor other equipment which contains PCBs; and

(u)      Except  as set  forth on  Exhibit  F  attached  hereto  and made a part
         hereof,  to Seller's  Knowledge,  there are no calls on  production  or
         production  purchase  agreements  that cannot be terminated  with sixty
         (60) days (or less) prior  written  notice,  in place which will burden
         the Oil and Gas  Properties in any material  respect from and after the
         Closing.

5.   Representations and Warranties of Buyer.  Buyer represents  and warrants to
Sellers that:

(a)      Buyer is a corporation  duly  organized and legally  existing and under
         the laws of the State of Delaware,  and is qualified to do business and
         in good standing in each of the states in which Oil and Gas  Properties
         are located  where the laws of such state would  require a  corporation
         owning the Oil and Gas  Properties  located in such state to qualify to
         do business.

(b)      Buyer has full power to enter into and  perform its  obligations  under
         this  Agreement and has taken all proper  action to authorize  entering
         into this Agreement and performance of its obligations hereunder.

(c)      Neither  the  execution  and  delivery  of  this  Agreement,   nor  the
         consummation  of  the  transactions   contemplated   hereby,   nor  the
         compliance with the terms hereof,  will result in any default under any
         agreement  or  instrument  to which  Buyer  is a party or by which  the
         Properties are bound, or violate any order, writ,  injunction,  decree,
         statute, rule or regulation applicable to Buyer or to the Properties.

(d)      This Agreement  constitutes,  and the Conveyance provided for herein to
         be delivered at Closing will, when executed and delivered,  constitute,
         the  legal,  valid and  binding  obligation  of Buyer,  enforceable  in
         accordance  with its terms,  except as limited by  bankruptcy  or other
         laws  applicable  generally  to  creditor's  rights  and as  limited by
         general equitable principles.

                                       6
<PAGE>

(e)      There are no pending  suits,  actions,  or other  proceedings  in which
         Buyer is a party  which  affect  the  execution  and  delivery  of this
         Agreement or the consummation of the transactions contemplated hereby.

(f)      Buyer is a knowledgeable  purchaser,  owner and operator of oil and gas
         properties, has the ability to evaluate (and in fact has evaluated) the
         Properties  for purchase,  and is acquiring the  Properties for its own
         account  and not with the  intent  to make a  distribution  within  the
         meaning of the  Securities  Act of 1933 (and the rules and  regulations
         pertaining thereto) or a distribution thereof in violation of any other
         applicable securities laws.

6.       Certain Covenants of Sellers Pending Closing.  Between the date of this
Agreement and the Closing Date:

(a)      Each  Seller will continue to  give  Buyer and its attorneys and  other
         representatives  access  at all  reasonable  times and upon  reasonable
         notice  to  the  Properties  and,  at  such  Seller's  office,  to such
         Seller's  records  pertaining to  the ownership and/or operation of the
         Properties,  (including, without limitation, title  files, lease files,
         land files, division order files, well  files,  environmental  records,
         production  records,  accounting  records,  marketing files,  equipment
         inventories,  and  production,  severance  and ad  valorem tax records)
         relating to the  Properties.  No  Seller  shall be obligated to provide
         Buyer with access to any  records  or data which such Seller  considers
         to be  proprietary or  confidential  to it  or which such Seller cannot
         legally provide to Buyer without, in  such Seller's opinion, breaching,
         or risking a  breach of, confidentiality agreements with other parties.
         Buyer  recognizes  and  agrees that all materials  made available to it
         (whether pursuant to  this Section or otherwise) in connection with the
         transaction  contemplated  hereby  are  made  available  to  it  as  an
         accommodation,  and except to the limited  extent set forth in  Section
         4(f) above,  without  representation or warranty of any  kind as to the
         accuracy and completeness of such materials. Buyer  waives and releases
         all claims against each  Seller,  its  respective  parent or subsidiary
         companies,  partners or other affiliates, and its and  their directors,
         officers, employees and  agents, for injury to, or death of, persons or
         for  damage to  property  arising  in any way from the  conduct of  the
         investigations  and  examinations  contemplated by this Section or  the
         conduct of its employees,  agents  or  contractors  in connection  with
         such  investigations  and examinations (or the exercise of such  rights
         of access).

(b)      Each  Seller  will continue  to  cause the operation of the Oil and Gas
         Properties  in the  ordinary  course of  its business  (or,  where such
         Seller is  not the operator of an Oil and Gas  Property,  will continue
         its actions  as a non-operator in the ordinary course of its business),
         and will  not sell or  otherwise  dispose of any portion of the Oil and
         Gas Properties,  without the prior written consent of  Buyer.  From and
         after  the date hereof  until the  Closing,  no Seller will propose the
         drilling of  any additional  wells, or propose the deepening,  plugging
         back or  reworking of any existing  wells, or propose the conducting of
         any  other  operations  which  require  consent  under  the  applicable
         operating  agreement, or propose the conducting of any other operations
         other than  the normal  operation of the existing  wells on the Oil and
         Gas Properties, or propose  the abandonment of any wells on the Oil and
         Gas  Properties;  Sellers  will advise Buyer of any such proposals made
         by third  parties  and  will  respond to each such  proposal  made by a
         third party in  the manner reasonably  requested by Buyer. Should Buyer
         fail to respond  to any such  proposal  sufficiently  in advance of the
         time that  an  election  must be made  under the  applicable  operating
         agreement or other  relevant  agreement,  Sellers may  take such action
         (or  fail  to  take  action)  as  they  deem  appropriate   under   the
         circumstances, and neither such action or any effect on  the Properties
         arising  from or  in  connection  with such  action  shall  affect  the
         obligations  or  Buyer   hereunder  or  result  in  any  liability   or
         responsibility of Sellers to Buyer hereunder.

                                       7
<PAGE>

(c)      Each Seller will use reasonable  commercial  efforts,  consistent  with
         industry  practices in  transactions of  this type, to identify (i) all
         preferential  rights  to  purchase  and  all  rights  to  require  that
         consents to  assignment  be  obtained  which would be applicable to the
         transactions  contemplated  hereby and (ii) the  parties  holding  such
         rights;  in attempting  to identify  the same,  such Seller shall in no
         event be  obligated  to go beyond its  own  records.  Each  Seller will
         request,  from the  parties so identified,  and in accordance  with the
         documents creating such rights,  waivers of  the preferential rights to
         purchase and requirements  that consent to assignment be obtained which
         were so  identified.  No Seller  shall have  any  obligation  hereunder
         other  than to so  attempt to  identify  such  preferential  rights and
         requirements for  consent to assignment and to so request such waivers.
         Without limiting the foregoing, each  Seller specifically shall have no
         obligation  to assure that  such waivers are obtained nor to expend any
         sums to obtain  such  waivers.  Except to  the  extent  that  Buyer can
         establish  that a Seller failed  to fulfill the  obligations  set forth
         above in  this  subsection,  Buyer shall indemnify and hold each Seller
         harmless from  and against all claims, actions,  liabilities,  damages,
         losses,  costs  or expenses (including court costs and attorney's fees)
         whatsoever  that  arise  out  of  the  failure  to  obtain  waivers  of
         preferential  rights   to  purchase  or  requirements  for  consent  to
         assignment  with  respect  to any  transfer by a Seller to Buyer of any
         part of the Properties  and  with respect to any subsequent  transfers;
         provided  however  should  Buyer be compelled to transfer after Closing
         any  portion  of  the  Properties  to  a  party  holding  an   unwaived
         preferential right to purchase,  Buyer shall  be entitled to retain all
         sums paid by this third party for such  portion of the Properties. If a
         party  from  whom a waiver  of  a  preferential  right to  purchase  is
         requested refuses to give such  waiver, the affected Seller will tender
         the  required  interest  in  the  Property  affected  by such  unwaived
         preferential  right to the holder, or holders,  of such right who have
         elected  not  to  waive  such  preferential  right  to  purchase.  Each
         affected Seller  will tender such required interest at a price equal to
         the amount specified  in Exhibit B hereto for the Wells or specifically
         identified and valued  undrilled  location  or  non-producing  interval
         located  on such  Property  and for  the units in which  such  Property
         participates, reduced appropriately, as  determined by Sellers, if less
         than the entire Property must be tendered. If, and  to the extent that,
         such  preferential  right to  purchase  is  exercised  by such party or
         parties,  and such  interest  in such Property is actually sold to such
         party or parties  so  exercising  such  right,  such  interest  in such
         Property will  be excluded from the transaction contemplated hereby and
         the Base Purchase  Price payable to the affected Seller will be reduced
         by the  amount due to  such  Seller by the party or parties  exercising
         such right.

                                       8
<PAGE>

(d)      Each Seller shall exercise  reasonable  commercial efforts to cause all
         policies of insurance  currently in force and effect and  pertaining to
         the Properties (or policies containing coverage  substantially  similar
         to such policies) be maintained by such Seller in full force and effect
         through Closing.

7.       Due Diligence Reviews.

(a)      Buyer may, to the  extent it  deems appropriate,  conduct, at  its sole
         cost, such title  examination or investigation,  and other examinations
         and  investigations,  as  it may choose to conduct  with respect to the
         Properties.   Should,   as   a   result   of  such   examinations   and
         investigations,  or  otherwise, matters come to Buyer's attention which
         would constitute "Defects" (as below defined), and  should there be one
         or more of such  Defects  which Buyer is  unwilling  to waive and close
         the  transaction  contemplated  hereby so long  as such Defects  exist,
         Buyer  shall  notify JN E&P in writing  of  such  Defects no later than
         December 15, 2000. To  be effective,  Buyer's notice of Defects (herein
         called a "Defect Notice") must include (i) a  brief  description of the
         matter  constituting  the Defect so asserted,  (ii)  the title opinion,
         other  reports of experts,  or other  documentation  on  which  Buyer's
         assertion  of a  Defect  is  based,  (iii)  such  supporting  documents
         reasonably  necessary  for  Sellers (or  a title  attorney  retained by
         Sellers) to verify the existence of any such Defect,  and  (iv) Buyer's
         estimate of the diminution in the sum to be paid  at Closing  resulting
         from such  alleged  Defect.  Such  Defects of which  Buyer  so provides
         notice are  herein called "Asserted  Defects".  All matters which would
         constitute Defects  with respect to which Buyer fails to so give JN E&P
         notice will be deemed waived for all purposes.

(b)      The term "Defect" as used in this Section shall mean the following:

(i)               Any  Seller's  ownership of  the  Properties is such that,
                  with respect to  a Well  or specifically identified and valued
                  undrilled  location or non producing  interval or  unit listed
                  on Exhibit B hereto,  (A) Sellers  are  entitled to receive  a
                  decimal  share  of  the  oil,  gas   and  other   hydrocarbons
                  produced  from, or allocated  to, such  Well  or  specifically
                  identified  and valued  undrilled  location or  non producing
                  interval  or  unit less  than the  decimal  share set forth on
                  Exhibit B in connection with such  Well or unit  in the column
                  headed "Net  Revenue  Interest" or (B) Sellers  are  obligated
                  to bear  a  decimal  share of the cost  of  operation  of such
                  Well  or   specifically   identified  and   valued   undrilled
                  location or  non  producing  interval or unit greater than the
                  decimal share set forth on  Exhibit B  in connection therewith
                  in the column headed "Working Interest"; or

(ii)              Any  Seller's  ownership of an Oil and Gas Property is subject
                  to a  mortgage,  lien or other  encumbrance  other than (A) as
                  reflected  on  Exhibit A hereto,  (B) a lien for taxes not yet
                  delinquent,  or (C) a  mechanic's  or  materialmen's  lien (or
                  other similar lien), or a lien under an operating agreement or
                  similar agreement,  to the extent the same relates to expenses
                  incurred which are not yet due, or which is being contested by
                  such Seller in good faith and for which such Seller has agreed
                  to remain responsible and to indemnify Buyer therefor; or

                                       9
<PAGE>

(iii)             Any  Seller's  ownership of an Oil and Gas Property is subject
                  to a  preferential  right to purchase or a requirement  that a
                  consent to assignment be obtained which is actually applicable
                  to the  transaction  contemplated  hereby,  unless a waiver of
                  such right has been obtained  with respect to the  transaction
                  contemplated hereby or, in the case of a preferential right to
                  purchase, an appropriate tender of the applicable interest has
                  been made to the party holding such right,  and such party has
                  either  declined to exercise such right, or the period of time
                  required  for such party to  exercise  such right has  expired
                  without such party exercising such right; or

(iv)              Any  Seller's  ownership of an Oil and Gas Property is subject
                  to an imperfection in title which, if asserted,  would cause a
                  Defect,  as defined in clause  (i) above,  to exist,  and such
                  imperfection  in title is not such as would normally be waived
                  by  persons  engaged  in the oil and gas  business  purchasing
                  producing property; or

(v)               An  Oil  and  Gas  Property  is  in  violation  of  applicable
                  environmental  laws in any material  respect.  As used herein,
                  the  term  "applicable  environmental  laws"  shall  mean  all
                  federal,  state or local laws,  rules,  orders or  regulations
                  pertaining  to  health  or the  environment,  including  those
                  relating to waste materials and/or hazardous substances.

(vi)              Sellers  are in  Material  Breach  of any  representations  or
                  warranties made herein. A breach shall be a Material Breach if
                  the  liability  associated  with the matter  affected  by such
                  breach shall  exceed  $50,000 as to any single  occurrence  or
                  $150,000 in the aggregate as to all such events of breach.

(c)      After  the  execution  of  this  Agreement,  Buyer and  its  authorized
         representatives  shall  have  physical  access  to  the  Properties  at
         Buyer's sole cost,  risk and expense for the  purpose of inspecting the
         Properties,  conducting such  tests,  examination,  investigations  and
         assessments  as  may be  reasonable  and  necessary or  appropriate  to
         evaluate  the environmental and physical  conditions of the Properties,
         including  the  identification of wetlands.  For those Properties which
         are  not operated by Sellers,  Buyer shall obtain  permission  from the
         operator  to conduct  such  inspections.  Sellers  shall   provide  all
         reasonable  assistance in  obtaining this  permission for Buyer.  Buyer
         shall defend and indemnify  Sellers from any and all liability, claims,
         causes of action,  injury to  Buyer's employees,  agents or contractors
         or to Buyer's  property, and/or injury to Sellers' property, employees,
         agents or  contractors which may arise out of Buyer's inspections,  but
         only to  the extent of Buyer's  negligence.  Buyer agrees to provide to
         Sellers,  upon  request,  a  copy  of  any  environmental  assessments,
         including any reports, data, and  conclusions.  Likewise, Sellers shall
         furnish to Buyer a copy of  any  environmental  assessments,  including
         any reports, data, and  conclusions pertaining to the Properties in the
         possession  of Sellers.  Buyer and  Sellers shall keep any and all data
         or information  acquired by  all such  examinations  and results of all
         analysis of such data and  information  strictly  confidential  and not
         disclose  same to  any  person or  agency  without  the  prior  written
         approval  of  both  Buyer and  Sellers.  The  foregoing  obligation  of
         confidentiality  shall survive Closing or termination of this Agreement
         without Closing.

                                       10
<PAGE>

(d)      Buyer waives and releases all claims against Sellers,  their respective
         parent  or  subsidiary  companies  or  other  affiliates,   and   their
         directors, officers, employees and agents, for injury to, or  death of,
         persons or for damage to property  arising in any way from  the conduct
         of the  investigations  and examinations  contemplated  by this Section
         (or the exercise of rights of access under  Section  7(a) above) or the
         conduct of its employees,  agents or  contractors  in  connection  with
         such  investigations  and examinations (or the exercise  of such rights
         of access). Buyer shall indemnify Sellers, their  respective parent and
         subsidiary  companies  and  other  affiliates,  and   their  directors,
         officers,  employees  and agents  from and against any and  all claims,
         actions,  liabilities,  losses,  damages, costs  or expenses (including
         court  costs  and  attorney  fees)  to   Buyer's   employees,   agents,
         representatives, contractors, or  subcontractors whatsoever arising out
         of the exercise of such  rights of  investigation  and  examination (or
         exercise  of  such  rights  of  access).  THE   FOREGOING  RELEASE  AND
         INDEMNIFICATION  SHALL  APPLY  WHETHER  OR  NOT SUCH  CLAIMS,  ACTIONS,
         CAUSES OF ACTION,  LIABILITIES,  DAMAGES,  LOSSES,  COSTS, OR  EXPENSES
         ARISE  OUT  OF  (i)  NEGLIGENCE  (INCLUDING  SOLE   NEGLIGENCE,  SINGLE
         NEGLIGENCE,  CONCURRENT  NEGLIGENCE,  ACTIVE  NEGLIGENCE,  OR   PASSIVE
         NEGLIGENCE,  BUT EXPRESSLY NOT INCLUDING  GROSS  NEGLIGENCE OR  WILLFUL
         MISCONDUCT) OF SELLERS OR ANY OTHER INDEMNIFIED  PARTY, OR  (ii) STRICT
         LIABILITY.

(e)      Upon request by Sellers, Buyer agrees to provide Sellers with a copy of
         the results of any investigations or examinations conducted pursuant to
         this Section 7,  including  but not limited to, any results of sampling
         of soil or water or any  environmental  assessments of the  Properties.
         Buyer agrees that any results of such  investigations  or  examinations
         are confidential and shall not be disclosed to any third party.

8.  Certain  Price  Adjustments.  In the event  that  Buyer  notifies  JN E&P of
Asserted  Defects,  Sellers  shall  have the right (but not the  obligation)  to
attempt to cure, prior to Closing,  such Asserted Defects. If Sellers are unable
(or unwilling) to cure such Asserted  Defects prior to Closing,  or in the event
that Buyer has elected to treat an Oil and Gas  Property  affected by a casualty
loss as if it was an Oil and Gas Property affected by an Asserted Defect, then

(a)      Buyer and  Sellers  shall,  with  respect to each Oil and Gas  Property
         affected  by  such  matters,  attempt  to  agree  upon  an  appropriate
         adjustment  to the  Purchase  Price to  account  for such  matters,  in
         accordance with the following principles:

(i)               If the Asserted  Defect is a mortgage,  lien,  encumbrance  or
                  other charge which is  undisputed  and  liquidated  in amount,
                  then (subject to the  provisions of paragraph  (iv) below) the
                  adjustment  would be the amount necessary to be paid to remove
                  the Asserted Defect from the affected Property;

(ii)              If there shall be an Asserted  Defect (or "NRI  Increase",  as

                  defined  below)  which (A)  represents a discrepancy  between
                  (1) the Net Revenue  Interest  to  which  Sellers are entitled
                  to  receive  from  any   Property  and  (2)  the  Net  Revenue
                  Interest  stated  on  Exhibit  B, and  (B) there is a Working
                  Interest  change  proportionate  to  the  change  in  the  Net
                  Revenue Interest  resulting  from  the Asserted Defect (or NRI
                  Increase),  then the amount of  the  adjustment  shall be  the
                  product of the value  allocated  to Sellers'  interest in  the
                  applicable Property as  set forth on  Exhibit B (herein called
                  the  "Allocated  Value")   multiplied   by  a  fraction,   the
                  numerator  of which  shall  be the change in  the Net  Revenue
                  Interest  of Sellers and  the  denominator  of which  shall be
                  the Net Revenue Interest of  Sellers set forth on Exhibit B;

                                       11
<PAGE>

(iii)             If the  Asserted  Defect  represents  a  matter  of a type not
                  described  in  paragraphs  (i) or (ii) above,  the  adjustment
                  amount  shall  be   determined  by  taking  into  account  the
                  Allocated  Value of the Property so  affected,  the portion of
                  the Property affected by the Asserted Defect, the legal effect
                  of the Asserted Defect,  the potential  economic effect of the
                  Asserted  Defect over the life of the  affected  Property  and
                  such  other   factors  as  are  necessary  to  make  a  proper
                  evaluation of the value of the Asserted Defect;

(iv)              Notwithstanding  any other  provision  contained  herein,  the
                  aggregate  adjustment   attributable  to  the  effect  of  all
                  Asserted  Defects related to a given Property shall not exceed
                  the Allocated Value of such Property;  provided, however, that
                  Buyer,  may  elect  to have a  Property  affected  by a Defect
                  excluded  from the  transaction  contemplated  hereby  if such
                  Property is subject to a Defect  which will either (A) require
                  remediation   operations  to  be  performed  on  the  affected
                  Property,  the cost of which is reasonably expected to exceed,
                  or (B) otherwise  require the current  expenditure of funds in
                  an amount  exceeding,  the  Allocated  Value  thereof,  unless
                  Sellers agree to adjust the Purchase  Price in an amount equal
                  to the full  costs of such  remediation  obligations  or other
                  required expenditure of funds.

(b)      Should Sellers  determine,  or should Buyer, in  the course of  its due
         diligence  reviews  contemplated  by Section 7  above,  have reasonable
         cause to believe,  that the  ownership  of  the  Properties  by Sellers
         entitles  the Sellers  (whether  individually  or  collectively)  to  a
         decimal share of the production  from a Well or  item listed on Exhibit
         B greater than the decimal share shown for such Well or item under  the
         column  headed "Net Revenue  Interest" on Exhibit B (herein  called  an
         "NRI Increase"),  then the party making  the  determination  (or having
         such cause to believe)  that an  NRI  Increase  exists  shall  promptly
         notify the other party thereof. JN E&P or  Helis may thereafter propose
         an upward  adjustment to the Purchase  Price  to account for such fact,
         in which case such  adjustment  shall be  handled in the same manner as
         provided  above with  respect  to  adjustments  for  Asserted  Defects;
         provided  that the party  making such  determination  shall notify  the
         other party no later than December 15, 2000.

(c)      Should the parties be unable to agree upon  an  appropriate  adjustment
         in light of  the  factors  set  forth  above,  then  each of JN E&P (on
         behalf of the  JN Group) and Helis (each a "Seller  Group")  shall have
         the right to  separately  elect  to either (i) require that the Closing
         take place,  deposit that portion of  the  estimated  diminution in the
         Allocated Value of the Property  affected  thereby  as set forth in the
         Defect  Notice (but in no event to exceed  the  Allocated  Value of the
         Property  affected  thereby)  attributable  to  such Seller Group in an
         escrow account and attempt to cure one or  more Asserted  Defects after
         the Closing;  (ii) refer the matter for  arbitration in accordance with
         the  provisions  of Section  8(d)  below,  in  which  case,  subject to
         Section  8(a)(iv)  above and the final two  sentences  of  this Section
         8(c),  the price to be paid at Closing shall be reduced  by the average
         of Sellers' and Buyer's  estimates of the  diminution in  the Allocated
         Value of the Property  affected  thereby  resulting  from such Asserted
         Defect,  or (iii)  exclude the  interest  of such  Seller  Group in the
         Property affected thereby from the transaction  contemplated hereby, in
         which case the Purchase  Price will be reduced  by the Allocated  Value
         of  the Property  affected  thereby,  subject to Section 8(a)(iv) above
         and  the final two  sentences  of this  Section  8(c).  If the Purchase
         Price  reduction  (or  increase)  attributable  to  the interest of all
         Sellers  which would  result  from  the above  provided  for  procedure
         (whether determined at Closing o r pursuant to the arbitration pursuant
         to Section  8(d) below) does not exceed  $300,000,  then  the  Purchase
         Price shall not be adjusted,  and if pursuant to the  provisions  above
         set forth,  Properties were to be excluded from  the transaction,  none
         of the Properties  which would be excluded  by such procedure  shall be
         excluded,  except for those properties which  Buyer, may, nevertheless,
         elect to have excluded notwithstanding the fact that no Purchase Price
         adjustment   occurs.  If   the  Purchase  Price  reduction   (increase)
         attributable  to the  interest of  all Sellers  which would result from
         the above provided for procedure exceeds $300,000,  the  Purchase Price
         shall be adjusted by the total  amount of such reduction (or increase).

                                       12
<PAGE>

(d)      If Sellers or Buyer are unable to agree as  to whether a Defect exists,
         the value to be  attributable  to an  Asserted  Defect prior to Closing
         and any Seller Group has elected  not to exclude the affected  Property
         pursuant to the provisions of  paragraph 8(c) above,  then either Buyer
         or any such Seller  Group may  elect to refer the matter to be resolved
         by a Defect Expert ("Defect  Expert"),  to be selected by the parties.
         Such Defect  Expert  shall be  an attorney or other party with not less
         than 15 years  experience  in the oil and  gas industry such that he or
         she is considered an expert in oil and gas  title  matters.  The Defect
         Expert may enlist the advice of a  petroleum  engineer  mutually agreed
         by the  parties  with  respect  to any  valuation  issues and any other
         experts as such Defect Expect shall  deem reasonably necessary.  Within
         10 business days after referral of such matter  to Defect Expert,  each
         of Buyer and the  Seller  Group(s)  participating  in  such  proceeding
         acting as a single  party (the  "Participating  Sellers") shall deliver
         to each  other  and to  the  Defect  Expert a notice  setting  forth in
         adequate  detail the issues to be  determined  by the Defect Expert and
         the  decision  (on a word for word basis) that such party  desires  the
         Defect Expert to make with respect to the issues being  determined (the
         "Decision  Notice");  provided,  however,  in  preparing  the  Decision
         Notice each party (as well as the Defect Expert) shall be  bound by the
         provisions of Section  8(a)(iv) above.  Within two  business days after
         giving of the two Decision Notices, the Parties shall  attend a meeting
         with the  Defect  Expert at a  mutually  acceptable  time and  place to
         discuss  fully the content of such  Decision  Notice and  based thereon
         whether  either or both wish to modify their  Decision  Notices in  any
         way.  Any such  modifications  shall be  discussed,  so  that when each
         party  finalizes  its  Decision  Notice,  it  shall  do  so  with  full
         knowledge of the content of the  other parties' final Decision  Notice.
         The  finalization of such Decision  Notices and  the deliver of same by
         each party to the other shall occur at  such  meeting  unless by mutual
         agreement they agree to have one or  more additional  meetings for such
         purposes.  The Defect Expect shall be  required to adopt a decision set
         forth in either  Decision  Notice and  shall have no power to reach any
         other result. Such Defect Expert shall adopt  a decision that in his or
         her judgment is more fair and  equitable  and  in  conformity  with the
         principles set forth in  subparagraphs  (a)(i) through (a)(iv) of  this
         Section 8, the Allocated Value of affected Property, the  likelihood of
         its economic effect on the affected Property and such  other reasonable
         and  customary  standards  as are  applicable  to  the  situation.  The
         decision,  to be made in writing and signed by  the Defect Expert shall
         determine  such  dispute.  Such  decision  shall  be made,  signed  and
         delivered to the parties at the meeting unless otherwise  agreed by the
         parties.  The  expenses  of the  Defect  Expert  and  any other  expert
         retained  by  the  Defect  Expert  shall   be  borne  one-half  by  the
         Participating  Sellers and  one-half  by  Buyer  except that such party
         shall pay fees and expenses of its  counsel,  witnesses and  employees.
         The  determination  and award of  the Defect  Expect shall be final and
         binding upon the parties and  judgment  may be  entered  thereon in any
         court of  competent  jurisdiction  upon  the  application  therefore of
         either party. Within five (5) business days from  the execution of such
         decision, any payment resulting from the decision shall be made.

                                       13
<PAGE>

9.       Conditions  Precedent to the  Obligations of Buyer.  The obligations of
Buyer under this Agreement are subject to each of the following conditions being
met:

(a)      Each and every  representation  and  warranty  of  Sellers  under  this
         Agreement shall be true and accurate in all material respects as of the
         date when made and shall be deemed to have been made again at and as of
         the time of Closing and shall at and as of such time of Closing be true
         and  accurate  in  all  respects  except  as  to  changes  specifically
         contemplated by this Agreement or consented to by Buyer.

(b)      Sellers shall have performed and complied in all material respects with
         (or  compliance  therewith  shall have been  waived by Buyer)  each and
         every covenant,  agreement and condition  required by this Agreement to
         be performed or complied with by Sellers prior to or at the Closing.

(c)      No suit, action or other proceedings shall, on the date of Closing,  be
         pending or threatened  before any court or governmental  agency seeking
         to restrain,  prohibit, or obtain damages or other relief in connection
         with  the  consummation  of  the  transactions   contemplated  by  this
         Agreement.

(d)      The Purchase  Price  reduction  arising under Section 8 hereof will not
         reduce  the  Purchase  Price by more than  twenty  five  percent  (25%)
         (inclusive of exercised preferential purchase rights).

         If any such condition on the  obligations of Buyer under this Agreement
is not met as of the Closing Date, or in the event the Closing does not occur on
or before  December  29, 2000 (herein  called the  "Termination  Date"),  and in
either case Buyer is not in breach of its obligations hereunder,  this Agreement
may, at the option of Buyer, be terminated.

                                       14
<PAGE>

10.      Conditions  Precedent to the  Obligations of Sellers.  The  obligations
of Sellers under this Agreement are subject to each of  the following conditions
being met:

(a)      Each  and  every  representation  and  warranty  of  Buyer  under  this
         Agreement shall be true and accurate in all material respects as of the
         date when made and shall be deemed to have been made again at and as of
         the time of Closing and shall at and as of such time of Closing be true
         and  accurate  in  all  respects  except  as  to  changes  specifically
         contemplated by this Agreement or consented to by Sellers.

(b)      Buyer shall have  performed and complied in all material  respects with
         (or  compliance  therewith  shall have been waived by Sellers) each and
         every covenant,  agreement and condition  required by this Agreement to
         be performed or complied with by Buyer prior to or at the Closing.

(c)      The  Purchase   Price   reduction  (if  any)  which  results  from  the
         application  of Section 8 does not exceed  twenty  five  percent  (25%)
         percent of the Base Purchase Price (inclusive of exercised preferential
         purchase rights).

(d)      Sellers shall have been furnished with evidence reasonably satisfactory
         to them that  Buyer  shall  have  caused  to have in  effect  any bonds
         required  in  connection  with  the  ownership  and  operation  of  the
         Properties  subsequent  to the Closing,  such that the bonds of Sellers
         presently in place may be released in the ordinary course of business.

(e)      No suit, action or other proceedings shall, on the date of Closing,  be
         pending or threatened  before any court or governmental  agency seeking
         to restrain,  prohibit, or obtain damages or other relief in connection
         with  the  consummation  of  the  transactions   contemplated  by  this
         Agreement.

         If any  such  condition  on  the  obligations  of  Sellers  under  this
Agreement  is not met as of the Closing  Date,  or in the event the Closing does
not occur on or before the Termination Date and (in either case) Sellers are not
in breach of its  obligations  hereunder  in the  absence of Buyer also being in
breach of its  Obligations  hereunder,  this Agreement may, at the option of any
Seller Group, be terminated.

11.      Termination of Agreement.

(a)      If this  Agreement is  terminated  by Buyer as set forth in Section 9

         above,  then the  Deposit  shall be promptly  returned to Buyer,  which
         shall be Buyer's sole remedy  hereunder,  unless such  termination is a
         result  of  Sellers'   willful  and   wrongful  failure  to  close  the
         transaction  contemplated  hereby  under  circumstances  in  which  all
         conditions  precedent to Sellers'  obligations as  set forth in Section
         10 shall  have been  performed  or  satisfied  (herein  called  "Seller
         Default"),  in  which  event  Buyer  shall be  entitled  to pursue  any
         remedies existing at  law or in equity.  From and after termination due
         to the first  instance  set  forth  above in this  Section  11(a),  the
         parties  shall have no further  obligations  to one  another  hereunder
         (other than the obligations under Section 16  hereof and under the last
         two   sentences   of  Section  7  hereof,   which   will  survive  such
         termination),  but such  termination  will not  affect any liability or
         obligation   related  to  the  failure  of  a  party  to  perform   its
         obligations hereunder prior to such termination.

                                       15
<PAGE>

(b)      If this  Agreement is  terminated by Sellers as set forth in Section 10
         above,  then the Deposit  shall be  retained  by Sellers as  liquidated
         Damages,  unless  at such  time  Buyer  shall  not be in  breach of its
         obligations  hereunder,  in which case the  Deposit  shall be  promptly
         returned to Buyer.  Upon such  termination,  the parties  shall have no
         further   obligations  to  one  another   hereunder   (other  than  the
         obligations under Section 16 hereof and under the last two sentences of
         Section 7 hereof,  which will  survive such  termination).  The parties
         agree  that  time  is of  the  essence  for  the  consummation  of  the
         transaction  contemplated  hereby and that the amount of damages caused
         by Buyer's  breach would be very  difficult to calculate  exactly.  The
         provision  for  liquidated   damages  shall  be  Sellers'  sole  remedy
         hereunder.

(c)      Upon the termination of this Agreement,  whether  pursuant to paragraph
         (a) or (b) above,  Sellers  shall be free to sell the  Property (or any
         portion  thereof) to any other party without any limitation under or by
         reason of this  Agreement,  unless at such time a  condition  of Seller
         Default shall exist. Buyer shall cooperate with Sellers in effectuating
         any such sale and shall promptly execute any instrument  evidencing the
         termination  of  Buyer's  right  to  acquire  the  Property  as  may be
         reasonably requested by Sellers. Buyer shall also immediately return to
         Sellers  all data  and  other  information  (and  all  copies  thereof)
         furnished to Buyer by or on behalf of Sellers in  connection  with this
         transaction.

12. The Closing.  The closing  (herein called the "Closing") of the  transaction
contemplated  hereby  shall  take place in the  offices  of JN E&P in  Billings,
Montana,  on or before  December 29, 2000, at 10 a.m.  Mountain Time, or at such
other date and location (i) as the Buyer and Sellers may mutually  agree upon or
(ii) to which  Sellers may  postpone  the  Closing  pursuant to Section 7 hereof
(such date and  location,  as changed  pursuant to clauses  (i) and (ii),  being
herein called the "Closing Date"). At the Closing:

(a)      Sellers shall:

(i)               execute,  acknowledge and deliver to Buyer a conveyance of the
                  Properties, (the "Conveyance"), in the form attached hereto as
                  Exhibit C (and with Exhibit A hereto being attached  thereto),
                  effective  as to runs of oil and  deliveries  of gas and other
                  products as of 7:00 a.m.,  local time at the  locations of the
                  Properties, respectively, on September 1, 2000, (herein called
                  the "Effective Date"); and

(ii)              execute  and  deliver to Buyer  letters  in  lieu of  transfer
                  orders (or similar  documentation),  in  form  acceptable   to
                  both parties; and

(iii)             deliver  to  Buyer  affidavits  or  other   certification  (as
                  permitted  by such code) from each  Seller that such Seller is
                  not a "foreign  person" within the meaning of Section 1445 (or
                  similar  provisions)  of the Internal  Revenue Code of 1986 as
                  amended  (i.e.,  no Seller is a  non-resident  alien,  foreign
                  corporation,  foreign  partnership,  foreign  trust or foreign
                  estate as those terms are defined in such code and regulations
                  promulgated thereunder); and

                                       16
<PAGE>

(iv)              turn over possession of the Properties.

(v)               within thirty (30) days after Closing, Sellers will deliver to
                  Buyer the records  and other  materials  described  in Section
                  1(f) above.

(b)      Buyer shall:

(i)               deliver to each Seller  Group,  by wire transfer to an account
                  designated by Sellers in a bank located in the United  States,
                  an amount equal to the proportionate  part of (a) the Purchase
                  Price  allocated  to such Seller Group as set forth on Exhibit
                  B-1 (b) less the Deposit; and

(ii)              with respect to properties operated by any Seller, execute and
                  deliver to Sellers  appropriate  evidence reflecting change of
                  operation  as required  by  applicable  authorities,  and such
                  evidence  as  Sellers  may  reasonably  require  that Buyer is
                  qualified  with such  authorities  to succeed  such  Seller as
                  operator.

(c)      With respect to  each  Oil and Gas  Property with  respect to which any
         Seller is  disbursing  proceeds  of  production  attributable  to other
         parties  entitled  thereto,  (i) such  Seller shall continue to collect
         proceeds of production  during the  month in which  Closing  occurs and
         shall be responsible for  making disbursements,  in accordance with its
         normal procedures (and at normal times) of  such proceeds of production
         so  collected  to the parties  entitled  to same,  with any proceeds of
         production   thereafter  collected   by  such  Seller  to  be  promptly
         forwarded  to Buyer  (who  shall  thereafter  account  for same  to the
         parties  entitled  thereto),  (ii) such Seller  shall,  as  promptly as
         possible  after Closing  deliver to Buyer (A) a copy  of its "pay list"
         for  each  such  property,  (B) a  list of all  parties  for whom it is
         holding in suspense  proceeds  of  production,  and (C) a check  (which
         shall be  delivered  within  thirty  days after the end of the month in
         which the Closing  occurs) in an  amount equal to all suspended  funds.
         Following  delivery of the  materials referred to in clause (ii) above,
         Buyer shall become  responsible for all  disbursements  of  proceeds of
         production (including suspense and other disbursements  attributable to
         periods prior to the Effective Date) and  such disbursement  activities
         shall be included in the matters which  Buyer assumes,  and indemnifies
         Sellers with respect to, under  Section 14 below.  It is understood and
         agreed  that such Seller  does  not  represent  or warrant to Buyer the
         accuracy of the pay lists so delivered.

13.  Certain  Accounting  Adjustments.  Appropriate  adjustments  shall  be made
between  Buyer and Sellers so that (i) all  expenses  which are  incurred in the
operation of the  Properties  before the Effective Date will be borne by Sellers
and all proceeds (net of applicable  production,  severance,  and similar taxes)
from sale of oil,  gas  and/or  other  minerals  produced  therefrom  before the
Effective  Date will be  received by Sellers,  and (ii) all  expenses  which are
incurred in the operation of the  Properties  after the  Effective  Date will be
borne by Buyer and all proceeds (net of applicable  production,  severance,  and
similar  taxes)  from  the  sale of oil,  gas  and/or  other  minerals  produced
therefrom after the Effective Date will be received by Buyer. It is agreed that,
in making  such  adjustments:  (i) oil which was  produced  from the Oil and Gas
Properties and which was, on the Effective Date,  stored in tanks located on the
Oil and Gas  Properties  (or located  elsewhere but used by Sellers to store oil
produced from the Oil and Gas  Properties  prior to delivery to oil  purchasers)
and natural gas above pipeline connections shall be deemed to have been produced
before the Effective  Date, and (ii) ad valorem taxes assessed with respect to a
period which the  Effective  Date splits  (regardless  of whether such taxes are
computed based upon production in a prior period) shall be prorated based on the
number of days in such  period  which  fall on each side of the  Effective  Date
(with the day on which the  Effective  Date  falls  being  counted in the period
after the Effective Date), and shall, where the current year's taxes are not yet
known, be based on the previous year's taxes,  (iii) no  consideration  shall be
given to the local,  state or federal income tax  liabilities of any party,  and
(iv) in calculating expenses, with respect to each well or wells as to which any
Seller is the operator,  there shall be included in expenses for the period from
the  Effective  Date to Closing an amount (A) equal to the  overhead  rate which
would be  chargeable  to such  Seller  during  such time  under the terms of the
applicable joint operating agreement if such Seller were a non-operator,  or (B)
if there is no applicable joint operating agreement, at the applicable rates set
forth under Exhibit H attached hereto. On or before 75 days after Closing, Buyer
and Sellers shall determine the amounts of such adjustments, and shall make such
adjustments  by  appropriate  payments  from  Sellers  to Buyer or from Buyer to
Sellers.

                                       17
<PAGE>

         Buyer and Sellers agree that the net gas imbalance  attributable to the
Properties as of the Effective Date is believed to be that which is set forth on
Exhibit "I" (the "Agreed Imbalance"),  notwithstanding that the actual imbalance
may be lesser or  greater.  Buyer and  Sellers  shall  verify the actual net gas
imbalance in the Post-Closing accounting, if not before, and any imbalance shall
be  accounted  for between the parties at the price of $1.50 per MCF but only as
to those volumes which exceed or are less than the Agreed  Imbalance;  provided,
however,  that if an applicable  operating or gas balancing  agreement  requires
cash balancing upon  conveyance of the  Properties,  the adjustment  price shall
equal the price received in the cash  balancing.  Such  settlement  shall become
final  ninety (90) days after  Closing,  it being  understood  and agreed by the
parties that should any variance in the gas  imbalance be  discovered  after the
Post-Closing  accounting  within the  period of time  ending  ninety  days after
Closing,  the parties  will  adjust  therefor in the same manner as set forth in
this  paragraph,  and  thereafter  neither party shall make claim upon the other
concerning the gas balances of the Properties. Upon Closing, Buyer shall own and
assume all rights and liabilities  relating to gas imbalances  discovered  after
the ninety day period set forth above,  including any revenue  adjustment caused
by such subsequently discovered imbalance.

14.      Assumption and Indemnification.

(a)      Buyer  shall,  on the date of  Closing,  agree (and,  upon the delivery
         to Buyer of the  Conveyance  shall be  deemed to  have  agreed)  (a) to
         assume,  and to  timely pay and perform,  all duties,  obligations  and
         liabilities   relating  to  the  ownership  and/or  operation  of   the
         Properties  after the Effective  Date (including,  without  limitation,
         those arising under the  contracts and agreements  described in Section
         1(d) above), and (b) to  indemnify and hold each Seller, its parent and
         subsidiary   companies  and  other  affiliates,   and   its  and  their
         directors,  officers,  employees and  agents  harmless from and against
         any and all claims,  actions,  liabilities,  losses, damages,  costs or
         expenses  (including  court costs and attorneys'  fees) of  any kind or
         character arising out of or otherwise relating to  the ownership and/or
         operation of the  Properties  after  the Effective  Date. In connection
         with (but not in  limitation  of) the  foregoing,  it  is  specifically
         understood  and  agreed  that  matters  arising  out  of  or  otherwise
         relating to the ownership and/or operation of  the Properties after the
         Effective Date shall include all matters  arising  out of the condition
         of   the   Properties  on  the  Effective  Date   (including,   without
         limitation,  within  such matters all  obligations to properly plug and
         abandon, or replug and re-abandon, wells located on the Properties, to
         restore the surface of  the  Properties and to comply with, or to bring
         the Properties into  compliance with,  applicable  environmental  laws,
         including conducting any  remediation  activities which may be required
         on or otherwise in  connection  with  activities  on  the  Properties),
         regardless  of  when  the  events  occurred  which  give  rise to  such
         condition  (and  regardless  of   whether  any  Seller,  its  officers,
         employees,  agents or  other representatives,  were wholly or partially
         negligent  or  otherwise,  at  fault),  and   the  above  provided  for
         assumptions  and  indemnifications  by  Buyer shall expressly cover and
         include  such  matters so arising  out  of such  condition.  Buyer also
         assumes,  and  agrees  to timely  pay  and  perform,  and to  indemnify
         Sellers with respect to, all  obligations and liabilities  with respect
         to any sales and/or use tax that  may be applicable to the  transaction
         contemplated  by this  Agreement.  This  indemnifications  contained in
         this  Section 14  expressly  includes any claims that arise as a result
         of strict liability.

                                       18
<PAGE>

(b)      Subject to the terms and  conditions of  this Section 14, Sellers shall
         severally (and not jointly  and severally) indemnify,  defend, and hold
         harmless  Buyer from and  against any and all costs,  expenses or other
         liabilities asserted against,  resulting  to, imposed upon, or incurred
         by Buyer,  directly or indirectly,  by  reason of or resulting from any
         proceeding  initiated  by a person  or entity  other  than Buyer or any
         affiliate of Buyer (a "Third Party")  against Buyer or with  respect to
         the Properties as a result of a condition  existing on  the Oil and Gas
         Properties as of the Closing which constitutes a  violation of existing
         Applicable Environmental Laws (an "Environmental Claim"), with  respect
         to which  Buyer has given  written  notice to Sellers  prior  to 5 p.m.
         Mountain Time on April 15, 2001, except  for  Environmental  Claims for
         which Purchase Price adjustments  under Section 8 hereof have been made
         or which were  asserted  prior to  the Defect Date,  and as further set
         forth in this section.  Buyer  covenants  and agrees that neither Buyer
         nor any  affiliate of Buyer will  disclose  or otherwise  reveal to any
         Third Party  any facts or other  information  concerning or relating to
         any  matter  which  might be  the  subject of an  Environmental  Claim.
         Without  limiting the  foregoing,  neither  Buyer nor  any affiliate of
         Buyer  shall  solicit  or  encourage  Third  Parties  to  commence  any
         Environmental  Claim against  Buyer or with respect  to the  Properties
         for which  Buyer  would  be  entitled  to  indemnification  under  this
         Section 14. To  the extent that Buyer (or its affiliates)  breaches its
         covenants set forth in  the preceding  sentences,  the  indemnification
         set  forth  in   this  Section  14  shall  not  be  applicable  to  any
         Environmental  Claim in any  way arising from or  connection  with such
         breach.

15.  Disclaimer  of  Warranties.  The  Properties  are being sold by each Seller
"where is" and "as is" without any warranty of title, except with respect to the
Oil and Gas  Properties,  as to those claiming by, through or under such Seller.
Each Seller hereby expressly disclaims any and all representations or warranties
(other  than those  expressly  set out in Section 4 above)  with  respect to the
Properties or the  transaction  contemplated  hereby.  Specifically as a part of
(but not a limitation of) the foregoing,  Buyer  acknowledges that no Seller has
made, and each Seller hereby expressly disclaims, any representation or warranty
(express, implied, under common law, by statute or otherwise) relating to titles
of  the  properties,   the  condition  of  the  properties   (INCLUDING  WITHOUT
LIMITATION, SELLERS DISCLAIM ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY,
FITNESS  FOR A  PARTICULAR  PURPOSE,  OR  CONFORMITY  TO  MODELS OR  SAMPLES  OF
MATERIALS),   the  extent  of  oil,  gas  and/or  other  mineral  reserves,  the
recoverability  of or the cost of covering  any of such  reserves,  the value of
reserves, prices (or anticipated prices) at which production has been or will be
sold, the ability to sell oil or gas  production  from the  Properties,  and the
environmental  condition  of the  Oil  and Gas  Properties,  including,  but not
limited to,  practices or  conditions  that may have  resulted in  environmental
contamination or violations of applicable environmental laws.

                                       19
<PAGE>

16.  Commissions.  Sellers agree to indemnify  and hold harmless  Buyer from and
against any and all claims, obligations,  actions, liabilities, losses, damages,
costs or  expenses  (including  court costs and  attorneys  fees) of any kind or
character  arising  out of or  resulting  from  any  agreement,  arrangement  or
understanding alleged to have been made by, or on behalf of, any Seller with any
broker  or  finder  in  connection   with  this  Agreement  or  the  transaction
contemplated  hereby.  Buyer agrees to indemnify  and hold  harmless each Seller
from and against any and all claims, obligations,  actions, liabilities, losses,
damages,  costs or expenses  (including  court costs and attorneys  fees) of any
kind or character arising out of or resulting from any agreement, arrangement or
understanding  alleged  to have been made by, or on behalf  of,  Buyer  with any
broker  or  finder  in  connection   with  this  Agreement  or  the  transaction
contemplated hereby.

17.  Casualty  Loss.  In the event of damage  by fire or other  casualty  to the
Properties prior to the Closing,  then this Agreement shall remain in full force
and effect,  and (unless Buyer and Sellers shall otherwise  agree) in such event
as to any  Properties  so damaged,  then, at Buyer's  election,  either (A) such
Property shall be treated as if it had an Asserted Defect associated with it and
the procedure provided for in Section 8 shall be applicable  thereto, or (B) the
Purchase  Price will not be  adjusted,  and if any Seller  should be entitled to
make any claims under any  insurance  policy with  respect to such damage,  such
Seller shall, at such Seller's election,  either collect (and when collected pay
over to Buyer),  or assign to Buyer,  such  claims.  To the extent that sums are
properly paid over to Buyer under this Section 17 less the  deductible  provided
in such insurance  policy,  Sellers shall reimburse Buyer for the amount of such
deductible amount so withheld.

18. Notices. All notices and other communications  required under this Agreement
shall  (unless  otherwise  specifically  provided  herein) be in writing  and be
delivered  personally,  by  recognized  commercial  courier or delivery  service
(which provides a receipt), by telex or telecopier (with receipt  acknowledged),
or  by  registered  or  certified  mail  (postage  prepaid),  at  the  following
addresses:

                                       20
<PAGE>

               If to Buyer:

                                 St. Mary Land & Exploration Company
                                 7060 S. Yale, Suite 800
                                 Tulsa, Oklahoma  74136-5741
                                 Facsimile: Tulsa, Oklahoma  (918) 488-0105
                                 Attention: Julian C. Pope

            With a copy to:

                                 St. Mary Land & Exploration Company
                                 1776 Lincoln Street, Suite 1100
                                 Denver, Colorado  80203
                                 Facsimile: (303) 863-1040
                                 Attention: Milam Randolph Pharo

             If to Sellers:

                                 JN Exploration & Production Limited Partnership
                                 c/o JN Oil and Gas, Inc.
                                 550 North 31st Street, Suite 300
                                 Billings, Montana  59101
                                 Facsimile: (406) 248-5253
                                 Attention: G.K. Nelson
            With a copy to:

                                 The William G. Helis Company, L.L.C.
                                 228 St. Charles Avenue, Suite 912
                                 New Orleans, Louisiana 70130
                                 Facsimile: (504) 522-6486
                                 Attention: David Kerstein

and shall be  considered  delivered on the date of receipt.  Either Buyer or any
Seller may specify as its proper  address any other post office  address  within
the continental limits of the United States by giving notice to the other party,
in the  manner  provided  in this  Section,  at least ten (10) days prior to the
effective date of such change of address.

19. Survival of Provisions.  The  representations  and warranties made herein by
Buyer and Sellers shall expire at the Closing  hereof and shall be of no further
force or effect  thereafter.  If the Closing  occurs under this  Agreement,  all
conditions of Closing shall be deemed to have been waived or satisfied and after
such Closing,  neither  party shall have any  liability  whatsoever to the other
arising out of,  resulting  from,  or  attributable  to any such  conditions  of
Closing,  irrespective  of whether such  conditions  of Closing  were,  in fact,
explicitly waived or satisfied. Notwithstanding the foregoing, nothing contained
in this  Section  19 shall  alter,  limit or  otherwise  affect  the  rights and
obligations of the parties set forth in Sections 13 through 20 inclusive,  which
rights and  obligations  shall also  survive the Closing and the delivery of the
Conveyance.

                                       21
<PAGE>

20.      Miscellaneous Matters.

(a)      After  the  Closing,  Sellers  shall  execute  and  deliver,  and shall
         otherwise  cause to be executed and delivered,  from time to time, such
         further  instruments,  notices,  division  orders,  transfer orders and
         other documents,  and do such other and further acts and things, as may
         be reasonably necessary to more fully and effectively grant, convey and
         assign the Properties to Buyer.

(b)      Neither  party  shall have the right to assign  its  rights  under this
         Agreement,  without the prior written  consent of the other party first
         having been obtained.

(c)      On  the date of Closing  (and,  upon  the  delivery  to  Buyer  of  the
         Conveyance),  Buyer  shall  succeed to  the  position  of Sellers  with
         respect to all gas  imbalances  and  to the  position  of Sellers  with
         respect to  all  make-up  obligations.  As a result of such  succession
         Buyer shall (i) be  entitled to receive any and all benefits, including
         payments of proceeds of  production in excess of amounts which it would
         otherwise be entitled to  produce and receive by virtue of ownership of
         the Oil and Gas  Properties,  which Sellers would have been entitled to
         receive by virtue  of such  position,  and (ii) shall be  obligated  to
         suffer any detriments  (whether the same be  in the form of obligations
         to deliver  production which would  have otherwise been attributable to
         its ownership of the  Oil and Gas  Properties  without  receiving  full
         payment therefor,  or be  in the form of the obligation to make payment
         in cash) which Sellers  would  have been  obligated to suffer by virtue
         of such positions.

(d)      To the extent applicable to the transaction  contemplated hereby or any
         portion  thereof,  Buyer waives the  provisions of the Texas  Deceptive
         Trade Practices Act,  Chapter 17,  Subchapter E, Sections 17.41 through
         17.63, inclusive (other than Section 17.555 which is not waived), Texas
         Business and  Commerce  Code.  In  connection  with such waiver,  Buyer
         hereby  represents and warrants to each Seller that Buyer (a) is in the
         business  of seeking or  acquiring  by  purchase  or lease,  goods,  or
         services,  for  commercial  or  business  use,  (b) has  knowledge  and
         experience in financial and business matters that enable it to evaluate
         the merits and risks of the transaction  contemplated hereby and (c) is
         not in a significantly disparate bargaining position.

(e)      In connection with Buyer's evaluation of the Properties,  Sellers shall
         disclose  to  Buyer   certain   confidential   information,   which  is
         proprietary,   and  includes,   but  is  not  necessarily  limited  to,
         geological and geophysical data; maps, models, and interpretations; and
         commercial,  contractual,  and  financial  information.  All such  data
         disclosed  by any Seller to Buyer shall  hereinafter  be referred to as
         the "Confidential Information". If, for any reason the Closing does not
         occur,  Buyer agrees that the  Confidential  Information  shall be kept
         strictly  confidential  and shall not be sold,  traded,  published,  or
         otherwise  disclosed to anyone in any manner  whatsoever,  including by
         means of  photocopy  or  reproduction,  without JN E&P'  prior  written
         consent,  except as  provided  in  Sections  20(e)(i),  20(e)(ii),  and
         20(e)(iii) below.

(i)               Buyer  may  disclose  the   Confidential  Information  without
                  JN  E&P'  prior  written  consent  only  to  the  extent  such
                  information:

                                       22
<PAGE>

(A)                     is already known to Buyer as of the date of disclosure
                        hereunder;

(B)                     is  already  in  possession  of  the  public or  becomes
                        available to the public other than through  the  act  or
                        omission of Buyer;

(C)                     is required to be disclosed  under  applicable law or by
                        a   governmental  order,  decree,  regulation,  or  rule
                        (provided that Buyer shall give  written  notice  to  JN
                        E&P prior to such disclosure); or

(D)                     is acquired independently from a third  party  that  has
                        the right to disseminate such information at the time it
                        is acquired by Buyer.

(ii)              Buyer  shall  be  entitled   to  disclose   the   Confidential
                  Information  without JN E&P's prior written consent to such of
                  the  following  persons who have a clear need to know in order
                  to evaluate  Sellers'  petroleum  exploration  and  production
                  rights:

(A)                     employees, officers, and directors of Buyer;

(B)                     any   professional  consultant  or  agent  retained   by
                        Buyer for the purpose  of  evaluating  the  Confidential
                        Information.

(iii)             Prior  to  making  any  such   disclosures  to  persons  under
                  subparagraph  20(e)(ii) above, however,  Buyer shall obtain an
                  undertaking of  confidentiality,  in the same form and content
                  as this Agreement, from each such person.

(iv)              Buyer shall use, or  permit  the  use  of   the   Confidential
                  Information disclosed  under Section 20 (e)(ii) or  20(e)(iii)
                  above, only  to evaluate petroleum exploration and  production
                  rights held by Sellers.

(v)               Buyer shall be  responsible  for ensuring  that all persons to
                  whom the  Confidential  Information  is  disclosed  under this
                  Agreement shall keep such  information  confidential and shall
                  not disclose or divulge the same to any  unauthorized  person.
                  Neither  Sellers  nor  Buyer  shall  be  liable  in an  action
                  initiated by one against the other for special,  indirect,  or
                  consequential  damages  resulting  from or arising out of this
                  Agreement,  including,  without limitation,  loss of profit or
                  business interruptions, however same may be caused.

(vi)              The  Confidential  Information  shall  remain the  property of
                  Sellers,  and any Seller may demand the return  thereof at any
                  time upon giving written notice to Buyer. Within ten (10) days
                  of  receipt  of such  notice,  Buyer  shall  return all of the
                  original Confidential Information and shall destroy all copies
                  and  reproductions   (both  written  and  electronic)  in  its
                  possession  and in the  possession  of  persons to whom it was
                  disclosed   pursuant  to  Sections  20(e)(ii)  and  20(e)(iii)
                  hereof.

                                       23
<PAGE>

(vii)             The term of this Section 20(e) and the rights and  obligations
                  created  hereunder  shall  commence  upon the date  hereof and
                  shall  continue  for a period  of two (2)  years  or  Closing,
                  whichever first occurs.

(viii)            No Seller makes any representations or warranties,  express or
                  implied, as to the quality,  accuracy, and completeness of the
                  Confidential   Information  disclosed  hereunder.   No  Seller
                  (including  its  affiliated  companies,  and  their  officers,
                  directors, employees) shall have any liability whatsoever with
                  respect  to  the  use of or  reliance  upon  the  Confidential
                  Information by Buyer.

Buyer and Sellers  agree,  to the best of their  ability,  to keep the terms and
conditions  of this  sale  confidential,  both  prior to and for a period of six
months  after  Closing,  except upon  written  consent of the other or as may be
required by law, rule or regulation.

(f)      Each party  hereto  shall bear and pay all  expenses  incurred by it in
         connection with the transaction contemplated by this Agreement.

(g)      Notwithstanding  any other provision of this Agreement to the contrary,
         the representations, warranties, covenants and other obligations of the
         Sellers under this Agreement are and shall be several and not joint and
         several.

(h)      No  assignment  or  other  transfer  by Buyer  of any  interest  in the
         Properties or of its rights  and/or  obligations  under this  Agreement
         shall  relieve  or  release  Buyer  from  any   liabilities   or  other
         obligations  to Sellers  under this  Agreement.  Without  limiting  the
         foregoing,  Buyer agrees that it shall cause the transferee of any such
         assignment or other transfer to  specifically  agree to be bound by and
         to  perform  all  obligations  and  liabilities  of  Buyer  under  this
         Agreement.

(i)      This  Agreement and the  documents to be delivered at Closing  contains
         the entire  understanding  of the parties  hereto  with  respect to the
         subject   matter   hereof   and   supersedes   all  prior   agreements,
         understandings,  negotiations,  and discussions  among the parties with
         respect to such subject matter.  The descriptive  headings contained in
         this Agreement are for convenience only and shall not control or affect
         the meaning or construction of any provision of this Agreement.  Within
         this Agreement words of any gender shall be held and construed to cover
         any other gender, and words in the singular shall be held and construed
         to cover the plural, unless the context otherwise requires.  Time is of
         the essence in this Agreement.

(j)      This  Agreement  may be amended,  modified,  supplemented,  restated or
         discharged (and provisions  hereof may be waived) only by an instrument
         in  writing  signed  by  the  party  against  whom  enforcement  of the
         amendment,  modification,  supplement,  restatement  or  discharge  (or
         waiver) is sought.

(k)      The Agreement  shall  be  binding  on  the  parties  hereto  and  their
         respective successors and assigns.

            [The remainder of this page is intentionally left blank.]

                                       24
<PAGE>

         IN WITNESS WHEREOF, this Agreement is executed by the parties hereto on
the date set forth above.

                   SELLERS:

                                 JN EXPLORATION & PRODUCTION LIMITED PARTNERSHIP
                                 By JN Oil and Gas, Inc., Its General Partner

                                 By:    /s/G.K. NELSON
                                        --------------
                                 Name:  G. K. Nelson
                                 Title: President

                                 COLT RESOURCES CORPORATION

                                 By:    /s/G.K.NELSON
                                        -------------
                                 Name:  G. K. Nelson
                                 Title: President

                                 PRINCEPS PARTNERS, INC.

                                 By:    /s/G.K.NELSON
                                        -------------
                                 Name:  G. K. Nelson
                                 Title: President

                                 THE WILLIAM G. HELIS COMPANY, L.L.C.

                                 By:    /s/DAVID A. KERSTEIN
                                        --------------------
                                 Name:  David A. Kerstein
                                 Title: President of Helis Oil & Gas Corporation
                                        Manager and a Member of
                                        The William G. Helis Company, L.L.C.

                   BUYER:

                                 ST. MARY LAND & EXPLORATION COMPANY

                                 By:    /s/MILAM RANDOLPH PHARO
                                        -----------------------
                                 Name:  Milam Randolph Pharo
                                 Title: Vice President - Land & Legal

Signature Page 1

                                       25
<PAGE>

THE STATE OF  MONTANA

COUNTY OF  YELLOWSTONE

         This  instrument  was  acknowledged  before  me on  this    17   day of
                                                                   ------

October,  2000, by G. K. Nelson as President of JN Oil and Gas,  Inc., a Wyoming
corporation,   Managing   Partner  for  JN  EXPLORATION  &  PRODUCTION   LIMITED
PARTNERSHIP,  a  Delaware  limited  partnership,  for  and  on  behalf  of  such
corporation.

  [SEAL]                                      /s/MELODY MYHRE
                                              -------------------------------
                                              Notary Public, State of Montana
                                              My Commission expires: 3/15/2004

THE STATE OF  MONTANA

COUNTY OF  YELLOWSTONE

         This  instrument  was  acknowledged  before  me  on  this   17   day of
                                                                   ------
October,  2000, by G. K. Nelson as President of COLT  RESOURCES  CORPORATION,  a
Delaware corporation, for and on behalf of such corporation.

  [SEAL]                                      /s/MELODY MYHRE
                                              -------------------------------
                                              Notary Public, State of Montana
                                              My Commission expires: 3/15/2004

THE STATE OF  MONTANA

COUNTY OF  YELLOWSTONE

         This  instrument  was  acknowledged  before  me  on  this   17   day of
                                                                   ------
October,  2000,  by G. K. Nelson as  President  of PRINCEPS  PARTNERS,  INC.,  a
Colorado corporation, for and on behalf of such corporation.

  [SEAL]                                      /s/MELODY MYHRE
                                              -------------------------------
                                              Notary Public, State of Montana
                                              My Commission expires: 3/15/2004

Signature Page 2

                                       26
<PAGE>

THE STATE OF  LOUISIANA

PARISH OF  ORLEANS

         This  instrument  was  acknowledged  before  me  on  this   20  day  of
                                                                    -----
October,  2000,  by   David  A.  Kerstein  as  President  of   Helis Oil  &  Gas
Corporation,  Manager and  a  Member of  THE  WILLIAM  G. HELIS COMPANY, L.L.C.,
a Louisiana limited partnership,  for and on behalf of such corporation.

  [SEAL]                                      /s/MARY ANN MEYER
                                              Notary Public, State of Louisiana
                                              My Commission expires: at death

THE STATE OF COLORADO

COUNTY OF DENVER

         This  instrument  was  acknowledged  before  me  on  this   18   day of
                                                                    -----
October, 2000,   by  Milam  Randolph  as  Vice  President  -  Land  &  Legal  of
St. Mary Land & Exploration Company, a Delaware  corporation,  on behalf of such
corporation.

[SEAL]                                        /s/PATRICIA FLANIGAN
                                              --------------------------------
                                              Notary Public, State of Colorado
                                              My Commission expires: 5/15/03

        [fix acknowledgement if states not using above form are included]

Signature Page 2

                                       27EXECUTION COPY

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

                                CREDIT AGREEMENT

                          Dated as of December 29, 2000

                                      among

                             THE MARCUS CORPORATION,

                                  BANK ONE, NA,
                            as Administrative Agent,

                       LASALLE BANK NATIONAL ASSOCIATION,
                             as Documentation Agent,

                  THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

                                       and

                         BANC ONE CAPITAL MARKETS, INC.,
                      as Lead Arranger and Sole Book Runner

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

<PAGE>
                                TABLE OF CONTENTS
                                -----------------
                                                                            PAGE

ARTICLE I DEFINITIONS                                                          1
         1.1      Certain Defined Terms.                                       1
         ---      ---------------------
         1.2      Other Interpretive Provisions.                              12
         ---      -----------------------------
         1.3      Accounting Principles.                                      13
         ---      ---------------------

ARTICLE II THE CREDITS                                                        13
         2.1      Amounts and Terms of Commitments.                           13
         ---      --------------------------------
         2.2      Loan Accounts.                                              13
         ---      -------------
         2.3      Procedure for Borrowing.                                    14
         ---      -----------------------
         2.4      Conversion and Continuation Elections.                      14
         ---      -------------------------------------
         2.5      Changes in Aggregate Commitments.                           16
         ---      --------------------------------
         2.6      Optional Prepayments.                                       16
         ---      --------------------
         2.7      Repayment.                                                  16
         ---      ---------
         2.8      Interest.                                                   16
         ---      --------
         2.9      Fees.                                                       17
         ---      ----
         2.10     Computation of Fees and Interest.                           18
         ----     --------------------------------
         2.11     Payments by the Company.                                    18
         ----     -----------------------
         2.12     Payments by the Banks to the Agent.                         18
         ----     ----------------------------------
         2.13     Sharing of Payments, Etc.                                   19
         ----     ------------------------
         2.14     Extension of Termination Date.                              19
         ----     -----------------------------

ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY                            20
         3.1      Taxes.                                                      20
         ---      -----
         3.2      Illegality.                                                 21
         ---      ----------
         3.3      Increased Costs and Reduction of Return.                    21
         ---      ---------------------------------------
         3.4      Funding Losses.                                             22
         ---      --------------
         3.5      Inability to Determine Rates.                               23
         ---      ----------------------------
         3.6      Certificates of Banks.                                      23
         ---      ---------------------
         3.7      Substitution of Banks.                                      23
         ---      ---------------------
         3.8      Survival.                                                   23
         ---      --------

ARTICLE IV CONDITIONS PRECEDENT                                               23
         4.1      Conditions of Initial Loans.                                23
         ---      ---------------------------
         4.2      Conditions to All Borrowings.                               24
         ---      ----------------------------

ARTICLE V REPRESENTATIONS AND WARRANTIES                                      25
         5.1      Corporate Existence and Power.                              25
         ---      -----------------------------
         5.2      Corporate Authorization; No Contravention.                  25
         ---      -----------------------------------------
         5.3      Governmental Authorization.                                 26
         ---      --------------------------
         5.4      Binding Effect.                                             26
         ---      --------------
         5.5      Litigation.                                                 26
         ---      ----------
         5.6      No Default.                                                 26
         ---      ----------

                                      -i-
<PAGE>
         5.7      ERISA Compliance.                                           27
         ---      ----------------
         5.8      Use of Proceeds; Margin Regulations.                        27
         ---      -----------------------------------
         5.9      Title to Properties.                                        27
         ---      -------------------
         5.10     Taxes.                                                      27
         ----     -----
         5.11     Financial Condition.                                        28
         ----     -------------------
         5.12     Environmental Matters.                                      28
         ----     ---------------------
         5.13     Regulated Entities.                                         28
         ----     ------------------
         5.14     No Burdensome Restrictions.                                 28
         ----     --------------------------
         5.15     Copyrights, Patents, Trademarks and Licenses, etc.          28
         ----     -------------------------------------------------
         5.16     Subsidiaries.                                               29
         ----     ------------
         5.17     Insurance.                                                  29
         ----     ---------
         5.18     Full Disclosure.                                            29
         ----     ---------------
         5.19     Subsidiary Indebtedness.                                    29
         ----     -----------------------

ARTICLE VI AFFIRMATIVE COVENANTS                                              29
         6.1      Financial Statements.                                       29
         ---      --------------------
         6.2      Certificates; Other Information.                            30
         ---      -------------------------------
         6.3      Notices.                                                    30
         ---      -------
         6.4      Preservation of Corporate Existence, Etc.                   31
         ---      -----------------------------------------
         6.5      Maintenance of  Property.                                   31
         ---      ------------------------
         6.6      Insurance.                                                  32
         ---      ---------
         6.7      Payment of Obligations.                                     32
         ---      ----------------------
         6.8      Compliance with Laws.                                       32
         ---      --------------------
         6.9      Employee Benefit Plans.                                     32
         ---      ----------------------
         6.10     Accounting; Inspection of Property and Books and Records.   32
         ----     --------------------------------------------------------
         6.11     Environmental Laws.                                         33
         ----     ------------------
         6.12     Use of Proceeds.                                            33
         ----     ---------------
         6.13     Contingent Obligations.                                     33
         ----     ----------------------

ARTICLE VII NEGATIVE COVENANTS                                                33
         7.1      Limitation on Liens.                                        33
         ---      -------------------
         7.2      Disposition of Assets.                                      34
         ---      ---------------------
         7.3      Merger; Purchase of Assets; Acquisitions; Etc.              34
         ---      ---------------------------------------------
         7.4      Loans and Investments.                                      35
         ---      ---------------------
         7.5      Limitation on Subsidiary Indebtedness.                      35
         ---      -------------------------------------
         7.6      Transactions with Affiliates.                               35
         ---      ----------------------------
         7.7      Use of Proceeds.                                            36
         ---      ---------------
         7.8      Restricted Payments.                                        36
         ---      -------------------
         7.9      Change in Business.                                         36
         ---      ------------------
         7.10     Accounting Changes.                                         36
         ----     ------------------
         7.11     Funded Debt Ratio.                                          36
         ----     -----------------
         7.12     Fixed Charge Coverage Ratio.                                36
         ----     ---------------------------
         7.13     Subsidiary Dividends.                                       36
         ----     --------------------

ARTICLE VIII EVENTS OF DEFAULT                                                36
         8.1      Event of Default.                                           36
         ---      ----------------
                                      -ii-
<PAGE>

         8.2      Remedies.                                                   38
         ---      --------
         8.3      Rights Not Exclusive.                                       39
         ---      --------------------

ARTICLE IX THE AGENT                                                          39
         9.1      Appointment and Authorization.                              39
         ---      -----------------------------
         9.2      Delegation of Duties.                                       39
         ---      --------------------
         9.3      Liability of Agent.                                         40
         ---      ------------------
         9.4      Reliance by Agent.                                          40
         ---      -----------------
         9.5      Notice of Default.                                          40
         ---      -----------------
         9.6      Credit Decision.                                            41
         ---      ---------------
         9.7      Indemnification.                                            41
         ---      ---------------
         9.8      Agent in Individual Capacity.                               41
         ---      ----------------------------
         9.9      Successor Agent.                                            42
         ---      ---------------
         9.10     Withholding Tax.                                            42
         ----     ---------------
         9.11     Documentation Agent.                                        43
         ----     -------------------

ARTICLE X MISCELLANEOUS                                                       44
         10.1     Amendments and Waivers.                                     44
         ----     ----------------------
         10.2     Notices.                                                    44
         ----     -------
         10.3     No Waiver; Cumulative Remedies.                             45
         ----     ------------------------------
         10.4     Costs and Expenses.  The Company shall:                     45
         ----     ------------------
         10.5     Indemnity.                                                  46
         ----     ---------
         10.6     Payments Set Aside.                                         46
         ----     ------------------
         10.7     Successors and Assigns.                                     46
         ----     ----------------------
         10.8     Assignments, Participations, Etc.                           46
         ----     --------------------------------
         10.9     Confidentiality.                                            48
         ----     ---------------
         10.10    Set-off.                                                    48
         -----    -------
         10.11    Automatic Debits of Fees.                                   49
         -----    ------------------------
         10.12    Notification of Addresses, Lending Offices, Etc.            49
         -----    -----------------------------------------------
         10.13    Counterparts.                                               49
         -----    ------------
         10.14    Severability.                                               49
         -----    ------------
         10.15    No Third Parties Benefited.                                 49
         -----    --------------------------
         10.16    Governing Law and Jurisdiction.                             49
         -----    ------------------------------
         10.17    Waiver of Jury Trial.                                       50
         -----    --------------------
         10.18    Entire Agreement.                                           50
         -----    ----------------

                                      -iii-
<PAGE>

SCHEDULES

Schedule 1.1           Pricing Schedule
Schedule 2.1           Commitments and Pro Rata Shares
Schedule 5.16          Subsidiaries and Minority Interests
Schedule 7.1           Permitted Liens
Schedule 7.4           Investments
Schedule 10.2          Lending Offices; Addresses for Notices

                                      -iv-

<PAGE>

                                CREDIT AGREEMENT

     This CREDIT AGREEMENT is entered into as of December 29, 2000, among THE
MARCUS CORPORATION, a Wisconsin corporation (the "Company"), the several
financial institutions from time to time party to this Agreement (collectively,
the "Banks"; individually, a "Bank"), Bank One, NA, as administrative agent for
the Banks and LaSalle Bank National Association, as documentation agent.

     WHEREAS, the Banks have agreed to make available to the Company a revolving
credit facility upon the terms and conditions set forth in this Agreement;

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

                                   ARTICLE I

                                   DEFINITIONS

     1.1 Certain Defined Terms. The following terms have the following meanings:

         "Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests or equity of any Person, or otherwise causing any
Person to become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person (other than a Person that is a Subsidiary)
provided that the Company or the Subsidiary is the surviving entity.

         "Adjusted Consolidated Cash Flow" means, for any period, the
Consolidated Net Income of the Company and its Subsidiaries plus (a)
depreciation and amortization for such period, (b) all current and deferred
taxes on income, provision for taxes on income, provision for taxes on
unremitted foreign earnings which are included in consolidated gross revenues
and current additions to reserves, and (c) Interest and Rental Expense for the
Company and its Subsidiaries on a consolidated basis.

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

         "Agent" means Bank One in its capacity as administrative agent for the
Banks hereunder, and any successor administrative agent arising under Section
9.9.

         "Agent-Related Persons" means Bank One and any successor administrative
agent arising under Section 9.9, together with their respective Affiliates
(including, in the case

<PAGE>

of Bank One, the Lead Arranger), and the officers, directors, employees, agents
and attorneys-in-fact of such Persons and Affiliates.

         "Agent's Payment Office" means the address for payments set forth on
the signature page hereto in relation to the Agent, or such other address as the
Agent may from time to time specify.

         "Agreement" means this Credit Agreement.

         "Applicable Margin" means, at any time, with respect to Eurodollar Rate
Loans and Base Rate Loans, the rate per annum determined in accordance with
Schedule 1.1.

         "Assignee" has the meaning specified in subsection 10.8(a).

         "Attorney Costs" means and includes all fees and disbursements of any
law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.

         "Bank" has the meaning specified in the introductory clause hereto.

         "Bank One" means Bank One, NA, a national banking association having
its principal office in Chicago, Illinois, in its individual capacity, and its
successors.

         "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C.ss.101, et seq.).

         "Base Rate" means, for any day, a rate of interest per annum equal to
the higher of (i) the Corporate Base Rate for such day and (ii) the sum of the
Federal Funds Effective Rate for such day plus 1/2% per annum.

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

         "Borrowing" means a borrowing hereunder consisting of Loans of the same
Type made to the Company on the same day by the Banks under Article II, and, in
the case of Eurodollar Rate Loans, having the same Interest Period.

         "Borrowing Date" means any date on which a Borrowing occurs under
Section 2.3.

         "Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in Chicago are authorized or required by law to close
and, if the applicable Business Day relates to any Eurodollar Rate Loan, means
such a day on which dealings are carried on in the London interbank market.

         "Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.

                                      -2-
<PAGE>

         "Capital Lease" means, as to any Person, any lease which, in accordance
with GAAP consistently applied, is or should be capitalized on the books of such
Person.

         "Cash Equivalents" means, as to any Person, (a) securities issued or
directly and fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than three
months from the date of acquisition, (b) time deposits and certificates of
deposit of any commercial bank with a long-term unsecured debt rating of at
least A or its equivalent from Standard & Poor's Ratings Group or at least A-2
or its equivalent from Moody's Investors Service, Inc., with maturities of not
more than three months from the date of acquisition by such Person, (c)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (b) above, (d) commercial paper
issued by any Person incorporated in the United States, which commercial paper
is rated at least A-l or the equivalent thereof by Standard & Poor's Corporation
or at least P-l or the equivalent thereof by Moody's Investors Service, Inc.,
and in each case maturing not more than three months after the date of
acquisition by such Person and (e) investments in money market funds,
substantially all the assets of which are comprised of securities of the types
described in clauses (a) through (d) above.

         "Change of Control" means any event, or combination of events, the
result of which is that Ben Marcus, Stephen H. Marcus and Diane Marcus
Gershowitz and their respective heirs, collectively, no longer beneficially own
(within the meaning of Rule 13d-3 of the SEC under the Exchange Act) 51% or more
of the voting rights with respect to outstanding shares of the Company.

         "Closing Date" means the date on which all conditions precedent set
forth in Section 4.1 are satisfied or waived by all Banks (or, in the case of
subsection 4.1(e), waived by the Person entitled to receive such payment).

         "Code" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.

         "Commitment", as to each Bank, has the meaning specified in Section
2.1. As of the date of this Agreement, the amount of the combined Commitments of
all Banks is $45,000,000.

         "Compliance Certificate" means a certificate substantially in the form
of Exhibit C.

         "Consolidated Net Income" means, for any period, the consolidated gross
revenues of the Company and its Subsidiaries, less all operating and
nonoperating expenses of the Company and its Subsidiaries, including all charges
of a proper character (including current and deferred taxes on income, provision
for taxes on income, provisions for taxes on unremitted foreign earnings which
are included in consolidated gross revenues, and current additions to reserves),
all determined in accordance with GAAP consistently applied, but not including
in the computation thereof the amounts (including related expenses and any tax
effect

                                      -3-
<PAGE>

related thereto) resulting from (i) any gains or losses resulting from the sale,
conversion or other disposition of capital assets (i.e., assets other than
current assets), (ii) any gains or losses resulting from the reevaluation of
assets, (iii) any gains or losses resulting from an acquisition by the Company
or any of its Subsidiaries at a discount of any debt of the Company or any of
its Subsidiaries, (iv) any equity of the Company or any of its Subsidiaries in
the unremitted earnings of any Person which is not a Subsidiary, (v) any
earnings of any Person acquired by the Company or any of its Subsidiaries
through purchase, merger or consolidation or otherwise for any time prior to the
date of acquisition, (vi) any deferred credit representing the excess of equity
in any Subsidiary of the Company at the date of acquisition over the cost of the
investment in such Subsidiary, (vii) any restoration to income of any reserve,
except to the extent that provision for such reserve was made out of income
accrued during such period, (viii) any net gain from the collection of life
insurance policies, or (ix) any gain resulting from any other nonrecurring item.

         "Contingent Obligation" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Obligation shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.

         "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.

         "Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.

         "Conversion/Continuation Date" means any date on which, under Section
2.4, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.

         "Corporate Base Rate" means a rate per annum equal to the corporate
base rate or prime rate of interest announced by Bank One or by its parent, BANK
ONE CORPORATION, from time to time, changing when and as said corporate base
rate or prime rate changes.

                                      -4-
<PAGE>

         "Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.

         "Dollars", "dollars" and "$" each mean lawful money of the United
States.

         "Eligible Assignee" means (i) 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; (ii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
United States; (iii) a Person that is primarily engaged in the business of
commercial banking and that is (A) 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; and (iv) any other Person agreed to by the Company and the Agent.

         "Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.

         "Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters.

         "ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.

         "Eurodollar Base Rate" means, with respect to a Eurodollar Rate Loan
for the relevant Interest Period, the applicable British Bankers' Association
Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters
Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, and having a maturity equal to such Interest
Period, provided that, (i) if Reuters Screen FRBD is not available to the Agent
for any reason, the applicable Eurodollar Base Rate for the relevant Interest
Period shall instead be the applicable British Bankers' Association Interest
Settlement Rate for deposits in U.S. dollars as reported by any other generally
recognized financial information service as of 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, and having a
maturity equal to such Interest Period, and (ii) if no such British Bankers'
Association Interest Settlement Rate is available to the Agent, the applicable
Eurodollar Base Rate for the relevant Interest Period shall instead be the rate
determined by the Agent to be the rate at which Bank One or one of its Affiliate
banks offers to place deposits in U.S. dollars with first-class banks in the
London interbank market at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, in the approximate

                                      -5-
<PAGE>

amount of Bank One's relevant Eurodollar Rate Loan and having a maturity equal
to such Interest Period

         "Eurodollar Rate" means, with respect to a Eurodollar Rate Loan for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base
Rate applicable to such Interest Period, divided by (b) one minus the Eurodollar
Reserve Percentage (expressed as a decimal) applicable to such Interest Period,
plus (ii) the Applicable Margin.

         "Eurodollar Rate Loan" means a Loan which, except as otherwise provided
in Section 2.8(c), bears interest at the applicable Eurodollar Rate.

         "Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether or not applicable to any
Bank) under regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities").

         "Event of Default" means any of the events or circumstances specified
in Section 8.1.

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

         "Facility Fee Rate" means, at any time, the rate per annum determined
in accordance with Schedule 1.1.

         "Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by Agent in its sole discretion.

         "Fee Letter" has the meaning specified in subsection 2.9(a).

         "FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.

         "Funded Debt" means all Indebtedness for borrowed money (including
obligations under Capital Leases and excluding Contingent Obligations with
respect to Funded Indebtedness of other Persons).

                                      -6-
<PAGE>

         "GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the Closing Date.

         "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to Government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.

         "Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms) (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such property); (f) all obligations with respect to capital leases; (g)
all net obligations with respect to Swap Contracts; (h) all indebtedness
referred to in clauses (a) through (g) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (i) all Contingent Obligations
in respect of indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) above.

         "Indemnified Liabilities" has the meaning specified in Section 10.5.

         "Indemnified Person" has the meaning specified in Section 10.5.

         "Independent Auditor" has the meaning specified in subsection 6.1(a).

         "Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; undertaken under U.S. Federal, state or foreign law, including
the Bankruptcy Code.

                                      -7-
<PAGE>

         "Interest and Rental Expense" means, for any period, all amounts
recorded and deducted in computing the Company's Consolidated Net Income for
such period in respect of interest charges and expense and rental charges for
such period (whether paid or accrued, or a cash or non-cash expense, and in the
case of rental payments, including the full amount of those payments made under
operating leases or synthetic leases, but only the imputed interest under
Capital Leases).

         "Interest Payment Date" means, as to any Eurodollar Rate Loan, the last
day of each Interest Period applicable to such Eurodollar Rate Loan and, as to
any Base Rate Loan, the last Business Day of each month and each date such Base
Rate Loan is converted into a Eurodollar Rate Loan, provided, however, that if
any Interest Period for a Eurodollar Rate Loan exceeds three months, the date
that falls three months after the beginning of such Interest Period and after
each Interest Payment Date thereafter is also an Interest Payment Date.

         "Interest Period" means, the period commencing on the Borrowing Date of
a Eurodollar Rate Loan or on the Conversion/Continuation Date on which the Loan
is converted into or continued as a Eurodollar Rate Loan, and ending on the date
one, two, three or six months thereafter as selected by the Company in its
Notice of Borrowing or Notice of Conversion/Continuation;

provided that:

                  (i) if any Interest Period would otherwise end on a day that
         is not a Business Day, that Interest Period shall be extended to the
         following Business Day unless the result of such extension would be to
         carry such Interest Period into another calendar month, in which event
         such Interest Period shall end on the preceding Business Day;

                  (ii) any Interest Period that begins on the last 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) shall end on the last Business Day of the calendar month at the
         end of such Interest Period; and

                  (iii) no Interest Period shall extend beyond the Termination
         Date.

         "Investment" means any advance, loan, extension of credit or capital
contribution to, or any investment in the capital stock or other equity
interest, or debt securities or other obligations of, another Person or any
contingent liability incurred for the benefit of another Person.

         "IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.

         "Joint Venture" means a single-purpose corporation, partnership, joint
venture or other similar legal arrangement (whether created by contract or
conducted through a separate legal entity) now or hereafter formed by the
Company or any of its Subsidiaries with another Person in order to conduct a
common venture or enterprise with such Person.

                                      -8-
<PAGE>

         "Lead Arranger" means Banc One Capital Markets, Inc.

         "Lending Office" means, as to any Bank, the office or offices of such
Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Eurodollar Lending Office", as the case may be, on Schedule 10.2, or such other
office or offices as such Bank may from time to time notify the Company and the
Agent.

         "Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the Uniform Commercial Code or any comparable law), but not
including the interest of a lessor under an operating lease.

         "Loan" means an extension of credit by a Bank to the Company under
Article II, and may be a Base Rate Loan or a Eurodollar Rate Loan (each, a
"Type" of Loan).

         "Loan Documents" means this Agreement, any Notes, the Fee Letter and
all other documents delivered to the Agent or any Bank in connection herewith.

         "Majority Banks" means at any time Banks then holding in excess of 50%
of the then aggregate unpaid principal amount of the Loans, or, if no such
principal amount is then outstanding, Banks then having in excess of 50% of the
Commitments.

         "Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the FRB.

         "Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, assets, liabilities
(actual or contingent), properties, condition (financial or otherwise) or
prospects of the Company or the Company and its Subsidiaries taken as a whole;
(b) a material impairment of the ability of the Company or any Subsidiary to
perform under any Loan Document and to avoid any Event of Default; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against the Company or any Subsidiary of any Loan Document.

         "Multiemployer Plan" means a "multiemployer plan", within the meaning
of Section 4001(a) (3) of ERISA, to which the Company or any member of the
Controlled Group makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to make,
contributions.

         "Note" means a promissory note executed by the Company in favor of a
Bank pursuant to subsection 2.2(b), in substantially the form of Exhibit F.

         "Notice of Borrowing" means a notice in substantially the form of
Exhibit A.

                                      -9-
<PAGE>

         "Notice of Conversion/Continuation" means a notice in substantially the
form of Exhibit B.

         "Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company to any
Bank, the Agent, or any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.

         "Organization Documents" means, for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation.

         "Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Documents.

         "Participant" has the meaning specified in subsection 10.8(d).

         "PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.

         "Pension Plan" means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
Multiemployer Plan), and to which the Company or any member of the Controlled
Group may have any liability with respect to current or former employees of the
Company or any member of the Controlled Group, including any liability by reason
of having been a substantial employer within the meaning of Section 4063 of
ERISA at any time during the preceding five years, or by reason of being deemed
to be a contributing sponsor under Section 4069 of ERISA.

         "Permitted Liens" has the meaning specified in Section 7.1.

         "Person" means an individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.

         "Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the combined Commitments of all Banks.

         "Replacement Bank" has the meaning specified in Section 3.7.

         "Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental

                                      -10-
<PAGE>

Authority, in each case applicable to or binding upon the Person or any of its
property or to which the Person or any of its property is subject.

         "Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants, the chief financial officer or the treasurer of the Company, or any
other officer having substantially the same authority and responsibility.

         "SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

         "Senior Indebtedness" means all Indebtedness of the Company for money
borrowed which is not by its terms subordinated in right of payment to the
payment of any other Indebtedness of the Company.

         "Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof. Unless
the context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Company.

         "Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.

         "Swap Contract" means any agreement (including any master agreement and
any agreement, whether or not in writing, relating to any single transaction)
that is an interest rate swap agreement, basis swap, forward rate agreement,
commodity swap, commodity option, equity or equity index swap or option, bond
option, interest rate option, forward foreign exchange agreement, rate cap,
collar or floor agreement, currency swap agreement, cross-currency rate swap
agreement, swaption, currency option or any other, similar agreement (including
any option to enter into any of the foregoing).

         "Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Agent, such taxes (including income
taxes or franchise taxes) as are imposed on or measured by each Bank's net
income by the jurisdictions (or any political subdivision thereof) under the
laws of which such Bank or the Agent, as the case may be, is organized or
maintains a lending office.

         "Termination Date" means the earlier to occur of:

                  (a) December 28, 2001 (subject to extension at the discretion
         of the Banks as provided in Section 2.14); and

                                      -11-
<PAGE>

                  (b) the date on which the Commitments terminate in accordance
         with the provisions of this Agreement.

         "Total Capitalization" means, as to any Person and as of any date, the
sum of the shareholders' equity of such Person, calculated in accordance with
GAAP consistently applied, as shown on a balance sheet of such Person, plus the
Funded Debt of such Person.

         "Type" has the meaning specified in the definition of "Loan."

         "United States" and "U.S." each means the United States of America.

         "Welfare Plan" means a "welfare plan", as such term is defined in
Section 3(1) of ERISA.

         "Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Company, or by one or more of the
other Wholly-Owned Subsidiaries, or both.

     1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.

         (b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.

         (c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.

                  (ii) The term "including" is not limiting and means "including
         without limitation."

                  (iii) In the computation of periods of time from a specified
         date to a later specified date, the word "from" means "from and
         including"; the words "to" and "until" each mean "to but excluding",
         and the word "through" means "to and including."

         (d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.

                                      -12-
<PAGE>

         (e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.

         (f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.

         (g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks' involvement in their preparation.

     1.3 Accounting Principles. Unless the context otherwise clearly requires,
all accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.

         (a) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.

                                   ARTICLE II

                                   THE CREDITS

     2.1 Amounts and Terms of Commitments. Each Bank severally agrees, on the
terms and conditions set forth herein, to make loans to the Company (each such
loan, a "Loan") from time to time on any Business Day during the period from the
Closing Date to the Termination Date, in an aggregate amount not to exceed at
any time outstanding, together with the principal amount of Loans outstanding in
favor of such Bank at such time, the amount set forth next to such Bank's name
on Schedule 2.1 (such amount, as the same may be reduced under Section 2.5 or as
a result of one or more assignments under Section 10.8, the Bank's
"Commitment"); provided, however, that, after giving effect to any Borrowing,
the aggregate principal amount of all outstanding Loans shall not at any time
exceed the combined Commitments. Within the limits of each Bank's Commitment,
and subject to the other terms and conditions hereof, the Company may borrow
under this Section 2.1, prepay under Section 2.6 and reborrow under this Section
2.1.

     2.2 Loan Accounts. (a) The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the Agent and
each Bank shall be conclusive absent manifest error of the amount of the Loans
made by the Banks to the Company and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay any amount owing
with respect to the Loans.

                                      -13-
<PAGE>

         (b) Upon the request of any Bank made through the Agent, the Loans made
by such Bank may be evidenced by one or more Notes, instead of loan accounts.
Each such Bank shall endorse on the schedules annexed to its Note(s) the date,
amount and maturity of each Loan made by it and the amount of each payment of
principal made by the Company with respect thereto. Each such Bank is
irrevocably authorized by the Company to endorse its Note(s) and each Bank's
record shall be conclusive absent manifest error; provided, however, that the
failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Bank.

     2.3 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable telephonic or written notice delivered to the Agent in the
form of a Notice of Borrowing, if written and promptly confirmed by delivery of
a form of Notice of Borrowing, if telephonic, which written or telephonic notice
must be received by the Agent prior to 9:00 a.m. (Chicago time) (i) two Business
Days prior to the requested Borrowing Date, in the case of Eurodollar Rate
Loans; and (ii) on the requested Borrowing Date, in the case of Base Rate Loans,
specifying:

                  (A) the amount of the Borrowing, which shall be in an
         aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in
         excess thereof;

                  (B) the requested Borrowing Date, which shall be a Business
         Day;

                  (C) the Type of Loans comprising the Borrowing; and

                  (D) the duration of the Interest Period applicable to such
         Loans included in such notice. If the Notice of Borrowing fails to
         specify the duration of the Interest Period for any Borrowing comprised
         of Eurodollar Rate Loans, such Interest Period shall be three months.

         (b) The Agent will promptly notify each Bank of its receipt of any
Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing.

         (c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Company at the Agent's
Payment Office by 1:00 p.m. (Chicago time) on the Borrowing Date requested by
the Company in funds immediately available to the Agent. The proceeds of all
such Loans will then be made available to the Company by the Agent by wire
transfer in accordance with written instructions provided to the Agent by the
Company of like funds as received by the Agent.

         (d) After giving effect to any Borrowing, there may not be more than
ten different Interest Periods in effect.

     2.4 Conversion and Continuation Elections. (a) The Company may, upon
irrevocable written or telephonic notice (promptly confirmed in writing, if
telephonic) to the Agent in accordance with subsection 2.4(b):

                                      -14-
<PAGE>

                  (i) elect, as of any Business Day, in the case of Base Rate
         Loans, or as of the last day of the applicable Interest Period, in the
         case of Eurodollar Rate Loans, to convert any such Loans (or any part
         thereof in an amount not less than $5,000,000, or that is in an
         integral multiple of $1,000,000 in excess thereof) into Loans of any
         other Type; or

                  (ii) elect, as of the last day of the applicable Interest
         Period, to continue any Eurodollar Rate Loans having Interest Periods
         expiring on such day (or any part thereof in an amount not less than
         $5,000,000, or that is in an integral multiple of $1,000,000 in excess
         thereof);

provided, that if at any time the aggregate amount of Eurodollar Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such Eurodollar Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as, and convert such Loans into,
Eurodollar Rate Loans shall terminate.

         (b) The Company shall give written or telephonic notice to be received
by the Agent not later than 9:00 a.m. (Chicago time) at least (i) two Business
Days in advance of the Conversion/Continuation Date, if the Loans are to be
converted into or continued as Eurodollar Rate Loans; and (ii) on the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:

                  (A) the proposed Conversion/Continuation Date;

                  (B) the aggregate amount of Loans to be converted or renewed;

                  (C) the Type of Loans resulting from the proposed conversion
         or continuation; and

                  (D) in the case of conversions into or continuations of
         Eurodollar Rate Loans, the duration of the requested Interest Period.

Such notice, if written, shall be in the form of a Notice of
Conversion/Continuation and, if telephonic, shall be confirmed with a Notice of
Conversion/Continuation.

         (c) If upon the expiration of any Interest Period applicable to
Eurodollar Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Eurodollar Rate Loans or if any Default or Event
of Default then exists, the Company shall be deemed to have elected to convert
such Eurodollar Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.

         (d) The Agent will promptly notify each Bank of its receipt of a Notice
of Conversion/Continuation, or, if no timely notice is provided by the Company,
the Agent will promptly notify each Bank of the details of any automatic
conversion. All conversions and continuations shall be made ratably according to
the respective outstanding principal amounts of the Loans with respect to which
the notice was given held by each Bank.

                                      -15-
<PAGE>

         (e) Unless the Majority Banks otherwise agree, during the existence of
a Default or Event of Default, the Company may not elect to have a Loan
converted into or continued as a Eurodollar Rate Loan.

         (f) After giving effect to any conversion or continuation of Loans,
there may not be more than five different Interest Periods in effect.

     2.5 Changes in Aggregate Commitments. The Company may, upon not less than
four Business Days' prior notice to the Agent, terminate the Commitments, or
permanently reduce the Commitments by an aggregate minimum amount of $5,000,000
or any multiple of $1,000,000 in excess thereof; unless, after giving effect
thereto and to any prepayments of Loans made on the effective date thereof, the
then-outstanding principal amount of the Loans would exceed the amount of the
combined Commitments then in effect. Once reduced in accordance with this
Section 2.5, the Commitments may not be increased. Any reduction of the
Commitments shall be applied to each Bank according to its Pro Rata Share. All
accrued commitment fees to, but not including the effective date of any
reduction or termination of Commitments, shall be paid on the effective date of
such reduction or termination.

     2.6 Optional Prepayments. Subject to Section 3.4, the Company may, at any
time or from time to time, upon not less than one Business Day's irrevocable
notice to the Agent (in the case of Base Rate Loans) and three Business Days'
irrevocable notice to the Agent (in the case of Eurodollar Rate Loans), ratably
prepay Loans in whole or in part, in minimum amounts of $1,000,000 or any
multiple of $1,000,000 in excess thereof. Such notice of prepayment shall
specify the date and amount of such prepayment and the Type(s) of Loans to be
prepaid. The Agent will promptly notify each Bank of its receipt of any such
notice, and of such Bank's Pro Rata Share of such prepayment. If such notice is
given by the Company, the Company shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein, together with, in the case of Eurodollar Rate Loans, accrued interest
to each such date on the amount prepaid and any amounts required pursuant to
Section 3.4.

     2.7 Repayment. The Company shall repay to the Banks on the Termination Date
the aggregate principal amount of Loans outstanding on such date.

     2.8 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Eurodollar Rate or the Base Rate, as the case may be (and subject
to the Company's right to convert to other Types of Loans under Section 2.4),
plus the Applicable Margin.

         (b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of Loans
under Section 2.6 for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the Agent at the request or with
the consent of the Majority Banks.

         (c) Notwithstanding subsection (a) of this Section, while any Event of
Default exists or after acceleration, the Company shall pay interest (after as
well as before

                                      -16-
<PAGE>

entry of judgment thereon to the extent permitted by law) on the principal
amount of all outstanding Loans, at a rate per annum which is determined by
adding 2% per annum to the Applicable Margin then in effect for such Loans;
provided, however, that, on and after the expiration of any Interest Period
applicable to any Eurodollar Rate Loan outstanding on the date of occurrence of
such Event of Default or acceleration, the principal amount of such Eurodollar
Rate Loan shall, during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Base Rate plus 2%.

         (d) Anything herein to the contrary notwithstanding, the obligations of
the Company to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.

     2.9 Fees. (a) Arrangement, Agency Fees. The Company shall pay an
arrangement fee to the Lead Arranger for the Lead Arranger's own account, and
shall pay an agency fee to the Agent for the Agent's own account, as required by
the letter agreement ("Fee Letter") between the Company and the Lead Arranger
and Agent dated November 20, 2000.

         (b) Facility Fee. The Company shall pay to the Agent for the account of
each Bank a facility fee on the Bank's Commitment (regardless of usage),
computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter, equal to the Facility Fee Rate. Such facility fee shall accrue
from the date hereof to the Termination Date and shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter
commencing on March 31, 2001 through the Termination Date, with the final
payment to be made on the Termination Date; provided that, in connection with
any reduction or termination of Commitments under Section 2.5, the accrued
facility fee calculated for the period ending on such date shall also be paid on
the date of such reduction or termination, with the following quarterly payment
being calculated on the basis of the period from such reduction or termination
date to such quarterly payment date. The facility fees provided in this
subsection shall accrue at all times after the above-mentioned commencement
date, including at any time during which one or more conditions in Article IV
are not met.

         (c) Utilization Fee. The Company shall pay to the Agent for the account
of each Bank a utilization fee at a rate of 0.25% per annum on the principal
amount of all outstanding Loans for each day on which the outstanding principal
balance of all Loans is equal to or greater than 33.0% of the combined
Commitments of all Banks hereunder. Such utilization fee shall accrue for each
such day from the date hereof to the Termination Date and shall be due and
payable quarterly in arrears on the last Business Day of each calendar quarter
commencing on March 31, 2001 through the Termination Date, with the final
payment to made on the Termination Date.

                                      -17-
<PAGE>

         (d) Upfront Fee. The Company shall pay an upfront fee to the Lead
Arranger for the ratable benefit of the Banks as required by the Fee Letter.

     2.10 Computation of Fees and Interest. (a) All computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof.

         (b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Company and the Banks in the absence of manifest
error.

     2.11 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Agent for the account of the Banks at the Agent's Payment Office, and shall be
made in dollars and in immediately available funds, no later than 2:00 p.m.
(Chicago time) on the date specified herein. The Agent will promptly distribute
to each Bank its Pro Rata Share (or other applicable share as expressly provided
herein) of such payment in like funds as received. Any payment received by the
Agent later than 2:00 p.m. (Chicago time) shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall continue
to accrue.

         (b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.

         (c) Unless the Agent receives notice from the Company prior to the date
on which any payment is due to the Banks that the Company will not make such
payment in full as and when required, the Agent may assume that the Company has
made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Agent, each Bank shall repay to the Agent on demand such
amount distributed to such Bank, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Bank
until the date repaid.

     2.12 Payments by the Banks to the Agent. (a) Unless the Agent receives
notice from a Bank on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date of
such Borrowing, that such Bank will not make available as and when required
hereunder to the Agent for the account of the Company the amount of that Bank's
Pro Rata Share of the Borrowing, the Agent may assume that each Bank has made
such amount available to the Agent in immediately available funds on the
Borrowing Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Agent in immediately

                                      -18-
<PAGE>

available funds and the Agent in such circumstances has made available to the
Company such amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the Agent
submitted to any Bank with respect to amounts owing under this subsection (a)
shall be conclusive, absent manifest error. If such amount is so made available,
such payment to the Agent shall constitute such Bank's Loan on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to the Agent on the Business Day following the Borrowing Date, the
Agent will notify the Company of such failure to fund and, upon demand by the
Agent, the Company shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the time
to the Loans comprising such Borrowing.

         (b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.

     2.13 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Agent of such fact, and (b) purchase from the other
Banks such participations in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 10.9) with respect to such
participation as fully as if such Bank were the direct creditor of the Company
in the amount of such participation. The Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments.

     2.14 Extension of Termination Date. At least 30 days but not more than 60
days prior to the Termination Date, the Company, by written notice to the Agent,
may request one extension of the Termination Date for an additional period of
364 days. The Agent shall promptly notify each Bank of such request, and each
Bank shall in turn, in its sole discretion, within 21 days after receipt of such
notice from the Agent, notify the Company and the Agent in writing as to whether
such Bank will consent to such extension. If any Bank shall fail to notify the
Agent and the Company in writing of its consent to any such request for
extension of the Termination Date by such time, such Bank shall be deemed to
have not consented to

                                      -19-
<PAGE>

such extension request. The Agent shall notify the Company on or prior to the
scheduled Termination Date of the decision of the Banks regarding the Company's
request for an extension of the Termination Date. If all the Banks consent in
writing to such request as provided above, the Termination Date shall, effective
as at the scheduled Termination Date set forth in clause (a) of the definition
thereof in Section 1.1, be automatically extended for a period of 364 days;
provided that on such date the applicable conditions set forth in Article IV
shall be satisfied.

                                  ARTICLE III

                     TAXES, YIELD PROTECTION AND ILLEGALITY

     3.1 Taxes. (a) Any and all payments by the Company to each Bank or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for any Taxes. In addition, the
Company shall pay all Other Taxes.

         (b) The Company agrees to indemnify and hold harmless each Bank and the
Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section) paid by
the Bank or the Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days after the date
the Bank or the Agent makes written demand therefor.

         (c) If the Company shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any Bank
or the Agent, then:

                  (i) the sum payable shall be increased as necessary so that
         after making all required deductions and withholdings (including
         deductions and withholdings applicable to additional sums payable under
         this Section) such Bank or the Agent, as the case may be, receives an
         amount equal to the sum it would have received had no such deductions
         or withholdings been made; (ii) the Company shall make such deductions
         and withholdings;

                  (iii) the Company shall pay the full amount deducted or
         withheld to the relevant taxing authority or other authority in
         accordance with applicable law; and

                  (iv) the Company shall also pay to each Bank or the Agent for
         the account of such Bank, at the time interest is paid, all additional
         amounts which the respective Bank specifies as necessary to preserve
         the after-tax yield the Bank would have received if such Taxes or Other
         Taxes had not been imposed.

                                      -20-
<PAGE>

         (d) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.

         (e) If the Company is required to pay additional amounts to any Bank or
the Agent pursuant to subsection (c) of this Section, then such Bank shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which may thereafter accrue, if such change in the
judgment of such Bank is not otherwise disadvantageous to such Bank.

     3.2 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Eurodollar Rate Loans, then, on notice thereof by the Bank to the Company
through the Agent, any obligation of that Bank to make Eurodollar Rate Loans
shall be suspended until the Bank notifies the Agent and the Company that the
circumstances giving rise to such determination no longer exist.

         (b) If a Bank determines that it is unlawful to maintain any Eurodollar
Rate Loan, the Company shall, upon its receipt of notice of such fact and demand
from such Bank (with a copy to the Agent), prepay in full such Eurodollar Rate
Loans of that Bank then outstanding, together with interest accrued thereon and
amounts required under Section 3.4, either on the last day of the Interest
Period thereof, if the Bank may lawfully continue to maintain such Eurodollar
Rate Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such Eurodollar Rate Loan. If the Company is required to so prepay any
Eurodollar Rate Loan, then concurrently with such prepayment, the Company shall
borrow from the affected Bank, in the amount of such repayment, a Base Rate
Loan.

         (c) If the obligation of any Bank to make or maintain Eurodollar Rate
Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Bank through the Agent that all Loans which would otherwise be
made by the Bank as Eurodollar Rate Loans shall be instead Base Rate Loans.

         (d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
Eurodollar Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Bank be
illegal or otherwise disadvantageous to the Bank.

     3.3 Increased Costs and Reduction of Return. (a) If any Bank determines
that, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) the compliance by that Bank with
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to such Bank of agreeing to make or making, funding or maintaining any
Eurodollar Rate Loans, then the Company shall be liable for, and shall from time
to time,

                                      -21-
<PAGE>

upon demand (with a copy of such demand to be sent to the Agent), pay to the
Agent for the account of such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs.

         (b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitments, loans, credits or obligations under this Agreement, then, upon
demand of such Bank to the Company through the Agent, the Company shall pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.

     3.4 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:

         (a) the failure of the Company to make on a timely basis any payment of
principal of any Eurodollar Rate Loan;

         (b) the failure of the Company to borrow, continue or convert a Loan
after the Company has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/Continuation;

         (c) the failure of the Company to make any prepayment in accordance
with any notice delivered under Section 2.6;

         (d) the prepayment or other payment (including after acceleration
thereof) of a Eurodollar Rate Loan on a day that is not the last day of the
relevant Interest Period; or

         (e) the automatic conversion under Section 2.4 of any Eurodollar Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Company to the Banks under this
Section and under subsection 3.3(a), each Eurodollar Rate Loan made by a Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the Eurodollar Base Rate used in
determining the Eurodollar Rate for such Eurodollar Rate Loan by a matching
deposit or other borrowing in the London interbank market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan is
in fact so funded.

                                      -22-
<PAGE>

     3.5 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the Eurodollar
Rate for any requested Interest Period with respect to a proposed Eurodollar
Rate Loan, or that the Eurodollar Rate applicable pursuant to subsection 2.8(a)
for any requested Interest Period with respect to a proposed Eurodollar Rate
Loan does not adequately and fairly reflect the cost to such Banks of funding
such Loan, the Agent will promptly so notify the Company and each Bank.
Thereafter, the obligation of the Banks to make or maintain Eurodollar Rate
Loans hereunder shall be suspended until the Agent with the consent of the
Majority Banks revokes such notice in writing. Upon receipt of such notice, the
Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation
then submitted by it. If the Company does not revoke such Notice, the Banks
shall make, convert or continue the Loans, as proposed by the Company, in the
amount specified in the applicable notice submitted by the Company, but such
Loans shall be made, converted or continued as Base Rate Loans instead of
Eurodollar Rate Loans.

     3.6 Certificates of Banks. Any Bank claiming reimbursement or compensation
under this Article III shall deliver to the Company (with a copy to the Agent) a
certificate setting forth in reasonable detail the amount payable to the Bank
hereunder and such certificate shall be conclusive and binding on the Company in
the absence of manifest error.

     3.7 Substitution of Banks. Upon the receipt by the Company from any Bank
(an "Affected Bank") of a claim for compensation under Section 3.3, the Company
may: (i) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution satisfactory to the Company to acquire
and assume all or a ratable part of all of such Affected Bank's Loans and
Commitment (a "Replacement Bank"); (ii) request one more of the other Banks to
acquire and assume all or part of such Affected Bank's Loans and Commitment; or
(iii) designate a Replacement Bank. Any such designation of a Replacement Bank
under clause (i) or (iii) shall be subject to the prior written consent of the
Agent (which consent shall not be unreasonably withheld)

     3.8 Survival. The agreements and obligations of the Company in this Article
III shall survive the payment of all other Obligations.

                                   ARTICLE IV

                              CONDITIONS PRECEDENT

     4.1 Conditions of Initial Loans. The obligation of each Bank to make its
initial Loan hereunder is subject to the condition that the Agent have received
on or before the Closing Date (i) evidence, satisfactory to the Agent, that the
line of credit letter agreement dated November 22, 2000, between the Company and
Bank One and the Master Note of the Company dated November 22, 2000 have been
terminated, that all amounts owing by the Company thereunder have been paid and
that all obligations of the Company thereunder have been satisfied, and (ii) all
of the following, in form and substance satisfactory to the Agent and each Bank,
and in sufficient copies for each Bank:

                                      -23-
<PAGE>

         (a) Credit Agreement. This Agreement executed by each party thereto;

         (b) Resolutions; Incumbency.

                  (i) Copies of the resolutions of the board of directors of the
         Company (or a committee thereof having power to authorize the
         transactions contemplated hereby) authorizing the transactions
         contemplated hereby, certified as of the Closing Date by the Secretary
         or an Assistant Secretary of the Company; and

                  (ii) A certificate of the Secretary or Assistant Secretary of
         the Company certifying the names and true signatures of the officers of
         the Company authorized to execute, deliver and perform this Agreement,
         and all other Loan Documents to be delivered by it hereunder;

         (c) Organization Documents. The articles or certificate of
incorporation and the bylaws of the Company as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of the Company as of the
Closing Date.

         (d) Legal Opinions. An opinion of Robin J. Irwin, counsel to the
Company and addressed to the Agent and the Banks, substantially in the form of
Exhibit D;

         (e) Payment of Fees. Evidence of payment by the Company of all accrued
and unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date; including any such costs, fees and expenses arising under or
referenced in Sections 2.9 and 10.4;

         (f) Certificate. A certificate signed by a Responsible Officer, dated
as of the Closing Date, stating that:

                  (i) the representations and warranties contained in Article V
         are true and correct on and as of such date, as though made on and as
         of such date;

                  (ii) no Default or Event of Default exists or would result
         from the initial Borrowing; and

                  (iii) there has occurred since May 25, 2000, no event or
         circumstance that has resulted or could reasonably be expected to
         result in a Material Adverse Effect;

         (g) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Bank may request.

     4.2 Conditions to All Borrowings. The obligation of each Bank to make any
Loan to be made by it (including its initial Loan) is subject to the
satisfaction of the following conditions precedent in the relevant Borrowing
Date:

                                      -24-
<PAGE>

         (a) Notice of Borrowing. The Agent shall have received a Notice of
Borrowing;

         (b) Continuation of Representations and Warranties. The representations
and warranties in Article V shall be true and correct on and as of such
Borrowing Date with the same effect as if made on and as of such Borrowing Date
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such earlier
date); and

         (c) No Existing Default. No Default or Event of Default shall exist or
shall result from such Borrowing.

Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the date of each
such notice and as of each Borrowing Date, that the conditions in Section 4.2
are satisfied.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

     The Company represents and warrants to the Agent and each Bank that:

     5.1 Corporate Existence and Power. The Company and each of its
Subsidiaries:

         (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;

         (b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;

         (c) is duly qualified as a foreign corporation and is licensed and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license; and

         (d) is in compliance with all Requirements of Law; except, with respect
to clauses (c) and (d), to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

         5.2 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company and its Subsidiaries of this Agreement and each
other Loan Document to which such Person is party, have been duly authorized by
all necessary corporate action, and do not and will not:

         (a) contravene the terms of any of that Person's Organization
Documents;

                                      -25-
<PAGE>

         (b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject; or

         (c) violate any Requirement of Law, except to the extent that such
violation could not reasonably be expected to have a Material Adverse Effect.

     5.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of the Agreement or any other Loan Document.

     5.4 Binding Effect. This Agreement and each other Loan Document to which
the Company or any of its Subsidiaries is a party constitute the legal, valid
and binding obligations of the Company and any or its Subsidiaries to the extent
it is a party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement or creditors'
rights generally or by equitable principles relating to enforceability.

     5.5 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, or its Subsidiaries or any of their respective
properties which:

         (a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or

         (b) if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect. No injunction, writ,
temporary restraining order or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.

     5.6 No Default. No Default or Event of Default exists or would result from
the incurring of any Obligations by the Company or the execution, delivery and
performance of a Guaranty by any Subsidiary. As of the Closing Date, neither the
Company nor any Subsidiary is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults could reasonably be expected to have a Material Adverse Effect, or
that would, if such default had occurred after the Closing Date, create an Event
of Default under subsection 8.1(e).

                                      -26-
<PAGE>

     5.7 ERISA Compliance.

         (a) During the twelve-consecutive-month period prior to the date of the
execution and delivery of this Agreement or the making of any Loan hereunder,
(i) no steps have been taken to terminate any Pension Plan and (ii) no
contribution failure has occurred with respect to any Pension Plan sufficient to
give rise to a lien under Section 302(f) of ERISA. No condition exists or event
or transaction has occurred with respect to any Pension Plan which might result
in the incurrence by the Company or any Subsidiary of any material liability,
fine or penalty.

         (b) All contributions (if any) have been made to any Multiemployer Plan
that are required to be made by the Company or any other member of the
Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable law; neither the Company nor any member of the
Controlled Group has withdrawn or partially withdrawn from any Multiemployer
Plan (except a single withdrawal, with respect to which the liability of the
Company and the members of the Controlled Group shall not exceed $l,000,000),
incurred any withdrawal liability with respect to any such plan, received notice
of any claim or demand for withdrawal liability or partial withdrawal liability
from any such plan, and no condition has occurred which, or continued, might
result in a withdrawal or partial withdrawal from any such plan; and neither the
Company nor any member of the Controlled Group has received any notice that any
Multiemployer Plan is in reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of any excise
tax, that any such plan is or has been funded at a rate less than that required
under Section 412 of the Code, that any such plan is or may be terminated, or
that any such plan is or may become insolvent.

     5.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 6.12 and
Section 7.7. Neither the Company nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.

     5.9 Title to Properties. The Company and each Subsidiary have good record
and marketable title in fee simple to, or valid leasehold interests in all real
property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. The property of the Company and
its Subsidiaries is subject to no Liens, other than Permitted Liens.

     5.10 Taxes. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.

                                      -27-
<PAGE>

     5.11 Financial Condition. (a) The audited consolidated financial statements
of the Company and its Subsidiaries dated May 25, 2000 and the unaudited
consolidated financial statements of the Company and its Subsidiaries dated
August 24, 2000; and the related consolidated statements of income or
operations, shareholders' equity and cash flows for the fiscal year or period
ended on such dates:

                  (i) Were prepared in accordance with GAAP consistently applied
         throughout the period covered thereby, except as otherwise expressly
         noted therein;

                  (ii) fairly present the financial condition of the Company and
         its Subsidiaries as of the date thereof and results of operations for
         the period covered thereby; and

                  (iii) show all material indebtedness and other liabilities,
         direct or contingent, of the Company and its consolidated Subsidiaries
         as of the date thereof, including liabilities for taxes, material
         commitments and Contingent Obligations.

         (b) Since May 25, 2000, there has been no Material Adverse Effect.

     5.12 Environmental Matters. The Company and its Subsidiaries conduct in the
ordinary course of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on its business, operations and
properties, and as a result thereof the Company has reasonably concluded that
such Environmental Laws and Environmental Claims could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

     5.13 Regulated Entities. None of the Company, any person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. The Company is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.

     5.14 No Burdensome Restrictions. Neither the Company nor any Subsidiary is
a party to or bound by any Contractual Obligation, or subject to any restriction
in any Organization Document, or any Requirement of Law, which could reasonably
be expected to have a Material Adverse Effect.

     5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company or its
Subsidiaries own or are licensed or otherwise have the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person, except to the extent any such conflict could not reasonably
be expected to have a Material Adverse Effect. To the best knowledge of the
Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Company or any Subsidiary infringes upon any rights held by any
other Person. No claim or litigation

                                      -28-
<PAGE>

regarding any of the foregoing is pending or threatened, and no patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or, to the knowledge of the Company, proposed,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.

     5.16 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries
other than those specifically disclosed in part (a) of Schedule 5.16 hereto and,
except as specifically disclosed in part (b) of Schedule 5.16 has no equity
investments in any other corporation or entity, which, as to any one corporation
or entity, are equal to or greater than 20% of the aggregate ownership interests
in such corporation or entity or the value of which equity investments in any
one corporation or entity is equal to or greater than $100,000.

     5.17 Insurance. The properties of the Company and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of the Company, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or such Subsidiary operates.

     5.18 Full Disclosure. None of the representations or warranties made by the
Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.

     5.19 Subsidiary Indebtedness. No Subsidiary has outstanding any Contingent
Obligations with respect to Indebtedness of the Company.

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

     So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:

     6.1 Financial Statements. The Company shall deliver to the Agent and the
Banks, in form and detail satisfactory to the Agent and the Majority Banks:

         (a) as soon as available, but not later than 110 days after the end of
each fiscal year, a copy of the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of

                                      -29-
<PAGE>

Ernst & Young LLP or another nationally recognized independent public accounting
firm ("Independent Auditor") which report shall state that such consolidated
financial statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of a restricted or
limited examination by the Independent Auditor of any material portion of the
Company's or any Subsidiary's records;

         (b) as soon as available, but not later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year, a copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer as fairly presenting, in accordance with GAAP (subject to ordinary, good
faith year-end audit adjustments), the financial position and the results of
operations of the Company and the Subsidiaries;

     6.2 Certificates; Other Information. The Company shall furnish to the Agent
and the Banks:

         (a) concurrently with the delivery of the financial statements referred
to in subsections 6.1(a) and (b), a Compliance Certificate executed by a
Responsible Officer;

         (b) promptly, copies of all financial statements and reports that the
Company sends to its shareholders, and copies of all financial statements and
regular, periodical or special reports (including Forms 10K, 10Q and 8K) that
the Company or any Subsidiary may make to, or file with, the SEC, any securities
exchange or the National Association of Securities Dealers, Inc.; and

         (c) promptly, such additional information regarding the business,
financial or corporate affairs or the Company or any Subsidiary as the Agent, at
the request of any Bank, may from time to time request.

     6.3 Notices. The Company shall promptly notify the Agent and each Bank:

         (a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;

         (b) of any matter that has resulted or may result in a Material Adverse
Effect, including (i) breach or non-performance of, or any default under, a
Contractual Obligation of the Company or any Subsidiary; (ii) any dispute,
litigation, investigation, proceeding or suspension between the Company or any
Subsidiary and any Governmental Authority; or (iii) the commencement of, or any
material development in, any litigation or proceeding affecting the Company or
any Subsidiary; including pursuant to any applicable Environmental Laws;

                                      -30-
<PAGE>

         (c) of the institution of any steps by any member of the Controlled
Group or any other Person to terminate any Pension Plan, or the failure or any
member of the Controlled Group to make a required contribution to any Pension
Plan (if such failure is sufficient to give rise to a lien under Section 302(f)
of ERISA) or to any Multiemployer Plan, or the taking of any action with respect
to a Pension Plan which could result in the requirement that the Company furnish
a bond on or other security to the PBGC or such Pension Plan, or the occurrence
of any event with respect to any Pension Plan or Multiemployer Plan which could
result in the incurrence by any member of the Controlled Group of any material
liability, fine or penalty (including any claim or demand for withdrawal
liability or partial withdrawal from any Multiemployer Plan), or any material
increase in the contingent liability of the Company with respect to any
post-retirement Welfare Plan benefit, or any notice that any Multiemployer Plan
is in reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated or that any such plan is
or may become insolvent;

         (d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries.

         Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary Proposes to take with respect thereto and at what time. Each notice
under subsection 6.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.

     6.4 Preservation of Corporate Existence, Etc. The Company shall and shall
cause each Subsidiary to:

         (a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;

         (b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business except in connection with
transactions permitted by Section 7.3 and sales or assets permitted by Section
7.2;

         (c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and

         (d) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.

     6.5 Maintenance of Property. The Company shall maintain, and shall cause
each Subsidiary to maintain, and preserve all its property which is used or
useful in its business in

                                      -31-
<PAGE>

good working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

     6.6 Insurance. The Company shall maintain, and shall cause each Subsidiary
to maintain, with financially sound and reputable independent insurers,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.

     6.7 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:

         (a) all tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company or such Subsidiary;

         (b) all lawful claims which, if unpaid, would by law become a Lien upon
its property; and

         (c) all indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.

     6.8 Compliance with Laws. The Company shall comply, and shall cause each
Subsidiary to comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Poor Standards Act), except as such may be contested
in good faith or as to which a bona fide dispute may exist.

     6.9 Employee Benefit Plans. The Company shall maintain and cause each or
its Subsidiaries to maintain, each Pension Plan in substantial compliance with
all applicable requirements of law and regulations.

     6.10 Accounting; Inspection of Property and Books and Records. The Company
shall maintain a system of accounting established and administered in accordance
with sound business practices to permit preparation of financial statements in
accordance with GAAP consistently applied, and to comply with the requirements
of this Agreement and the other Loan Documents. The Company shall maintain and
shall cause each Subsidiary to maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Company and such Subsidiary. The Company shall
permit, and shall cause each Subsidiary to permit, representatives and
independent contractors of the Agent or any Bank to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom,

                                      -32-
<PAGE>

and to discuss their respective affairs, finances and accounts with their
respective directors, officers, and independent public accountants, all at the
expense of the Company and at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance notice to the
Company; provided, however, when an Event of Default exists the Agent or any
Bank may do any of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice.

     6.11 Environmental Laws. The Company shall, and shall cause each Subsidiary
to, conduct its operations and keep and maintain its property in compliance with
all Environmental Laws except to the extent any such noncompliance could not
reasonably be expected to have a Material Adverse Effect.

     6.12 Use of Proceeds. The Company shall use the proceeds of the Loans for
working capital, capital expenditures, commercial paper backup and other general
corporate purposes not in contravention of any Requirement of Law or of any Loan
Document.

     6.13 Contingent Obligations. If any Subsidiary shall have any Contingent
Obligations with respect to any Indebtedness of the Company, the Company shall
cause such Subsidiary to take such actions as are reasonably necessary, or as
the Agent or any Bank may reasonably request from time to time, to guarantee the
Obligations.

                                  ARTICLE VII

                               NEGATIVE COVENANTS

     So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:

     7.1 Limitation on Liens. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):

         (a) Liens for taxes not delinquent or for taxes being contested in good
faith by appropriate proceedings and as to which adequate financial reserves
have been established on the books and records of the Company or any Subsidiary;

         (b) Liens (other than any Lien imposed by ERISA) created and maintained
in the ordinary course of business which are not material in the aggregate, and
which would not constitute or result in a Material Adverse Effect, and which
constitute (i) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (ii) good faith deposits in
connection with bids, tenders, contracts or leases to which the Company or a
Subsidiary is a party for a purpose other than borrowing money or obtaining
credit, including rent security deposits, (iii) Liens imposed by law, such as
those of carriers, warehousemen and mechanics, if payment of the obligation
secured thereby is not yet due, (iv) Liens securing taxes, assessments or other
charges or levies of any Governmental

                                      -33-
<PAGE>

Authority not yet subject to penalties for nonpayment, and (v) pledges or
deposits to secure public or statutory obligations of the Company or a
Subsidiary, or surety, customs or appeal bonds to which the Company or a
Subsidiary is a party;

         (c) Liens affecting real property which constitute minor survey
exceptions or defects or irregularities in title, minor encumbrances, easements
or reservations of, or rights of others for, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of such real property; provided, however, that
all of the foregoing, in the aggregate, do not at any time materially detract
from the value of said properties or materially impair their use in the
operation of the businesses of the Company or any Subsidiary;

         (d) each Lien described in Schedule 7.1 may be suffered to exist upon
the same terms as those existing on the date hereof, but no extension or renewal
thereof shall be permitted except for a refinancing in the ordinary course of
business for an amount not in excess of the original amount subject to such
Lien;

         (e) purchase money Liens upon or in property of the Company or a
subsidiary acquired after the Closing Date; provided, however, that no such Lien
shall extend to or cover any other property of the Company or a Subsidiary or
secure an amount in excess of the lesser of the purchase price or the market
value of such property; and

         (f) other Liens provided that the aggregate outstanding amount of
Indebtedness secured by all such other Liens shall not exceed $15,000,000 at any
time after the Closing Date.

     7.2 Disposition of Assets. The Company shall not, and shall not suffer or
permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions)
any property (including accounts and notes receivable, with or without recourse)
or enter into any agreement to do any of the foregoing, except: (a) inventory
sold in the ordinary course of business upon customary credit terms and sales of
obsolete or damaged material or equipment, (b) sales of assets in connection
with sale-leaseback transactions in an amount not to exceed $10,000,000 and (c)
other sales of assets not to exceed 10% of the consolidated total assets of the
Company and its Subsidiaries in any fiscal year of the Company ending after the
Closing Date; except that (x) any Subsidiary may sell, lease, transfer or
otherwise dispose of its assets to the Company or any other Subsidiary; and (y)
the Company may sell, lease, transfer or otherwise dispose of assets in excess
of the limitations set forth above if the proceeds thereof (i) are used to
purchase or are committed to purchase other property of a similar nature of at
least equivalent value within one year of such sale, lease, transfer or other
disposition or (ii) are used to prepay Senior Indebtedness (including the Loans)
on a pro-rata basis.

     7.3 Merger; Purchase of Assets; Acquisitions; Etc. The Company shall not,
and shall not suffer or permit any Subsidiary to purchase or otherwise acquire,
whether in one or a series of transactions, all or a substantial portion of the
business, assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, of any Person, or all or a substantial

                                      -34-
<PAGE>

portion of the capital stock of or other ownership interest in any other Person;
nor merge or consolidate or amalgamate with any other Person or take any other
action having a similar effect, nor enter into any Joint Venture or similar
arrangement with any other Person; provided, however, that this Section 7.3
shall not prohibit any Acquisition by the Company or any of its Subsidiaries of
any Person engaged in substantially the same business as the Company or such
Subsidiary if (a) in the case of an Acquisition of stock or a merger, the
acquired Person shall be immediately merged with and into the Company or such
Subsidiary which shall be the surviving corporation, and (b) immediately after
such Acquisition, no Default or Event of Default shall exist or shall have
occurred and be continuing and, prior to the consummation of such Acquisition,
the Company shall have provided to the Bank a certificate of a Responsible
Officer (attaching computations to demonstrate compliance with all financial
covenants hereunder) stating that such Acquisition complies with this Section
7.3 and will not cause a Default or Event of Default to occur or continue and
that any other conditions under this Agreement and the other Loan Documents
relating to such transaction have been satisfied; and provided, further, that
this Section 7.3 shall not prohibit any merger or consolidation solely between
or among the Company and its Subsidiaries, so long as the Company is the
surviving person of such merger or consolidation.

     7.4 Loans and Investments. The Company shall not and shall not suffer or
permit any Subsidiary to make or commit to make any Investment, other than: (a)
Investments in Cash Equivalents; (b) Investments in its existing Subsidiaries;
(c) Investments in new Subsidiaries consisting of partnerships or limited
liability companies engaged in the business of owning and operating hotels or
motels, movie theaters or restaurants; (d) loans or advances to franchisees not
to exceed $10,000,000, on a consolidated basis, in the aggregate at any time
after the Closing Date; (e) Investments listed in the attached Schedule 7.4, (f)
Investments (excluding contingent liabilities) to owners of properties or
businesses managed by the Company or a Subsidiary not to exceed $15,000,000, on
a consolidated basis, in the aggregate at any time after the Closing Date; (g)
Investments, consisting of contingent liabilities, to owners of properties or
businesses managed by the Company or a Subsidiary not to exceed $10,000,000, on
a consolidated basis, in the aggregate at any time after the Closing Date; and
(h) other Investments (including contingent liabilities) not to exceed
$3,000,000 on a consolidated basis, in the aggregate at any time after the
Closing Date.

     7.5 Limitation on Subsidiary Indebtedness. The Company shall not permit any
Subsidiary to create, incur, assume, suffer to exist, or otherwise become or
remain directly or indirectly liable with respect to, any Indebtedness, except
Indebtedness, which when added to the Indebtedness secured by Liens permitted
under Sections 7.1(d), (e) and (f) shall not exceed 5% of Total Capitalization.

     7.6 Transactions with Affiliates. The Company shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary.

                                      -35-
<PAGE>

     7.7 Use of Proceeds. The Company shall not, and shall not suffer or permit
any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly,
(i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of the Company or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.

     7.8 Restricted Payments. The Company shall not, and shall not suffer or
permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding, if a
Default or Event of Default has occurred and is continuing or would result from
any of the foregoing.

     7.9 Change in Business. The Company shall not, and shall not suffer or
permit any Subsidiary to, change the nature of its business from that engaged in
on the date hereof or engage in any other businesses other than those in which
it is engaged on the date hereof or other than those related thereto.

     7.10 Accounting Changes. The Company shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Company or of any Subsidiary.

     7.11 Funded Debt Ratio. The Company shall not permit or suffer the ratio of
Funded Debt to Total Capitalization to exceed at any time 0.55 to 1.0.

     7.12 Fixed Charge Coverage Ratio. The Company shall not permit or suffer
the ratio at any fiscal quarter end for the four fiscal quarters then ending of
Adjusted Consolidated Cash Flow to Interest and Rental Expense to be less than
3.0 to 1.0.

     7.13 Subsidiary Dividends. The Company shall not, and shall not permit any
Subsidiary to, enter into any agreement that would restrict the ability of any
Subsidiary to pay dividends.

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

     8.1 Event of Default. Any of the following shall constitute an "Event of
Default":

         (a) Non-Payment. The Company fails to pay, (i) when and as required to
be paid herein, any amount of principal of any Loan, or (ii) within three days
after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or

                                      -36-
<PAGE>

         (b) Representation or Warranty. Any representation or warranty by the
Company or any Subsidiary made or deemed made herein, in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made; or

         (c) Specific Defaults. The Company fails to perform or observe any
term, covenant or agreement contained in any of Section 6.1, 6.2, 6.3, 6.4, 6.9
or 6.12 or in Article VII; or

         (d) Other Defaults. The Company or any Subsidiary party thereto fails
to perform or observe any other term or covenant contained in this Agreement or
any other Loan Document, and such default shall continue unremedied for a period
of 30 days after the earlier of (i) the date upon which a Responsible Officer
knew or reasonably should have known of such failure or (ii) the date upon which
written notice thereof is given to the Company by the Agent or any Bank; or

         (e) Cross-Default. The Company or any Subsidiary (i) fails to make any
payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $5,000,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure; or (ii) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation, and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document on
the date of such failure if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or

         (f) Insolvency; Voluntary Proceedings. The Company or any Subsidiary
(i) ceases or fails to be solvent, or generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or

         (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding
is commenced or filed against the Company or any Subsidiary, or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Company's or any Subsidiary's
properties, and any such proceeding or petition shall not be

                                      -37-
<PAGE>

dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company or any Subsidiary admits the
material allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company or any Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or

         (h) Pension Plans. (i) Institution of any steps by the Company or any
other Person to terminate a Pension Plan if as a result of such termination the
Company could be required to make a contribution to such Pension Plan, or could
incur a liability or obligation to such Pension Plan, in excess of $10,000,000;
(ii) a contribution failure occurs with respect to any Pension Plan sufficient
to give rise to a Lien under Section 302(f) of ERISA; or (iii) there shall occur
any withdrawal or partial withdrawal from a Multiemployer Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Plans as a
result of such withdrawal (including any outstanding withdrawal liability that
the Company and the Controlled Group have incurred on the date of such
withdrawal) exceeds $10,000,000; or

         (i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company or any Subsidiary involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $10,000,000 or more, and the same shall remain
unvacated and unstayed pending appeal for a period of 30 days after the entry
thereof; or

         (j) Non-Monetary Judgments. Any non-monetary judgment, order or decree
is entered against the Company or any Subsidiary which does or would reasonably
be expected to have a Material Adverse Effect, and there shall be any period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or

         (k) Change of Control. There occurs any Change of Control; or

         (l) Loss of Licenses. The Company or any Subsidiary for any reason
loses any material license, permit or franchise, or the Company or any
Subsidiary suffers the imposition of any restraining order, escrow, suspension
or impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise; or

         (m) Adverse Change. There occurs a Material Adverse Effect.

     8.2 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks,

                                      -38-
<PAGE>

         (a) declare the commitment of each Bank to make Loans to be terminated,
whereupon such commitments shall be terminated;

         (b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and

         (c) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;

provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 8.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent or any
Bank.

     8.3 Rights Not Exclusive. The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.

                                   ARTICLE IX

                                    THE AGENT

     9.1 Appointment and Authorization. Each Bank hereby irrevocably (subject to
Section 9.9) appoints, designates and authorizes the Agent to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent.

     9.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.

                                      -39-
<PAGE>

     9.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.

     9.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Banks as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.

         (a) For purposes of determining compliance with the conditions
specified in Section 4.1, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.

     9.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except with respect
to defaults in the payment of principal, interest and fees required to be paid
to the Agent for the account of the Banks, unless the Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Majority Banks in accordance with Article
VIII; provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be

                                      -40-
<PAGE>

obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.

     9.6 Credit Decision. Each Bank acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by the
Agent hereinafter taken, including any review of the affairs of the Company and
its Subsidiaries, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Bank. Each Bank represents to the Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.

     9.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Banks shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), pro rata, from and against any
and all Indemnified Liabilities; provided, however, that no Bank shall be liable
for the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Company. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.

     9.8 Agent in Individual Capacity. Bank One and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though Bank One were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge

                                      -41-
<PAGE>

that, pursuant to such activities, Bank One or its Affiliates may receive
information regarding the Company or its Affiliates (including information that
may be subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, Bank One shall have
the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent, and the terms "Bank" and
"Banks" include Bank One in its individual capacity.

     9.9 Successor Agent. The Agent may, and at the request of the Majority
Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent
resigns under this Agreement, the Majority Banks shall appoint from among the
Banks a successor agent for the Banks. If no successor agent is appointed prior
to the effective date of the resignation of the Agent, the Agent may appoint,
after consulting with the Banks and the Company, a successor agent from among
the Banks. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above.

     9.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver to
the Agent:

                  (i) if such Bank claims an exemption from, or a reduction of,
         withholding tax under a United States tax treaty, properly completed
         IRS Forms 1001 and W-8 before the payment of any interest in the first
         calendar year and before the payment of any interest in each third
         succeeding calendar year during which interest may be paid under this
         Agreement;

                  (ii) if such Bank claims that interest paid under this
         Agreement is exempt from United States withholding tax because it is
         effectively connected with a United States trade or business of such
         Bank, two properly completed and executed copies of IRS Form 4224
         before the payment of any interest is due in the first taxable year of
         such Bank and in each succeeding taxable year of such Bank during which
         interest may be paid under this Agreement, and IRS Form W-9; and

                  (iii) such other form or forms as may be required under the
         Code or other laws of the United States as a condition to exemption
         from, or reduction of, United States withholding tax.

                                      -42-
<PAGE>

Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

         (b) If any Bank claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form 1001 and such Bank sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Bank, such Bank agrees to notify the Agent of
the percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Bank. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.

         (c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of the Company to such
Bank, such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.

         (d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.

         (e) If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that the Agent did not properly withhold
tax from amounts paid to or for the account of any Bank (because the appropriate
form was not delivered, was not properly executed, or because such Bank failed
to notify the Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Bank shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Banks under this subsection shall survive
the payment of all Obligations and the resignation or replacement of the Agent.

     9.11 Documentation Agent. None of the Banks identified on the facing page
or signature pages of this Agreement as a "documentation agent" shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Banks as such. Without limiting the
foregoing, none of the Banks so identified as a "documentation agent" shall have
or be deemed to have any fiduciary relationship with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on any of the Banks so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.

                                      -43-
<PAGE>

                                   ARTICLE X

                                  MISCELLANEOUS

     10.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Agent at the written request of the Majority Banks) and the Company
and acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Banks and the Company and acknowledged
by the Agent, do any of the following:

         (a) increase (except as provided in Section 2.5) or extend the
Commitment of any Bank (or reinstate any Commitment terminated pursuant to
Section 8.2);

         (b) postpone or delay any date for any scheduled payment of principal
or any date for payment of interest, fees or other amounts due to the Banks (or
any of them) hereunder or under any other Loan Document;

         (c) reduce the principal of, or the rate of interest specified herein
on any Loan, or (subject to clause (ii) below) any fees or other amounts payable
hereunder or under any other Loan Document;

         (d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which is required for the Banks or any of them to
take any action hereunder; or

         (e) amend this Section, or Section 2.13, or any provision herein
providing for consent or other action by all Banks;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed by the parties
thereto.

     10.2 Notices. (a) All notices, requests and other communications shall be
in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Company by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 10.2, and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and mailed, faxed or
delivered, to the address or facsimile number specified for notices on Schedule
10.2; or, as directed to the Company or the Agent, to such other address as
shall be designated by such party in a written notice to the other parties, and
as directed to any other party, at such other address as shall be designated by
such party in a written notice to the Company and the Agent.

                                      -44-
<PAGE>

         (b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX shall not be effective until actually
received by the Agent.

         (c) Any agreement of the Agent and the Banks herein to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of the Company. The Agent and the Banks shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the Company to
give such notice and the Agent and the Banks shall not have any liability to the
Company or other Person on account of any action taken or not taken by the Agent
or the Banks in reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans shall not be affected in any way or
to any extent by any failure by the Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Agent
and the Banks of a confirmation which is at variance with the terms understood
by the Agent and the Banks to be contained in the telephonic or facsimile
notice.

     10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.

     10.4 Costs and Expenses. The Company shall:

         (a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse Bank One (including in its capacity as Agent) and
the Lead Arranger within ten days after demand (subject to subsection 4.1(e))
for all costs and expenses incurred by Bank One (including in its capacity as
Agent) and the Lead Arranger in connection with the development, preparation,
delivery, administration and execution of, and any amendment, supplement, waiver
or modification to (in each case, whether or not consummated), this Agreement,
any Loan Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including reasonable Attorney Costs incurred by Bank One (including in
its capacity as Agent) and the Lead Arranger with respect thereto; and

         (b) pay or reimburse the Agent, the Lead Arranger and each Bank within
ten days after demand (subject to subsection 4.1(e)) for all costs and expenses
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding)

                                      -45-
<PAGE>

     10.5 Indemnity. Whether or not the transactions contemplated hereby are
consummated, the Company shall indemnify and hold the Agent-Related Persons, and
each Bank and each of its respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agent or replacement of any Bank) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Company shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations.

     10.6 Payments Set Aside. To the extent that the Company makes a payment to
the Agent or the Banks, or the Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Bank severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.

     10.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank.

     10.8 Assignments, Participations, Etc. (a) Any Bank may, with the written
consent of the Company at all times other than during the existence of an Event
of Default and the Agent, which consents shall not be unreasonably withheld, at
any time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company or the Agent shall be required in connection with
any assignment and delegation by a Bank to an Eligible Assignee that is an
Affiliate of such Bank) (each an "Assignee") all, or any ratable part of all, of
the Loans, the Commitments and the other rights and obligations of such Bank
hereunder, in a minimum amount of $5,000,000; provided, however, that the
Company and the Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment

                                      -46-
<PAGE>

instructions, addresses and related information with respect to the Assignee,
shall have been given to the Company and the Agent by such Bank and the
Assignee; (ii) such Bank and its Assignee shall have delivered to the Company
and the Agent an Assignment and Acceptance in the form of Exhibit E ("Assignment
and Acceptance") and (iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $3,500 (including, without limitation, in
connection with any assignment by a Bank to a Bank).

         (b) From and after the date that the Agent notifies the assignor Bank
that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.

         (c) Within five Business Days after its receipt of notice by the Agent
that it has received an executed Assignment and Acceptance and payment of the
processing fee, (and provided that it consents to such assignment in accordance
with subsection 10.8(a)) the Company shall execute and deliver to the Agent, new
Notes evidencing such Assignee's assigned Loans and Commitment and, if the
assignor Bank has retained a portion of its Loans and its Commitment,
replacement Notes in the principal amount of the Loans retained by the assignor
Bank (such Notes to be in exchange for, but not in payment of, the Notes held by
such Bank). Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.

         (d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company and the
Agent shall continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks as described in the first proviso
to Section 10.1. In the case of any such participation, the Participant shall be
entitled to the benefit of Sections 3.1, 3.3 and 10.5 as though it were also a
Bank hereunder, and if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each

                                      -47-
<PAGE>

Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.

         (e) Notwithstanding any other provision in this Agreement, any Bank may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement and the Note held by it in favor of
any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.

     10.9 Confidentiality. Each Bank agrees to take and to cause its Affiliates
to take normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" or "secret" by
the Company and provided to it by the Company or any Subsidiary, or by the Agent
on such Company's or Subsidiary's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with the Company or any Subsidiary; except to
the extent such information (i) was or becomes generally available to the public
other than as a result of disclosure by the Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality agreement with the
Company known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent, any
Bank or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Banks hereunder; (H) as to any
Bank or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Company or any
Subsidiary is party or is deemed party with such Bank or such Affiliate; and (I)
to its Affiliates.

     10.10 Set-off. In addition to any rights and remedies of the Banks provided
by law, if an Event of Default exists or the Loans have been accelerated, each
Bank is authorized at any time and from time to time, without prior notice to
the Company, any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the account
of the Company against any and all Obligations owing to such Bank, now or
hereafter existing, irrespective of whether or not the Agent or such Bank shall
have made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or

                                      -48-
<PAGE>

unmatured. Each Bank agrees promptly to notify the Company and the Agent after
any such set-off and application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application.

     10.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, or other fee, or any other cost or expense (including Attorney
Costs) due and payable to the Agent, Bank One or the Lead Arranger under the
Loan Documents, the Company hereby irrevocably authorizes Bank One to debit any
deposit account of the Company with Bank One in an amount such that the
aggregate amount debited from all such deposit accounts does not exceed such fee
or other cost or expense. If there are insufficient funds in such deposit
accounts to cover the amount of the fee or other cost or expense then due, such
debits will be reversed (in whole or in part, in Bank One's sole discretion) and
such amount not debited shall be deemed to be unpaid. No such debit under this
Section shall be deemed a set-off.

     10.12 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.

     10.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.

     10.14 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.

     10.15 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Company, the Banks, the Agent
and the Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.

     10.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
ILLINOIS; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.

         (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS OR
OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE

                                      -49-
<PAGE>

AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND
THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
ILLINOIS LAW.

     10.17 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS,
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     10.18 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.

                                      -50-
<PAGE>

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

                                       THE MARCUS CORPORATION

                                       By:  /s/ Stephen H. Marcus
                                            ------------------------------------
                                       Title:  Chairman of the Board, President
                                               and Chief Executive Officer

                                       BANK ONE, NA (Main Office Chicago),
                                          as Agent

                                       By:  /s/ A. F. Maggiore
                                            ------------------------------------
                                       Title:  Managing Director

                                       BANK ONE, NA (Main Office Chicago),
                                          as a Bank

                                       By:  /s/ A. F. Maggiore
                                            ------------------------------------
                                       Title:  Managing Director

                                       BANK OF AMERICA, N.A.

                                       By:  /s/ M. H. Claggett
                                           -------------------------------------
                                       Title:  Principal

                                       LASALLE BANK NATIONAL ASSOCIATION

                                       By:  /s/ Dusko Marinovic
                                            ------------------------------------
                                       Title:  Commercial Banking Officer

                                      -51-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}]]