Document:

EXHIBIT 10.1
               AMENDED AND RESTATED CREDIT AGREEMENT

          AMENDED  AND RESTATED CREDIT AGREEMENT dated as of  July
30,  1999, among PENN VIRGINIA CORPORATION, a Virginia corporation
(the  "Borrower"), the Banks (as hereinafter defined), FIRST UNION
NATIONAL BANK (f/k/a First Union National Bank of North Carolina),
a  national  banking  association ("First Union")  acting  in  its
capacity as syndication Agent for the Banks (in such capacity, the
"Syndication  Agent"),  THE  FIRST NATIONAL  BANK  OF  CHICAGO,  a
national  banking  association ("First National")  acting  in  its
capacity  as documentation agent for the Banks (in such  capacity,
the   "Documentation  Agent"),  CHASE  BANK  OF  TEXAS,   NATIONAL
ASSOCIATION  (f/k/a Texas Commerce Bank National  Association),  a
national  banking association ("Chase") acting in its capacity  as
agent for the Banks (in such capacity, the "Agent"), and PNC BANK,
NATIONAL ASSOCIATION, a national banking association ("PNC").

                     PRELIMINARY STATEMENTS

          WHEREAS,  this Agreement is an amendment and restatement
of  that certain Credit Agreement (the "Initial Credit Agreement")
dated  as  of  August 2, 1996 among the Borrower, the Banks  party
thereto, and Agent;

          WHEREAS,  Borrower  and  its  Subsidiaries  (as   herein
defined)  have requested that the Banks increase for the Borrower,
the  amount  of  the revolving credit facility set  forth  in  the
Initial  Credit  Agreement,  on  the  terms  and  subject  to  the
conditions stated herein, the proceeds of which will be  used  (i)
to  provide  working capital to the Borrower and its  Subsidiaries
for   exploration   and  production,  (ii)  to   finance   capital
expenditures and acquisitions of the Borrower and its Subsidiaries
and  (iii)  to  provide letters of credit for the account  of  the
Borrower and its Subsidiaries;

          WHEREAS,  Borrower owns, either directly or  indirectly,
one  hundred percent (100%) of the issued and outstanding  capital
stock  of  each  of  Concord Land Company, a Delaware  corporation
("Concord"),  Lexington  Land  Company,  a  Delaware   corporation
("Lexington"), Penn Virginia Holding Corp., a Delaware corporation
("PVHC"),   Penn   Virginia  Equities  Corporation,   a   Delaware
corporation  ("Equities"), Penn Virginia Oil & Gas Corporation,  a
Virginia  corporation  ("PVOG"), Penn  Virginia  Coal  Company,  a
Virginia  corporation  ("PVCC"),  and  Savannah  Land  Company,  a
Delaware corporation ("Savannah");

          WHEREAS, the Banks are willing, upon and subject to  the
terms  and conditions stated herein, to make such revolving credit
facility available to the Borrower and its Subsidiaries.

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

                           ARTICLE I

                DEFINITIONS AND ACCOUNTING TERMS

     SECTION 1.1.  Certain Defined Terms.  As used in this  Credit
Agreement, the following terms shall have the following meanings:

     "ABR  Borrowing"  shall mean a Borrowing  comprised  of  ABR
Loans.

     "ABR  Loan"  shall  mean any Revolving Credit  Loan  bearing
interest at a rate determined by reference to the Alternate  Base
Rate in accordance with the provisions of Article II.

     "Accommodation  Obligation," as applied to the  Borrower  or
any  of  its Subsidiaries, shall mean any Contractual Obligation,
contingent  or  otherwise, of the Borrower or such Subsidiary  of
the Borrower with respect to any Indebtedness or other obligation
or  liability of another, including, without limitation, any such
Indebtedness,  obligation  or liability  directly  or  indirectly
guarantied,  endorsed  (other  than  endorsements  of  negotiable
instruments for collection or deposit in the ordinary  course  of
business),  co-made or discounted or sold with  recourse  by  the
Borrower  or  such Subsidiary of the Borrower, or in  respect  of
which  the  Borrower  or  such  Subsidiary  of  the  Borrower  is
otherwise  directly  or indirectly liable, including  Contractual
Obligations   (contingent  or  otherwise)  arising  through   any
agreement  to  purchase,  repurchase, or otherwise  acquire  such
Indebtedness,  obligation or liability or any security  therefor,
or to provide funds for the payment or discharge thereof (whether
in   the  form  of  loans,  advances,  stock  purchases,  capital
contributions  or  otherwise), or to maintain  solvency,  assets,
level  of  income,  or other financial condition,  or  any  "keep
well,"  "take-or-pay," "throughput" or other similar  arrangement
or to make payment other than for value received.

     "Advance  Payment Contract" shall mean any contract  whereby
the  Borrower or any of its Subsidiaries either (a)  receives  or
becomes  entitled to receive (either directly or indirectly)  any
payment  (an "Advance Payment") to be applied toward  payment  of
the  purchase  price of Hydrocarbons produced or to  be  produced
from  Oil and Gas Interests owned by the Borrower or any  of  its
Subsidiaries and which Advance Payment is paid or to be  paid  in
advance  of  actual delivery of such production  to  or  for  the
account  of the purchaser regardless of such production,  or  (b)
grants  an  option or right of refusal to the purchaser  to  take
delivery of such production in lieu of payment, and, in either of
the  foregoing instances, the Advance Payment is, or  is  to  be,
applied  as  payment in full for such production  when  sold  and
delivered  or is, or is to be, applied as payment for  a  portion
only of the purchase price thereof or of a percentage or share of
such   production;  provided  that  inclusion  of  the   standard
provisions  in any gas sales or purchase contract or any  similar
contract shall not, in and of itself, constitute such contract as
an Advance Payment Contract for the purposes hereof.

     "Affiliate"  shall  mean,  when used  with  respect  to  any
Person, each other Person that directly or indirectly controls or
is controlled by or is under common control with such Person.  As
used in this definition, "control" means the possession, directly
or  indirectly,  of  power to direct or cause  the  direction  of
management  or policies (whether through ownership of  securities
or  partnership  or  other ownership interests,  by  contract  or
otherwise) and shall include, without limitation, any Person  who
beneficially owns more than fifty percent (50%) of the equity  of
the  other  Person and, as to any general or limited partnership,
any general partner thereof.

     "Agent" shall have the meaning assigned to that term in  the
introduction  to  this  Credit Agreement and  shall  include  any
successor agent appointed in accordance with Section 9.6 of  this
Credit Agreement.

     "Alternate  Base Rate" shall mean, for any day, a  rate  per
annum  (rounded upwards, if necessary, to the next 1?100  of  1%)
equal to the greatest of (a) the Prime Rate in effect on such day
and  (b)  the Federal Funds Effective Rate in effect on such  day
plus  1?2 of 1%.  For purposes hereof:  "Prime Rate" shall  mean,
as  of  a  particular date, the prime rate of interest per  annum
most  recently announced by the Agent, automatically  fluctuating
upward  or  downward with and at the time specified in each  such
announcement without notice to the Borrower or any other  Person;
each change in the Prime Rate shall be effective on the date such
change  is  announced;  which  Prime  Rate  may  not  necessarily
represent the Agent's lowest or best rate actually charged  to  a
customer; "Federal Funds Effective Rate" shall mean, for any day,
the  weighted  average  of the rates on overnight  Federal  funds
transactions with members of the Federal Reserve System  arranged
by  Federal  funds brokers, as published by the  Federal  Reserve
Bank of New York for such day on the next succeeding Business Day
or,  if  such  rate is not so published for any day  which  is  a
Business Day, the average of the quotations for the day  of  such
transactions  received  by  the Agent from  three  federal  funds
brokers of recognized standing selected by it.  If for any reason
the  Agent  shall have determined (which determination  shall  be
conclusive absent manifest error) that it is unable to  ascertain
the  Federal  Funds  Effective Rate for  any  reason,  including,
without  limitation, the inability or failure  of  the  Agent  to
obtain sufficient quotations in accordance with the terms hereof,
the  Alternate  Base Rate shall be determined without  regard  to
clause  (b)  of  the  first  sentence  of  this  definition,   as
appropriate,  until  the  circumstances  giving  rise   to   such
inability no longer exist.  Any change in the Alternate Base Rate
due  to a change in the Prime Rate or the Federal Funds Effective
Rate  shall be effective on the effective date of such change  in
the Prime Rate or the Federal Funds Effective Rate, respectively.

     "Applicable Eurodollar Margin" shall mean, with  respect  to
each Eurodollar Borrowing:

     (a)   on  each  day  on  which the  Utilized  Percentage  of
Borrowing  Base  is  less than fifty percent (50%),  one  percent
(1.00%) per annum;

     (b)   on  each  day  on  which the  Utilized  Percentage  of
Borrowing  Base is equal to or greater than fifty  percent  (50%)
but  less  than  seventy-five percent (75%), one and  one-quarter
percent (1.25%) per annum;

     (c)   on  each  day  of  which the  Utilized  Percentage  of
Borrowing  Base is equal to or greater than seventy-five  percent
(75%), one and one-half percent (1.50%) per annum.

     "Approved  Petroleum Engineer" shall mean Wright &  Company,
Inc.  or  such  other reputable firm(s) of independent  petroleum
engineers as shall be approved by the Majority Banks.

     "Available  Borrowing Base" shall mean the  Total  Borrowing
Base minus the Existing Debt.

     "Available  Commitment" shall mean at any  time,  an  amount
equal to the Available Borrowing Base in effect at that time, or,
if  the  Borrower  has  notified  the  Agent  of  its  Designated
Borrowing  Base  pursuant to the provisions of Section  3.3,  the
Available Designated Borrowing Base in effect at that time.

     "Available  Designated  Borrowing  Base"  shall   mean   the
Designated Borrowing Base minus Existing Debt.

     "Bank"  shall mean each of the financial institutions  whose
name appears on the signature pages to this Credit Agreement  and
the  Persons  which from time to time become a  party  hereto  in
accordance with Section 10.9.

     "Bankruptcy  Code" shall mean the Bankruptcy Reform  Act  of
1978 as codified under 11 U.S.C. 101, et seq.

      "Benefit Plan" shall mean any employee benefit plan subject
to  Title  IV  of ERISA maintained by the Borrower or  any  ERISA
Affiliate  with  respect  to which the  Borrower  or  such  ERISA
Affiliate has a fixed or contingent liability.

     "Board"  shall  mean the Board of Governors of  the  Federal
Reserve System of the United States.

     "Borrower" shall mean Penn Virginia Corporation, a  Virginia
corporation.

     "Borrowing" shall mean a borrowing comprised of simultaneous
Revolving  Credit Loans of the same Type made to the Borrower  on
the  same  date  by the Banks, (or resulting from conversions  or
continuations on a given date pursuant to Section 2.4),  and,  in
the case of Eurodollar Loans, having the same Eurodollar Interest
Period,  distributed  ratably  among  the  Banks  in  the  manner
described in Article II. A Borrowing is an "ABR Borrowing" if the
Revolving  Credit Loans comprising such Borrowing are ABR  Loans,
and  a  "Eurodollar  Borrowing" if  the  Revolving  Credit  Loans
comprising such Borrowing are Eurodollar Loans.

     "Borrowing  Base Assets" shall mean, collectively,  the  (i)
Oil  and Gas Interests, (ii) Coal Interests, (iii) dividends with
respect  to the Norfolk Common Stock and (iv) any other  property
owned  by  the  Borrower or Restricted Subsidiary (x)  which  the
Borrower   has  requested  that  the  Banks  consider  in   their
determination  of  the Total Borrowing Base  and  (y)  which  the
Banks, in their sole discretion, have considered for purposes  of
determining the Total Borrowing Base (as evidenced by a notice to
such effect delivered by the Agent to the Borrower).

     "Borrowing Base Deficiency" shall mean, as of any date,  the
amount, if any, by which the Utilized Credit on such date exceeds
the Available Commitment in effect on such date.

     "Borrowing  Base  Asset  Reports"  shall  mean  the  reports
required  to  be delivered to the Banks pursuant to  Section  3.1
which  shall include the Reserve Report, the Coal Reserve  Report
and   a  report  setting  forth  the  aggregate  amount  of   all
outstanding Consolidated Debt.

     "Borrowing Base Notice" shall mean a written notice sent  to
the  Borrower by the Agent pursuant to Section 3.2 notifying  the
Borrower  of the Total Borrowing Base and the Available Borrowing
Base.

     "Borrowing Base Period" shall mean (a) initially, the period
from  the  Effective  Date through November  30,  1999;  and  (b)
thereafter, each six month period beginning on June 1 or December
1 of each year.

     "Borrowing Date" shall mean, with respect to each Borrowing,
the  Business  Day upon which the proceeds of such Borrowing  are
made available to the Borrower by the Banks.

     "Borrowing  Request"  shall  mean,  with  respect  to   each
Borrowing,  a request made pursuant to Section 2.2 which  request
shall be in the form of Exhibit A.

     "Business Day" shall mean any day (other than a day which is
a  Saturday,  Sunday or legal holiday in the State  of  Texas  on
which  banks  are open for business in Houston, Texas;  provided,
however, that, when used in connection with a Eurodollar Loan  or
Eurodollar Borrowing, the term "Business Day" shall also  exclude
any  day  on  which  banks are not open for  dealings  in  dollar
deposits in the interbank eurodollar market.

     "Capital  Lease" shall mean, when used with respect  to  any
Person,  any  lease in respect of which the obligations  of  such
Person constitute Capitalized Lease Obligations.

     "Capitalized Lease Obligations" shall mean, when  used  with
respect  to  any Person, without duplication, all obligations  of
such  Person to pay rent or other amounts under any lease of  (or
other  arrangement conveying the right to use) real  or  personal
property, or a combination thereof, which obligations shall  have
been  or should be, in accordance with GAAP,  capitalized on  the
books of such Person.

     "Cash Equivalents" shall mean, when used in connection  with
the  Borrower or any Subsidiary of the Borrower, such  Borrower's
or such Subsidiary's Investments in:

          (a)  Government Securities due within one year from the
     date of acquisition thereof;

          (b)  Readily marketable direct obligations of any State
     of  the  United States or any political subdivision  of  any
     such  State  given on the date of such investment  a  credit
     rating of at least A2 by Moody's Investors Service, Inc.  or
     A  by S&P, in each case due within one year from the date of
     acquisition thereof;

          (c)   Certificates of deposit issued by,  money  market
     deposit accounts with, eurodollar deposits through, bankers'
     acceptances  of,  and  repurchase  and  reverse   repurchase
     agreements covering Government Securities executed by a Bank
     or  any other bank doing business in and incorporated  under
     the  laws  of  the United States or any state thereof  whose
     deposits  are  insured through the FDIC,  or  any  successor
     thereto,  and having (either itself or its holding  company)
     on the date of such Investment combined capital, surplus and
     undivided profits of at least $400,000,000, or any  offshore
     branch  of such bank, in each case maturing within one  year
     from the date of acquisition thereof;

          (d)   Certificates of deposit issued by,  money  market
     deposit accounts with, eurodollar deposits through, bankers'
     acceptances  of,  and  repurchase  and  reverse   repurchase
     agreements covering Government Securities executed by  First
     American Bank, N.A. having an aggregate market value at  any
     one  time not in excess of $3,000,000, in each case maturing
     within one year from the date of acquisition thereof;

          (e)   Commercial paper of a Bank or such Bank's holding
     company  or of any other bank or bank holding company  given
     on the date of such Investment a credit rating of at least P-
     1  by Moody's Investors Service, Inc. and A-1 by S&P, or  of
     corporations  doing business in and incorporated  under  the
     laws of the United States or any state thereof given on  the
     date  of such Investment a credit rating of at least P-1  by
     Moody's  Investors Service, Inc. and A-1  by  S&P,  in  each
     case,  maturing within one year from the date of acquisition
     thereof; and

          (f)  "Money-market mutual funds" investing at least 95%
     of  the  mutual  fund  assets in instruments  of  the  types
     described in subparagraphs (a) through (e) above.

     "Chase"   shall   mean   Chase  Bank  of   Texas,   National
Association, a national banking association.
     "Closing Date" shall mean July 30, 1999.

     "Coal  Interests" shall mean any and  all  rights,
estates,  titles and interests in the Coal Leases,  all
royalty   interests,  net  profits  interests,  carried
interests  and  any  and all other interests  in  coal,
whether any of the same be real or personal, now  owned
or   hereafter   acquired  by  the  Borrower   or   its
Subsidiaries,   directly   or   indirectly,   and   all
properties,  rights  and  interests  covered   thereby,
whether  arising by contract, by order, or by operation
of laws, which now or hereafter include all or any part
of the foregoing.

     "Coal  Leases" shall mean those coal mining leases
described on Schedule 5.6 hereto.

     "Coal Reserve Report" shall mean a report in  form
and  substance  satisfactory to each Bank,  which  Coal
Reserve  Report shall be dated as of the next preceding
December  31,  and shall (i) review the  material  coal
reserves  attributable  to  the  Coal  Leases  of   the
Borrower and its Subsidiaries (and showing any material
additions  to  or  deletions from  the  Coal  Interests
covered by the previous Coal Reserve Report and made by
the Borrower and its Subsidiaries since the date of the
previous  Coal  Reserve Report),  (ii)  set  forth  the
quality  of the coal reserves attributable to the  Coal
Interests  covered in said Coal Reserve  Report,  (iii)
contain a reasonably detailed five (5) year forecast of
the  rate of production and net income with respect  to
the  coal reserves covered by said Coal Reserve  Report
as  of  the date of such Coal Reserve Report, (iv)  set
forth  the  current material terms of all  Coal  Leases
with  respect to the Coal Interests described  in  said
Coal Reserve Report, (v) contain a status report on all
material   permits  relevant  to  the  Coal   Interests
described  in  said Coal Reserve Report, and  (vi)  set
forth the capital expenditure plans of PVCC.  Each Coal
Reserve  Report shall be prepared by personnel  of  the
Borrower  and  its  Subsidiaries,  which  Coal  Reserve
Report   shall  provide  the  current  status  of   the
information set forth in the immediately preceding Coal
Reserve Report.

     "Code"  shall mean Internal Revenue Code of  1986,
as  amended  from  time to time,  and  the  regulations
promulgated thereunder.

     "Commitment" shall mean, when used with  reference
to any Bank at the time any determination thereof is to
be  made, the commitment of such Bank to extend  credit
to  the  Borrower by means of Revolving  Credit  Loans,
which  subject  to Sections 2.9 and 8.2,  shall  be  an
amount equal to the amount set forth opposite the  name
of  such  Bank under the heading "Amount of Commitment"
on Schedule 1.1 to this Credit Agreement.

     "Commitment  Fee  Rate"  shall  have  the  meaning
specified in Section 2.5(a) hereof.

     "Commitment  Percentage" shall mean, with  respect
to each Bank, the percentage determined by dividing its
Commitment by the Total Commitment.

     "Commitment  Transfer  Supplement"  shall  mean  a
Commitment Transfer Supplement entered into by  a  Bank
and  an  Eligible Assignee, and accepted by the  Agent,
substantially in the form of Exhibit B attached hereto.

     "Communications" shall have the meaning  specified
in Section 10.2.

     "Concord"  shall  mean  Concord  Land  Company,  a
Delaware  corporation and a wholly-owned Subsidiary  of
Borrower.

       "Consolidated" shall refer to the  consolidation
of  any  Person,  in  accordance with  GAAP,  with  its
properly  Consolidated  Affiliates.   Reference  to   a
Person's  Consolidated financial statements,  financial
position, financial condition, liabilities, etc.  refer
to  the  consolidated  financial statements,  financial
position,  financial  condition, liabilities,  etc.  of
such  Person  and its properly Consolidated Affiliates;
provided,   however,   that   such   consolidation   of
Unrestricted  Subsidiaries shall be excluded  from  the
financial calculations contained in Section 7.15.

     "Consolidated Assets" shall mean, when  used  with
respect    to   the   Borrower   and   its   Restricted
Subsidiaries,  all items which should be classified  as
assets on the Consolidated financial statements of  the
Borrower  delivered  to the Agent pursuant  to  Section
6.1, all as determined in conformity with GAAP.

     "Consolidated  Capitalization"  shall  mean,  when
used  with  respect to the Borrower and its  Restricted
Subsidiaries,  an  amount  equal  to  the  sum  of  (i)
Consolidated Equity plus (ii) Consolidated Funded Debt.

     "Consolidated Cash Flow" shall mean, with  respect
to  the Borrower and its Restricted Subsidiaries for  a
particular period, without duplication, the sum of  (i)
Consolidated  Net  Income of such  Person  during  such
fiscal  period  plus  (ii) the Borrower's  Consolidated
depreciation,  depletion, amortization and  other  non-
cash items reducing Consolidated Net Income during such
period, all determined in accordance with GAAP.

     "Consolidated  Debt  Service"  shall  mean,   with
respect to the Borrower and its Restricted Subsidiaries
for   a   particular  period,  the  sum  of   (i)   the
Consolidated Interest Expense, including all fees  paid
with respect to letters of credit, of the Borrower  and
its Restricted Subsidiaries paid during such period  by
the  Borrower and its Restricted Subsidiaries plus (ii)
the  total scheduled principal payments on Consolidated
Funded  Debt  owing by the Borrower and its  Restricted
Subsidiaries on a Consolidated basis, paid during  such
period, all as determined in accordance with GAAP.

     "Consolidated EBITDA" shall mean, for a particular
period,  an amount equal to (a) all amounts  which,  in
accordance    with   generally   accepted    accounting
principles  consistently applied, would be included  as
Consolidated income from continuing operations  of  the
Borrower   and   its  Restricted  Subsidiaries   on   a
Consolidated    basis   before   income    taxes    and
extraordinary items, if any, for such period, plus  (b)
the   aggregate   amount  which,  in  accordance   with
generally  accepted accounting principles  consistently
applied,  was  deducted in determining the Consolidated
operating  income  from  continuing  operations   under
clause    (a)   in   respect   of   interest   expense,
depreciation,  depletion, amortization and  other  non-
cash  items reducing said Consolidated operating income
of   the   Borrower  and  its  Restricted  Subsidiaries
determined on a Consolidated basis for such period.

     "Consolidated Equity" shall mean, with respect  to
the  Borrower  and  its  Restricted  Subsidiaries,   at
anytime,  the Consolidated Assets of the Borrower  less
the Consolidated Liabilities of the Borrower.

     "Consolidated  Funded Debt"  shall  mean,  without
duplication  and with respect to the Borrower  and  its
Restricted Subsidiaries, at anytime, Debt in any of the
following categories:

     (a)  Debt of such Person for borrowed money or for
          the  deferred purchase price of  property  or
          services;

      (b) Debt  of such Person which is evidenced by  a
          note,  bond, debenture or similar instrument,
          but  excluding  bonds or deposits  posted  in
          favor of the United States of America or  any
          state   securing   reclamation   obligations,
          obligations to plug abandoned wells  or  seal
          abandoned  mines or obligations to  clean  up
          and  restore the land on which such wells  or
          mines are located;

     (c)  all   obligations   of  such   Person   under
          Capitalized Lease Obligations;

     (d)  all obligations of such Person in respect  of
          letters  of credit and acceptances issued  or
          created  for  the  account  of  such  Person,
          except     letters of credit in favor of  the
          United   States  of  America  or  any   state
          securing reclamation obligations, obligations
          to  plug  abandoned wells or  seal  abandoned
          mines  or obligations to clean up and restore
          the  land  on which such wells or  mines  are
          located;

     (e)  all  liabilities secured by any Lien  on  any
          property  owned  by such Person  even  though
          such  Person  has  not assumed  or  otherwise
          become liable for the payment thereof;

     (f)  all  obligations  to pay production  payments
          and to make capital contributions under joint
          venture or other similar agreements; and

     (g)  all  Accommodation Obligations of such Person
          with  respect  to  Consolidated  Funded  Debt
          described  in  subclauses  (a)  through   (f)
          above.

     "Consolidated Interest Expense" shall  mean,  with
respect    to   the   Borrower   and   its   Restricted
Subsidiaries, for any fiscal period, the  aggregate  of
all  costs, fees and expenses paid by the Borrower  and
its  Restricted Subsidiaries in such fiscal period  for
Consolidated  Funded  Debt,  which  are  classified  as
interest   expense   on   the  Consolidated   financial
statements   of   the  Borrower  and   its   Restricted
Subsidiaries,  all  as determined  in  conformity  with
GAAP.

     "Consolidated Liabilities" shall mean,  when  used
with   respect  to  the  Borrower  and  its  Restricted
Subsidiaries, all items which should be  classified  as
liabilities on the Consolidated financial statements of
the Borrower delivered to the Agent pursuant to Section
6.1, all as determined in conformity with GAAP.

     "Consolidated  Net  Income" shall  mean,  for  any
period, the net earnings (or loss) after taxes  of  the
Borrower   and   its  Restricted  Subsidiaries   on   a
Consolidated  basis  for  such  period  determined   in
conformity with GAAP.

     "Consolidated Tangible Net Worth" shall mean, with
respect    to   the   Borrower   and   its   Restricted
Subsidiaries, at any time, the Consolidated  Equity  of
the   Borrower,  at  such  time,  less  the  Borrower's
Consolidated Intangible Assets with a value of  greater
than  $1,000,000  at such time.  For purposes  of  this
definition, "Intangible Assets" shall mean  the  amount
(to  the  extent reflected in determining  Consolidated
Equity)  of all unamortized debt discount and  expense,
unamortized   deferred  charges,   goodwill,   patents,
trademarks, service marks, trade names, copyrights  and
organization expenses.

     "Contractual Obligation" as applied to any Person,
shall   mean  any  provision  of  any  stock  or  other
securities  issued  by that Person  or  any  indenture,
mortgage,   deed   of  trust,  contract,   undertaking,
document,  instrument or other agreement or  instrument
to  which that Person is a party or by which it or  any
of  its  properties is bound, or to which it or any  of
its   properties   is   subject   (including,   without
limitation,  any  restrictive covenant  affecting  such
Person or any of its properties).

     "Credit  Agreement" shall mean  this  Amended  and
Restated  Credit Agreement dated as of July  30,  1999,
among  the  Borrower, the Agent and  the  each  of  the
Banks,  as  said  agreement may be  amended,  modified,
supplemented, and/or extended from time to time.

     "Debt"   shall  mean,  as  to  any   Person,   all
indebtedness,  liabilities  and  obligations  of   such
Person,  whether  matured or unmatured,  liquidated  or
unliquidated, primary or secondary, direct or indirect,
absolute,  fixed  or  contingent, and  whether  or  not
required  to  be  considered  pursuant  to  GAAP.  Debt
includes,   without   limiting  the   foregoing,    (a)
indebtedness of such Person for borrowed money  or  for
the deferred purchase price of property or services  or
which  is  evidenced  by  a note,  bond,  debenture  or
similar     instrument,    (including     Environmental
Liabilities  or  liabilities  to  the  PBGC),  (b)  all
obligations  of  such  Person under  Capitalized  Lease
Obligations,  (c)  all obligations of  such  Person  in
respect of letters of credit and acceptances issued  or
created  for  the  account  of  such  Person,  (d)  all
liabilities  secured by any Lien on any property  owned
by  such Person even though such Person has not assumed
or otherwise become liable for the payment thereof, (e)
all  Accommodation Obligations of such Person, (f)  all
obligations  to  pay production payments  and  to  make
capital  contributions  under joint  venture  or  other
similar  agreements,  (g) all net payments  or  amounts
owing  by such Person in respect of Hedge Transactions,
interest  rate protection agreements, foreign  currency
exchange agreements, commodity swap agreements or other
interest,   exchange   rate   or   commodity    hedging
arrangements,  and  (h)  liabilities  in   respect   of
Unfunded Vested Liabilities. The Debt of a Person shall
include the Debt of any partnership or joint venture in
which such Person is a general or venture partner.  The
Debt  of  a Person shall not include (i) trade payables
and   expense  accruals  incurred  or  assumed  in  the
ordinary  course  of  such Person's business,  provided
such payables have not remained unpaid for a period  of
ninety (90) days after the same became due unless  such
Person  is diligently contesting same in good faith  or
(ii)  bonds,  letters of credit or deposits  posted  in
favor  of  the  United States of America or  any  state
securing reclamation obligations, obligations  to  plug
abandoned  wells or seal abandoned mines or obligations
to clean up and restore the land on which such wells or
mines are located.

     "Debtor  Relief  Laws" shall mean  the  Bankruptcy
Code and all other applicable dissolution, liquidation,
conservatorship,  bankruptcy, moratorium,  readjustment
of   debt,   compromise,  rearrangement,  receivership,
insolvency,  reorganization, or similar  debtor  relief
laws  from time to time in effect affecting the  rights
of creditors generally.

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

     "Default  Rate"  shall  mean  the  interest   rate
described in Section 2.8.

     "Designated Borrowing Base" shall have the meaning
assigned to that term in Section 3.3.

     "Determination Date" shall mean (a) each  December
1  and  June  1,  and (b) with respect to  any  Special
Determination, the first day of the first  month  which
is  not  less  than twenty (20) Domestic Business  Days
following   the  date  of  a  request  for  a   Special
Determination.

     "Distribution" shall mean any dividend payable  in
cash  or property with respect to any shares of capital
stock of the Borrower or any Subsidiary of the Borrower
(other  than  dividends payable in shares of  the  same
class  of  common, preferred or other capital stock  as
the  shares upon which the dividend is being paid), any
other  distribution made with respect to any shares  of
capital stock of the Borrower or any Subsidiary of  the
Borrower, or any purchase, redemption or retirement of,
or  other payment with respect to, or sinking or  other
analogous    fund   for   the   purchase,   redemption,
defeasance,  retirement or other  acquisition  of,  any
shares  of  capital  stock  of  the  Borrower  or   and
Subsidiary of the Borrower.

     "Documentation  Agent"  shall  have  the   meaning
assigned  to  that  term in the  introduction  to  this
Credit Agreement.

     "Dollars" and the symbol "$" shall mean the lawful
currency of the United States.

     "Effective Date" shall mean the date on which  all
of  the  conditions  precedent to  the  making  of  the
Revolving  Credit Loans set forth in  Section  4.1  are
first  satisfied or waived by the Banks and the initial
Revolving Credit Loans are made.

     "Eligible Assignee" shall mean any of (i)  a  Bank
or  any  Affiliate  of a Bank; (ii) a  commercial  bank
organized under the laws of the United States,  or  any
state   thereof  having  total  assets  in  excess   of
$1,000,000,000; (iii) a commercial bank organized under
the  laws of any other country which is a member of the
OECD,  or  a political subdivision of any such  country
having   total  assets  in  excess  of  $1,000,000,000,
provided  that  such bank is acting  through  its  main
office or a branch or agency located in the country  in
which it is organized or another country which is  also
a  member of the OECD having total assets in excess  of
$1,000,000,000; (iv) the central bank  of  any  country
which is a member of the OECD or (v) a finance company,
insurance  company  or other financial  institution  or
fund  having  total assets in excess of $1,000,000,000,
provided  that a holder, either directly or indirectly,
of  capital  stock or of any right to  acquire  capital
stock  of the Borrower or any Affiliate of the Borrower
shall not be an Eligible Assignee.

     "Environmental  Laws" shall  mean  any  applicable
federal,   state,   or   local  statute,   law,   rule,
regulation, ordinance, code, permit, consent, approval,
license,  written policy or rule of common law  now  or
hereafter  in  effect and in each case as amended,  and
any  judicial or administrative interpretation thereof,
including   any   judicial  or  administrative   order,
injunction,  consent  decree  or  judgment,  or   other
authorization  or  requirement  whenever   promulgated,
issued  or  modified,  including  the  requirement   to
register  underground storage tanks, well plugging  and
abandonment  requirements,  and  oil  and   gas   waste
disposal requirements relating to:

          (i)      emissions,    discharges,    spills,
     migration,   movement,  releases   or   threatened
     releases  of  pollutants, contaminants,  Hazardous
     Materials,  or  hazardous or  toxic  materials  or
     wastes  into  or  onto soil,  land,  ambient  air,
     surface   water,   ground   water,   watercourses,
     publicly  owned  treatment  works,  drains,  sewer
     systems, wetlands or septic systems;

          (ii)  the  use, treatment, storage, disposal,
     handling,   manufacturing,   transportation,    or
     shipment   of  Hazardous  Materials  or  hazardous
     and?or  toxic  wastes, material, products  or  by-
     products  containing Hazardous  Materials  (or  of
     equipment   or   apparatus  containing   Hazardous
     Materials); or

            (iii)    otherwise relating to pollution or
     the protection of human health or the environment,
     including,  without limitation, the  Comprehensive
     Environmental    Response,    Compensation,    and
     Liability  Act of 1980, 42 U.S.C.  9601  et  seq.,
     as amended, the Resource Conservation and Recovery
     Act,  42  U.S.C.   6901 et seq., as  amended,  the
     Hazardous Materials Transportation Act, 49  U.S.C.
       1801  et seq., as amended, the Clean Water  Act,
     33  U.S.C.   1251 et seq., as amended,  the  Toxic
     Substances Control Act, 15 U.S.C.  2601  et  seq.,
     as  amended,; the Clean Air Act, 42  U.S.C.   7401
     et  seq.,  as amended, the federal Water Pollution
     Control  Act, 33 U.S.C. 1251 et seq., as  amended,
     the  Safe Drinking Water Act, 42 U.S.C.   300f  et
     seq., as amended, the Atomic Energy Act, 42 U.S.C.
       2011  et  seq.,  as  amended,  the  Natural  Gas
     Pipeline  Safety Act of 1968, 49  U.S.C.  1671  et
     seq.,   as   amended,  the  Federal   Insecticide,
     Fungicide  and Rodenticide Act, 7 U.S.C.   136  et
     seq., as amended, and the Occupational Safety  and
     Health  Act,  29 U.S.C.  651 et seq., as  amended,
     and  all  comparable statutes  of  the  States  of
     Kentucky,  Pennsylvania, Tennessee,  Virginia  and
     West    Virginia,   and   all   comparable   local
     governmental regulations in such states, and other
     environmental, conservation or protection laws  in
     effect in any jurisdiction where any real Property
     of  the Borrower or any Subsidiary of the Borrower
     is located.

     "Environmental   Liabilities"  shall   mean   with
respect   to  any  Person,  any  and  all  liabilities,
responsibilities, losses, sums paid  in  settlement  of
claims,   obligations,  charges,  actions  (formal   or
informal),   claims  (including,  without   limitation,
claims  for  personal injury or for  real  or  personal
property  damage),  liens, administrative  proceedings,
damages (including, without limitation, loss or  damage
resulting  from the occurrence of an Event of Default),
punitive   damages,   consequential   damages,   treble
damages,    penalties,   fines,   monetary   sanctions,
interest, court costs, response and remediation  costs,
stabilization  costs, encapsulation  costs,  treatment,
storage,  or disposal costs, groundwater monitoring  or
environmental  sampling costs, other causes  of  action
and  any  other costs and expenses (including,  without
limitation,   reasonable  attorneys',   experts',   and
consultants'   fees,   costs   of   investigation   and
feasibility  studies  and disbursements  in  connection
with  any  investigative,  administrative  or  judicial
proceeding)  ,  whether direct or  indirect,  known  or
unknown,  absolute  or  contingent,  past,  present  or
future arising under, pursuant to or in connection with
any  Environmental Law, or any other binding obligation
of  such  Person  requiring abatement of  pollution  or
protection of human health and the environment.

     "Environmental Lien" shall mean a Lien in favor of
any  Governmental Authority for (i) any liability under
Environmental  Laws or (ii) damages  arising  from,  or
costs  incurred  by  such  Governmental  Authority   in
response  to,  a  Release or threatened  Release  of  a
Hazardous Substance into the environment.

     "Equities"  shall  mean  Penn  Virginia   Equities
Corporation, a Delaware corporation and a wholly  owned
Subsidiary of the Borrower.

     "ERISA"  shall  mean  the United  States  Employee
Retirement Income Security Act of 1974, as amended from
time  to  time, together with all rules and regulations
promulgated with respect thereto.

     "ERISA  Affiliate" shall mean any (i)  corporation
which  is  a  member  of the same controlled  group  of
corporations (within the meaning of Section  414(b)  of
the  Code) as the Borrower, (ii) partnership  or  other
trade  or business (whether or not incorporated)  under
common control (within the meaning of Section 414(c) of
the  Code) with the Borrower, (iii) member of the  same
affiliated service group (within the meaning of Section
414(m)  of  the  Code) as the Borrower  or  (iv)  other
Person  required to be aggregated with the Borrower  or
an  ERISA Affiliate thereof, as defined above, pursuant
to Section 414(o) of the Code.

      "Eurocurrency Liabilities" shall have the meaning
assigned to that term in Regulation D.

     "Eurodollar  Borrowing"  shall  mean  a  Borrowing
comprised of Eurodollar Loans.

     "Eurodollar  Interest  Period"  shall  mean,  with
respect to each Eurodollar Borrowing, a period of  one,
two, three or six months, as specified in the Borrowing
Request  submitted pursuant to Section 2.2 with respect
thereto,  beginning on and including the date specified
in  such  Borrowing Request (which must be  a  Business
Day)   and   ending  on  the  date  which   corresponds
numerically to such beginning date one, two,  three  or
six  months  thereafter  (or  if  such  month  has   no
numerically  corresponding date, on the  last  Business
Day  of  such  month);  provided that  each  Eurodollar
Interest  Period which would otherwise  end  on  a  day
which  is  not  a Business Day shall end  on  the  next
succeeding  Business  Day unless such  next  succeeding
Business  Day is the first Business Day of  a  calendar
month,  in  which case such Eurodollar Interest  Period
shall  end  on  the  Business Day next  preceding  such
numerically corresponding day.  No Eurodollar  Interest
Period  may  be  elected  which  would  end  after  the
Maturity Date.

     "Eurodollar Loan" shall mean any Revolving  Credit
Loan bearing interest at a rate determined by reference
to   the   Eurodollar  Rate  in  accordance  with   the
provisions of Article II.

     "Eurodollar Rate" shall mean, with respect to each
Eurodollar   Loan  comprising  part  of  a   Eurodollar
Borrowing  and  with respect to the related  Eurodollar
Interest  Period,  the  rate  of  interest  per   annum
(rounded  upward  to the nearest 1/16 of  one  percent)
determined pursuant to the following formula:

                                Eurodollar (Unadjusted)
     Eurodollar  Rate      =        1.00  -  Eurodollar
     Reserve Percentage

     "Eurodollar Reserve Percentage" of any  Bank  with
respect  to  any  Eurodollar Interest  Period  for  any
Eurodollar  Loan of such Bank shall mean,  the  reserve
percentage  (expressed  as  a  decimal)  equal  to  the
maximum  aggregate reserve requirements (including  all
basic,  emergency,  supplemental,  marginal  and  other
reserves  and  taking  into  account  any  transitional
adjustments  or  other  scheduled  changes  in  reserve
requirements) specified under regulations  issued  from
time  to  time by the Board of Governors of the Federal
Reserve  System  and  then  applicable  to  assets   or
liabilities  consisting  of and including  Eurocurrency
Liabilities  having  a  term  approximately  equal   or
comparable to such Eurodollar Interest Period.

     "Eurodollar (Unadjusted)" shall mean, with respect
to  each  day  during each Eurodollar  Interest  Period
pertaining   to  each  Eurodollar  Loan  comprising   a
Eurodollar Borrowing, the rate per annum equal  to  the
rate  at which Chase is offered Dollar deposits  at  or
about  11:00  A.M., Houston, Texas time,  two  Business
Days prior to the beginning of such Eurodollar Interest
Period  in  the interbank eurodollar market  where  the
eurodollar and foreign currency and exchange operations
in  respect  of  its Eurodollar Loans  are  then  being
conducted  for  delivery  on  the  first  day  of  such
Eurodollar  Interest  Period for  the  number  of  days
comprised  therein and in an amount comparable  to  the
amount  of  the Eurodollar Borrowing to be  outstanding
during such Eurodollar Interest Period.

     "Event   of   Default"  shall  have  the   meaning
specified in Section 8.1.

     "Existing  Debt"   shall  mean,  at  the  time  of
determination, the aggregate principal then outstanding
on Consolidated Funded Debt described in Schedule 7.1.

     "Existing  Litigation"  shall  mean  all  actions,
suits,  proceedings,  governmental  investigations   or
arbitration disclosed in Schedule 5.10 hereto.

     "Existing  Plans" shall have the meaning specified
in Section 7.9.

     "FDIC"  shall  mean the Federal Deposit  Insurance
Corporation (or any successor).

     "Federal  Funds  Effective Rate"  shall  have  the
meaning  specified  in  the  definition  of  the   term
"Alternate Base Rate".

     "Fiscal  Quarter" shall mean a three-month  period
ending  on  the  last day of December, March,  June  or
September of any year.

     "Fiscal  Year"  shall  mean a twelve-month  period
ending on December 31 of any year.

     "GAAP"  shall  mean generally accepted  accounting
principles set forth in the opinions and pronouncements
of  the  Accounting Principles Board  of  the  American
Institute   of   Certified   Public   Accountants   and
statements   and   pronouncements  of   the   Financial
Accounting  Standards Board or in such other statements
by   such  other  entity  as  may  be  approved  by   a
significant segment of the accounting profession, which
are consistent with those applied in the preparation of
the financial statements of the Borrower referred to in
Section 5.9(a).

     "Gas Balancing Agreement" shall mean any agreement
or arrangement whereby any Person having an interest in
any  Hydrocarbons to be produced from the Oil  and  Gas
Interests  of the Borrower and its Subsidiaries  has  a
right  to  take  more than its proportionate  share  of
production therefrom.

     "Government   Securities"   shall   mean   readily
marketable direct full faith and credit obligations  of
the   United   States  or  obligations  unconditionally
guaranteed  by the full faith and credit of the  United
States  (or  by any agency thereof to the  extent  such
obligations are backed by the full faith and credit  of
the United States).

     "Governmental    Approval"    shall    mean    any
authorization,   consent,  approval,  license,   lease,
ruling,  permit, certification, exemption, filing  for,
or  registration by or with any Governmental  Authority
required  by  the  Borrower or any  Subsidiary  of  the
Borrower in connection with (i) the execution, delivery
and  performance of the Loan Documents by any  of  such
Persons  and  the  borrowing of any  funds  under  this
Credit  Agreement, (ii) the validity or  enforceability
of  the Loan Documents and the exercise by the Agent or
any  Bank of its rights and remedies thereunder, and/or
(iii)  the  acquisition,  maintenance,  ownership   and
operation of the Borrowing Base Assets.

     "Governmental Authority" shall mean any nation  or
government,  any federal, state, province, city,  town,
municipality,   county,  local   or   other   political
subdivision  thereof  or thereto  and  any  department,
commission, board, bureau, instrumentality,  agency  or
other   entity   exercising   executive,   legislative,
judicial, regulatory or administrative functions of  or
pertaining to government.

     "Hazardous  Substances" shall mean  (1)  hazardous
materials,  hazardous wastes, and hazardous  substances
including,   but  not  limited  to,  those  substances,
materials  and  wastes  listed  in  the  United  States
Department of Transportation Hazardous Materials Table,
49  C.F.R..  172.101,  as amended,  or  listed  by  the
federal  Environmental Protection Agency  as  hazardous
substances under or pursuant to 40 C.F.R. Part 302,  as
amended,  or  substances,  materials,  contaminants  or
wastes   which  are  or  become  regulated  under   any
Environmental Law, including without limitation,  those
substances,  materials,  contaminants  or   wastes   as
defined   in   the   following   statutes   and   their
implementing  regulations:   the  Hazardous   Materials
Transportation  Act,  49  U.S.C.  1801  et   seq.,   as
amended, the Resource Conservation and Recovery Act, 42
U.S.C.  6901  et  seq., as amended,  the  Comprehensive
Environmental Response, Compensation and Liability Act,
42   U.S.C.  9601  et  seq.,  as  amended;  the   Toxic
Substances  Control Act, 15 U.S.C.  2601  et  seq.,  as
amended; the Clean Air Act, 42 U.S.C. 7401 et seq.,  as
amended,  the federal Water Pollution Control  Act,  33
U.S.C.  1251  et  seq.,  as amended,  the  Occupational
Safety  and  Health  Act,  2 U.S.C.  651  et  seq.,  as
amended,  the Safe Drinking Water Act, 42  U.S.C.  300f
et seq., as amended and the Natural Gas Pipeline Safety
Act  of  1968, 49 U.S.C. 1671 et seq., as amended;  (2)
all   substances,  materials,  contaminants  or  wastes
listed  in  all  comparable statutes of the  States  of
Kentucky,  Pennsylvania, Tennessee, Virginia  and  West
Virginia and in comparable local Requirements of Law in
such  states; (3) acid gas, sour water streams or  sour
water  vapor  streams  containing hydrogen  sulfide  or
other forms of sulfur, sodium hydrosulfide and ammonia;
(4)  Hydrocarbons; (5) natural gas, synthetic gas,  and
any  mixtures thereof; (6) asbestos and?or any material
which  contains 1% or more, by weight, of any  hydrated
mineral   silicate,  including  but  not   limited   to
chrysotile,     amosite,    crocidolite,     tremolite,
anthophylite and?or actinolite, whether friable or non-
friable;  (7)  PCB's,  or PCB containing  materials  or
fluids;  (8) radon; (9) naturally occurring radioactive
material,  radioactive substances or waste;  (10)  salt
water  and other oil and gas wastes and (11) any  other
hazardous  or  noxious substance, material,  pollutant,
emission, or solid, liquid or gaseous waste.

     "Hedge   Transaction"  shall  mean  a  transaction
pursuant   to  which  the  Borrower  or  any   of   its
Subsidiaries fix the price to be received by  them  for
future production of Hydrocarbons, including price swap
agreements under which the Borrower or its Subsidiaries
agree  to  pay  a  price  for  a  specified  amount  of
Hydrocarbons  determined by reference to  a  recognized
market  on  a specified future date and the contracting
party agrees to pay the Borrower or its Subsidiaries  a
fixed   price  for  the  same  or  similar  amount   of
Hydrocarbons.

     "Highest  Lawful  Rate"  shall  mean,  as   of   a
particular  date  and  as  to  any  Bank,  the  maximum
nonusurious interest rate that may under applicable law
then  be  contracted for, charged or received  by  such
Bank in connection with its Revolving Credit Loans.

     "Hostile  Acquisition" shall mean any  transaction
in  which the Borrower or its Subsidiaries, directly or
indirectly, purchases or offers to purchase or acquire,
in  any  transaction  or  series  of  transactions,  an
aggregate  of  5% or more of the equity  securities  or
controlling  interest of any Person, for  any  type  of
consideration,  without the prior  written  consent  of
such  Person  or  such Person's Board of  Directors  or
controlling body.

     "Hydrocarbons"  shall  mean oil,  gas,  casinghead
gas,   condensate,  distillate,  liquid   hydrocarbons,
gaseous   hydrocarbons  and  all  products   separated,
settled  and  dehydrated  therefrom  and  all  products
refined   therefrom,  including,  without   limitation,
kerosene,  liquified petroleum gas, refined lubricating
oils,  diesel  fuel, drip gasoline,  natural  gasoline,
helium, sulfur and all other minerals.

     "Immaterial Oil and Gas Interests" shall have  the
meaning assigned to that term in Section 5.6 hereof.

     "Initial Borrowing Base Asset Reports" shall  mean
(i)  the  Reserve  Report  covering  the  Oil  and  Gas
Interests of the Borrower and its Subsidiaries prepared
as  of  December  31,  1998, by the Approved  Petroleum
Engineer, and (ii) the Coal Reserve Report covering the
Coal  Interests  of the Borrower and  its  Subsidiaries
prepared  as of December 31, 1998, by the personnel  of
the Borrower and its Subsidiaries, complete and correct
copies of which have been furnished by the Borrower  to
the Banks.

     "Initial  Credit Agreement" shall mean the  Credit
Agreement  dated  as  of  August  2,  1996,  among  the
Borrower, the Agent and the each of the Banks  thereto,
as   said   agreement   may   be   amended,   modified,
supplemented, and/or extended from time to time.

     "Initial Financial Statements" shall mean (i)  the
audited annual Consolidated financial statements of the
Borrower and its Consolidated Subsidiaries dated as  of
December  31,  1998 and (ii) the quarterly Consolidated
financial   statement   of   the   Borrower   and   its
Subsidiaries  dated  as of March 31,  1999,  copies  of
which Initial Financial Statements have heretofore been
delivered by the Borrower to the Banks.

     "Interest  Payment  Date"  shall  mean  any   date
interest  is due pursuant to the provisions of  Section
2.7(b) hereof.

     "Investment"  shall  mean,  as  applied   to   the
Borrower or a Subsidiary of the Borrower, any direct or
indirect  purchase or other acquisition by the Borrower
or  such  Subsidiary of stock, partnership interest  or
other  equity  interest, or of  a  beneficial  interest
therein,  of  any  other  Person,  and  any  direct  or
indirect  loan,  advance  (other  than  deposits   with
financial  institutions  available  for  withdrawal  on
demand,  prepaid  expenses, advances to  employees  and
similar  items made or incurred in the ordinary  course
of  business), or capital contribution by the  Borrower
or  such Subsidiary to any other Person, including  all
Debt  and accounts owed by that other Person which  are
not current assets or did not arise from sales of goods
or  services to the Borrower or such Subsidiary in  the
ordinary  course  of  business.   The  amount  of   any
Investment shall be determined in conformity with GAAP.

     "IRS"  shall mean the Internal Revenue Service  or
any successor agency.

     "Issuing Bank" shall mean Chase.

     "Lending Office" shall mean, with respect to  each
Bank,   the   branch  or  branches  (or  Affiliate   or
Affiliates) from which such Bank's Eurodollar Loans  or
ABR  Loans,  as the case may be, are made or maintained
and  for the account of which payments of principal of,
and  interest on, such Bank's Eurodollar Loans  or  ABR
Loans are made.

     "Letter of Credit" shall mean a Standby Letter  of
Credit  requested  to  be issued under  the  Letter  of
Credit Commitment.

     "Letter  of  Credit Application"  shall  mean  the
application to the Issuing Bank by the Borrower for the
issuance of a Standby Letter of Credit in substantially
the form of Exhibit C hereto.

     "Letter  of  Credit Commitment"  shall  mean  with
respect  to  each Bank, the lesser of (a)  such  Bank's
Commitment  Percentage  of  $10,000,000  and  (b)  such
Bank's Commitment.

     "Letter of Credit Exposure" of any Bank shall mean
such  Bank's  aggregate participation in  the  unfunded
portion of Letters of Credit outstanding at any time.

     "Lexington" shall mean Lexington Land  Company,  a
Delaware  corporation and a wholly-owned Subsidiary  of
PVCC.

     "Lien" shall mean, with respect to any asset,  (a)
any   mortgage,  deed  of  trust,  production  payment,
deposit, lien, charge, pledge, security interest, claim
or  encumbrance  of  any  kind  (whether  voluntary  or
involuntary,  affirmative  or  negative,  and   whether
imposed  or  created by operation of law or  otherwise)
upon  such  asset, (b) the interest of a  vendor  or  a
lessor  under  any conditional sale agreement,  capital
lease  or  other title retention agreement relating  to
such  asset  and  (c)  in the case of  securities,  any
purchase option, call or similar right of a third party
with respect to such securities but excluding any right
of   offset  which  arises  without  agreement  in  the
ordinary course of business.

     "Loan Documents" shall mean this Credit Agreement,
each of the Notes, the Subsidiary Guaranty, the Letters
of  Credit,  the  Letter  of  Credit  Applications  and
reimbursement   agreements   executed   in   connection
therewith, each Compliance Certificate, each Notice  of
Conversion or Continuance, each Borrowing Request,  all
Reserve Reports, all Borrowing Base Asset Reports,  all
legal  opinions and when executed and delivered by  the
parties  thereto,  all other agreements,  certificates,
instruments  and documents executed in connection  with
the  Credit  Agreement, as the  same  may  be  amended,
modified, supplemented or extended from time to time.

     "Loan(s)" shall mean all Revolving Credit Loans.

     "Majority  Banks" shall mean those  Banks  holding
more  than  66-2?3% of the Utilized Credit, or,  if  no
Utilized Credit is outstanding, at least 66-2?3% of the
Total Commitment.

     "Margin  Stock"  shall have the meaning  given  to
such term under Regulation U.

     "Material  Adverse  Effect"  shall  mean   (a)   a
material  adverse  effect  on  the  business,   assets,
operations or condition (financial or otherwise) of the
Borrower  and  its Subsidiaries taken as a  whole,  (b)
material  impairment of the ability of the Borrower  or
any  of  its Subsidiaries to perform timely any of  its
respective Obligations under any Loan Document to which
it is or will be a party, or (c) material impairment of
the  rights of or benefits available to the Banks under
any Loan Document.

     "Material   Contract"  shall  mean  any  contract,
agreement or instrument to which the Borrower or any of
its  Restricted Subsidiaries is a party (i) which calls
for  payments to or from the Borrower or any Subsidiary
of  the  Borrower of an amount in excess of  $2,000,000
during  any  twelve month period or  (ii)  pursuant  to
which  the  Borrower or any Subsidiary of the  Borrower
acquires  any right to an interest in real or  personal
property  or a right to obtain services if the Borrower
or such Subsidiary's inability to obtain any such right
could  reasonably be expected to result in  a  Material
Adverse Effect.

     "Material  Restricted  Subsidiaries"  shall   mean
those  certain  Restricted Subsidiaries with  Borrowing
Base Assets greater than $2,000,000.

     "Maturity Date" shall mean June 30, 2003,  or  the
earlier date of termination in whole of the Commitments
or  as extended pursuant to the provisions contained in
Section 2.21 hereof.

     "Multiemployer  Plan" shall mean a  "multiemployer
plan"  as  defined in Section 4001(a)(3)  of  ERISA  to
which the Borrower or any ERISA Affiliate is making  or
accruing  an obligation to make contributions,  or  has
within any of the preceding five (5) plan years made or
accrued an obligation to make contributions.

     "Norfolk Common Stock" shall mean the common stock
of  the  Norfolk  Southern Corporation,  par  value  of
$1.00.

     "Notes"  shall mean the promissory  notes  of  the
Borrower dated the Effective Date payable to the  order
of each Bank, substantially in the form of Exhibit D.

     "Notice of Conversion or Continuation" shall  mean
a  Notice of Conversion or Continuation in the form  of
Exhibit  E  signed  by  a Responsible  Officer  of  the
Borrower.

     "Obligations"   shall   mean   all    obligations,
liabilities  and indebtedness of every  nature  of  the
Borrower  and its Subsidiaries from time to time  owing
to  any  Bank  under  any Loan Document  to  which  the
Borrower  or  such  Subsidiary is a  party,  including,
without limitation, (a) the due and punctual payment of
(x)  the  principal of and interest  on  the  Revolving
Credit  Loans,  Letters  of  Credit  and  reimbursement
obligations  under Letter of Credit Applications,  when
and  as due, whether at maturity, by acceleration, upon
one  or  more  dates set for prepayment  or  otherwise,
including,  to the extent permitted by applicable  law,
interest  that  accrues after the commencement  of  any
proceeding  by or against the Borrower or  any  of  its
Subsidiaries  under the Bankruptcy Code and  all  other
applicable  Debtor  Relief  Laws  and  (y)  all   other
monetary   obligations   of  the   Borrower   and   its
Subsidiaries  to  any Bank under this Credit  Agreement
and  each  of  the other Loan Documents  to  which  the
Borrower  or such Subsidiary is a party, including  any
and  all fees, costs, expenses and indemnities and  (b)
the   due   and  punctual  performance  of  all   other
obligations of the Borrower and its Subsidiaries  under
this  Credit Agreement and each other Loan Document  to
which  the  Borrower  or such Subsidiary  is  a  party.
"Obligation" means any part of the Obligations.

     "Oil  and  Gas Interests" shall mean any  and  all
rights,  estates, titles and interests in any  oil  and
gas   wells,   oil,  gas,  sulfur  and  other   mineral
leaseholds  and  fee interests, all overriding  royalty
interests,  mineral interests, royalty  interests,  net
profits  interests, oil payments, production  payments,
carried  interests and any and all other  interests  in
Hydrocarbons,  whether  any of  the  same  be  real  or
personal,  now  owned  or  hereafter  acquired  by  the
Borrower  or  its Subsidiaries, directly or  indirectly
together  with rights, titles and interests created  by
or   arising   under  the  terms  of  any  unitization,
communitization,    and    pooling    agreements     or
arrangements, and all properties, rights and  interests
covered thereby, whether arising by contract, by order,
or by operation of laws, which now or hereafter include
all or any part of the foregoing.

     "Opinion of the Borrower's Counsel" shall mean the
favorable written legal opinion of Nancy Snyder,  legal
counsel to the Borrower and its Subsidiaries, dated  as
of   the  Closing  Date,  and  in  form  and  substance
satisfactory to the Agent.

     "Participants" shall have the meaning assigned  to
that term in Section 10.9 hereof.

     "PBGC"  shall  mean the Pension  Benefit  Guaranty
Corporation or any entity succeeding to all or  any  of
its functions under ERISA.

     "Permitted Liens" shall mean with respect  to  the
Borrower or any Subsidiary of the Borrower:

     (a)  Liens (if any) securing the Notes in favor of
the Banks;

     (b)   Inchoate  Liens incident to construction  or
maintenance  of  real property or with respect  to  the
conduct of the Borrower's business with respect to  the
Coal  Interests and the Oil and Gas Interests, or Liens
incident  to  construction  or  maintenance   of   real
property,  now or hereafter filed of record  for  which
adequate  reserves with respect thereto are  maintained
on  its  books  in accordance with GAAP and  which  are
being diligently contested in good faith by appropriate
proceedings   and  have  not  proceeded  to   judgment,
provided   that,  by  reason  of  nonpayment   of   the
obligations  secured  by  such  Liens,  no  such   real
property  is  subject to a material  risk  of  loss  or
forfeiture prior to judgment;

     (c)   Liens  for  taxes  and assessments  on  real
property which are not yet past due, or Liens for taxes
and  assessments  on real property for  which  adequate
reserves  with  respect thereto are maintained  on  its
books  in  accordance  with GAAP and  which  taxes  and
assessments  are  being diligently  contested  in  good
faith by appropriate proceedings and have not proceeded
to  judgment, provided that, by reason of nonpayment of
the  obligations secured by such Liens,  no  such  real
property  is  subject to a material  risk  of  loss  or
forfeiture prior to judgment;

     (d)  Imperfections and irregularities in title  to
any  property which in the aggregate do not  materially
impair  the  marketability or use of such property  for
the  purposes  for  which it is or  may  reasonably  be
expected to be held;

     (e)  Easements, exceptions, reservations, or other
agreements  for  the  purpose of  pipelines,  conduits,
cables,  wire  communication  lines,  power  lines  and
substations,   streets,  trails,  walkways,   drainage,
irrigation,   water,  and  sewerage  purposes,   dikes,
canals,  ditches,  the removal of oil,  gas,  coal,  or
other minerals, and other like purposes affecting  real
property  which  in  the aggregate  do  not  materially
burden or impair the marketability or use of such  real
property  for  the  purposes for which  it  is  or  may
reasonably be expected to be held;

     (f)    Non-consensual  Liens   imposed   by   Law,
including     carrier's,    mechanics',     landlord's,
warehousemen's or other similar Liens, other than those
described in clauses (b) or (c) above, arising  in  the
ordinary course of business with respect to obligations
which  are  not  delinquent  or  are  being  diligently
contested  in  good  faith by appropriate  proceedings,
provided  that, if delinquent, adequate  reserves  with
respect   thereto  are  maintained  on  its  books   in
accordance  with GAAP and, by reason of nonpayment,  no
property  is  subject to a material  risk  of  loss  or
forfeiture prior to judgment;

     (g)   Liens consisting of pledges or deposits made
in  the ordinary course of business in compliance  with
workers' compensation, unemployment insurance and other
social security laws or regulations;

     (h)   Liens consisting of deposits of property  to
secure  the performance of bids, trade contracts (other
than  for  Debt), leases (other than Capitalized  Lease
Obligations), statutory obligations, surety and  appeal
bonds,  performance bonds and other  obligations  of  a
like   nature  incurred  in  the  ordinary  course   of
business;

      (i)  Lease burdens payable to third parties which
are   either   (i)  deducted  in  the  calculation   of
discounted  present value of the Oil and Gas  Interests
covered  in  the  Reserve  Reports  including,  without
limitation, any royalty, overriding royalty, net profit
interests,  production  payment,  carried  interest  or
reversionary working interest which has been  disclosed
to   the   Agent  in  writing,  or  (ii)  which  burden
properties  which  are  not  included  in  the  Reserve
Reports or the Coal Reserve Reports;

     (j)   Liens  arising under operating,  pooling  or
unitization agreements of a scope and nature  customary
in the oil and gas industry;

     (k)   Liens arising under, in connection  with  or
related  to farm-out, farm-in, joint operating or  area
of  mutual  interest  agreements or  other  similar  or
customary   arrangements,  agreements   or   interests,
incurred in the ordinary course of business and to  the
extent  such Liens are limited in recourse to  (x)  the
properties subject to such interests or agreements, (y)
the  Hydrocarbons produced from such properties and (z)
the proceeds of such Hydrocarbons;

     (l)   Purchase money Liens upon or in any property
acquired by the Borrower or any of its Subsidiaries  in
the  ordinary course of business to secure the deferred
portion of the purchase price of such property  or  any
indebtedness  incurred to finance  the  acquisition  of
such  property provided, however, that (i) no such Lien
shall  be  extended to cover property  other  than  the
property  being acquired (ii) the Debt secured  thereby
is permitted pursuant to Section 7.1(h);

     (m)  All other non-consensual Liens arising in the
ordinary course of the Borrower's or such Subsidiaries'
business  or  incidental  to  the  ownership  of  their
properties;

provided that no Permitted Lien referred to above shall
(i)  secure any Debt except for Debt permitted pursuant
to  subparagraphs (a), (e) or (h) of Section 7.1 hereof
or  (ii)  in the aggregate materially detract from  the
marketability of the material Borrowing Base Assets  or
materially  impair the use thereof in the operation  of
the business of the Borrower or such Subsidiary.

     "Person"  shall  mean an individual,  partnership,
corporation  (including a business trust), joint  stock
company,   trust,  unincorporated  association,   joint
venture  or  other  entity,  or  a  foreign  state   or
political  subdivision thereof or any  agency  of  such
state or subdivision.

     "Prime  Rate" shall have the meaning specified  in
the definition of the term "Alternate Base Rate."

     "Proved    Developed   Behind   Pipe   Hydrocarbon
Reserves" shall mean Proved Hydrocarbon Reserves  which
are  recoverable from zones behind casing  in  existing
wells, which will require additional completion work or
a future recompletion prior to the start of production.

     "Proved    Developed   Non-Producing   Hydrocarbon
Reserves"  shall mean the summation of Proved Developed
Behind  Pipe Hydrocarbon Reserves and Proved  Developed
Shut-in Hydrocarbon Reserves.

     "Proved  Developed Producing Hydrocarbon Reserves"
shall mean those Proved Hydrocarbon Reserves which  are
recoverable  from completion intervals  currently  open
and  producing  to market.  Improved recovery  reserves
are  considered to be producing only after an  improved
recovery   project  has  been  installed  and   is   in
operation.

     "Proved  Developed  Shut-in Hydrocarbon  Reserves"
shall   mean  Proved  Hydrocarbon  Reserves  that   are
recoverable from completion intervals open  as  of  the
date  of estimation, but which are not producing as  of
such date.

     "Proved  Hydrocarbon Reserves"  shall  mean  those
recoverable  Hydrocarbons which have been proved  to  a
high   degree  of  certainty  by  reason  of   existing
production,  adequate testing, or in certain  cases  by
adequate  core data and other engineering and  geologic
information  on  zones which are  present  in  existing
wells  or  in known reservoirs.  Reserves that  can  be
produced   economically  through  the  application   of
established  improved recovery techniques are  included
in   the  proved  classification  when  (a)  successful
testing  by  a  pilot project or the operation  of  any
installed  program  in that reservoir  or  one  in  the
immediate  area with similar rock and fluid  properties
provides support for the engineering analysis on  which
the  project  or  program was  based,  and  (b)  it  is
reasonably certain the project will proceed.   Reserves
to  be  recovered by improved recovery techniques  that
have   yet   to   be   established   through   repeated
economically  successful applications are  included  in
the proved category only after successful testing by  a
pilot  project or after the operation of  an  installed
program  in  the  reservoir provides  support  for  the
engineering  analysis on which the project  or  program
was  based.  Improved recovery includes all methods for
supplement  natural  reservoir including  (1)  pressure
maintenance, (2) cycling and (3) secondary recovery  in
its  original  sense.  Improved recovery also  includes
the  enhanced  recovery methods  of  thermal,  chemical
flooding,  and  the  use  of  miscible  and  immiscible
displacement fluids.

     "Proved  Reserves" shall mean the meaning assigned
to that term in the definition of "Reserve Report".

     "Proved  Undeveloped Hydrocarbon  Reserves"  shall
mean  Proved  Hydrocarbon Reserves that are recoverable
(i)  by  new  wells  on  undrilled  acreage,  (ii)   by
replacement  wells on previously drilled and  producing
acreage or (iii) from existing wells where a relatively
large expenditure is required for recompletion and from
acreage  where the application of an improved  recovery
technique  is planned and the costs required  to  place
the  project in operation are relatively large.  Proved
Undeveloped  Hydrocarbon Reserves on undrilled  acreage
shall  be  limited  to those drilling units  offsetting
productive   units  that  are  reasonably  certain   of
production  when drilled.  Proved Hydrocarbon  Reserves
for   other  undrilled  units  are  Proved  Undeveloped
Hydrocarbon  Reserves only where it can be demonstrated
with  certainty that there is continuity of  production
from the existing productive formation.

     "PVCC"  shall mean Penn Virginia Coal  Company,  a
Virginia  corporation and a wholly owned Subsidiary  of
the Borrower.

     "PVHC"  shall mean Penn Virginia Holding Corp.,  a
Delaware  corporation and a wholly-owned Subsidiary  of
Borrower.

     "PVOG"  shall  mean  Penn  Virginia  Oil   &   Gas
Corporation, a Virginia corporation and a wholly  owned
Subsidiary of the Borrower.

     "Register"  shall  have the meaning  specified  in
Section 10.9(f) hereof.

     "Regulation  D"  shall mean Regulation  D  of  the
Board (respecting reserve requirements), as the same is
from  time to time in effect, and all official  rulings
and interpretations thereunder or thereof.

     "Regulation  U"  shall mean Regulation  U  of  the
Board (respecting margin credit extended by banks),  as
the  same  is  from  time to time in  effect,  and  all
official  rulings  and  interpretations  thereunder  or
thereof.

     "Regulation  X"  shall mean Regulation  X  of  the
Board  (respecting borrowers who obtain margin credit),
as  the  same is from time to time in effect,  and  all
official  rulings  and  interpretations  thereunder  or
thereof.

     "Release" shall mean any release, spill, emission,
leak,    injection,   deposit,   disposal,   discharge,
dispersal,  leaching  or  migration  of  any  Hazardous
Substance  into the environment or into or out  of  any
real property of the Borrower or any Subsidiary of  the
Borrower,   including   the   movement   of   Hazardous
Substances through or in the air, soil, surface  water,
groundwater  and?or land in violation of  Environmental
Laws.

     "Remedial Action" shall mean actions required by a
Governmental Agency to (i) clean up, remove,  treat  or
in  any  other way address Hazardous Substances in  the
environment,  (ii)  prevent the Release  or  threat  of
Release  or  minimize the further Release of  Hazardous
Substances  so  they  do  not migrate  or  endanger  or
threaten  to endanger public health or welfare  or  the
environment  or (iii) perform pre-remedial studies  and
investigations and post-remedial monitoring and care.

     "Reportable  Event" shall mean any of  the  events
described in Section 4043 or Section 4068(f)  of  ERISA
for which the thirty (30) day notice requirement of  29
C.F.R.  2615.3 has not been waived.

     "Requirements  of  Law" shall  mean  any  federal,
state or local law, rule or regulation, permit or other
binding  determination  of any  Governmental  Authority
applicable  to the Borrower or any of its  Subsidiaries
or any of their respective properties or assets.

     "Reserve  Report" shall mean a report in form  and
substance  satisfactory  to each  Bank,  which  Reserve
Report shall be dated as of the next preceding December
31  or June 30, as the case may be, and shall review at
least  80% of the Proved Reserves attributable  to  the
Oil   and  Gas  Interests  of  the  Borrower  and   its
Subsidiaries (and showing any material additions to  or
deletions from the Oil and Gas Interests covered by the
previous  Reserve Report made by the Borrower  and  its
Subsidiaries  since  the date of the  previous  Reserve
Report), shall set forth the Proved Developed Producing
Hydrocarbon  Reserves,  Proved  Developed  Behind  Pipe
Hydrocarbon   Reserves,   Proved   Developed    Shut-In
Hydrocarbon Reserves and Proved Undeveloped Hydrocarbon
Reserves  (the "Proved Reserves") attributable  to  the
Oil  and Gas Interests and a projection of the rate  of
production  and net income with respect to  the  Proved
Reserves as of the date of such Reserve Report, all  in
accordance  with  the  guidelines  published   by   the
Securities  and  Exchange  Commission.   Each   Reserve
Report to be submitted prior to  March 31 in each  such
year  shall  be  prepared  by  the  Approved  Petroleum
Engineer.  The Majority Banks shall have the  right  to
approve of the composition of the Oil and Gas Interests
covered  in  the Reserve Report to be prepared  by  the
Approved Petroleum Engineer.  Each Reserve Report to be
submitted  prior  to  October 1 in  each  year  may  be
limited  to  information prepared by personnel  of  the
Borrower  or  its  Subsidiaries, which  Reserve  Report
shall provide the current status of the information set
forth in the immediately preceding Reserve Report.

     "Responsible  Officer"  shall  mean,  as  to   any
Person,   its   Chairman,   Vice-Chairman,   President,
Executive  Vice President(s), Senior Vice  President(s)
or  Vice President duly authorized to act on behalf  of
such Person.

     "Restricted   Subsidiary   "   shall   mean   each
Subsidiary of the Borrower that, at the particular time
in  question,  (i)  owns  directly  or  indirectly  any
material assets or any interest in any other Restricted
Subsidiary and (ii) has been designated as a Restricted
Subsidiary  by the Borrower or has not been  designated
as  an  Unrestricted Subsidiary by the Borrower  either
(i)  on Schedule 5.16 hereto or (b) in accordance  with
the terms and provisions of this Credit Agreement.  The
Unrestricted  Subsidiaries on the  Effective  Date  are
listed   on   Schedule  5.16  hereto.    A   Restricted
Subsidiary shall remain such (even if it no longer owns
directly  or  indirectly any interest  in  any  of  the
material assets or any interest in any other Restricted
Subsidiary)   until  designated  as   an   Unrestricted
Subsidiary  in accordance with the terms and provisions
of this Agreement.

     "Revolving Credit Loan(s)" shall have the  meaning
provided in Section 2.1(a).

     "S&P" shall mean Standard & Poor's Corporation.

     "Savannah"  shall mean Savannah  Land  Company,  a
Delaware  corporation and a wholly-owned Subsidiary  of
PVCC.

     "Special Determination" means any determination of
the Borrowing Base pursuant to Section 3.4.

     "Standby Letter of Credit" shall mean a Letter  of
Credit   which   represents  an   obligation   to   the
beneficiary  on  the part of the Issuing  Bank  (a)  to
repay  money  borrowed by or advanced  to  or  for  the
account  of the Borrower or any of its Subsidiaries  or
(b)  to  make  payment on account of  any  indebtedness
undertaken  by the Borrower or any of its  Subsidiaries
or (c) to make payment on account of any default by the
Borrower  or any of its Subsidiaries in the performance
of an obligation.

     "Subordinated  Intercompany  Notes"  shall   mean,
collectively,  (i)  that certain subordinate  advancing
promissory  note  dated February  11,  1998  issued  by
Borrower  payable  to  the order  of  Savannah  in  the
original principal sum of $75,000,000,(ii) that certain
subordinate  advancing promissory note  dated  February
11,  1998  issued  by  PVCC payable  to  the  order  of
Savannah  in the original principal sum of $75,000,000,
(iii) that certain subordinate promissory note dated as
of  December  31, 1998 issued by PVCC  payable  to  the
order  of  PVHC  in  the  original  principal  sum   of
$40,918,000,   and   (iv)  that   certain   subordinate
promissory note dated as of December 31, 1998 issued by
PVOG  payable  to  the order of PVHC  in  the  original
principal sum of $42,156,000.

     "Subsidiary"  shall  mean  as  of  any   date   of
determination  and  with respect  to  any  Person,  any
corporation, partnership, joint venture or other entity
whether now existing or hereafter organized or acquired
of  which  the securities, partnership units  or  other
ownership  interests having ordinary voting  power,  in
the  absence  of contingencies, to elect a majority  of
the  board  of  directors or other  persons  performing
similar  functions  (including that  of  a  general  or
venture partner) are at the time directly or indirectly
owned by such Person and?or one or more Subsidiaries of
such Person.

     "Subsidiary    Guarantors"shall   mean    Concord,
Equities, Lexington, PVCC, PVOG, PVHC, and Savannah and
any  such  other  Person who has been accepted  by  the
Banks  to guarantee and has guaranteed some or  all  of
the  Obligations,  including  all  Material  Restricted
Subsidiaries  of  the Borrower which now  or  hereafter
execute  and  deliver an Instrument of Joinder  of  the
Subsidiary  Guaranty in the form of Exhibit  C  to  the
Subsidiary  Guaranty  pursuant  to  the  provisions  of
Section 6.11.

     "Subsidiary  Guaranty" shall mean the guaranty  of
the  Obligations  executed by each  Subsidiary  of  the
Borrower in favor of the Agent for the benefit  of  the
Banks  to secure the Obligations substantially  in  the
form of Exhibit F, either as originally executed or  as
the  same  may  from  time  to  time  be  supplemented,
modified, amended, renewed, extended or supplanted.

     "Swing  Loans" shall have the meaning assigned  to
such term in Section 7.1(g).

     "Syndication   Agent"  shall  have   the   meaning
assigned  to  that  term in the  introduction  to  this
Credit Agreement.

     "Termination  Event" shall mean (i)  a  Reportable
Event  with respect to any Benefit Plan (other  than  a
"reportable event" that is not subject to the provision
for 30 days notice to the PBGC); (ii) the withdrawal of
the Borrower from a Benefit Plan during a plan year  in
which  the  Borrower  was a "substantial  employer"  as
defined  in  Section  4001(a)(2) of  ERISA;  (iii)  the
imposition  of  an  obligation on  the  Borrower  under
Section  4041  of  ERISA  to provide  affected  parties
written notice of intent to terminate a Benefit Plan in
a  distress termination described in Section 4041(c) of
ERISA;  (iv) the institution by the PBGC of proceedings
to  terminate  a Benefit Plan; (v) any other  event  or
condition which would constitute grounds under  Section
4042   of  ERISA  for  the  termination  of,   or   the
appointment  of  a trustee to administer,  any  Benefit
Plan;  or (vi) the occurrence of an event described  in
Section  4068(f)  of ERISA with respect  to  a  Benefit
Plan.

     "Total   Borrowing  Base"  shall  mean,   at   the
particular  time in question, the amount determined  by
the Agent and the Majority Banks in accordance with the
provisions of Article III.

     "Total  Commitment"shall mean $120,000,000 as  the
same  may  be  reduced from time to  time  pursuant  to
Section 2.9.

     "Type,"  when  used in respect  to  any  Revolving
Credit  Loan  or  Borrowing,  refers  to  the  Rate  by
reference  to  which interest on such Revolving  Credit
Loan  or on the Revolving Credit Loans comprising  such
Borrowing  is determined.  For purposes hereof,  "Rate"
shall  include  the Eurodollar Rate and  the  Alternate
Base Rate.

     "Unavailable  Commitment" shall have  the  meaning
specified in Section 2.5(d) hereof.

     "Unavailable  Fee  Rate" shall  have  the  meaning
specified in Section 2.5(d) hereof.

     "Unfunded  Vested  Liabilities" shall  mean,  with
respect to any Benefit Plan at any time, the amount (if
any)  by  which  (i) the present value  of  all  vested
nonforfeitable benefits under such Benefit Plan exceeds
(ii)  the fair market value of all Benefit Plan  assets
allocable  to such benefits, all determined as  of  the
then  most recent valuation date for such Benefit Plan,
but  only  to the extent that such excess represents  a
potential liability of an ERISA Affiliate to  the  PBGC
or such Benefit Plan under Title IV of ERISA.

     "United States" and "U.S." each shall mean  United
States of America.

     "Unrestricted   Subsidiary"   shall   mean    each
Subsidiary  of the Borrower which is (i) designated  as
an  Unrestricted Subsidiary on Schedule 5.16 hereto  or
(ii)  designated as an Unrestricted Subsidiary  by  the
Borrower   at  any  time  after  the  Effective   Date;
provided,  however,  that  a  Subsidiary  may  not   be
designated as an Unrestricted Subsidiary by Borrower if
(i)  at  the  time of such designation there  exists  a
Borrowing  Base  Deficiency or a Default  or  Event  of
Default or (ii) such designation would trigger either a
Borrowing Base Deficiency or a Default or an  Event  of
Default.  An Unrestricted Subsidiary shall remain  such
until   designated  as  a  Restricted   Subsidiary   in
accordance  with  the  terms  and  provisions  of  this
Agreement.

     "Unused  Availability" shall mean at any time,  an
amount  equal to the Available Commitment in effect  at
that time, minus the Utilized Credit.

     "Utilized Credit" shall mean, at any time, without
duplication,  the  sum of (i) the  aggregate  principal
amount then outstanding on Revolving Credit Loans, plus
(ii) the aggregate principal amount then outstanding on
Swing  Loans, plus (iii) the aggregate Letter of Credit
Exposure,  plus  (iv) the aggregate amount  of  payment
theretofore  made  by the Issuing Bank  in  respect  to
Letters of Credit and not theretofore reimbursed by the
Borrower  to  the  Issuing Bank or deemed  a  Revolving
Credit Loan pursuant to Section 2.3(d).

     "Utilized Percentage of Borrowing Base" shall mean
on  any date an amount equal to (i) the Utilized Credit
on  such day minus the aggregate principal amount  then
outstanding  on  Swing  Loans  divided  by   (ii)   the
Available Borrowing Base on such day.

     "Withholding   Taxes"  shall  have   the   meaning
provided in Section 2.17(a).

     SECTION 1.2.  Accounting Terms.  All terms  of  an
accounting  or financial nature shall be  construed  in
accordance with GAAP, as in effect from time  to  time;
provided,  however, that, for purposes  of  determining
compliance with any covenant set forth in Article  VII,
such  terms shall be construed in accordance with  GAAP
as  in  effect  on  the date of this Credit  Agreement,
applied on a basis consistent with the application used
in  the  audited  financial statements referred  to  in
Section 5.9(a).

     SECTION 1.3.  Interpretation.

     (a)  In  this  Credit Agreement,  unless  a  clear
     contrary intention appears:

          (i)   the singular number includes the plural
     number and vice versa;

          (ii)   reference to any gender includes  each
          other gender;

          (iii)   the  words  "herein,"  "hereof"   and
          "hereunder" and other words of similar import
          refer to this Credit Agreement as a whole and
          not  to  any  particular Article, Section  or
          other subdivision;

          (iv)   reference to any Person includes  such
          Person's  successors  and  assigns  but,   if
          applicable,  only  if  such  successors   and
          assigns   are   permitted  by   this   Credit
          Agreement,  and reference to a  Person  in  a
          particular capacity excludes such  Person  in
          any  other capacity or individually, provided
          that  nothing in this clause (iv) is intended
          to  authorize  any assignment  not  otherwise
          permitted by this Credit Agreement;

           (v)  reference to any agreement, document or
          instrument means such agreement, document  or
          instrument   as   amended,  supplemented   or
          modified and in effect from time to  time  in
          accordance  with  the terms thereof  and,  if
          applicable,  the terms hereof, and  reference
          to any Note includes any Note issued pursuant
          hereto in extension or renewal thereof and in
          substitution or replacement therefor;

          (vi)  unless the context indicates otherwise,
          reference  to any Article, Section,  Schedule
          or  Exhibit  means  such Article  or  Section
          hereof or such Schedule or Exhibit hereto;

          (vii)    the  words  "including"  (and   with
          correlative    meaning    "include")    means
          including, without limiting the generality of
          any description preceding such term;

          (viii)  with respect to the determination  of
          any  period  of time, the word  "from"  means
          "from  and including" and the word "to" means
          "to but excluding;" and

          (ix)   reference  to any law  means  such  as
          amended, modified, codified or reenacted,  in
          whole or in part, and in effect from time  to
          time.

     (b)  The  Article and Section headings herein  and
the  Table  of  Contents are for convenience  only  and
shall  not  affect  the  construction  of  this  Credit
Agreement.

     (c) No provision of this Credit Agreement shall be
interpreted  or  construed against  any  Person  solely
because that Person or its legal representative drafted
such provision.

                           ARTICLE II

                     REVOLVING CREDIT LOANS

     SECTION 2.1.  Revolving Credit Loans.  (a) Subject
to  the  terms  and  conditions and  relying  upon  the
representations and warranties set forth herein and  in
the  other  Loan Documents, each Bank agrees, severally
and  not jointly, to make its Commitment Percentage  of
loans  to  the  Borrower (collectively, the  "Revolving
Credit  Loans"), at any time and from time to  time  on
and  after the Effective Date and up to, but excluding,
the   Maturity  Date,  provided,  a  Bank's  Commitment
Percentage  of  the aggregate amount  of  the  Utilized
Credit  at  any one time shall not exceed  such  Bank's
Commitment  and provided, further, that  the  aggregate
amount  of the Utilized Credit shall at no time  exceed
the  lesser  of  the  (i)  Total  Commitment  and  (ii)
Available  Commitment. Except as otherwise provided  in
this Credit Agreement, the Revolving Credit Loans shall
mature  and be due and payable in full on the  Maturity
Date.  Subject to the terms and provisions hereof,  the
Borrower  may  borrow,  repay and  reborrow  hereunder.
Each  Borrowing  shall be made in accordance  with  the
procedures set forth in Section 2.2 and shall be in  an
aggregate  principal amount (x) in the case of  an  ABR
Borrowing, $500,000 or a whole multiple of $100,000  in
excess thereof (or, if then Unused Availability is less
than  $500,000, such lesser amount) and (y) in the case
of  a  Eurodollar  Borrowing,  $1,000,000  or  a  whole
multiple  of $500,000 in excess thereof.  The Revolving
Credit  Loans  may from time to time be (i)  Eurodollar
Loans,  (ii) ABR Loans, or (iii) a combination thereof,
as determined by the Borrower and notified to the Agent
in accordance with Sections 2.2 and 2.4.

     b)   Subject  to  the  terms  and  conditions  and
relying upon the representations and warranties  herein
set forth, the Issuing Bank agrees to issue Letters  of
Credit upon the request of the Borrower for the account
of  the  Borrower or any Subsidiary of the Borrower  at
any  time  and  from  time to time  on  and  after  the
Effective Date and up to, but excluding, the earlier of
the Maturity Date and the termination of the Letter  of
Credit Commitments in accordance with the terms hereof.
Each  Bank  (other  than  the Issuing  Bank)  severally
agrees,  on  the  terms and conditions hereinafter  set
forth,  to  purchase participations in the  Letters  of
Credit  issued by the Issuing Bank pursuant to  Section
2.3  in  an aggregate amount not to exceed such  Bank's
Letter  of  Credit  Commitment.   Notwithstanding   the
foregoing,  the aggregate undrawn face  amount  of  all
Letters  of  Credit at any time outstanding  shall  not
exceed  the  aggregate Letter of Credit Commitments  of
all  the Banks, and no Letter of Credit will be  issued
if  immediately after such issuance the Utilized Credit
would  exceed the Available Commitment then in  effect.
On  each  day  during  the period commencing  with  the
issuance  by the Issuing Bank of any Letter  of  Credit
and  until such Letter of Credit shall have expired  or
been  terminated,  and, irrespective  of  whether  such
Letter of Credit has expired or terminated, if same has
been  drawn upon and the amount so drawn has  not  been
reimbursed to the Issuing Bank, the Commitment of  each
Bank  shall  be deemed to be utilized for all  purposes
hereof  in  an  amount equal to such Bank's  Commitment
Percentage of the undrawn face amount of such Letter of
Credit,  plus  the aggregate amount of all unreimbursed
drawings.

     SECTION  2.2.   Borrowing Procedure for  Revolving
Credits.

     (a)   In  order  to  effect  a  Borrowing(s),  the
Borrower shall submit a Borrowing Request in writing or
by  telecopy (or telephone notice promptly confirmed in
writing  or by telecopy) to the Agent, (i) in the  case
of  a  Eurodollar Borrowing, not later than 11:00 a.m.,
Houston, Texas time, three (3) Business Days before the
Borrowing  Date specified in the Borrowing Request  for
such  proposed Eurodollar Borrowing(s) and (ii) in  the
case  of  an ABR Borrowing, not later than 12:00  noon,
Houston, Texas time, on the Borrowing Date specified in
the  Borrowing Request for such proposed ABR Borrowing.
Such  Borrowing Request shall be irrevocable and  shall
in each case refer to this Credit Agreement and specify
(w)  whether the Borrowing(s) then being requested  are
to  be Eurodollar Borrowing(s), or ABR Borrowing(s), or
a  combination thereof, (x) the Borrowing Date of  such
Borrowing(s) (which shall be a Business Day),  (y)  the
aggregate principal amount of such Borrowing(s) and (z)
in  the  case of Eurodollar Borrowings, the  Eurodollar
Interest   Periods  with  respect   thereto.    If   no
Eurodollar   Interest  Period  with  respect   to   any
Eurodollar  Borrowing(s)  is  specified  in  any   such
Borrowing Request, then the Borrower shall be deemed to
have  selected a Eurodollar Interest Period of one  (1)
month's duration.  The Agent shall promptly advise  the
Banks  of any Borrowing Request given pursuant to  this
Section 2.2 and of each Bank's Commitment Percentage of
the  requested  Borrowing(s) by telecopy (or  telephone
notice promptly confirmed in writing or by telecopy).

     (b)    Each  Bank  may  at  its  option  make  any
Eurodollar Loan by causing any Lending Office  of  such
Bank  to  make such Eurodollar Loan; provided, however,
that  any exercise of such option shall not affect  the
obligation  of  the Borrower to repay  such  Eurodollar
Loan  in  accordance  with the  terms  of  this  Credit
Agreement and the applicable Notes.

      (c) No later than 1:00 p.m., Houston, Texas time,
on  the  Borrowing  Date specified  in  each  Borrowing
Request, each Bank will make available to the Agent its
Commitment   Percentage   of  the   Revolving   Credits
comprising  the Borrowing(s) requested to  be  made  on
such  date, in Dollars and immediately available funds.
Upon fulfillment of the applicable conditions set forth
in Article IV, the Agent will make the proceeds of each
Borrowing  so  requested available to the  Borrower  by
crediting the amounts so received to a general  deposit
account  maintained by the Borrower with Chase Bank  of
Texas, National Association, on the Borrowing Date  or,
if  a  Borrowing shall not occur on such Borrowing Date
because any condition precedent herein specified  shall
not have been met, the Agent will return the amounts so
received   to   the  respective  Banks   as   soon   as
practicable.  All Borrowings shall be made by the Banks
pro  rata  in  accordance with such  Bank's  Commitment
Percentage  of  the Revolving Credits  comprising  such
Borrowing.  Unless the Agent shall have received notice
from a Bank prior to the date of any proposed Borrowing
Date  that  such  Bank will not make available  to  the
Agent   such  Bank's  Commitment  Percentage  of   such
Borrowing, the Agent may assume that such Bank has made
its  Commitment Percentage available to  the  Agent  on
such  Borrowing Date in accordance with this  paragraph
(c)  and  the  Agent, in reliance upon such assumption,
may,  (but  under no circumstances shall the  Agent  be
obligated  to) make available to the Borrower  on  such
Borrowing Date a corresponding amount.  If and  to  the
extent   that  such  Bank  shall  not  have  made   its
Commitment  Percentage of such Borrowing  available  to
the  Agent, such Bank and the Borrower severally  agree
to   repay  to  the  Agent  forthwith  on  demand  such
corresponding  amount together with  interest  thereon,
for  each  day  from  the  date  such  amount  is  made
available to the Borrower until the date such amount is
repaid to the Agent at (i) in the case of the Borrower,
the  interest rate applicable to the Revolving  Credits
comprising such Borrowing and (ii) in the case of  such
Bank,  the Federal Funds Effective Rate.  If such  Bank
shall  repay  to  the Agent such corresponding  amount,
such  amount  shall  constitute such Bank's  Commitment
Percentage  of  such  Borrowing for  purposes  of  this
Credit Agreement.

     (d)  No Eurodollar Borrowing may be made if, after
giving effect to such Eurodollar Borrowing, there would
be  more than six (6) Eurodollar Borrowings outstanding
at such time.

     SECTION 2.3.  Issuing the Letters of Credit.   (a)
In  order to effect the issuance of a Letter of Credit,
the  Borrower  shall submit a Borrowing Request  and  a
Letter of Credit Application in writing by telecopy  to
the  Agent (who shall promptly notify the Issuing Bank)
not later than 12:00 noon, Houston, Texas time, two (2)
Business  Days  before the date  of  issuance  of  such
Letter  of  Credit.   Each such Borrowing  Request  and
Letter  of  Credit Application shall be signed  by  the
Borrower, specify the Business Day on which such Letter
of Credit is to be issued, and specify the availability
for  Letters  of  Credit under  the  Letter  of  Credit
Commitment and the Available Commitment as of the  date
of  issuance  of such Letter of Credit and  the  expiry
date  thereof which shall not be later than the earlier
of  (i) twelve (12) months from the date of issuance of
such  Letter  of  Credit and (ii)  the  Maturity  Date;
provided,  however,  that  the  Borrower  may   request
evergreen Letters of Credit that automatically renew on
their expiry date for an additional one year period  so
long  as the final expiry date thereof is on or  before
the Maturity Date.

          (b)    Upon  satisfaction of  the  applicable
terms  and  conditions set forth  in  Article  IV,  the
Issuing Bank shall issue such Letter of Credit  to  the
specified  beneficiary  not later  than  the  close  of
business,   Houston,  Texas  time,  on  the   date   so
specified.   The Agent shall provide the  Borrower  and
each  Bank  with  a copy of each Letter  of  Credit  so
issued.   Each such Letter of Credit shall (i)  provide
for   the  payment  of  drafts,  presented  for   honor
thereunder  by the beneficiary in accordance  with  the
terms  thereon,  at  sight  when  accompanied  by   the
documents described therein and (ii) be subject to  the
Uniform  Customs  and Practice for Documentary  Credits
(1993  Revision),  International  Chamber  of  Commerce
Publication  No.  500,  (and any  subsequent  revisions
thereof  approved  by a Congress of  the  International
Chamber  of  Commerce) (the "UCP")  and  shall,  as  to
matters  not governed by the UCP, be governed  by,  and
construed and interpreted in accordance with, the  laws
of the State of Texas.

            (c)       Upon  the issuance date  of  each
Letter  of  Credit, the Issuing Bank shall  be  deemed,
without  further  action by any party hereto,  to  have
sold  to each other Bank, and each other Bank shall  be
deemed, without further action by any party hereto,  to
have  purchased from the Issuing Bank, a participation,
to  the extent of such Bank's Commitment Percentage, in
such  Letter of Credit, the obligations thereunder  and
in the reimbursement obligations of the Borrower due in
respect  of drawings made under such Letter of  Credit.
If  requested by the Issuing Bank, the other Banks will
execute any other documents reasonably requested by the
Issuing   Bank  to  evidence  the  purchase   of   such
participation.

        (d)  Upon  the  presentment of  any  draft  for
honor  under  any  Letter of Credit by the  beneficiary
thereof  which  the  Issuing  Bank  determines  is   in
compliance  with the conditions for payment thereunder,
the  Issuing  Bank shall promptly notify the  Borrower,
the  Agent and each Bank of the intended date of  honor
of  such  draft  and the Borrower hereby  promises  and
agrees, at the Borrower's option, to either (i) pay  to
the  Agent for the account of the Issuing Bank, by 1:00
p.m.,  Houston, Texas time, on the date payment is  due
as  specified in such notice, the full amount  of  such
draft in immediately available funds or (ii) request  a
Revolving  Credit  Loan pursuant to the  provisions  of
Sections  2.1 and 2.2 of this Credit Agreement  in  the
full  amount of such draft, which request shall specify
that  the  Borrowing Date is to be the date payment  is
due  under  the  Letter of Credit as specified  in  the
Issuing Bank's notice.  If the Borrower fails timely to
make  such  payment  because a  Revolving  Credit  Loan
cannot  be made pursuant to Section 2.1(a) and  Article
IV,   each   Bank  shall,  notwithstanding  any   other
provision  of  this  Credit  Agreement  (including  the
occurrence and continuance of a Default or an Event  of
Default),  make available to the Agent for the  benefit
of  the  Issuing Bank an amount equal to its Commitment
Percentage  of  the  presented draft  on  the  day  the
Issuing Bank is required to honor such draft.  If  such
amount  is not in fact made available to the  Agent  by
such  Bank  on such date, such Bank shall  pay  to  the
Agent  for  the account of the Issuing Bank, on  demand
made  by  the Issuing Bank, in addition to such amount,
an amount equal to the product of (i) the average daily
Federal  Funds  Effective Rate  per  annum  during  the
period  referred  to in clause (iii) of  this  sentence
times   (ii)  the  amount  of  such  Bank's  Commitment
Percentage  of  the  presented draft  times  (iii)  the
number  of  days that elapse from the day  the  Issuing
Bank  honors such draft to the date on which the amount
equal  to  such  Bank's Commitment  Percentage  of  the
presented  draft becomes immediately available  to  the
Issuing Bank divided (iv) by 360.  Upon receipt by  the
Agent  from the Banks of the full amount of such draft,
notwithstanding  any  other provision  of  this  Credit
Agreement (including the occurrence and continuance  of
a  Default  or an Event of Default) the full amount  of
such  draft shall automatically and without any  action
by  the  Borrower,  be  deemed  to  have  been  an  ABR
Borrowing  as  of the date of payment  of  such  draft.
Nothing  in  this  paragraph (d) or elsewhere  in  this
Credit   Agreement   shall  diminish   the   Borrower's
obligation  under this Credit Agreement to provide  the
funds for the payment of, or on demand to reimburse the
Issuing  Bank  for payment of, any draft presented  to,
and  duly honored by, the Issuing Bank under any Letter
of  Credit,  and the automatic funding of  a  Revolving
Credit  Loan  as in this paragraph provided  shall  not
constitute a cure or waiver of the Event of Default for
failure,  timely  to  provide such  funds  as  in  this
paragraph agreed.

          (e)    In  order  to induce the  issuance  of
Letters  of Credit by the Issuing Bank and the purchase
of  participations  therein by  the  other  Banks,  the
Borrower  agrees with the Agent, the Issuing  Bank  and
the  other  Banks that neither the Agent nor  any  Bank
(including  the  Issuing Bank) shall be responsible  or
liable  (except as provided in the following  sentence)
for,  and  the  Borrower's unconditional obligation  to
reimburse  the  Issuing  Bank  through  the  Agent  for
amounts  paid  by  the  Issuing Bank,  as  provided  in
Section  2.3(d), on account of drafts so honored  under
the  Revolving Credit Letters of Credit  shall  not  be
affected   by,  any  circumstance,  act   or   omission
whatsoever  (whether or not known to the Agent  or  any
Bank   (including  the  Issuing  Bank)  other  than   a
circumstance, act or omission resulting from the  gross
negligence  or willful misconduct of the Agent  or  any
Bank).   The Borrower agrees that any action  taken  or
omitted to be taken by the Agent or any Bank (including
the  Issuing  Bank)  under or in  connection  with  any
Letter  of  Credit  or any related draft,  document  or
property shall be binding on the Borrower and shall not
put  the Agent or any Bank (including the Issuing Bank)
under  any resulting liability to the Borrower,  unless
such  action  or omission is the result  of  the  gross
negligence  or willful misconduct of the Agent  or  any
such Bank.  The Borrower hereby waives presentment  for
payment  (except the presentment required by the  terms
of  any  Letter  of  Credit) and  notice  of  dishonor,
protest  and notice of protest with respect  to  drafts
honored under the Letters of Credit.  The Issuing  Bank
agrees promptly to notify the Borrower whenever a draft
is presented under any Letter of Credit, but failure to
so  notify the Borrower shall not in any way affect the
Borrower's  obligations hereunder.  Subject to  Section
2.19  and  2.22,  if  while any  Letter  of  Credit  is
outstanding, any law, executive order or regulation  is
enforced,  adopted or interpreted by any  public  body,
governmental  agency or court of competent jurisdiction
so  as  to affect any of the Borrower's obligations  or
the  compensation to any Bank in respect of the Letters
of  Credit  or  the cost to such Bank  of  establishing
and?or  maintaining  the  Letters  of  Credit  (or  any
participation therein), such Bank shall promptly notify
the  Borrower  thereof in writing  in  accordance  with
Section 2.13(c) or 2.17, as the case may be, and within
ten (10) Business Days after receipt by the Borrower of
such   Bank's   request   (through   the   Agent)   for
reimbursement or indemnification or within thirty  (30)
days   after   receipt  of  a  notice  in  respect   of
Withholding   Taxes   under   Section   2.17    hereof,
accompanied  by  a certificate from such  Bank  setting
forth    the   basis   for   such   reimbursement    or
indemnification   and   the  calculation   thereof   in
accordance  with Section 2.14(c) or 2.17, as  the  case
may  be, the Borrower shall reimburse or indemnify such
Bank, as the case may be, with respect thereto so  that
such Bank shall be in the same position as if there had
been  no  such enforcement, adoption or interpretation,
unless  the  Borrower notifies the Agent  of  its  good
faith  contest to, and dispute of, the requested amount
and  such  Bank's  basis  therefor  and?or  calculation
thereof.   The foregoing agreement of the  Borrower  to
reimburse  or indemnify the Banks shall apply  in  (but
shall not be limited to) the following situations:   an
imposition of or change in reserve, capital maintenance
or  other similar requirements or in excise or  similar
taxes  or  monetary  restraints,  except  a  change  in
franchise taxes imposed on such Bank or in tax  on  the
net income of such Bank.

        (f)In  the event that any provision of a Letter
of  Credit  Application  is inconsistent  with,  or  in
conflict  of,  any provision of this Credit  Agreement,
including   provisions  for  the   rate   of   interest
applicable to drawings thereunder or rights  of  setoff
or  any  representations, warranties, covenants or  any
events of default set forth therein, the provisions  of
this Credit Agreement shall govern.

    SECTION   2.4.   Conversions  or  Continuation   of
Borrowings.

    (a)Subject  to the other provisions of this  Credit
Agreement, the Borrower may elect from time to time  to
convert  (i) all or any part of Eurodollar Loans  which
comprise  part  of the same Eurodollar Borrowing  to  a
Borrowing  comprised of ABR Loans and (ii) all  or  any
part  of  ABR  Loans which comprise part  of  the  same
Borrowing to a Borrowing comprised of Eurodollar Loans,
provided,   however,  in  each  case  that   any   such
conversion  of  Revolving  Credit  Loans  comprising  a
Eurodollar  Borrowing  shall,  subject  to  the  second
following sentence, only be made on the last day  of  a
Eurodollar  Interest Period with respect thereto.   All
or any part of a Borrowing may be converted as provided
herein,  provided  that no Borrowing may  be  converted
into  a Eurodollar Borrowing when any Default or  Event
of Default has occurred and is continuing.

    (b)Any  Eurodollar Borrowing may  be  continued  as
such  effective  upon the expiration of the  Eurodollar
Interest Period with respect thereto; provided, that no
Eurodollar Borrowing may be continued as such when  any
Default  or  Event  of  Default  has  occurred  and  is
continuing, but shall be automatically converted to  an
ABR   Borrowing  on  the  last  day  of  then   current
Eurodollar Interest Period with respect thereto.

      (c)   In order to elect to convert or continue  a
Borrowing,  or any portion thereof, under this  Section
2.4,  the Borrower shall deliver an irrevocable  Notice
of  Conversion or Continuation to the Agent  not  later
than 1:00 p.m., Houston, Texas time, (i) at least three
(3) Business Days in advance of the proposed conversion
or continuation date in the case of a conversion to, or
continuation  of, a Eurodollar Borrowing  and  (ii)  at
least  one (1) Business Day in advance of the  proposed
conversion date in the case of a conversion to  an  ABR
Borrowing.    Each   such  Notice  of   Conversion   or
Continuation shall be by telecopy (confirmed thereafter
by  a  delivery  of  the original  of  such  Notice  of
Conversion or Continuation by United States mail  or  a
reputable  courier) and shall specify (v) the  date  of
the  requested conversion or continuation (which  shall
be a Business Day), (w) the amount and the Borrowing to
be  converted or continued, (y) whether a conversion or
continuation  is requested, and, if a conversion,  into
what  Type  of  Borrowing and (z)  in  the  case  of  a
conversion  to,  or  a continuation  of,  a  Eurodollar
Borrowing,  the  requested Eurodollar Interest  Period.
Promptly  after  receipt of a Notice of  Conversion  or
Continuation  under this Section 2.4, the  Agent  shall
provide each Bank with a copy thereof.

    (d)   No Borrowing, or any portion thereof, may  be
converted into an Eurodollar Borrowing if, after giving
effect to such conversion, there would be more than six
(6) Eurodollar Borrowings outstanding at such time.

    (e)If  the Borrower shall fail to deliver a  timely
Notice  of  Conversion or Continuation with respect  to
any  Eurodollar Borrowing, the Borrower shall be deemed
to have elected to convert such Eurodollar Borrowing to
an  ABR  Borrowing  on the last day of  the  Eurodollar
Interest   Period  with  respect  to  such   Eurodollar
Borrowing.

    (f)For  purposes  of this Section  2.4,  Borrowings
having    different   Eurodollar   Interest    Periods,
regardless of whether they commence on the same date or
are of the same Type shall be considered Borrowings  of
different Types.

    SECTION 2.5.  Fees.

    (a)In  consideration of each Bank's  commitment  to
make  Revolving Credit Loans, the Borrower will pay  to
Agent  for  the  account of each Bank a commitment  fee
determined  on a daily basis by applying the applicable
Commitment   Fee   Rate  to  such   Bank's   Commitment
Percentage of the difference between (i) the  Available
Commitment and (ii) the aggregate outstanding principal
amount of all Revolving Credit Loans, on each day  from
the  Effective Date to but excluding the Maturity Date.
This commitment fee shall be due and payable in arrears
on the first day of the next succeeding Fiscal Quarter,
on  the  date of each reduction in the Total Commitment
and  at  Maturity (by acceleration or otherwise).   The
applicable "Commitment Fee Rate" shall be based on  the
Utilized Percentage of Borrowing Base in effect on each
such  day  and  calculated pursuant  to  the  following
table:

        Utilized Percentage of      Applicable Commitment
            Borrowing Base                 Fee Rate

     Less than fifty percent       three-tenths of one
     (50%)                         percent (0.30%) per
                                   annum

     Equal to or greater than      three-tenths of one
     fifty percent (50%) but       percent (0.30%) per
     less than seventy-five        annum
     percent (75%)

     Equal to or greater than      three-eighths   of   one
     seventy-five percent (75%)    percent   (0.375%)   per
                                   annum

    (b)In  consideration of each Bank's  commitment  to
participate in Letters of Credit, the Borrower will pay
to  Agent  for  the account of each Bank  a  letter  of
credit fee equal to the greater of (i) $500.00 and (ii)
a  fee determined by applying the applicable Letter  of
Credit  Fee Rate to the face amount of each  Letter  of
Credit from the date of issuance thereof to the date on
which  such Letter of Credit expires.  All such  Letter
of  Credit fees shall be payable in full in advance  of
the issuance of such Letter of Credit.  The Agent shall
pay  to  each  Bank its Commitment Percentage  of  such
Letter  of Credit fee. The applicable "Letter of Credit
Fee Rate" shall be based on the Utilized Percentage  of
Borrowing  Base  in  effect  on  each  such   day   and
calculated pursuant to the following table:

        Utilized Percentage of       Applicable Letter of
            Borrowing Base             Credit Fee Rate

     Less than fifty percent       one percent (1.00%) per
     (50%)                         annum

     Equal to or greater than      one and one-quarter
     fifty percent (50%), but      percent (1.25%) per
     less than seventy-five        annum
     percent (75%)
                                   one and one-half percent
     Equal to or greater than      (1.50%) per annum
     seventy-five percent (75%)

    (c)the  Borrower agrees to pay to the Issuing  Bank
as  a  fronting fee for the issuance of each Letter  of
Credit,  an  amount equal to one-eighth of one  percent
(.125%) per annum of the face amount of each Letter  of
Credit from the date of issuance thereof to the date on
which such Letter of Credit expires or is terminated.

    (d)the  Borrower shall pay to Agent for the ratable
account  of  each  Bank an unavailable  commitment  fee
determined  on a daily basis by applying the applicable
Unavailable   Fee   Rate  to  such  Bank's   Commitment
Percentage  of the Unavailable Commitment on  each  day
from  the  Effective Date to but excluding the Maturity
Date.  The term "Unavailable Commitment" shall mean  an
amount  equal  to  the  positive  difference,  if  any,
between   the   Total  Commitment  and  the   Available
Commitment then in effect.  This unavailable commitment
fee  shall  be due and payable in arrears on the  first
day  of the next succeeding Fiscal Quarter, on the date
of  each  reduction  in  the Total  Commitment  and  at
Maturity   (by   acceleration   or   otherwise).    The
applicable "Unavailable Fee Rate" shall be based on the
Utilized Percentage of Borrowing Base in effect on each
such  day  and  calculated pursuant  to  the  following
table:

        Utilized Percentage of      Applicable Unavailable
            Borrowing Base                 Fee Rate

     Less than fifty percent       three-twentieths of one
     (50%)                         percent (0.15%) per
                                   annum

     Equal to or greater than      three-twentieths of one
     fifty percent (50%) but       percent (0.15%) per
     less than seventy-five        annum
     percent (75%)
                                   three-sixteenths of one
     Equal to or greater than      percent (0.1875%)
     seventy-five percent (75%)

         (e)the  Borrower shall pay  when  due  to
     the  Agent  and each of the Banks such  other
     fees as shall have been separately agreed  by
     the Agent and the Borrower in writing.

         (f)All  computations  of  fees  hereunder
     shall be calculated on the basis of a year of
     360  days  and  the  actual  number  of  days
     elapsed.

         SECTION 2.6.  Notes.

         (a)The  Revolving Credit  Loans  made  by
     each Bank shall be evidenced by a single Note
     duly  executed and delivered by the Borrower,
     dated  the  Closing  Date,  with  the  blanks
     appropriately completed, payable to the order
     of  such Bank in a principal amount equal  to
     such  Bank's  Commitment  as  set  forth   in
     Schedule 1.1.

         (b)Each Bank is hereby authorized by  the
     Borrower,  at its option, to endorse  on  the
     schedule  attached  to  its  Note  (or  on  a
     continuation of such schedule attached to its
     Note  and  made  a part thereof)  or  in  its
     internal  records relating  to  its  Note  an
     appropriate notation evidencing the date  and
     amount   of   each  Revolving   Credit   Loan
     evidenced  thereby, the date  and  amount  of
     each  payment  of principal  or  interest  in
     respect  thereof  and such other  information
     provided for on such schedule.  The aggregate
     unpaid principal amount so recorded shall  be
     presumptive evidence of the principal  amount
     owing by the Borrower to such Bank and unpaid
     under  its Note.  The failure of any Bank  to
     make  such  a  notation or any error  therein
     shall not in any manner affect the obligation
     of the Borrower to repay the Revolving Credit
     Loans  made  by such Bank in accordance  with
     the   terms  of  its  Note  and  this  Credit
     Agreement.

         SECTION   2.7.   Interest  on   Revolving
     Credit Loans and Payment Dates.

         (a)Subject  to the provisions of  Section
     2.8,  the  Revolving Credit Loans shall  bear
     interest as follows:

             (i)The    Revolving   Credit    Loans
             comprising each Eurodollar  Borrowing
             shall bear interest (computed on  the
             basis  of the actual number  of  days
             elapsed  over a year of 360 days)  at
             a  rate per annum equal to the lesser
             of  (i)  the Highest Lawful Rate  and
             (ii)  the  Eurodollar  Rate  for  the
             Eurodollar Interest Period in  effect
             for    such   Borrowing   plus    the
             Applicable  Eurodollar  Margin   with
             respect to such Eurodollar Loans.

             (ii)    The  Revolving  Credit  Loans
             comprising  any  ABR Borrowing  shall
             bear  interest  at a rate  per  annum
             equal  to  the  lesser  of  (i)   the
             Highest  Lawful  Rate  and  (ii)  the
             Alternate   Base   Rate    (if    the
             Alternate Base Rate is based  on  the
             Prime Rate, computed on the basis  of
             the  actual  number of  days  elapsed
             over  a  year of 365 or 366 days,  as
             the  case  may  be; if the  Alternate
             Base  Rate  is based on  the  Federal
             Funds  Effective  Rate,  computed  on
             the  basis  of the actual  number  of
             days  elapsed  over  a  year  of  360
             days).

      (b)    Interest  on  each Revolving  Credit  Loan
shall be payable by the Borrower (i) in respect of each
Revolving  Credit  Loan  comprising  part  of  an   ABR
Borrowing,  quarterly in arrears on the  last  Business
Day  of each calendar quarter, (ii) in respect of  each
Revolving  Credit Loan comprising part of a  Eurodollar
Borrowing,  on the last day of the Eurodollar  Interest
Period applicable to such Eurodollar Borrowing, and, in
the case of a Eurodollar Interest Period for Eurodollar
Borrowings  of  six (6) months, on the  date  occurring
three  (3)  months from the first day of such  Interest
Period  and on the last day of such Eurodollar Interest
Period, (iii) in respect of each Revolving Credit  Loan
accruing  interest at the Default Rate, on  demand  and
(iv)  in respect of all Revolving Credit Loans, on  any
prepayment  or  conversion (on the  amount  prepaid  or
converted),  at  maturity (whether by  acceleration  or
otherwise) and, after maturity, on demand.

    (c)Interest  in  respect of  the  unpaid  principal
amount of each Revolving Credit Loan shall accrue  from
(and   including)  the  date  of  the  making  of  such
Revolving Credit Loan to (but not including)  the  date
on  which such Revolving Credit Loan shall be  paid  in
full.

    (d)The  Agent shall, upon determining a  Eurodollar
Rate for any Eurodollar Interest Period with respect to
a  Eurodollar  Borrowing, promptly notify the  Borrower
and the Banks thereof.

    SECTION 2.8.  Interest on Overdue Amounts.  If  the
Borrower shall fail to pay the principal of or interest
on  any Revolving Credit Loan or any other amount  when
due  hereunder, the Borrower shall on demand from  time
to  time pay interest, to the extent permitted by  law,
on such defaulted amount from the date of such Event of
Default  up to (but not including) the date  of  actual
payment  (after as well as before judgment) at  a  rate
per  annum (the "Default Rate") equal to the lesser  of
(i) the Highest Lawful Rate and (ii) (x) in the case of
ABR  Borrowings,  the  Alternate  Base  Rate  plus  two
percent (2%) per annum or (y) in the case of Eurodollar
Borrowings,  the  Eurodollar Rate  for  the  Eurodollar
Interest  Period in effect for such Borrowing plus  the
Applicable  Eurodollar  Margin  with  respect  to  such
Eurodollar  Loans plus two percent (2%) per  annum,  in
either case, computed on the basis of the actual number
of  days elapsed over a year of 365 or 366 days, as the
case may be.

    SECTION  2.9.  Voluntary Termination and  Reduction
of the Total Commitment.

    (a)   Subject  to Section 2.11.  The  Borrower  may
permanently  terminate, or from time to  time  in  part
permanently reduce, the Total Commitment upon at  least
five  (5)  Business Days' prior irrevocable written  or
telecopy notice (or telephone notice promptly confirmed
in  writing) to the Agent (which notice the Agent shall
promptly  transmit to each of the Banks).  Such  notice
shall   specify  the  date  and  the  amount   of   the
termination or reduction of the Total Commitment.  Each
partial reduction of the Total Commitment shall be in a
minimum aggregate principal amount of $5,000,000 and in
integral  multiples of $1,000,000 (or a  lesser  amount
equal  to  the excess of the Total Commitment over  the
sum of the Utilized Credit).

       (b)   Simultaneously  with  any  termination  or
reduction  of  the  Total Commitment pursuant  to  this
Section  2.9, the Borrower shall pay to the  Agent  for
the  account  of each Bank the commitment fees  on  the
amount   of   the  Available  Commitment   and/or   the
Unavailable   Commitment  so  terminated  or   reduced,
accrued  through  the  date  of  such  termination   or
reduction.  After  a reduction of the Total  Commitment
hereunder,  the  commitment fees with  respect  of  the
"Unavailable Commitment" shall thereafter be calculated
on the Total Commitment as so reduced.

    SECTION  2.10.  Voluntary Prepayment  of  Revolving
Credit Loans.

    (a)   the Borrower shall have the right at any time
and  from  time to time to prepay the Revolving  Credit
Loans,  in  whole  or  in part,  (i)  in  the  case  of
Eurodollar Loans upon at least three (3) Business Days'
prior  written or telecopy notice (or telephone  notice
promptly  confirmed in writing) to the Agent, provided,
however,  that  in  the  event  the  Borrower   prepays
Eurodollar Borrowing in whole or in part on a day which
is  not  the last day of the Eurodollar Interest Period
applicable  thereto,  the provisions  of  Section  2.15
shall apply or (ii) in the case of an ABR Loan, upon at
least  one (1) Business Day's prior written or telecopy
notice  or  telephone  notice  promptly  confirmed   in
writing)  to  the Agent; provided, however,  that  each
such partial prepayment shall be in a minimum principal
amount  of  $1,000,000  and in  integral  multiples  of
$1,000,000 (or a lesser amount equal to the sum of  the
aggregate  principal  amount of  all  Revolving  Credit
Loans outstanding).

    (b)   Each  notice  of prepayment under  subsection
(a)  above  shall (i) specify the prepayment date,  the
principal  amount of such prepayment,  which  Revolving
Credit  Loans  are to be prepaid, and in  the  case  of
Revolving    Credit    Loans   comprising    Eurodollar
Borrowings, the specific Borrowing(s) pursuant to which
such   Revolving  Credit  Loans  were  made   and   the
Eurodollar Interest Period applicable thereto, (ii)  be
irrevocable  and  (iii) commit the Borrower  to  prepay
such  Revolving  Credit Loan(s) by  the  amount  stated
therein  on  the date stated therein.  All  prepayments
under  this  Section 2.10 shall be subject  to  Section
2.15  (as  to  prepayments of  Eurodollar  Loans),  but
otherwise  without premium or penalty.  All prepayments
under this Section 2.10 shall be accompanied by accrued
interest on the principal amount being prepaid  to  the
date of payment.

    SECTION  2.11.   Mandatory  Payments  on  Revolving
Credit Loans.

      (a)  If at any time there shall occur a Borrowing
Base  Deficiency, the Borrower shall, at its  election,
either  (1)  prepay (no later than sixty (60)  calendar
days  after  the  applicable  Determination  Date)  the
principal of the Revolving Credit Loans on a  pro  rata
basis  in  an aggregate amount equal to such  Borrowing
Base Deficiency (together with accrued interest on  the
principal  amount  of  the Revolving  Credit  Loans  so
prepaid  to  the  date  of  prepayment),  (2)  if  such
condition arises, in part or in whole, by reason  of  a
Designated Borrowing Base being in effect, increase the
Designated  Borrowing Base by an amount  equal  to  the
lesser  of  (i)  such  excess or  (ii)  the  difference
between the Available Borrowing Base and the Designated
Borrowing Base or (3) any combination of (1) and (2) or
any  other  solution acceptable to the Majority  Banks.
The  Borrower shall give prompt written notice  to  the
Agent  of  each  election made by it pursuant  to  this
Section  2.11(a). If the Borrower shall  fail  to  give
notice to the Agent as aforesaid, the Borrower shall be
deemed  to have elected to prepay the Revolving  Credit
Loans  in  accordance  with clause  (1)  of  the  first
sentence of Section 2.11(a).

    (b)On  the  date  of  any reduction  of  the  Total
Commitment pursuant to Section 2.9, the Borrower  shall
pay or prepay Revolving Credit Loans in an amount equal
to  the  Borrowing Base Deficiency, if any, created  by
such reduction.

    (c)   With  respect  to each payment  of  principal
required to be made pursuant to this Section 2.11,  the
Borrower may designate, by written notice to the  Agent
on  or  before the date of such payment, the  Types  of
Revolving Credit Loans which are to be paid and, in the
case  of  Eurodollar  Loans,  the  specific  Eurodollar
Borrowing(s) pursuant to which made and the  Eurodollar
Interest Periods applicable thereto, provided that  (i)
payments  of Eurodollar Loans may only be made  on  the
last  day  of an Eurodollar Interest Period  applicable
thereto  unless all ABR Loans have been paid  in  full;
and  (ii)  if  any  payment of  Eurodollar  Loans  made
pursuant to a single Eurodollar Borrowing shall  reduce
the outstanding Revolving Credit Loans made pursuant to
such  Eurodollar  Borrowing  to  an  amount  less  than
$1,000,000, such Eurodollar Borrowing shall immediately
be  converted  into ABR Loans.  In  the  absence  of  a
designation  by  the  Borrower  as  described  in   the
preceding sentence, the Agent shall apply the amount of
such  payment  first to the payment of all  outstanding
ABR  Loans and second to the payment of the outstanding
Eurodollar Loans.

    (d)The  unpaid  principal amount of  all  Revolving
Credit  Loans shall be due and payable in full  on  the
Maturity Date.

    SECTION 2.12.  Alternate Rate of Interest.  In  the
event, and on each occasion, that on the day three  (3)
Business  Days  prior  to  the  commencement   of   any
Eurodollar  Interest Period for a Eurodollar Borrowing,
the  Agent  shall  have  reasonably  determined  (which
determination  shall  be final  and  binding  upon  the
Borrower)  that  (i) Dollar deposits in  the  principal
amounts  of  the  relevant Eurodollar Loans  comprising
such  Eurodollar Borrowing are not generally  available
in  the  interbank eurodollar market, or (ii) by reason
of  any  changes arising after the date of this  Credit
Agreement  affecting the interbank  eurodollar  market,
adequate  and  fair means do not exist for ascertaining
such  Eurodollar Rate on the basis provided for in  the
definition of the Eurodollar Rate, or (iii)  by  reason
of  any  other  circumstance affecting a  Bank  or  the
interbank  eurodollar market or the  position  of  such
Bank  in  such  market, the Eurodollar  Rate  will  not
adequately and fairly reflect the cost to any  Bank  of
making  or maintaining its Eurodollar Loan during  such
Eurodollar Interest Period and such unreflected cost is
not paid by the Borrower pursuant to Section 2.13(a)the
Agent  shall,  as soon as practicable thereafter,  give
written  notice of such determination to  the  Borrower
and the Banks.  In the event of any such determination,
any  request by the Borrower for a Eurodollar Borrowing
pursuant  to  Sections  2.2 or  2.4  shall,  until  the
circumstances  giving  rise to such  notice  no  longer
exist,  be  deemed  to  be a request  for  a  Borrowing
comprised of ABR Loans.

    SECTION 2.13.  Change in Circumstances.

      (a)   Notwithstanding any other provision  herein
but  subject  to Section 2.19, if after  the  Effective
Date   the  introduction  of  any  applicable  law   or
regulation   or  any  change  in  applicable   law   or
regulation  or  in the interpretation or administration
thereof by any Governmental Authority charged with  the
interpretation or administration thereof, or compliance
by  the  Banks with any applicable guideline or request
from   any   central  bank  or  Governmental  Authority
(whether  or  not having the force of  law)  (i)  shall
change the basis of taxation of payments to any Bank of
the  principal  of or interest on any Revolving  Credit
Loan  made by such Bank or of any other fees or amounts
payable  hereunder (other than changes in the  rate  of
tax  imposed  on the overall net income  of,  including
penalties and interest in respect thereof, or franchise
taxes  based  on the net income of, such  Bank  or  its
Lending  Office),  (ii) shall impose,  modify  or  deem
applicable  any  reserve, special  deposit  or  similar
requirement against assets of, deposits with or for the
account  of, or credit extended by, any Bank  or  (iii)
shall  impose  on any Bank or the interbank  eurodollar
market   any  other  condition  affecting  this  Credit
Agreement or any Eurodollar Loan made by such Bank, and
the result of any of the foregoing shall be to increase
the  cost  to  such Bank of making or  maintaining  any
Eurodollar  Loan  or to reduce the amount  of  any  sum
received  or receivable by such Bank hereunder (whether
of principal, interest or otherwise) in respect thereof
by  an  amount deemed in good faith by such Bank to  be
material  (provided that the foregoing shall not  apply
to   increases  resulting  from  general  increases  in
interest  rates  or general increases  in  such  Bank's
administrative expenses or overhead), then the Borrower
shall  pay  to  such  Bank such  additional  amount  or
amounts   as  will  compensate  such  Bank   for   such
additional  costs  incurred or reductions  suffered  in
accordance  with  paragraph (c) below.  Notwithstanding
the  foregoing, in no event shall any Bank be permitted
to  receive  any  compensation  hereunder  constituting
interest in excess of the Highest Lawful Rate.

      (b)   If any Bank shall have determined that  the
applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of any changes after
the  date  hereof to the July 1988 report of the  Basle
Committee   on  Banking  Regulations  and   Supervisory
Practices   entitled  "International   Convergence   of
Capital  Measurement  and  Capital  Standards"  or  the
adoption or effectiveness after the date hereof of  any
law,  rule,  regulation or guideline regarding  capital
adequacy, or any change in any of the foregoing, or any
change  in the interpretation or administration in  any
of the foregoing by any Governmental Authority, central
bank   or   comparable   agency   charged   with    the
interpretation or administration thereof, or compliance
by  such  Bank (or its Lending Office) or  such  Bank's
holding company with any request or directive regarding
capital  adequacy (whether or not having the  force  of
law)  of any such Governmental Authority, central  bank
or  comparable agency, has or would have the effect  of
reducing  the rate of return on such Bank's capital  or
on  the  capital of such Bank's holding company,  as  a
consequence  of  its  obligations  under  this   Credit
Agreement to a level below that which such Bank or such
Bank's holding company could have achieved but for such
adoption,    change   or   compliance   (taking    into
consideration such Bank's policies and the policies  of
such  Bank's  holding company with respect  to  capital
adequacy)  by  an amount deemed in good faith  by  such
Bank  to  be  material, then such Bank  shall  promptly
notify the Borrower in writing of the occurrence of any
such  event, such notice to state in reasonable  detail
the reasons therefor and the additional amount required
to  compensate such Bank for the reduction in its  rate
of  return  and the Borrower and such Bank or  (as  the
case  may  be)  the Agent shall thereafter  attempt  to
negotiate in good faith, within thirty (30) days of the
day  on  which  the Borrower receives such  notice,  an
adjustment   payable  hereunder  that  will  adequately
compensate  such Bank or the Agent in  light  of  these
circumstances.  If the Borrower and such  Bank  or  the
Agent  are  unable  to agree to such adjustment  within
thirty  (30)  days  of the date on which  the  Borrower
receives  such  notice, then the  Borrower  shall  pay,
subject to Section 2.19, to such Bank or the Agent,  as
the case may be, an amount that will, in such Bank's or
the  Agent's reasonable determination, provide adequate
compensation  to  such  Bank  or  such  Bank's  holding
company  (or the Agent or the Agent's holding  company,
as  the  case  may  be)  for  any   such  reduction  in
accordance  with  paragraph (c) below.  Notwithstanding
the  foregoing, in no event shall any Bank be permitted
to  receive  any  compensation  hereunder  constituting
interest in excess of the Highest Lawful Rate.

    (c)   Any Bank requesting compensation pursuant  to
Section  2.13(a)  or (b) hereof shall  deliver  to  the
Borrower a certificate of such Bank setting forth  such
amount  or  amounts as shall be necessary to compensate
such  Bank  or  its  holding company  as  specified  in
paragraphs (a) or (b) above, as the case may  be,  such
certificates  to  state,  in  reasonable  detail,   the
reasons therefor, and such certificate shall be, in the
absence  of  manifest error, prima facie evidence  that
such  amount(s)  are due and owing.  In preparing  such
certificate, such Bank may employ such assumptions  and
allocations of costs and expenses as it shall  in  good
faith  deem  reasonable and may be  determined  by  any
reasonable  averaging  and  attribution  method.    The
Borrower shall pay to such Bank the amount shown as due
on  any  such  certificate within thirty (30)  Business
Days  after  the Borrower's receipt of the  same.   Any
decision  by  a  Bank  not to require  payment  of  any
interest,  cost  or  other amount  payable  under  this
Section  2.13 or to calculate any amount payable  by  a
particular  method, on one occasion, shall  in  no  way
limit  or  be deemed a waiver of such Bank's  right  to
require  full  payment of any interest, cost  or  other
amount  payable hereunder, or to calculate  any  amount
payable  by  another method, on any other or subsequent
occasion.

    SECTION 2.14.  Change in Legality.

      (a)   Notwithstanding any other provision  herein
contained to the contrary, if (x) any change in any law
or  regulation or in the interpretation thereof by  any
Governmental  Authority charged with the administration
or  interpretation thereof shall make it  unlawful  for
any  Bank or its Lending Office to make or maintain its
Commitment Percentage of any Eurodollar Borrowing or to
give  effect to its obligations as contemplated  hereby
with  respect  to  its  Commitment  Percentage  of  any
Eurodollar  Borrowing or (y) at any time  the  Majority
Banks reasonably determine the making or continuance of
any  Bank's Revolving Credit Loans comprising a portion
of any Eurodollar Borrowing has become impracticable as
a  result  of  a contingency occurring after  the  date
hereof which adversely affects the interbank eurodollar
market or the position of such Bank in such market,  as
the case may be, then, and in any such event, such Bank
shall,  promptly after making such determination,  give
written  or  telecopy notice (or by telephone  promptly
confirmed in writing) to the Borrower and the Agent  of
such   determination  (which  notice  the  Agent  shall
promptly   transmit  to  each  of  the  other   Banks);
provided, however, that before giving any such  notice,
such  Bank  shall use reasonable good faith efforts  to
designate  a  different  Lending  Office  to  make   or
maintain its Eurodollar Loans if such designation  will
avoid  the  need to suspend such Bank's obligations  to
make  or  maintain Eurodollar Loans  and  will  not  be
otherwise  disadvantageous to  such  Bank.   Thereafter
each  such  affected  Bank may (i)  declare  that  such
affected  Bank  will  no longer make  Eurodollar  Loans
(subject to paragraph (b) below) whereupon any  request
by the Borrower for a Eurodollar Borrowing shall, as to
such  Bank  only, be deemed a request for an ABR  Loan;
and  (ii) require that all outstanding Eurodollar Loans
made  by  such affected Bank(s) be converted  into  ABR
Loans  at the end of the applicable Eurodollar Interest
Period  or  such  earlier time as may  be  required  by
applicable Requirements of Law, in each case by  giving
the  Agent  written or telecopy notice (or by telephone
promptly  confirmed in writing) thereof (which  notice,
in the case of subclause (ii) above shall specify which
affected   Eurodollar  Loans  are  to  be   converted);
provided,  however,  that all  Banks  whose  Eurodollar
Loans are affected by the circumstances described above
shall be treated in the same manner.

    (b)   In  the  event  any Bank shall  exercise  its
rights under (a) above, all payments of principal which
would   otherwise  have  been  applied  to  repay   the
Eurodollar  Loans that would have been made,  converted
or  continued by such Bank or the converted  Eurodollar
Loans  of  such Bank shall instead be applied to  repay
the ABR Loans made by the Bank in lieu of, or resulting
from the conversion of, such affected Eurodollar Loans.

    SECTION    2.15.     Funding    Losses.     Without
duplication  of other provisions contained herein,  the
Borrower shall indemnify each Bank against any loss  or
reasonable expense which such Bank may sustain or incur
as  a consequence of (i) any failure by the Borrower to
fulfill   on  the  Borrowing  Date  for  any  Borrowing
hereunder  the  applicable  conditions  set  forth   in
Article IV, (ii) any failure by the Borrower to  borrow
hereunder  after a Borrowing Request pursuant  to  this
Article  II  has been given, (iii) any failure  by  the
Borrower  to convert or continue a Borrowing  hereunder
after  a  Notice of Conversion or Continuation pursuant
to  this  Article II has been given, (iv) any  payment,
prepayment,  continuance or conversion of a  Eurodollar
Borrowing  required or permitted by any other provision
of this Credit Agreement including, without limitation,
payments  made due to the acceleration of the  maturity
of the Notes pursuant to Section 8.1, or otherwise made
on  a  date  other than the last day of the  applicable
Eurodollar  Interest Period, (v)  any  default  in  the
payment  or prepayment of the principal amount  of  any
Eurodollar  Borrowing or any part thereof  or  interest
accrued  thereon, as and when due and payable  (at  the
due date thereof, by notice of prepayment or otherwise)
including,  but not limited to, any loss or  reasonable
expense  sustained or incurred or to  be  sustained  or
incurred  in  liquidating  or employing  deposits  from
third  parties  acquired  to effect  or  maintain  such
Bank's   Commitment   Percentage  of   any   Eurodollar
Borrowing   or   any  part  thereof  as  a   Eurodollar
Borrowing.   Such  loss  or  reasonable  expense  shall
include,  without limitation, an amount  equal  to  the
excess,  if any, as reasonably determined by such  Bank
of  (i)  its  cost  of  obtaining  the  funds  for  its
Commitment Percentage of the Eurodollar Borrowing being
paid,  prepaid or converted or not borrowed  (based  on
the  Eurodollar Rate applicable thereto) for the period
from  the date of such payment, prepayment, continuance
or  conversion or failure to borrow to the last day  of
the Eurodollar Interest Period for such Eurodollar Loan
(or, in the case of a failure to borrow, the Eurodollar
Interest  Period  for the Eurodollar Loan  which  would
have  commenced on the date of such failure to  borrow)
over   (ii)  the  amount  of  interest  (as  reasonably
determined by such Bank) that would be realized by such
Bank   in  reemploying  the  funds  so  paid,  prepaid,
continued or converted or not borrowed for such  period
or  Eurodollar  Interest Period, as the  case  may  be,
provided that such Bank will use its reasonable efforts
to reemploy funds in investments of similar quality.  A
certificate  of such Bank signed by an officer  setting
forth  in reasonable detail any amount or amounts which
such  Bank  is  entitled to receive  pursuant  to  this
Section  2.15 shall be delivered to the Borrower.   The
Borrower shall pay to such Bank the amount shown as due
on  any  certificate within thirty (30)  Business  Days
after  its  receipt  of the same.  Notwithstanding  the
foregoing,  in no event shall any Bank be permitted  to
receive   any   compensation   hereunder   constituting
interest in excess of the Highest Lawful Rate.  Without
prejudice  to the survival of any other obligations  of
the Borrower hereunder, the obligations of the Borrower
under  this  Section  2.15 shall survive  the  date  of
termination of this Credit Agreement and the payment in
full of the Obligations.

    SECTION   2.16.   Method  of  Payments   Pro   Rata
Treatment.

    (a)    the   Borrower  shall  make   each   payment
hereunder  and under the Notes delivered hereunder  not
later  than 1:00 p.m., Houston, Texas time, on the  day
when  due  in  lawful money of the  United  States  (in
freely  transferable  Dollars) to  the  Agent  for  the
account  of  the Banks entitled thereto at the  Agent's
address  referred  to  in Section 10.2  in  immediately
available  funds and any funds received  by  the  Agent
after   such  time  shall,  for  all  purposes   hereof
(including the following sentence), be deemed  to  have
been  paid on the next succeeding Business Day.  Except
as  otherwise specifically provided herein,  the  Agent
shall thereafter cause to be distributed on the date of
receipt  thereof  to  each  Bank  in  like  funds   its
Commitment Percentage (or, if the Revolving Credit Loan
of  such  Bank  with respect to which such  payment  is
being  made  is  not of the same Type as the  Revolving
Credit  Loans of the other Banks with respect to  which
such  payment  is  being made, such Bank's  appropriate
share)  of the payments so received for the account  of
such  Bank's  Lending Office for the  Revolving  Credit
Loan in respect of which such payment is made.

    (b)   Except as otherwise provided herein, (i) each
Borrowing comprised of Revolving Credit Loans hereunder
shall be obtained from the Banks, each payment of  fees
shall  be  paid for the account of the Banks  and  each
partial reduction of the Total Commitment under Section
2.9  shall be applied to the Commitments of the  Banks,
in  each case simultaneously and pro rata in accordance
with  each  Bank's  Commitment  Percentage,  (ii)  each
conversion of a Borrowing comprised of Revolving Credit
Loans of a particular type shall be made pro rata among
the  Banks  according  to their  respective  Commitment
Percentage of such Borrowing and (iii) each payment and
prepayment of principal of or interest on any Revolving
Credit  Loans will be made to the Agent for the account
of  each  of the Banks simultaneously and pro  rata  in
accordance  with their respective Commitment Percentage
of  unpaid  principal amounts of such Revolving  Credit
Loans made by the Banks.

      (c)  Whenever any payment hereunder or under  the
Notes  (including  principal  of  or  interest  on  any
Revolving  Credit Loan or any fees or  other  amounts),
shall  be  stated  to  be due on a  day  other  than  a
Business  Day, such payment shall be made on  the  next
succeeding  Business Day, and such  extension  of  time
shall  in  such case be included in the computation  of
payment  of interest, fee or other amount, as the  case
may  be;  provided,  however, if such  extension  would
cause  payment  of  interest  on  or  principal  of   a
Eurodollar  Loan  to  be  made in  the  next  following
calendar month, such payment shall be made on the  next
preceding Business Day.

        SECTION 2.17.  Taxes.

    (a)    All   payments   of   principal,   interest,
expenses,   reimbursements,  compensation,  commitment,
arrangement or administration fees and any other amount
from time to time due hereunder, under the Notes or any
other Loan Document made by the Borrower shall be  made
free and clear of and without deduction for any present
or  future  tax, levy, impost or any other  charge,  if
any,  of any nature whatsoever now or hereafter imposed
by  any Governmental Authority, excluding, however,  in
the  case  of the Agent and each Bank, any such  taxes,
levies, costs or charges imposed on or measured by  the
gross  receipts, capital or overall net income  of  the
Agent or such Bank or such Bank's Lending Office by any
jurisdiction  in which the Agent or such Bank  or  such
Bank's Lending Office is located (all such non-excluded
taxes,  levies, costs, imposts, deductions, charges  or
withholdings being herein called "Withholding  Taxes").
If  any  Withholding Taxes are required to be  withheld
from  any  amounts  payable to the Agent  or  any  Bank
hereunder  or under the Notes, and if such  withholding
does  not  result from the breach by such Bank  of  its
agreement  set forth in subsection (b) below  or  would
not  be  required  if  such Bank's  representation  and
warranty  set forth in subsection (c) below were  true,
then, to the extent that any such Withholding Taxes are
a  liability  of, or credited to, the  account  of  the
Borrower, the Borrower shall pay to the Agent  or  such
Bank, on the date of each such payment, such additional
amounts  as  may  be necessary in order  that  the  net
amounts  received by the Bank after such  deduction  or
withholding  shall equal the amounts which  would  have
been received if such deduction or withholding were not
required;  provided, however, that all amounts  payable
under this Section 2.17 which constitute interest under
applicable  law shall not exceed an amount which  would
result  in the payment of interest at a rate in  excess
of  the  Highest Lawful Rate.  Whenever any Withholding
Taxes  are  withheld by the Borrower as  aforesaid,  as
promptly  as  possible thereafter, the  Borrower  shall
send  to  the  Agent  for its own account  or  for  the
account  of such Bank, as the case may be, a  certified
copy  of an original official receipt received  by  the
Borrower  showing  payment thereof.   If  the  Borrower
fails  to pay any Withholding Taxes so withheld  by  it
when  due to the appropriate taxing authority or  fails
to  remit  to the Agent the required receipts or  other
required  documentary  evidence,  the  Borrower   shall
indemnify  the Agent and the Banks for any  incremental
taxes, interest or penalties that may become payable by
the  Agent or any Bank as a result of any such failure.
The  agreements in this Section 2.17 shall survive  the
termination of this Credit Agreement and the payment of
the Notes and all other Obligations.

      (b)  Each Bank that is not incorporated under the
laws of the United States of America or a state thereof
(including each Eligible Assignee that becomes a  party
to this Credit Agreement pursuant to Section 10.9) that
is  entitled  to  receive payments  under  this  Credit
Agreement   and   the   Notes  without   deduction   or
withholding  of any United States federal income  taxes
or  is entitled to an exemption from backup withholding
tax  agrees that, prior to the first date on which  any
payment is due to it hereunder, it will deliver to  the
Borrower and the Agent, as the case may be, (i) two (2)
duly  completed copies of United States IRS Forms  1001
or  4224 or successor applicable form, as the case  may
be,  certifying in each case that such Bank is entitled
to receive payments under this Credit Agreement and the
Notes  payable to it, without deduction or  withholding
of  any United States federal income taxes, and (ii) an
IRS  Forms W-8 or W-9 or successor applicable form,  as
the  case may be, to establish an exemption from United
States   backup  withholding  tax.   Each  Bank   which
delivers to the Borrower and the Agent IRS Forms and/or
applicable  certification  pursuant  to  the  preceding
sentence  further undertakes to deliver to the Borrower
and  the Agent two (2) additional duly completed copies
of  the said IRS Forms or applicable certification,  or
successor   applicable  forms,  or  other   manner   of
certification,  as the case may be, on  or  before  the
date that any such form expires or becomes obsolete  or
after the occurrence of any event requiring a change in
the  most recent form previously delivered by it to the
Borrower,  and such extensions or renewals  thereof  as
may   reasonably   be  requested   by   the   Borrower,
establishing  that  such Bank is  entitled  to  receive
payments  under this Credit Agreement without deduction
or  withholding  of  any United States  federal  income
taxes,  unless  in any such case a Requirement  of  Law
(including,  without  limitation,  any  change  in  any
Requirement of Law) has occurred prior to the  date  on
which  any  such delivery would otherwise  be  required
which  renders  all  such forms inapplicable  or  which
would  prevent  such  Bank  from  duly  completing  and
delivering  any such form with respect to it  and  such
Bank  advises  the Borrower that it is not  capable  of
receiving payments without any deduction or withholding
of United States federal income tax, and in the case of
a  Forms  W-8  or  W-9, establishing an exemption  from
United States backup withholding tax.

    (c)   Each  Bank (including each Eligible  Assignee
that  becomes a party to this Credit Agreement pursuant
to   Section  10.9)  represents  and  warrants  to  the
Borrower   that  each  Lending  Office  of  such   Bank
hereunder  will  be  entitled to  receive  payments  of
principal  of,  and interest on, the  Revolving  Credit
Loans  made  by  such  Bank from  such  Lending  Office
without  withholding or deduction for or on account  of
any United States federal income taxes.

    SECTION  2.18.   Sharing of Payments  and  Setoffs.
Each Bank agrees that if it shall, through the exercise
of  a  right  of banker's lien, setoff or  counterclaim
against  the  Borrower  (pursuant  to  Section  8.3  or
otherwise),  including, but not limited to,  a  secured
claim  under  Section 506 of Title  11  of  the  United
States Code or other security or interest arising from,
or  in  lieu of, such secured claim, received  by  such
Bank  under  any applicable bankruptcy,  insolvency  or
other  similar  law or otherwise, or by similar  means,
obtain payment (voluntary or involuntary) in respect of
any  Revolving  Credit Loan or Revolving  Credit  Loans
(other than pursuant to Sections 2.13, 2.15 or 2.17) as
a  result of which the unpaid principal portion of  its
Revolving  Credit  Loans shall be proportionately  less
than  the  unpaid  principal portion of  the  Revolving
Credit Loans of any other Bank, it shall simultaneously
purchase  from  such  other  Banks  at  face  value   a
participation  in the Revolving Credit  Loans  of  such
other  Banks,  so  that the aggregate unpaid  principal
amount of Revolving Credit Loans and participations  in
Revolving  Credit Loans held by each Bank shall  be  in
the  same  proportion to the aggregate unpaid principal
amount  of  all Revolving Credit Loans then outstanding
as  the principal amount of its Revolving Credit  Loans
prior  to  such  exercise  of  banker's  lien,  setoff,
counterclaim or other event was to the principal amount
of all Revolving Credit Loans outstanding prior to such
exercise  of  banker's  lien, setoff,  counterclaim  or
other  event;  provided,  however,  that  if  any  such
purchase  or  purchases or adjustments  shall  be  made
pursuant  to  this Section 2.18 and the payment  giving
rise   thereto  shall  thereafter  be  recovered,  such
purchase or purchases or adjustments shall be rescinded
to  the extent of such recovery and the purchase  price
or prices or adjustment restored without interest.  The
Borrower    expressly   consents   to   the   foregoing
arrangements  and  agrees  that  any  Bank  holding   a
participation  in  a  Note  deemed  to  have  been   so
purchased  may exercise any and all rights of  banker's
lien,  setoff or counterclaim with respect to  any  and
all  moneys owing by the Borrower to such Bank as fully
as  if  such  Bank  had  made a Revolving  Credit  Loan
directly  to  such the Borrower in the amount  of  such
participation.

    SECTION   2.19.    Limitation   on   Reimbursement;
Mitigation.

    (a)   Notwithstanding  the  provisions  of  Section
2.13  if  any Bank fails to give notice to the Borrower
of  any  event that would obligate the Borrower to  pay
any  amount  owing pursuant to Section 2.13 within  180
days  after such Bank obtains knowledge of such  event,
and  subsequently gives notice to the Borrower of  such
event,  the  Borrower shall pay only such  amounts  for
costs  incurred  for the one hundred eighty-day  period
immediately prior to such notice.

    (b)   Any  Bank  claiming  any  additional  amounts
payable  pursuant to Sections 2.13 or 2.17 or any  Bank
subject  to  Sections 2.12 or 2.14 shall use reasonable
efforts (consistent with its internal policy and  legal
and regulatory restrictions) to change the jurisdiction
of  its  lending office for the Revolving Credit Loans,
if  the  making of such a change would avoid  the  need
for,  or  reduce  the  amount of, any  such  additional
amounts which may thereafter accrue under Sections 2.13
or 2.17 or would avoid the unavailability of Eurodollar
Loans under Sections 2.12 or 2.14 and would not, in any
such  case, in the judgment of such Bank, be  otherwise
disadvantageous.

    SECTION  2.20.  Use of Proceeds.  (a) The  proceeds
of the Revolving Credit Loans and Letters of Credit may
be  used (i) to provide working capital to the Borrower
and   its   Subsidiaries,  (ii)  to   finance   capital
expenditures  and acquisitions (other than acquisitions
of  Margin  Stock) of the Borrower and its Subsidiaries
and  (iii)  to  provide for letters of credit  for  the
account  of  the  Borrower and  its  Subsidiaries.  The
proceeds  of all Swing Loans shall be used  solely  for
cash management purposes of the Borrower.

    (b)No  portion  of  the proceeds of  any  Revolving
Credit  Loan made under, or any Letter of Credit issued
pursuant to, this Credit Agreement shall be used by the
Borrower to purchase or carry Margin Stock, or  in  any
manner   that   might  cause  the  borrowing   or   the
application  of such proceeds to violate Regulation  U,
Regulation  T, or Regulation X or any other  regulation
of  the Board or to violate the Securities Exchange Act
of 1934, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.

    (c)No  portion  of  the proceeds of  any  Revolving
Credit  Loan under this Credit Agreement shall be  used
by  the Borrower, directly or indirectly, for a Hostile
Acquisition.

    SECTION  2.21.   Mandatory  Termination  of   Total
Commitment; Extension of Maturity Date.  (a) The  Total
Commitment  shall terminate on the Maturity  Date,  and
any  Revolving Credit Loans then outstanding  (together
with accrued and unpaid interest thereon) shall be  due
and payable on such date.

    (b)   At  any time after March 1 but on  or  before
May  1  of  each  calendar year,  commencing  with  the
calendar  year 2000, the Borrower may request that  the
Banks  extend the Maturity Date for successive  periods
of  one  year.  The Banks in their sole discretion  may
agree to extend or decline to extend the Maturity Date;
however,  if  the  Banks  have not  responded  to  such
request  in  writing  by June 1  of  the  year  of  the
Borrower's request such request shall be deemed to have
been  denied.   In the event the Banks  agree  to  such
request,  the Borrower, the Agent and the  Banks  shall
execute a written amendment and extension agreement  in
form  reasonably acceptable to the Agent and the  Banks
evidencing such extension and the agreed upon terms and
conditions  of such extension together with such  other
documents  as the Agent and the Banks shall  reasonably
request.

    SECTION  2.22.  Replacement of Banks.  If any  Bank
(an  "Affected Bank") shall have (i) failed to fund any
Revolving  Credit Loan that such Bank is  obligated  to
fund  hereunder  and such failure has not  been  cured,
(ii)  requested  compensation from the  Borrower  under
Sections  2.13  or  2.17  to  recover  costs  or  taxes
incurred  by  such  Bank which are not  being  incurred
generally  by  the  other  Banks,  (iii)  given  notice
pursuant  to Sections 2.12 or 2.14 that such  Bank  has
suspended  the  Borrower's right  to  elect  Eurodollar
Loans   from  such  Bank  for  reasons  not   generally
applicable to the other Banks or (iv) failed to approve
the  recommended  Total Borrowing  Base  and  Available
Borrowing Base of the Majority Banks, then, in any such
case  and  in addition to any other rights or  remedies
available  to  the  Borrower,  the  Borrower  may  give
written  notice to such Affected Bank of the occurrence
of  an  event set forth in subsections (i), (ii), (iii)
or (iv) of this Section 2.22, and during the sixty (60)
day period following such notice, the Borrower may make
written  demand on such Affected Bank (with a  copy  to
Agent  and each other Bank), for such Affected Bank  to
assign  to  one  or  more  financial  institutions   (a
"Replacement Bank"), all of such Affected Bank's rights
and obligations under this Agreement and the other Loan
Documents  (including such Affected  Bank's  Commitment
and  all  Revolving Credit Loans owing to such Affected
Bank),  provided, such assignment shall be  consummated
in accordance with and shall be subject to the terms of
Section 10.9).  Pursuant to Section 10.9, upon any such
assignment,  such Affected Bank shall  cease  to  be  a
party  hereto,  provided, however, such  Affected  Bank
shall  continue  to  be entitled  to  the  benefits  of
Sections 2.13, 2.15, 2.17 and 8.4 accruing with respect
to such Affected Bank prior to such assignment, as well
as  any fees accrued for its account and not yet  paid.
If  an Eligible Assignee cannot be obtained within  the
sixty  (60)  day period following said  notice  to  the
Affected  Bank,  to  assume  the  Commitment  of   such
Affected Bank, and provided that no Default or Event of
Default shall have occurred and be continuing, then the
Borrower  may  prepay immediately all Revolving  Credit
Loans of such Affected Bank and terminate such Affected
Bank's  entire Commitment hereunder provided,  however,
that  in  the  event the Borrower makes any  prepayment
pursuant  to  this sentence, then on the date  of  such
prepayment, the Total Commitment of the Banks shall  be
permanently  reduced  by the amount  of  such  Affected
Bank's  Commitments  and the Commitment  Percentage  of
each  other Bank shall be redetermined based  upon  the
amount  each  such other Bank's Commitment  is  of  the
Total Commitment as so reduced.

                    ARTICLE III

                    BORROWING BASE

    SECTION  3.1.   Borrowing Base Asset  Reports.   As
soon  as  available and in any event by  March  31  and
October  1  of each year commencing October, 1999,  the
Borrower  shall  deliver  to  each  of  the  Banks  the
Borrowing  Base  Asset  Reports  prepared  as  of   the
immediately   preceding  December  31   and   June   30
respectively.

    SECTION  3.2.   Determination  of  Total  Borrowing
Base.   Based  in  part  on the  Borrowing  Base  Asset
Reports  delivered pursuant to Section  3.1  the  Banks
shall  determine  the  Total  Borrowing  Base  and  the
Available  Borrowing Base to be in effect on  the  next
succeeding   Determination  Date.   Such  determination
shall be made in good faith by the Banks in their  sole
discretion   in   accordance  with   their   respective
customary  practices and standards for  loans  of  this
nature,   which  may  vary  from  Bank  to  Bank.    In
connection   with  the  determination  of   the   Total
Borrowing  Base and upon the receipt of each  Borrowing
Base  Asset Report, the Agent shall submit to the Banks
in  writing on or before May 1 or November  1,  as  the
case may be, the Agent's recommendation as to the Total
Borrowing  Base and the Available Borrowing Base  which
the  Agent  has determined should be available  to  the
Borrower  pursuant to the Total Commitment  as  of  the
next  succeeding June 1 or December 1, as the case  may
be  (each such date being a "Determination Date"). Each
Bank  shall submit to the Agent in writing on or before
May  15 or November 15, as the case may be, such Bank's
approval  or  disapproval  of the  Agent's  recommended
Total  Borrowing  Base and any such  disapproval  shall
state  the  maximum Total Borrowing Base acceptable  to
such  Bank.  If the Agent has not received such  notice
from  a Bank on or before the close of business on  May
15  or November 15, as the case may be, such Bank shall
be  deemed  to  have  approved the Agent's  recommended
Total  Borrowing Base. In the event the Majority  Banks
approve  the Agent's recommended Total Borrowing  Base,
the Total Borrowing Base approved by the Majority Banks
shall   become   effective  on  the   next   succeeding
Determination Date and shall remain in effect until the
next Determination. In the event the Majority Banks  do
not  approve  the  Agent's recommended Total  Borrowing
Base,  the Banks shall consult with each other in order
to agree on the Total Borrowing Base to be effective on
such  Determination Date.   In the event  the  Majority
Banks  are unable to agree on the Total Borrowing  Base
to  be  effective on the next succeeding  Determination
Date  prior to May 25 or November 25, as the  case  may
be, the Total Borrowing Base which becomes effective on
the  next  Determination Date  shall  be  the  weighted
average of the Total Borrowing Bases, requested by  the
Banks in the notices referred to in the fourth sentence
of  this  Section 3.2 and shall remain in effect  until
the  next  Determination.  The Agent shall  notify  the
Borrower   of  the  Total  Borrowing  Base  to   become
effective  on each Determination Date by providing  the
Borrower  a  Borrowing Base Notice no later  than  2:00
p.m.,  Houston,  Texas time three days  prior  to  such
Determination Date.

    Without   limiting  the  right  of  the  Banks   to
determine  in  good faith the Total Borrowing  Base  in
their  sole  discretion, the Borrower acknowledges  and
agrees   that   subject   to  the   Banks'   consistent
application  of their respective standards for  similar
loans,   the   Banks  (i)  may  make  such  assumptions
regarding  appropriate existing and  projected  pricing
for  Hydrocarbons and coal as they deem appropriate  in
their  sole  discretion, (ii) may make such assumptions
regarding  and/or  modifying  projected  rates   and/or
quantities  of  future production of  (y)  Hydrocarbons
from  Oil  and  Gas Interests and (z)  coal  from  Coal
Interests  owned  by  the Borrower and  the  Subsidiary
Guarantors as they deem appropriate in their sole  good
faith discretion, (iii) may consider the projected cash
requirements  of  the  Borrower and  its  Subsidiaries,
including,   without  limitation,   obligations   under
Consolidated  Debt, and other debt  service  and  lease
obligations  of  the  Borrower  and  its  Subsidiaries,
general  and  administrative expenses and distributions
in respect of equity, (iv) are not required to consider
any  asset other than Borrowing Base Assets,  (v)  will
give  no consideration to any asset owned by an  entity
other  than the Borrower or a Subsidiary Guarantor  and
(vi)  may  make  such other assumptions, considerations
and  exclusions as each Bank deems appropriate  in  the
exercise  of its good faith sole discretion,  it  being
recognized  that  the  ultimate  determination  to   be
reached is more predicted upon the aggregate amount  of
credit  available hereunder which, at the time  of  the
determination, each Bank determines should be available
as reasonably expected to be repayable by the Borrower,
considering all then existing and projected other items
which  are expected to be payable or repayable, without
undue  risk of failure to timely repay. Notwithstanding
anything   contained  herein  to  the   contrary,   the
borrowing base value given by the Banks to the  Norfolk
Common  Stock (together with the borrowing  base  value
given  by the Banks to all other Margin Stock, if any,)
shall  never  exceed twenty-five percent (25%)  of  the
Total Borrowing Base.

    SECTION  3.3.  The Designated Borrowing Base.   The
Borrower may designate a borrowing base amount for each
Borrowing  Base  Period, which  borrowing  base  amount
shall  be equal to or less than the Available Borrowing
Base set forth in the most recent Borrowing Base Notice
delivered  to  the Borrower (the "Designated  Borrowing
Base"),   provided,   however,  that   the   Designated
Borrowing  Base  can  never be  less  than  $75,000,000
(i.e.,  if  the Available Borrowing Base is  less  than
$75,000,000,  then the Borrower shall not be  permitted
to  designate a Designated Borrowing Base). The initial
Designated Borrowing Base for the first Borrowing  Base
Period  is  $110,000,000. The Borrower shall  elect  to
have  a  Designated Borrowing Base take effect for  any
Borrowing  Base Period by giving notice  to  the  Agent
within  five  Business  Days after  its  receipt  of  a
Borrowing  Base  Notice  for a Borrowing  Base  Period;
provided  that if the Borrower has elected a Designated
Borrowing  Base  for  a  Borrowing  Base  Period,   the
Borrower  may,  at any time prior to the  end  of  such
Borrowing  Base  Period, by giving five Business  Days'
prior  written notice to the Agent, elect  to  increase
the  Designated Borrowing Base for that Borrowing  Base
Period to an amount not greater than the amount of  the
Available  Borrowing Base originally  included  by  the
Agent  in  the Borrowing Base Notice for such Borrowing
Base  Period; provided further that if the Borrower  so
elects to increase the Designated Borrowing Base,  then
all  commitment  fees payable pursuant to  Section  2.5
below  with  respect to the Borrowing  Base  Period  in
which  such increase took place shall be calculated  as
if  the increased Designated Borrowing Base had been in
effect for the entire Borrowing Base Period.

    SECTION   3.4.   Special  Determination  of   Total
Borrowing Base.  In addition to the redeterminations of
the  Total Borrowing Base pursuant to Section 3.2,  (i)
within five (5) days following receipt of notice (given
pursuant  to  Section 6.1(l)) of a planned asset  sale,
transfer  or  disposal of Borrowing Base  Assets  other
than  those sales permitted under Section 7.8, or  (ii)
the Borrower elects not to cure defects in title at the
request of the Majority Banks pursuant to Section 6.14,
the   Majority   Banks   may  request   an   additional
redetermination  of the Total Borrowing  Base  and  the
Available  Borrowing Base in connection with such  sale
or  defects in title.  In the event the Majority  Banks
request  such a Special Determination, the Agent  shall
promptly deliver notice of such request to the Borrower
and  the  Borrower shall, within ten (10) days of  such
request, deliver to the Banks the Borrowing Base  Asset
Reports  prepared as of the last day  of  the  calendar
month  preceding the date of such request. Upon receipt
of  such  Borrowing Base Asset Reports the Banks  shall
redetermine the Total Borrowing Base and the  Available
Borrowing  Base  in accordance with the  procedure  set
forth  in  Section 3.2 which Total Borrowing  Base  and
Available Borrowing Base shall become effective on  the
Determination   Date   applicable   to   such   Special
Determination and shall remain in effect until the next
Determination.

    SECTION   3.5.    Initial  Total  Borrowing   Base;
Initial Available Borrowing Base.
During  the period from the Effective Date to September
1, 1999, the Total Borrowing Base shall be $110,000,000
and the Available Borrowing Base shall be $110,000,000.

                     ARTICLE IV

                 CONDITIONS PRECEDENT

    SECTION   4.1.    Conditions   Precedent   to   the
Revolving Credit Loans.  The obligation of each Bank to
make  its  initial Revolving Credit  Loan  or  for  the
Issuing  Bank to issue its initial Letter of Credit  is
subject to the satisfaction of the following conditions
precedent:

    (a)The  Agent shall have received, duly authorized,
executed and delivered by each Person that is  a  party
thereto,  in  form  and substance satisfactory  to  the
Banks, each of the following:

        (i)   each  of  the  following  Loan  Documents
        (together with all exhibits thereto)  dated  on
        or as of the Effective Date:

            (aa)  this Credit Agreement;
            (bb)  each of the Notes; and
            (cc)  the Subsidiary Guaranty;

        (ii)    a  certificate  of  the  Secretary   or
        Assistant Secretary of the Borrower, dated  the
        Effective  Date,  certifying  as  to  (aa)  the
        adoption  and continuing effect of  resolutions
        of  the  board  of  directors of  the  Borrower
        authorizing   the   transactions   contemplated
        hereby  and  by the other Loan Documents;  (bb)
        the  Articles of Incorporation of the Borrower,
        (cc)  the  Bylaws  of  the  Borrower  and   all
        amendments thereto, and (dd) the incumbency  of
        all  officers of the Borrower who will  execute
        or  have  executed any document  or  instrument
        required  to be delivered hereunder, containing
        the signature of same;

          (iii)   a  certificate of  the  Secretary  or
        Assistant    Secretary   of   each   Subsidiary
        Guarantor,   dated  the  Effective   Date   and
        certifying   as  to  (aa)  the   adoption   and
        continuing effect of resolutions of  the  board
        of   directors  of  such  Subsidiary  Guarantor
        authorizing   the   transactions   contemplated
        hereby  and  by the other Loan Documents;  (bb)
        the  Articles (or Certificate, as the case  may
        be)   of   Incorporation  of  such   Subsidiary
        Guarantor and all amendments thereto, (cc)  the
        Bylaws  of  the  such Subsidiary Guarantor  and
        all    amendments   thereto,   and   (dd)   the
        incumbency  of all officers of such  Subsidiary
        Guarantor  who  will execute or  have  executed
        any  document  or  instrument  required  to  be
        delivered  hereunder, containing the  signature
        of same;

        (iv)    with   respect  to  the   Borrower,   a
        certificate  of  existence  and  good  standing
        from  the  Secretary of State of the  State  of
        Virginia  dated no more than 5  days  prior  to
        the Effective Date;

        (v)   with  respect to PVHC, a  certificate  of
        existence  and good standing from the Secretary
        of  State  of  the State of Delaware  dated  no
        more than 5 days prior to the Effective Date.

        (vi)   with  respect to PVOG, a certificate  of
        existence  and good standing from the Secretary
        of  State of Virginia dated no more than 5 days
        prior  to  the  Effective Date and certificates
        of   authorization  to  do  business  and  good
        standing   in  the  States  of  West  Virginia,
        Kentucky, Tennessee, Illinois and Indiana.

        (vii)   with respect to PVCC, a certificate  of
        existence  and good standing from the Secretary
        of  State of Virginia dated no more than 5 days
        prior  to  the  Effective Date and certificates
        of   authorization  to  do  business  and  good
        standing  in  the States of West  Virginia  and
        Kentucky;

        (viii)     with   respect   to   Equities,    a
        certificate  of  existence  and  good  standing
        from  the Secretary of State of Delaware  dated
        no  more  than  5 days prior to  the  Effective
        Date;

        (ix) the Opinion of the Borrower's Counsel;

        (x)(aa)   the  Initial  Borrowing  Base   Asset
        Reports   and   (bb)  such  other   information
        regarding  the  Borrowing Base  Assets  as  the
        Agent or any Bank may reasonably request;

        (xii)  (aa)  the  Initial Financial  Statements
        and  (bb)  such  other  financial  information,
        regarding   the   Borrower  or   any   of   its
        Subsidiaries  as  the Agent  or  any  Bank  may
        reasonably  request.   All  of  such  financial
        statements and financial information  shall  be
        satisfactory to the Banks;

          (xiii) for its account and for the account of
        each   Bank,  as  applicable,  all   fees   and
        expenses  due  and  payable  hereunder  on   or
        before  the Effective Date and invoiced to  the
        Borrower  in  writing prior  to  the  Effective
        Date;

        (xiv)  a Federal Reserve Form U-1, as the  case
        may  be, with respect to the Commitment of each
        Bank; and

        (xv)   such   other   certificates,   opinions,
        documents  and  instruments  relating  to   the
        transactions contemplated hereby  as  may  have
        been  reasonably requested by the Agent or  any
        Bank.

    (b)   (i) the representation and warranties of  the
Borrower  contained  in Article V hereof  and,  in  all
material  respects, in each of the other Loan Documents
to  which  the Borrower is a party shall  be  true  and
correct in all material respects on the Effective  Date
both  before and after giving effect to the  making  of
the   initial   Revolving  Credit   Loans;   (ii)   the
representations  and  warranties  of  each   Subsidiary
contained in any Loan Document to which such Subsidiary
is  a  party  are  true  and correct  in  all  material
respects  on the Effective Date both before  and  after
giving  effect  to the initial Revolving Credit  Loans;
(iii)  no  Default  or  Event  of  Default  shall  have
occurred and be continuing on the Effective Date either
before  or  after giving effect to the  making  of  the
initial   Revolving  Credit  Loans,  (iv)  no  material
litigation (other than Existing Litigation) is  pending
or,  to  the best knowledge of the Borrower  after  due
inquiry,  threatened  against  the  Borrower   or   any
Subsidiary  of  the  Borrower and no  material  adverse
development  has  occurred in any Existing  Litigation,
and  (v)  no  events  or state of affairs  which  could
reasonably be expected to result in a Material  Adverse
Effect shall have occurred since December 31, 1998;

    (c)   A search, made no more than 30 days prior  to
the  Effective  Date,  of the Uniform  Commercial  Code
filing offices in each relevant jurisdiction shall have
revealed no filings or recordings with respect  to  the
Borrowing Base Assets (except Permitted Liens) in favor
of any Person.  The Agent shall have received a copy of
the  search reports received as a result of such search
and    fully   executed   releases   effectuating   the
termination of any and all Liens (other than  Permitted
Liens) pertaining to any of the Borrowing Base Assets;

    (d)   Such  other  conditions precedent  which  the
Agent may reasonably have requested or required.

    SECTION 4.2.  Additional Conditions Precedent.   No
Bank  has  any obligation to make any Revolving  Credit
Loan (including its initial Revolving Credit Loan)  and
the  Issuing Bank has no obligation to issue any Letter
of  Credit  (including the initial  Letter  of  Credit)
unless  the  following conditions precedent  have  been
satisfied:

      (a)   The Agent shall have received, in form  and
substance  satisfactory to the Agent, a certificate  of
the  Borrower  and  of  each  Subsidiary  signed  by  a
Responsible  Officer  of  the  Borrower  and  of   each
Subsidiary, dated as of the Borrowing Date,  certifying
that  (aa)  the representations and warranties  of  the
Borrower  and  each Subsidiary contained in  Article  V
hereof  and, in all material respects, in each  of  the
other  Loan  Documents to which the  Borrower  or  such
Subsidiary  is  a party, are true and  correct  in  all
material respects (both before and after giving  effect
to  the  making of such Revolving Credit  Loan  or  the
issuing  of  such Letter of Credit) on and  as  of  the
Borrowing  Date as if made on and as of such date  (or,
if  stated  to have been made solely as of  an  earlier
date,  were true and correct as of such earlier  date);
(bb)   no  event  or  state  of  affairs  which   could
reasonably be expected to result in a Material  Adverse
Effect  has occurred since the fiscal year end  of  the
Fiscal  Year  for  which audited  financial  statements
conforming  to the requirements of Section 6.1(b)  have
been delivered to the Banks pursuant to Section 6.1(b);
(cc)  no Default or Event of Default then exists either
before  or  after giving effect to the making  of  such
Revolving Credit Loan or the issuing of such Letter  of
Credit; and (dd) no new material litigation (other than
Existing  Litigation)  is  pending  or,  to  the   best
knowledge of the Borrower after due inquiry, threatened
against  the Borrower or any Subsidiary and no material
adverse   development  has  occurred  in  any  Existing
Litigation.

    (b)   the  Borrower  shall have complied  with  the
provisions of Section 2.2 and/or 2.3, as applicable;

    (c)  The Maturity Date shall not have occurred;

    (d)   The  sum  of (i) the amount of the  requested
Borrowing  and/or  the  face amount  of  the  requested
Letter  of  Credit plus (ii) the Utilized Credit  shall
not exceed the Available Commitment then in effect.

    (e)   The making of such Revolving Credit Loans  or
the issuance of such Letters of Credit shall not result
in  the  Borrower's,  any of its  Subsidiary's  or  any
Bank's  being in noncompliance with or in violation  of
Regulation  U,  and  shall not  be  prohibited  by  any
Requirements of Law.

    SECTION  4.3.   General.  All  of  the  agreements,
instruments, reports, opinions and other documents  and
papers  referred to in this Article IV (except for  the
Notes  and  the  Letters of Credit),  unless  otherwise
expressly specified, shall be delivered to the Agent in
sufficient counterparts for each of the Banks.  As soon
as  practicable  after receipt of  such  documents  the
Agent  shall  deliver such documents  to  each  of  the
Banks.

                     ARTICLE V

            REPRESENTATIONS AND WARRANTIES

    In  order  to  induce the Agent and  each  Bank  to
enter  into  this  Credit Agreement  and  to  make  the
Revolving  Credit  Loans, the Borrower  represents  and
warrants as to itself and each of its Subsidiaries,  to
the  Agent  and each Bank that the following statements
are true, correct and complete.

    SECTION 5.1.  Organization; Corporate Powers.  Each
of  the Borrower 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 or organization, (b) is duly qualified to
do  business as a foreign corporation and  is  in  good
standing  in  each  other jurisdiction  in  which  such
qualification and good standing are necessary in  order
for  it  to conduct its business and own its properties
as  conducted  and owned (except only for jurisdictions
in  which  the failure to be so qualified  or  in  good
standing  would not, individually or in the  aggregate,
result  in  (i)  the  loss of any  privileges  in  such
jurisdiction which are material to the Borrower or such
Subsidiary or their respective businesses,  or  (ii)  a
material  liability to the Borrower or such Subsidiary,
and  (c) has all requisite power and authority  to  own
its property and assets and to carry on its business as
now conducted and as proposed to be conducted.

    SECTION 5.2.  Authority.  Each of the Borrower  and
each  of  its Subsidiaries has the corporate power  and
authority  and  legal  right to  execute,  deliver  and
perform each of the Loan Documents executed by,  or  to
be  executed  by, the Borrower or such  Subsidiary  and
each other agreement or instrument contemplated thereby
to  which it is or will be a party and, with respect to
the  Borrower,  to  borrow hereunder.   The  execution,
delivery  and performance of each of the Loan Documents
to  which the Borrower or any of its Subsidiaries is or
will   be   a  party  and  the  consummation   of   the
transactions contemplated thereby, and, with respect to
the  Borrower, the borrowing of funds under this Credit
Agreement,  have  been duly approved by  the  board  of
directors  of  each such Person and no other  corporate
proceedings on the part of such Person are necessary to
consummate  such  transactions.  This Credit  Agreement
constitutes,  and each of the other Loan  Documents  to
which  the  Borrower or any of its  Subsidiaries  is  a
party when executed and delivered by such Person,  will
constitute  the legal, valid and binding obligation  of
such   Person,  enforceable  against  such  Person   in
accordance  with  its terms, except  as  enforceability
thereof  may  be  limited  by  bankruptcy,  insolvency,
reorganization,  fraudulent  transfer,  moratorium   or
other   similar  laws  relating  to  creditors'  rights
generally and by general principles of equity which may
limit   the   right   to   obtain  equitable   remedies
(regardless   of   whether   such   enforceability   is
considered in a proceeding in equity or at law).

    SECTION  5.3.   Use  of Proceeds.   The  Borrower's
uses  of  the  proceeds of the Revolving  Credit  Loans
shall be as set forth in Section 2.20.

    SECTION   5.4.   No  Conflict.     The   execution,
delivery  and  performance by  the  Borrower  and  each
Subsidiary  of  the Borrower of the Loan  Documents  to
which  the Borrower or such Subsidiary of the  Borrower
is  a  party,  the compliance by the Borrower  or  such
Subsidiary   of  the  Borrower  with  the   terms   and
provisions thereof and the consummation of each of  the
transactions contemplated thereby, do not and will  not
(i) require any consent or approval of the stockholders
of  the  Borrower  or any of its Subsidiaries,  or  any
authorization, consent or approval by any  Governmental
Authority  or (ii) by the lapse of time, the giving  of
notice or otherwise, (a) constitute a violation of  any
Requirement  of  Law binding on the  Borrower  or  such
Subsidiary of the Borrower or a breach of any provision
contained   in   the   articles   or   certificate   of
incorporation  or  bylaws  of  the  Borrower  or   such
Subsidiary of the Borrower, (b) constitute a breach  of
any   material  provision  contained  in  any  Material
Contract  to  which the Borrower or such Subsidiary  of
the  Borrower  is a party or by which the  Borrower  or
such Subsidiary of the Borrower is bound, or (c) result
in  or  require the creation or imposition of any  Lien
whatsoever upon any of the properties or assets of  the
Borrower or such Subsidiary of the Borrower (other than
Permitted Liens).
    SECTION  5.5.  Gas Balancing Agreements and Advance
Payment  Contracts.  As of the Effective Date, (a)  the
net  gas imbalance to the Borrower and PVOG (considered
in the aggregate) under all Gas Balancing Agreements to
which  the Borrower or PVOG is a party or by which  any
Oil  and Gas Interests owned by the Borrower or any  of
its  Subsidiaries  is  bound,  is  not  in  excess   of
$500,000, and (b) the aggregate amount of all  Advanced
Payments received by the Borrower or PVOG under Advance
Payment  Contracts  which have not  been  satisfied  by
delivery of production does not exceed $500,000.

    SECTION  5.6.   Borrowing  Base  Assets.  (a)   The
Borrower and/or PVOG have good and defensible title  to
all  Oil  and  Gas Interests described in  the  Initial
Borrowing  Base Asset Report other than Immaterial  Oil
and  Gas Interests, free and clear of all Liens  except
Permitted Liens.  With the exception of Immaterial  Oil
and  Gas Interests, all such Oil and Gas Interests  are
valid,  subsisting, and in full force and  effect,  and
all  rentals,  royalties, and  other  amounts  due  and
payable in respect thereof have been duly paid.  Except
with  respect to Immaterial Oil and Gas Interests,  but
without regard to any consent or non-consent provisions
of  any  joint operating agreement covering any of  the
Proved   Reserves  of  the  Borrower  and   PVOG,   the
Borrower's (and PVOG's) share of (a) the costs for each
of  the  Proved Reserves described in Initial Borrowing
Base  Asset  Report  is not greater  than  the  decimal
fraction set forth in the Initial Borrowing Base  Asset
Reports, before and after payout, as the case  may  be,
and  described  therein by the respective  designations
"working  interests", "WI", "gross  working  interest",
"GWI",  or  similar  terms, and  (b)  production  from,
allocated  to,  or  attributed  to  each  such   Proved
Reserves  is  not  less than the decimal  fraction  set
forth  in  the  Initial Borrowing Base  Asset  Reports,
before  and  after  payout, as the  case  may  be,  and
described  therein  by  the  designations  net  revenue
interest,  NRI, or similar terms.  Except with  respect
to  Immaterial Oil and Gas Interests, each well drilled
in   respect   of   each  Proved  Developed   Producing
Hydrocarbon Reserves described in the Initial Borrowing
Base Asset Reports (y) is capable of, and is presently,
producing  Hydrocarbons in commercial  quantities,  and
the  Borrower  or PVOG is currently receiving  payments
for its share of production, with no material funds  in
respect   of  any  thereof  being  presently  held   in
suspense,  other  than any such  funds  being  held  in
suspense   pending  delivery  of  appropriate  division
orders,  and (z) has been drilled, bottomed, completed,
and   operated   in  compliance  with  all   applicable
Requirements of Law and no such well which is currently
producing  Hydrocarbons is subject to  any  penalty  in
production  by reason of such well having  produced  in
excess  of  its allowable production. For  purposes  of
this  Section  5.6(a), "Immaterial  Mineral  Interests"
means Oil and Gas Interests which, in the aggregate, do
not  represent  more  than  two  percent  (2%)  of  the
discounted  present value of all Oil and Gas  Interests
as set forth in the Initial Reserve Report.

    (b)The   Borrower  and/or  PVCC   have   good   and
defensible title to all material coal assets  described
in  that certain reserve report dated December 30, 1998
and issued to the Agent as of March 31, 1999 (the "Coal
Interests"),  free  and  clear  of  all  Liens   except
Permitted  Liens.  All such Coal Interests  are  valid,
subsisting,  and  in  full force and  effect,  and  all
rentals,  royalties, and other amounts due and  payable
in respect thereof have been duly paid.

      (c)   As of the Effective Date, Equities has good
and  marketable  title to 3,307,200 shares  of  Norfolk
Common Stock (the "Norfolk Securities"), free and clear
of  all Liens, options, warrants, puts, calls, or other
rights of the issuer or third persons.

    SECTION  5.7.   Ownership of Properties  Generally.
With respect to all other properties and assets of  the
Borrower  and its Subsidiaries not covered  by  Section
5.6  above,  the Borrower and each of its  Subsidiaries
have  good and defensible fee simple or leasehold title
to  all material properties and assets purported to  be
owned  by  them,  including,  without  limitation,  all
assets reflected in the balance sheets referred  to  in
Section  5.9 (a) and all assets which are used  by  the
Borrower and its Subsidiaries in the operation of their
respective  businesses, and none of such properties  or
assets  is  subject  to any Lien other  than  Permitted
Liens.  Neither the Borrower nor any Subsidiary of  the
Borrower  owns any real property or leasehold interests
in any real property located on tribal lands.

    SECTION 5.8.  No Defaults.

    (a)Neither the Borrower nor any Subsidiary  of  the
Borrower is a party to any Contractual Obligation  that
has  resulted or is reasonably likely to  result  in  a
Material Adverse Effect.

    (b)(i)   No Default or Event of Default exists  and
(ii)  neither  the Borrower nor any Subsidiary  of  the
Borrower  is  in default with respect to  any  Material
Contract.

    SECTION   5.9.   Financial  Position;  No  Material
Adverse Change.

    (a)The  Borrower  has heretofore furnished  to  the
Agent and the Banks its Consolidated balance sheet, and
the  related  Consolidated statements of  income,  cash
flows and shareholders' equity of the Borrower and  its
Subsidiaries  (x) as of and for the Fiscal  Year  ended
December  31, 1998, audited by and accompanied  by  the
unqualified  opinion  of Arthur  Andersen,  independent
certified public accountants, and (y) as of and for the
Fiscal  Quarter  ended March 31, 1999, certified  by  a
Responsible  Officer  of the Borrower.  Such  financial
statements  present fairly the financial condition  and
results   of  operations  of  the  Borrower   and   its
Subsidiaries  as  of such dates and for  such  periods.
Such  financial statements were prepared in  accordance
with GAAP applied on a consistent basis.

    (b)Neither the Borrower nor any Subsidiary  of  the
Borrower   has  any  material  contingent  liabilities,
material  liabilities for taxes, unusual  and  material
forward or long-term commitments or material unrealized
or anticipated losses from any unfavorable commitments,
except  as referred to or reflected or provided for  in
the  Consolidated balance sheets of the Borrower or  as
otherwise disclosed to the Banks in writing.

    (c)the  Borrower  has disclosed  to  the  Banks  in
writing any and all facts which, in the reasonable good
faith  judgment  of the Borrower, could  reasonably  be
expected to result in a Material Adverse Effect.

    SECTION 5.10.  Litigation; Adverse Effects.

      (a)    There  are no actions, suits, proceedings,
governmental investigations or arbitrations, at law  or
in  equity,  before  or by any Governmental  Authority,
pending  or,  to  the best knowledge of  the  Borrower,
probable  of  assertion against  the  Borrower  or  any
Subsidiary  of  the  Borrower or any  property  of  the
Borrower  or any Subsidiary of the Borrower,  which  if
adversely determined, is likely to result in a material
judgment  or  liability not fully covered by  insurance
and/or  could  reasonably be expected to  result  in  a
Material Adverse Effect.

    (b)None  of the business, properties, or operations
of  the Borrower or any Subsidiary of the Borrower  are
materially   and  adversely  affected  by   any   fire,
explosion,  accident, strike, lockout  or  other  labor
dispute, drought, storm, hail, earthquake, embargo, act
of  God,  or  of  the  public enemy or  other  casualty
(whether or not covered by insurance).

    SECTION  5.11.  ERISA.  A summary of all  currently
existing  Benefit  Plans are listed  on  Schedule  5.11
hereto. The Borrower and each of its Subsidiaries is in
compliance in all material respects with the applicable
provisions  of ERISA and the regulations and  published
interpretations  thereunder.  No Reportable  Event  has
occurred as to which the Borrower or any Subsidiary  of
the  Borrower  was required to file a report  with  the
PBGC,  and the present value of all benefit liabilities
and  benefit assets under each Benefit Plan  (based  on
those assumptions used to fund such Benefit Plan) is as
set forth in the Initial Financial Statements delivered
to  the Banks.  Neither the Borrower nor any Subsidiary
of  the  Borrower has any ERISA Affiliates (other  than
the  Borrower  and  its Subsidiaries) or  Multiemployer
Plans.

    SECTION 5.12.  Payment of Taxes.  The Borrower  has
filed, and has caused each of its Subsidiaries to file,
all  federal,  state and local tax  returns  and  other
reports  required by Requirements of Law to  have  been
filed  by  the  Borrower  or  such  Subsidiary  of  the
Borrower and has paid (prior to delinquency) all  taxes
and  other similar charges and assessments that are due
and payable including extensions, except taxes, charges
and assessments which are being diligently contested in
good  faith  by appropriate proceedings  and  any  Lien
arising  thereunder constitutes a Permitted  Lien.   No
Responsible  Officer of the Borrower or any  Subsidiary
of  the  Borrower  has knowledge of  any  proposed  tax
assessment  against the Borrower or any  Subsidiary  of
the  Borrower that is reasonably likely to result in  a
Material Adverse Effect.

    SECTION  5.13.  Environmental Matters.   Except  as
could  not reasonably be expected to result in material
liability  to  the  Borrower or any Subsidiary  of  the
Borrower:

    (a)The Borrower and each of its Subsidiaries is  in
compliance with all applicable Environmental Laws;

    (b)Each   of   the  Borrower  and   each   of   its
Subsidiaries  has  obtained all  consents  and  permits
required  under  all applicable Environmental  Laws  to
operate  its  business  as presently  conducted  or  as
proposed  to be conducted, if and at the time  required
by applicable Environmental Laws, and all such consents
and  permits  are  in  full force and  effect  and  the
Borrower and its Subsidiaries is in compliance with all
terms and conditions of such approvals;
      (c)   Neither the Borrower nor any Subsidiary  of
the  Borrower  nor any of the property  or  operations,
either  past  or  present,  of  the  Borrower  or   any
Subsidiary of the Borrower is subject to any order from
or agreement with any Governmental Authority or private
party  respecting  (i)  failure  to  comply  with   any
Environmental Law or any Remedial Action  or  (ii)  any
Environmental Liabilities arising from the  Release  or
threatened  Release of a Hazardous Substance  into  the
environment  except  those orders and  agreements  with
which  the Borrower or such Subsidiary of the  Borrower
is in compliance with;

    (d)None  of the operations of the Borrower  or  any
Subsidiary  of the Borrower is subject to any  judicial
or  administrative proceeding alleging a violation  of,
or liability under, any Environmental Law;

    (e)To   the  best  knowledge  and  belief  of   the
Borrower, none of the operations of the Borrower or any
Subsidiary  of  the  Borrower is  the  subject  of  any
investigation by any Governmental Authority  evaluating
whether any Remedial Action is needed to respond  to  a
Release  or threatened Release of a Hazardous Substance
into the environment;

    (f)Neither the Borrower nor any Subsidiary  of  the
Borrower  has  filed any notice under any Environmental
Law  indicating past or present treatment,  storage  or
disposal of a Hazardous Substance under 40 CFR Part 261
or any state or local equivalent;

    (g)Neither the Borrower nor any Subsidiary  of  the
Borrower  has  filed  any notice under  any  applicable
Environmental  Law reporting a Release of  a  Hazardous
Substance  (other  than minor or de minimis  emissions)
into the environment;

    (h)There  is  not now, nor, to the  best  knowledge
and  belief of the Borrower has there ever been, on  or
in any property of the Borrower or of any Subsidiary of
the Borrower:

        (i)any    generation,   treatment,   recycling,
        storage  or disposal of any Hazardous Substance
        under  40  CFR Part 261 or any state  or  local
        equivalent,

        (ii)     any   underground  storage  tanks   or
        surface impoundments,

        (iii)      any    friable   asbestos-containing
        material, or

        (iv)    any  polychlorinated  biphenyls  (PCBs)
        used     in    hydraulic    oils,    electrical
        transformers  or  other  equipment,  except  in
        compliance  with  all applicable  Environmental
        Laws;

      (i)   Except for those commitments and agreements
entered into by the Borrower or any Subsidiary  of  the
Borrower   in  the  ordinary  course  of  business   in
compliance with all material requirements of applicable
Environmental   Laws,  there  have  been   no   written
commitments or agreements involving the Borrower or any
Subsidiary   of   the  Borrower  from   or   with   any
Governmental   Authority   or   any   private    entity
(including,  without  limitation,  the  owner  of   the
property  or  any  portion  thereof)  relating  to  the
generation,  storage, treatment, presence, Release,  or
threatened  Release of any Hazardous  Substance  on  or
into  any  of  the  properties of the Borrower  or  any
Subsidiary   of   the  Borrower  or   the   environment
(including  off-site  disposal  of  toxic   wastes   or
Hazardous  Substances)  or  any  Remedial  Action  with
respect thereto;

    (j)Neither the Borrower nor any Subsidiary  of  the
Borrower has received any pending or unresolved written
notice  or  claim to the effect that it is  or  may  be
liable  to  any  Person as a result of the  Release  or
threatened  Release of a Hazardous Substance  into  the
environment;

    (k)Neither the Borrower nor any Subsidiary  of  the
Borrower has any known liability in connection with any
material Release or material threatened Release of  any
Hazardous Substances into the environment; and

    (l)To   the  best  knowledge  and  belief  of   the
Borrower,  no  Environmental Lien has attached  to  any
properties  of  the Borrower or any Subsidiary  of  the
Borrower.

    SECTION  5.14.   Governmental Regulation.   Neither
the  Borrower  nor any Subsidiary of  the  Borrower  is
subject  to  regulation under the  Interstate  Commerce
Act,  the  Investment Company Act of 1940,  the  Public
Utility Holding Company Act of 1935, the Federal  Power
Act  or  any  other Requirements of Law such  that  its
ability to incur indebtedness is limited or its ability
to  consummate  the transactions contemplated  by  this
Credit  Agreement and the other Loan Documents  or  any
document executed in connection therewith is impaired.

    SECTION   5.15.    Disclosure.    All   information
contained in any financial statements, Reserve Reports,
Coal  Reserve  Reports, Borrowing Base  Asset  Reports,
certificates, exhibits, schedules, operating statements
and   any   other   written  statements   and   written
information   (excluding   estimates   and   forecasts)
furnished  by  or  on  behalf of the  Borrower  or  any
Subsidiary of the Borrower to the Banks and the  Agent,
(taken  as  a whole) in connection with any transaction
contemplated hereby or by any other Loan Document on or
prior to the date this representation is made or deemed
made,  was,  and  will  be, true  and  correct  in  all
material  respects and does not, and will not,  contain
any  material misstatement of fact or omit to  state  a
material fact necessary in order to make the statements
contained therein, in light of the circumstances  under
which they were made, not misleading.

    SECTION  5.16.  Subsidiaries.  As of the  Effective
Date,  Schedule 5.16 contains a complete  and  accurate
(a)  list  of  all  Subsidiaries of the  Borrower,  (b)
description of the issued and outstanding capital stock
of  each Subsidiary of the Borrower and (c) the  record
owners  of such capital stock.  Except as set forth  on
Schedule  5.16,  neither  of  the  Borrower   nor   any
Subsidiary  of  the  Borrower is  a  partner  or  joint
venturer  in  any  partnership or joint  venture  or  a
member of any unincorporated association.

    SECTION 5.17.  Solvency.  Neither the Borrower  nor
any  Subsidiary  of  the Borrower  (i)  is  "insolvent"
(within   the  meaning  of  Section  101(32)   of   the
Bankruptcy  Code,  Section 2 of the Uniform  Fraudulent
Conveyance  Act or Section 2 of the Uniform  Fraudulent
Transfer  Act) or will become insolvent as a result  of
the   incurrence  of  any  obligation  under  any  Loan
Document  to which it is a party; (ii) has unreasonably
small  capital (after giving effect to the transactions
contemplated  in any Loan Document to  which  it  is  a
party) for the conduct of its existing and contemplated
business  and  (iii) is able to perform its  contingent
obligations and other commitments as they mature in the
normal course of business.

    SECTION  5.18.   Business.  The  Borrower  and  its
Restricted Subsidiaries have not conducted and are  not
conducting any business other than business relating to
the  exploration, development, financing,  acquisition,
ownership,     operation,     maintenance,     storage,
transporting  and  marketing  of  the   Oil   and   Gas
Interests,  the  Coal Interests and  timber  interests,
land  management, and related activities  as  currently
conducted.

    SECTION  5.19.  Material Contracts.  Schedule  5.19
lists  all Material Contracts to which the Borrower  or
any  of its Subsidiaries is a party or by which  it  or
its properties is bound (including, without limitation,
all   amendments,   supplements,  waivers   and   other
agreements   amending,   supplementing   or   otherwise
modifying  or clarifying such agreements) but excluding
(a)  the  Loan  Documents,  (b)  leases  and  operating
agreements related to the Borrowing Base Assets and (c)
agreements  and  plans relating to  employee  benefits.
The Borrower and each of its Subsidiaries have complied
in  all material respects with all obligations required
to  be  performed by them under all Material Contracts,
except  to  the  extent a failure to comply  could  not
reasonably be expected to result in a Material  Adverse
Effect.   The Borrower is not aware of any  default  by
any other party to any Material Contract.

    SECTION   5.20.   Licenses,  Permits,   Etc.    The
Borrower  and  each  of its Subsidiaries  possess  such
valid  franchises,  certificates  of  convenience   and
necessity,   operating   rights,   licenses,   permits,
consents,  authorizations,  exemptions  and  orders  of
Governmental Authorities, as are necessary to carry  on
their  respective  businesses as now conducted  and  as
proposed  to  be  conducted, except  to  the  extent  a
failure to obtain any such item could not reasonably be
expected to result in a Material Adverse Effect.

    SECTION 5.21.  Fiscal Year.  The Borrower's  Fiscal
Year is January 1 through December 31.

    SECTION   5.22.    Year  2000.   Any  reprogramming
required  to  permit  the proper  functioning,  in  and
following the year 2000, of (a) the Borrower's and  its
Subsidiaries'   computer  systems  and  (b)   equipment
containing  embedded microchips (including systems  and
equipment  supplied by others or with which  Borrower's
or its Subsidiaries' systems interface) and the testing
of  all such systems and equipment, as so reprogrammed,
will  be completed by September 30, 1999.  The cost  to
the  Borrower and it Subsidiaries of such reprogramming
and   testing   and   of  the  reasonably   foreseeable
consequences  of  year  2000 to the  Borrower  and  its
Subsidiaries     (including,    without     limitation,
reprogramming errors and the failure of others' systems
or  equipment)  will  not result  in  a  Default  or  a
Material Adverse  Effect.

                     ARTICLE VI
                AFFIRMATIVE COVENANTS

        So  long as this Credit Agreement shall  remain
in  effect  or  the  principal of or  interest  on  any
Revolving Credit Loan, or any Letter of Credit, or  any
reimbursement obligation with respect to any Letter  of
Credit,  or  any  commitment  or  other  fee,  expense,
compensation or any other amount payable under any Loan
Document  shall  remain unpaid or  outstanding  or  the
Banks shall have any Commitments hereunder, unless  the
Majority Banks shall otherwise consent in writing,  the
Borrower covenants and agrees that:

    SECTION  6.1.   Information.   The  Borrower  shall
deliver, or cause to be delivered, to the Banks at  the
Borrower's sole expense:

    (a)As  soon as practicable, and in any event within
fifty (50) days after the end of each Fiscal Quarter in
each  Fiscal  Year of the Borrower (but within  ninety-
five (95) days after the end of the last Fiscal Quarter
in  each  Fiscal  Year or one hundred five  (105)  days
after the end of the last Fiscal Quarter in such Fiscal
Year upon the Borrower's timely filing of a Form 12b-25
with  respect  to  the Borrower's Form  10-K  for  that
Fiscal Year), the unaudited Consolidated balance  sheet
of  the Borrower and its Subsidiaries as at the end  of
such  quarterly  period and year to  date  period  then
ended,   and   the   related   unaudited   Consolidated
statements  of  income,  cash flows  and  shareholders'
equity for such quarterly period and for the portion of
the  Fiscal  Year  ended with  the  last  day  of  such
quarterly  period,  and  in  each  case  setting  forth
comparative  figures  for the related  periods  in  the
prior Fiscal Year, all in reasonable detail prepared in
a  manner satisfactory to the Agent and the Banks,  and
certified  by  a  Responsible Officer of  the  Borrower
responsible for the administration of the finances  and
accounting   practices  of  the  Borrower   that   such
financial  statements fairly present  the  Consolidated
financial  condition  and  results  of  operations  of,
respectively,  the  Borrower and  its  Subsidiaries  in
accordance with GAAP for the Fiscal Quarter and year to
date  period  then ended, subject to changes  resulting
from normal year-end audit adjustments.

    (b)Within ninety-five (95) days after the close  of
each  Fiscal Year of the Borrower (or one hundred  five
(105)  days  after the close of each such  Fiscal  Year
upon the Borrower's timely filing of a Form 12b-25 with
respect  to  the Borrower's Form 10-K for  that  Fiscal
Year),  the audited Consolidated balance sheet  of  the
Borrower  as  of the end of such Fiscal  Year  and  the
related audited Consolidated statements of income, cash
flows and shareholders' equity of the Borrower for such
Fiscal Year, setting forth the comparative figures  for
the  preceding  Fiscal Year all audited  by  KPMG  Peat
Marwick   or   other   independent   certified   public
accountants of recognized national standing  reasonably
satisfactory  to the Majority Banks and accompanied  by
(x)  an unqualified opinion of such accountants to  the
effect  that  such  Consolidated  financial  statements
present fairly, in all material respects, the financial
position  and results of operations and cash  flows  of
the  Borrower  and its Subsidiaries, on a  Consolidated
basis,  in  accordance with GAAP, and (y) a certificate
of  such  accountants certifying that in the course  of
its  regular audit of the financial statements  of  the
Borrower, which audit was conducted in accordance  with
generally  accepted auditing standards, such accounting
firm  has obtained no knowledge of any Default or Event
of  Default,  or  if in the opinion of such  accounting
firm a Default or Event of Default has occurred and  is
continuing, a statement as to the nature thereof.
      (c)    Together  with the delivery of  statements
referred  to  in  paragraphs  (a)  and  (b)  above,   a
Compliance   Certificate,   in   form   and   substance
satisfactory  to  the Agent, signed  by  a  Responsible
Officer   of   the   Borrower   responsible   for   the
administration of the finances and accounting practices
of  the  Borrower, stating that the signer has reviewed
the  terms of this Credit Agreement and the other  Loan
Documents and that in the course of the performance  of
his  duties,  he would normally have knowledge  of  any
condition or event which would constitute an  Event  of
Default  or Default and stating whether or not  he  has
knowledge  of any such condition or event and,  if  so,
specifying each such condition or event of which he has
knowledge  and  the nature thereof and  any  corrective
action  taken  or  proposed to be  taken  with  respect
thereto.   Such Compliance Certificate shall set  forth
the  calculations required to establish compliance with
the  financial covenants set forth in Section 7.15  for
the fiscal period covered by such financial statements.

    (d)Promptly  and  in  any event  within  three  (3)
Business  Days  after any Responsible  Officer  of  the
Borrower obtains knowledge thereof, notice of  (i)  the
institution  of or threat in writing of,  any  material
action, suit, proceeding, governmental investigation or
arbitration  against or affecting the Borrower  or  any
Subsidiary of the Borrower not previously disclosed  in
writing   to   the   Banks  or  any  material   adverse
development    in   any   action,   suit,   proceeding,
governmental   investigation  or  arbitration   already
disclosed  to the Banks or (ii) the occurrence  of  any
event  which constitutes a Default or Event of Default,
such  notice  to  specify  the  nature  and  period  of
existence of such Default or Event of Default, and what
action  the Borrower and/or such Subsidiary has  taken,
are taking or propose to take with respect thereto.

    (e)promptly  upon  the  mailing  thereof   to   the
stockholders of the Borrower generally, copies  of  all
financial  statements, reports and proxy statements  so
mailed;

    (f)promptly upon the filing thereof, copies of  all
final    registration   statements,   post    effective
amendments  thereto  and annual, quarterly  or  special
reports  which the Borrower shall have filed  with  the
Securities and Exchange Commission; provided, that  the
Borrower  must  deliver, or cause to be delivered,  any
annual reports which the Borrower shall have filed with
the  Securities  and  Exchange Commission,  within  one
hundred (100) days after the end of each Fiscal Year of
the  Borrower (or one hundred five (105) days after the
end  of  such  Fiscal Year upon the  Borrower's  timely
filing  of a Form 12b-25 with respect to the Borrower's
Form  10-K  for  that Fiscal Year), and  any  quarterly
reports  which the Borrower shall have filed  with  the
Securities  and Exchange Commission, within fifty  (50)
days  after  the  end of each of the  first  three  (3)
quarters of each Fiscal Year of the Borrower;

    (g)promptly  upon request therefor  by  the  Agent,
such title opinions and other information in either the
Borrower's  possession, control or direction  regarding
title  to  the Borrowing Base Assets as are appropriate
to determine the status of title with respect thereto;

      (h)    promptly upon receipt of same, any  notice
or  other information received by the Borrower  or  any
Subsidiary  of  the Borrower indicating any  potential,
actual  or alleged (i) non-compliance with or violation
of  the  requirements  of any Environmental  Law  which
could  result  in  liability to  the  Borrower  or  any
Subsidiary for fines, clean up or any other remediation
obligations  or  any  other  liability  in  excess   of
$1,000,000 in the aggregate; (ii) release or threatened
release of any toxic or hazardous waste, substance,  or
constituent,  or  other substance into the  environment
which  release  would  impose on the  Borrower  or  any
Subsidiary  of  the  Borrower a duty  to  report  to  a
governmental authority or to pay cleanup  costs  or  to
take  remedial action under any Environmental Law which
could  result  in  liability to  the  Borrower  or  any
Subsidiary  of  the Borrower for fines,  clean  up  and
other remediation obligations or any other liability in
excess  of  $1,000,000 in the aggregate; or  (iii)  the
existence  of any Environmental Lien arising under  any
Environmental  Law  securing  any  obligation  of   the
Borrower  or  any  Subsidiary of the  Borrower  to  pay
fines, clean up or other remediation costs or any other
liability  in  excess of $1,000,000 in  the  aggregate.
Without  limiting  the foregoing,  the  Borrower  shall
provide to Agent, promptly upon request, copies of  all
environmental consultants or engineers reports received
by the Borrower or any Subsidiary of the Borrower which
involves  the  investigation, remediation  or  response
action  with  respect to any circumstance or  condition
which  would  require delivery of  a  notice  or  other
information   to   the   Banks   pursuant    to    this
Section 6.1(h);

    (i)In  the  event any notification is  provided  by
the  Borrower  to  any Bank or the  Agent  pursuant  to
Section  6.1(h)  hereof  or  the  Agent  or  any   Bank
otherwise learns of any event or condition under  which
any  such notice would be required, then, upon  request
of  the  Majority  Banks,  the Borrower  shall,  within
ninety (90) days of such request, cause to be furnished
to  each  Bank a report by an environmental  consulting
firm  acceptable  to  Agent  and  the  Majority  Banks,
stating  that  a  review of such  event,  condition  or
circumstance  has been undertaken (the scope  of  which
shall  be  reasonably  acceptable  to  Agent  and   the
Majority    Banks)   and   detailing   the    findings,
conclusions,  and  recommendations of such  consultant.
The   Borrower  shall  bear  all  expenses  and   costs
associated  with  such review and updates  thereof,  as
well  as  all remediation or curative action which  (y)
the  Borrower and/or any Subsidiary of the Borrower  is
required  by  contract  or  law  to  make  or  (ii)  is
recommended  by  any such environmental consultant  and
undertaken by the Borrower;

    (j)Promptly  (but  in all events within  three  (3)
Domestic  Business Days) after any Responsible  Officer
becomes  aware  of the occurrence of  any  Default),  a
certificate of a Responsible Officer setting forth  the
details  thereof and the action which the  Borrower  is
taking or proposes to take with respect thereto;

    (k)Promptly  (but  in all events within  three  (3)
Domestic  Business Days) after any Responsible  Officer
becomes  aware of same), notice of any material adverse
change in the business, financial condition, operations
or  prospects of the Borrower, any Subsidiary Guarantor
or  of  the  Borrower and its Subsidiaries taken  as  a
whole;

    (l)Promptly  (but  in all events within  three  (3)
Domestic  Business Days) after any Responsible  Officer
becomes  aware  of same), notice of the intended  sale,
transfer,  encumbrance  or  other  disposition  of  any
Borrowing  Base  Asset  other than  a  sale,  transfer,
encumbrance or other disposition permitted pursuant  to
Section 7.8; and

       (m)     From   time  to  time  such   additional
information   regarding  the  financial   position   or
business  of the Borrower and its Subsidiaries  as  the
Agent,  at  the  request of any  Bank,  may  reasonably
request.

    SECTION  6.2.   Business  of  the  Borrower.    The
primary  business of the Borrower and its  Subsidiaries
on  a Consolidated basis is and will continue to be the
acquisition, exploration for, development,  production,
transportation,    processing    and    marketing    of
Hydrocarbons, coal and accompanying elements.

    SECTION  6.3.   Corporate Existence.  The  Borrower
shall,  and  shall  cause each of its Subsidiaries  to,
maintain  its  (i) existence and good standing  in  the
jurisdiction  of its organization or incorporation  and
(ii)   qualification   and   good   standing   in   all
jurisdictions  in  which  such qualification  and  good
standing  are  necessary in order for the  Borrower  or
such  Subsidiary to conduct its business  and  own  its
property  as  conducted and owned in such  jurisdiction
except where the failure to be so qualified or in  good
standing  would not, individually or in the  aggregate,
result in a Material Adverse Effect.

    SECTION  6.4.   Right of Inspection.  The  Borrower
will  permit,  and  will cause each Subsidiary  of  the
Borrower  to permit, any officer, employee or agent  of
the  Agent or any of the Banks to visit and inspect any
of  the  assets  of the Borrower and its  Subsidiaries,
examine  the Borrower's and its Subsidiaries' books  of
record   and   accounts,  take  copies   and   extracts
therefrom,  and  discuss  the  affairs,  finances   and
accounts of the Borrower and its Subsidiaries with  the
Borrower's  and its Subsidiaries' officers, accountants
and auditors, all at such reasonable times and as often
as the Agent or any of the Banks may reasonably desire,
all at the expense of the Borrower.

    SECTION   6.5.   Maintenance  of  Insurance.    The
Borrower  will maintain or cause to be maintained,  and
will  cause each Subsidiary of the Borrower to maintain
or  cause to be maintained (and will use all reasonable
good  faith efforts to cause all operators of Borrowing
Base  Assets to maintain or cause to be maintained)  at
all   times,  insurance  covering  such  risks  as  are
customarily carried by businesses similarly situated.

    SECTION  6.6.   Payment of Taxes and  Claims.   The
Borrower  will  pay,  and  will  cause  each   of   its
Subsidiaries to pay, (a) all taxes imposed upon  it  or
any  of  its  assets  or with respect  to  any  of  its
franchises,  business,  income or  profits  before  any
material  penalty or interest accrues thereon  and  (b)
all  material  claims  (including, without  limitation,
claims for labor, services, materials and supplies) for
sums which have become due and payable and which by law
have  or  might become a Lien (other than  a  Permitted
Lien)  on  any  of  its assets; provided,  however,  no
payment of taxes or claims shall be required if (i) the
amount,  applicability or validity thereof is currently
being  contested  in  good faith by appropriate  action
promptly   initiated   and  diligently   conducted   in
accordance with good business practices and no material
part  of the property or assets of the Borrower or  any
of  its  Subsidiaries are subject to levy or execution,
(ii)  the  Borrower  as and to the extent  required  in
accordance with GAAP, shall have set aside on its books
reserves  (segregated to the extent required  by  GAAP)
deemed  by it to be adequate with respect thereto,  and
(iii)  to the extent the amount of the contested  taxes
or   claims  are  in  excess  of  $1,000,000  (in   the
aggregate), the Borrower has notified the Agent of such
circumstances, in detail satisfactory to the Agent.
    SECTION    6.7.    Compliance   with    Laws    and
Documents.   The Borrower will comply, and  will  cause
each   of   its  Subsidiaries  to  comply,   with   all
Requirements of Law, their respective certificates  (or
articles) of incorporation, bylaws and similar  charter
documents  and  all  Material Contracts  to  which  the
Borrower  or any of its Subsidiaries is a party,  if  a
violation,  alone or when combined with all other  such
violations, could reasonably be expected to result in a
Material Adverse Effect.

    SECTION   6.8.    Operation   of   Properties   and
Equipment.  (a) the Borrower will maintain and operate,
and will cause each of its Subsidiaries to maintain and
operate,    their   respective   material   properties,
including without limitation all of the Borrowing  Base
Assets, in a good and workmanlike manner, and, (i) with
respect  to  the  Oil  and Gas Interests,  observe  and
comply with all of the terms and provisions, express or
implied, of all oil and gas leases relating to such Oil
and Gas Interests so long as such Oil and Gas Interests
are  capable of producing Hydrocarbons and accompanying
elements in paying quantities, and (ii) with respect to
the  Coal Interests, observe and comply with all of the
terms  and provisions, express or implied, of all  Coal
Leases relating to such Coal Interests so long as  such
Coal   Leases  are  capable  of  producing   coal   and
accompanying elements in commercial quantities.

    (b)   The Borrower will comply, and will cause each
of its Subsidiaries to comply, in all material respects
with all Material Contracts.

    (c)   The  Borrower  will  maintain,  preserve  and
keep,  and  will  cause  each of  its  Subsidiaries  to
maintain, preserve and keep, at all times, all material
equipment   used  with  respect  to  their   respective
businesses   in  proper  repair,  working   order   and
condition,   and  make  all  necessary  or  appropriate
repairs,   renewals,   replacements,   additions    and
improvements  thereto so that the  efficiency  of  such
operating  equipment  shall at all  times  be  properly
preserved  and  maintained; provided that  no  item  of
operating  equipment  need  be  so  repaired,  renewed,
replaced,  added to or improved, if the Borrower  shall
in  good  faith  determine  that  such  action  is  not
necessary or desirable for the continued efficient  and
profitable  operation of the business of  the  Borrower
and its Subsidiaries.

    SECTION  6.9.   Environmental  Law  Compliance  and
Indemnity.   The Borrower will comply, and  will  cause
each  of  its  Subsidiaries to comply, in all  material
respects  with  all Environmental Laws binding  on  the
Borrower   or   such  Subsidiary,  including,   without
limitation, (a) all licensing, permitting, notification
and similar requirements of Environmental Laws, and (b)
all  provisions  of  all Environmental  Laws  regarding
storage,  discharge, release, transportation, treatment
and  disposal  of Hazardous Substances.   The  Borrower
will  promptly  pay and discharge when  due,  and  will
cause  each  of  its Subsidiaries to promptly  pay  and
discharge when due, all debts, claims, liabilities  and
obligations with respect to any clean-up or remediation
measures  necessary  to comply with Environmental  Laws
binding  on  the  Borrower or  any  Subsidiary  of  the
Borrower.   The  Borrower hereby agrees  to  indemnify,
defend  and hold harmless each of the Banks, the  Agent
and  their  respective  agents,  affiliates,  officers,
directors, and employees from and against any  and  all
claims, losses, demands, actions, causes of action, and
liabilities  whatsoever (including  without  limitation
reasonable attorney's fees and expenses, and costs  and
expenses    reasonably   incurred   in   investigating,
preparing or defending against any litigation or claim,
action,  suit,  proceeding or demand  of  any  kind  or
character)  arising  out  of  or  resulting  from   the
contamination   by   any   Hazardous    Substance    or
environmental   pollutant   in   violation    of,    or
noncompliance  with,  any  federal,  state   or   local
Environmental   Laws,  including   without   limitation
violation  of the Comprehensive Environmental Response,
Compensation and Liability Act, as amended from time to
time, or of the Resource Conservation and Recovery Act,
as amended from time to time, except to the extent that
such  claim, loss, demand, action, cause of action,  or
liability was caused by the gross negligence or willful
misconduct   of   the  indemnified   party   requesting
indemnification pursuant to this Section 6.9.

    SECTION  6.10.  ERISA Reporting Requirements.   The
Borrower  shall  furnish or cause to  be  furnished  to
Agent:

    (a)Promptly  and  in any event (i)  within  fifteen
(15)  days  after  the Borrower or any ERISA  Affiliate
knows  or  has  reason  to know that  any  ERISA  Event
described  in  clause  (a) of the definition  of  ERISA
Event  or  any  event described in section  4063(a)  of
ERISA  with respect to any Benefit Plan of the Borrower
or  any  ERISA Affiliate has occurred, and (ii)  within
ten (10) days after the Borrower or any ERISA Affiliate
knows  or has reason to know that any other ERISA Event
with respect to any Benefit Plan of the Borrower or any
ERISA  Affiliate has occurred or a request for  minimum
funding  waiver  under section 412  of  the  Code  with
respect  to  any  Benefit Plan of the Borrower  or  any
ERISA   Affiliate  has  been  made,  a  written  notice
describing  such event and describing  what  action  is
being  taken  or is proposed to be taken  with  respect
thereto,  together with a copy of any notice  of  event
that is given to the PBGC;

    (b)Promptly  and  in  any  event  within  two   (2)
Business Days after receipt thereof by the Borrower  or
any  ERISA  Affiliate  from the PBGC,  copies  of  each
notice  received by the Borrower or any ERISA Affiliate
of  the  PBGC's intention to terminate any Plan  or  to
have  a  trustee  appointed to administer  any  Benefit
Plan;

    (c)Promptly  and in any event within  fifteen  (15)
days  after  the receipt by the Borrower of  a  request
therefor  by  a  Bank, copies of any annual  and  other
report (including Schedule B thereto) with respect to a
Benefit  Plan  filed  by  the  Borrower  or  any  ERISA
Affiliate  with the United States Department of  Labor,
the IRS or the PBGC;

    (d)Promptly,  and  in  any event  within  ten  (10)
Business  Days  after receipt thereof, a  copy  of  any
correspondence  the  Borrower or  any  ERISA  Affiliate
receives  from the Plan Sponsor (as defined by  section
4001(a)(10)  of  ERISA) of any Benefit  Plan  asserting
withdrawal liability pursuant to section 4219  or  4202
of  ERISA upon the Borrower or any ERISA Affiliate, and
a  statement from a Responsible Officer of the Borrower
or such ERISA Affiliate setting forth details as to the
events giving rise to such withdrawal liability and the
action  which  the Borrower or such ERISA Affiliate  is
taking or proposes to take with respect thereto;

      (e)   Notification within three (3) Business Days
after the Borrower or any ERISA Affiliate knows or  has
reason  to  know  that the Borrower or any  such  ERISA
Affiliate has or intends to file a notice of intent  to
terminate any Benefit Plan under a distress termination
within  the meaning of section 4041(c) of ERISA  and  a
copy of such notice; and

    (f)Promptly  after  receipt of  written  notice  of
commencement thereof, notice of all (i) claims made  by
participants  or  beneficiaries  with  respect  to  any
Benefit  Plan  and (ii) actions, suits and  proceedings
before    any   court   or   governmental   department,
commission,  board, bureau, agency or  instrumentality,
domestic  or  foreign, affecting the  Borrower  or  any
ERISA  Affiliate  with  respect to  any  Benefit  Plan,
except  those  which,  in the aggregate,  if  adversely
determined  could  not  result in  a  Material  Adverse
Effect.

    SECTION  6.11.  Subsidiary Guaranty.  The  Borrower
will cause each of its Material Restricted Subsidiaries
hereafter  formed or acquired to execute and deliver  a
joinder  of the Subsidiary Guaranty promptly  following
such formation or acquisition.

    SECTION  6.12.   Permits, Licenses.   The  Borrower
shall, and shall cause each Subsidiary to, maintain all
material    assets,   consents,   licenses,    patents,
copyrights,  trademarks, service  marks,  trade  names,
permits   and   other   approvals  and   authorizations
necessary  to conduct its business, including,  without
limitation   all  consents,  permits,   licensees   and
agreements material to the Borrowing Base Assets.

    SECTION  6.13.  Additional Documents.  The Borrower
will  cure  promptly,  and  will  cause  each  of   its
Subsidiaries  to  cure promptly,  any  defects  in  the
creation  and issuance of each Note, and the  execution
and  delivery  of this Credit Agreement and  the  other
Loan  Documents  and,  at the Borrower's  expense,  the
Borrower  shall promptly and duly execute and  deliver,
and  cause each Subsidiary of the Borrower to  promptly
execute  and  deliver,  to each Bank,  upon  reasonable
request,   all   such  other  and  further   documents,
agreements  and  instruments  in  compliance  with   or
accomplishment of the covenants and agreements of  each
the  Borrower  and each Subsidiary of the  Borrower  in
this  Credit Agreement and the other Loan Documents  as
may   be   reasonably  necessary  or   appropriate   in
connection therewith.

    SECTION   6.14.   Title  Assurances.  The  Borrower
shall  furnish or cause to be furnished  to  the  Agent
such   information  in  its  possession  or  reasonably
available  to it with respect to title to the Borrowing
Base  Assets  as  the  Majority  Banks  may  reasonably
request  and  shall cooperate with the  Agent  and  its
counsel  in analyzing such title. Where appropriate  in
the opinion of the Majority Banks and at the request of
the Majority Banks, the Borrower shall correct material
defects  in such title, or, if the Borrower elects  not
to  correct such defects in title, the Banks  shall  be
entitled  to an immediate redetermination of the  Total
Borrowing Base pursuant to Section 3.4.

                    ARTICLE VII

                  NEGATIVE COVENANTS

        So  long as this Credit Agreement shall  remain
in  effect  or  the  principal of or  interest  on  any
Revolving Credit Loan, or any Letter of Credit, or  any
reimbursement obligation with respect to any Letter  of
Credit,  or  any  commitment  or  other  fee,  expense,
compensation or any other amount payable under any Loan
Document  shall  remain unpaid or  outstanding  or  the
Banks shall have any Commitments hereunder, unless  the
Majority Banks shall otherwise consent in writing,  the
Borrower covenants and agrees that:

    SECTION  7.1.  Debt.  The Borrower shall  not,  and
shall not permit any of its Restricted Subsidiaries to,
create,  incur,  assume or otherwise become  or  remain
liable with respect to, any Debt, except for:

    (a)   Debt  arising hereunder and under  the  other
Loan Documents;

    (b)   Unsecured  Debt outstanding on the  Effective
Date  and described in Schedule 7.1, in each case in  a
principal  amount  at any one time outstanding  not  to
exceed the amount set forth on Schedule 7.1 hereof;

    (c)   Endorsements  of negotiable  instruments  for
collection in the ordinary course of business;

    (d)   Current liabilities (exclusive of  Debt)  for
accounts  payable  and  expense  accruals  incurred  or
assumed  in  the ordinary course of business,  provided
such  accounts payable have not remained unpaid  for  a
period  of  ninety (90) days after the same became  due
unless  currently being contested in good faith  or  by
appropriate proceedings;

    (e)     Liabilities    for   taxes,    assessments,
governmental charges or levies not yet due and payable;

    (f)   Liabilities incurred under Hedge Transactions
permitted pursuant to Section 7.14 hereof;

      (g)   Unsecured  Debt incurred  by  the  Borrower
pursuant  to  a line(s) of credit entered into  by  the
Borrower after the Effective Date with any Bank or  any
other  financial institution, provided,  however,  that
(i) the terms, covenants and conditions of said line(s)
of  credit may be no more burdensome or onerous on  the
Borrower   and   its  Subsidiaries  than   the   terms,
conditions  and  covenants  contained  in  this  Credit
Agreement, (ii) at the time said Debt is incurred,  the
aggregate  principal amount of all advances,  including
the  proposed advance (the "Swing Loans") made  to  the
Borrower  by  any  Bank  or any  such  other  financial
institution pursuant to such line(s) of credit does not
exceed at any one time outstanding $5,000,000.00, (iii)
after  giving  pro forma effect to any  proposed  Swing
Loan, the aggregate amount of the Utilized Credit  does
not  exceed  the  Available Commitment,  and  (iv)  the
proceeds  of  all Swing Loans are used by the  Borrower
solely for cash management purposes.  Swing Loans shall
not be considered a utilization of the Total Commitment
or  the  Commitment of such Bank hereunder for purposes
of  calculating the commitment fee due pursuant to  the
provisions of Section 2.5(a), but shall be included  in
the  determination  of the Utilized  Credit;  provided,
however, that if an advance made pursuant to the  Swing
Loans  affects either the Applicable Eurodollar  Margin
or  the  Unavailable Fee Rate, Borrower  shall  provide
Bank  with written notice of such effect prior to  each
advance of funds made pursuant to the Swing Loans;

    (h)Purchase  money  Debt  in  respect  of  property
acquired  by  the Borrower and its Subsidiaries  (other
than  the  Restricted  Subsidiaries)  in  the  ordinary
course   of  business  provided,  however,   that   the
aggregate  amount of all Debt incurred by the  Borrower
and  its  Subsidiaries pursuant to this Section  7.1(h)
and  Section 7.1(i) shall not exceed $5,000,000 at  any
one time outstanding;

    (i)Additional  unsecured  Debt  not  permitted   by
subclauses (a) through (h), provided, however, that the
aggregate  amount of all Debt incurred by the  Borrower
and   its   Subsidiaries  (other  than  the  Restricted
Subsidiaries)  pursuant  to  this  Section  7.1(i)  and
Section  7.1(h) shall not exceed $5,000,000 at any  one
time outstanding;

    (j)Unfunded Vested Liabilities with respect to  any
Existing   Plan,  provided,  however,  that  (x)   such
Existing Plan at all times meets all applicable funding
requirements contained in Section 412 of the  Code  and
(y) Borrower is at all times in compliance with Section
7.15(b); and

    (k)  Unsecured subordinated Debt outstanding  under
the  Subordinated  Intercompany  Notes  and  any  other
intercompany  Debt  among  Borrower  and  any  of   the
Restricted   Subsidiaries   which   have   executed   a
Subsidiary Guaranty.

    It  is  understood and agreed that  Borrower  shall
not  permit  any  of  its  Restricted  Subsidiaries  to
create,  incur,  assume or otherwise become  or  remain
liable   with   respect   to,   any   Indebtedness   or
Accommodation  Obligations, except  for  that  incurred
under subparagraphs (a), (c), (d), and (e) above.

    SECTION  7.2.  Restrictions on Distributions.   The
Borrower will not directly or indirectly declare or pay
or  incur  any liability to pay, and the Borrower  will
not  permit  any  of  its  Restricted  Subsidiaries  to
directly  or  indirectly declare or pay, or  incur  any
liability to pay any Distributions, except that:

    (a)The  Borrower  may  pay  Distributions  to   its
shareholders  from  funds legally  available  for  such
purpose,   provided,  however,  that  if  the  Utilized
Percentage  of the Borrowing Base exceeds  seventy-five
percent  (75%),  the  Borrower will  not,  directly  or
indirectly, declare or make, or incur any liability  to
make,  Distributions to its shareholders in any  Fiscal
Quarter  in excess of an amount equal to (x) fifty-five
percent  (55%) of Consolidated EBITDA for the  previous
four (4) Fiscal Quarters for which financial statements
have  been  delivered to the Banks pursuant to  Section
6.1   less   (y)  the  aggregate  amount  of  quarterly
Distributions made to its shareholders during such four
(4) fiscal quarter period.

       (b)     It   shall  be  a  condition   to   each
Distribution  permitted by the  provisions  of  Section
7.2(a) that at the time such Distribution is made:  (i)
no payment of principal, interest, fees or other amount
required  hereunder  or under the  Loan  Documents  has
become  due  and has not been paid, (ii) no Default  or
Event of Default (other than as described in clause (i)
of  this  proviso) has occurred, is continuing and  has
not  been  waived by the Majority Banks (or if required
under  Section 10.1, all of the Banks) has occurred  or
would  occur  as  a  result  of  the  making  of   such
Distribution, (iii) no Borrowing Base Deficiency exists
or  is  reasonably expected to exist  as  of  the  next
Determination Date, and (iv) after giving effect to the
proposed  Distribution the Borrower  is  in  compliance
with covenants contained in Section 7.15 as of (and  as
if  the  most  recently  ended Fiscal  Quarter  of  the
Borrower  had  ended on) the date such Distribution  is
made.

    Notwithstanding the foregoing, (i)  any  Subsidiary
Guarantor may make Distributions to the Borrower or any
other Subsidiary Guarantor, (ii) any Subsidiary of  the
Borrower may make Distributions to the Borrower,  (iii)
Powell River Rail Corporation may make Distributions to
the  Borrower and its other shareholders so long as the
Borrower  owns  80%  or more of the  capital  stock  or
equity interests of Powell River Rail Corporation,  and
(iv)   Borrower  may  make  Distributions,   loans   or
Investments  in an amount not to exceed $10,000,000  in
the  aggregate  to  any  Unrestricted  Subsidiaries  or
Restricted  Subsidiaries  that  have  not  executed   a
Subsidiary  Guaranty pursuant to this Credit Agreement.
The  Borrower will not enter into or become subject to,
and   the   Borrower  will  not  permit  any   of   its
Subsidiaries to enter into, or become subject  to,  any
agreement or order of any Governmental Authority  which
prohibits or restricts in any way the right of  any  of
the  Borrower's  Subsidiaries to make Distributions  to
the Borrower.

    SECTION  7.3.  Negative Pledge.  The Borrower  will
not  create, incur, assume or suffer to exist, and  the
Borrower  will not permit any Restricted Subsidiary  of
the  Borrower  to create, incur, assume  or  suffer  to
exist, any Lien on any asset of the Borrower or any  of
its Restricted Subsidiaries other than Permitted Liens.
The  Borrower will not enter into or become subject to,
and   the  Borrower  will  not  permit  any  Restricted
Subsidiary  of  the Borrower to enter  into  or  become
subject  to,  any  agreement  (other than  this  Credit
Agreement)  that prohibits or otherwise  restricts  the
right   of  the  Borrower  or  any  of  its  Restricted
Subsidiaries  to  create, incur, assume  or  suffer  to
exist any Lien in favor of Agent for the benefit of the
Banks on any of the Borrower's or any of its Restricted
Subsidiaries' assets.

    SECTION    7.4.    Consolidation,    Mergers    and
Acquisitions; Fundamental Changes.  The Borrower  shall
not,  and shall not permit any of its Subsidiaries  to,
merge or consolidate with or acquire substantially  all
of the outstanding capital stock or assets of any other
Person or liquidate, wind up or dissolve (or suffer any
liquidation  or dissolution), or convey,  lease,  sell,
transfer or otherwise dispose of, in one transaction or
series of transactions, all or any substantial part  of
its  business,  property  or  assets,  whether  now  or
hereafter  acquired,  except for  transactions  in  the
nature  of  a consolidation and/or merger (i) involving
the  Borrower  in which the Borrower is  the  surviving
entity,  or  (ii) involving a Subsidiary  Guarantor  in
which the surviving entity is a wholly owned Restricted
Subsidiary  of the Borrower and has duly  executed  and
delivered a joinder to the Subsidiary Guaranty pursuant
to  Section  6.11, or (iii) involving any other  wholly
owned  Subsidiary of the Borrower in which such  wholly
owned  Subsidiary is the surviving entity,  subject  in
each  case to the condition that immediately after such
merger or consolidation and after giving effect and pro
forma  effect  thereto  for the  immediately  preceding
twelve-month  period, no Event of  Default  or  Default
shall  have  occurred,  exist or  be  continuing.   The
Borrower  shall not, and shall not permit  any  of  its
Subsidiaries to, purchase, redeem, retire or  otherwise
acquire  for  value  any of its capital  stock  now  or
hereafter outstanding.

    SECTION  7.5.   Investments.   The  Borrower  shall
not,  and  shall  not  permit  any  of  its  Restricted
Subsidiaries  to,  make, directly  or  indirectly,  any
Investments, except:

    (a)   Investments existing on the date  hereof  and
disclosed on Schedule 7.5;

    (b)  Investments consisting of Cash Equivalents;

    (c)   Accounts  receivable from  customers  in  the
ordinary course of business;

    (d)   Investments by the Borrower in  wholly  owned
Subsidiaries  provided such Subsidiaries have  executed
and  delivered a Subsidiary Guaranty in  favor  of  the
Agent;

    (e)   Margin deposits in connection with any  Hedge
Transaction permitted pursuant to Section 7.14;

    (f)    Acquisitions  permitted  under  Section  7.4
hereof;

    (g)   Investments in connection with or related  to
farm-out,  farm-in, joint operating, joint  venture  or
area  of mutual interest agreements, gathering systems,
pipelines  or  other similar or customary  arrangements
entered into in the ordinary course of business;

    (h)investments   by  the  Borrower,   directly   or
indirectly, in Powell River Rail Corporation, provided,
however,  that all Investments made by the Borrower  in
Powell  River Rail Corporation pursuant to this Section
7.5(h) shall not exceed $5,000,000 in the aggregate; or

    (j)   An  Investment in capital stock  (other  than
Margin  Stock)  issued by a United  States  corporation
(other  than  Westmoreland Coal  Company,  Westmoreland
Resources,  Inc. and Powell River Rail Corporation)  in
the  same line of business(es) as the Borrower and  its
Subsidiaries provided such Investment is not a  Hostile
Acquisition  and subject in each case to the  condition
that immediately after such Investment and after giving
effect  and  pro  forma  effect thereto  for  the  next
succeeding twelve-month period, no Event of Default  or
Default shall have occurred, exist or be continuing.

    SECTION  7.6.   Transactions with Affiliates.   The
Borrower  shall not, and shall not permit  any  of  its
Subsidiaries  to,  enter into, or be  a  party  to  any
transaction with any affiliated Person, except for  (i)
the transactions provided for in the Loan Documents, or
(ii)   transactions  entered  into  pursuant   to   the
reasonable  requirements of such Person's business  and
upon such fair and reasonable terms as could reasonably
be  obtained  in  a  arm's length transaction  with  an
unaffiliated  Person  in  accordance  with   prevailing
industry customs and practices.

    SECTION 7.7.  Agreements.  The Borrower shall  not,
and  shall not permit any of its Subsidiaries to, enter
into  any  contract, agreement or transaction which  at
the  time  such contract, agreement or transaction  was
entered  into materially and adversely affects (i)  the
business,   property,  assets,  operations,   condition
(financial  or  otherwise)  of  the  Borrower  or   any
Subsidiary  of  the Borrower, (ii) the ability  of  the
Borrower  or any Subsidiary of the Borrower to  perform
timely its obligations under this Credit Agreement  and
the  other  Loan Documents to which it is  a  party  or
(iii)  a  Subsidiary's ability to  perform  timely  its
material covenants and obligations under any Subsidiary
Guaranty to which it is a party.

    SECTION 7.8.  Sales of Assets.  The Borrower  shall
not,  and shall not permit any of its Subsidiaries  to,
sell,  assign,  transfer, lease,  convey  or  otherwise
dispose of any of its assets or properties, whether now
owned  or hereafter acquired, or any income or  profits
therefrom,  or  enter  into any  agreement  to  do  so,
except:

    (a)  sales  of inventory in the ordinary course  of
its business;

    (b)  sales or dispositions of worn out or  obsolete
tools  or  equipment no longer used or  useful  in  the
business  of  the  Borrower or such Subsidiary  of  the
Borrower;

    (c)  sales  of  Oil and Gas Interests  and/or  Coal
Interests  used in the determination of  the  Borrowing
Base for fair market value on an arm's length basis  in
an  aggregate amount for both Oil and Gas Interests and
Coal  Interests  for the Borrower and its  Subsidiaries
not  to  exceed  $10,000,000 during  any  Fiscal  Year,
provided,  however, that at the time of  such  sale  no
Event of Default has occurred and is continuing and  no
Borrowing Base Deficiency then exists;

    (d)  sales  of  the Norfolk Common Stock  for  fair
market  value on an arm's length basis in an  aggregate
amount  not  to  exceed $50,000,000 during  any  Fiscal
Year;

    (e)  sales of the common stock of Westmoreland Coal
Company; or

    (f)  sales  of assets not used in the determination
of  the  Borrowing Base, which sales shall  not  exceed
$30,000,000 in the aggregate.

    SECTION 7.9.  ERISA. (a) With the exception of  the
Benefit Plans described on Schedule 5.11 (the "Existing
Plans"), neither the Borrower nor any Subsidiary of the
Borrower  shall create, adopt or become  bound  by  any
Benefit  Plan.  The Borrower shall not, and  shall  not
permit  any  of  its  Subsidiaries  to,  engage  in   a
"prohibited transaction", as defined in Section 406  of
ERISA or Section 4975 of the Code, with respect to  any
Existing  Plan  or  knowingly  consent  to  any   other
"interested  party"  or any "disqualified  person",  as
such  terms are defined in Section 3(14) of  ERISA  and
Section  4975(e)(2) of the Code, respectively, engaging
in  any  "prohibited transaction", with respect to  any
Existing  Plan, or permit any Existing Plan  maintained
by  the Borrower or such Subsidiary of the Borrower  to
incur  any "accumulated funding deficiency", as defined
in  Section  302 of ERISA or Section 412 of  the  Code,
unless  such  incurrence  shall  have  been  waived  in
advance by the IRS; or terminate any Existing Plan in a
manner  which could result in the imposition of a  Lien
on  any property of the Borrower or such Subsidiary  of
the  Borrower  pursuant to Section 4068  of  ERISA;  or
breach any fiduciary responsibility imposed under Title
I of ERISA with respect to any Existing Plan; engage in
any transaction which would result in the incurrence of
a  liability under Section 4069 of ERISA;  or  fail  to
make  contributions to any Existing Plan which  results
in  the  imposition of a Lien on any  property  of  the
Borrower or such Subsidiary of the Borrower pursuant to
Section 302(f) of ERISA or Section 412(n) of the  Code,
if  the occurrence of any of the foregoing events would
result  in  liability to the Borrower  or  any  of  its
Subsidiaries of $2,000,000 or more.  The Borrower shall
not,  and shall not permit any of its Subsidiaries  to,
materially  increase the benefits  provided  under  any
Existing  Plan. The Borrower shall not, and  shall  not
permit  any of its Subsidiaries to (nor will any  trade
or  business, whether or not incorporated,  that  is  a
member  of  a  group  of  which the  Borrower  or  such
Subsidiary  of the Borrower is a member  and  which  is
treated as a single employer under Section 414  of  the
Code)   sponsor,   maintain  or   contribute   to   any
Multiemployer  Plan(s).  The Borrower  shall  not,  and
shall  not permit any of its Subsidiaries to, become  a
member  of any other group which is treated as a single
employer under Section 414 of the Code.

    SECTION  7.10.  Sales and Leasebacks.  The Borrower
shall not, and shall not permit any of its Subsidiaries
to,  become liable, directly or by way of Accommodation
Obligation,  with respect to any lease or any  property
(whether  real or personal or mixed) whether now  owned
or  hereafter acquired, (i) which the Borrower or  such
Subsidiary  of the Borrower has sold or transferred  or
is  to  sell  or transfer to any other Person  or  (ii)
which  the Borrower or such Subsidiary of the  Borrower
intends  to use for substantially the same purposes  as
any  other property which has been or is to be sold  or
transferred by the Borrower or such Subsidiary  of  the
Borrower  to any other Person in connection  with  such
lease.

    SECTION  7.11.   Margin Regulation.   The  Borrower
shall  not  use or permit any other Person to  use  any
portion  of  the proceeds of any credit extended  under
this  Credit Agreement in any manner which might  cause
the  extension  of  credit or the application  of  such
proceeds  to  violate the Securities  Act  of  1933  or
Securities Exchange Act of 1934 (each as amended to the
date  hereof and from time to time hereafter,  and  any
successor  statute)  or  to violate  Regulation  U,  or
Regulation  X, or any other regulation of  the  Federal
Reserve Board, in each case as in effect on the date or
dates  of  such  extension of credit and  such  use  of
proceeds.

    SECTION    7.12.    Amendment   to   Organizational
Documents. The Borrower will not enter into or  permit,
and   the   Borrower  will  not  permit  any   of   its
Subsidiaries  to enter into or permit, any modification
or   amendment  of  its  certificate  or  articles   of
incorporation, bylaws or other charter documents  other
than  amendments, modifications and waivers  which  are
not,  individually or in the aggregate,  material.  The
Borrower  will  not  enter  into  or  permit,  and  the
Borrower  will  not permit PVCC, Savannah  or  PVHC  to
enter into or permit, any modification or amendment  of
the Subordinated Intercompany Notes without the express
written consent of the Banks.

    SECTION  7.13.  Fiscal Year; Fiscal  Quarter.   The
Borrower  shall not, and shall not permit  any  of  its
Subsidiaries to, change its Fiscal Year or any  of  its
Fiscal Quarters.

    SECTION  7.14.  Hedge Transactions.   The  Borrower
will  not enter into, and the Borrower will not  permit
any  of its Restricted Subsidiaries to enter into,  any
Hedge  Transactions  which would cause  the  amount  of
Hydrocarbons   which   are   the   subject   of   Hedge
Transactions  in existence at such time to  exceed  one
hundred  percent  (100%)  of  the  Borrower's  and  its
Restricted  Subsidiaries' anticipated  production  from
Proved  Developed Producing Hydrocarbon Reserves during
the  term  of such existing Hedge Transactions  and  no
such  Hedge Transactions requires the Borrower  or  any
Restricted Subsidiary of the Borrower to put up  money,
assets, letters of credit or other security against the
event of its nonperformance prior to actual default  by
the  Borrower  or  such Subsidiary  in  performing  its
obligations thereunder.

    SECTION  7.15.   Financial  Covenants.   From   and
after   the   Effective  Date,  the   Borrower   on   a
Consolidated basis shall not:

    (a)Permit  its Consolidated Tangible Net  Worth  at
any  time  to  be less than the sum of (i) $135,000,000
plus,   if   positive  (ii)  forty  percent  (40%)   of
Consolidated  Net  Income  for  the  period  from   the
Effective Date plus, if any, (iii) seventy-five percent
(75%)  of  the  net proceeds from the  sale  of  equity
securities   of   the  Borrower  and   its   Restricted
Subsidiaries for the period from the Effective Date, on
a Consolidated basis;

    (b)Permit  its Consolidated Funded Debt  to  exceed
sixty  percent (60%) of its Consolidated Capitalization
at any time; or

    (c)Permit  its ratio of Consolidated Cash  Flow  to
Consolidated  Debt  Service at the end  of  any  Fiscal
Quarter to be less than 3.5 to 1.0, to be calculated at
the  end  of  each Fiscal Quarter, for the  four-Fiscal
Quarter period ending with such Fiscal Quarter.

    SECTION    7.16.     Subsidiary    Guarantors    as
Subsidiaries of Borrower.  At all times, Borrower shall
directly   or   indirectly   through   a   wholly-owned
Subsidiary retain full, absolute and unencumbered title
to all of the issued and outstanding securities of each
of the Subsidiary Guarantors.

                    ARTICLE VIII

                  EVENTS OF DEFAULT

    SECTION  8.1.  Events of Default.  If  any  of  the
following events, acts, occurrences or conditions (each
an "Event of Default") shall occur and be continuing:

    (a)   The  Borrower shall fail to pay when due  any
payment of any principal of the Revolving Credit Loans;
or

      (b)  The Borrower shall fail to pay when due  the
payment of any accrued interest on the Revolving Credit
Loans  and  such  failure shall continue  for  two  (2)
Business Days; or (ii) the Borrower shall fail  to  pay
when due the payment of any fee, expense, compensation,
reimbursement  or  other amount  when  due  under  this
Credit  Agreement, the Notes or any other Loan Document
or  other  agreement  or document  contemplated  by  or
delivered pursuant to or in connection with this Credit
Agreement  or  such  Loan  Document  or  any   material
document executed in connection therewith and,  in  any
event,  such  failure  shall  continue  for  five   (5)
Business  Days after the earlier of (y) notice  thereof
from  the  Agent  or any Bank to the Borrower  and  (z)
discovery thereof by the Borrower; or

    (c)    The  Borrower  or  any  Subsidiary  of   the
Borrower  shall  fail to perform or observe  any  term,
covenant  or  agreement contained in  Sections  6.1(c),
6.1(d)(ii),   6.11  or  Article  VII  of  this   Credit
Agreement; or

    (d)    The  Borrower  or  any  Subsidiary  of   the
Borrower  shall fail to perform any term,  covenant  or
agreement contained in this Credit Agreement other than
those referenced in subsections (a), (b) or (c) of this
Section  8.1 or in any other Loan Document to which  it
is a party and, in the case of any such failure that is
capable of being remedied, such failure shall not  have
been remedied within thirty (30) days after the earlier
of  (i)  notice thereof from the Agent to the  Borrower
and (ii) discovery thereof by a Responsible Officer  of
the Borrower or such Subsidiary of the Borrower; or

    (e)   Any  Subsidiary  shall fail  to  perform  any
term, covenant or agreement contained in the Subsidiary
Guaranty  other  than those referenced  in  subsections
(a),  and (b) of this Section 8.1, and, in the case  of
any  such  failure that is capable of  being  remedied,
such failure shall not have been remedied within thirty
(30)  days after the earlier of (i) notice thereof from
the Agent to such Subsidiary and (ii) discovery thereof
by a Responsible Officer of such Subsidiary; or

    (f)   Any  Termination  Event  occurs  which  would
subject the Borrower or any Subsidiary of the Borrower,
to  a  liability in excess of $2,000,000, or  the  plan
administrator of any Benefit Plan applies under Section
412(d) of the Code  for a waiver of the minimum funding
standards  of  Section 412(a) of the Code  which  would
subject the Borrower or any Subsidiary of the Borrower,
to a liability in excess of $2,000,000; or

    (g)    Any  representation  or  warranty  made   or
incorporated by the Borrower or any Subsidiary  of  the
Borrower in any Loan Document to which such Person is a
party  or  in any certificate, agreement or  instrument
delivered  in connection with, any Loan Document  shall
prove  to  have  been incorrect or  misleading  in  any
material respect when made or deemed made; or

      (h)   The  Borrower  or  any  Subsidiary  of  the
Borrower,  shall  (i) fail to pay  any  Debt  having  a
principal  amount in excess of $2,000,000  (other  than
the  amounts referred to in subsections (a) and (b)  of
this Section 8.1) owing by such Person, or any interest
or  premium thereon, when due (or, if permitted by  the
terms  of  the relevant document, within any applicable
grace  period), whether such Debt shall become  due  by
scheduled   maturity,   by  required   prepayment,   by
acceleration, by demand or otherwise unless effectively
waived or consented to in accordance with the documents
evidencing such Debt or (ii) fail to observe or perform
any   material  term,  covenant  or  condition  on  its
respective part to be performed under any agreement  or
instrument evidencing, securing or relating to any such
Debt,  when required to be performed, and such  failure
shall  continue after the applicable grace  period,  if
any,  specified in such agreement or instrument if  the
effect  of  any failure is to cause, or to  permit  the
holder  or holders of such Debt or a trustee on its  or
their behalf (with or without the giving of notice, the
lapse  of time, or both), to cause such Debt to  become
due prior to its stated maturity; or

    (i)   Any  Loan Document shall, at any  time  after
its execution and delivery and for any reason, cease to
be  in full force and effect or shall be declared to be
null  and  void,  or  the  validity  or  enforceability
thereof  shall be contested by any Person party thereto
(other  than the Agent or any Bank) or any such  Person
party  thereto (other than the Agent or any Bank) shall
deny that it has any or further liability or obligation
thereunder,  or  the Obligations shall be  subordinated
for any reason; or

    (j)    The  Borrower  or  any  Subsidiary  of   the
Borrower  shall  be  adjudicated  insolvent,  or  shall
generally not pay, or admit in writing its inability to
pay,  its  debts  as  they mature, or  make  a  general
assignment  for  the  benefit  of  creditors,  or   any
proceeding  shall  be instituted  by  any  such  Person
seeking    to   adjudicate   it   insolvent,    seeking
liquidation,  dissolution, winding-up,  reorganization,
arrangement,   adjustment,   protection,   relief    or
composition of it or its debts under any Debtor  Relief
Law, or seeking the entry of an order for relief or the
appointment  of a receiver, trustee, or  other  similar
official  for  it or for any substantial  part  of  its
property,  or any such Person shall take any  corporate
action  in furtherance of any of the actions set  forth
above in this Section 8.1(j); or

    (k)   Any  proceeding of the type  referred  to  in
Section  8.1(j)  is  filed, or any such  proceeding  is
commenced against the Borrower or any Subsidiary of the
Borrower,  or any such Person by any act indicates  its
approval   thereof,  consent  thereto  or  acquiescence
therein,  or  an  order for relief  is  entered  in  an
involuntary case under the bankruptcy law of the United
States,  or  an  order, judgment or decree  is  entered
appointing  a trustee, receiver, custodian,  liquidator
or  similar  official or adjudicating any  such  Person
insolvent,  or  approving  the  petition  in  any  such
proceedings, and such order, judgment or decree remains
in effect for sixty (60) days; or

    (l)   A final judgment or order for the payment  of
money  in  excess  of  $2,000,000 and  not  covered  by
insurance shall be rendered against the Borrower or any
Subsidiary  of the Borrower and the same shall  not  be
discharged  (or provision shall not be  made  for  such
discharge), or a stay of execution thereof shall not be
procured,  within  thirty (30) days from  the  date  of
entry thereof, or the Borrower or any Subsidiary of the
Borrower  shall not, within said period of thirty  (30)
days  or  such longer period during which execution  of
the  same shall have been stayed, appeal therefrom  and
cause  the  execution thereof to be stayed during  such
appeal; or

    (m)  (i)   Any Environmental Liability  shall  have
been  asserted  under any applicable Environmental  Law
against  the Borrower or any Subsidiary of the Borrower
or  (ii)  any Release of any Hazardous Substance  shall
have  occurred, and such event could form the basis  of
an  Environmental Liability against the Borrower or any
Subsidiary of the Borrower; which in either case  could
reasonably  be expected to result in liability  to  the
Borrower  or  any Subsidiary of Borrower in  excess  of
$2,000,000;

THEN,  (x) upon the occurrence of any Event of  Default
described  in  Section 8.1(j) or  Section  8.1(k)  with
respect  to  the  Borrower or  any  Subsidiary  of  the
Borrower (i) all of the Commitments shall automatically
terminate,  and  the Borrower shall  deposit  with  the
Agent  cash equal to the aggregate face amount  of  all
outstanding Letters of Credit issued hereunder and (ii)
the  entire  unpaid  amount of  all  Obligations  shall
automatically  become  immediately  due  and   payable,
without   presentment  for  payment,  demand,  protest,
notice  of intent to accelerate, notice of acceleration
or  further notice of any kind, all of which are hereby
expressly  waived  by  the Borrower  and  each  of  its
Subsidiaries  and the obligation of each Bank  to  make
any  Revolving  Credit Loan hereunder  shall  thereupon
terminate  and  (y) upon the occurrence  of  any  other
Event  of  Default, the Agent shall at the request,  or
may  with  the consent, of the Majority Banks,  (i)  by
written  notice  to  the Borrower declare  all  of  the
Commitments  to  be terminated, whereupon  all  of  the
Commitments  and the obligations of each Bank  to  make
any  Revolving  Credit Loan hereunder  shall  forthwith
terminate,  and  the Borrower shall  deposit  with  the
Agent  cash equal to the aggregate face amount  of  all
outstanding Letters of Credit issued hereunder and (ii)
by  written  notice to the Borrower declare the  entire
unpaid  amount  of all Obligations to be forthwith  due
and payable, whereupon all Obligations shall become and
be  forthwith due and payable, without presentment  for
payment,   demand,  protest,  notice   of   intent   to
accelerate, notice of acceleration or further notice of
any  kind, all of which are hereby expressly waived  by
the  Borrower and each Subsidiary of the Borrower.  The
Borrower  hereby  grants to the Agent for  the  ratable
benefit  of the Banks a security interest in, and  Lien
on, any Dollars delivered to the Agent pursuant to this
Section 8.1, as security for the Obligations.

    SECTION 8.2.  Remedies. If any Default or Event  of
Default  shall occur and be continuing, the obligations
of the Banks to make Revolving Credit Loans, and of the
Issuing Bank(s) to issue Letters of Credit, under  this
Credit  Agreement shall terminate immediately.  If  any
Event of Default shall occur, the Agent for the ratable
benefit of the Banks, may (and upon the request of  the
Majority  Banks shall) protect and enforce  the  Banks'
rights  and  remedies under the Loan Documents  by  any
appropriate  proceedings,  including  proceedings   for
specific  performance  of  any  covenant  or  agreement
contained  in  any  Loan Document, and  the  Banks  may
enforce  the payment of any Obligations due or  enforce
any  other  legal or equitable right.  All  rights  and
remedies and powers conferred upon the Agent and/or the
Banks   under  the  Loan  Documents  shall  be   deemed
cumulative  and  not  exclusive of  any  other  rights,
remedies  or powers available under the Loan  Documents
or at law or in equity.

    SECTION 8.3.  Right of Setoff.  In addition to  any
rights now or hereafter granted under applicable law or
otherwise,  and not by way of limitation  of  any  such
rights,  upon the occurrence and during the continuance
of any Event of Default, each Bank is hereby authorized
at any time or from time to time, to the fullest extent
permitted  by  law  and  without  presentment,  demand,
protest or other notice of any kind to the Borrower  or
to  any  other  Person, any such  notice  being  hereby
expressly  waived,  to set off and apply  any  and  all
deposits   (general  or  special,   time   or   demand,
provisional or final) at any time held, and other  Debt
at  any  time  owing, by such Bank (including,  without
limitation, by Affiliates, branches or agencies of such
Bank  wherever  located) to or for the  credit  or  the
account  of  the Borrower against any of  and  all  the
Obligations,   including,   without   limitation,   all
interests   in  Obligations  purchased  by  such   Bank
pursuant to Section 2.18, and all other claims  of  any
nature  or  description arising out of or in connection
with  this Credit Agreement or any other Loan Document,
irrespective  of  whether or not such Bank  shall  have
made  any  demand  under this Credit Agreement  or  the
Notes  or  other  Loan  Documents  and  although   such
Obligations,  liabilities or claims, or  any  of  them,
shall  be  contingent or unmatured.  Such  Bank  agrees
promptly  to notify the Borrower after any such  setoff
and  application made by such Bank, but the failure  to
give  such notice shall not affect the validity of such
setoff and application.  The rights of the Banks  under
this  Section 8.3 are in addition to other  rights  and
remedies  (including, without limitation, other  rights
of  setoff)  which the Banks may have.  Notwithstanding
any  other  provisions  of this Credit  Agreement,  the
provisions  of  this  Section  8.3  (except   for   the
provisions  of  this sentence) will not  apply  to  any
amounts held by the Borrower or any Subsidiary  of  the
Borrower  for  the benefit of working  interest  owners
and/or  royalty  owners for the purpose  of  paying  ad
valorem taxes, development costs and/or operating costs
or  for  the  purpose  of making distributions  to  the
revenue  interest owners of revenues from  various  Oil
and Gas Interests.

    SECTION   8.4.   Indemnity.   The  Borrower   shall
indemnify  the  Agent and each Bank and each  Affiliate
thereof   and  their  respective  directors,  officers,
employees,   shareholders   and   agents    (each    an
"Indemnitee")  from,  and hold each  of  them  harmless
against,  any  and  all  losses,  liabilities,  claims,
damages,   expenses,  penalties,  actions,   judgments,
suits,  costs  or disbursements of any kind  or  nature
whatsoever  that are asserted against an Indemnitee  by
any   Person  if  such  losses,  liabilities,   claims,
damages,   expenses,  penalties,  actions,   judgments,
suits,  costs or disbursements arise out of  or  result
from (i) any use by the Borrower of the proceeds of any
extension of credit by the Banks hereunder or (ii)  any
investigation,    litigation   or   other    proceeding
(including  any threatened investigation or proceeding)
relating  to the foregoing or arising out of  or  based
upon  any  Loan  Document or any  of  the  transactions
contemplated  by  any Loan Document, and  the  Borrower
shall  reimburse  such  Indemnitee,  within  ten   (10)
Business Days after receipt of a composite statement of
account   for   any   reasonable  expenses   (including
reasonable legal fees) incurred in connection with  any
such  investigation or proceeding;  but  excluding  any
such  losses,  liabilities, claims, damages,  expenses,
penalties,   actions,  judgments,   suits,   costs   or
disbursements  which  are proximately  caused  by  such
Indemnitee.  Without prejudice to the survival  of  any
other  Obligations  of the Borrower hereunder  and  the
other  Loan Documents, the Obligations of the  Borrower
under this Section 8.4 shall survive the termination of
this  Credit  Agreement, the payment  in  full  of  the
Obligations and/or assignment of the Notes.

                      ARTICLE IX

                      THE AGENT

    SECTION   9.1.   Authorization  and  Action.    The
general  administration of the Loan Documents  and  any
other  documents contemplated by this Credit  Agreement
shall  be by the Agent or its designees.  Each  of  the
Banks authorizes the Agent to take such actions on  its
behalf and to exercise such powers and to perform  such
duties  as are expressly delegated to the Agent by  the
terms  of  this  Credit Agreement and  the  other  Loan
Documents,  together with such powers as are reasonably
incidental  thereto.  Notwithstanding any provision  to
the  contrary  elsewhere in this Credit Agreement,  the
Agent  shall  not  have any duties or responsibilities,
except  those  expressly  set  forth  herein,  or   any
fiduciary  relationship with any Bank, and  no  implied
covenants,    functions,   responsibilities,    duties,
obligations  or liabilities on the part  of  the  Agent
shall  be  read into this Credit Agreement or otherwise
exist against the Agent.

    (b)The  provisions of this Article  IX  are  solely
for the benefit of the Agent and the Banks, and neither
the  Borrower nor any Subsidiary of the Borrower  shall
have  any  rights  as  a  third  party  beneficiary  or
otherwise under, or be bound by, the provisions of this
Article IX.

    (c)In   performing   its   functions   and   duties
hereunder and under the other Loan Documents, the Agent
shall  act  solely as the agent of the  Banks  and  the
Agent  does not assume nor shall it be deemed  to  have
assumed  any  obligation or relationship  of  trust  or
agency with or for the Borrower, any Subsidiary of  the
Borrower  or  any  of their respective  successors  and
assigns.

    SECTION   9.2.    Agent's   Reliance;   Exculpatory
Provisions, Etc.

      (a)   Neither the Agent nor any of its directors,
officers,  agents or employees shall be liable  to  any
Bank for any action taken or omitted to be taken by  it
or  them  under  or  in  connection  with  this  Credit
Agreement  or  the other Loan Documents  (i)  with  the
consent or at the request of the Majority Banks  or  if
required under Section 10.1, all of the Banks  or  (ii)
in  the absence of its or their own gross negligence or
willful  misconduct (it being the express intention  of
the parties that the Agent and its directors, officers,
agents  and  employees  shall  have  no  liability  for
actions  and omissions under this Section 9.2 resulting
from  their  sole ordinary or contributory negligence).
Without  limitation of the generality of the foregoing,
the Agent:  (i) may treat the payee of each Note as the
holder  thereof until the Agent receives  a  Commitment
Transfer Supplement from such payee in accordance  with
the  terms of Section 10.9; (ii) may consult with legal
counsel    (including   counsel   to   the   Borrower),
independent   public  accountants  and  other   experts
selected  by it and shall not be liable for any  action
taken  or  omitted to be taken in good faith by  it  in
accordance with the advice of such counsel, accountants
or  experts;  (iii) makes no warranty or representation
to  any  Bank and shall not be responsible to any  Bank
for  any statements, warranties or representations made
in  or in connection with this Credit Agreement or  the
other   Loan   Documents;  (iv)  except  as   otherwise
expressly provided herein, shall not have any  duty  to
ascertain  or  to  inquire as  to  the  performance  or
observance of any of the terms, covenants or conditions
of this Credit Agreement or the other Loan Documents or
to  inspect  the  property  (including  the  books  and
records) of the Borrower or its Subsidiaries; (v) shall
not  be  responsible to any Bank for the due execution,
legality,    validity,   enforceability,   genuineness,
sufficiency  or value of this Credit Agreement  or  the
other  Loan  Documents  or  any  other  instrument   or
document  furnished pursuant hereto  or  thereto;  (vi)
shall  incur no liability under or in respect  of  this
Credit  Agreement or the other Loan Documents by acting
upon   any   notice,  consent,  certificate  or   other
instrument  or  writing  (which  may  be  by  telegram,
telecopier, cable or telex) reasonably believed  by  it
to be genuine and signed or sent by the proper party or
parties, (vii) shall incur no liability to any Bank  or
the  Issuing Bank as a result of any act or failure  to
act  in  respect of a Letter of Credit that  would  not
form  the basis for liability against the Agent  acting
either as the Agent or the Issuing Bank with respect to
such  Letter of Credit, in an action between the Agent,
in  either  such  capacity,  and  either  the  customer
arranging  for  such Letter of Credit, the  beneficiary
thereof or the holder of the draft drawn thereunder and
(viii) the provisions of this Section 9.2 shall survive
the  termination  of this Credit Agreement  and?or  the
payment  or assignment of any of the Obligations.   The
Agent  shall be fully justified in failing or  refusing
to  take any action under this Credit Agreement or  any
other Loan Document unless it shall first receive  such
advice  or  concurrence of the Majority  Banks  (or  if
required  under Section 10.1, all of the Banks)  as  it
deems  appropriate or it shall first be indemnified  to
its  satisfaction  by  the Banks against  any  and  all
liability  and expense (other than that resulting  from
its  own gross negligence or willful misconduct)  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 Credit Agreement and the other  Loan
Documents in accordance with a request of the  Majority
Banks or all of the Banks, as the case may be, and such
request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks and  all
future holders of the Notes.

    (b)Neither  the  Agent nor any  of  its  directors,
officers,   employees,  or  agents   shall   have   any
responsibility to any Person on account of the  failure
or  delay in performance or breach by any of the  Banks
or  the  Borrower or any Subsidiary of the Borrower  or
any  of  their respective Obligations under this Credit
Agreement, the Notes, the Loan Documents or any related
agreement  or  document  or in connection  herewith  or
therewith.

    SECTION  9.3.  The Agent in its Individual Capacity
and Affiliates.  With respect to its Commitment, any of
the  Revolving Credit Loans made by it and/or the Notes
issued  to  it  as a Bank, Chase shall  have  the  same
rights  and powers under this Credit Agreement  or  the
other Loan Documents as any other Bank and may exercise
the  same  as though it were not the Agent.  The  terms
"Bank"  or  "Banks"  shall, unless otherwise  expressly
indicated,   include  the  Agent  in   its   individual
capacity.  Chase and its Affiliates may accept deposits
from,  lend money, act as trustee under indentures  of,
and  generally engage in any kind of business with, the
Borrower, its Subsidiaries and/or any Person who may do
business with or own securities of the Borrower or  any
Subsidiary of the Borrower, all as if it were  not  the
Agent  and without any duty to account therefor to  the
other Banks.

    SECTION  9.4.   Bank  Credit Decision.   Each  Bank
acknowledges and agrees that it has, independently  and
without  reliance upon the Agent or any other Bank  and
based on the financial statements and other information
referred to in Section 5.9 and such other documents and
information as it has deemed appropriate, made its  own
credit  analysis and decision to enter into this Credit
Agreement.  Each Bank also acknowledges and agrees that
it  will,  independently and without reliance upon  the
Agent or any other Bank and based on such documents and
information as it shall deem appropriate at  the  time,
continue to make its own credit decisions in taking  or
not  taking action under this Credit Agreement and  the
other Loan Documents.

    SECTION  9.5.   Indemnification and  Reimbursement.
The  Agent  shall  not be required to take  any  action
hereunder or to prosecute or defend any suit in respect
of  this  Credit Agreement or the other Loan  Documents
unless  indemnified to the Agent's satisfaction by  the
Banks  against loss, cost, liability and  expense.   If
any  indemnity  furnished to  the  Agent  shall  become
impaired,  it  may  call for additional  indemnity  and
cease  to  do the acts indemnified against  until  such
additional indemnity is given.  In addition, the  Banks
agree  to  indemnify  the  Agent  (to  the  extent  not
reimbursed by the Borrower), ratably according  to  the
respective principal amounts of the Notes then held  by
each   of  them  (or  if  no  Notes  are  at  the  time
outstanding,  ratably  according  to  either  (i)   the
respective  amounts  of  their Commitments,  or  if  no
Commitments   are  outstanding,  (ii)  the   respective
amounts  of  the Commitments immediately prior  to  the
time  the  Commitments ceased to be outstanding),  from
and  against  any  and  all  liabilities,  obligations,
losses, damages, penalties, actions, judgments,  suits,
costs,  expenses or disbursements of any kind or nature
whatsoever  which may be imposed on,  incurred  by,  or
asserted  against the Agent in any way relating  to  or
arising  out  of this Credit Agreement  or  any  action
taken  or  omitted  by  the  Agent  under  this  Credit
Agreement  or  the  other  Loan  Documents  (including,
without  limitation, any action taken or omitted  under
Article II of this Credit Agreement); provided, that no
Bank   shall  be  liable  for  any  portion   of   such
liabilities,  obligations, losses, damages,  penalties,
actions,   judgments,   suits,   costs,   expenses   or
disbursements   resulting  from   the   Agent's   gross
negligence  or willful misconduct.  Each  Bank  agrees,
however, that it expressly intends, under this  Section
9.5,  to  indemnify the Agent ratably as aforesaid  for
all  such  liabilities, obligations,  losses,  damages,
penalties,  actions, judgments, suits, costs,  expenses
and  disbursements arising out of or resulting from the
Agent's  ordinary or contributory negligence.   Without
limitation  of  the  foregoing,  each  Bank  agrees  to
reimburse  the  Agent  promptly  upon  demand  for  its
ratable  share of any out-of-pocket expenses (including
reasonable  counsel  fees) incurred  by  the  Agent  in
connection    with    the    preparation,    execution,
administration, or enforcement of, or legal  advice  in
respect  of  rights  or  responsibilities  under,  this
Credit  Agreement and the other Loan Documents  to  the
extent  that  the  Agent  is not  reimbursed  for  such
expenses  by  the  Borrower.  The  provisions  of  this
Section  9.5  shall survive the termination  of  Credit
Agreement  and?or the payment or assignment of  any  of
the Obligations.

    SECTION  9.6.   Successor  Agent.   The  Agent  may
resign at any time by giving written notice thereof  to
the  Banks and the Borrower and may be removed as Agent
at  any time for cause by the Majority Banks.  Upon any
such  resignation or removal, the Majority Banks  shall
have  the  right  to  appoint from among  the  Banks  a
successor Agent (with the consent of the Borrower which
shall not be unreasonably withheld or delayed, provided
that if an Event of Default shall have occurred and  be
continuing  the  consent of the Borrower  need  not  be
obtained).   If no successor Agent shall have  been  so
appointed  by  the  Majority  Banks,  and  shall   have
accepted  such  appointment, within  30  calendar  days
after   the  retiring  Agent's  giving  of  notice   of
resignation  or  the  Majority Banks'  removal  of  the
retiring Agent, then the retiring Agent may, on  behalf
of  the Banks and with the concurrence of the Borrower,
appoint  a successor Agent, which shall be an  Eligible
Assignee.   Upon  the acceptance of any appointment  as
Agent hereunder and under the other Loan Documents by a
successor  Agent, such successor Agent shall  thereupon
succeed  to  and  become vested with  all  the  rights,
powers,  privileges and duties of the  retiring  Agent,
and  the  retiring Agent shall be discharged  from  its
duties and obligations under this Credit Agreement  and
the  other Loan Documents.  After any retiring  Agent's
resignation or removal as Agent hereunder and under the
other Loan Documents, the provisions of this Article IX
shall  inure to its benefit as to any actions taken  or
omitted to be taken by it while it was Agent under this
Credit Agreement and the other Loan Documents.

    SECTION  9.7.  Notice of Default.  The Agent  shall
not  be  deemed  to  have knowledge or  notice  of  the
occurrence of any Default or Event of Default hereunder
unless the Agent shall have received notice from a Bank
or  the  Borrower  referring to this Credit  Agreement,
describing such Default or Event of Default and stating
that  such  notice  is a "notice of default."   If  the
Agent  receives such a notice, the Agent shall promptly
give notice thereof to the Banks; provided, however, if
such  notice  is received from a Bank, the  Agent  also
shall  give notice thereof to the Borrower.  The  Agent
shall be entitled to take action or refrain from taking
action with respect to such Default or Event of Default
as provided in Section 9.1 and Section 9.2.

    SECTION 9.8.  Delegation of Duties.  The Agent  may
execute  any of its duties under this Credit  Agreement
or  the  other Loan Documents by or through  agents  or
attorneys-in-fact and shall be entitled  to  advice  of
counsel  concerning  all  matters  pertaining  to  such
duties.   The  Agent shall not be responsible  for  the
negligence or misconduct of any agents or attorneys-in-
fact selected by it with reasonable care.

                     ARTICLE X

                    MISCELLANEOUS

    SECTION  10.1.   Amendments and  Waivers.   Neither
this  Credit  Agreement or any other Loan  Document  to
which the Borrower or any Subsidiary is a party nor any
terms  hereof  or thereof may be amended, supplemented,
waived or otherwise modified except in accordance  with
the  provisions of this subsection.  Any  provision  of
this Credit Agreement or any other Loan Document may be
amended, supplemented, waived, or otherwise modified if
and only if such amendment, supplement, waiver or other
modification  (x) is in writing, (y) is signed  by  the
Majority Banks (if the Banks are a party thereto) or by
the  Agent  with the consent of the Majority Banks  (if
the Agent is a party thereto and the Banks are not) and
(z)  is signed by each other party thereto except  that
in the case of a waiver, the party whose performance is
being waived need not be a signatory; provided no  such
amendment,  supplement, waiver  or  other  modification
shall  do any of the following unless signed by all  of
the Banks (if the Banks are a party thereto) and by the
Agent  with  the consent of all of the  Banks  (if  the
Agent is a party thereto and the Banks are not):

        (i)   extend  the Maturity Date,  the  date  of
        payment of any principal, interest or fees,  or
        the  date  of payment of any required principal
        prepayment;

        (ii)   reduce  the  amount  of  any  principal,
        interest  or  fees, the rate of  interest  paid
        with  respect to any unpaid principal, interest
        or  fees,  or the amount of any fee payable  to
        the Banks hereunder;

        (iii)   change the amount of any Commitment  of
        any Bank;

          (iv)   amend,  modify, or waive  any  of  the
        conditions set forth in Article IV (other  than
        any  condition  which  refers  therein  to  the
        Majority Banks);

        (v)   amend,  modify  or  waive  any  provision
        which  calls  for the consent of, the  approval
        of, or direction from all of the Banks;

        (vi)  amend,  modify  or  waive  any  provision
contained in Article III.

        (vii)  amend, modify or waive any provision  of
        this   Section   10.1  or  the  definition   of
        Majority Banks;

        (viii)  release  any Subsidiary Guarantor  from
        its  obligations under the Subsidiary Guaranty;
        or

        (ix)   consent  to or permit the assignment  or
        transfer  by the Borrower or any Subsidiary  of
        the   Borrower  of  any  of  its   rights   and
        obligations under this Credit Agreement or  any
        other  Loan  Document to which it  is  a  party
        (other  than as a result of a permitted  merger
        or  consolidation pursuant to Section 7.4 which
        refers therein to the Majority Banks);

and   provided,  further,  without  the  prior  written
consent  of  the Agent, no such amendment,  supplement,
waiver  or modification shall amend, supplement,  waive
or  otherwise modify any provision of Article IX or any
other  provision  of any Loan Document  if  the  effect
thereof is to affect the rights or duties of the Agent;
and  provided,  further, that no amendment,  waiver  or
consent  shall,  unless in writing and  signed  by  the
Issuing Bank in addition to the Banks required above to
take  such action, affect the rights and duties of  the
Issuing Bank with respect to the Letters of Credit  and
the  Letter of Credit Applications, if any, outstanding
under  this  Credit  Agreement.   Any  such  amendment,
supplement, modification or waiver shall apply to  each
of  the  Banks  equally and shall be binding  upon  the
Banks,  the Agent, all future holders of the Notes  and
Obligations,  and all parties to the Loan  Document  so
amended, supplemented, waived or otherwise modified.

    SECTION  10.2.   Notices, Etc.  Notices,  consents,
requests,  approvals, demands and other  communications
(collectively  "Communications")  provided  for  herein
shall  be  in writing (including telecopy, telegraphic,
telex  or cable communications) and mailed, telecopied,
telegraphed, telexed, cabled or delivered:

        If  to the Borrower or any of its Subsidiaries,
    to it at:

            Penn Virginia Corporation
            100 Matsonford Road, Suite 200
            Radnor, Pennsylvania  19087
            Telephone Number:  (610) 687-8900
            Telecopy Number:   (610) 687-3688
            Attention: Steven W. Tholen
           Vice   President and Chief Financial Officer

        If to the Agent, to it at:

            Chase Bank of Texas, National Association
            600 Travis, CTH-20-86
               Houston, Texas 77002
            Telephone Number:  (713) 216-4147
            Telecopy Number:   (713) 216-4117
            Attention: Bob Mertensotto
            Vice President

        If   such  notice  to  the  Agent  relates   to
fundings or payments, with a copy to:

            Muniram Appana
            Agency Services
            Chase Bank of Texas, N.A.
            One Chase Manhattan Plaza, 8th Floor
            New York, New York 10081
            Telephone Number: (212) 552-7943
            Telecopy Number: (212) 552-7490

        If  to  any Bank, as specified on Schedule  1.1
        hereto   or   in  the  appropriate   Commitment
        Transfer Supplement pursuant to Section 10.9.

All   Communications,  except  as  otherwise  expressly
provided in the Loan Documents, must be in writing  and
must  be  mailed,  telecopied  or  delivered,  to   the
appropriate  party at the address set forth  herein  or
other  applicable Loan Document or, as to any party  to
any  Loan  Document, at any other  address  as  may  be
designated by it in a written notice sent to all  other
parties  to such Loan Document in accordance with  this
Section  10.2  and  (b)  any notice,  request,  demand,
direction,  or other communication given by  telecopier
must  be confirmed within 48 hours by letter mailed  or
delivered  to  the appropriate party at its  respective
address.  Except as otherwise expressly provided in any
Loan  Document, any notice, request, demand, direction,
or  other  communication required or permitted  by  any
Loan  Document  given in compliance with  this  Section
10.2 shall be effective when received or delivered.

    SECTION 10.3.  No Waiver; Remedies Cumulative.   No
failure  on  the part of the Agent or any Bank  or  any
holder  of  a  Note  to  exercise,  and  no  delay   in
exercising, any right, power or privilege hereunder  or
under  any other Loan Document and no course of dealing
between the Borrower, its Subsidiaries, or any of  them
and  the  Agent or any Bank or any holder of  any  Note
shall operate as a waiver thereof; nor shall any single
or  partial  exercise  of  any  such  right,  power  or
privilege, or any abandonment or discontinuance of  any
steps  to  enforce  such  right,  power  or  privilege,
preclude any other or further exercise thereof  or  the
exercise  of  any other right, power or privilege.   No
notice  to or demand on the Borrower in any case  shall
entitle the Borrower to any other or further notice  or
demand in similar or other circumstances.  The remedies
herein provided are cumulative and not exclusive of any
remedies provided by law.

    SECTION 10.4.  Costs, Expenses and Taxes.

    (a)   The  Borrower agrees to pay within  ten  (10)
Business   Days  after  presentation  of  a   composite
statement of account, all reasonable costs and expenses
of  the Agent in connection with:  (i) the negotiation,
preparation,  distribution, execution and  delivery  of
this  Credit  Agreement, the Notes and the  other  Loan
Documents and the documents and instruments referred to
therein,  (ii) the syndication, management and agenting
of the Revolving Credit Loans, (iii) the Agent's review
and  due diligence (including, without limitation,  the
review  of the material Oil and Gas Interests and  Coal
Interests,   and  (iv)  the  negotiation,  preparation,
distribution, execution and delivery of any  amendment,
supplement, modification, waiver or consent relating to
any  of the Loan Documents to which the Borrower or any
Subsidiary  of  the  Borrower is  a  party  (including,
without  limitation, as to each of the  foregoing,  the
reasonable fees and disbursements of legal counsel).

    (b)   The Borrower shall pay all reasonable out-of-
pocket costs and expenses of the Agent and each Bank in
connection  with (i) the preservation of  their  rights
under, and enforcement of, the Loan Documents to  which
the  Borrower  or any Subsidiary of the Borrower  is  a
party  and  the documents and instruments  referred  to
therein   and   (ii)  any  workout,  restructuring   or
rescheduling of the Obligations or any proceeding under
any  Debtor Relief Law with respect to the Borrower  or
any  Subsidiary  of  the Borrower  (including,  without
limitation,  in  each  case, the  reasonable  fees  and
disbursements  of counsel for the Agent and  the  Banks
and allocated costs of internal counsel).

    (c)   The  Borrower shall pay, and hold  the  Agent
and  each  of the Banks harmless from and against,  any
and  all  present and future stamp, excise,  and  other
similar  taxes  and fees with respect to the  foregoing
matters and hold the Agent and each Bank harmless  from
and against any and all liabilities with respect to  or
resulting from any delay or omission (other than to the
extent  attributable to the Agent or such Bank) to  pay
such taxes.

    (d)   Without  prejudice to  the  survival  of  any
other obligations of the Borrower hereunder, under  the
other  Loan Documents, the obligations of the  Borrower
under  this  Section 10.4 shall survive the termination
of this Credit Agreement and the payment in full of the
Obligations for a period of fifteen (15) months.

    SECTION   10.5.    Governing  Law.    This   Credit
Agreement,  the  Notes and, unless otherwise  specified
therein,  all  other  Loan  Documents  and  all   other
documents executed in connection herewith or therewith,
shall be deemed to be contracts and agreements executed
by the Borrower, the Agent and the Banks under the laws
of  the State of Texas and of the United States and for
all purposes shall be construed in accordance with, and
governed  by, the laws of said State and of the  United
States.   Without limitation of the foregoing,  nothing
in  this Credit Agreement, the Notes or any other  Loan
Document shall be deemed to constitute a waiver of  any
rights which any Bank may have under applicable federal
legislation  relating to the amount of  interest  which
such Bank may contract for, take, receive or charge  in
respect  of  any Revolving Credit Loans, including  any
right to take, receive, reserve and charge interest  at
the  rate  allowed by the law of the state  where  such
Bank is located.  The Agent, the Banks and the Borrower
further agree that insofar as the provisions of Article
1.04,  Subtitle  1,  Title 79,  of  the  Revised  Civil
Statutes of Texas, 1925, as amended, are applicable  to
the  determination  of  the Highest  Lawful  Rate  with
respect  to  the  Notes,  the  indicated  rate  ceiling
computed from time to time pursuant to Section  (a)  of
such  Article  shall  apply  to  the  Notes;  provided,
however,  that to the extent permitted by such Article,
the  Agent  may  from time to time by notice  from  the
Agent  to  the  Borrower revise the  election  of  such
interest  rate  ceiling as such  ceiling  affects  then
current  or  future  balances of the  Revolving  Credit
Loans  outstanding under the Notes.  The provisions  of
Chapter  15 of Subtitle 3 of the said Title 79  do  not
apply  to  this  Credit Agreement or the  Notes  issued
hereunder.

    SECTION  10.6.  Interest.  Each provision  in  this
Credit  Agreement  and  each  other  Loan  Document  is
expressly limited so that in no event whatsoever  shall
the amount paid, or otherwise agreed to be paid, to the
Agent or any Bank for the use, forbearance or detention
of  the  money to be loaned under this Credit Agreement
or  any Loan Document or otherwise (including any  sums
paid   as   required  by  any  covenant  or  obligation
contained herein or in any other Loan Document which is
for  the  use, forbearance or detention of such money),
exceed  that  amount  of money which  would  cause  the
effective rate of interest to exceed the Highest Lawful
Rate,  and all amounts owed under this Credit Agreement
and  each  other  Loan Document shall  be  held  to  be
subject to reduction to the effect that such amounts so
paid  or  agreed  to be paid which  are  for  the  use,
forbearance  or  detention of money under  this  Credit
Agreement  or  such  Loan Document shall  in  no  event
exceed  that  amount  of money which  would  cause  the
effective rate of interest to exceed the Highest Lawful
Rate.   Anything in this Credit Agreement, any Note  or
any    other    Loan   Document   to    the    contrary
notwithstanding, with respect to each Note the Borrower
shall  never  be required to pay unearned  interest  on
such  Note or ever be required to pay interest on  such
Note  at  a rate in excess of the Highest Lawful  Rate,
and  if  the  effective  rate of interest  which  would
otherwise  be payable with respect to such  Note  would
exceed  the  Highest Lawful Rate, or if the  holder  of
such  Note shall receive any unearned interest or shall
receive  monies that are deemed to constitute  interest
which  would  increase the effective rate  of  interest
payable by the Borrower with respect to such Note  to a
rate in excess of the Highest Lawful Rate, then (i) the
amount of interest which would otherwise be payable  by
the Borrower with respect to such Note shall be reduced
to the amount allowed under applicable law and (ii) any
unearned  interest paid by the Borrower or any interest
paid  by  the Borrower in excess of the Highest  Lawful
Rate  shall  be in the first instance credited  on  the
principal  of  such Notes with the excess  thereof,  if
any,  refunded  to the Borrower.  It is further  agreed
that,   without   limitation  of  the  foregoing,   all
calculations  of  the rate of interest contracted  for,
charged or received by any Bank under the Notes held by
it,  or  under this Credit Agreement or the other  Loan
Documents,  are  made  for the purpose  of  determining
whether  such  rate  exceeds the  Highest  Lawful  Rate
applicable to such Bank (such Highest Lawful Rate being
the  Bank's "Maximum Permissible Rate"), shall be made,
to  the  extent  permitted by usury laws applicable  to
such   Bank   (now  or  hereafter  enacted),   by   (a)
characterizing any non-principal payment as an expense,
fee   or  premium  rather  than  as  interest  and  (b)
amortizing,  prorating  and spreading  in  equal  parts
during  the  period  of the full  stated  term  of  the
Revolving  Credit  Loans evidenced by  said  Notes  all
interest  at  any  time  contracted  for,  charged   or
received by such Bank in connection therewith.

    SECTION  10.7.   Survival  of  Representations  and
Warranties.    All  representations,   warranties   and
covenants contained or incorporated herein or  made  in
writing  by  the  Borrower or  any  Subsidiary  of  the
Borrower  in  connection  herewith  shall  survive  the
execution  and  delivery of this Credit Agreement,  the
Notes and the other Loan Documents.

    SECTION   10.8.   Binding  Effect.    This   Credit
Agreement  shall become effective when  it  shall  have
been  executed by the Borrower, the Agent and  each  of
the  Banks and shall be binding upon and inure  to  the
benefit  of  the  Borrower  and  the  Banks  and  their
respective successors and assigns, whether so expressed
or  not, provided, that the undertaking of the Banks to
make  Revolving Credit Loans to the Borrower shall  not
inure  to  the benefit of any successor or assignee  of
the Borrower.

    SECTION     10.9.     Successors    and    Assigns;
Participation; Eligible Assignees.

    (a)This Credit Agreement shall be binding upon  and
inure  to  the benefit of the Borrower, the Banks,  the
Agent,  all  future  holders of  the  Notes  and  their
respective  successors  and assigns,  except  that  the
Borrower  may not assign or transfer any of its  rights
or  obligations under this Credit Agreement without the
prior written consent of each Bank.

      (b)   Any Bank may, in the ordinary course of its
commercial  banking  business and  in  accordance  with
applicable law at any time sell to one or more banks or
other entities ("Participants") participating interests
in  any  Revolving Credit Loan owing to such Bank,  any
Note  held by such Bank, any Letter of Credit  Exposure
held by it, any Commitment of such Bank, including such
Bank's  Commitment Percentage of the Letter  of  Credit
Commitment,  or  any  other  interest  of   such   Bank
hereunder  and under the other Loan Documents.  In  the
event  of  any  such  sale by a Bank  of  participating
interests  to  a  Participant, such Bank's  obligations
under  this  Credit Agreement to the other  parties  to
this Credit Agreement shall remain unchanged, such Bank
shall  remain  solely responsible for  the  performance
thereof, such Bank shall remain the holder of any  such
Note  for all purposes under this Credit Agreement  and
the  other  Loan  Documents, and the Borrower  and  the
Agent  shall continue to deal solely and directly  with
such  Bank  in connection with such Bank's  rights  and
obligations under this Credit Agreement and  the  other
Loan  Documents.  The Borrower agrees that  if  amounts
outstanding under this Credit Agreement and  the  Notes
are due or unpaid, or shall have been declared or shall
have  become due and payable upon the occurrence of  an
Event  of Default, each Participant shall be deemed  to
have  the  right  of  setoff in respect  of  its  parti
cipating  interest in amounts owing under  this  Credit
Agreement  and any Note to the same extent  as  if  the
amount   of  its  participating  interest  were   owing
directly to it as a Bank under this Credit Agreement or
any Note, provided that such Participant shall only  be
entitled  to  such  right of setoff if  it  shall  have
agreed in the agreement pursuant to which it shall have
acquired  its participating interest to share with  the
Banks the proceeds thereof as provided in Section  8.3.
The Borrower also agrees that each Participant shall be
entitled  to the benefits of Sections 2.13, 2.15,  2.17
and  10.4  with  respect to its  participation  in  the
Commitments  and  the Utilized Credit outstanding  from
time  to  time, provided, that no Participant shall  be
entitled to receive any greater amount pursuant to such
sections  than  the  transferor Bank  would  have  been
entitled  to  receive in respect of the amount  of  the
participation  transferred by such transferor  Bank  to
such Participant had no such transfer occurred.

      (c)   Any Bank may, in the ordinary course of its
commercial  banking  business and  in  accordance  with
applicable  law  at any time sell to any  Bank  or  any
Affiliate  thereof and, so long as no Event of  Default
has occurred and is continuing, with the consent of the
Borrower and the Agent (which in each case shall not be
unreasonably withheld) and if an Event of  Default  has
occurred and is continuing, without the consent of  the
Borrower, to one or more Eligible Assignees, all or any
part  of  its rights and obligations under this  Credit
Agreement,    its   Commitment,   including,    without
limitation, its Commitment Percentage of the Letter  of
Credit Commitment, the Revolving Credit Loans owning to
it,  the  Note(s)  held  by it, the  Letter  of  Credit
Exposure  held by it (in respect of any such Bank,  the
"Credit  Exposure"), pursuant to a Commitment  Transfer
Supplement,  substantially in the form  of  Exhibit  B,
provided,  however,  that  (i)  the  parties  to   such
Commitment Transfer Supplement shall have executed  and
delivered to the Agent for its acceptance and recording
in  the  Register,  a  Commitment Transfer  Supplement,
together  with the Note(s) subject to such  assignment,
(ii)  each such assignment shall be of a constant,  and
not  a  varying,  percentage of the  transferor  Bank's
Credit  Exposure,  i.e.,  any  such  assignment   shall
include a constant percentage of, inter alia the rights
and obligations of such transferor Bank with respect to
its  Commitment,  including,  without  limitation,  its
Commitment   Percentage  of  the   Letter   of   Credit
Commitment,  the Revolving Credit Loans owning  to  it,
the  Note(s)  held  by  it, and the  Letter  of  Credit
Exposure  held  by it, (iii) the amount  of  each  such
assignment   (determined  as  of  the  date  Commitment
Transfer Supplement with respect to such assignment  is
delivered to the Agent) shall be in a minimum principal
amount  of  $5,000,000 and (iv) if the transferor  Bank
has  retained any Commitment hereunder, such transferor
Bank's   remaining  Commitment  shall   be   at   least
$5,000,000 after giving effect to such assignment. Upon
such  execution,  delivery, acceptance  and  recording,
from  and  after the Transfer Effective Date determined
pursuant  to  such Commitment Transfer Supplement,  (x)
the  Eligible  Assignee thereunder  shall  be  a  party
hereto  and, to the extent provided in such  Commitment
Transfer Supplement, have the rights and obligations of
a  Bank  hereunder  with  a  Commitment  as  set  forth
therein, and (y) the transferor Bank thereunder  shall,
to  the  extent  provided in such  Commitment  Transfer
Supplement, be released from its obligations under this
Credit  Agreement  (and, in the case  of  a  Commitment
Transfer  Supplement  covering  all  or  the  remaining
portion  of  a transferor Bank's rights and obligations
under this Credit Agreement, such transferor Bank shall
cease  to  be a party hereto.  Such Commitment Transfer
Supplement  shall  be  deemed  to  amend  this   Credit
Agreement  to  the  extent, and  only  to  the  extent,
necessary  to  reflect the addition  of  such  Eligible
Assignee  and  the resulting adjustment  of  Commitment
Percentages arising from the purchase by such  Eligible
Assignee  of  all  or  a  portion  of  the  rights  and
obligations  of such transferor Bank under this  Credit
Agreement  and the Notes.  On or prior to the  Transfer
Effective  Date determined pursuant to such  Commitment
Transfer  Supplement,  the Borrower,  at  its  expense,
shall execute and deliver to the Agent in exchange  for
the  surrendered Note a new Note to the order  of  such
Eligible  Assignee in an amount equal to the Commitment
and  Revolving Credit Loans assumed by it  pursuant  to
such   Commitment  Transfer  Supplement  and,  if   the
transferor Bank has retained a Commitment and Revolving
Credit Loans hereunder, a new Note to the order of  the
transferor  Bank in an amount equal to  the  Commitment
and  Revolving  Credit Loans retained by it  hereunder.
Such  new  Notes  shall be in the  form  of  the  Notes
replaced thereby.

    (d)The   Agent  shall  maintain  at   its   address
referred  to in Section 10.2 a copy of each  Commitment
Transfer Supplement delivered to it and a register (the
"Register")  for  the  recordation  of  the  names  and
addresses  of  the  Banks and the  Commitment  of,  the
principal  amount of the Revolving Credit  Loans  owing
to,  and  the Letter of Credit Exposure of,  each  Bank
from  time to time. The entities in the Register  shall
be  conclusive, in the absence of manifest  error,  and
the  Borrower, the Agent and the Banks may  treat  each
Person  whose name is recorded in the Register  as  the
owner of the Revolving Credit Loan and/or the Letter of
Credit  Exposure recorded therein for all  purposes  of
this  Credit Agreement. The Register shall be available
for  inspection  by the Borrower and the  Bank  at  any
reasonable  time and from time to time upon  reasonable
prior notice.

    (e)Upon   its  receipt  of  a  Commitment  Transfer
Supplement  executed  by  a  transferor  Bank  and   an
Eligible  Assignee  (and, in the case  of  an  Eligible
Assignee  that  is  not  then a Bank  or  an  affiliate
thereof,  by the Borrower and the Agent) together  with
payment  to  the Agent of a registration and processing
fee of $2,500, the Agent shall (i) promptly accept such
Commitment Transfer Supplement and (ii) on the Transfer
Effective Date determined pursuant thereto, record  the
information contained therein in the Register and  give
notice of such acceptance and recordation to the  Banks
and the Borrower.

    (f)The  Borrower  hereby authorizes  each  Bank  to
disclose  to  any Participant or Eligible Assignee  and
any prospective Eligible Assignee any and all financial
information  in  such Bank's possession concerning  the
Borrower and its Affiliates which has been delivered to
such  Bank by or on behalf of the Borrower pursuant  to
this  Credit  Agreement or which has been delivered  to
such Bank by or on behalf of the Borrower in connection
with such Bank's credit evaluation of the Borrower  and
its Affiliates prior to becoming a party to this Credit
Agreement, provided that, prior to any such disclosure,
each  such Eligible Assignee or Participant or proposed
Eligible Assignee or Participant shall agree in writing
to be bound by the confidentiality provisions contained
in Section 10.11;

      (g)    If, pursuant to this section, any interest
in  this Credit Agreement or any Note is transferred to
any Eligible Assignee which is organized under the laws
of any jurisdiction other than the United States or any
state  thereof,  the transferor Bank shall  cause  such
Eligible  Assignee, concurrently with the effectiveness
of  such  transfer, (i) to represent to the  transferor
Bank (for the benefit of the transferor Bank, the Agent
and   the  Borrower)  that  under  applicable  law  and
treaties  no  taxes will be required to be withheld  by
the  Agent,  the Borrower or the transferor  Bank  with
respect  to  any payments to be made to  such  Eligible
Assignee in respect of the Revolving Credit Loans, (ii)
to  furnish to the transferor Bank (and, in the case of
any  Eligible Assignee registered in the Register,  the
Agent  and  the Borrower) either U.S. Internal  Revenue
Service Form 4224 or U.S. Internal Revenue Service Form
1001 (wherein such Eligible Assignee claims entitlement
to complete exemption from U.S. federal withholding tax
on  all interest payments hereunder) and (iii) to agree
(for the benefit of the transferor Bank, the Agent  and
the  Borrower) to provide the transferor Bank (and,  in
the  case  of any Eligible Assignee registered  in  the
Register,  the Agent and the Borrower) a new Form  4224
or Form 1001 upon the expiration or obsolescence of any
previously delivered form and comparable statements  in
accordance  with  applicable U.S. laws and  regulations
and  amendments  duly executed and  completed  by  such
Eligible  Assignee,  and  to  comply  in  all  material
respects  from  time to time with all  applicable  U.S.
laws  and  regulations with regard to such  withholding
tax exemption; and

    (h)Nothing herein shall prohibit any Bank from  (i)
pledging  or assigning any Note to any Federal  Reserve
Bank  in accordance with applicable law or (ii) selling
or  assigning its Notes and its rights under the Credit
Agreement  and the other Loan Documents to  any  Person
after  the occurrence and during the continuance of  an
Event of Default.

    SECTION  10.10.  Separability.  Should any  clause,
sentence, paragraph or section of this Credit Agreement
or any other Loan Document be judicially declared to be
invalid, unenforceable or void, such decision will  not
have   the  effect  of  invalidating  or  voiding   the
remainder  of this Credit Agreement or such other  Loan
Document,  as  the case may be, and the parties  hereto
agree  that the part or parts of this Credit  Agreement
or   such   Loan  Document  so  held  to  be   invalid,
unenforceable  or  void will be  deemed  to  have  been
stricken here from or therefrom and the remainder  will
have  the same force and effectiveness as if such  part
or parts had never been included herein or therein.

    SECTION  10.11.  Confidentiality.   Each  Bank  and
the Agent acknowledge that any information furnished to
it   directly   by  the  Borrower  is  and   shall   be
confidential   unless  designated  otherwise   by   the
Borrower  (however, such Bank or the Agent may disclose
or  furnish  any  or  all of such  information  to  its
employees,  officers, board members, auditors,  counsel
and  agents  after  informing them of the  confidential
nature  of  such information), and each  Bank  and  the
Agent agrees that (i) it will maintain, and direct  its
employees,  officers, board members, auditors,  counsel
and  agents  to maintain, the confidentiality  of  such
information, (ii) it will not disclose, and will direct
its   employees,  officers,  board  members,  auditors,
counsel  and agents not to disclose, in any event  such
information  to any third party (except as  herein  set
forth)  and (iii) it will not use, and will direct  its
employees,  officers, board members, auditors,  counsel
or  agents not to use such information for any purposes
other  than  as contemplated by this Credit  Agreement;
provided, however, that such Bank or the Agent  or  its
employees,  officers, board members, auditors,  counsel
or agents may disclose any such information that is (i)
in the public domain or that becomes part of the public
domain  after  the execution hereof,  as  a  result  of
filing or recording with any Governmental Authority  or
for  any  other  reason other than as a result  of  any
action  of  a  Bank  or the Agent or  their  respective
employees, officers, board members, auditors,  counsel,
agents  or Affiliates, (ii) in the possession  of  such
Bank  or the Agent as a result of disclosure by a third
party, except to the extent that the Person making such
disclosure is aware that such third party is bound by a
confidentiality  obligation  to  the  Borrower,   (iii)
required  in  such  Bank's or the  Agent's  good  faith
judgment  to be disclosed in order to comply  with  any
applicable Requirement of Law, in order to comply  with
legal  process, or in order to comply with the  request
of  any  Governmental  Authority  having  authority  or
purported authority to regulate the Agent or such Bank,
provided,  such Bank or the Agent will give  notice  to
the Borrower of any such requirement, (iv) permitted to
be  disclosed  to an Eligible Assignee  or  prospective
Eligible  Assignee pursuant to Section 10.9(i)  or  (v)
disclosed  in  connection  with  any  suit   or   other
proceeding  brought by the Agent or such  Bank  against
the  Borrower or any Subsidiary of the Borrower  or  by
the  Borrower or any Subsidiary of the Borrower against
the Agent or such Bank.  Each Bank and the Agent agrees
that if it is required by any applicable Requirement of
Law to disclose any confidential information, such Bank
or  the  Agent will, as soon as practicable notify  the
Borrower of the applicable Requirement of Law  and  the
date  on  which a response to the same is due from  it,
provided  that  this sentence shall not  apply  to  any
disclosure  the  Agent  or  any  Bank  is  required  by
applicable   Requirements  of  Law  to  make   to   any
Governmental Authority having authority to regulate the
Agent or such Bank.

    SECTION  10.12.   Marshalling; Recapture.   Neither
the Agent nor any Bank shall be under any obligation to
marshal  any  assets in favor of the  Borrower  or  any
other Person or against or in payment of any or all  of
the  Obligations.  To the extent any Bank receives  any
payment  by or on behalf of the Borrower, which payment
or   any  part  thereof  is  subsequently  invalidated,
declared to be fraudulent or preferential, set aside or
required  to  be repaid to the Borrower or its  estate,
trustee,  receiver, custodian or any other party  under
any Debtor Relief Law, state or federal law, common law
or  equitable cause, then to the extent of such payment
or  repayment, the obligation or part thereof which has
been paid, reduced or satisfied by the amount so repaid
shall  be reinstated by the amount so repaid and  shall
be  included within the liabilities of the Borrower  to
such   Bank  as  of  the  date  such  initial  payment,
reduction or satisfaction occurred.

    SECTION 10.13.  Representation by the Banks.   Each
of   the  Banks  represents  that  it  is  the  present
intention of such Bank to acquire its Notes for its own
account  or for the account of its Affiliates  and  not
with  a  view  to  the distribution  or  sale  thereof,
subject,  nevertheless to the necessity that such  Bank
remain  in  control at all times of the disposition  of
property  held  by  it for its own  account;  it  being
understood that the foregoing representations shall not
affect  the  characterization of the  Revolving  Credit
Loans as commercial lending transactions.

    SECTION 10.14.  No Third Party Beneficiaries.   The
agreement  of  each Bank to make its  Revolving  Credit
Loans  on  the terms and conditions set forth  in  this
Credit  Agreement,  is solely for the  benefit  of  the
Borrower,  and no other Person (including any  obligor,
contractor,   subcontractor,  supplier  or  materialman
furnishing  supplies, goods or services to or  for  the
benefit   of  the  Borrower)  shall  have  any   rights
hereunder, as against the Agent or any Bank, under  any
other  Loan Document, or with respect to the  Revolving
Credit Loans or the proceeds thereof.

    SECTION  10.15.   Execution in Counterparts.   This
Credit  Agreement  may be executed  in  any  number  of
counterparts  and  by  different  parties   hereto   in
separate  counterparts, each of which when so  executed
shall  be  deemed to be an original and  all  of  which
taken  together  shall  constitute  one  and  the  same
agreement.

    SECTION  10.16.  Jurisdiction; Consent  to  Service
of Process.

      (a)    Each party to this Credit Agreement hereby
irrevocably and unconditionally submits, for itself and
its  property, to the nonexclusive jurisdiction of  any
Texas State court or Federal court of the United States
of  America  sitting in Harris County,  Texas,  in  any
action or proceeding arising out of or relating to this
Credit   Agreement  or  the  Loan  Documents,  or   for
recognition  or enforcement of any order  or  judgment,
and  each of the parties hereto hereby irrevocably  and
unconditionally agrees that all claims  in  respect  of
any   such  action  or  proceeding  may  be  heard  and
determined in such Texas State court, or to the  extent
permitted  by  law,  in such Federal  court  in  Harris
County,  Texas.   Each party to this  Credit  Agreement
irrevocably consents to the service of process  out  of
any  Texas  State court or Federal court of the  United
States  of America sitting in Harris County,  Texas  in
any  such action or proceeding by the mailing of copies
thereof   by  registered  or  certified  mail,  postage
prepaid,  to such party at its address referred  to  in
Section  10.2.   Each  Party to this  Credit  Agreement
agrees  that  a  final judgment in any such  action  or
proceeding  shall be conclusive and may be enforced  in
other  jurisdictions by suit on the judgment or in  any
other  manner provided by law.  Nothing in this  Credit
Agreement shall affect any right that the Agent or  any
Bank  may  otherwise  have  to  bring  any  action   or
proceeding  relating to this Credit  Agreement  or  the
Loan  Documents against the Borrower or any  Subsidiary
of  the  Borrower or its respective properties  in  the
courts of any other jurisdiction.

    (b)Each  party  to  this  Credit  Agreement  hereby
irrevocably and unconditionally waives, to the  fullest
extent  it  may  legally  and effectively  do  so,  any
objection  which it may now or hereafter  have  to  the
laying  of  venue  of  any suit, action  or  proceeding
arising out of or relating to this Credit Agreement  or
the  Loan Documents in any Texas State or Federal court
sitting  in Harris County, Texas.  Each Party  to  this
Credit  Agreement  hereby irrevocably  waives,  to  the
fullest  extent  permitted by law, the  defense  of  an
inconvenient forum to the maintenance of such action or
proceeding in any such court.

    SECTION    10.17.     Credit   Agreement    Governs
Conflicts.  To the fullest extent possible,  the  terms
and  provisions  of the Loan Documents  shall  be  read
together  with the terms and provisions of this  Credit
Agreement  so that the terms and provisions thereof  do
not  conflict  with  the terms and provisions  of  this
Credit  Agreement;  provided, however,  notwithstanding
the  foregoing, in the event that any of the  terms  of
provisions  of  the  Loan Documents conflict  with  any
terms or provisions of this Credit Agreement, the terms
or provisions of this Credit Agreement shall govern and
control  for all purposes, provided that the  inclusion
of additional terms and provisions, supplemental rights
or  remedies in favor of the Agent in any Loan Document
shall  not be deemed to be a conflict with this  Credit
Agreement.

    SECTION 10.18. Jury Trial.  EACH PARTY TO ANY  LOAN
DOCUMENT,  IN EACH CASE FOR ITSELF, ITS SUCCESSORS  AND
ASSIGNS,  IRREVOCABLY  WAIVES  TO  THE  FULLEST  EXTENT
PERMITTED BY LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF  ANY  CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT  OF  ANY LOAN DOCUMENT.  The scope of the foregoing
waiver  is intended to be all-encompassing of  any  and
all  disputes that may be filed in any court  and  that
relate  to  the  subject matter  of  this  transaction,
including,  without limitation, contract  claims,  tort
claims, breach of duty claims, and all other common law
and statutory claims.  Borrower acknowledges that these
waivers  are a material inducement to Agent's and  each
Bank's agreement to enter into a business relationship,
that  Agent  and each Bank has already relied  on  this
waiver in entering into this Credit Agreement, and that
Agent  and  each  Bank will continue to  rely  on  this
waiver  in  related future dealings.  Borrower  further
warrants  and  represents that  it  has  reviewed  this
waiver  with  its legal counsel, and that it  knowingly
and   voluntarily  agrees  to  this  waiver   following
consultation  with legal counsel.  THE WAIVER  IN  THIS
SECTION  10.18 IS IRREVOCABLE, MEANING THAT IT MAY  NOT
BE  MODIFIED  EITHER  ORALLY OR IN  WRITING,  AND  THIS
WAIVER   SHALL  APPLY  TO  ANY  SUBSEQUENT  AMENDMENTS,
SUPPLEMENTS, OR REPLACEMENTS TO OR OF THIS OR ANY OTHER
LOAN DOCUMENT.  In the event of litigation, this Credit
Agreement may be filed as a written consent to a  trial
by the court.

    SECTION  10.19.   FINAL AGREEMENT OF  THE  PARTIES.
THIS  CREDIT AGREEMENT (INCLUDING THE EXHIBITS HERETO),
THE  NOTES  AND THE OTHER LOAN DOCUMENTS TO  WHICH  THE
BORROWER  OR  ANY  OF  ITS  SUBSIDIARIES  IS  A   PARTY
CONSTITUTE  A  "LOAN AGREEMENT" AS DEFINED  IN  SECTION
26.02(A)  OF THE TEXAS BUSINESS AND COMMERCE CODE,  AND
REPRESENT  THE FINAL AGREEMENT BETWEEN THE PARTIES  AND
MAY   NOT   BE  CONTRADICTED  BY  EVIDENCE  OF   PRIOR,
CONTEMPORANEOUS  OR SUBSEQUENT ORAL AGREEMENTS  OF  THE
PARTIES.

        THERE  ARE  NO  ORAL  AGREEMENTS  BETWEEN   THE
PARTIES.

        IN  WITNESS  WHEREOF, the parties  hereto  have
caused  this Credit Agreement to be executed  by  their
respective  officers thereunto duly authorized,  as  of
the date first above written.
                             BORROWER:

                             PENN VIRGINIA CORPORATION

                             By:
                             _________________________
                             /s/Steven    W.   Tholen,
                             Vice President
                             and Chief Financial Officer

                             AGENT:

                             CHASE BANK OF TEXAS,
                             NATIONAL ASSOCIATION,
                            (formerly  known  as
                             Texas Commerce Bank National Association)
                             as Agent

                             By:_________________________________

                             Name:________________________________

                             Title:_______________________________

                            BANKS:

                             CHASE BANK OF TEXAS,
                             NATIONAL ASSOCIATION,
                             (formerly known as Texas Commerce Bank National
                              Association)

                             By:_________________________________

                             Name:_______________________________

                             Title:______________________________

                             FIRST UNION NATIONAL BANK
                            (formerly known as First Union
                            National Bank of North Carolina),
                            as a Bank and as Syndication Agent

                             By:__________________________________

                             Name:________________________________

                             Title:_______________________________

                             THE FIRST NATIONAL BANK OF
                             CHICAGO, as a Bank and as
                             Documentation Agent

                             By:__________________________________

                             Name:________________________________

                             Title:_______________________________

                            PNC BANK, NATIONAL ASSOCIATION

                             By:__________________________________

                             Name:________________________________

                             Title:_______________________________

<PAGE>
                  TABLE OF CONTENTS

    ARTICLE I     DEFINITIONS AND ACCOUNTING TERMS              1
    SECTION 1.1.  Certain Defined Terms                         1
    SECTION 1.2.  Accounting Terms.                            24
    SECTION 1.3.  Interpretation.                              24

    ARTICLE II    REVOLVING CREDIT LOANS                       25
    SECTION 2.1.  Revolving Credit Loans                       25
    SECTION 2.2.  Borrowing Procedure for Revolving Credits    26
    SECTION 2.3.  Issuing the Letters of Credit.               27
    SECTION 2.4.  Conversions or Continuation of Borrowings    29
    SECTION 2.5.  Fees                                         30
    SECTION 2.6.  Notes                                        32
    SECTION 2.7.  Interest on Revolving Credit Loans
                  and Payment Dates                            32
    SECTION 2.8.  Interest on Overdue Amounts                  33
    SECTION 2.9.  Voluntary Termination and Reduction of the
                  Total Commitment                             33
    SECTION 2.10.  Voluntary Prepayment of Revolving
                   Credit Loans                                34
    SECTION 2.11.  Mandatory Payments on Revolving Credit Loans34
    SECTION 2.12.  Alternate Rate of Interest                  35
    SECTION 2.13.  Change in Circumstances                     35
    SECTION 2.14.  Change in Legality                          37
    SECTION 2.15.  Funding Losses                              38
    SECTION 2.16.  Method of Payments Pro Rata Treatment       39
    SECTION 2.17.  Taxes                                       40
    SECTION 2.18.  Sharing of Payments and Setoffs             41
    SECTION 2.19.  Limitation on Reimbursement; Mitigation     42
    SECTION 2.20.  Use of Proceeds                             42
    SECTION 2.21.  Mandatory Termination of Total Commitment;
                          Extension of Maturity Date           42
    SECTION 2.22.  Replacement of Banks                        43

    ARTICLE III   BORROWING BASE                               44
    SECTION 3.1.  Borrowing Base Asset Reports                 44
    SECTION 3.2.  Determination of Total Borrowing Base.       44
    SECTION 3.3.  The Designated Borrowing Base.               45
    SECTION 3.4.  Special Determination of Total
                  Borrowing Base.                              45

    SECTION 3.5.  Initial Total Borrowing Base; Initial Available
                  Borrowing Base.                              46

    ARTICLE IV    CONDITIONS PRECEDENT                         46
    SECTION 4.1.  Conditions Precedent to the Revolving
                  Credit Loans                                 46
    SECTION 4.2.  Additional Conditions Precedent              48
    SECTION 4.3.  General                                      49

    ARTICLE V     REPRESENTATIONS AND WARRANTIES               49
    SECTION 5.1.  Organization; Corporate Powers               49
    SECTION 5.2.  Authority                                    50
    SECTION 5.3.  Use of Proceeds                              50
    SECTION 5.4.  No Conflict                                  50
    SECTION 5.5.  Gas Balancing Agreements and Advance Payment
                  Contracts                                    51
    SECTION 5.6.  Borrowing Base Assets                        51
    SECTION 5.7.  Ownership of Properties Generally            52
    SECTION 5.8.  No Defaults                                  52
    SECTION 5.9.  Financial Position; No Material Adverse
                  Change                                       52
    SECTION 5.10.  Litigation; Adverse Effects                 52
    SECTION 5.11.  ERISA                                       53
    SECTION 5.12.  Payment of Taxes                            53
    SECTION 5.13.  Environmental Matters                       53
    SECTION 5.14.  Governmental Regulation                     55
    SECTION 5.15.  Disclosure                                  55
    SECTION 5.16.  Subsidiaries                                55
    SECTION 5.17.  Solvency                                    55
    SECTION 5.18.  Business                                    56
    SECTION 5.19.  Material Contracts                          56
    SECTION 5.20.  Licenses, Permits, Etc                      56
    SECTION 5.21.  Fiscal Year                                 56
    SECTION 5.22.  Year 2000                                   56

    ARTICLE VI    AFFIRMATIVE COVENANTS                        57
    SECTION 6.1.  Information                                  57
    SECTION 6.2.  Business of the Borrower                     60
    SECTION 6.3.  Corporate Existence                          60
    SECTION 6.4.  Right of Inspection                          60
    SECTION 6.5.  Maintenance of Insurance                     60
    SECTION 6.6.  Payment of Taxes and Claims                  60
    SECTION 6.7.  Compliance with Laws and Documents           61
    SECTION 6.8.  Operation of Properties and Equipment        61
    SECTION 6.9.  Environmental Law Compliance and Indemnity   61
    SECTION 6.10.  ERISA Reporting Requirements                62
    SECTION 6.11.  Subsidiary Guaranty                         63
    SECTION 6.12.  Permits, Licenses.                          63
    SECTION 6.13.  Additional Documents                        63
    SECTION 6.14.  Title Assurances                            63

    ARTICLE VII    NEGATIVE COVENANTS                          63
    SECTION 7.1.                                               64
    SECTION 7.2.  Restrictions on Distributions                65
    SECTION 7.3.  Negative Pledge                              66
    SECTION 7.4.  Consolidation, Mergers and Acquisitions;
                  Fundamental Changes                          66
    SECTION 7.5.  Investments                                  67
    SECTION 7.6.  Transactions with Affiliates                 67
    SECTION 7.7.  Agreements                                   67
    SECTION 7.8.  Sales of Assets                              68
    SECTION 7.9.  ERISA                                        68
    SECTION 7.10.  Sales and Leasebacks                        69
    SECTION 7.11.  Margin Regulation                           69
    SECTION 7.12.  Amendment to Organizational Documents       69
    SECTION 7.13.  Fiscal Year; Fiscal Quarter                 69
    SECTION 7.14.  Hedge Transactions                          69
    SECTION 7.15.  Financial Covenants                         70

    ARTICLE VIII   EVENTS OF DEFAULT                           70
    SECTION 8.1.  Events of Default                            70
    SECTION 8.2.  Remedies                                     73
    SECTION 8.3.  Right of Setoff                              73
    SECTION 8.4.  Indemnity                                    74

    ARTICLE IX    THE AGENT                                    74
    SECTION 9.1.  Authorization and Action                     74
    SECTION 9.2.  Agent's Reliance; Exculpatory Provisions, Etc75
    SECTION 9.3.  The Agent in its Individual Capacity and
                  Affiliates                                   76
    SECTION 9.4.  Bank Credit Decision                         76
    SECTION 9.5.  Indemnification and Reimbursement            76
    SECTION 9.6.  Successor Agent                              77
    SECTION 9.7.  Notice of Default                            78
    SECTION 9.8.  Delegation of Duties                         78

    ARTICLE X     MISCELLANEOUS                                78
    SECTION 10.1.  Amendments and Waivers                      78
    SECTION 10.2.  Notices, Etc                                79
    SECTION 10.3.  No Waiver; Remedies Cumulative              80
    SECTION 10.4.  Costs, Expenses and Taxes                   81
    SECTION 10.5.  Governing Law                               81
    SECTION 10.6.  Interest                                    82
    SECTION 10.7.  Survival of Representations and Warranties  83
    SECTION 10.8.  Binding Effect                              83
    SECTION 10.9.  Successors and Assigns; Participation;
                   Eligible Assignees                          83
    SECTION 10.10.  Separability                               86
    SECTION 10.11.  Confidentiality                            86
    SECTION 10.12.  Marshalling; Recapture                     87
    SECTION 10.13.  Representation by the Banks                87
    SECTION 10.14.  No Third Party Beneficiaries               87
    SECTION 10.15.  Execution in Counterparts                  87
    SECTION 10.16.  Jurisdiction; Consent to Service of Process87
    SECTION 10.17.  Credit Agreement Governs Conflicts         88
    SECTION 10.18. Jury Trial                                  88
    SECTION 10.19.  FINAL AGREEMENT OF THE PARTIES             89

SCHEDULES

Schedule 1.1  -          Name and Address of the Banks and
                             Commitment Amounts
Schedule 5.11 -          Summary of Existing Benefit Plans
Schedule 5.16 -          Subsidiaries
Schedule 7.1  -          Description of Existing Debt as of the
                             Effective Date
Schedule 7.5  -          Description of Existing Investments

EXHIBITS

Exhibit A   - Form of Borrowing Request
Exhibit B   - Form of Commitment Transfer Supplement
Exhibit C   - Form of Letter of Credit Application
Exhibit D   - Form of Note
Exhibit E   - Form of Notice of Conversion or Continuation
Exhibit F   - Form of Subsidiary GuarantySUMMARY PLAN DESCRIPTION
                          FOR THE
     SCOTT'S LIQUID GOLD - INC. & AFFILIATED COMPANIES
          EMPLOYEE BENEFIT HEALTH AND WELFARE PLAN
                       GROUP NO. 398

The Employee Benefit Health and Welfare Plan as summarized in this booklet is
provided through a combination of insured and self-funded benefits.  The final
interpretation of any specific provision herein, regardless of whether it is
paid out of the self-funded or insured portion, is governed by the terms of a
master Plan Document.

This booklet describes the Employee Benefit Health and Welfare Plan in an easily
understood manner as in effect on January 1, 1999, (and as subsequently
amended), and is both the Summary Plan Description and the Plan Document.  It
does not, however, create or confer any rights, as it merely summarizes some of
the essential provisions of the Plan and may not describe your particular
circumstances.

The Plan is intended to be consistent with any contracts for policies of
insurance under which the contributions are made, and with any contracts for
medical review services.  To the extent the terms of the Plan are inconsistent
with such contracts, the terms of such contracts shall prevail.

The Plan will not be deemed to constitute a contract of employment or give any
participant the right to be retained in the service of the employer or to
interfere with the right of the employer to discharge or otherwise terminate the
employment of any participant.

The claims are administered by:

               Mountain States Administration
                 13901 E. Exposition Avenue
                      Aurora, CO 80012

          phone:  (303) 360-9600 Local in Colorado
            (800) 828-8847 Toll Free in Colorado
        (800) 828-8012 Toll Free outside of Colorado

           Hours: Monday - Friday 8:00 a.m. - 4:30 p.m.  MST

This  revised booklet describes the Plan of Benefits in effect as of January  1,
1999.

                                        1

                     TABLE OF CONTENTS

SCHEDULE OF MEDICAL BENEFITS                               1

ELIGIBILITY                                                6

CASE MANAGEMENT AND ALTERNATE TREATMENT PROVISION         20

COVERED MEDICAL EXPENSES                                  21

GENERAL PLAN EXCLUSIONS AND LIMITATIONS                   41

DEFINITIONS                                               48

GENERAL INFORMATION - FACTS ABOUT YOUR PLAN               66

HOW TO FILE A CLAIM                                       77

SUMMARY PLAN DESCRIPTION                                  80

LIST - DEPARTMENT OF LABOR                                83

SCHEDULE OF MEDICAL BENEFITS                              84

SCHEDULE OF DENTAL BENEFITS                               89

DENTAL CARE PROGRAM                                       90

COVERED DENTAL EXPENSES                                   92

DENTAL EXPENSES NOT COVERED                               94

GROUP LIFE INSURANCE                                      95

                                        2

                          FOREWORD

The employer has initiated the Plan to provide benefits for its employees and
their eligible dependents, and it shall be maintained for this exclusive
purpose.

The employer intends the Plan to be continuous, but since future conditions
affecting your employer cannot be anticipated or foreseen, the employer reserves
the right to amend, modify or terminate the Plan at any time, which may result
in the termination or modification of the coverage.  Expenses incurred prior to
the Plan's termination will be paid as provided under the terms of the Plan
prior to its termination.

The employer desires to provide a health care benefit plan that financially
assists employees and dependents with health care expenses and provides
affordable care.  While part of increasing health care costs result from new
technology and important medical advances, another significant cause is the way
health care services are used.

Employee benefits are affected by certain limitations and conditions which
require the employee to be a wise consumer of health services and to use only
those services he or she needs.

Some studies indicate that a high percentage of the cost for health care
services may be unnecessary.  For example, hospital stays can be longer than
necessary.  Some hospitalizations may be entirely avoidable, such as when
surgery could be performed at an outpatient facility with equal safety.

Alternative care at home, other alternative methods of treatment, or medical
care not otherwise covered under the Plan may be suggested to patients for which
additional inpatient care is medically necessary.  This allows the patient to be
discharged from the hospital sooner than would otherwise be possible, providing
a savings to the employee and the Plan while maintaining care equal to a
hospital confinement.

                    BILLING AUDIT BONUS

The Plan will pay the employee a cash bonus if he/she finds an overcharge on a
hospital bill (excluding double billings and very obvious mistakes which would
be caught during claims processing).The overcharge must be for a covered
expense.  To receive the bonus, the employee must follow the following
procedures:

*    Within five (5) working days of receiving your hospital bill, call Mountain
States Administration at 303-360-9600 or 1-800-828-8847 to inform them that you
have found an error(s) in the bill.  This must be done before the hospital bill
has been processed by Mountain States Administration.
                                        3

*    Next, within the same five (5) day period, you must follow up with a letter
  to Mountain States Administration explaining how or why the bill is in error.

*    Once the error is confirmed with the hospital by Mountain States
  Administration and a corrected bill is received, you will receive your audit
  savings.

                 SPECIAL ENROLLMENT PERIOD

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires
the employer to inform employees of their rights to Special Enrollment under
this Plan when they or their eligible dependents decline coverage during the
enrollment period.

If the employee is declining enrollment for themselves or their dependents
(including their spouse) because of another group health plan or other group
health insurance coverage, the employee may in the future be able to enroll
themselves or their dependents in this Plan, provided that they request
enrollment within thirty (30) days after their alternative group health coverage
ends.  In order to qualify for the special enrollment period if enrollment was
declined because of alternative group health coverage, your employer must
receive a written statement from the employee at the time of the enrollment
period stating that other group coverage was the reason for declining
enrollment.

In addition, if the employee has a new dependent as a result of marriage, birth,
adoption, or placement for adoption, the employee and new dependents may be able
to enroll provided that the employee requests enrollment within thirty (30) days
after the marriage, birth, adoption, or placement for adoption.

Individuals who enroll under these special enrollment conditions are not
considered late entrants.

If the employee has any questions, please discuss this with personnel in the
Benefits Department at the time of enrollment.

                            SCHEDULE OF MEDICAL BENEFITS

All eligible and covered medical charges are subject to applicable deductible
and coinsurance provisions unless indicated differently below.  Charges are
limited to usual, customary, and reasonable for the area in which services are
rendered.  Charges excluded as not covered, over usual, customary, and
reasonable or as otherwise noted, do not count toward either deductible or out-
of-pocket coinsurance.  This is a summary of benefits only; for specific
restrictions and limitations, see detailed explanations elsewhere in the Plan.

The Plan has entered into an arrangement with The Alliance for covered
participants in the Denver area and PHCS for participants living or traveling
outside Colorado.  The Alliance is an employer-owned cooperative and PHCS is a
preferred provider organization (PPO) which negotiates hospital, doctor and
other provider fees with contracting health care providers.

LIFETIME MAXIMUM               $5,000,000 per Covered Person
(While covered under this Plan)     2,000 for Temporomandibular Joint Disorders
                                   30,000 for Alcoholism or Substance Abuse
                                           Treatment
                                   25,000 for Hospice Benefits

The term "lifetime maximum" means the total amount of benefits which may be
payable while covered under this Plan, or any other health plan sponsored by
Scott's Liquid Gold - Inc. and Affiliated Companies.  It will not be interpreted
to mean the lifetime of the covered person.

CALENDAR YEAR DEDUCTIBLE
(Combined Medical and Dental)     Single Coverage Maximum:  $100
                                  Family Coverage Maximum:$200

DEDUCTIBLE CARRYOVER     If a covered person has not met his/her deductible in
                         the first nine (9) months of the year, then any charges
                         incurred in the last three (3) months will apply to the
                         deductible for both the current year and the next
                         calendar year.

The term "deductible" means a specified dollar amount of covered expenses which
must be incurred during a calendar year, or as specified, before any other
covered expenses can be considered for payment.

COINSURANCE FOR ELIGIBLE MEDICAL EXPENSES

For Single Coverage 		 After the single coverage deductible, eligible
under the Plan           expenses (other than outpatient mental health
                         disorders, alcoholism or substance abuse or as
                         otherwise noted) are paid 80% of the next $5,000, then
                         100% for the balance of the calendar year.
                                        4

For Family Coverage      After the family coverage deductible, eligible
under the Plan           expenses (other than outpatient mental health
                         disorders, alcoholism or substance abuse, or as
                         otherwise noted) are paid at 80% of the next $10,000
                         (individual or family), then 100% for the balance of
                         the calendar year.

The term "coinsurance" means the amount payable by the Plan for a covered
expense.  The covered person is required to pay the amount not paid by the Plan.

AIDS BENEFIT             Eligible expenses for treatment of Acquired Immune
                         Deficiency Syndrome (AIDS), AIDS-related Complex, or
                         HIV-positive are paid as for any other illness, subject
                         to deductible and coinsurance provisions.

ALCOHOLISM AND SUBSTANCE ABUSE BENEFITS
(See specific restrictions on page 36.)

Inpatient                Covered as any other illness, subject to deductible and
                         coinsurance provisions, to a maximum of thirty (30)
                         days per calendar year.

Outpatient               Eligible expenses are subject to the deductible
                         provision and are then paid at 50% to 50 visits per
                         calendar year.  Alcoholism and substance abuse
                         inpatient, partial, and outpatient treatment combined:

                         Calendar year maximum, per person: $15,000
                         Lifetime maximum, per person: $30,000

CHIROPRACTIC SERVICES    Eligible expenses are limited to forty (40) visits in
                         six (6) consecutive months for vertebral column
                         problems only, and are subject to deductible and
                         coinsurance provisions.  (See #15, page 22.)

HOME HEALTH CARE         Eligible expenses are paid, subject to deductible and
                         coinsurance provisions, to a maximum of sixty (60)
                         visits per calendar year. (See specific restrictions on
                         page 32.)

HOSPICE BENEFIT          100% of eligible expenses not to exceed a maximum of
                         six (6) months from the time a covered person is
                         certified terminally ill and subject to a $25,000
                         lifetime maximum.  (See specific restrictions on page
                         34.)
                                        5

HOSPITAL ROOM LIMIT      Semiprivate rate, paid subject to deductible and
                         coinsurance provisions.

IMMUNIZATION BENEFIT     The deductible is waived and 100% of eligible charges
                         are paid for routine immunizations, vaccinations, and
                         preventive shots for eligible participants.  (See
                         Covered Medical Expenses, #51, page 26 for additional
                         information.)

INTENSIVE CARE UNIT &    Usual, customary, and reasonable, subject to
SPECIAL CARE UNIT        deductible and coinsurance provisions.

MENTAL HEALTH DISORDER BENEFITS
(See specific restrictions on page 36.)

Inpatient                Covered as any other illness, subject to deductible and
                         coinsurance provisions, to a maximum of forty-five (45)
                         days per calendar year.

Outpatient               Eligible expenses are subject to the deductible
                         provision and then paid at 50% to 100 visits per
                         calendar year.

NEWBORN  WELL-BABY  CARE  Usual,  customary,  and  reasonable  hospital  nursery
                          expenses, subject to deductible and coinsurance
                          provisions. Eligible  physician charges are paid
                          under the Routine Care Benefit.  (See Covered
								  Medical Expenses, page 37 for additional information.)

OUTPATIENT DIAGNOSTIC    100%  of  the  first  $200 per  calendar year  of
LAB AND X-RAY BENEFIT    eligible outpatient expenses incurred for illness or
                         injury, with the deductible waived.  Eligible expenses
                         in excess of $200 are subject to the deductible and
                         coinsurance provisions.

OUTPATIENT SURGICAL      100% of eligible expenses incurred in conjunction
BENEFIT                  with a surgical procedure performed on an outpatient
                         basis, and incurred on the date of surgery, with the
                         deductible waived.
                                        6

PRE-ADMISSION TESTING    100% of eligible expenses incurred for outpatient tests
                         within seven (7) days of a scheduled hospital
                         admission, with the deductible waived.  (See page 37.)

ROUTINE CARE BENEFIT     100% of the first $250 per calendar year, with the
                         deductible waived for examinations and diagnostic tests
                         related to routine wellness care, including flu shots
                         and pneumovax injections for adults, and well
                         baby/child checkups.  (See Covered Medical Expenses,
                         #51, page 26 for additional information.)

SECOND SURGICAL OPINION  100% of the amount charged by physician rendering a
                         second opinion, with the deductible waived. (See page
                         38.)

SKILLED NURSING CARE     One-half of hospital semiprivate rate where
FACILITY                 previously confined, to a maximum of sixty (60) days
                         per illness or injury, subject to deductible and
                         coinsurance provisions. (See page 38.)

SMOKING CESSATION        Charges for generally recognized programs  to
BENEFIT                  stop smoking are eligible to a $200 maximum per person,
                         subject to deductible and coinsurance provisions, in
                         any three (3) year period for employees and spouses who
                         have been covered by the Plan at least eighteen (18)
                         months. (See page 39).

SUPPLEMENTAL ACCIDENT    100%  of  the  first  $500 of eligible expenses
BENEFIT                  incurred within ninety (90) days of the accident, due
                         to a non-work related accident, with the deductible
                         waived.  Eligible expenses in excess of $500 or ninety
                         (90) day period are subject to the deductible and
                         coinsurance provisions.

TMJ BENEFIT              Eligible expenses incurred for the diagnosis and
                         treatment of temporomandibular joint dysfunction are
                         paid, subject to deductible and coinsurance provisions,
                         to the $2,000 lifetime maximum.  (See #59, page 27.)

TRANSPLANT BENEFIT       Covered  transplants  are paid as  any  other  illness,
                         subject to deductible and coinsurance provisions.  (See
                         #60, page 27).
                                        7

VISION BENEFITS          Eye exams by an ophthalmologist or optometrist are
                         covered, subject to deductible and coinsurance
                         provisions.  Prescription lenses and frames are covered
                         at 100% to a $50 maximum per calendar year, with the
                         deductible waived.  (See #22, page 23.)

WEIGHT  REDUCTION          Charges for weight reduction  programs  under  direct
BENEFIT                    physician  supervision  are  eligible  to  a   $1,000
                           maximum, subject to deductible and coinsurance
				               provisions,  in  any five  (5) year period for employees
                   only, who have been	covered  by the Plan at least twenty
                   four (24) months.
(See page 40).

MEDICAL CASE             Medical Case Management optimizes the treatment
MANAGEMENT               and recovery phase of major illness or injury.
                         Services otherwise not covered under the Plan will
                         be eligible for reimbursement if recommended by
                         the medical case management coordinator.

                                        8

                        ELIGIBILITY

EMPLOYEES ELIGIBLE FOR COVERAGE

Employees eligible for coverage under the Plan are as follows:

1. Full-time regular employees who have completed the waiting period and who
   are scheduled to work at least thirty (30) hours per week in the employment
   of the employer.

2. Ineligible employees who have an employment status change which makes them
   eligible for coverage will be given credit for prior service in order to
   determine their effective date of coverage.

Eligibility for Medicaid or the receipt of Medicaid benefits will not be taken
into account in determining eligibility.

EMPLOYEE'S EFFECTIVE DATE OF COVERAGE

The employee will be covered under the Plan provided he/she meets eligibility
and waiting period requirements as listed, and provided any required
contributions are made.

Employees will be eligible on the first day following the completion of ninety
(90) days of continuous, full-time employment.

When an employee has satisfied the above requirements, such employee must
complete and submit an enrollment card and any additional forms required by the
employer within thirty (30) days of his or her date of full-time employment.  If
the employee submits an enrollment card and any additional forms required by the
employer within thirty (30) days of his or her date of full-time employment, and
then requests a change within the ninety (90) day waiting period, the change
will be honored as a timely entrant request.

If an employee fails to enroll within thirty (30) days of full-time employment
such employee will be considered a late entrant unless he/she becomes eligible
under the special enrollment periods provision.  Coverage for a late entrant
will begin the date the application is received.

DEPENDENTS ELIGIBLE FOR COVERAGE

Dependents eligible for coverage under the Plan are as follows:

1. The employee's lawful wife or husband, unless legally separated, or, with
   documentation or appropriate paperwork, a spouse by a common-law marriage
   agreement.  A dependent spouse who is eligible for coverage under his or her
   employer's health benefit plan is not eligible for coverage under this Plan,
   regardless of the benefits or the contribution required by the other plan.
                                        9

2. A child from birth to age nineteen (19), or to age twenty-three (23) if
   attending an accredited high school, college, university or vocational
   school on a full-time basis, provided:

     a.   they are not married; and
     b.   they are primarily dependent upon the employee for support and
          maintenance; and
     c.   they are not covered, as an employee, by another employer group health
          plan.

3. Semester breaks do not jeopardize a child's full-time status.  However, if a
   child is not attending as a full-time student during the semester following
   the break, that child will no longer be considered a dependent under the
   Plan.  Coverage will terminate as of the first day of the semester following
   the break.

4. A previously ineligible dependent child who later becomes a full-time
   student at an accredited educational institution may be enrolled under the
   Plan as a new dependent within thirty (30) days of the date the semester
   begins.  Proof of full-time attendance from the registrar of the educational
   institution must be provided to the plan administrator within the same
   thirty (30) day period.

   If the employee notifies the employer and completes and submits enrollment
   forms more than thirty (30) days from the date of eligibility of such
   dependent, the dependent will be considered a late entrant unless they
   become eligible under the special enrollment periods provision.  Coverage
   for a late entrant will begin the date the application is received.

5. The term "child" as used herein shall mean an employee's natural child,
   stepchild, legally adopted child, or a child placed under the legal
   guardianship of the employee or the covered spouse of the employee who
   resides in the employee's home in a parent-child relationship, or a child
   for whose medical care an employee or the covered spouse of the employee is
   legally responsible through a divorce decree or other court order.  In each
   case, the child must satisfy the requirements in #2 above.

   Coverage for adopted children under the age of eighteen (18) begins on the
   date of placement for the purpose of adoption and is continued unless the
   placement is disrupted prior to legal adoption of the child.  Provided the
   child is enrolled within thirty (30) days of placement, the pre-existing
   condition limitation will not apply.  If the employee completes and submits
   enrollment forms more than thirty (30) days from the date of placement, the
   adopted child will be considered a late entrant unless they become eligible
   under the special enrollment periods provision.  Coverage for a late entrant
   will begin the date the application is received.

   Any child covered by a Qualified Medical Child Support Order (QMCSO) is
   required to be covered under the Plan as of the date of the QMCSO or
   coinciding with the  10
	effective date of coverage, whichever is later.  If the covered person
	does not carry dependent coverage, the Plan will enroll the child(ren)
	named in the QMCSO, and the covered person must pay any required
	contribution for family coverage.  If the coverage is for a stepchild
	and the parent named in the QMCSO is covered under the stepparent's
	health plan, the Plan must enroll that stepchild.  All Plan provisions
	for late entrants will apply.

6. A dependent child's coverage may be extended beyond age, if the child is:

    a.   incapable of self-sustaining employment by reason of mental retardation
         or physical disability; and
    b.   primarily dependent upon the employee for support and maintenance; and
    c.   they are not covered, as an employee, by another employer group health
         plan.

   A letter of certification from the parents of the child and the attending
   physician is required stating that the condition began before or during the
   year in which the child reached the attained age and showing proof of
   incapacity and dependency.  Such proof must be submitted within thirty (30)
   days of the dependent's attainment of age nineteen (19), or within thirty
   (30) days of age twenty-three (23) in case of a full-time student.  During
   the two (2) years after the child reaches the attaining age, the Plan may
   ask for regular proof of the child's continued disability.  A physician's
   examination may be required as part of the proof.  After the two (2) year
   period, the Plan cannot ask for proof more than once a year.  The Plan may
   require that a physician examine the child before granting a continuation of
   the dependent's coverage.  The Plan chooses the doctor and pays the fees for
   all required examinations.

   This provision stops on the earliest of the following dates:

     a.   The date the child is no longer disabled according to the Plan.
     b.   The date the Plan is not furnished with proof of the child's
	       disability when requested.

Situations specifically excluded from the definition of a dependent are:

1. A spouse eligible for coverage under his or her employer's health benefit
   plan.

2. A spouse who is legally separated or divorced from the employee.  Such
   spouse must have met all requirements of a valid separation or divorce
   contract in the state granting such separation or divorce.

3. If both husband and wife are eligible as employees, only one (1) may carry
   dependent coverage.

4. A person cannot be covered under the Plan as an employee and as a dependent.

5. Dependents whose permanent residence is not in the United States are not
   eligible for coverage.

Note:  The Plan may require proof (such as a copy of the employee's income tax
form, court order, legal adoption or legal guardianship papers) that the spouse
or child qualifies as a dependent under the employee's coverage.

DEPENDENT'S EFFECTIVE DATE OF COVERAGE

Dependent coverage will not take effect unless the employee's coverage is in
effect.

Eligible dependents become covered under the Plan as follows, provided any
required contributions are made:

1. If the dependent is eligible as a dependent on the employee's effective
   date, such dependent becomes eligible under the Plan on the date the
   employee's coverage commences.

2. If the dependent becomes an eligible dependent after the employee's
   effective date, such dependent becomes eligible for coverage on the date
   he/she is obtained.

3. If coverage is due to a Qualified Medical Child Support Order (QMCSO),
   coverage will become effective on the date of the QMCSO or coinciding with
   the effective date of coverage, whichever is later.

Eligibility for Medicaid or the receipt of Medicaid benefits will not be taken
into account in determining eligibility.

When a dependent has met one (1) of the eligibility requirements above, the
employee must complete and submit an enrollment card and any additional forms
required by the employer within thirty (30) days of the initial date of the
dependent's eligibility.  If the employee fails to enroll within thirty (30)
days of the initial date of the dependent's eligibility, such dependent will be
considered a late entrant unless he/she becomes eligible under the special
enrollment periods provision.  Medical coverage for a late entrant will begin
the date the application is received.

The following rules apply for coverage of newborn children from the moment of
birth:

A newborn child will be covered automatically from the date of birth, provided
that within 30 days of their birth, the employee completes and submits all
necessary enrollment forms changing to family coverage (if necessary) and
agreeing to pay the required contribution (if any) for family coverage.

If the employee fails to enroll such newborn within thirty (30) days of the date
of birth, the newborn will be considered a late entrant unless he/she becomes
eligible under the special enrollment periods provision.  Medical coverage for a
late entrant will begin the date the application is received.

Note:  Newborn "well-baby" care is subject to the newborn's own deductible, out-
of-pocket maximum, and all Plan provisions.
                                        11

CHANGE IN STATUS

It is the covered employee's responsibility to advise the employer and to make
in writing any change in dependent status.  This includes changes due to
marriage, divorce, legal separation, the addition of newborns or adopted
children, and any desire to change beneficiaries.

If a person covered under the Plan changes status from employee to dependent or
dependent to employee, and the person is covered continuously under the Plan
before, during and after the change in status, credit will be applied to all
Plan provisions including deductibles and all amounts applied to maximums.

If the employee and their spouse are both covered under the Plan as employees,
with single coverage, either the employee or their spouse may change to family
coverage within thirty (30) days if:

1. the employee is adding a newborn, adopted child, or child placed for
adoption; or

2. the employee or their spouse terminates employment or ceases to be in a
   class of employees eligible for coverage with the employer.

If the employee or their spouse is covered under the Plan and the employee who
is covering the dependent children terminates coverage, dependent coverage may
be transferred to the other covered employee as long as coverage has been
continuous.

SPECIAL ENROLLMENT PERIODS (CHANGE IN EMPLOYEE STATUS)

If an eligible employee or dependent declined coverage under the Plan at the
time of initial eligibility (and stated in writing at the time that coverage was
declined because of alternative group health coverage); or there is an employee
status change as defined below, the employee may make a written request to
change coverage by completing an enrollment form.  Such request must be made
within thirty (30) days of the employee status change, and such addition or
change will take effect on the later of:

1. the date of the loss of eligibility under another group health plan or
   through a health insurance issuer offering group health insurance coverage;
   or

2. for a marriage, the date of marriage; or

3. for a birth, the date of birth; or

4. for an adoption or placement for adoption, the date of the adoption or
   placement.

The special enrollment rights may apply with respect to an employee, a dependent
of an employee, or both.
                                        12

The term "special enrollment periods (change in employee status)" means only the
following:

1. A loss of eligibility for an employee and/or affected dependents under
   another group health plan or through a health insurance issuer offering
   group health insurance coverage due to:

   a.   legal separation,
   b.   divorce,
   c.   death,
   d.   termination of employment,
   e.   reduction in work hours,
   f.   employer contributions for the coverage were terminated, or
   g.   COBRA continuation coverage under the other plan has been exhausted.

   An individual does not have to elect COBRA continuation coverage or exercise
   similar continuation rights in order to preserve the right to special
   enrollment.  However, an individual does not have a special enrollment right
   if the individual loses the other coverage as a result of the individual's
   failure to pay premiums/ contributions or for termination of coverage for
   cause (such as making a fraudulent claim or an intentional misrepresentation
   of a material fact in connection with the Plan).

2. A change in family status due to:

   a.   marriage,
   b.   birth of a child, or
   c.   adoption or placement for adoption of a child.

The special enrollment rules allow an eligible employee to enroll when he or she
marries or has a new child (as a result of marriage, birth, adoption, or
placement for adoption).  A spouse of a participant can be enrolled separately
at the time of marriage or when a child is born, adopted, or placed for
adoption.  The spouse can be enrolled together with the employee when they marry
or when a child is born, adopted, or placed for adoption.  A child who becomes a
dependent of a participant as a result of marriage, birth, adoption, or
placement for adoption can be enrolled when the child becomes a dependent.
Similarly, a child who becomes a dependent of an eligible employee as a result
of marriage, birth, adoption, or placement for adoption can be enrolled if the
employee enrolls at the same time.  Individuals who enroll under these special
enrollment conditions are not considered late entrants.

DELETING A DEPENDENT

To remove a dependent from the employee's coverage, the employee must complete a
 change form.  The employer must receive this form within thirty (30) days after
    the effective date of change.  If the employee fails to timely remove an
                            ineligible dependent,  13

the employer reserves the right to recoup any benefit payments made on behalf of
such dependent back to the date such dependent should have been deleted.

WAIVER OF PARTICIPATION

Waiver of participation means an employee's failure to enroll himself/herself
and his/her eligible dependent(s) within thirty (30) days of his or her date of
full-time employment.  This waiver will also include coverage under the Plan
which was canceled by the employee while the person remained eligible.

Waiver of participation means that future coverage under the Plan is subject to
the Plan's special enrollment periods provision or enrollment as a late entrant.
A "late entrant" means an employee or dependent who does not enroll during the
initial period in which he/she is eligible to enroll, or during a special
enrollment period when there is a change in family status or loss of group
health coverage under another plan.  Medical coverage for a late entrant will
begin the date the application is received.

PRE-EXISTING CONDITION EXCLUSION

The pre-existing condition exclusion applies only to late entrants.

This Plan includes a pre-existing condition exclusion period of six (6) months
for a late entrant.  Generally, participants are not eligible to receive
benefits under this Plan for a pre-existing condition during this period.
However, if the participant has been covered under another health plan within
sixty-three (63) days of the date of enrollment into this Plan, the pre-existing
condition exclusion period may be reduced by the prior coverage.

A pre-existing condition must relate to a condition (whether physical or
mental), regardless of the cause of the condition, for which medical advice,
diagnosis, care, or treatment was recommended or received within the six (6)
month period ending on the enrollment date.  The enrollment date is defined as
the first date the person becomes covered under the Plan or, if earlier, the
first day of any waiting period for such enrollment.

The pre-existing condition exclusion does not apply to:

1. Genetic information in the absence of a diagnosis of the condition related
   to the genetic information.

2. Pregnancy.

3. A newborn child or newly adopted child under age eighteen (18) if the child
   is covered within thirty (30) days of the date of birth, adoption, or
   placement for adoption (or who has creditable coverage from birth, adoption,
   or placement for adoption without a significant break in coverage).

4. Conditions first discovered during the waiting period.

                                  14

The medical pre-existing condition exclusion period will not exceed six (6)
months after the enrollment for a late entrant.  A pre-existing condition must
be reduced by the period of creditable coverage the participant has under any
previous plan as of the enrollment date.  The enrollment date is defined as the
first date the person becomes covered under the Plan or, if earlier, the first
day of any waiting period for such enrollment.

"Late entrant" means an employee or dependent who does not enroll during the
initial period in which he or she is eligible to enroll, or during a special
enrollment period when there is a change in family status or loss of group
health coverage under another plan.

The pre-existing condition exclusionary period runs concurrently with the
waiting period that the employee needs to satisfy before becoming effective
under the Plan and before any benefits are payable under this Plan.

In order to make a determination of whether the participant is eligible for
credit for prior coverage, the participant must submit a Certificate of Prior
Health Coverage or any other evidence of prior coverage.  If the employee was
covered under more than one (1) plan, provide documentation of coverage from
each health plan.  Please submit this information to the Benefits Department
immediately upon receipt from the prior employer.  Employees may request a
certificate, free of charge, for themselves or their dependent(s) before losing
coverage or within two (2) years of losing coverage.  Please let the Benefits
Department know if assistance is needed in obtaining this information from the
prior employer or carrier.

If it is determined that the employee and/or his/her eligible dependents:

1. will receive only a partial credit for the prior coverage towards satisfying
   the pre-existing condition exclusion period; or

2. will have to satisfy the entire pre-existing condition exclusion period;

based on the information on the prior certificate of health coverage, Mountain
States Administration will inform the employee of this determination.  If the
employee wishes to appeal this decision or provide additional evidence of
creditable coverage, contact the eligibility department at Mountain States
Administration.

LOSS OF COVERAGE DUE TO MISREPRESENTATION

The employer has the right to rescind any coverage of the employee and/or
his/her dependents for cause, such as making a fraudulent claim or an
intentional misrepresentation of a material fact in connection with the Plan.
The employer will refund all contributions paid for any coverage rescinded;
however, claims paid will be offset from this amount.  The employer reserves the
right to collect additional monies if claims are paid in excess of the
employee's and/or dependent's paid contributions.
                                        15

EMPLOYEE TERMINATION OF COVERAGE
(See COBRA Continuation Coverage on page 66.)

The coverage of any employee will automatically terminate at midnight on the
earliest date indicated below:

1. On the date employment ends.

2. On the date an employee ceases to be in a class of employees eligible for
   coverage.

3. On the date the required contribution for coverage is not made, unless due
   to a clerical error whereby past contributions may be paid to bring coverage
   current.

4. On the date coverage is discontinued with respect to the class of employees
   to which such employee belongs.

5. On the date the Plan is terminated with respect to all employees, or on the
   date a benefit provided under the Plan is terminated.

6. On the date the employee retires.

7. On the date the employee becomes an active full-time member of the armed
   forces of any country for more than thirty (30) days.

8. On the date of the employee's death.

9. On the date the employee elects to terminate coverage.

(For non-work related disability over ninety (90) days, see Extension of Medical
Benefits on page 18.)

DEPENDENT TERMINATION OF COVERAGE
(See COBRA Continuation Coverage on page 66.)

Dependents' coverage will automatically cease at midnight on the earliest date
indicated below:

1. On the date the employee's coverage terminates.

2. On the date the employee ceases to be in a class eligible for dependent
   coverage.

3. On the date the required contribution for dependent coverage is not made,
   unless due to a clerical error whereby past contributions may be paid to
   bring coverage current.

4. On the date the Plan is terminated with respect to all dependents or on the
   date a dependent benefit provided under the Plan is terminated.

5. On the date such dependent ceases to be a dependent of the employee as
   defined herein.

6. On the date the dependent becomes an active full-time member of the armed
   forces of any country for more than thirty (30) days.

7. On the date of the employee's death.

8. On the date the employee elects to terminate the dependent's coverage.

9. On the date the dependent becomes effective as an employee under the Plan.

LEAVE OF ABSENCE

1. During an approved Medical Leave of Absence certified by a physician and
   approved by the Plan Administrator (unless covered under the Family and
   Medical Leave Act, in which case the better benefits apply) coverage may
   continue under the Plan for up to ninety (90) days providing all required
   contributions to the Plan are made by the covered employee; or

2. During a personal leave of absence approved by the Plan Administrator
   (unless covered under the Family and Medical Leave Act, in which case the
   better benefits apply), coverage may continue under the Plan for a maximum
   of six (6) months providing all required contributions to the Plan are made
   by the covered employee.

Regardless of any other provisions of this Plan, benefits will be paid in
accordance with the rules and regulations as specified by the Family and Medical
Leave Act (Public Law 103-3).

Family and Medical Leave Act (FMLA)

If a covered employee ceases work due to an employer approved Family Medical
Leave of Absence in accordance with the requirements of Public Law 103-3,
coverage will be continued under the same terms and conditions which would have
been provided had the covered employee continued work, provided the employee
continues to pay any required contributions.  Contributions will remain at the
same employer/employee percentage level as on the date immediately prior to the
leave (unless contributions change for other employees in the same
classifications).

If the covered employee does not return to work after the approved Family
Medical Leave or if the covered employee has given the employer notice of intent
not to return to service during the leave, coverage may be continued under the
Continuation of Coverage (COBRA) provision of this Plan provided coverage has
not lapsed, effective with the date notification is given to the employer and
provided the covered employee elects to continue under the COBRA provision.  The
covered employee will be totally responsible for paying contributions during
COBRA continuation if elected.  Coverage continued during a family or medical
leave will not be counted toward the maximum COBRA continuation period. 16

If the covered employee fails to make the required contribution for coverage to
continue during FMLA leave within thirty (30) days after the date the
contribution was due, the covered employee's coverage will terminate effective
on the date the contribution was due.  If coverage under this Plan was
terminated during an approved family medical leave due to non-payment of
required contributions by the employee and the employee returned to work
immediately upon completion of that leave, coverage will be reinstated on the
date the employee returns to work without having to satisfy any waiting period
or the pre-existing conditions limitation provision in this Plan provided the
employee resumes any necessary contribution and enrolls for coverage within
thirty (30) days of the return to work.

It is the intent of the Plan to comply with all existing Family and Medical
Leave Act regulations.  If for some reason the information presented in the Plan
differs from actual FMLA regulations, the Plan reserves the right to
administrate Plan benefits in compliance with such actual regulations.

Active Military Duty and Military Reservists

Employees or covered dependents who are called to active military duty will no
longer be considered eligible for benefits under this Plan, but may elect
continuation of coverage.

Those individuals returning from active duty in the armed forces may have
coverage reinstated under this Plan, for themselves and any eligible dependent,
provided:

1. such individual was covered under the Plan on the day employment with
   his/her employer ended due to being called to active duty in the armed
   forces; and

2. such individual becomes re-employed with his/her employer subsequent to
   being discharged from active duty, or within two (2) years if such
   individual was hospitalized or recovering from an illness or injury on the
   date of his/her discharge; or

3. such individual who, under normal circumstances, would have a) remained in
   the service of his/her employer and b) satisfied the eligibility
   requirements under this Plan, makes application for coverage within thirty
   (30) days following his/her date of rehire.

The coverage provided will be the benefits currently provided by the Plan.  If
an individual returns to employment within the same calendar year, eligible
charges accumulated toward the satisfaction of provisions such as the out-of-
pocket and deductible provisions or calendar year maximums will be taken into
consideration when determining benefits available for the remainder of the
calendar year.

It is the intent of the Plan to comply with all existing regulations of The
Uniformed Services Employment and Reemployment Rights Act (U.S.E.R.R.A.) of
1993.  If for some reason the information presented in the Plan differs from the
actual regulations of the U.S.E.R.R.A., the Plan reserves the right to
administrate Plan benefits in compliance with such actual regulations. 17

LAYOFF

If coverage terminates due to a company layoff, there is no continuation of
coverage except what is chosen through the COBRA election.

All Plan provisions will continue as though there were no lapse of coverage
status if COBRA was elected during this termination period and coverage was
uninterrupted to the date of rehire.

RECALL FROM LAYOFF

As a general rule, a person who is laid off and called back to full-time regular
employment within ninety (90) days of the date, receives credit for prior time
worked.  However, this employee must fill out the appropriate enrollment forms.

For persons recalled from layoff and still in the ninety (90) day waiting period
prior to the coverage effective date, the waiting period is shortened by the
number of days worked during their previous employment.

For persons whose health coverage was in effect when they were laid off,
coverage is effective on the first day they return to work at their previous
level.

EXTENSION OF MEDICAL BENEFITS:  (Disability)

Should coverage terminate because a covered employee is disabled by a non-work
related injury or sickness so as to be continuously prevented from returning to
work within ninety (90) days, and, further prevented from engaging in any
occupation, benefits under this Plan will continue (provided any required
employee contributions are paid) until the earliest of:

1. nine (9) months from the date coverage terminates; or

2. the date the covered employee becomes covered under another group plan; or

3. the date such total disability terminates.

Proof of disability must be furnished to the Plan Administrator if requested.

Dependent coverage in effect at the time employee coverage terminates will
continue, provided that required contributions to the Plan are made and provided
the dependent remains eligible for benefits as defined by this plan.  However,
such dependent coverage shall only extend until the earliest of:

1. nine (9) months from the date employee coverage terminates; or
                                        18

2. the date the covered employee becomes covered under another group plan; or

3. the date the employee's total disability ceases; or

4. the date the covered dependent becomes covered under another group plan.

The employee may elect continuation coverage under COBRA once the extension of
benefits has expired.  Although such election will require premium payments,
such continuation coverage will ensure against all covered medical expenses and
may enable the employee to provide dependent coverage for a longer period of
time, provided such
dependent coverage already exists under this Plan.

DEATH (SURVIVOR) BENEFITS

Upon the death of an employee covered under the Plan for fewer than 365 days,
the then covered family members of the employee shall, at company expense,
automatically be covered under the Plan for the lesser of the number of calendar
days the employee was covered by the Plan or ninety (90) days.  For employees
who were participants in the Plan for 365 days or more, such extended benefits
shall be provided for 180 days following the employee's death.  Such extension
shall not extend beyond the date that such dependent(s) become eligible, either
as an individual or as a dependent, under any other group type of employee
benefit program arranged through any other employer, trust, or association.
Covered family members may elect continued coverage under the COBRA provisions
once survivor benefits have expired.

ELIGIBILITY DATE FOR REINSTATED EMPLOYEES

An employee whose coverage terminates due to termination of employment or ceases
to be in a class of employees eligible for coverage and who resumes employment
with the employer or has a status change which makes them eligible for coverage
must meet the same eligibility and waiting period requirements as that of a new
hire, with the waiting period starting on the date of rehire.

REINSTATEMENT OF COVERAGE

If the employee or his or her covered dependents qualify and elect COBRA
continuation and subsequently again become eligible for coverage under the Plan
during the designated COBRA continuation period (with no break in coverage), the
employee and his or her covered dependent(s) are not required to re-qualify as a
new Plan participant.  All Plan provisions will continue as though there were no
lapse of coverage status.

ACQUISITION OF A NEW COMPANY - WHEN COVERAGE BEGINS

When enrollment requirements are met, coverage for eligible employees, and their
eligible dependents, who are employed by the newly acquired company will be
effective as of the date of the acquisition, or the date of termination of the
prior company's coverage, whichever is later, if they were covered under a plan
offered by the prior company on the

                                    19

day before the date of the acquisition.  The waiting period will be waived.

If a bodily injury or sickness is a pre-existing condition, but would not have
been a pre-existing condition under the prior plan had it remained in force, it
will not be a pre-existing condition under this Plan.  Credit will be given for
any pre-existing period satisfied under the prior plan.  A certificate of prior
health coverage may be required to substantiate the creditable period of
coverage.

The employee and his/her eligible dependents will be given credit for
deductibles and coinsurance provided they submit evidence of amounts satisfied
under the prior plan.

New hires will be subject to the waiting period, pre-existing condition
exclusion, and all other Plan provisions.

                                        20

CASE MANAGEMENT AND ALTERNATE TREATMENT PROVISION

The Plan reserves the right to allow for care at home or other alternative
methods of treatment or medical care not otherwise covered under the Plan.  In
cases where the patient's condition is expected to be or is of a serious nature,
the Plan Administrator may arrange for review and/or case management services
from a professional qualified to perform such services.  The Plan Administrator
shall have the right to alter or waive the normal provisions of the Plan when it
is reasonable to expect a cost effective result without a sacrifice to the
quality of patient care, provided such care is approved by the Plan's case
management organization, the patient (or patient's legal representative), the
attending physician, the Plan Administrator, and the Plan's reinsurance carrier.

Benefits provided under this section are subject to all other Plan provisions.
Alternative care will be determined on the merits of each individual case and
any care or treatment provided will not be considered as setting any precedent
or creating any future liability, with respect to that covered person or any
other covered person.

                                        21

                  COVERED MEDICAL EXPENSES

Unless specifically provided for in the Plan, covered medical expenses shall
include, subject to the "General Plan Exclusions and Limitations," only usual,
customary, and reasonable medically necessary charges for services and supplies
which are incurred by a covered person and are:

1. Administered or ordered by a physician.

2. Medically necessary for the diagnosis and treatment of a non-work related
   illness or injury unless otherwise specifically included as a covered
   expense.

3. Not excluded under any provision or section of the Plan.

An expense is incurred on the date of treatment, service or purchase.  Covered
expenses are limited to:

1. Acupuncture performed by a physician (M.D. or D.O.) or licensed
   acupuncturist when medically necessary to treat a covered illness or injury.

2. Medical care and treatment of alcoholism or substance abuse furnished on an
   inpatient or outpatient basis by a hospital, treatment facility, physician,
   or licensed therapist for psychotherapy under direct supervision of an M.D.,
   D.O., Ph.D., Ed.D., or Psy.D., and as described later in this section of the
   Plan.  When direct supervision is not required by the state, that licensed
   therapist will be a recognized provider.

3. Allergy testing, treatment, and injections.  RAST (radioallergosorbent test)
   allergy testing will be allowed only when medically necessary as the only
   alternative to traditional allergy testing.

4. Professional ambulance service when the covered person cannot be safely
   transported by any other means to the nearest facility where emergency care
   or treatment is rendered or when medically necessary, from one facility to
   another for care; or for professional ambulance from the facility to the
   patient's home when medically necessary.  Air ambulance is covered only when
   terrain, distance or condition warrants.  Ambulance charges for convenience
   are not covered.

5. Expenses made by an ambulatory surgical center, urgent care facilities, or
   minor emergency medical clinic when treatment has been rendered.

6. Expenses for amniocentesis testing and/or genetic counseling, when
   recommended by a physician for a covered person who is expected to deliver
   at age thirty-five (35) or older, or for a documented high-risk pregnancy,
   or family history of genetic disorder.  Any procedure intended solely for
   sex determination is not covered.
                                        22

7. The cost and administration of an anesthetic by a physician or by a nurse
   anesthetist (CRNA) if necessary for a covered surgery.  Benefit allowances
   are based on the complexity of the surgical procedure, the amount of time
   needed to administer the anesthetic, and the patient's physical condition at
   the time the service is provided.  Standby anesthesia is a benefit when
   anesthesia services may potentially be required.  These benefits depend upon
   the procedure and the circumstances of the case.

8. Assistant surgeon's fee when the procedure requires an assistant surgeon due
   to medical necessity.

9. Expenses for the testing to determine the diagnosis, medication and medical
   management of the medication for attention deficit disorder will be covered
   as any other illness under the Plan.  All other expenses for treatment of
   attention deficit disorder will be covered under the mental health disorders
   provision of the Plan.

10.Biofeedback and equipment medically necessary for the treatment of a covered
   illness or injury.

11.Birthing centers.

12.Birth control pills, birth control injections, prescription birth control
   devices, and birth control implants.  Removal of Norplant or a similar birth
   control implant is not covered unless it is medically necessary to remove it
   due to a medical complication involving the implant.  All eligible charges
   for implanting Norplant are prorated into five (5) equal portions.  Each
   year over the five (5) year period, one (1) portion (20% of the total
   charges) is payable, provided the person remains covered under this Plan.

13.Blood transfusions, blood processing costs, blood transport charges, blood
   handling charges, administration charges, the cost of blood, plasma and
   blood derivatives, and pre-surgical autologous storage of blood.  Any credit
   allowable for replacement of blood plasma by donor or blood insurance will
   be deducted from the total of eligible covered expenses.

14.Cardiac exercise therapy when prescribed by a physician after cardiac
   surgery or myocardial infarction.

15.Chiropractic services will only be covered for the detection and correction
   by manual or mechanical means of a structural imbalance, distortion or
   subluxation in the human body or for the removal of nerve interference,
   where such interference is the result of or related to distortion,
   misalignment, or subluxation of or in the vertebral column.  Maximum payable
   per six (6) consecutive month period is forty (40) visits.

16.Accredited facilities, clinics, or centers involved in the testing and
   treatment of chronic pain for a covered illness or injury.
                                        23

17.Cleft palate and cleft lip expenses as described later in this section of
   the Plan.

18.Dental treatment as described later in this section of the Plan.  Associated
   medical   charges for facility, anesthesia, etc. and related eligible
   charges are covered when dental surgery requires hospitalization.

19.Electrocardiograms, electroencephalograms, pneumoencephalograms, basal meta
   bolism tests, or similar well-established diagnostic tests generally
   approved by physicians throughout the United States.

20.The rental or purchase (whichever is less) of durable medical equipment.
   When purchase of durable medical equipment is covered, repair, maintenance,
   replacement, and adjustments will also be covered.  Items such as air
   conditioners, purifiers, vibrating chairs, whirlpools, saunas, and
   dehumidifiers are not covered items.

21.Extracorporeal shock therapy (lithotripsy) for treatment of kidney stones.

22.Eye examinations by an ophthalmologist or optometrist (in those
   jurisdictions where permitted by law) for the purpose of prescribing
   corrective lenses.  These vision benefits will include prescription lenses
   and frames and the replacement of lost, stolen, or broken eyeglass lenses,
   frames, or contacts payable to a maximum of $50 per person, per calendar
   year, not subject to deductible or coinsurance.

23.Prescription eyeglasses, frames or contact lenses will be covered when their
   function is to replace the human lens absent at birth or lost through
   intraocular surgery or ocular injury or when caused by a medically
   ascertainable problem.  This benefit is not subject to the $50 maximum
   stated in the Vision Benefit provision.  Limitation will be to one (1) pair
   of prescription eyeglasses or contact lenses, unless due to a change in
   prescription as a result of the surgery, injury, or medically ascertainable
   problem.

   The Plan will also cover eyeglasses or contact lenses when prescribed by the
   covered person's physician as the only method of treatment available for the
   treatment of aphakia or keratoconus.

24.Fetal surgery will be considered as part of the mother's care.

25.  Head halter or other traction apparatus.

26.Expenses for treatment of kidney disorder by hemodialysis or peritoneal
   dialysis as an inpatient in a hospital, or other facility, or for expenses
   in an outpatient facility or in your home, including the training of one (1)
   attendant to perform kidney dialysis at home.  The attendant may be a family
   member.  When home care replaces inpatient or outpatient dialysis
   treatments, the Plan will pay for rental of dialysis equipment and
   expendable medical supplies for use in your home.

27.  Home health care benefits as described later in this section of the Plan.

28.  Hospice benefits as described later in this section of the Plan.
                                        24

29.When hospitalized in a licensed hospital, reimbursement will be provided for
   care by a hospital for semiprivate room and board, intensive care, coronary
   care unit, or private room rate when documented in writing from the
   physician as medically necessary for treatment of the condition, and for all
   other medically necessary services and supplies.  Expenses for a private
   room will be paid at the private room rate when the hospital only has
   private rooms.

   Hospital supplies covered will include one (1) admission kit.  Benefits are
   also payable for outpatient hospital services and charges made by the
   hospital for outpatient surgery, emergency room treatment and other
   outpatient medical care.

30.Expenses incurred for the initial diagnosis and testing to determine
   infertility and impotency, whether a medical problem exists or not, is
   covered; expenses incurred in connection with the treatment, whether a
   medical problem exists or not, of infertility, impotency or promotion of
   conception, including drug therapy, are not covered.

31.  Insulin, related supplies, syringes.

32.  Laboratory and pathology services, and x-ray and radiology services.

33.   Surgery/procedures necessary for reconstruction of breast(s) after
mastectomy.    This benefit includes the costs of prostheses (implants, special
bras, etc.) and     physical complications of all stages of mastectomy,
including lymphedemas, as     recommended by the attending physician.  Coverage
also provides for surgery/    reconstruction on the breast which did not have
the mastectomy, in order to   produce a symmetrical appearance.

34.Medical supplies, including, but not limited to:  dressings, sutures, casts,
   splints, trusses, crutches, colostomy bags, catheters, syringes and needles
   for administering covered drugs, medicines or insulin. Over-the-counter
   supplies, except for insulin, syringes and needles, and items that would not
   serve a useful medical purpose, or which are used for comfort, convenience,
   or personal hygiene, are not included.

35.Medical care and treatment of mental health disorder furnished on an
   inpatient or outpatient basis by a hospital, psychiatric hospital, mental
   health facility, physician, nurse practitioner or licensed therapist for
   psychotherapy under direct supervision of an M.D., D.O., Ph.D., Ed.D., or
   Psy.D., and as described later in this section of the Plan.  When direct
   supervision is not required by the state, that licensed therapist will be a
   recognized provider.

36.  Licensed or registered midwife.

37.Any expenses for care or treatment provided by the United States government
   for non-service connected disabilities will be reimbursed to the Veterans
   Administration to the extent that the services are otherwise covered under
   the Plan.

38.  Occupational therapy, only when prescribed by a physician as to type and
     duration and when the therapy is generally expected to improve bodily
  	  function.  Occupational therapy for vocational testing, occupational
	  training or retraining, even when due to a covered condition is
	  not covered.
                                   25

39. Outpatient Surgery, paid at 100%, subject to Plan deductibles and
	 coinsurance.

40.Oxygen and other gases, and equipment necessary for its administration.

41.  Physical therapy performed by a physician or licensed physical therapist.

42.The services of a legally qualified physician for medical care and/or
   surgical treatments including but not limited to office visits, home visits,
   hospital inpatient care, consulting physician services, hospital outpatient
   visits/exams, clinic care, and second opinion consultations.

43.Physician's assistant fee when the procedure requires a physician's
   assistant due to medical necessity, in lieu of the service of an assistant
   surgeon.

44.  Expenses for pre-admission testing, as described later in this section of
     the Plan.

45.Prescription drugs requiring the written prescription of a physician.
   Growth hormone therapy must be previously authorized with a letter from the
   physician documenting the need for such therapy in advance of dates of
   service.  Newly approved drugs are not automatically covered, and must be
   authorized by the Plan Administrator.

46.Expenses incurred for private-duty nursing services by a practicing
   registered nurse (R.N.) or licensed practical nurse (L.P.N.) for:

     a.   inpatient care only if the hospital does not have intensive care
          facilities or can not provide the level of care necessary; or
     b.   outpatient care in the covered person's home or other outpatient
          location.

   The private nurse cannot be employed by the hospital and cannot reside in
   the same household with the covered person nor be related by blood, marriage
   or legal adoption to the employee or employee's spouse.

   All claims for private-duty nursing services must include a physician's
   certification that such services are medically necessary and indicate the
   nurse's degree and license number.

47.  Prostheses and orthopedic appliances including, but not limited to:

   a.   artificial arms, legs, larynx or eyes;
   b.   leg braces, including attached shoes;
   c.   arm and back braces;
   d.   maxillofacial prostheses;
   e.   cervical collars; and
   f.   non-cosmetic surgical implants.
                                        26

   Benefits include charges for the fitting, adjusting, repair or maintenance
   of such prosthetic or orthopedic appliances.  Covered expenses are limited
   to the initial placement of prosthetic or orthopedic appliances when
   required to replace natural limbs or eyes lost while covered under this
   Plan.

   Orthopedic shoes are covered only when they are used with an attached leg
   brace.  Prescription orthotics and arch supports are covered when medically
   necessary for treatment of a covered illness or injury.

48.  Radiation therapy, chemotherapy, radium, and radioactive isotope therapy.

49.  Rehabilitation expenses as described later in this section of the Plan.

50.Respiratory therapy ordered by a physician and performed by a registered
   respiratory therapist or qualified medical personnel.

51.Expenses for routine medical checkups, including pap smears, mammograms,
   prostate examinations and other routine diagnostic x-ray and lab tests; well-
   baby care; flu shots and pneumovax injections for adults; or any charge for
   checkup purposes not incident to or necessary to diagnose an injury or
   illness, to a maximum paid of $250 per person, per calendar year.

   Routine immunizations, vaccinations, and preventive shots recommended or
   required by the American Academy of Pediatrics and Department of Education,
   for eligible dependent children.  Immunizations are also covered for covered
   adult participants.

52.Expenses for second or third surgical opinion as described later in this
   section of the Plan.

53.  Skilled nursing care facility benefits as described later in this section
     of the Plan.

54.Accredited facilities, clinics or centers involved in sleep testing and
   treatment for a covered illness or injury.

55.Smoking cessation as described later in this section of the Plan.

56.Speech therapy, only when prescribed by a physician, with an estimated
   duration of treatment, and only for conditions caused by injury, illness or
   congenital defect or as a loss due to surgery.

   Speech therapy services must be performed by a therapist with a Clinical
   Competence Certification or Equivalency Statement from either the American
   Speech and Hearing Association or the Peer Review Board of the State Speech
   and Hearing Association.

57.Services for voluntary sterilization:  tubal ligations or vasectomies for
   employees and dependent spouses.  Reversals are covered for employees only
   to a lifetime maximum of $1,000 for male employees and $2,000 for female
   employees.
                                        27

58.A surgical procedure performed by a physician, nurse practitioner working
   within the scope of their license, or licensed or registered midwife.  There
   will be a reduction for secondary surgeries/procedures performed in the same
   operative session.

59.Medical or surgical services for the diagnosis, testing and treatment of
   temporomandibular joint (TMJ) disorders, regardless of the reason(s) such
   services are necessary.  Benefits are limited to a maximum paid per person
   of $2,000 per lifetime.

60.Transplant and replacement procedures, including but not limited to the
   following, are covered as any other illness:

   a.   artery or vein transplants;
   b.   bone marrow transplants, including a bone marrow transplant for breast
        cancer;
   c.   cornea transplants;
   d.   heart valve replacements;
   e.   implantable prosthetic lenses in connection with cataracts;
   f.   joint replacements;
   g.   kidney transplants;
   h.   prosthetic bypass or replacement vessels;
   i.   human heart transplants (mechanical, artificial or other than human
        heart transplants are not covered);
   j.   heart and lung transplants;
   k.   lung transplants;
   l.   liver transplants;
   m.   pancreas transplants;
   n.   peripheral stem cell transplants; and

   any human organ transplant not considered to be experimental or
   investigational in nature under standards set by the Health Care Financing
   Administration (HCFA) and/or the National Institute of Health (NIH).
   Procedures that are considered experimental or investigational in nature may
   be covered subject to review by three licensed physicians who are board
   certified in the appropriate transplant specialty.

   In addition, the following limitations apply:

   a.  Donor and Search and Procurement Expenses:  If a covered person receives
     a transplant, the donor's expenses and the search and procurement expenses
     will be considered to be the covered person's even if the donor is covered
     under the same family plan as the covered person.  Benefits will be paid
     for the donor's covered charges to the extent an actual charge is made
     that is not paid or payable by any other plan covering the donor.  The
     maximum benefit that will be paid is limited to $10,000.  The maximum
     amount may be increased to cover expenses over $10,000 subject to medical
     review for determination of coverage.
     b.  Charges for Transportation, Lodging and Meals:  If the recipient is a
     minor, this will include both parents, otherwise just the recipient and
     one (1) other adult.
     c.  Mandatory Second Surgical Opinion Requirement.  This must certify that
         the
		                                     28

patient has no alternative procedure, service, or course of treatment that would
be effective in the treatment of the patient's condition.

61.Expenses for a covered illness or injury incurred while traveling outside
   the United States on business or pleasure.  Expenses incurred outside the
   United States, if the covered person traveled to such a location for the
   primary purpose of obtaining medical services, drugs, or supplies, are not
   covered.

62.Weight control for employees only, as described later in this section of the
   Plan.

63.Wigs and artificial hairpieces will be covered to a maximum paid of $150 per
   person, per lifetime, upon receipt of a physician's prescription that
   indicates a medical condition for the hair loss.

ACCIDENT BENEFIT

Expenses for an accidental bodily injury will be paid at 100% for the first $500
for covered services provided within ninety (90) days from the accident.
Thereafter, the deductible and coinsurance provisions apply. Expenses paid at
100% do not count toward the deductible nor do they count toward the out-of-
pocket maximum.

This benefit shall not include eye refractions, eyeglasses, hearing aids,
prosthetic devices or their fitting.

CHILDBIRTH CENTERS

Charges made by a childbirth center are covered for services and supplies
furnished for:

1. prenatal care; and

2. delivery of child(ren).

A birthing center is a licensed facility which:

1. provides:  (a) prenatal care; (b) delivery and immediate postpartum care;
   and (c) care of a child born at the birthing center; and

2. is directed by a physician specializing in obstetrics and gynecology; and

3. has a physician or licensed or registered midwife present at all births and
   during the immediate postpartum period; and

4. extends staff privileges to physicians who practice obstetrics and
   gynecology in the area; and

5. has at least two (2) beds or birthing rooms for use by patients during labor
   and delivery; and
                                        29

6. provides full-time skilled nursing services (directed by an R.N. or licensed
   or registered midwife) in the delivery and recovery rooms; and

7. provides diagnostic x-ray and lab services for the mother and newborn; and

8. has the capacity to administer a local anesthetic and perform minor surgery
   (including episiotomy and repair of perineal tear); and

9. is equipped and staffed to handle medical emergencies and provide immediate
   life support measures; and

10.accepts only patients with low risk pregnancies if a stand-alone facility,
   not part of a hospital; and

11.has a written agreement with an area hospital for emergency transfer of
   patients and ensures its staff is aware of such procedures; and

12.  provides an on-going quality assurance program; and

13.keeps a medical record on each patient.

CLEFT PALATE AND CLEFT LIP

The Plan will provide benefits for cleft palate and cleft lip.  Cleft palate is
defined as a birth deformity in which the palate (the roof of the mouth) fails
to close, and cleft lip is defined as a birth deformity in which the lip fails
to close.

The Plan will cover expenses incurred for the following services when provided
by a physician, other professional provider, and facilities necessary for
treatment.

1. Oral and facial surgery, surgical management and follow up care by plastic
   surgeons and oral surgeons.

2. Habilitative speech therapy.

3. Otolaryngology treatment.

4. Audiological assessments and treatment.

5. Orthodontic treatment.

6. Prosthodontic treatment.

7. Prosthetic treatment such as obturators, speech appliances, and feeding
appliances.

DENTAL BENEFITS (Under the Medical Plan)

  The Plan will provide benefits for expenses incurred for the following dental
                                services only: 30

1. Excision of exostosis of the jaw (removal of bony growth).

2. Surgical correction of accidental injuries of the jaws, cheeks, lips,
   tongue, floor of the mouth, and soft palate (provided the procedure is not
   done in preparation for dentures or dental prosthesis).

3. Treatment of fracture of facial bones.

4. Incision and drainage of cellulitis (inflammation of soft tissue).

5. Incision of accessory sinuses, salivary glands or ducts.

6. Extraction of impacted teeth partially or totally covered by bone.

7.     Dental Implants.

The Plan will pay for the charges for a semiprivate room and covered hospital
ancillary services in a hospital if the covered person has a hazardous medical
condition (such as heart disease) which requires that an otherwise non-covered
dental procedure be performed in the hospital.  The Plan will not pay for the
services of the physician, dentist, or oral surgeon in relation to that
non-covered dental procedure even if the hospital charges are paid.

The Plan will allow benefits for accident-related dental expenses not otherwise
covered under any other provision of the Plan when all of the following criteria
have been met.

1. The covered person is in need of dental services, supplies, and appliances
   because of an accident in which he/she sustained injuries of the mouth or
   oral cavity.

2. The injury occurred on or after the covered person's effective date of
coverage.

3. Treatment must be for injuries to sound natural teeth.

4. Treatment must be necessary to restore the teeth to the condition they were
   in immediately before the accident.

5. Services must be performed within six (6) months after the accident, unless
   it can be shown that it was not medically possible to provide treatment
   within this period of time.

6. All services must be performed while the covered person's coverage is in
effect.

The Plan will not pay for restoring the mouth, teeth, or jaws because of
injuries from biting or chewing.

Limitations and Exclusions

1. Restorations - Benefits for restorations are limited to those services,
   supplies, and appliances determined to be appropriate in restoring the
   mouth, teeth, or jaws to the condition they were in immediately before the
                                  accident. 31

   No benefits will be paid for duplicate, or spare dental appliances,
   personalized restorations, cosmetic replacement of serviceable restorations,
   and materials (such as precious metals) that are more expensive than
   necessary to restore damaged teeth.

2. Surgical Preparations for Dentures - Artificial implanted devices and bone
   grafts for denture wear are not covered under the medical portion of the
   Plan.

HOME HEALTH CARE

Home health care benefits will include covered charges which meet all of the
following requirements:

1. They are medically necessary for the care of a covered individual who is
   totally disabled and who would otherwise have been confined as a bed patient
   in a hospital or skilled nursing facility, provided:

   a.   the covered person is under the direct care of a doctor; and
   b.   the plan of treatment for the home health care agency is established in
        writing by the attending doctor prior to the start of such treatment.

   Periodic assessment visits by either a physician or a licensed nurse will be
   required to determine the patient's condition, progress and level of care
   needs.  After the period of time specified on the prescribed treatment plan,
   continuation of care depends on a reevaluation of the patient's status.

2. They are for services provided by a home health agency.  A "home health
   agency" means an agency which meets the following requirements:

   a.   its primary services are those listed in 4. below; and
   b.   it is federally certified as a home health agency; and
   c.   it is licensed, if licensing is required.

3. Home health care benefits will include charges by a home health care agency
   to a maximum of sixty (60) visits per calendar year.  A visit by a
   representative of a home health care provider, other than an aide, will be
   one (1) home health care visit.  A visit by a home health care aide will be
   counted as one (1) visit for any four (4) hours or portion thereof.

4. Home health care benefits will be allowed for the following services:

     a.Professional nursing services performed by a registered nurse (R.N.), or
     under the supervision of an R.N.
     b.Physical therapy performed by a registered physical therapist.
     c.Occupational therapy performed by a properly accredited registered
     occupational therapist (OTR) or a certified occupational therapy assistant
     (COTA).
     d.Respiratory and inhalation therapy performed by a therapist trained or
     licensed to provide these services.
     e.Speech therapy and audiology given for speech disorders caused by a
     primary or secondary muscular or structural abnormality.  Services must be
     provided by a properly accredited speech therapist who has received a
     Clinical Competence Certification or Equivalency Statement from either the
     American Speech and Hearing Association or the Peer Review Board of the
     State Speech and Hearing Association.
     f.Medical social services ordered by the attending physician and provided
     by a qualified medical or psychiatric social worker to assist you or your
     family in dealing with a specific medical condition.  The individual
     providing such services must possess a degree in social work, psychology
     or counseling, or the documented equivalent in a combination of education,
     training and experience.
     g.Home health aide services required and supervised by a registered nurse
     or a physical, speech or occupational therapist.
     h.Medical supplies furnished to the covered person by the home health
     agency during visits for services.
     i. Nutrition counseling by a nutritionist or dietitian.
     j.The following additional items and services are eligible expenses under
     a home health care program.  However, some of these expenses may also be
     covered under benefits otherwise provided by the Plan:

     1) Prostheses and orthopedic appliances.
     2) Rental or purchase of durable medical equipment.
     3) Expenses for prescription drugs, medicines, or insulin.

Limitations and Exclusions for Home Health Care

No home health care benefits will be paid for:

1. Custodial Care.  The Plan will pay for one-time training for a family
   member, household resident, or non-professional person employed by the
   patient or family.  This training covers the services necessary for the
   custodial or maintenance levels of care.

2. Non-Covered Services.  The following list of services are not home health
   care benefits.  However, some of these expenses may be covered under
   benefits otherwise provided by the Plan:

   a.   Blood, blood plasma, or blood derivatives.
   b.   Services provided by a hospital.
   c.   Services provided by a physician.
   d.   Services related to non-covered conditions and surgeries, as excluded in
        the Plan.
   e.   Services or supplies for personal comfort or convenience, including
        homemaker services.
   f.   Services related to well-baby care.
   g.   Food or meal services other than dietary counseling.
                                        32

3. Psychiatric Social Worker Services.  The services of a psychiatric social
   worker which are not related to a home health program prescribed by a
   physician may be covered and paid as outpatient benefits as described in
   Mental Health Disorders, Alcoholism or Substance Abuse.

4. Review of Treatment.  The Plan reserves the right to review treatment plans
   at periodic intervals.

HOSPICE CARE

Definition

An alternative way of caring for terminally ill individuals which stresses
palliative care as opposed to curative or restorative care.  Hospice care
focuses upon the patient/family as the unit of care.  Supportive services are
offered to the family before and after the death of the patient.  Hospice care
addresses physical, social, psychological, and spiritual needs of the patient.

All Hospice Benefits

Benefits are allowed for hospice care provided under active physician and
nursing management through a licensed hospice agency which is responsible for
coordinating all hospice care services, regardless of the location or facility
in which such services are furnished.  Hospice care is provided in the covered
person's home or on an inpatient basis in a licensed health care facility.

Benefits are allowed only for a terminally ill covered person with a life
expectancy of six (6) months or less, who, alone or in conjunction with a family
member or members, has voluntarily requested admission and been accepted into a
hospice program.

All claims must include a physician's certification of the covered person's
illness, including a prognosis for life expectancy and a statement that hospice
care is medically necessary and a copy of the hospice agency's treatment plan.

Benefit Period

The benefit period for hospice care is limited to six (6) months from the date
the terminally ill person entered hospice care or until death if the covered
person continues to live beyond the prognosis for life expectancy.  The maximum
paid for hospice care is $25,000 per person, per lifetime.  Coverage may be
extended until the death of the covered person if he or she exceeds the $25,000
lifetime maximum.

The following services are covered:

 1. Inpatient hospice care provided on a regularly scheduled basis in a hospice
    facility governed by the hospice board of directors to ensure the overall
    continuum of patient care.
	                                     33

2. Home hospice care services provided in the covered person's home to meet the
   covered person's physical requirements and/or to accommodate a covered
   person's maintenance or supportive needs.  This benefit is payable for any
   combination of the following:

     a.Professional nursing services provided by or under the supervision of a
     registered nurse (R.N.).
     b.Home health aide services under the supervision of a registered nurse or
     specialized rehabilitative therapist.
     c.Physical therapy performed by a registered physical therapist.
     d.Occupational therapy performed by a properly accredited registered
     occupational therapist (OTR) or a certified occupational therapy assistant
     (COTA).
     e.Speech therapy and audiology provided by a properly accredited speech
     therapist who has received a Clinical Competence Certification or
     Equivalency Statement from either the American Speech and Hearing
     Association or the Peer Review Board of the State Speech and Hearing
     Association.
     f.Respiratory and inhalation therapy performed by a therapist trained or
     licensed to provide these services.
     g.Nutrition counseling by a nutritionist or dietitian.
     h.Medical social services provided by a qualified individual who possesses
     a degree in social work, psychology, or counseling or the documented
     equivalent in a combination of education, training and experience.  Such
     services must be provided at the recommendation of a physician for the
     purpose of assisting the covered person or immediate family in dealing
     with a specified medical condition.
	  i.Family counseling related to the covered person's terminal condition.
     j.Respite care which provides temporary relief for the covered person's
     family or other care giver for unforeseen emergencies and from the daily
     demands of care for the patient.
     k.Short-term inpatient care or continuous home care which may be required
     during a period of crisis, for pain control or for acute intervention
     alternatives and chronic symptom management.  Benefits are limited to a
     separate thirty (30) day period for such care.
	   l.Medical supplies, including prescription drugs and biological drugs.
   	m.Prostheses and orthopedic appliances.
   	n.Rental or purchase of durable medical equipment.

Limitations and Exclusions for Hospice Care

1. Non-Covered Services.  The following items and services are not covered
   expenses under this hospice care program.  However, some of these expenses
   may be covered under benefits otherwise provided by the Plan:

   a.   Blood, blood plasma, or blood derivatives.
   b.   Services provided by a hospital.
   c.   Services related to non-covered conditions and surgeries, as excluded in
        the Plan.
   d.   Services related to well-baby care.

	                                       34

   e.Food services or meals other than dietary counseling.
   f.Services or supplies for personal comfort or convenience, including
     homemaker services, except in crisis periods or in association with
     respite care.
   g.Estate planning, drafting of wills, or other legal services.
   h.Funeral arrangements or services.

2. Review of Treatment.  The Plan reserves the right to review treatment plans
   at periodic intervals.
3. Any covered charge paid under hospice benefits will not be considered a
   covered charge under any other benefit in the Plan.

HOSPITAL AUDIT SAVINGS

If you discover an overcharge or mistake on an inpatient or outpatient hospital
bill, (excluding double billings and very obvious mistakes which would be caught
during claims processing) you will receive (by check) 50% of the error to a $500
maximum per confinement if the following procedures are followed. This
reimbursement is considered to be taxable income.

1. Within five (5) days of receiving your hospital bill, call Mountain States
   Administration at 303-360-9600 or 1-800-828-8847 to inform them that you
   have found an error(s) in the bill. This must be done before the hospital
   bill has been processed by Mountain States Administration.

2. Next, within the same five (5) day period, you must follow up with a letter
   to Mountain States Administration explaining how or why the bill is in
   error.

3. Once the error is confirmed with the hospital by Mountain States
   Administration and a corrected bill is received, you will receive your audit
   savings.

MATERNITY

This Plan complies with the requirements of the Newborns' and Mothers' Health
Protection Act (NMHPA) of 1996.  This Plan may not, under federal law, restrict
benefits for any length of hospital stay in connection with childbirth for the
mother or newborn child to less than forty-eight (48) hours following a normal
vaginal delivery, or less than ninety-six (96) hours following a cesarean
section, or require that a provider obtain authorization from the Plan for
prescribing a length of stay not in excess of the above periods.  The Plan may
not penalize individuals nor provide incentives for earlier discharge, although
the Plan may allow earlier discharge if the mother and physician agree.

Maternity expenses are covered as any other medical illness, including expenses
for the diagnosis and care of a pregnancy and for the delivery services.
Benefits are limited to covered employees and covered spouses as follows:

1. Maternity benefits will be subject to all Plan provisions.

2. Delivery must occur while the individual is a covered person under the Plan
   in order for delivery expenses to be a covered expense.
                                        35

3. Fetal surgery will be considered as part of the mother's care.

4. Expenses incurred as a result of elective induced abortions are covered for
   employees or spouses only, limited to one (1) procedure every three (3)
   years to a maximum of $300 per procedure.

Dependent children are not covered for maternity benefits unless due to a
complication of pregnancy as defined below.

Complications of Pregnancy

Complications of pregnancy mean conditions with diagnoses that are distinct from
pregnancy, but which are adversely affected by or are caused by a pregnancy.
These expenses are covered as any other illness.

Complications of pregnancy include:  acute nephritis, nephrosis, cardiac
decompression, puerperal infection, toxemia, missed abortion, ectopic pregnancy
that is terminated, spontaneous termination of pregnancy occurring during a term
of gestation in which there is not a viable birth (this does not include
voluntary or elective abortion), or other similar medical and surgical
conditions of comparable severity.

Complications of pregnancy do not include:  Cesarean section delivery, false or
premature labor, occasional spotting, physician prescribed rest during
pregnancy, morning sickness, hyperemesis gravidarum, pre-eclampsia, or other
similar conditions associated with management of a difficult pregnancy but which
do not constitute a diagnostically distinct complication of pregnancy.

MENTAL HEALTH DISORDERS, ALCOHOLISM OR SUBSTANCE ABUSE

Outpatient Treatment:  Eligible charges are covered and payable per the Schedule
of Medical Benefits.

Inpatient Treatment:  Eligible charges are covered and payable per the Schedule
of Medical Benefits.  Each two (2) days of partial hospitalization will count as
one (1) day inpatient care.

"Partial Hospitalization" means continuous treatment at a hospital or treatment
facility for at least three (3) hours but not more than twelve (12) hours in any
twenty-four (24) hour period.

Expenses for outpatient treatment do not apply toward medical out-of-pocket
maximums.

Special Limitations for Alcoholism or Substance Abuse Treatment

1. When the purpose of admission is for convalescent or custodial care, no
   benefits are available.  In those instances where the type of care rendered
   during a continuous period of confinement develops into convalescent or
   custodial care, that portion of the

	                               36

   stay beginning on the day of such development is excluded from benefit.
2. If a covered person shall remain in a hospital or treatment center after
   being advised by appropriate authority at said hospital or center that
   further inpatient care is unnecessary, benefits under this section will not
   be furnished for the remainder of that inpatient admission.
3. Benefits for inpatient care for alcoholism or substance abuse are available
   only when facility or physician discharging the covered person so certifies.
   That the covered person completed the full continuum of care.
4. Admissions solely for detoxification, which do not include
   rehabilitation, are not covered.

NEWBORN CARE

Hospital Confined - Surgical and birthing centers, hospital and doctor's charges
for a newborn, "well-baby" including circumcision, shall be considered a covered
expense from birth until initial discharge from the hospital.  Newborn well-baby
care is subject to the newborn's own deductible and out-of-pocket maximum.

Non-Hospital Confined - Routine examination and checkup charges, including
immunizations, are covered expenses and payable according to the Schedule of
Medical Benefits.  Doctor visits for treatment of sickness or injury shall be
treated as an illness, subject to the newborn's own deductible and out-of-pocket
maximum.

In order for newborn care to be covered the employee must follow the enrollment
requirements.  Please refer to page 6.  Failure to properly enroll the newborn
child will result in a denial of benefits.

PRE-ADMISSION TESTING (Deductible Waived)

The Plan will pay for covered expenses for pre-admission testing on an
outpatient basis performed within seven (7) days prior to a hospitalization for
surgery.  The charges must be related to the illness or injury that ultimately
causes confinement.  Pre-admission testing that is repeated in the hospital will
not be paid unless medically necessary.

REHABILITATION CENTER BENEFIT

The Plan will pay for covered expenses the employee or his/her eligible
dependent incur for a sickness or injury that results in the need for
rehabilitation services as provided or offered in a rehabilitation hospital or
center.  The employee or his/her eligible dependent must be under the care of a
physician for any benefits to be payable.

"Rehabilitation services" means a formal program of treatment that:

1. is provided to those individuals who have severe disabling impairments of
   recent onset or recent progression or persons who have not had prior
   exposure to these services and who require an identifiable intensity of
   services; and

2. is performed in a rehabilitation hospital or center either as an inpatient
   or an outpatient; and

	                                  37

3. is prescribed by a physician as medically necessary and is periodically
   reviewed; and

4. is prescribed in place of a stay in the acute setting of a hospital or is an
   extension of a hospital stay; and

5. is provided in a hospital or facility that is licensed and qualified to
   render rehabilitation services.

The primary emphasis of the program is providing, in a coordinated manner, those
comprehensive services deemed appropriate to the needs of a person with a
disability, in a program designed to achieve objectives of improved health,
welfare and the realization of one's maximum physical, social, psychological and
vocational potential for useful and productive activity.

Services must be of such a level of complexity or the condition of the patient
must be such that services can be safely performed only by the qualified
therapist or pathologist.

The Plan will not pay benefits for any alcoholism and/or substance abuse
rehabilitation expenses under this provision.

SECOND SURGICAL OPINIONS (Deductible Waived)

Second surgical opinions will be paid at 100% for exams, x-rays and lab work
incurred on an outpatient basis by a qualified physician, in the approved
specialty, to substantiate medical necessity of the procedure to be performed.
The physician giving the second opinion must not be professionally affiliated
with the treating physician.  A final opinion will be paid for in case of a
conflict between the first two (2) opinions.

SKILLED NURSING CARE FACILITY BENEFIT

Expenses incurred for daily room and board and general nursing services for each
day of confinement in a skilled nursing care facility are payable for no more
than sixty (60) days per illness or injury.  The daily rate allowed cannot
exceed one-half of the semiprivate room charges made by the hospital in
which the covered person was confined before transfer to the facility.

To be paid under this benefit the confinement means confinement in a skilled
nursing care facility must:

1. begin while covered under this benefit; and

2. start within fourteen (14) days after discharge from:

   a.   a hospital confinement of at least three (3) consecutive days; or
   b.   a prior covered skilled nursing care facility confinement; and

3. be necessary for care or treatment of the same bodily injury or sickness
   which caused the hospital confinement; and
                                        38

4. occur while the covered person is under the regular care of a physician who
   certified the required confinement.

Expenses  for private duty nursing or special nursery services are  not  covered
under this benefit.

SMOKING CESSATION

Charges related to any generally recognized program specifically established to
aid in the cessation of cigarette smoking are covered provided such services are
performed at a facility which is under the direct supervision of a physician.
This benefit will be paid at an amount not to exceed $200 per person in any
three (3) year period, for covered employees and/or covered spouses.

SURGICAL BENEFITS

Surgical benefits are provided for surgeries resulting from illness or
accidental bodily injury.  The maximum amount of payment for a particular
surgery is based upon the Usual, Customary, and Reasonable surgical charge
(UCR).  The definition of UCR is on page 64.

More than one (1) surgery performed by one (1) or more physicians during the
course of only one (1) operative period is called a "multiple surgery."  Because
allowances for surgery include benefits for pre- and post-surgical care, total
benefits for multiple surgeries are reduced so that pre- and post-surgery
allowances of the major surgery are not duplicated.  The reduced benefits vary,
depending upon the circumstances of the multiple surgery.  Variables include the
number of incisions required, the location of the incision and the complexity of
each surgical procedure.

Multiple surgery benefits for procedures performed on the same day, under the
same anesthesia, will be allowed as follows:

1. For surgeries performed through the same incision, the Plan will allow 100%
   of the usual, customary, and reasonable allowance for the procedure with the
   greatest value, plus 50% of the usual, customary, and reasonable allowance
   for each additional procedure.

2. For surgeries performed through different incisions, the Plan will allow
   100% of the usual, customary, and reasonable allowance for the procedure
   with the greatest value, plus 80% of the UCR allowance for the other
   procedure(s).

3. For similar procedures performed on the same day on opposite sides of the
   body, the Plan will allow 100% of the usual, customary, and reasonable
   allowance for the first procedure plus 80% of the UCR allowance for the
   other procedure(s).
                                        39

4. Multiple surgeries performed on the same foot:  The Plan will allow 100% of
   the UCR allowance for the procedure of greatest value.  For the procedure of
   the second greatest value, the Plan will allow 50% of the UCR allowance, and
   for all other surgeries the Plan will allow 25% of the usual, customary, and
   reasonable allowance.

5. For similar surgical procedures performed on both feet on the same day, the
   Plan will allow 100% of the UCR allowance for the procedure with the
   greatest value plus 80% of the UCR allowance for the procedure of the second
   greatest value and 50% of the UCR allowance for the procedure with the third
   greatest value.  For each additional surgery, the Plan will allow 25% of the
   UCR allowance.

Surgical benefits are payable whether the operation is performed in the hospital
or in the doctor's office.  The physician's assistant expenses will be
calculated at 15% and the assistant surgeon's expense will be calculated at 20%
of the covered surgeon's fees.

WEIGHT REDUCTION BENEFIT

Charges related to weight reduction, weight control, and/or physical fitness,
are covered provided such services are performed at a facility which is under
the direct supervision of a physician.  This coverage is restricted in that such
charges may not exceed $1,000 in any five (5) year period. 40

          GENERAL PLAN EXCLUSIONS AND LIMITATIONS

The Plan will not provide benefits for any of the items listed in this section
regardless of medical necessity or recommendation of a physician.  This list is
intended to give you a general description of expenses for services and supplies
not covered by the Plan, and is not all inclusive:

1. Ambulance expense for convenience is not covered.  Any expense for
   commercial transport, private aviation, or air taxi services are not covered
   regardless of the circumstances or their Federal Aviation Authority
   Certification.  Any expenses for transportation by private automobile,
   commercial, or public transportation are not covered.  The Plan will not pay
   for any of these services even if other means of transportation were not
   available.

2. Any expenses for artificial insemination, including but not limited to, in
   vitro fertilization, GIFT procedure, surrogate parents, or expenses related
   to other direct attempts to induce pregnancy including drug and hormone
   therapy.

3. Services and treatment, including drugs related to behavioral disorders,
   communication delays, conduct problems, learning disabilities, and
   developmental delays, special education, counseling, therapy, or training.
   Expenses incurred for initial diagnostic testing to determine the diagnosis
   will be covered.  (However, expenses for the medication and medical
   management of the medication for attention deficit disorders will be
   covered.)

4. Expenses for birthing classes.

5. Expenses for breast pumps and infant formula.

6. Any expenses which are reimbursed or which are repaid through any charitable
   or governmental public program.

7. Expenses required only for the convenience of the covered person or the
   covered person's physician.

8. Expenses for removal of corns, calluses, or trimming of toenails, except
   when necessary in the treatment of a metabolic or peripheral vascular
   disease.  (Prescription orthotics and arch supports are covered when
   medically necessary for treatment of a covered illness or injury.)

9. Any expenses for cosmetic surgery, or the revision of a previous procedure
   performed for cosmetic purposes, including, but not limited to, breast
   augmentation.  Cosmetic surgery is beautification or aesthetic surgery to
   improve an individual's appearance by surgical alteration of a physical
   characteristic.  Cosmetic surgery for psychiatric or psychological reasons,
   or to change family characteristics or conditions due to aging is not
   covered.  For Plan participants who elect reconstruction after mastectomy
   the following reconstructive surgery is covered:  1)  reconstruction of the
   breast on which the mastectomy has been performed;  2)  surgery and
   reconstruction of the other breast to produce a symmetrical appearance; and
   3)  coverage for prostheses and physical complications of all stages of
   mastectomy in a manner determined in consultation with the attending
   physician and the patient.  Such coverage may be subject to annual
   deductibles and coinsurance provisions as may be deemed appropriate and as
   are consistent with those established for other benefits under the Plan.

   Benefits for cosmetic surgery and related expenses are allowed only when
   such surgery is required as the result of a congenital anomaly or an
   accidental injury.

10.Any expense as a result of a court order will only be paid if it would
   ordinarily be a covered expense under the plan.

11.  Any expenses related to custodial care, sanitarium care, or rest care.

12.Expenses for deluxe or luxury items:  examples are motorized equipment when
   manually operated equipment can be used.  The Plan will cover deluxe
   equipment only when additional features are required for effective medical
   treatment, or to allow the covered person to operate the equipment without
   assistance.

   Air conditioners, purifiers, humidifiers, corrective shoes, heating pads,
   hot water bottles, exercise equipment, whirlpools, waterbeds or other
   floatation mattresses, self-help devices, and other clothing and equipment
   which is not medical in nature are not covered, regardless of the relief
   they provide for a medical condition.

13.Any expenses for dental services or dental supplies, except where
   specifically indicated as a covered expense.

14.Expenses incurred for diagnostic admissions.  If the covered person is
   admitted as an inpatient to a hospital for diagnostic procedures, and could
   have received these services as an outpatient without endangering his/her
   health then the Plan will not pay for hospital room and board charges or
   other charges that would not have been incurred if the covered person had
   received the services as an outpatient.

15.Expenses incurred for domiciliary care.  Care provided in a residential
   institution, treatment center, half-way house, or school because a covered
   person's own home arrangements are not appropriate, and consisting chiefly
   of room and board, is not covered, even if therapy is included.

16.Expenses for examinations for employment, licensing, insurance or adoption
   purposes.

17.Expenses which are deemed experimental or investigational or are considered
   an unproven health practice as determined by a medical review organization,
   The Health Care Financing Administration (HCFA) and/or the consensus of the
   medical industry or community.

18.Expenses for any eye surgery in connection with radial keratotomy or any
   procedure designed to correct farsightedness, nearsightedness or
   astigmatism.  This includes any related charges for medical or hospital
   services and/or supplies

19.Hair transplants, implants or drugs even if there is a physician's
   prescription and medical reason for the hair loss.

20.  Expenses for health club membership.

21.Hearing aids and supplies, hearing examinations, evaluation for hearing
   aids, and hearing therapy.  This exclusion shall not apply to the initial
   purchase of a hearing aid if the loss of hearing is a result of a surgical
   procedure performed while coverage is in effect.

22.Expenses related to hypnosis whether for medical or anesthesia purposes,
   except where approved for smoking cessation.

23.Any expenses for testing or treatment of an illness or injury which is not
   recommended by, or for which a covered person is not under the regular care
   of, a physician.

24.Expenses incurred in connection with the treatment of infertility,
   impotency, or promotion of conception, including drug and hormone therapy.

25.Inpatient admissions before coverage becomes effective.  When inpatient
   services begin before coverage under the Plan becomes effective, the entire
   hospital or facility stay will not be covered.

26.Any expenses for late claims filing.  Expenses submitted for coverage more
   than fifteen (15) months after the date of service are late.

27.Services or supplies for which there is no legal obligation to pay, or
   charges which would not be made but for the availability of benefits under
   the Plan.

28.Expenses for lifestyle and personal growth counseling.

29.  Expenses for mailing or sales tax.

30.  Marital counseling or related services.

31.Any expenses incurred by a masseur, physical culturist, or physical
   education instructor are not covered.

32.Any expenses for preparing medical reports, including preparation and
   presentation, or itemized bills, unless requested by Mountain States
   Administration, to a maximum of $50.

33.Expenses for examinations and treatment conducted for the purpose of medical
   research.
	                                     41

34.Any expenses not medically necessary for diagnosis or treatment, except as
   specifically indicated as a covered medical expense.

35.Expenses for missed appointments in a provider's office and/or charges
   incurred when scheduled services are canceled by the covered person.

36.Any services, supplies or drugs related to non-covered services or
   complications arising from such non-covered services are not a benefit (such
   as non-covered artificial conception, cosmetic surgery, sex change
   operations, and experimental/ investigational procedures).

37.Non-medical expenses such as training, education instructions, educational
   materials, or studies, modifications to home, vehicle, or work place to
   accommodate medical conditions, even if they are performed or prescribed by
   a physician.

38.Expenses for services or supplies not included as a covered expense under
   the Plan, even though provided, ordered or referred by a recognized provider
   of the Plan, unless authorized as a part of Medical Case Management.

39.The Plan will not pay for occupational, physical, or speech therapy or
   chiropractic services to maintain function at a level to which it has been
   restored, or when no further significant practical improvement can be
   expected.

40.Orthognathic (Jaw) Surgery.  The only circumstances under which benefits
   will be allowed for upper or lower jaw augmentation or reduction procedures
   is when restoration is required as the result of an accidental injury or
   congenital defect.

41.Any expenses for professional services performed by a person who ordinarily
   resides in the covered person's household or who is related to the covered
   person, such as a spouse, parent, child, brother or sister, whether such
   relationship is by blood or exists in law.

42.Services or supplies used primarily for personal comfort or convenience that
   are not related to the treatment of the covered person's condition.
   Examples:  guest trays, beauty and barber shop services, gift shop purchase,
   telephone, television, more than one (1) admission kit per hospitalization,
   and personal laundry services.

43.Accidents, when no-fault automobile coverage exists or should have existed
   had there been compliance with applicable no-fault regulations.  Expenses in
   excess of applicable no-fault reimbursements are covered expenses.

   If you are a non-owner operator, passenger, or a pedestrian injured by a
   vehicle even though the vehicle(s) involved are not covered by personal
   injury protection (PIP) or no-fault automobile insurance, the Plan will pay
   eligible benefits related to a covered person's injuries.

43.Services related to post-mortem testing.

                                       42

44.Expenses that are subject to the pre-existing condition exclusion provision.

45.Expenses for prescription drugs or substances not approved for general use
   by the Food and Drug Administration (FDA) and drugs which have been labeled
   "Caution, Limited by Federal Law for Experimental Use".

46.Benefits for prescription drugs and medicines will not be provided when a
   written prescription is not required in order to purchase a certain drug or
   medicine, even when a prescription number has been assigned.

47.Expenses incurred prior to the covered person's effective date of coverage
   and expenses after the date the employee ceases to be covered under the
   Plan.

48.Care in any private institution, or any institution owned or operated by the
   federal, state, or local government, which would be provided to the covered
   person without charge were it not for the fact that benefits were available
   to such covered person under the Plan.  This exclusion will not apply if the
   claim is made by the Veterans Administration under Title 38 of the U.S. Code
   for treatment of a veteran not having a service connected disability.

49.Psychoanalysis or psychotherapy that can be credited towards earning a
   degree or furtherance of the education or training of a covered person
   regardless of diagnosis or symptoms that may be present.

50.Any treatment or service furnished by:  a physician or other health care
   provider who is a resident or intern of a general hospital, a physician or
   health care provider who is reimbursed for his or her services by a general
   hospital, or a physician or health care provider who is a resident of a
   covered person's household or member of the immediate family.

51.Benefits for restoration or reconstructive surgery and related expenses are
   allowed only when such surgery is required as a result of a congenital
   anomaly, accidental injury, disease process or its treatment.  Please see
   information regarding mastectomy reconstruction benefits on page 24.

52.Any expenses for rhinoplasty, blepharoplasty or brow lift except expenses
   for rhinoplasties and blepharoplasties to correct a functional condition, or
   expenses for rhinoplasty to correct a condition as a result of an accidental
   injury.

54.Expenses incurred for treatment, testing, procedures, devices, drugs,
   therapy and training and self-help programs include but are not limited to:

   a.   Any type of goal-oriented or behavior modification therapy.

	                                	  43

   b.   Educational programs such as diabetic instruction, cardiac class or
        arthritis class.
   c.   Holistic medicine, environmental medicine, and naturopathic medicine.
   d.   Megavitamin therapy.
   e.   Myotherapy or massage therapy.
   f.   Recreational, sex addiction, primal scream, and Z therapies.
   g.   Religious or marital counseling.
   h.   Rolfing.
   i.   Self-help, stress management.
   j.   Sensitivity or assertiveness training.
   k.   Transactional analysis, encounter groups, and transcendental meditation
        (TM).

55.Any services, care or treatment for transsexualism, gender dysphoria, sexual
   reassignment or change, sexual dysfunction or inadequacy procedures,
   including drugs, medication, implants, hormone therapy, surgery, medical or
   psychiatric care or treatment.

56.Travel expenses of a physician attending a covered person or travel expenses
   of a covered person, although recommended by a physician, except as
   specifically indicated as a covered medical expense.

57.Any expenses which exceed the usual, customary, and reasonable expenses for
   the care rendered.

58.Vision therapy, orthoptic training (eye muscle exercise).

59.Vitamins, minerals, nutritional supplements, appetite suppressants, dietary
   supplements, and formulas whether or not prescribed by a physician.

60.Any charges for any condition, disability or expense resulting from or
   sustained as a result of voluntary participation in or being engaged in an
   illegal occupation, riot, commission of or attempted commission of an
   assault or a felonious act.

61.Any charges for any condition, disability or expense resulting from or
   sustained as a result of war or act of war, declared or undeclared, civil
   war, insurrection, rebellion or revolution, or to any act or condition
   incident to any of the foregoing, unless as a result of a random act.

62.Weekend hospital admission unless due to an emergency or unless surgery is
   scheduled within twenty-four (24) hours.

   Admissions prior to surgery.  If the employee or his/her dependent is
   admitted to the hospital prior to the day of surgery, no benefits will be
   paid for expenses incurred during that period prior to surgery unless the
   admission is medically necessary due to:  (a) an emergency situation; or (b)
   complications which require admission prior to the day of surgery.

63.Expenses for treatment, supplies, instruction or activities for weight
   reduction,
	                                    44

   weight control, weight loss programs or physical fitness even if the services
   are performed or prescribed by a physician except where specifically
   indicated as a covered expense.  Obesity in itself is not considered an
   illness or disease and benefits are not allowed solely for its evaluation
   and treatment.

64.Any expenses for any condition or disability which is due to injury or
   illness arising out of or in the course of any occupation or employment for
   wage or profit or which would entitle the covered person to any benefit
   under a workers' compensation act, law or similar legislation, including
   those situations whereby the covered person lawfully chose not to be covered
   or waived or failed to assert his/her rights under a workers' compensation
   law, act or similar legislation.

                                        45

                        DEFINITIONS

The terms as used herein shall be deemed to define terms that may be used in the
wording of the Plan Document.  These definitions shall not be construed to
provide coverage under any benefit unless specifically provided.

"Accident" means a sudden and unforeseen event, definite as to time and place.

"Administrator" means, as defined by federal law, the Plan Administrator.

"Affiliated Companies" means all wholly owned subsidiaries of Scott's Liquid
Gold - Inc.

"Alcoholism" means a morbid state caused by excessive or compulsive consumption
of alcohol.

"Alcoholism and Substance Abuse Treatment Facility" means an institution which
meets all of the following:

1. Provides a program for diagnosis, evaluation, and effective treatment of
   alcoholism and/or substance abuse;

2. Provides detoxification services needed with its effective treatment
   program;

3. Provides infirmary level medical services or arrangements with a hospital in
   the area for any other medical services that may be required;

4. Is at all times supervised by a staff of physicians;

5. Provides at all times skilled nursing care by licensed nurses who are
   directed by a full-time registered nurse (R.N.);

6. Prepares and maintains a written plan of treatment for each patient based on
   medical, psychological and social needs which is supervised by a physician;
   and

7. Meets licensing standards.

"All Day" shall be considered to begin at 12:01 a.m., and to end immediately
prior to 12:01 a.m. standard time at the residence of the employee, as stated in
his/her application/ request for coverage under the Plan; or if none is stated,
at the address of the company.

"Alternate Payee Provision" means the Plan must make payments to your separated/
divorced spouse, state child support agencies or Medicaid agencies if required
by a qualified medical child support order (QMCSO) or state Medicaid law.

"Ambulance" means a specially designed or equipped vehicle which is licensed for
 transferring the sick or injured.  It must have customary patient care, safety,
        and life-saving equipment, and must utilize trained personnel. 46

"Ambulatory Surgical Center" means an institution or facility, licensed by the
jurisdiction in which it is located, either free standing or as part of a
hospital with permanent facilities, equipped and operated for the primary
purpose of performing surgical procedures and which a patient is admitted to and
discharged from within a twenty-four (24) hour period.  An office maintained by
a physician for the practice of medicine or dentistry, or for the primary
purpose of performing terminations of pregnancy, shall not be considered to be
an ambulatory surgical center.

"Anesthesia" means general anesthesia which produces unconsciousness in varying
degrees with muscular relaxation and a reduction or absence of pain.  Regional
or local anesthesia produces similar effects to a limited region of the body
without causing loss of consciousness.  Anesthesia is administered by a
physician or certified registered nurse anesthetist (CRNA).

"Assignment of Benefits" means payments will also be made in accordance with any
assignment of rights required by a state Medicaid plan.

"Benefit Percentage" means that portion of eligible expenses to be paid by the
Plan in accordance with the coverage provisions as stated in the Plan. It is the
basis used to determine any out-of-pocket expenses which are to be paid by the
participant.

"Calendar Year" means a period of time commencing on January 1 and ending on
December 31 of the same year.

"Child" - Refer to "Dependents Eligible for Coverage," #2, page 7.

"Claims Administrator" means Mountain States Administration (MSA).  MSA has been
hired as the third party contract administrator by the Plan Administrator to
perform claims processing and other specified administrative services in
relation to the Plan.  The contract administrator is not an insurer of health
benefits under this plan, is not a fiduciary of the plan, and does not exercise
any of the discretionary authority and responsibility granted to the plan
administrator.  The contract administrator is not responsible for plan financing
and does not guarantee the availability of benefits under this plan.

"Cleft Lip" means a birth deformity in which the lip fails to close.

"Cleft Palate" means a birth deformity in which the palate (the roof of the
mouth) fails to close.

"Close Relative" means the spouse, parent, brother, sister, child, (to include
step-relations), or spouse's parent, brother, sister or child (to include step
relations).

"COBRA" refers to the Consolidated Omnibus Budget Reconciliation Act of 1985
signed into law (Pub. L. 99-272) April 7, 1986, which amends the Internal
Revenue Code, the Public Health Service Act, and Title I of the Employee
Retirement Income Security Act of 1974 to require certain group health plans of
covered employers to give employees and certain family members the opportunity
to continue their health care coverage at group rates in certain instances where
the coverage would otherwise end.
                                        47

Exhaustion of COBRA continuation coverage means that an individual's COBRA
continuation coverage ceases for any reason other than either failure of the
individual to pay premiums on a timely basis, or for cause (such as making a
fraudulent claim or an intentional misrepresentation of a material fact in
connection with the plan).

"College" - See definition of University.

"Common-Law Marriage" means a marriage in which the covered person resides as
common-law and files both federal and state taxes as married, provides evidence
of cohabitation as husband and wife, and by general reputation the two (2)
individuals are living together as husband and wife and claiming to be such, and
submits a notarized affidavit verifying common-law marriage status.  By general
reputation is meant the understanding among the neighbors and acquaintances with
whom the parties associate in their daily lives, that they are living together
as husband and wife, and not that they are merely living together.

"Company" means Scott's Liquid Gold - Inc. & Affiliated Companies, and any
subsidiary or affiliate which adopts the Plan and business and becomes a party
to the Plan.

"Condition" means a medical condition.  Refer to page 57 for the definition of
"Medical Condition."

"Consultation" means a service provided by another physician at the request of
the physician in charge of your case.  The consulting physician often has
specialized skills that are helpful in diagnosing or treating the illness or
injury.

"Contribution" means the amount payable by the employer or the amount payable by
the employer/employee jointly for participation in the benefits of the Plan.

"Convalescent Nursing Facility" - See definition of "Skilled Nursing Care
Facility".

"Cosmetic Procedure/Surgery" means a procedure performed solely for the
improvement of a covered person's appearance rather than for the improvement or
restoration of bodily function.  Cosmetic procedures performed for psychiatric
or psychological reasons or to change family characteristics or conditions due
to aging are not covered under the Plan.

"Covered Expense/Covered Service" means any necessary usual, customary, and
reasonable item of expense at least a portion of which is covered under the
Plan.

"Covered Person" means any employee or dependents of an employee and/or a person
and his/her dependents who are included in a class or group of persons to which
the Plan has been extended, meeting the eligibility requirements for coverage as
specified in the Plan, and are properly enrolled in the Plan.

"Creditable Coverage" means coverage of an individual under any of the
following:

1. A group health plan (see definition below);

2. Health insurance coverage as defined below (without regard to whether the
   coverage is offered in the group market, the individual market, or
   otherwise);

3. Part A or Part B of Medicare;

4. Medicaid, other than coverage consisting solely of benefits under the
   program for distribution of pediatric vaccines;

5. Medical and dental care for members and certain former members of the
   uniformed services, and for their dependents.

6. A medical care program of the Indian Health Service or of a tribal
   organization;

7. A State health benefits risk pool;

8. A health plan offered under the Federal Employees Health Benefits Program;

9. A public health plan, which means any plan established or maintained by a
   State, county, or other political subdivision of a State that provides
   health insurance coverage to an individual who are enrolled in the plan; and

10.A health benefit plan under the Peace Corps Act.

Creditable coverage does not include:

1. Accident only coverage including accidental death and dismemberment;

2. Disability income insurance;

3. Liability insurance, including general liability insurance and automobile
   liability insurance;

4. Coverage issued as a supplement to liability insurance;

5. Workers' compensation or similar insurance;

6. Automobile medical payment insurance;

7. Credit-only insurance (for example, mortgage insurance); and

8. Coverage for on-site medical clinics.

9. Limited Scope Benefits.  Refer to page 57 for the definition of "Limited
   Scope Benefits."

10.Long-term care benefits.

11.Supplemental benefits.  Refer to page 63 for the definition of "Supplemental
   Benefits".

12.Non-coordinated benefits such as:  (a) coverage for only a specific disease
   or illness (for example, cancer only policies) or hospital indemnity or
   other fixed dollar indemnity insurance (for example, $100/day) which are
   provided under a separate policy, certificate, or contract of insurance; (b)
   there is no coordination between the provision of benefits and an exclusion
   of benefits under any group health plan maintained by the same plan
   administrator; and (c) the benefits are paid with respect to an event
   without regard to whether benefits are provided under any group health plan
   maintained by the same plan administrator.

"Custodial Care" means that type of care or service, wherever furnished and by
whatever name called, which is designed primarily to assist in meeting the needs
of daily living of a covered person, whether or not totally disabled, in the
activities included, but not limited to:  bathing, dressing, feeding,
preparation of special diets, assistance in walking or in getting in and out of
bed, and supervision over medication which can normally be self-administered.

"Dentist" means a person duly licensed to practice dentistry by the governmental
authority having jurisdiction over the licensing and practice of dentistry in
the locality where the service is rendered.

"Dependent" - Refer to "Dependents Eligible for Coverage" on pages 6 through 9.

"Durable Medical Equipment" means equipment which is able to withstand repeated
use, used to serve a medical purpose, and not generally useful to a person in
the absence of illness or injury.

"Effective Date" means the date as of which the employer and any subsidiary or
affiliate adopts the Plan; or the date the employee and his/her eligible
dependent are properly enrolled in the Plan as specified in the eligibility
requirements for coverage.

"Eligible Expenses" means any medically necessary treatments, services or
supplies that are not specifically excluded from coverage elsewhere in this
Plan.

"Emergency Services" means treatment for an illness or injury which develops
suddenly and unexpectedly and which in the absence of immediate medical
treatment would result in the condition becoming significantly worse, or result
in the death of the covered person.

"Employee" means a person employed by the company and/or who is included in a
class or group of persons to which the Plan has been and continues to be
extended, and who is properly enrolled in the Plan.

"Employer" as defined by ERISA Section 3(5), is "any person acting directly as
an employer, or indirectly in the interest of an employer, in relation to an
employee benefit plan; and includes a group or association of employers acting
for an employer in such capacity."  Specific to this Plan, "employer" means
Scott's Liquid Gold - Inc. & Affiliated Companies, and any subsidiary or
affiliate which adopts the Plan and business and becomes a party to the Plan.
                                        48

"Enrollment Date" (enrollment date and first day of coverage) means the
following:

1. Enrollment date means the first day of coverage or, if there is a waiting
   period, the first day of the waiting period (typically the date employment
   begins).

2. First day of coverage means, in the case of an individual covered for
   benefits under a group health plan in the group market, the first day of
   coverage under the plan and, in the case of an individual covered by health
   insurance coverage in the individual market, the first day of coverage under
   the policy.

"ERISA" refers to the Employee Retirement Income Security Act of 1974 or any
provision or section thereof which is herein specifically referred to as such
act, provision or section which may be amended from time to time.

"Exclusion" means any provision of the Plan whereby coverage for a specific
service or condition is entirely eliminated regardless of medical necessity.

"Experimental or Investigational Services" means:

1. Care, procedure, treatment or technology which:  (a) is not widely accepted
   as safe, effective and appropriate for the injury or sickness throughout the
   recognized medical profession and established medical societies in the
   United States; or (b) is experimental, in the research or investigational
   stage, or conducted for research or similar purposes.

2. Drugs and tests which:  (a) the Federal Food and Drug Administration has not
   approved for general use; (b) are considered experimental; or (c) are for
   investigational use.  Drugs and tests approved for a specific medical
   condition but which are used for another condition, will be considered
   experimental.

In determining any of the above, the Plan will rely on recognized medical
sources such as, but not limited to, the Data Project of the American Medical
Association, the National Institute of Health, the U.S. Food and Drug
Administration, the Health Care Finance Administration (HCFA), and other broadly
accepted medical authorities and sources.

"Family" means a covered employee and his/her eligible dependents.

"Full-Time Employment" means a basis whereby a regular employee is employed by
the company and scheduled to work at least thirty (30) hours per week.  Such
work may occur either at the usual, customary, and reasonable place of business
of the company or at a location to which the business of the company requires
the employee to travel, and for which he or she receives regular earnings from
the company.

"Full-Time Student" means an employee's dependent child who is enrolled in and
regularly attending an accredited college or university, high school or
vocational school for the minimum number of credit hours required by that
school, college or university in order to maintain full-time student status.
                                        49

"Genetic Information" means information about genes, gene products, and
inherited characteristics that may derive from the individual or a family
member.  This includes information regarding carrier status and information
derived from laboratory tests that identify mutations in specific genes or
chromosomes, physical medical examinations, family histories, and direct
analysis of genes or chromosomes.

"Group Health Insurance Coverage" means health insurance coverage offered in
connection with a group health plan.

"Group Health Plan" means a plan (including a self-insured plan) of, or
contributed to by, an employer (including a self-employed person) or employee
organization to provide health care (directly or otherwise) to the employees,
former employees, the employer, others associated or formerly associated with
the employer in a business relationship, or their families.

"Health Insurance Coverage" means benefits consisting of medical care (provided
directly, through insurance or reimbursement, or otherwise) under any hospital
or medical service policy or certificate, hospital or medical service plan
contract, or HMO contract offered by a health insurance issuer.

"Health Insurance Issuer" means an insurance company, insurance service, or
insurance organization (including an HMO) that is required to be licensed to
engage in the business of insurance in a State and that is subject to State law
that regulates insurance (within the meaning of Section 514(b)(2) of ERISA).
Such term does not include a group health plan.

"Hemodialysis" means the treatment of an acute or chronic kidney ailment during
which impurities are removed from the blood with dialysis equipment.

"HIPAA" means The Health Insurance Portability and Accountability Act of 1996,
enacted on August 21, 1996.  HIPAA amends the Public Health Service Act (PHS
Act), the Employee Retirement Income Security Act of 1974 (ERISA), and the
Internal Revenue Code of 1986 (CODE), significantly expanding employee access to
health care coverage.

"Home Health Care Agency" means a public or private agency or organization that
specializes in providing medical care and treatment in the home.  Such a
provider must meet all of the following conditions:

1. It is primarily engaged in and duly licensed, if such licensing is required,
   by the appropriate licensing authority to provide skilled nursing services
   and other therapeutic services.

2. It has policies established by a professional group associated with the
   agency or organization.  This professional group must have at least one (1)
   physician and at least one (1) graduate registered nurse (R.N.) to govern
   the services provided and it must provide full-time supervision of such
   services by a physician or graduate registered nurse (R.N.). 50

3. It maintains a complete medical record on each patient.

4. It has a full-time administrator.

5. It is a provider of services under Medicare.

In rural areas where there are no agencies which meet the above requirements or
areas in which the available agencies do not meet the needs of the community,
the services of visiting nurses may be substituted for the services of an
agency.

"Home Health Care Plan" means a program for continued care and treatment of the
covered person established and approved in writing by the covered person's
attending physician. Home Health Care must be either: (a) an alternate form of
treatment which is cost effective or reasonable compared to other options, or
(b) must begin within seven (7) days following discharge from an inpatient
hospital confinement of at least three (3) days, be for the same or related
condition, and the attending physician must certify that the proper treatment of
the illness or injury would require continued confinement in a hospital in the
absence of Home Health Care.

"Hospice" means a health care program providing a coordinated set of services
rendered at home, in outpatient settings or in institutional settings for
covered persons suffering from a condition that has a terminal prognosis.  A
hospice must have an interdisciplinary group of personnel which includes at
least one (1) physician and one (1) graduate registered nurse (R.N.), and it
must maintain central clinical records on all patients.  A hospice must meet the
standards of the National Hospice Organization (NHO) and applicable state
licensing requirements.

"Hospice Benefit Care Period" means a specified amount of time during which the
covered person undergoes treatment by a hospice.  Such time period begins on the
date the attending physician of a covered person certifies a diagnosis of
terminally ill, and the covered person is accepted into a hospice program.

"Hospital" means an institution which meets all of the following conditions:

1. It is licensed and operated in accordance with the laws of jurisdiction in
   which it is located which pertain to hospitals; is engaged primarily in
   providing medical care and treatment to ill and injured persons on an
   inpatient basis at the patient's expense; maintains on its premises all the
   facilities necessary to provide for diagnosis and medical and surgical
   treatment of an illness or an injury; and such treatment is provided by or
   under the supervision of physicians with continuous twenty-four (24) hour
   nursing services by graduate registered nurses (R.N.s).

2. It qualifies as a hospital, a psychiatric hospital, or a tuberculosis
   hospital and is accredited by the Joint Commission on the Accreditation of
   Health Care Organizations (JCAHO).

                                        51

3. It is a provider of services under Medicare.

4. It is not, other than incidentally, a place for rest, a place for the aged
   or a nursing home.

5. A free-standing facility which is licensed to treat alcohol and substance
   abuse will meet the definition of a hospital.

"Hospital Miscellaneous Expenses" means the actual charges made by a hospital in
its own behalf for services and supplies rendered to the covered person which
are medically necessary for the treatment of such covered person.  Hospital
miscellaneous expenses do not include charges for room and board or for
professional services of a physician and drugs or supplies not consumed or used
in the hospital.

"Illness/Sickness" means any bodily sickness, disease or mental/nervous
disorder.  For purposes of this plan, pregnancy will be considered as any other
illness.

"Incurred Expenses/Services" means those treatments, services and supplies
rendered to a covered person.  Such expenses shall be considered to have
occurred at the time or on the date the treatment, service or purchase is
actually provided.

"Injury" means sudden and instant damage to the body, which is unintended and
undesigned by the individual and which results directly from and independently
of all other causes of loss covered by the Plan.

"Inpatient" refers to the classification of a covered person when that person is
admitted to a hospital, hospice, or convalescent facility for treatment, and
charges are made for room and board to the covered person as a result of such
treatment, upon the recommendation of a physician.

"Intensive Care Unit" means a section, ward, single room or coronary care unit
within the hospital which is separated from other facilities and:

1. is operated exclusively for the purpose of providing professional medical
   treatment for critically ill patients; and

2. has special supplies and equipment necessary for such medical treatment
   available on a standby basis for immediate use; and

3. provides constant observation and treatment by registered nurses (R.N.s) or
   other highly trained hospital personnel.

"Laboratory, Pathology Services, X-Ray and Radiology Services" means:

  Laboratory and pathology services - testing procedures required for the
  diagnosis or treatment of a condition.  Generally, these services involve the
  analysis of a specimen of tissue or other material which has been removed from
  the body.  Diagnostic medical procedures requiring the use of technical
  equipment for evaluation of body systems are also considered laboratory
  services.  Examples:  electrocardiograms (EKGs) and  52

electroencephalograms (EEGs).

X-ray and radiology services - services including the use of radiology, nuclear
medicine, and ultrasound equipment to obtain a visual image of internal body
organs and structures, and the interpretation of these images.

"Late Entrant" means an employee or dependent who does not enroll during the
initial period in which he or she is eligible to enroll, or during a special
enrollment period when there is a change in family status or loss of coverage
under another plan.  Coverage for a late entrant will begin the date the former
coverage ended as long as the application is made within thirty (30) days.

"Life-Threatening Emergency" shall mean the sudden and unexpected onset of a
condition which threatens life, limb, or organ system and requires immediate
medical or surgical intervention, but in no case later than twenty-four (24)
hours after onset.

"Limitation" means any provision other than an exclusion, which restricts
coverage under the Plan, regardless of medical necessity.

"Limited Scope Benefits" are dental, vision  or other types of benefits which
are not deemed an integral part of the Plan and the participant has the right to
elect to receive such coverage and pay an additional contribution for such
coverage; or a benefit provided under a separate plan or policy.  They are
limited in scope to a narrow range or type of benefits that are generally
excluded from hospital/medical/surgical benefit packages.

"Maternity" means that physical state which results in childbirth, abortion, or
miscarriage, and any medical complications arising out of or resulting from such
state.

"Medicaid" - Title XIX (Grants to states for Medical Assistance Programs) of the
United States Social Security Act as amended.

"Medical Condition" means any condition, whether physical or mental, including,
but not limited to, any condition resulting from illness, injury (whether or not
the injury is accidental), pregnancy, or congenital malformation.  However,
genetic information is not a condition.

"Medically Necessary" means health care services, supplies or treatment which,
in the judgment of the attending physician, are appropriate and consistent with
the diagnosis and which, in accordance with generally accepted medical
standards, could not have been omitted without adversely affecting the patient's
condition or the quality of medical care rendered.

"Medicare" means the programs established by Title I of Public Law 89-98 (79
Statute 291) as amended entitled "Health Insurance for the Aged Act," and which
includes Parts A and B and Title XVIII of the Social Security Act (as amended by
Public Law 89-97, 79) as amended from time to time.

"Mental Health Disorder" means neurosis, psychoneurosis, psychopathy,
 personality
                                      53

disorder, psychosis, or mental or emotional diagnosed disease or disorder of any
kind.  Anorexia nervosa, bulimia nervosa, and eating disorders are classified as
manifest mental disorders.

"Mental Retardation and/or Physical Disability" means the inability of a person
to be self-sufficient as a result of a condition such as mental retardation,
cerebral palsy, epilepsy or another neurological disorder and diagnosed by the
physician as permanent and continuing.

"Midwife" means a person licensed or certified to practice as a midwife who has
completed the academic and clinical requirements set forth by specific states
who provide this license or certification.  It is issued upon passing a state
board exam and a practical exam, and by meeting a set number of supervised
experiences and births.

"Minor Emergency Medical Clinic" means a freestanding facility which is engaged
primarily in providing minor emergency and episodic medical care to a covered
person.  A board-certified physician, a registered nurse (R.N.) and a registered
x-ray technician must be in attendance at all times that the clinic is open.
The clinic's facilities must include x-ray and laboratory equipment and a life
support system.  For the purposes of the Plan, a clinic meeting these
requirements will be considered to be a minor emergency medical clinic, by
whatever actual name it may be called.  However, a clinic located on or in
conjunction with or in any way made a part of a regular hospital shall be
excluded from the terms of this definition.

"Named Fiduciary" means Scott's Liquid Gold - Inc. & Affiliated Companies, which
has the authority to control and manage the operation and administration of the
Plan.

"Newborn" refers to an infant from the date of his/her birth until initial
discharge from the hospital.

"Nurse" means a graduate registered nurse (R.N.), a licensed practical nurse
(L.P.N.) who is licensed in the state in which the services are performed.

"Nurse Practitioner" means a registered nurse (other than an immediate family
member or employee of the employer) who:  (1) completes a program of study
affiliated with a college or university; (2) passes a nurse practitioner
certification examination given by the American Nurses Association; (3) acts
within the scope of that certification in treating the injury or sickness; and
(4) who is licensed by the law of the state in which services are rendered.

"Office Visit" means a face to face meeting between a physician and a patient
for the purpose of medical treatment or service.

"Orthopedic Appliance" means any rigid, or semi-rigid support used to restrict,
eliminate, or support motion in a part of the body that is diseased, injured,
weak or deformed.

"Outpatient" refers to treatment either outside of a hospital setting or at a
 hospital when room and board charges are not incurred.

                                    54

"Outpatient Psychiatric Facility" means an administratively distinct
governmental, public, private or independent unit or part of such unit that
provides outpatient mental health services and which provides for a psychiatrist
who has regularly scheduled hours in the facility, and who assumes the overall
responsibility for coordinating the care of all patients.  This definition
includes alcoholism and substance abuse facilities.

"Participant" as defined in ERISA Section 3(7), means:  "any employee or former
employee of an employer, or any member or former member of an employee
organization, who is or may become eligible to receive a benefit of any type
from an employee benefit plan which covers employees of such employer or member
of such organization, or whose beneficiaries may be eligible to receive any such
benefit".

"Participant Coverage" means coverage (as stated in the Plan Document and as
amended) that is provided to a covered participant and his or her eligible
dependents.

"Physician" means a legally licensed physician who is acting within the scope of
his/her license and any other professional provider required to be recognized
for benefit payment purposes under the law of the state in which the employee
receives treatment and is acting within the scope of his/her license, but is not
a close relative of the employee.

"Placement for Adoption" is defined under ERISA Sec. 609(c)(3)(B) as follows:

"The term "placement," or being "placed," for adoption, in connection with any
placement for adoption of a child with any person, means the assumption and
retention by such person of a legal obligation for total or partial support of
such child in anticipation of adoption of such child."

For group health plan purposes, these provisions override state laws requiring
the legal guardianship of a child placed for adoption to remain with the
appropriate agency until the adoption is finalized.

"Plan" means without qualification the Plan Document.

"Plan Administrator/Plan Sponsor" means Scott's Liquid Gold - Inc. & Affiliated
Companies which is responsible for the day-to-day functions and management of
the Plan.  The Plan Administrator/Plan Sponsor may employ persons or firms to
process claims and perform other Plan related services.

"Pre-Existing Condition" must relate to a condition (whether physical or
mental), regardless of the cause of the condition, for which medical advice,
diagnosis, care, or treatment was recommended or received within the six (6)
month period ending on the enrollment date.

"Pregnancy" means that physical state which results in childbirth, abortion, or
miscarriage, and any medical complications arising out of or resulting from such
state.

    "Private-Duty Nursing Services" means services that require the training,
                                judgment, and  55

technical skills of an actively practicing registered nurse (R.N.) or licensed
practical nurse (L.P.N.).  Such services must be prescribed by the attending
physician for the continuous medical treatment of a condition.

"Prosthesis" means any device that replaces all or part of a missing body organ
or body member.

"Provider" means a person or facility that is recognized by the Plan as a health
care provider, and fits one (1) or more of the following descriptions:

1. Professional Provider.  A physician or other professional provider who is
   recognized by the Plan.

2. Other Professional Provider.  A professional provider (except a physician)
   who is recognized by the Plan and licensed, certified, or registered by the
   state or jurisdiction where services are provided to perform designated
   health care services.  Services of such a provider must be among those
   covered by the Plan and are subject to review by a medical authority
   appointed by the Plan.  A professional supplier of medical supplies and
   equipment is considered an other professional provider.

3. Facility Provider.  An alcoholism or substance abuse treatment center, home
   health agency, hospice agency, hospital, or other facility which the Plan
   recognizes as a health care provider.

4. Other Facility.  A facility provider (except a hospital, alcoholism or
   substance abuse treatment center, home health agency, or hospice agency)
   that the Plan recognizes as a provider and that is licensed or certified to
   perform designated health care services by the state or jurisdiction where
   services are provided.  Services of such a provider must be among those
   covered by the Plan and are subject to review by a medical authority
   appointed by the Plan.  Examples:  ambulatory surgery center, dialysis
   center, Veteran's Administration, or Department of Defense Hospital.

"Psychiatric Care" also known as psychoanalytic care, means treatment for a
mental illness or disorder, or a functional nervous disorder.

"Psychiatric Hospital" means an institution which meets the following
requirements:

1. maintains diagnostic and medical facilities on its premises or in facilities
   under its control; and

2. primarily provides care and treatment to registered inpatients for mental
   illness, emotional or nervous disorder, psychosis, neurosis, character or
   personality disorder or other mental or emotional disease or disorder; and

3. is supervised by a staff of one (1) or more physicians; and

4. has twenty-four (24) hour nursing service by registered nurses (R.N.s) on
   duty or call; and
                                        56

5. complies with all licensing or legal requirements; and

6. is not primarily a nursing, convalescent or rest home or a place for the
   aged or custodial care.

A part of an institution operated as a nursing, convalescent, rehabilitation or
geriatric unit primarily for nursing care is not considered a psychiatric
hospital.

"Psychologist" means an individual holding the degree of Ph.D., Ed.D and Psy.D.
acting within the scope of his/her license.

"Qualified Medical Child Support Order (QMCSO)" means a judgment, decree or
order issued by a court, domestic relations magistrate or administrator that
provides for child support related to health benefits or enforces a state
medical child support order under the Social Security Act (for Medicaid
purposes).  It requires that the child(ren) named in the order have the right to
receive benefits from their parent through any group medical plan under which
the parent is enrolled, whether or not the parent has family coverage.  The
required contribution for coverage will be that of family coverage.  The QMCSO
must contain:

1. the name and last known mailing address of the participant;

2. the name and mailing address of each child (alternate recipient) covered by
the order;

3. a reasonable description of the type of coverage to be provided by the group
   health plan to each alternate recipient or the manner in which coverage will
   be determined;

4. the period of time to which the order applies; and

5. the identification of each plan to which the order applies.

"Qualifying Beneficiary (under COBRA)" is a covered employee and/or the spouse
and/or child of a covered employee who, on the date before a qualifying event
occurred, was eligible for benefits under this group health plan.  Effective
January 1, 1997, a qualified beneficiary includes a child who is born to or
placed for adoption with the covered employee during the period of COBRA
coverage.

"Rehabilitation Facility" means a distinct organizational entity, either
separate or within a larger institution or agency which meets the following
requirements:

1. provides individualized, goal-oriented, comprehensive and coordinated
   services designed to minimize the effects of physical, mental, social and
   vocational disadvantages and to effect a realization of the individual's
   potential; and

       2. is accredited for its stated purpose by the Joint Commission on
     Accreditation of Health Care Organizations (JCAHO) or the Commission on
            Accreditation of Rehabilitation Facilities (CARF); and 57

3. is certified for its stated purpose by Medicare for Medicare reimbursement;
and

4. is licensed and complies with its stated purpose under all relevant state
   and local laws.

"Rehabilitation Services" means the process of providing, in a coordinated
manner, those comprehensive services deemed appropriate to the needs of a person
with a disability, in a program designed to achieve objectives of improved
health, welfare and the realization of one's maximum physical, social,
psychological and vocational potential for useful and productive activity.

"Restorative or Reconstructive Surgery" means surgery to restore or improve
bodily function to the level experienced before the event which necessitated the
surgery or, in the case of a congenital defect, to a level considered normal.
Such surgery may have a coincidental cosmetic effect.

"Room and Board" refers to all charges by whatever name called which are made by
a hospital, hospice, or convalescent nursing facility as a condition of
occupancy.  Such charges do not include the professional services of physicians
nor intensive nursing care by whatever name called.

"Schedule of Benefits" means the outline of benefits.

"Second Surgical Opinion" means expenses incurred for examination, x-ray, and
lab performed by a qualified physician in the approved specialty to substantiate
medical necessity of the procedure to be performed.  A third opinion will be
paid in case of a conflict between the first two (2) opinions.

"Semiprivate" refers to a class of accommodations in a hospital or convalescent
nursing facility in which at least two (2) patient beds are available per room.

"Significant Break in Coverage" means a period of sixty-three (63) consecutive
days during all of which the individual does not have any creditable coverage,
except that neither a waiting period nor an affiliation period is taken into
account in determining a significant break in coverage.

"Skilled Nursing Care Facility" means an institution, or distinct part thereof,
operated pursuant to law and one which meets all of the following conditions:

1. It is licensed to provide, and is engaged in providing professional nursing
   services on an inpatient basis, for persons convalescing from injury or
   illness.  Services are rendered by a graduate registered nurse (R.N.) or by
   a licensed practical nurse (L.P.N.). In addition they provide physical
   restoration service to assist patients to reach a degree of body functioning
   to permit self-care in essential daily living activities.

2. Its services are provided for compensation from its patients and under the
   full-time supervision of a physician or graduate registered nurse (R.N.).

	                                     58

3. It provides twenty-four (24) hour per day nursing service by licensed
   nurses, under the direction of a full-time graduate registered nurse (R.N.).

4. It maintains a complete original record on each patient.

5. It has an effective organization review plan.

6. It is not, other than incidentally, a place for rest, the aged, drug
   addicts, alcoholics, mentally handicapped, custodial or educational care, or
   care of mental disorders.

7. It is approved and licensed by Medicare.

This term shall also apply to an institution referring to itself as a
convalescent nursing facility, extended care facility, convalescent nursing
home, or any such other similar nomenclature.

"Sound Natural Teeth" means teeth which are whole or properly restored, are
without impairment or periodontal disease, and are not in need of the treatment
provided for reasons other than dental injury.

"Subrogation/Third Party Liability" means the transfer of one's liabilities for
another; in this case the temporary assumption of the claimant's liabilities by
the Plan prior to repayment by the party of primary liability.  The Plan
contains a subrogation clause and the claimant is obligated to obtain any monies
available from third parties to reduce the Plan's losses.

"Substance Abuse" means addiction or abuse of alcohol, legal or illegal drugs,
or any other substance used in a way which results in producing abnormal
behavior and/or a mind-altered state.

"Supplemental Benefits" means benefits that are provided under a separate
policy, certificate, or contract of insurance, such as:  (1) Medicare
supplemental health insurance, also known as Medigap or MedSupp insurance; (2)
coverage supplemental to that provided under the Civilian Health & Medical
Program of the Uniformed Services (also known as CHAMPUS supplemental programs);
and (3) similar supplemental coverage provided to coverage under a group health
plan.  Refer to Creditable Coverage on page 50.

"Surgery" means any operative or diagnostic procedures performed for the
treatment of illnesses or injuries by an instrument or cutting procedure through
any natural body opening or incision, including the necessary treatment of
fractures and dislocations, severe sprains and casting thereof, but not
including simple sprains or bruises.

"TEFRA" refers to the Tax Equity and Fiscal Responsibility Act of 1982, as
amended from time to time.
                                        59

"Therapies:  Chemotherapy, Radiation, Occupational, Physical and Speech" mean:

Chemotherapy - drug therapy administered as treatment for malignant conditions
and diseases of certain body systems.

Radiation therapy - x-ray, radon, cobalt, betatron, telocobalt, and radioactive
isotope treatment for malignant diseases and other medical conditions.

Occupational therapy - the use of educational, vocational, and rehabilitative
techniques to improve a patient's functional ability to live independently.

Physical therapy - the use of physical agents to treat disability resulting from
disease or injury.  Physical agents used include heat, cold, electrical
currents, ultrasound, ultraviolet radiation, massage, and therapeutic exercise.

Speech therapy (also called speech pathology) - services used for diagnosis and
treatment of speech and language disorders.

"Total Disability (Totally Disabled)" means the physical state of a covered
person resulting from an illness or injury which wholly prevents that individual
from performing the duties pertaining to his/her customary employment.
Individuals must be under the continuous care of a physician.  All
determinations of a final definition of a disability are the decision of the
Plan Administrator.  In the case of a dependent, "Total Disability (Totally
Disabled)" means unable to perform the normal activities of a person of same age
and sex in good health.

"University" means an accredited institution of higher education.

"Urgent Care/Extended Care Facility" means a freestanding facility which is
engaged primarily in providing minor emergency and episodic medical care to a
covered person.  A physician and registered nurse (RN) must be in attendance at
all times.  The facility may or may not have an x-ray technician and x-ray and
laboratory equipment.  The facility must have a life support system available.

"Usual, Customary, and Reasonable (UCR)" refers to the designation of a charge
as being the usual charge made by a physician or other provider of services,
supplies, medications, or equipment that is deemed medically necessary, is not
experimental, and does not exceed the general level of charges made by other
providers rendering or furnishing such care or treatment within the same area.
The term "area" in this definition means a county or such other area as is
necessary to obtain a representative cross section of such charges.

Due consideration will be given to the nature and severity of the condition
being treated and any medical complications or unusual circumstances which
require additional time, skill or expertise.

"Waiting Period" means the period of time that must pass before an employee or
dependent is eligible to enroll under the terms of a group health plan.  If an
employee or dependent enrolls as a late entrant or on a special enrollment date,
any period before such late or special enrollment is not a waiting period.

"Well-Baby Care" means medical treatment, services or supplies rendered to a
child or newborn solely for the purpose of health maintenance and not for the
treatment of an illness or injury.

                                        60

                    GENERAL INFORMATION
              IMPORTANT FACTS ABOUT YOUR PLAN

THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (HIPAA)

If your coverage terminates under this Plan, recent changes in Federal law may
affect your health coverage if you become eligible to enroll in another health
plan which limits or excludes coverage for pre-existing conditions.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) limits
the circumstances under which coverage may be excluded for conditions which
exist before you enroll in a new Plan.  Under the law, beginning with health
care plans with "plan year" dates of July 1, 1997, and after, a pre-existing
condition exclusion period may be reduced under certain circumstances by the
period you were covered under this Plan.  To assist you in verifying coverage,
the Plan will issue a certificate to you (and your eligible dependents) that
will provide evidence of your coverage under this Plan at the time your coverage
terminates.

You have the right to receive such a certificate for any period of health
coverage since July 1, 1996.  If you were not covered under this Plan
consecutively for a period of at least eighteen (18) months, you may need to
provide documentation for earlier periods of health care coverage, not covered
by the certificate issued by this Plan.  This will require that you contact
previous providers of health coverage.

It is the intent of the Plan to comply with all existing HIPAA regulations.  If
for some reason the information presented in the Plan differs from actual HIPAA
regulations, the Plan reserves the right to administer HIPAA in accordance with
such actual regulations.

OPTIONAL CONTINUATION OF COVERAGE (COBRA)

Continuation of Coverage Under Federal Law (COBRA)

If you have additional health coverage in effect before the time of your COBRA
eligibility, you may still elect COBRA continuation coverage under this Plan.
As mandated by Federal law, the Plan offers optional continuation coverage to
the employee and/or his/her dependents if coverage would otherwise end due to
one (1) of the following events:

1. Termination of the employee's employment for any reason except gross
   misconduct.  Coverage may continue for the employee and his/her eligible
   dependents.

2. A reduction in hours worked by the employee which results in loss of Plan
   eligibility.  Coverage may continue for the employee and his/her eligible
   dependents.

3. The employee's death.  Coverage may continue for his/her eligible
   dependents.

 4. Divorce or legal separation from his/her spouse.  Coverage may continue for
                                    that  61

spouse and his/her eligible dependents.

5. The employee becomes entitled to Medicare.  Coverage may continue for
   eligible dependents who are not entitled to Medicare.

6. Loss of eligibility of a covered dependent child due to Plan eligibility
   requirements.  Coverage may continue for that dependent.

7. The employer files a Chapter 11 bankruptcy petition and the employee was
   covered as a qualified retiree at the time of the filing.  Coverage may
   continue for qualified retirees and their beneficiaries if coverage ends or
   is substantially reduced within one (1) year before or after the filing for
   bankruptcy.

Note:  To choose this continuation coverage, an individual must be a covered
person under the Plan on the day before the qualifying event.  In the case of
bankruptcy, an individual must have retired on or before the date coverage was
substantially reduced, or be a beneficiary of the retired employee on the day
before the bankruptcy.

Notification Requirement

The qualifying individual has the responsibility to inform the employer, in
writing, of a divorce, legal separation, or a child losing dependent status
under the Plan within sixty (60) days of the qualifying event.  Failure to
provide this notification within sixty (60) days will result in the loss of
continuation coverage rights.

The employer has the responsibility of notifying Mountain States Administration
in writing of the employee's death, termination of employment, reduction in
hours, entitlement to Medicare, or the employer's bankruptcy within thirty (30)
days of the qualifying event.

The employer will notify the qualifying individual of continuation coverage
rights in writing within fourteen (14) days of the notice described above.  The
qualifying individual will then have sixty (60) days to elect continuation
coverage.  Failure to elect continuation coverage within sixty (60) days after
notification by the employer will result in loss of continuation coverage
rights.

Maximum Period of Continuation Coverage

The maximum period of continuation coverage for individuals who qualify due to
termination of employment or reduction in hours worked is eighteen (18) months
from the date of the qualifying event.

If a qualified beneficiary is disabled (as determined under the Social Security
Act) at the time of termination or reduction in hours, continuation coverage for
the qualifying individual may be extended to twenty-nine (29) months, provided
the qualifying individual notifies the employer either within the eighteen (18)
month continuation coverage period, or within sixty (60) days after receiving
notification of disability.  The covered person must notify the employer of a
determination by Social Security that the individual is no longer disabled
within thirty (30) days of such determination.
                                        62

Coverage may continue for up to twenty-nine (29) months if the Social Security
Administration determines that you, or a covered dependent, were or became
totally disabled at any time during the first sixty (60) days of COBRA
continuation coverage.  To qualify for the extension, the qualified beneficiary
must submit a copy of the Social Security disability determination notice within
sixty (60) days of the date of such notice to the employer.  This paragraph
applies only if you have health coverage under the COBRA law on or after January
1, 1997.

The maximum period of continuation coverage for individuals who qualify due to
any other described qualifying event, except the employer's bankruptcy, is
thirty-six (36) months from the date of the qualifying event.

Qualifying retirees, widows and widowers of retirees who died before the
employer's bankruptcy are entitled to lifetime continuation coverage.  However,
if a retiree dies after bankruptcy, the surviving spouse and dependent children
may only elect an additional thirty-six (36) months of continuation coverage
after the death.

If an individual experiences more than one (1) qualifying event, the maximum
period of coverage will be computed from the date of the earliest qualifying
event, but will be extended to the full thirty-six (36) months if required by
the subsequent qualifying event.

However, if the employee's spouse and dependent children would otherwise lose
coverage because of a qualifying event, they will be entitled to thirty-six (36)
months of continuation coverage from the date the employee becomes entitled to
Medicare even if the employee's entitlement to Medicare does not cause loss of
coverage either because he/she is still employed or because he/she had already
terminated employment.

Cost of Continuation Coverage

The cost of continuation coverage is determined by the employer and paid by the
qualifying individual.  If the qualifying individual is not disabled, the
applicable premium cannot exceed 102% of the Plan's cost of providing coverage.
The cost of coverage during a period of extended continuation coverage due to a
disability cannot exceed 150% of the Plan's cost of coverage.

The qualified individual must make the first payment within forty-five (45) days
of notifying the Plan of selection of continuation coverage.  Future payments
can be made in monthly installments within thirty (30) days of the due date.
Rates and payment schedules are established by the employer and may change when
necessary due to Plan modifications.

The cost of continuation coverage is computed from the date coverage would
normally end due to the qualifying event.

Failure to make the first payment within forty-five (45) days or failure to make
any subsequent payment within thirty (30) days of the established due date will
result in the permanent cancellation of continuation coverage.
                                        63

When Continuation Coverage Ends

Continuation of coverage ends on the earliest of:

1. The date the maximum continuation period expires.

2. The date the qualifying individual becomes entitled to coverage under
Medicare.

3. The first day for which timely payment is not made to the plan.

4. The date the employer no longer offers a group health plan to any of its
employees.

5. The date the qualifying individual becomes covered under any other group
   health plan that does not exclude or limit coverage for a pre-existing
   condition the qualifying individual may have.

It is the intent of the Plan to comply with all existing COBRA regulations.  If
for some reason the information presented in the Plan differs from actual COBRA
regulations, the Plan reserves the right to administer COBRA in accordance with
such actual regulations.

CONVERSION PRIVILEGE

There are no conversion benefits for medical or dental coverage when COBRA
participation ends.

MEDICARE

Health insurance protection is provided in two (2) forms under the Federal
Medicare Program.

Part A:  Hospital Insurance

1. Hospital costs for semiprivate room in an accredited hospital up to a
   limited number of days.

2. Nursing home care after hospital confinement.

3. Home health visits after hospital discharge.

Part B:  Medical Insurance Plan and Supplemental Plan.

1. The supplementary plan provides protection that is not given under the
   Part A, Hospital Insurance Program; with the primary function of providing
   coverage for the cost of physicians' services.
                                        64

The above Medicare programs, both Parts A and B, will assist in paying part of
the health care cost for individuals age sixty-five (65) or older.

If your employer has less than twenty (20) employees in the current calendar
year, Medicare coverage is primary (and the Plan will be secondary) for active
employees age sixty-five (65) or older and their dependents age sixty-five (65)
or older.  The Plan will reduce payment by the amount paid or payable by
Medicare.

If your employer had twenty (20) or more employees in the current or preceding
calendar year, federal law requires that Medicare coverage be secondary to the
Plan.  You have the option of rejecting the Plan thereby retaining Medicare as
your primary coverage.  If you choose Medicare as primary, you will have no
coverage under the Plan.  If you reject coverage under the Plan, that choice
must be made in writing to your employer.  When your coverage under the Plan
terminates, you will have a seven (7) month period, beginning on the termination
date, to enroll in Medicare Part B.

Federal law also mandates which plan is primary in the case of certain persons
who are totally disabled or have end stage renal disease.

It is the intent of the Plan to comply with all existing Medicare regulations.
If for some reason the information presented in the Plan differs from actual
Medicare regulations, the Plan reserves the right to administer Medicare in
accordance with such actual regulations.

COORDINATION OF BENEFITS (COB)

The coordination of benefits provision is intended to prevent the payment of
benefits which exceed expenses.  It applies when the employee or any eligible
dependent who are covered by the Plan are also covered by any other plan or
plans, excluding an individual insurance policy.  When more than one (1)
coverage exists, one (1) plan normally pays its benefits in full and the other
plan pays a reduced benefit.  When spouses are employees covered under the Plan,
benefits will not be coordinated within the Plan.

The Plan will always pay either its benefits in full or a reduced amount which,
when added to the benefits payable by the other plan or plans, will not exceed
100% of total allowable expenses.

Allowable expense means a necessary, reasonable and customary item of expense
for health care when the item of expense is covered, at least in part, by one
(1) or more plans covering the individual for whom the claim is made.

The coordination of benefits provision applies whether or not a claim is filed
under the other plan or plans.
                                        65

Definitions

The term "Plan" as used in this section of Coordination of Benefits will mean
any plan providing benefits or services for or by reason of medical, vision, or
dental treatment, and such benefits or services are provided by:

1. Group insurance or any other arrangement for coverage for covered persons in
   a group whether on a covered or uncovered basis, including but not limited
   to:
   a.   hospital indemnity benefits; and
   b.   hospital reimbursement-type plans which permit the covered person to
        elect indemnity at the time of claims.

2. Hospital or medical service organizations on a group basis, group practice
   and other group prepayment plans.

3. Hospital or medical service organizations on an individual basis having a
   provision similar in effect to this provision.

4. Any coverage for students which is sponsored by, or provided through a
   school or other educational institution.

5. Any health maintenance organization (HMO).

6. Any coverage under a governmental program, and coverage required or provided
   by any statute.

7. Group automobile insurance.

8. Group, blanket or franchise insurance coverage.

9. Individual automobile insurance coverage on an automobile leased or owned by
   the company.

10.  Individual auto insurance, by whatever name called.

   Note:  The Plan is always a secondary plan to benefits provided under any
   mandatory no-fault auto insurance act in the state in which the covered
   individual resides.

   If a no-fault policy provides coverage in excess of the minimum required by
   state law, the Plan will coordinate benefits with those coverages in effect.

   The benefits of the Plan will not be available to you to the extent of
   minimum benefits required by the no-fault law for injuries suffered by you
   while operating or riding in a
	                                    66

motor vehicle owned by you if said vehicle is not covered by no-fault automobile
   insurance as required by law.  This denial of benefits does not apply to any
   other person injured in a motor vehicle accident if the injured person is a
   non-owner operator, passenger or pedestrian and such other person is not
   covered by no-fault automobile insurance.

The term "Plan" will be construed separately with respect to each policy,
contract, or other arrangement for benefits or services, and separately with
respect to that portion of any such policy, contract, or other arrangement which
reserves the right to take the benefits or services of other Plans into
consideration in determining its benefits and that portion which does not.

The term "Claim Determination Period" means a calendar year during which the
covered person for whom claim is made has been covered under the Plan.

Coordination Procedures

If a covered person is covered under more than one (1) plan, this coordination
of benefits section will apply.  This section will be used to determine the
amount of benefits payable under the Plan for a covered person.

One plan is the primary plan, and all the other plans are secondary, in the
order described below.  The primary plan pays its benefits first, without taking
the other plans into consideration.  The secondary plans then pay benefits up to
the extent of their liability after taking into consideration the benefits
provided by the other plans.  Benefits under other plans include benefits which
a covered person could have received if such benefits had been claimed.

1. If a plan has no coordination of benefits provision (or similar provision),
   it is automatically the primary plan.

2. If all the plans have coordination of benefits provisions, a plan is primary
   if it covers the person as an employee, and secondary if it covers the
   person as a dependent.

3. If a person is covered as a dependent child under more than one (1) plan:

     a.the plan of the parent whose birthday falls earlier in the year is the
     primary plan (month and day only);
     b.if the father and mother have the same birthday, the plan covering the
     parent longer is the primary plan;
     c.if the other plan coordinates benefits based upon the sex of the
     parents, then the plan that covers such person as a dependent of a male
     person is the primary plan;
     d.if the parents are separated or divorced, the rules below will apply:
       1)    The plan covering the child as a dependent of
             the parent with legal custody of the child would be the primary
				 plan unless
				                            67

        2)    a court decree sets the obligation for medical
        expenses of such child.  The plan which covers the child as a dependent
        of the parent with such obligation will be the primary plan.
        3)    If the specific terms of a court decree state
        that the parents shall share joint custody, without stating that one
        (1) of the parents is responsible for the health care expenses of the
        child, the plan covering the child shall follow the order of benefits
        determination rules for dependent children of parents who are not
        separated or divorced.
       4)     If a plan is "no-fault" auto insurance or third party liability
              insurance, it is the primary plan.

If the primary plan is still not established by 1, 2, 3, or 4 above then the
plan that covers such person for the longest, continuous period of time will be
the primary plan.  Regardless of 1 through 4, a plan which covers the person as
an employee (or a dependent of an employee) will be primary to the plan which
covers the person as:

1. a laid-off or retired employee;
2. the dependent of a laid-off, retired or deceased employee; or
3. a COBRA beneficiary who is continuing coverage in accord with federal law.

Payments

A payment made under another Plan may have included an amount that should have
been paid under this Plan.  If it does, the Plan Administrator may pay that
amount to the organization that made the payment.  That amount will then be
treated as though it was a benefit paid under this Plan.  The Plan Administrator
will not pay that amount again.  The term "payment made" includes providing
benefits in the form of services.  In this case "payment made" means the
reasonable cash value of the benefits provided in the form of services.

Rights of Recovery

Whenever payments have been made by the company, with respect to allowable
expenses, in a total amount, at any time, in excess of the maximum amount of
payment necessary at this time to satisfy the intent of this provision, the
company shall have the right, exercisable alone and at its sole discretion, to
recover such payments to the extent of such excess from among one (1) or more of
the following, as the company shall determine:  any persons, companies or other
organizations to, or for, or with respect to whom payments have been made.

Right to Receive and Release Necessary Information

For the purpose of determining the applicability of and implementing the terms
of this provision of the Plan or any provision of similar purpose of any other
plan, the Plan may, without the consent of or notice to any person, release to
or obtain from any insurance company or other organization or person any
information with respect to any person, which the Plan deems to be necessary for
such purposes.  Any person claiming benefits under the Plan shall furnish to the
Plan such information as may be necessary to implement this provision.
                                        68

SUBROGATION/THIRD PARTY LIABILITY

Third party liability exists when someone else is legally responsible for the
condition or injury of an employee or his/her dependent while covered for
benefits under the Plan.  No benefits will be payable under the Plan for any
services or supplies related to such a condition or injury for which a third
party is determined to be liable until benefits afforded under any third party
coverage have been exhausted.

The Plan may, however, provide benefits if:

1. it is established that a third party liability does not exist; or

2. the employee or his/her dependent provides the Plan with a written lien to
   reimburse the Plan the amount of all benefits paid on behalf of such person,
   if such person later receives, or settles, or recovers in court, any
   benefits or damages from a third party which are/were related to the
   condition or injury for which benefits are being or were paid while such
   person was covered under the Plan.

Plan Rights When Third Party Liability Exists

1. When a third party is or may be liable for the costs of any covered expenses
   payable to the employee or his/her dependent, or on behalf of the employee
   or his/her dependent under the Plan, the Plan has subrogation rights.  This
   means that the Plan has the right, either as co-plaintiffs or by direct
   suit, to enforce the employee or his/her dependent claim against a third
   party for any benefits paid under the Plan on behalf of such person for the
   related condition or injury; and

2. When the employee or his/her dependents fails to cooperate in satisfying the
   Plan's subrogation interest, and the Plan must file a lawsuit against such
   person or the third party in order to enforce the Plan's rights under this
   provision, the employee or his/her dependent for which benefits are being
   paid or were paid under the Plan shall be responsible for attorney's fees
   and costs incurred by the Plan.

Employee's Obligations When Third Party Liability Exists

If a third party is or may be liable for the costs of any expenses payable to or
on behalf of the employee or his/her dependents under the Plan, the employee
and/or his/her dependents must do the following:

1. promptly notify the Plan of a claim involving or against a third party; and

2. the employee or his/her dependents and his/her attorney must provide a
   written lien to the Plan to reimburse the amount of any benefits paid by the
   Plan on behalf of such employee or his/her dependents in any action with or
   against the third party or the third party's insurance carrier; and

3. if the employee or his/her dependents receives money for the claim by suit,
   settlement, or otherwise, the employee or his/her dependents must fully
   reimburse the Plan the amount of any benefits provided under the Plan on
   his/her behalf which are or were related to a condition or injury for which
   the third party is liable.  The employee or his/her dependents may not
   exclude recovery of benefits paid under the Plan on his/her behalf from any
   type of damages or settlement recovered by the employee or his/her
   dependents; and

4. cooperate in every way necessary to help the Plan enforce its subrogation
   rights; and

5. the employee and his/her dependents may not take any action that might
   prejudice the Plan's subrogation rights.

CLAIMS PAYMENTS MADE IN ERROR

If payments in excess of the correct amount due are made, the Plan may recover
all excess amounts paid to providers or to covered persons.  Recovery will be
made by reducing or suspending future Plan payments, or by requiring
reimbursement of the overpayment in full, or in installments, until the
overpayment is recovered.

ALTERNATE PAYEE PROVISION

The Plan must make payments to the employee's separated/divorced spouse, state
child support agencies or Medicaid agencies if required by a qualified medical
child support order (QMCSO) or state Medicaid law.

ASSIGNMENT OF BENEFITS

Payments will also be made in accordance with any assignment of rights required
by a state Medicaid plan.

                                        69

                    HOW TO FILE A CLAIM

Your health care provider should file claims for you.  Your health care provider
should submit the following information:

*    Plan participant's name, Social Security number and address;

*    Patient's name, Social Security number and address, if different from  the
     participant's;

*    Provider's name, tax identification number, address, degree and signature;

*    Date(s) of service;

*    Diagnosis;

*    Procedure codes (describes the treatment of services rendered);

*    Assignment of benefits, signed (if payment is to be made to the provider);

*    Release of information statement, signed;

*    Explanation of benefits (EOB) information if another plan is  the  primary
     payor.

Claims  should be submitted for each individual.  Please do not attach or staple
claims together.  If additional information is needed to process your claim, you
or  your  health  care  provider will be notified.   If  you  receive  a  letter
regarding  your  claim,  prompt completion and return of  the  letter  with  any
requested  attachments  will expedite processing of the  claim.   Send  complete
information to:

   For employees outside Colorado:

             PHCS (Private Health Care Systems)
                       P. O. Box 2476
                Des Plaines, IL  60017-2476
                       (800) 227-8197

   For Colorado employees:

                        THE ALLIANCE
                  650 South Cherry Street
                         Suite 300
                     Denver, CO  80246
                       (800) 996-2447
                                          (303) 333-6767 70

   Every attempt will be made to help covered persons understand their
   benefits; however, any statement made by an employee of the claims
   administrator or the employer will be deemed a representation and not a
   warranty.  Actual benefit payment can only be determined at the time the
   claim is submitted and all facts are presented in writing.

   If a definite answer to a specific question is required, please submit a
   written request, including all pertinent information, and a statement from
   the attending physician (if applicable), and a written reply (which will be
   kept on file) will be sent.

   Benefits may be assigned to the hospital, doctor or any provider of service.

   First notice of claim must be filed within ninety (90) days of occurrence.
   All claims should be submitted within a reasonable time frame for prompt
   processing.  Claims fifteen (15) months or older may be denied.

   All persons making a claim shall be notified in writing whether or not the
   claim will be paid.  This notice will be given or mailed to the claimant
   within ninety (90) days of receipt by Mountain States Administration of a
   properly filed claim.  Under certain circumstances, additional time may be
   needed to process the claim.  If additional time is needed, the claimant
   will be notified in writing.  If notice of the claim is not received by the
   claimant as stated above, the claim should be considered denied for purposes
   of proceeding to the review procedure.

   If any part of the claim is denied, the notice will explain the specific
   reason(s) for the denial and will include a specific reference to the Plan
   provision(s) upon which the denial was based.  If applicable, the claimant
   will be given a description of any additional information necessary to
   process the claim, an explanation of why such information is necessary, and
   the steps which may be followed to request a review of the decision.

   If the claim is denied in whole or in part, the claimant is entitled to:

     a.request a review of the decision;
     b.review pertinent documents used in the claim determination;
     c.submit any issues and comments in writing.

   To request a review, the claimant must file a written request with the Plan
   Administrator within sixty (60) days of receiving the original claim
   determination.  The claimant may request, within that sixty (60) day period
   an extension if more time is needed to prepare an appeal.

     A final decision on the review will be made by the Plan Administrator, or
   his/her designee, though the Plan Administrator may, at his/her discretion,
         make an interim review of the initial claim decision.  The Plan
   Administrator's decision will be made within sixty (60) days after the Plan
        Administrator's receipt of the request for appeal.  Under certain
   circumstances, additional time may be required to complete the review, but
  in no event will such period extend beyond one hundred twenty (120) days  71

following receipt of the request.  If additional time is needed, the claimant
   will be notified in writing.

   The decision upon review will be final.  It shall be in writing and contain
   the specific reason(s) for the decision, contain references to the pertinent
   Plan language upon which the decision was based, and be written in a manner
   to be understood by the claimant.
                                        72

                  SUMMARY PLAN DESCRIPTION

1. Name of the Plan:

   Scott's Liquid Gold - Inc. & Affiliated Companies Employee Benefit Health
   and Welfare Plan

2. Name and address of employer whose employees are covered by the Plan:

   Scott's Liquid Gold - Inc.
   4880 Havana Street
   Denver, Colorado  80239-0019
   (303) 373-4860

3. Source of contributions to the Plan:

   Scott's Liquid Gold - Inc. & Affiliated Companies and its employees
   contribute to the cost of the Plan.

4. Date of the end of the Plan Year:

   Plan years end on each May 31.  Financial records of the Plan are kept on a
   Plan Year basis.

5. Plan Administrator:

   Scott's Liquid Gold - Inc.
   4880 Havana Street
   Denver, Colorado  80239-0019
   (303) 373-4860

6. Agent for service of legal process:

   The Plan Administrator has authority to control and manage the operation and
   administration of the Plan and is the agent for service of legal process.

7. Type of Administration of the Plan:

   The partially self-funded Plan is administered directly by the Plan
   Administrator.  The Plan Administrator has appointed a Third Party
   Administrator (TPA) to handle the day-to-day operation of the Plan.  The TPA
   does not serve as an insurer, but just as a claims (processor) administrator
   (refer to #9).

   The TPA processes the claims, then requests and receives funds from the Plan
   Administrator to pay the claims, and makes payment on the claims to
   hospitals and other providers. The Plan Administrator, Scott's Liquid Gold -
   Inc. is ultimately responsible for providing Plan benefits, and not the
   reinsurance carrier, from whom the Plan Administrator has purchased coverage
   for catastrophic claims.

8. Eligibility:

   Employees and dependents may participate in the Plan (or be denied coverage)
   based on eligibility requirements set forth herein.

9. Claims Administrator:

   Mountain States Administration Co., Inc.
   13901 E. Exposition Avenue
   Aurora, CO 80012

   Telephone:   (303) 360-9600  Local in Colorado
           (800) 828-8847  Toll free in Colorado
           (800)     828-8012  Toll free outside Colorado

10.    Claims Procedures:

   Claims may be submitted and appealed as set forth herein.

11.  Federal ID #:  84-0762527

12.  Plan Number:

   501 Medical and Dental (This is not the group number.)
   502 Life & AD&D (This is not the group number.)

13.  Plan Termination:

   The right is reserved for the company to terminate, suspend, withdraw, amend
   or modify the program in whole or in part at any time.

14.  ERISA RIGHTS:

   As a participant in this Employee Benefit Health and Welfare Plan, you are
   entitled to certain rights and protection under the Employee Retirement
   Income Security Act of 1974 (ERISA).  This act provides that all Plan
   participants shall be entitled to:

   Examine, without charge, at the Plan Administrator's office and at other
   specified locations, such as work sites, all Plan documents, including
   insurance contracts, collective bargaining agreements and copies of all
   documents filed by the Plan with the U.S. Department of Labor, such as
   detailed annual reports and Plan descriptions.

   Obtain copies of all documents and other Plan information upon written
   request to the Plan Administrator.  The Plan Administrator may make a
   reasonable charge for the copies.

   Receive a summary of the Plan's annual financial report.  The Plan
   Administrator is required by law to furnish each participant with a copy of
   this Summary Annual Report, if requested.

   In addition to creating rights for the Plan participants, ERISA imposes
   obligations upon the persons who are responsible for the operation of this
   Employee Benefit Health and Welfare Plan.  The people who operate the Plan,
   called "fiduciaries" of the Plan, have a duty to do so prudently and in the
   interest of you and other Plan participants and beneficiaries.

   No one, including your employer, may fire you or otherwise discriminate
   against you in any way to prevent you from obtaining a welfare benefit or
   exercising your rights under ERISA.  If your claim for a welfare benefit is
   denied in whole or in part, you must receive a written explanation of the
   reason for denial.  You have the right to have the Plan review and
   reconsider your claim.  Under ERISA there are steps you can take to enforce
   the above rights.  For instance, if you request materials from the Plan and
   do not receive them within thirty (30) days, you may file suit in a federal
   court.  In such a case, the court may require the Plan Administrator to
   provide the materials and pay you up to $110 a day until you receive the
   materials, unless the materials were not sent because of reasons beyond the
   control of the Administrator.  If you have a claim or benefit which is
   denied or ignored in whole or in part, you may file suit in a state or
   federal court.  If it should happen that Plan fiduciaries misuse the Plan's
   money or if you are discriminated against for asserting your rights, you may
   seek assistance from the U.S. Department of Labor, or you may file suit in a
   federal court.  The court will decide who should pay court costs and legal
   fees.  If you are successful, the court may order the person you have sued
   to pay these costs and fees.  If you lose, the court may order you to pay
   these costs and fees, for example if it finds your claim is frivolous.

   If you have any questions about this statement or your rights under ERISA,
   you should contact the nearest office of the Pension and Welfare Benefits
   Administration, U.S. Department of Labor, listed in your telephone
   directory, or the Division of Technical Assistance and Inquiries, Pension
   and Welfare Benefits Administration, U.S. Department of Labor, 200
   Constitution Avenue, N.W., Washington, D.C. 20210.

                            SCHEDULE OF MEDICAL BENEFITS

All eligible and covered medical charges are subject to applicable deductible
and coinsurance provisions unless indicated differently below.  Charges are
limited to usual, customary, and reasonable for the area in which services are
rendered.  Charges excluded as not covered, over usual, customary, and
reasonable or as otherwise noted, do not count toward either deductible or out-
of-pocket coinsurance.  This is a summary of benefits only; for specific
restrictions and limitations, see detailed explanations elsewhere in the Plan.

The Plan has entered into an arrangement with The Alliance for covered
participants in the Denver area and PHCS for participants living or traveling
outside Colorado.  The Alliance is an employer-owned cooperative and PHCS is a
preferred provider organization (PPO) which negotiates hospital, doctor and
other provider fees with contracting health care providers.

LIFETIME MAXIMUM            $5,000,000 per Covered Person
(While covered under this Plan)  2,000 for Temporomandibular Joint Disorders
                                30,000 for Alcoholism or Substance Abuse
                                       Treatment
                                25,000 for Hospice Benefits

The term "lifetime maximum" means the total amount of benefits which may be
payable while covered under this Plan, or any other health plan sponsored by
Scott's Liquid Gold - Inc. and Affiliated Companies.  It will not be interpreted
to mean the lifetime of the covered person.

CALENDAR YEAR DEDUCTIBLE
(Combined Medical and Dental)Single Coverage Maximum:  $100
                         Family Coverage Maximum:$200

DEDUCTIBLE CARRYOVER     If a covered person has not met his/her deductible in
                         the first nine (9) months of the year, then any charges
                         incurred in the last three (3) months will apply to the
                         deductible for both the current year and the next
                         calendar year.

The term "deductible" means a specified dollar amount of covered expenses which
must be incurred during a calendar year, or as specified, before any other
covered expenses can be considered for payment.

COINSURANCE FOR ELIGIBLE MEDICAL EXPENSES

For Single Coverage      After the single coverage deductible, eligible
under the Plan           expenses (other than outpatient mental health
                         disorders, alcoholism or substance abuse or as
                         otherwise noted) are paid 80% of the next $5,000, then
                         100% for the balance of the calendar year.
                                        73

For Family Coverage     After the family coverage deductible, eligible
under the Plan          expenses (other than outpatient mental health
                        disorders, alcoholism or substance abuse, or as
                        otherwise noted) are paid at 80% of the next $10,000
                        (individual or family), then 100% for the balance of
                        the calendar year.

The term "coinsurance" means the amount payable by the Plan for a covered
expense.  The covered person is required to pay the amount not paid by the Plan.

AIDS BENEFIT             Eligible expenses for treatment of Acquired Immune
                         Deficiency Syndrome (AIDS), AIDS-related Complex, or
                         HIV-positive are paid as for any other illness, subject
                         to deductible and coinsurance provisions.

ALCOHOLISM AND SUBSTANCE ABUSE BENEFITS
(See specific restrictions on page 36.)

Inpatient                Covered as any other illness, subject to deductible and
                         coinsurance provisions, to a maximum of thirty (30)
                         days per calendar year.

Outpatient               Eligible expenses are subject to the deductible
                         provision and are then paid at 50% to 50 visits per
                         calendar year.  Alcoholism and substance abuse
                         inpatient, partial, and outpatient treatment combined:

                         Calendar year maximum, per person: $15,000
                         Lifetime maximum, per person: $30,000

CHIROPRACTIC SERVICES    Eligible expenses are limited to forty (40) visits in
                         six (6) consecutive months for vertebral column
                         problems only, and are subject to deductible and
                         coinsurance provisions.  (See #15, page 22.)

HOME HEALTH CARE         Eligible expenses are paid, subject to deductible and
                         coinsurance provisions, to a maximum of sixty (60)
                         visits per calendar year. (See specific restrictions on
                         page 32.)

HOSPICE BENEFIT          100% of eligible expenses not to exceed a maximum of
                         six (6) months from the time a covered person is
                         certified terminally ill and subject to a $25,000
                         lifetime maximum.  (See specific restrictions on page
                         39.)
                                        74

HOSPITAL ROOM LIMIT      Semiprivate rate, paid subject to deductible and
                         coinsurance provisions.

IMMUNIZATION BENEFIT     The deductible is waived and 100% of eligible charges
                         are paid for routine immunizations, vaccinations, and
                         preventive shots for eligible participants.  (See
                         Covered Medical Expenses, #50, page 26 for additional
                         information.)

INTENSIVE CARE UNIT &    Usual, customary, and reasonable, subject to
SPECIAL CARE UNIT        deductible and coinsurance provisions.

MENTAL HEALTH DISORDER BENEFITS
(See specific restrictions on page 36.)

Inpatient                Covered as any other illness, subject to deductible and
                         coinsurance provisions, to a maximum of forty-five (45)
                         days per calendar year.

Outpatient               Eligible expenses are subject to the deductible
                         provision and then paid at 50% to 100 visits per
                         calendar year.

NEWBORN WELL-BABY CARE    Usual, customary, and reasonable hospital
                         nurseryexpenses, subject to deductible and coinsurance
                         provisions.  Eligible physician charges are paid under
                         the Routine Care Benefit.  (See Covered Medical
                         Expenses, page 37 for additional information.)

OUTPATIENT DIAGNOSTIC    100%  of  the  first  $200 per  calendar year  of
LAB AND X-RAY BENEFIT    eligible outpatient expenses incurred for illness or
                         injury, with the deductible waived.  Eligible expenses
                         in excess of $200 are subject to the deductible and
                         coinsurance provisions.

OUTPATIENT SURGICAL      100% of eligible expenses incurred in conjunction
BENEFIT                  with a surgical procedure performed on an outpatient
                         basis, and incurred on the date of surgery, with the
                         deductible waived.
                                        75

PRE-ADMISSION TESTING    100% of eligible expenses incurred for outpatient tests
                         within seven (7) days of a scheduled hospital
                         admission, with the deductible waived.  (See page 37.)

ROUTINE CARE BENEFIT     100% of the first $250 per calendar year, with the
                         deductible waived for examinations and diagnostic tests
                         related to routine wellness care, including flu shots
                         and pneumovax injections for adults, and well
                         baby/child checkups.  (See Covered Medical Expenses,
                         #50, page 26 for additional information.)

SECOND SURGICAL OPINION  100% of the amount charged by physician rendering a
                         second opinion, with the deductible waived. (See page
                         38.)

SKILLED NURSING CARE     One-half of hospital semiprivate rate where
FACILITY                 previously confined, to a maximum of sixty (60) days
                         per illness or injury, subject to deductible and
                         coinsurance provisions. (See page 38.)

SMOKING CESSATION        Charges for generally recognized programs  to
BENEFIT                  stop smoking are eligible to a $200 maximum per person,
                         subject to deductible and coinsurance provisions, in
                         any three (3) year period for employees and spouses who
                         have been covered by the Plan at least eighteen (18)
                         months. (See page 39).

SUPPLEMENTAL ACCIDENT    100%  of  the  first  $500 of eligible expenses
BENEFIT                  incurred within ninety (90) days of the accident, due
                         to a non-work related accident, with the deductible
                         waived.  Eligible expenses in excess of $500 or ninety
                         (90) day period are subject to the deductible and
                         coinsurance provisions.

TMJ BENEFIT              Eligible expenses incurred for the diagnosis and
                         treatment of temporomandibular joint dysfunction are
                         paid, subject to deductible and coinsurance provisions,
                         to the $2,000 lifetime maximum.  (See #59, page 27.)

TRANSPLANT BENEFIT       Covered  transplants  are paid as  any  other  illness,
                         subject to deductible and coinsurance provisions.  (See
                         #60, page 27).
                                        76

VISION BENEFITS          Eye exams by an ophthalmologist or optometrist are
                         covered, subject to deductible and coinsurance
                         provisions.  Prescription lenses and frames are covered
                         at 100% to a $50 maximum per calendar year, with the
                         deductible waived.  (See #22, page 23.)

WEIGHT REDUCTION
BENEFIT                  Charges    for   weight   reduction   programs    under
                         directphysician supervision are eligible  to  a  $1,000
                         maximum,   subject   to  deductible   and   coinsurance
                         provisions,  in any five (5) year period for  employees
                         only, who have been covered by the Plan at least twenty
                         four (24) months. (See page 40).

MEDICAL CASE             Medical Case Management optimizes the treatment
MANAGEMENT               and recovery phase of major illness or injury.
                         Services otherwise not covered under the Plan will
                         be eligible for reimbursement if recommended by
                                   the medical case management coordinator.

                                        77

                           SCHEDULE OF DENTAL BENEFITS

CALENDAR YEAR MAXIMUM      $2,000 per covered person

CALENDAR YEAR DEDUCTIBLE
(Combined medical and dental) Single Coverage Maximum:  $100
                           Family Coverage Maximum:  $200

PREVENTIVE AND BASIC       After the deductible, eligible expenses are paid
SERVICES                   at 100% to the calendar year maximum.

MAJOR RESTORATIVE AND      After the deductible, eligible expenses are paid
PROSTHODONTIC SERVICES     at 50% to the calendar year maximum.

TMJ BENEFITS               See under medical benefits.

ORTHODONTIC SERVICES       Eligible expenses are paid at 50% to a $1,000 per
                           calendar year and $2,000 per lifetime maximum, only
                           for dependent children under 19 years old.

PRE-TREATMENT              All benefits of any non-emergency course of
ESTIMATE *                 treatment exceeding $250 will be reduced by 50% if
                           pre-estimate has not been obtained.

*    Note:  If the dentist's office calls the Claims Administrator (Mountain
States Administration) for a pre-estimate on work to be performed immediately,
verification of coverage for the services to be performed is not a guarantee of
payment.

                                        78

                               DENTAL CARE PROGRAM

If a covered person incurs covered dental expenses, the Schedule of Benefits set
forth in this Plan shall apply.

MAXIMUM BENEFIT AMOUNT

The total amount payable for all covered expenses incurred for a covered person
in a calendar year will not be more than the maximum benefit amount shown in the
Schedule of Dental Benefits ($2,000 per Calendar Year per Covered Person).

DENTAL ELIGIBILITY

If  dental coverage is desired, the employee must enroll within thirty (30) days
of  date  of  hire.  Benefits will be effective the first working day  following
ninety (90) days of continuous full-time employment.

If an employee does not enroll for dental benefits within this time frame and
subsequently desires coverage, there is a twelve (12) month waiting period
before any benefits are payable, except for accidental injuries to sound,
natural teeth.  Refer to Late Entrant Provision (For Dental Benefits) on page
91.  All other enrollment procedures follow the guidelines outlined under the
Eligibility section on page 6.

PRE-TREATMENT ESTIMATE REQUIREMENT *

Except for initial emergency care, it is necessary that the attending dentist or
physician submit a treatment plan to the Claims Administrator (Mountain States
Administration) prior to rendering services in excess of $250 for a covered
person.  Such treatment plan must itemize recommended services, the charge for
each, and if requested, may need to be supported by x-rays.  The purpose of the
pre-treatment plan is to resolve questions before, rather than after, work has
begun or is completed.  Failure on the part of the dentist or physician to
submit a treatment plan will cause benefits to be reduced by 50%.

* Note:  If the dentist's office calls the Claims Administrator (Mountain States
Administration) for a pre-estimate on work to be performed immediately,
verification of coverage for the services to be performed is not a guarantee of
payment.  Pre-estimate of benefits indicates only that the services will be
considered as eligible expenses at the time of the call.

DEDUCTIBLE AMOUNT

Single coverage maximum calendar year deductible for both medical and dental
expenses combined is $100.  Family coverage maximum calendar year deductible for
both medical and dental expenses combined is $200.
                                        79

LATE ENTRANT PROVISION (FOR DENTAL BENEFITS)

If an employee did not elect coverage for himself or herself and/or his or her
eligible dependents within thirty (30) days of the employee's date of full-time
hire, benefits will be limited as follows:

No benefits will be payable, except for accidental injuries to sound, natural
teeth, until the person has been covered under the Plan for twelve (12)
consecutive months.

The dental waiting period for the late entrant, as described above, must be
reduced by the period of creditable coverage the individual has under any
previous dental plan as of the enrollment date.  Refer to creditable coverage on
page 50.

COVERED DENTAL EXPENSES

The term "covered dental expenses" means usual, customary, and reasonable
expenses incurred for a dental service when that service:

1. Is performed by or under the direction of a licensed dentist;

2. Is essential for the necessary care of the teeth;

3. Starts and is completed while the person is covered (Refer to Extended
   Dental Benefits on this page); and

4. Is not excluded under the Dental Expenses Not Covered and General Plan
   Exclusions and Limitations sections of the Plan.

A dental service is deemed to start on the date it is performed, except that:

1. Full or partial dentures, start when first impressions are taken;

2. Crown, bridge, inlay or onlay, start on the first date of tooth
   preparations; and

3. Root canal therapy, starts when the pulp chamber of the tooth is opened.

Note:  Any dental claim which is payable under any benefits in this Plan other
than dental benefits will be paid under the other benefits first; then the
dental claim will be calculated under dental benefits.  The amount paid under
dental benefits will be only the amount, if any, which exceeds the amount paid
under the other benefits.

EXTENDED DENTAL BENEFITS

Dental benefits will be extended for thirty (30) days following the date the
covered person ceases to be covered under this Plan, but only for an expense
incurred for a dental service which started while the person was covered.  In no
event will an oral examination, prophylaxis or x-ray be deemed a dental service
started.
                                        80

                             COVERED DENTAL EXPENSES

PREVENTIVE AND BASIC SERVICES

Eligible expenses are subject to the deductible and are then paid at 100% of
usual, customary, and reasonable, to the calendar year maximum, and include:

1. Oral exams, initial or periodic.

2. Prophylaxis, including periodontal prophylaxis (perio prophys).

3. Topical application of fluoride for dependents under age nineteen (19).

4. X-rays; one full mouth series per twenty-four (24) months, bitewing films,
   and periapicals.

5. Laboratory and other tests and pathology.

6. Topical sealants for dependents under age fourteen (14).

7. Palliative, emergency treatment.

8. Restorative fillings.

9. Oral surgery, including extractions, except those required for orthodontia.

10.General anesthetics when necessary and in connection with oral surgery.

11.Periodontal treatment.

12.Endodontia, including root canal therapy.

13.Injection of antibiotic drugs, prescription drugs and medicines.

14.Space maintainers for deciduous teeth.

15.Consultations.

16.Diagnostic casts, not for TMJ or orthodontia.

17.Dental implants including the attached crown or replacement tooth.

MAJOR RESTORATIVE AND PROSTHODONTIC SERVICES

Eligible expenses are subject to the deductible, and are then paid at 50% of
usual, customary, and reasonable, to the calendar year maximum, and include:
                                        81

1. Major restorative services:  inlays, onlays, crowns, crown buildups and
   posts.

2. Initial placement of a bridge, a partial or a full denture to replace one or
   more teeth extracted while the person is covered by this Plan, including
   adjustment during the six (6) months following the placement.

3. Recement a crown, inlay or onlay.

4. Replacement of existing bridge or denture of the original is (a) at least
   five (5) years old and unserviceable; or (b) damaged while being worn and
   cannot be fixed and while the person is covered under the Plan.

ORTHODONTIC SERVICES

Benefits are payable for orthodontia procedures performed on your covered
dependent children who are age nineteen (19) or less on the date the orthodontia
procedure starts.  Coverage is not extended after the date a person ceases to be
a covered person.

Eligible charges are paid at 50% to a $1,000 per calendar year and $2,000 per
lifetime maximum, per person.

Eligible charges must meet all of the following conditions:

1. They are made for a service or supply furnished in connection with an
   orthodontic procedure and furnished before the end of the estimated duration
   shown in the orthodontic treatment.

2. The service or supply is made part of an orthodontic treatment plan that,
   before the orthodontic procedure is performed, has been:

     a.sent to Mountain States Administration for review; and
     b.returned by Mountain States Administration to the dentist showing
     estimated benefits.

                                        82

                DENTAL EXPENSES NOT COVERED

Covered dental expenses will not include, and no payment will be made, for
expenses incurred as follows:

1. Services that are cosmetic in nature, excluding orthodontia.

2. Any replacement of a bridge or denture which is or can be made serviceable.

3. Initial installation of a bridge or denture to replace teeth all of which
   are missing prior to the person's becoming covered by this Plan.

4. Replacement of a lost, missing or stolen prosthetic device.

5. Replacement of a bridge or denture if the existing bridge or denture is less
   than five (5) years old, unless the replacement is required to replace one
   or more natural teeth extracted while the person is covered.

6. Procedures, appliances or restorations whose main purpose is to (1) change
   vertical dimension; (2) diagnose or treat dysfunction of the
   temporomandibular joint; (3) stabilize periodontally involved teeth; or (4)
   restore occlusion.  (See Special Coverage section under the medical portion
   of the Plan.)

7. Veneers of crown or pontics placed on or replacing the upper and lower
   first, second and third molars.

8. Bite registrations; precision or semi-precision attachments; or splinting.

9. Instruction for plaque control, oral hygiene and diet.

10.Dental services that do not meet accepted dental standards.

11.Services that are deemed to be medical services (such as TMJ).

12.Services and supplies received from a hospital.

13.Services or procedures considered experimental in nature or not yet approved
   by the American Dental Association.

14.Services for which benefits are not payable according to the section,
   "General Plan Exclusions and Limitations."

15.Replacement of serviceable restorations with restoration material of
   differing chemical composition.

16.Dental treatment involving the use of gold, porcelain or white restoration
   materials, if such treatment could have been rendered at a lower cost by
   means of a reasonable substitute consistent with generally accepted dental
   practice.
                                        83

                              GROUP LIFE INSURANCE

All eligible employees of Scott's Liquid Gold - Inc. & Affiliated Companies
receive a life insurance policy in the amount listed below:

EMPLOYEE

  Life Insurance:

                                          Per eligible employee    An amount
                                          equal to their annual earnings
                                          exclusive of bonuses and overtime,
                                          rounded to the next highest $1,000 to
                                          a maximum of $190,000.

  Accidental Death & Dismemberment (AD&D):

                                          Per eligible employee    Refer to the
                                          schedule in the life insurance policy.

Life insurance is not administered by Mountain States Administration.  To obtain
benefits and a certification of coverage, you must contact the Benefits
Department of Scott's Liquid Gold - Inc.

GROUP LIFE INSURANCE

The following is a general outline of the life insurance contract and its
benefits.  It is not the contract itself.  Copies of the life insurance contract
are required to be distributed to all covered employees.  Such contracts may
change from time to time, depending upon the carrier chosen by the companies.

ELIGIBILITY

All regular full-time employees (as defined in the medical plan) are eligible
for term life insurance on the day following thirty (30) calendar days of
uninterrupted employment.

ENROLLMENT

To be covered by the Plan, employees must complete an enrollment card.

COVERAGE

  Each employee will be insured for an amount equal to his/her annual earnings
   (rounded to the next higher $1,000), to a maximum of $190,000, exclusive of
  bonuses and overtime pay.  Upon attaining age seventy (70), coverage will be
 reduced 50%, an additional 30% at age seventy-five (75), and further reduced by
                           20% at age eighty (80). 84

BENEFITS/PAYMENT OPTIONS

Upon written proof of death, the proceeds of insurance will be paid to
beneficiaries designated by the insured; and if not so designated, to the
insured's estate.  The insured employee may name his/her own beneficiary or
beneficiaries and elect the manner in which the proceeds are to be paid.
Available payment options include payment in one lump sum or part in cash and
the balance in monthly installments.  In the absence of an election by the
insured employee, any beneficiary may elect any of the foregoing payment
options.

DISABILITY

Should an insured person become totally disabled prior to age sixty (60), life
insurance will be continued, upon application by the disabled employee, with
waiver of premium, to age sixty-five (65) and the face amount of insurance will
be based upon the employee's last compensation rate.  Such insurance shall
terminate upon the attainment of age sixty-five (65), with conversion privilege.

ACCIDENTAL DEATH

Should death occur prior to age seventy (70) through accidental means, an amount
equal to that provided for life insurance shall be paid to a covered employee's
beneficiaries or estate in addition to the standard life insurance benefits.
Under this provision of the Plan, death must occur within ninety (90) days of
the accident, be the direct result of such accident and not the result from
suicide or intentional self-inflicted injury or any attempt threat, while sane
or insane.

Accidental death benefits are not provided if death occurs while totally
disabled, or if coverage is through a conversion policy.

DISMEMBERMENT

Should a loss of limbs or eyesight occur through accidental means, but not as
the result of an occupational accident, benefits as set forth below are payable
under this Plan to the covered employee, provided such loss is not the result of
risks not covered (see "Risks Not Covered" below).

For the loss of both hands, both feet, sight of both eyes, one hand and one
foot, one hand and sight of one eye, or one foot and sight of one eye, an amount
equal to the face value of life insurance will be paid.

One-half of the face value of life insurance will be paid for the loss of one
hand, one foot, or sight of one eye.

Payments for dismemberment shall not reduce the amount of life insurance
payments provided elsewhere in this benefit.
                                        85

RISKS NOT COVERED

No benefit under the accidental death or dismemberment provisions of the Plan
shall be paid for any loss resulting from or contributed to by any of the
following:  (1) disease, or bodily or mental infirmity;  (2) infection of any
nature not resulting from accidental bodily injury; (3) suicide or intentionally
self-inflicted injury, or attempt thereat, while sane or insane; (4) war,
declared or undeclared, any act of war, or any type of military conflict; (5)
travel in or descent from any kind of aircraft while the covered person was
participating in training or had duties aboard such aircraft, or if such
aircraft was operated by or for the armed forces of any country; (6) injuries
sustained while the insured person was driving a vehicle and the insured
person's blood contained in excess of eighty (80) milligrams of alcohol per one
hundred (100) milliliters of blood.

CONVERSION RIGHTS

Upon termination of the employee's eligibility for life insurance coverage or at
the time coverage is reduced, the employee may be eligible to convert all or
part of the life insurance to an individual policy.  If the employee is
interested in converting the life insurance coverage, the employee must consult
with the benefits department concerning the requirements necessary and submit
the application, along with the required initial premium, within thirty (30)
days after the date the life insurance coverage ceases.

Life insurance is not administered by Mountain States Administration.  To obtain
benefits and a certification of coverage, the employee must contact the Benefits
Department of Scott's Liquid Gold - Inc.
                                        86

                              BENEFIT PLAN ADOPTION

Sponsor:       Scott's Liquid Gold - Inc. and Affiliated Companies

Plan Document:      Self-funded Medical

Summary Plan
Description:        Medical, Dental, and Life

Replacement:        This Plan replaces the prior plan dated 10/01/94, as
                    amended, which is hereby terminated.

Takeover Provision: This Plan will not cover expenses which are incurred and
payable under the 10/01/94 Plan.  These expenses are payable under the terms
and conditions of that Plan.

Deductibles, coverage levels, maximum benefits and time spent in
satisfying pre-existing condition terms and waiting periods are
hereby grandfathered into this Plan for persons covered by the 10/01/94
plan as amended, as of 1/1/99.

Covered persons who are hospitalized on 1/1/99 will be covered
pursuant to the terms of this Plan for all charges incurred 1/1/99 and
after, provided the prior plan provisions do not contain an Extension of
Benefits Clause.

Legal Compliance:   This Plan is intended to comply with all applicable federal
laws and findings of their regulatory authorities and by this provision is
automatically amended to be in minimal compliance as necessary.

Claims Filing Deadline:  If, due to provider error or administrative delay,
claims are not filed by the Plan's claim filing deadline, the Plan Administrator
may, at his sole dis-cretion and without setting any precedent, accept and
process such claims as covered by the Plan, provided such claims are submitted
no later than 12 months after the end of the calendar year in which
services are provided.

Effective Date:          January 1, 1999

Signature:

Title:

Date:

                           Scott's Liquid Gold - Inc.
                                Amendment #1 - 99

Effective June 1, 1999, Scott's Liquid Gold & Affiliated Companies Employee
Benefit Health and Welfare Plan is amended as follows:

Page 22 currently:

12.  Birth control pills, birth control injections, birth control devices, and
birth control implants.  Removal of Norplant or a similar birth control implant
is not covered unless it is medically necessary to remove it due to a medical
complication involving the implant.  All eligible charges for implanting
Norplant are prorated into five (5) equal portions.  Each year over the five (5)
year period, one (1) portion (20% of the total charges) is payable, provided the
person remains covered under this Plan.

IS AMENDED TO:

12.  Birth control pills, birth control injections, prescription birth control
devices, and birth control implants.  Removal of a birth control implant or
device is not covered unless its removal is deemed prudent on the advice of the
treating physician.

Page 26, 1ST paragraph currently:

Benefits include charges for the fitting, adjusting, repair or maintenance of
such prosthetic or orthopedic appliances.  Covered expenses are limited to the
initial placement of prosthetic or orthopedic appliances when required to
replace natural limbs or eyes lost while covered under this Plan.

IS AMENDED TO:

Benefits include charges for the fitting, adjusting, repair or maintenance of
such prosthetic or orthopedic appliances.  Covered expenses are limited to the
initial placement of prosthetic or orthopedic appliances when required to
replace natural limbs or eyes.

Page 30, the following item is hereby DELETED:

1.   The injury occurred on or after the covered person's effective date of
coverage.

Page 30, the following item is hereby DELETED:

2. Services must be performed within six (6) months after the accident, unless
   it can be shown that it was not medically possible to provide treatment
   within this period of time.

                                        87

Page 91 currently:

3. Initial placement of a bridge, a partial or a full denture to replace one or
   more teeth extracted while the person is covered by this Plan, including
   adjustment during the six (6) months following the placement.

IS AMENDED TO:

4. Initial placement of a bridge, a partial or a full denture to replace one or
   more teeth extracted, including adjustment during the six (6) months
   following the placement.

Page 92 currently:

5. Replacement of a bridge or denture if the existing bridge or denture is less
   than five (5) years old, unless the replacement is required to replace one
   or more natural teeth extracted while the person is covered.

IS AMENDED TO:

6. Replacement of a bridge or denture if the existing bridge or denture is less
   than five (5) years old, unless the replacement is required to replace one
   or more natural teeth extracted.

REVIEWED AND ACCEPTED:

SCOTTS LIQUID GOLD - INC.
                          NAME

                          TITLE

                          DATE

                           Scott's Liquid Gold - Inc.
                                Amendment #2 - 99

Effective  August  1, 1999, Scott's Liquid Gold & Affiliated Companies  Employee
Benefit Health and Welfare Plan is amended to include the following:

Page 1 is amended to add the following immediately preceding "Calendar Year
Deductible":

PRESCRIPTION DRUG BENEFIT

The  Prescription Drug Benefits are described later in this Plan.   Prescription
Drugs  obtained  through Express Scripts are not subject to  the  deductible  as
applied to the Medical portion of this Plan.  Prescriptions obtained through non
participating providers will be subject to deductible and copayment  provisions.
For  information  regarding the Prescription Drug Benefit, its  deductibles  and
coinsurance, please see that portion of the Plan.

The following is amended to be included in the Plan:

                            PRESCRIPTION DRUG BENEFIT

PHARMACY OPTION                         NETWORK

Co-payment, per Prescription
     For name brands                         20%
     For Generic drugs                       10%

(no minimum co-payment)

MAIL ORDER

Co-payment, per Prescription
     For name brands or brand equivalent               20%
     For Generic drugs                       10%

(no minimum co-payment)

Participating  pharmacies  have  contracted  with  the  Plan  to   charge   Plan
participants  reduced fees for covered prescription drugs.  Express  Scripts  is
the  administrator  of  the Prescription Drug Plan.  The  telephone  number  for
Express Scripts is 1-800-955-1171.

The  Prescription  Drug Benefit does not have a deductible.  The  Co-Payment  is
applied  to each covered pharmacy drug charge.  The Co-Payment is not a  covered
charge  under the Medical Plan.  Any one prescription is limited  to  a  90  day
supply per prescription or refill.

 If a drug is purchased from a non-participating provider, the participant will
  pay for his/her prescription in full, and submit the paid receipt to Mountain
 States Administration for reimbursement.  Reimbursement will be subject to the
 co-payment and deductible provisions as described in the Medical portion of the
                                    Plan. 88

MAIL ORDER BENEFIT OPTION

A  mail order option is also available under the Plan.  If you wish to order  by
mail,  you  need to obtain an order form from the Benefits Department,  complete
it,  and  mail  the  form  together  with the physician's  original  (not  copy)
prescription and your co-payment.

COVERED PHARMACY EXPENSES

*    Only drugs approved by the FDA are approved by this Plan.

*    Up to a 90-day supply for maintenance medications (those that are taken for
  a  long time, such as drugs sometimes prescribed for heart disease, high blood
  pressure, asthma, etc.) whether obtained at a pharmacy or through mail order.

*     Federal legend drugs that bear the legend "Caution:  Federal law prohibits
  dispensing without a prescription", except as noted.

*     Insulin  and  insulin  needles/syringes on prescription,  glucose  testing
  strips,  ketone  testing  strips and tablets,  diabetic  lancets  and  glucose
  monitors.

*    Prescriptions for skin care products to treat acne, for individuals through
  the age of 25.

*     Compounded  medication of which at least one ingredient is a  prescription
  legend drug.

*    Drugs prescribed in connection with weight loss.

*    Growth hormones with prior approval.

*    Contraceptive drugs.

*     Imitrex  (1  kit  per prescription), glucagon (not to exceed  1  vial  per
  prescription) and bee sting kits (2 per prescription).

*      Prescription   vitamins  and  minerals,  including  Pre-natal   vitamins;
  prescription required.

*     FDA  approved  medication or supplies used for  the  treatment  of  sexual
  dysfunction. (Viagra only)

*     Physician  recommended smoking cessation products - limit of $200  maximum
  per year.

PHARMACY EXPENSES NOT COVERED

*    Minoxidil (Rogaine) for the treatment of alopecia.

*    Non-legend drugs other than insulin.

*     Prescriptions  for  skin care products to treat acne, for  individuals  26
  years of age or older (without prior approval).

*    Sales tax.

*    Therapeutic devices or appliances, including support garments and other non
  medical substances.
                                        89

*     Experimental drugs, except as approved by a physician for the treatment of
  a life-threatening medical condition.

*    Replacement of lost or stolen prescriptions.

*    Infertility drugs with no other approved indications.

*    Vitamins, except pre-natal vitamins available only by prescription, and any
  other non-prescription supplements.

*    Charges for the administration or injection of any drug.

*    Prescriptions which you or your eligible dependents are entitled to receive
  without charge from any Workers' Compensation laws.

*     Medication which is to be taken by or administered to a covered person, in
  whole or in part, while he or she is a patient in a licensed Hospital, nursing
  home  or  similar institution which operates on its premises, a  facility  for
  dispensing  pharmaceuticals.  (Such expenses are  covered  under  the  Medical
  portion of the Plan).

*      Drugs,   medicines  or  supplies  that  do  not  require  a   Physician's
prescription, even if administered or prescribed by a Physician.  This shall not
apply in cases where such drugs, medicines, or supplies are the only available
source of nutrients for the covered person.

*     Medications,  drugs  or hormones to stimulate growth  unless  there  is  a
  laboratory confirmed diagnosis of growth hormone deficiency.

*    Drugs with cosmetic indications.

*     Newly  approved drugs are not automatically covered, and may require  Plan
  approval.

Page 46, item #55 (GENERAL PLAN EXCLUSIONS AND LIMITATIONS) currently:

55.   Any  services,  care  or treatment for transsexualism,  gender  dysphoria,
  sexual  reassignment  or change, sexual dysfunction or inadequacy  procedures,
  including  drugs, medication, implants, hormone therapy, surgery,  medical  or
  psychiatric care or treatment.

Is amended to:

55.   Any  services,  care  or treatment for transsexualism,  gender  dysphoria,
sexual reassignment or change procedures, including drugs, medication, implants,
hormone therapy, surgery, medical or psychiatric care or treatment.

Page 46, item #59 (GENERAL PLAN EXCLUSIONS AND LIMITATIONS) currently:

59.  Vitamins, minerals, nutritional supplements, appetite suppressants, dietary
  supplements, and formulas whether or not prescribed by a physician.
                                        90

Is amended to:

59.  Vitamins, minerals, nutritional supplements, appetite suppressants, dietary
supplements, and formulas whether or not prescribed by a physician.  Please see
the  Prescription  Drug  Benefit  portion of  the  Plan  for  certain  covered
allowances.

REVIEWED AND ACCEPTED:
SCOTTS LIQUID GOLD - INC.

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                                        91

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