ENTERRA CORP /DE/, 10-Q, 1995-08-14

ENTERRA CORP /DE/
10-Q, 1995-08-14
EQUIPMENT RENTAL & LEASING, NEC

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<PAGE> 1
================================================================================

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1995 OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-8153

ENTERRA CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 23-2154837
---------------------------- -------------------
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
organization)

13100 NORTHWEST FREEWAY, SIXTH FLOOR
HOUSTON, TEXAS
77040
---------------------------------------------------
(Address of principal executive offices)

(713) 462-7300
---------------------------------------------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No
----- -----

As of August 10, 1995, 27,815,450 common shares were outstanding.
<PAGE> 2
ENTERRA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
---------- -----------
<S> <C> <C>
ASSETS
------

Current assets:
Cash and cash equivalents $ 7,305 $ 13,782
Accounts receivable, less allowance of $4,411 and $3,630 126,699 128,458
Inventories 101,387 98,810
Deferred tax and other current assets 23,065 19,408
---------- ----------
Total current assets 258,456 260,458

Property, plant and equipment 543,355 546,041
Less accumulated depreciation 308,343 298,898
---------- ----------
Property, plant and equipment, net 235,012 247,143
Deferred charges and other assets 6,159 5,979
Goodwill, net 178,265 186,427
---------- ----------
$ 677,892 $ 700,007
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
Current portion of long-term debt $ 1,142 $ 1,551
Accounts payable 32,724 36,951
Other current liabilities 57,502 60,117
---------- ----------
Total current liabilities 91,368 98,619

Long-term debt 128,643 123,045
Deferred income taxes 12,198 23,369
Other liabilities 470 495
Minority interest 1,756 2,045

Commitments and contingencies

Stockholders' equity:
Common stock - $1.00 par value, 27,774,950 shares
issued and outstanding 27,775 27,748
Additional paid-in capital 288,946 288,514
Cumulative translation adjustment (8,529) (6,181)
Retained earnings 135,265 142,353
---------- ----------
Total stockholders' equity 443,457 452,434
---------- ----------
$ 677,892 $ 700,007
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

1
<PAGE> 3
ENTERRA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Rentals $ 58,974 $ 35,112 $ 116,017 $ 70,081
Sales 53,247 8,443 113,588 22,047
---------- ---------- ---------- ----------
112,221 43,555 229,605 92,128
---------- ---------- ---------- ----------

COSTS AND EXPENSES
Cost of rentals 29,949 17,096 57,143 33,175
Cost of sales 40,979 6,705 84,331 16,158
Selling, general and administrative 24,129 12,766 49,017 25,602
Depreciation and amortization 12,377 6,259 24,242 12,162
Unusual charges 28,281 -- 28,281 --
---------- ---------- ---------- ----------
135,715 42,826 243,014 87,097
---------- ---------- ---------- ----------

OPERATING INCOME (LOSS) (23,494) 729 (13,409) 5,031

Other income (expense)
Interest income 237 300 390 594
Interest and debt expense (2,357) (58) (4,647) (106)
Other 325 517 871 473
---------- ---------- ---------- ----------
(1,795) 759 (3,386) 961

Income (loss) before income taxes and minority
interests (25,289) 1,488 (16,795) 5,992
Income tax provision (benefit) (12,634) 555 (9,396) 1,950
---------- ---------- ---------- ----------
Income (loss) before minority interests (12,655) 933 (7,399) 4,042
Minority interests in (income) loss of subsidiaries 284 68 311 66
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (12,371) $ 1,001 $ (7,088) $ 4,108
========== ========== ========== ==========

Weighted average common shares outstanding 27,761 16,435 27,755 16,432
========== ========== ========== ==========

NET INCOME (LOSS) PER SHARE $ (0.45) $ 0.06 $ (0.26) $ 0.25
========== ========== ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

2
<PAGE> 4
ENTERRA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ (7,088) $ 4,108
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 24,242 12,162
Unusual charges, net of payments 27,145 --
Provision for losses on accounts receivable 1,076 608
Gain on sale of property, plant and equipment (3,460) (2,759)
Change in assets and liabilities, net of acquisitions:
Accounts receivable 683 (7,813)
Inventories (5,342) (7,634)
Deferred taxes and other current assets (3,450) (1,373)
Deferred charges and other assets (498) (1,000)
Accounts payable and other current liabilities (11,996) 5,440
Deferred income taxes (11,171) (487)
Other liabilities (25) (512)
Other (256) 286
---------- ----------
Net cash provided by operating activities 9,860 1,026
---------- ----------

CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (27,615) (17,540)
Proceeds from sale of property, plant and equipment 6,179 4,745
---------- ----------
Net cash used in investing activities (21,436) (12,795)
---------- ----------

CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt $ 178,296 $ --
Payments of long-term debt (173,107) --
Stock options exercised 459 167
---------- ----------
Net cash provided by financing activities 5,648 167
---------- ----------

Effect of exchange rate changes on cash and cash equivalents (549) (389)
---------- ----------

Net change in cash and cash equivalents (6,477) (11,991)

Cash and cash equivalents, beginning of period 13,782 48,229
---------- ----------

Cash and cash equivalents, end of period $ 7,305 $ 36,238
========== ==========
</TABLE>

3
<PAGE> 5
ENTERRA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)

1. BASIS OF PRESENTATION

The financial statements included herein have been prepared by Enterra
Corporation (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and in accordance with
generally accepted accounting principles. In the opinion of management, the
information furnished reflects all adjustments, all of which are of a normal
recurring nature, necessary for a fair presentation of the results of the
interim periods. It is recommended that these statements be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K for the year ended
December 31, 1994. No significant accounting changes have occurred during the
six months ended June 30, 1995, except that, effective June 30, 1995, the
Company adopted Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." Certain reclassifications have been made to conform to the
1995 presentation.

2. PROPOSED MERGER

On June 23, 1995, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") providing for the business combination of Enterra and
Weatherford International Incorporated (the "Merger"). Pursuant to the Merger
Agreement, each share of Enterra common stock will be exchanged for 1.69 shares
of Weatherford common stock (0.845 of a share after giving effect to a
contemporaneous one-for-two reverse stock split of Weatherford common stock).
The transaction will be accounted for as a pooling of interests. The Merger,
which is subject to the approval of Weatherford and Enterra stockholders, is
expected to close in early October.

3. PROPOSED ACQUISITION

On June 30, 1995, the Company announced that Enterra and Zapata Corporation
entered into an agreement whereby Enterra will purchase from Zapata the assets
of its Energy Industries compression division for $130 million in cash. Energy
Industries is involved in the design, manufacture, packaging and rental of
compressors. The transaction is subject to the execution of a definitive
assets purchase agreement and certain regulatory approvals.

4. UNUSUAL CHARGES

During the second quarter of 1995, as a result of implementing SFAS No. 121 and
a review of its operating strategies and the carrying values of its assets, the
Company recognized unusual charges of $28.3 million of which approximately
$26.0 million is noncash. The charge includes $10.0 million related to the
writedown to expected net realizable values of certain oilfield equipment
businesses that will be disposed and $12.4 million of writedowns related to
rental tools, properties and certain inventories that are excess or obsolete.
The businesses to be sold generated $1.7 million in operating income during the
first half of 1995 and the Company anticipates proceeds of approximately $35
million from their sale.

4
<PAGE> 6
service administrative and operating locations, each of which was implemented
or formally announced during the second quarter. The restructuring resulted in
personnel reductions of approximately 40 persons in the pipeline segment and
approximately 80 persons in the oilfield segment. The pipeline operations that
were closed lost approximately $1.0 million in the first half of 1995. The
oilfield restructurings are expected to save over $3 million annually.

5. INVENTORIES

Inventories consisted of:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
---------- -----------
<S> <C> <C>
Raw materials $ 29,380 $ 32,960
Work in progress 15,795 14,394
Finished goods and purchased parts 43,607 38,997
Supplies 12,605 12,459
---------- ----------
$ 101,387 $ 98,810
========== ==========
</TABLE>

6. INCOME TAXES

The increase in the effective tax rate to 56% at June 30, 1995 from 34% at
December 31, 1994 is primarily due to variances in the countries of origin of
the Company's taxable income, as well as the effect of nondeductible goodwill
amortization from the acquisition of Total Energy Services Company and other
nondeductible expenses relative to the Company's lower taxable income that
results from the unusual charges. In addition, the Company is taxed on local
gross revenues by some foreign countries in which it does business, regardless
of taxable income.

7. SETTLEMENT OF CONTINGENCIES

On August 10, 1995, the Company and Kuwait Oil Company (KOC) entered into a
settlement agreement whereby KOC will pay $14.25 million in cash within 30 days
in full settlement of the parties' dispute related to work performed in Kuwait
during 1992 and 1993, resulting in no material gain or loss to the Company.

8. STATEMENTS OF CASH FLOWS

The following information is provided to supplement the Statements of Cash
Flows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------
1995 1994
---------- ----------
<S> <C> <C>
Cash paid during the period for:
Interest $ 4,288 $ 106

Income taxes 5,400 2,229

Noncash increase in paid-in capital from exercise of stock options 12 31
</TABLE>

5
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

INTRODUCTION

Enterra Corporation provides specialized services and products to the oil and
gas industry through its oilfield services and equipment business, consisting
principally of equipment rentals and well control assistance, fishing services
and product sales, and its pipeline services and equipment business and
compression services and equipment business. Oilfield rental equipment
provided by the Company is used in deep well exploratory and development
drilling, generally below 7,500 feet, and in completion, production and
workover activities. Well control assistance consists of providing personnel
and equipment needed to control critical wells. Fishing services consist of
locating and removing obstructions created by objects broken off, stuck or
dropped into the well. The Company manufactures and sells oil and gas well
production and completion equipment and surface and downhole drilling equipment
and tools. Specialized pipeline equipment designed, manufactured, serviced and
sold or rented by the Company is used in the construction and rehabilitation of
pipelines. Compression equipment designed, manufactured, serviced and sold or
rented by the Company is used in the production and transportation of natural
gas.

On August 12, 1994, the Company expanded its business by acquiring Total Energy
Services Company ("TOTAL"), a privately owned company that designs,
manufactures, sells and rents compression and oilfield equipment.

RESULTS OF OPERATIONS

The Company's oilfield services and equipment business revenues are directly
related to the levels of oil and gas drilling (particularly deep well
drilling), completion and workover activity in the United States, Canada, the
Middle East, Latin America, Southeast Asia and the North Sea, which in turn are
affected by the current and anticipated price of oil and gas. While a majority
of the Company's current revenues come from the relatively stable production
and workover sector of the industry, an increase in exploration for gas would
have a significant impact on revenues since such work typically involves
drilling at increased depths and often requires increased rentals of equipment
owned by the Company. In addition, any significant change in the level of oil
and gas production within the industry could impact product sales.

While the pipeline services and equipment business also is affected by the
price of oil and gas, the impact is recognized over longer periods due to the
extended lead times inherent in large pipeline projects. In addition, this
segment is also affected by other factors, including the need for pipelines to
transport oil and gas to areas of high demand, the age and condition of
existing pipelines, political and economic influences, environmental factors
and governmental regulation.

The Company's compression services and equipment business revenues are
influenced by natural gas production and consumption, construction of gathering
and storage systems, the age and operating pressures of natural gas wells and
the price of natural gas, principally in the United States and Canada.

6
<PAGE> 8
None of the Company's segments have experienced significant warranty or product
liability claims. Any warranty accruals necessary for specialized equipment
sales are generally insignificant.

During the second quarter of 1995, as a result of a review of its operating
strategies and the carrying values of its assets, the Company recognized
unusual charges of $28.3 million of which approximately $26.0 million is
noncash. The charge includes $10.0 million related to the writedown to
expected net realizable values of certain oilfield equipment businesses that
will be disposed and $12.4 million of writedowns related to rental tools,
properties and certain inventories that are excess or obsolete. The businesses
to be sold generated $1.7 million in operating income during the first half of
1995 and the Company anticipates proceeds of approximately $35 million from
their sale.

Also included in the unusual charges are costs pursuant to formal restructuring
plans of $4.6 million related to the closure and associated write-off of assets
of certain pipeline businesses and $1.3 million to close certain oilfield
service administrative and operating locations, each of which was implemented
or formally announced during the second quarter. The restructuring resulted in
personnel reductions of approximately 40 persons in the pipeline segment and
approximately 80 persons in the oilfield segment. The pipeline operations that
were closed lost approximately $1.0 million in the first half of 1995. The
oilfield restructurings are expected to save over $3 million annually.

Operations

Operating results by business segment are as follows (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Oilfield services and equipment $ 70,971 $ 32,676 $ 141,401 $ 66,105
Pipeline services and equipment 17,007 10,879 34,814 26,023
Compression services and equipment 24,243 -- 53,390 --
---------- ---------- ---------- ----------
$ 112,221 $ 43,555 $ 229,605 $ 92,128
========== ========== ========== ==========
OPERATING INCOME (LOSS) BEFORE UNUSUAL CHARGES
Oilfield services and equipment $ 3,160 $ 3,480 $ 7,500 $ 7,975
Pipeline services and equipment 1,308 (1,658) 4,913 (829)
Compression services and equipment 1,839 -- 5,406 --
Corporate (1,520) (1,093) (2,947) (2,115)
---------- ---------- ---------- ----------
$ 4,787 $ 729 $ 14,872 $ 5,031
========== ========== ========== ==========
OPERATING INCOME (LOSS)
Oilfield services and equipment $ (20,559) $ 3,480 $ (16,219) $ 7,975
Pipeline services and equipment (3,254) (1,658) 351 (829)
Compression services and equipment 1,839 -- 5,406 --
Corporate (1,520) (1,093) (2,947) (2,115)
---------- ---------- ---------- ----------
$ (23,494) $ 729 $ (13,409) $ 5,031
========== ========== ========== ==========
</TABLE>

7
<PAGE> 9
Oilfield Services and Equipment Segment. Revenues of the oilfield services and
equipment segment are generated by the following principal services and
products (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
OILFIELD SERVICES AND EQUIPMENT REVENUES
Equipment rental and well control assistance $ 26,904 $ 19,442 $ 52,667 $ 39,683
Fishing services 12,048 10,634 23,035 19,804
Product sales 32,019 2,600 65,699 6,618
---------- ---------- ---------- ----------
$ 70,971 $ 32,676 $ 141,401 $ 66,105
========== ========== ========== ==========
</TABLE>

Oilfield services and equipment revenues increased $38.3 million (117%) in the
second quarter of 1995 as compared to 1994. North American rental and fishing
operations increased by $2.1 million (11%) due to acquisitions and a broadened
offering of services. International rental and fishing revenues increased by
$.7 million (6%) primarily due to increased activity in Latin America offset by
lower activity in the Former Soviet Union and Southeast Asia. The increase in
product sales of $29.4 million between the two quarters is primarily due to the
acquisition of TOTAL.

Operating income decreased $24.0 million in the second quarter of 1995 as
compared to the prior year. This decline is primarily due to unusual charges
of $23.7 million in the quarter. Exclusive of the unusual charges, operating
income decreased $0.3 million in the second quarter of 1995 as compared to the
same quarter of the prior year and decreased as a percentage of revenues from
11% to 4%. This decline is primarily due to the lower margin revenues
generated by product sales from the companies acquired in the TOTAL merger
combined with lower profitability from the Company's international
subsidiaries.

For the six month period, revenues were up $75.3 million in 1995 as compared to
1994. The addition of the TOTAL companies accounted for $55.4 million (74%) of
the increase while North American and Latin American rental and service revenue
increases made up the balance. Other international operations experienced a
small decline in revenues from 1994 to 1995. Operating income decreased $24.2
million, of which $23.7 million was due to the unusual charges taken in 1995.
Exclusive of the unusual charges, operating income decreased $0.5 million and
margins decreased from 12% to 5%. The lower margins result from substantial
increases in 1995 of low margin product revenues from the acquisition of the
TOTAL companies combined with decreases in activity from Kazahkstan and
Southeast Asia. Increases in depreciation and amortization expense of $4.4
million further depressed operating income.

Pipeline Services and Equipment Segment. Revenues of the pipeline services
and equipment segment are generated from rentals and sales of equipment as
follows (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PIPELINE SERVICES AND EQUIPMENT REVENUES
Rentals $ 11,084 $ 6,682 $ 22,327 $ 13,957
Sales 5,923 4,197 12,487 12,066
---------- ---------- ---------- ----------
$ 17,007 $ 10,879 $ 34,814 $ 26,023
========== ========== ========== ==========
</TABLE>

8
<PAGE> 10
Pipeline services and equipment revenues increased $6.1 million (56%) in the
second quarter of 1995 as compared to 1994, due to a $1.3 million increase in
sales of equipment and service income from the Company's rehabilitation
business combined with a $1.0 million increase in equipment sales revenues in
the pipeline equipment division, $1.5 million increase in rental revenues in
the automatic welding division and a $2.3 million increase in service revenues
in the Company's pipeline coating business.

The pipeline services and equipment segment is volume sensitive due to the
fixed nature of many costs associated with operating specialized manufacturing
facilities and a worldwide sales effort. Operating results in the pipeline
services and equipment segment can vary significantly from period to period due
to the timing of large pipeline projects. Operating income decreased $1.6
million in the second quarter of 1995 as compared to the prior year due
primarily to a $4.6 million unusual charge in the pipeline segment. Operating
income, exclusive of the unusual charges, as a percentage of revenues increased
to 8% in 1995 from a negative 15% in 1994 due to an increase in higher margin
rental revenues in the second quarter of 1995 along with a $1.0 million loss
recognized on the Allseas project in the second quarter of 1994.

For the six months, revenues increased $8.8 million (34%) due to a $7.4 million
increase in the autoweld division's international sales and rentals, a $1.7
million increase in the rehabilitation business, and a $1.7 million increase in
service revenues by the Company's pipeline coating business offset slightly by
a $2.0 million decrease in the pipeline equipment division equipment sales
export revenues. Operating income increased $1.2 million ($5.7 million
exclusive of the unusual charge), due to a large increase in high margin
international and Canadian rentals, a decrease in lower margin export equipment
sales as compared to 1994, significant increases in sales of equipment by the
rehabilitation group and increases in coating service revenues from a large
international pipeline construction project. In addition, in 1994 the Allseas
project recognized a $1.0 million loss.

Compression Services and Equipment. Revenues of the compression services and
equipment segment are generated from rentals and sales of equipment as follows
(in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1995 1995
------------------ -----------------
<S> <C> <C>
COMPRESSION SERVICES AND EQUIPMENT REVENUES
Rentals $ 8,938 $ 17,988
Sales 15,305 35,402
---------- ----------
$ 24,243 $ 53,390
========== ==========
</TABLE>

The compression services and equipment segment was acquired in connection with
the acquisition of TOTAL on August 12, 1994. Revenues of $24.2 million for the
second quarter 1995 consisted of compressor equipment rental revenue of $8.9
million and compressor system sales revenue of $15.3 million. The compression
segment's Canadian operations provided $12.0 million of these revenues.

Revenues for the six months were $53.4 million and consisted of compressor
rental revenue of $18.0 million and compressor system sales revenue of $35.4
million. The compression segment's Canadian operations provided $28.6 million
of these revenues.

9
<PAGE> 11
Interest Income and Expense

Interest income decreased and interest expense increased in 1995 as compared to
1994 primarily due to the acquisition of TOTAL which resulted in the
expenditure of excess cash balances and the incurrence of debt.

Income Taxes

Income tax benefit as a percentage of net loss before taxes and minority
interest was 56% during the six months ended June 30, 1995 and the income tax
expense as a percentage of net income before income taxes and minority interest
was 33% during the same period in 1994. The increase in the effective tax rate
primarily is due to variances in the countries of origin of the Company's
taxable income and nondeductible goodwill amortization arising from the
acquisition of TOTAL. In addition, the Company is taxed on local gross
revenues by some foreign countries in which it does business, regardless of
taxable income.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1995, the Company had cash and cash equivalents of $7.3 million,
down $6.5 million from year end. Cash provided by operating activities was
$9.9 million during the six months ended June 30, 1995 as compared to $1.0
million in 1994. Depreciation and amortization expense increased $12.1 million
during the six months ended June 30, 1995 as compared to 1994 as a result of
capital expenditures and the acquisition of TOTAL. Inventories increased by
$2.6 million during the six months ended June 30, 1995 primarily due to
purchases of materials to manufacture oilfield and compression equipment.
Accounts payable and other current liabilities decreased $6.8 million in 1995
due to seasonally lower levels of activity as compared to the fourth quarter of
1994.

On August 10, 1995, the Company and Kuwait Oil Company (KOC) entered into a
settlement agreement whereby KOC will pay $14.25 million cash within 30 days in
full settlement of the outstanding accounts receivable and the parties' dispute
related to work performed in Kuwait during 1992 and 1993, resulting in no
material gain or loss to the Company.

The Company continues to replenish and increase its inventory of rental
equipment utilized in the oilfield services and equipment segment and develop
and manufacture new equipment and systems to improve or expand the pipeline and
compression businesses. Capital expenditures were $27.6 million in the six
months ended June 30, 1995 as compared to $17.5 million in 1994. During the
six months ended June 30, 1995, $15.7 million or 57% of the capital
expenditures were made in the oilfield services and equipment segment,
primarily directed towards the expansion of North American rental and fishing
operations and international expansion in Latin America. Capital expenditures
of $3.2 million in the pipeline services equipment segment were primarily
directed towards the addition of rental equipment. Capital expenditures in the
compression services and equipment segment consisted of $7.0 million, primarily
for the expansion of the domestic compressor rental fleet. Almost all of the
$17.5 million spent on capital expenditures during the six months ended June
30, 1994 went to the oilfield services and equipment segment, primarily for
fishing tools and drill pipe. Sources for the equipment purchased, assembled
or manufactured by the Company are readily available and long-term capital
commitments are not required.

On August 12, 1994, Enterra completed the acquisition of all the outstanding
common shares of TOTAL in exchange for 11.3 million common shares of Enterra
valued at $18.90 per share. Minority interests in two of TOTAL's subsidiaries
were acquired for approximately $23 million in cash, and the termination of
option and employment obligations and the costs of the transaction resulted in
further cash expenditures of approximately $15 million. At closing, TOTAL had
outstanding long-term indebtedness of approximately $75 million.

10
<PAGE> 12
On June 30, 1995, the Company announced that Enterra and Zapata Corporation
entered into an agreement whereby Enterra will purchase from Zapata the assets
of its Energy Industries compression division for $130 million in cash. Energy
Industries is involved in the design, manufacture, packaging and rental of
compressors. The transaction is subject to the execution of a definitive
assets purchase agreement and certain regulatory approvals.

On July 17, 1995, the Company increased its revolving line of credit from $140
million to $175 million in order to provide additional availability for
acquisitions and future operating needs. The amended and restated agreement
provides the option of borrowing up to $35 million in Canadian funds for use of
the Company's Canadian subsidiaries. The term of the credit agreement is
through March 1998. Borrowings bear interest at the prime rate or, at the
Company's election, at .75% over a specified Eurodollar rate. The credit
agreement contains a number of covenants, including limitations on the amount
of dividends paid and repurchases of common stock, the amount and type of
permitted indebtedness and investments, the pledge or disposition of assets and
requirements that the Company meet certain financial tests. Borrowings under
the revolving line of credit at June 30, 1995 were $122 million.

The Company currently believes that its cash flow from operations, working
capital and borrowing capabilities will be sufficient to fund its projected
capital expenditures, working capital needs and debt service requirements.
Additional borrowings will be required to complete the acquisition of Energy
Industries and, based upon discussions with its banks and other potential
lenders, the Company expects such borrowings will be available.

Enterra is affected by fluctuations in foreign currency exchange rates.
Although most of Enterra's foreign operations revenues are denominated in the
local currency, the effects of foreign currency fluctuations are mitigated as
local expenses of foreign entities are generally in the same currency. The
reported operating results of foreign operations are affected by changes in the
exchange rates of foreign currencies against the U.S. dollar. The significance
of the effect on the operating results of Enterra will depend on the magnitude
of the rate change and the level of operations in the local currency. Enterra
recorded net foreign currency transaction gains of $0.7 million during the six
months ended June 30, 1995. Enterra did not incur any material foreign
currency transaction gains or losses during the six months ended June 30, 1994.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On June 28, 1995, a class action complaint was filed against Enterra and
members of its Board of Directors in the Delaware Court of Chancery in New
Castle County. The complaint alleges breach of fiduciary duty and other
matters and seeks damages in an unspecified amount and injunctive relief to
prevent the consummation of the Merger. On July 17, 1995, an answer to the
complaint was filed by the defendants denying the material allegations.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

The annual meeting of stockholders was held on May 11, 1995. Stockholders
elected three directors nominated by the board of directors for terms expiring
in 1998 by the following votes:

11
<PAGE> 13
<TABLE>
<CAPTION>
FOR WITHHELD
---------- ----------
<S> <C> <C>
Thomas J. Edelman 25,195,080 234,915

D. Dale Wood 25,193,586 236,409

R. Rudolph Reinfrank 25,194,467 235,528
</TABLE>

Under applicable Delaware law, votes cast could not be recorded against or as
an abstention for the election of directors, nor could a broker non-vote be
recorded as such shares were not considered to be present at the meeting and
entitled to vote. As directors are elected by a plurality of the votes cast, a
withheld vote had no effect. There were no nominees to office other than the
directors elected.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

4.1 Second Amended and Restated Credit Agreement, dated as of
July 17, 1995 between Enterra Corporation and certain
subsidiaries, on the one hand, and certain financial
institutions

27.1 Financial Data Schedule

(b) Reports on Form 8-K

The Company filed a Current Report on Form 8-K dated June 23, 1995, in
respect of the signing of a definitive agreement providing for the
business combination of the Company and Weatherford International
Incorporated. The combination will be effected pursuant to an
Agreement and Plan of Merger, dated as of June 23, 1995, providing for
the merger of the Company with and into Weatherford.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date August 13, 1995 /s/ Steven W. Krablin
----------------- ----------------------------------------
Steven W. Krablin
Principal Financial and Accounting
Officer and Duly Authorized Signatory

<PAGE> 1

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

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of July 17, 1995

between

ENTERRA CORPORATION

and

ENTERRA CANADA LIMITED,

and

CHERCO-BARBER LTD.,

on the one hand,

and

THE FINANCIAL INSTITUTIONS SIGNATORY HERETO,

and

WELLS FARGO BANK, N.A.,

as Agent,

and

FIRST INTERSTATE BANK OF TEXAS, N.A.,

as Co-Agent,

on the other hand

U.S.$175,000,000

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

<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.3 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.4 Disclosure Statement and Exhibits . . . . . . . . . . . . . . . . . . . . . . . 25
1.5 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.6 Currency Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE II AMOUNT AND TERMS OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1 A Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.2 B Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.3 C Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.4 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.5 Rate Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.6 Interest Rates; Payment of Principal and Interest on Loans . . . . . . . . . . 36
2.7 Overdue Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.8 Computation of Interest and Fees; Maximum Interest Rate . . . . . . . . . . . . 38
2.9 Notice of Borrowing Requirements . . . . . . . . . . . . . . . . . . . . . . . 39
2.10 Conversion or Continuation . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.11 Loans by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.12 Prepayments and Termination or Voluntary Reduction of Commitments . . . . . . . 44
2.13 Voluntary Reallocation of B Commitment and C Commitment . . . . . . . . . . . . 46
2.14 Canadian Exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.15 Commitment Reductions; Mandatory Prepayments . . . . . . . . . . . . . . . . . 47
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
2.16 Agency Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.17 Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.18 Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.19 Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2.20 Euro-Currency Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.21 Special Euro-Currency Circumstances . . . . . . . . . . . . . . . . . . . . . . 51
2.22 Increased Risk-Based Capital Cost . . . . . . . . . . . . . . . . . . . . . . . 51
2.23 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.24 Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.25 Place of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.26 Time and Place of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2.27 Survivability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2.28 Outstanding Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE III NATURE OF CANADIAN OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . 56
3.1 Joint and Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.1 Conditions Precedent to Effectiveness . . . . . . . . . . . . . . . . . . . . . 58
4.2 Conditions Precedent to All Loans and Issuances of Letters of Credit . . . . . 62
4.3 Conditions Precedent to Certain Loans . . . . . . . . . . . . . . . . . . . . . 62
4.4 Determinations Under Section 4.1 . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BORROWER . . . . . . . . . . . . . . . . . 63
5.1 Organization, Powers, Good Standing, and Subsidiaries . . . . . . . . . . . . . 64
5.1.1 Organization and Powers . . . . . . . . . . . . . . . . . . . . . . . 64
5.1.2 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.1.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.2 Authorization of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . . . . 65
5.2.1 Authorization of Borrowing . . . . . . . . . . . . . . . . . . . . . 65

</TABLE>

- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
5.2.2 Authorization of Loan Documents by Subsidiary Guarantors . . . . . . 65
5.2.3 No Conflict - Borrower . . . . . . . . . . . . . . . . . . . . . . . 65
5.2.4 No Conflict - Canadian Obligors . . . . . . . . . . . . . . . . . . . 65
5.2.5 No Conflict - Subsidiary Guarantors . . . . . . . . . . . . . . . . . 66
5.2.6 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . 66
5.2.7 Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.2.8 Lien Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
5.3 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
5.4 Changes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
5.5 Title to Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 68
5.6 Litigation; Adverse Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
5.7 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
5.8 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
5.9 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.10 Securities Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
5.13 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
5.14 Trademarks, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
5.15 Existing Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
5.16 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
5.17 Burdensome Agreements, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
5.18 Fire, Explosion, and Labor Disputes . . . . . . . . . . . . . . . . . . . . . . 73
5.19 Environmental Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.20 Partnerships and Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
5.21 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
5.22 Ownership Of Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

</TABLE>

- iii -
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C> <C>
5.23 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE VI AFFIRMATIVE COVENANTS OF BORROWER . . . . . . . . . . . . . . . . . . . . . . 75
6.1 Accounting Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
6.2 Financial Statements; Duty to Report . . . . . . . . . . . . . . . . . . . . . 76
6.3 Corporate Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
6.4 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 82
6.5 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
6.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
6.7 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
6.8 Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
6.9 Pollution and Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . 83
6.10 Schedule of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 83
6.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
6.12 Repatriation of Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
6.13 Additional Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE VII NEGATIVE COVENANTS OF BORROWER . . . . . . . . . . . . . . . . . . . . . . . 84
7.1 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
7.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
7.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
7.5 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
7.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
7.7 Restriction on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . 96
7.8 Sales and Lease-Backs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
7.9 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
7.10 Transactions with Shareholders and Affiliates . . . . . . . . . . . . . . . . . 98
7.11 Disposal of Subsidiary Debt or Securities . . . . . . . . . . . . . . . . . . . 98
7.12 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

</TABLE>

- iv -
<PAGE> 6
<TABLE>
<CAPTION>
Page
<S> <C> <C>
7.13 Amendments or Waivers of Certain Documents . . . . . . . . . . . . . . . . . . 99
7.14 Prepayment of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
7.15 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
7.16 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
7.17 Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
7.18 Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
7.19 Margin Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
7.20 Concentration of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
ARTICLE VIII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
8.1.1 Failure to Make Payments When Due . . . . . . . . . . . . . . . . . . 103
8.1.2 Default in Other Agreements . . . . . . . . . . . . . . . . . . . . . 103
8.1.3 Breach of Certain Covenants . . . . . . . . . . . . . . . . . . . . . 104
8.1.4 Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . 104
8.1.5 Other Defaults Under Agreement . . . . . . . . . . . . . . . . . . . 105
8.1.6 Default Under Collateral Documents . . . . . . . . . . . . . . . . . 105
8.1.7 Inability to Pay Debts . . . . . . . . . . . . . . . . . . . . . . . . 105
8.1.8 Involuntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . 106
8.1.9 Voluntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . . 106
8.1.10 Judgments and Attachments . . . . . . . . . . . . . . . . . . . . . 107
8.1.11 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
8.1.12 ERISA Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 107
8.1.13 Termination of Collateral Documents . . . . . . . . . . . . . . . . 109
8.1.14 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . 109
8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
ARTICLE IX THE AGENT AND THE BANKS . . . . . . . . . . . . . . . . . . . . . . . . . . 111
9.1 Appointment and Powers of Agent . . . . . . . . . . . . . . . . . . . . . . . 111

</TABLE>

- v -
<PAGE> 7
<TABLE>
<CAPTION>
Page
<S> <C> <C>
9.2 Nature of Duties; Independent Credit Investigation . . . . . . . . . . . . . . 113
9.3 Actions in Discretion of Agent; Instructions from Banks . . . . . . . . . . . . 113
9.4 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
9.5 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
9.6 Excess Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
9.7 Obligations Separate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
9.8 Resignation by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
ARTICLE X BANKS' REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
10.1 Investment Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
10.2 Participation in Notes; Compliance with Law . . . . . . . . . . . . . . . . . . 116
10.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
10.4 Release of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
ARTICLE XI EXPENSES AND INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 117
11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
11.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
12.1 Waivers; Modifications in Writing . . . . . . . . . . . . . . . . . . . . . . . 119
12.2 Failure or Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
12.3 Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
12.4 Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
12.5 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
12.6 Availability of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
12.7 Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
12.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
12.9 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
12.10 Governing Law and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
12.11 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 124

</TABLE>
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<TABLE>
<CAPTION>
Page
<S> <C> <C>
12.12 Changes in Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . 125
12.13 Survival of Agreements, Representations, and Warranties . . . . . . . . . . . . 125
12.14 Set Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
12.15 Obligations Separate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
12.16 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
12.17 Final Agreement of the Parties . . . . . . . . . . . . . . . . . . . . . . . . 126
12.18 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

</TABLE>
- vii -
<PAGE> 9
TABLE OF EXHIBITS

Exhibit A - Assignment and Assumption Agreement
Exhibit B-1 - Form of Amended and Restated Borrower Pledge Agreement
Exhibit B-2 - Form of Canadian Pledge Agreement
Exhibit C-1 - U.S. Banks and Commitments
Exhibit C-2 - Canadian Bank Commitment
Exhibit D-1 - Form of Amended and Restated Promissory Note
Exhibit D-2 - Form of B Note
Exhibit D-3 - Form of C Note
Exhibit E - L/C Request Certificate
Exhibit F - Notice of Borrowing
Exhibit G - Notice of Conversion/Continuation
Exhibit H - Form of Amended and Restated Subsidiary Guaranty
Exhibit I - Form of Amended and Restated Subsidiary Pledge Agreement
Exhibit J - Legal Opinion of Borrower's Counsel
Exhibit K - Officer's Compliance Certificate
Exhibit L - Regulation U Valuation Certificate
Exhibit M - Addresses for Notice
Exhibit N - Form of Subordinated Note

viii
<PAGE> 10

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
July 17, 1995, between ENTERRA CORPORATION, a Delaware corporation
("Borrower"), and Enterra Canada Limited, an Alberta corporation, and
Cherco-Barber Ltd., an Alberta corporation (collectively, "Canadian Obligors"),
on the one hand, and the banks and financial institutions which either now or
in the future are signatories hereto (hereinafter collectively referred to as
"Banks" and individually as a "Bank"), and WELLS FARGO BANK, N.A., a national
banking association, as agent (hereinafter, in such capacity, together with any
successors thereto in such capacity, referred to as "Agent") for Banks
hereunder, and FIRST INTERSTATE BANK OF TEXAS, N.A., a national banking
association, as co-agent (hereinafter, in such capacity, referred to as
"Co-Agent"), on the other hand.

PRELIMINARY STATEMENT. Borrower entered into a Loan Agreement, dated as
of March 30, 1994, as amended by Waiver Letters dated as of March 30, 1994 and
August 12, 1994 (the "Original Credit Agreement"), with the Banks parties
thereto and Agent providing for a revolving loan facility in the aggregate
principal amount not to exceed U.S.$40,000,000 at any time outstanding,
including letters of credit in the aggregate stated amount not to exceed
U.S.$10,000,000 at any time outstanding. The Original Credit Agreement was
amended and restated pursuant to the Amended and Restated Credit Agreement,
dated as of August 12, 1994, Waiver Letters dated as of November 14, 1994 and
December 27, 1994 and the First Amendment to Amended and Restated Credit
Agreement dated as of September 30, 1994 (collectively, the "First
Restatement"), among Borrower, the Banks parties thereto, Agent and Co-Agent.
Borrower desires to increase the revolving loan facility to the aggregate
principal amount not to exceed U.S.$175,000,000 at any time outstanding,
including letters of credit in the aggregate stated amount not to exceed
U.S.$30,000,000 at any time outstanding, and including a Canadian facility for
Borrower and Canadian Obligors in the aggregate principal amount not to exceed
the amount of the commitment therefor, (which commitment is based upon the
equivalent amount in Canadian Dollars of U.S.$35,000,000 on the date hereof and
on the date of any adjustment to the commitment pursuant to this Agreement) and
which includes letters of credit in an aggregate stated amount based upon the
equivalent amount in Canadian Dollars of U.S.$10,000,000. The Banks named
herein are willing to agree to such increases on the terms and conditions
hereinafter set forth. Borrower, Canadian Obligors, such Banks, Agent and
Co-Agent wish to amend and restate the First Restatement in connection with the
foregoing.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 11

In consideration of the foregoing premises and the mutual covenants,
conditions, and provisions hereinafter set forth, the parties hereto agree that
the First Restatement is hereby amended and restated in its entirety, effective
from and after the Second Restatement Date (as hereinafter defined), as
follows:
ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.1 Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings:

"A Borrowing" means and refers to any borrowing pursuant to Section
2.1.

"A Commitment" means and refers to, at the time any determination
thereof is to be made, the total amount of U.S. Banks' commitments to make A
Loans to Borrower under the Credit Facility, the amount of which shall be,
subject to any and all voluntary reductions or terminations made hereunder of
such commitments, the total of the amounts set forth opposite the name of U.S.
Banks as their A Commitments in Exhibit C-1.

"A Loan" means and refers to any loan made or to be made severally
(not jointly and not jointly and severally) by U.S. Banks to Borrower pursuant
to Section 2.1.

"A Note" means and refers to any of the amended and restated
promissory notes, substantially in the form of Exhibit D-1, executed by
Borrower to the order of a U.S. Bank under the Credit Facility.

"Affiliate" means and refers to, as to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control" (including
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract, or otherwise.

"Agency Fee" shall have the meaning set forth in Section 2.16.

"Agent" shall have the meaning set forth in the introduction to this
Agreement.

"Agreement" means and refers to this Second Amended and Restated
Credit Agreement, dated as of July 17, 1995, between Borrower and Canadian
Obligors, on the one hand, and Banks, Agent

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 12
and Co-Agent, on the other hand, together with all exhibits and schedules.

"Assignment and Assumption Agreement" means and refers to any
agreement substantially in the form of Exhibit A, under which an interest of a
Bank hereunder is transferred to an assignee pursuant to Section 12.5(b).

"B Borrowing" means and refers to any borrowing pursuant to Section
2.2.

"B Commitment" means and refers to, at the time any determination
thereof is to be made, the total amount of Canadian Bank's commitment to make B
Loans to Borrower under the Credit Facility, the amount of which shall be,
subject to any and all voluntary reallocations, increases, reductions or
terminations made hereunder of such commitment, the amount set forth opposite
the name of the Canadian Bank as its B Commitment in Exhibit C-2; provided,
however, that Exhibit C-2 may be amended from time to time in accordance with
Section 2.13.

"B Loan" means and refers to any loan made or to be made by Canadian
Bank to Borrower pursuant to Section 2.2.

"B Note" means and refers to the promissory note, substantially in
the form of Exhibit D-2, executed by Borrower to the order of Canadian Bank
under the Credit Facility.

"Bank" and "Banks" shall have the respective meanings set forth in the
introduction to this Agreement.

"Bank Related Party" and "Bank Related Parties" shall have the
respective meanings set forth in Section 12.19.

"Basic Rate Borrowing" means and refers to any A Borrowing or
B Borrowing designated by Borrower as a Borrowing based upon the U.S. Basic Rate
or any such Borrowing which, pursuant to Section 2.10, is deemed to be converted
to a Basic Rate Loan.

"Basic Rate Loan" means and refers to any A Loan or B Loan bearing
interest at the U.S. Basic Rate.

"Borrower" shall have the meaning set forth in the introduction to
this Agreement.

"Borrower Pledge Agreement" means and refers to the Second Amended
and Restated Pledge Agreement executed by the Borrower, in substantially the
form of Exhibit B-1.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 13

"Borrowing" means and refers to any borrowing under the Credit
Facility, including an A Borrowing, a B Borrowing and a C Borrowing.

"C Borrowing" means and refers to any Borrowing pursuant to Section
2.3.

"C Commitment" means and refers to, at the time any determination
thereof is to be made, the total amount of Canadian Bank's commitment to make C
Loans to Canadian Obligors under the Credit Facility, the amount of which shall
be, subject to any and all voluntary reallocations, increases, reductions or
terminations made hereunder of such commitment the Equivalent Amount in
Canadian Dollars of the amount set forth opposite the name of the Canadian Bank
as its C Commitment in Exhibit C-2, as of the date stated in Exhibit C-2;
provided, however, that Exhibit C-2 may be amended from time to time in
accordance with Section 2.13.

"C Letter of Credit Fee" shall have the meaning set forth in Section
2.19.

"C Loan" means and refers to any loan made or to be made by Canadian
Bank to any Canadian Obligor pursuant to Section 2.3.

"C Note" means and refers to the promissory note, substantially in
the form of Exhibit D-3, executed by Borrower and Canadian Obligors to the
order of Canadian Bank under the Credit Facility, as the same may be amended in
accordance with Section 2.13.

"Canadian Bank" means and refers to Bank of Montreal.

"Canadian Base LIBOR" means and refers to, for any applicable
Interest Period, the rate, per annum (rounded upwards to the nearest
one-hundredth of one percent (1/100%)), as determined by Canadian Bank's
Chicago Money Market Desk in accordance with its usual procedures (which
determination shall be conclusive in the absence of manifest error) at which
Canadian Bank's Chicago Money Market Desk is able to borrow Canadian Dollars in
the interbank market. Such interbank market shall be chosen by Canadian Bank's
Chicago Money Market Desk and the determination made two (2) applicable
Euro-Currency Business Days prior to the beginning of the applicable Interest
Period for the proposed Euro-Currency Rate Borrowing for delivery on the first
day of such Interest Period, for a term comparable thereto, and
in an amount comparable to the amount of such Euro-Currency Rate Borrowing.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 14

"Canadian Business Day" means and refers to a day, other than a
Saturday or Sunday, on which major commercial banks are open for business in
Toronto, Ontario and Chicago, Illinois.

"Canadian Commitment Fee" shall have the meaning set forth in Section
2.18.

"Canadian Dollars and Cdn.$" means and refers to Canadian dollars or
such coin or currency of Canada as at the time of payment shall be legal tender
for the payment of public and private debts in Canada.

"Canadian Euro-Currency Rate" means and refers to, for any applicable
Interest Period, an interest rate, per annum, equal to the lesser of: (a) the
rate (rounded upwards if necessary to the nearest whole one-sixteenth of one
percent (1/16%)), determined as the quotient of: (i) Canadian Base LIBOR;
divided by (ii) the number equal to one hundred percent (100%) minus, if
applicable, the LIBOR Reserve Percentage; plus three-quarters of one percent
(.75%) per annum; and (b) the Highest Lawful Rate. The Canadian Euro-Currency
Rate shall be adjusted automatically on the effective date of any change in the
LIBOR Reserve Percentage, if applicable, such adjustment to affect any
Euro-Currency Rate Loans bearing interest at the Canadian Euro-Currency Rate
outstanding on such effective date. Each determination of a Canadian
Euro-Currency Rate by Canadian Bank, including any determination as to the
applicability or allocability of reserves to euro-currency liabilities or as to
the amount of such reserves, shall be conclusive and final in the absence of
manifest error.

"Canadian Facility Fee" shall have the meaning set forth in Section
2.17.

"Canadian Issuing Bank" means and refers to, with respect to a
Canadian Letter of Credit, Bank of Montreal.

"Canadian L/C Rate" means and refers to, with respect to each Canadian
Reimbursement Obligation owing with respect to a drawing under a Canadian Letter
of Credit, an interest rate, per annum, equal to the lesser of: (a) the
Canadian Euro-Currency Rate that would be applicable to a C Borrowing made on
the date of payment of such drawing in an amount equal to such Canadian
Reimbursement Obligation and for an Interest Period of one (1) month; and (b)
the Highest Lawful Rate.

"Canadian Letter of Credit" means and refers to each Standby Letter
of Credit denominated in Canadian Dollars issued or outstanding pursuant to
Section 2.3(c).

"Canadian Letter of Credit Amount" means and refers to,
Cdn.$13,550,000 representing the Equivalent Amount of

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 15

U.S.$10,000,000 as of July 17, 1995, subject to any and all voluntary or
mandatory reductions or terminations made hereunder.

"Canadian Letter of Credit Fee" shall have the meaning set forth in
Section 2.19.

"Canadian Letter of Credit Usage" means and refers to, as of the date of
determination thereof, the sum of: (a) the aggregate Stated Amount of each
outstanding Canadian Letter of Credit; and (b) the aggregate amount of all
Unpaid Drawings on Canadian Letters of Credit.

"Canadian Obligors" shall have the meaning set forth in the introduction
to this Agreement.

"Canadian Overdue Rate" shall have the meaning set forth in
Section 2.7.

"Canadian Pledge Agreement" means and refers to the Pledge Agreement
executed by Canadian Obligors in substantially the form of Exhibit B-2.

"Canadian Reimbursement Obligation" has the meaning specified in Section
2.3(c)(ii).

"Capitalized Lease" means and refers to any lease of property (whether
real, personal, or mixed real and personal) by a Person as lessee which would,
in conformity with GAAP, be required to be accounted for as a capital lease on
the balance sheet of that Person.

"Capitalized Lease Obligations" means and refers to any and all lease
obligations which, in accordance with GAAP, have been or are required to be
capitalized on the books of a lessee.

"CERCLA" means and refers to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time (by SARA or
otherwise), set forth at 42 U.S.C. Section 9601 et seq., and any successor
statute, and all rules and regulations promulgated thereunder.

"Change in Control" means and refers to (i) a sale of all or
substantially all of the assets of Borrower to any Person (other than a
wholly-owned domestic Subsidiary of Borrower, acting individually or jointly) or
group (as that term is used in Section 13(d)(3) of the Exchange Act) of Persons
(other than any wholly-owned domestic Subsidiaries of Borrower, acting
individually or jointly), (ii) the first day on which a majority of the members
of the Board of Directors of Borrower are not Continuing Directors, (iii) the
acquisition by any Person or group (as defined in clause (i) above) of Persons
(other than wholly-owned domestic Subsidiaries of Borrower, acting

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 16

individually or jointly), of more than fifty percent (50%) of the total voting
power of the capital stock of Borrower, (iv) the first day on which the
Agreement, dated as of May 2, 1994, among Borrower, American Gas & Oil
Investors, AMGO II, AMGO III, First Reserve Secured Energy Assets Fund, Limited
Partnership, First Reserve Fund V, Limited Partnership, First Reserve Fund V-2,
Limited Partnership, First Reserve Fund VI, Limited Partnership and First
Reserve Corporation shall cease to be in effect while the FRC Group (as defined
in such agreement) as a group (as defined in clause (i) above) beneficially owns
more than twenty-five percent (25%) of the total voting power of the capital
stock of Borrower, or (v) the liquidation or dissolution of Borrower. As used
herein, "Continuing Directors" means any member of the Board of Directors of
Borrower who (a) is a member of such Board of Directors as of August 12, 1994 or
(b) was nominated for election or elected to such Board of Directors with the
affirmative vote of two-thirds of the Continuing Directors who were members of
such Board of Directors at the time of such nomination or election.

"Co-Agent" shall have the meaning set forth in the introduction to this
Agreement.

"Code" means and refers to the Internal Revenue Code of 1986, as amended
from time to time, or any successor or superseding tax laws of the United States
of America, together with all regulations promulgated thereunder.

"Collateral" means and refers to (a) the interests of Borrower and of
the Subsidiary Guarantors in the capital stock of and other equity interests in
other Persons (including, unless prohibited by any existing charter or bylaw
provisions, minority interests held by Borrower or a Subsidiary Guarantor),
other than Inactive Subsidiaries, pledged under the Pledge Agreements, (b)
indebtedness owed to Borrower or any of the Subsidiary Guarantors by any
Subsidiary of Borrower, (c) indebtedness owed to Borrower or any Subsidiary
Guarantor by any Joint Venture, (d) indebtedness owed to any Canadian Obligor by
any Subsidiary of any Canadian Obligor, (e) all certificates, notes or other
instruments evidencing such interests or indebtedness, and (f) all other
collateral referred to in the Collateral Documents. The stock and other equity
interests referred to in clause (a) above shall not exceed, in the case of
foreign Persons, the lesser of (i) sixty-five percent (65%) of the outstanding
shares or other equity interest or (ii) all of the stock and other equity
interest owned by Borrower or any Subsidiary Guarantor. The stock and other
equity interests referred to in clause (a) above shall not include
Margin Stock.

"Collateral Documents" means and refers to the Borrower Pledge
Agreement, the Subsidiary Guaranty, the Subsidiary Pledge Agreement, the
Canadian Pledge Agreement, and any and all other

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 17

documents, agreements, or instruments executed or delivered in connection
therewith by Borrower, any of the Subsidiary Guarantors or any of the Canadian
Obligors in connection with the transactions contemplated by this Agreement,
including financing statements.

"Commitment Fees" means and refers to the U.S. Commitment Fee and the
Canadian Commitment Fee.

"Consolidated Cash Flow" means and refers to, for any period, EBITDA for
such period minus consolidated income tax expense included in determining
Consolidated Net Income for such period.

"Consolidated Current Assets" means and refers to the total of all
assets of Borrower and its Subsidiaries which have been or properly may be
classified as current assets, less any applicable reserve or allowance, in
accordance with GAAP and determined on a consolidated basis, after elimination
of all intercompany items, and excluding current assets of Borrower or its
Subsidiaries consisting of cash or cash equivalents to the extent that such
current assets have been hypothecated as collateral for liabilities (or a letter
of credit supporting same) of Borrower or any of its Subsidiaries.

"Consolidated Current Liabilities" means and refers to the total of all
of the liabilities of Borrower and its Subsidiaries which have been or properly
may be classified as current liabilities in accordance with GAAP and determined
on a consolidated basis, after elimination of all intercompany items, and
excluding (a) current liabilities to pay principal and interest under the Notes
and (b) current liabilities of Borrower or any of its Subsidiaries to the extent
that such current liabilities (or a letter of credit supporting same) have been
collateralized by cash or cash equivalents.

"Consolidated Debt" means and refers to the total Debt of Borrower and
its Subsidiaries, on a consolidated basis, after elimination of all intercompany
items.

"Consolidated Interest Expense" means and refers to the interest expense
of Borrower and its Subsidiaries, determined in accordance with GAAP on a
consolidated basis, after elimination of all intercompany items, including
computed interest in respect of Capitalized Lease Obligations, all commissions,
fees and other charges with respect to letters of credit or acceptances, the net
costs associated with currency exchange and interest rate protection agreements,
amortization of discount or premium, if any, and all other noncash interest
expense; provided that if a determination of Consolidated Interest Expense is
required to be made in respect of any period prior to the First Restatement
Date, Consolidated Interest Expense for such period shall be

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 18

deemed to equal the product of (a) U.S.$574,667 times (b) the number of months,
including any portion thereof (rounded to the nearest thirtieth of a month), in
such prior period.

"Consolidated Net Income" means and refers to, for any period, the net
income of Borrower and its Subsidiaries for such period (on a consolidated
basis); provided, however, that there shall be excluded: (i) the income (or
deficit) of any Person accrued prior to the date it becomes a Subsidiary of
Borrower or is merged into or consolidated with Borrower or any of its
Subsidiaries or such Person's assets are acquired by Borrower or any of its
Subsidiaries; (ii) the income (or deficit) of any Person (other than a
Subsidiary of Borrower) in which Borrower or any of its Subsidiaries has an
ownership interest, except to the extent that any such income has been actually
received by Borrower or such Subsidiary in the form of dividends or similar
distributions; and (iii) the undistributed earnings of any Subsidiary of
Borrower to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule, or governmental regulation applicable to such Subsidiary; provided,
however, that the foregoing exception shall not be applicable if, and to the
extent that, such undistributed earnings are used by such Subsidiary to repay
Debt owed to Borrower or any Subsidiary Guarantor.

"Consolidated Net Worth" means and refers to, on the date of
determination thereof, the amount calculated as follows: (a) the consolidated
stockholders' equity of Borrower; plus (b) minority interests; minus (c) the
consolidated Intangible Assets of Borrower and its Subsidiaries.

"Consolidated Total Liabilities" means and refers to the total of all of
the liabilities of Borrower and its Subsidiaries which have been or properly may
be classified as liabilities in accordance with GAAP and determined on a
consolidated basis, after elimination of all intercompany items, and excluding
liabilities of Borrower or its Subsidiaries to the extent that such liabilities
have been collateralized by cash or cash equivalents.

"Contingent Obligation" means and refers to, as to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend, letter of credit or other
obligation of another Person, including any such obligation directly or
indirectly guaranteed, endorsed (other than for collection or deposit in the
ordinary course of business), co-made or discounted or sold with recourse by
that Person, or in respect of which that Person is otherwise directly or
indirectly liable, including any such obligation for which that Person is in
effect liable through any

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 19

agreement (contingent or otherwise) to purchase, repurchase, or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions, or otherwise), or to maintain the
solvency or any balance sheet, income, or other financial condition of the
obligor of such obligation, or to make payment for any products, materials, or
supplies or for any transportation, services, or lease regardless of the
non-delivery or non- furnishing thereof, in any such case if the purpose or
intent of such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof, and any other obligation which, in
economic effect, is substantially equivalent to a Contingent Obligation. The
amount of any Contingent Obligation shall be equal to the amount of the
outstanding obligation so guaranteed or otherwise supported.

"Contractual Obligation" means and refers to, as to any Person, any
provision of any security issued by that Person or of any material indenture,
mortgage, deed of trust, lease, contract, undertaking, agreement, or other
instrument to which that Person is a party or by which it or any of its owned
properties is bound or to which it or any of its owned properties is subject.

"CRC-Evans" means and refers to CRC-Evans Pipeline International, Inc.,
a Delaware corporation.

"Credit Facility" shall mean the revolving facility described in Article
II.

"Damage(s)" shall have the meaning set forth in 42 U.S.C. Section 9601,
42 U.S.C. Section 9607(a), and 42 U.S.C. Section 9611(b).

"Debt" means and refers to, with respect to any Person, the aggregate
amount of, without duplication: (a) all obligations for borrowed money or
(whether contingent or otherwise) under any acceptance, letter of credit or
similar facility; (b) all obligations evidenced by bonds, debentures, notes, or
other similar instruments; (c) all Capitalized Lease Obligations; (d) all
obligations or liabilities of others secured by a Lien on any asset owned by
such Person, irrespective of whether such obligation or liability is assumed;
(e) all Contingent Obligations of such Person; and (f) any obligation owed for
all or any part of the deferred purchase price of property or services (other
than an obligation arising out of an earnout or similar contingent arrangement
for the deferred payment of such purchase price) which purchase price is due
more than six (6) months from the date of the incurrence of the obligation in
respect thereto or is evidenced by a note or similar instrument or a conditional
sale or other title retention agreement with

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 20

respect to the property acquired (even though the rights and remedies of the
seller or lender under such agreement upon default are limited to repossession
or sale).

"De Minimis Letter of Credit" means and refers to each U.S. Letter of
Credit issued or outstanding pursuant to Section 2.1(c) in a Stated Amount not
to exceed U.S.$30,000, which De Minimis Letters of Credit shall not exceed
U.S.$300,000 in the aggregate Stated Amount at any time outstanding, and shall
not be subject to the participation requirements set forth in this Agreement for
other U.S. Letters of Credit.

"Disclosure Statement" means and refers to the disclosure statement
executed and delivered by a Responsible Officer of Borrower, dated as of the
Second Restatement Date, delivered on the date of execution hereof, which
statement sets forth information regarding or exceptions to the representations,
warranties, and covenants made by Borrower or any Canadian Obligor hereunder.

"EBITDA" means and refers to, for any period, Consolidated Net Income;
plus the sum of (a) Consolidated Interest Expense and (b) consolidated income
tax expense, depreciation and amortization, and other non-cash items (excluding
any non-cash charge to the extent that such non-cash charge requires an accrual
of or a reserve for cash charges for any future period) included in determining
such Consolidated Net Income; and less net extraordinary gains and net gains on
the sale or other disposition of any business, property, or assets (other than
in the ordinary course of business), included in determining such Consolidated
Net Income; provided that if a determination of EBITDA is required to be made in
respect of any period prior to the First Restatement Date, EBITDA for Borrower
and its Subsidiaries for such prior period shall be deemed to be equal to the
product of (a) U.S.$6,250,000 times (b) the number of months, including any
portion thereof (rounded to the nearest thirtieth of a month), in such prior
period.

"Environment" and "Environmental" shall have the meaning set forth in 42
U.S.C. Section 9601(8).

"Environmental Protection Statute" means and refers to (a) any state or
federal law, statute or regulation enacted in connection with or relating to the
protection or regulation of the Environment with respect to Pollutants or
Contaminants, including those laws, statutes, and regulations regulating the
disposal, removal, production, storing, refining, handling, transferring,
processing, or transporting of Hazardous Waste or Hazardous Substances and any
regulations issued or promulgated in connection with such statutes by any
governmental agency or instrumentality; and (b) any Canadian municipal,
provincial or federal environmental law, statute or regulation.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 21

"EPA" means and refers to the United States Environmental Protection
Agency, or any successor thereto.

"Equivalent Amount" means and refers to, as of the date of
determination, the amount of Canadian Dollars into which U.S. Dollars may be
converted at the Exchange Rate or the amount of U.S. Dollars into which Canadian
Dollars may be converted at the Exchange Rate, as the context requires.

"ERISA" means and refers to the Employee Retirement Income Security Act
of 1974, as the same may from time to time be amended or supplemented, including
any rules or regulations issued in connection therewith.

"ERISA Affiliate" means and refers to, with respect to any Person, any
trade or business (irrespective of whether incorporated) which together with
such Person is, under common control within the meaning of Section 414(b) and
(c) of the Code and the regulations promulgated thereunder (except that such
rules and regulations shall also be deemed to apply to foreign corporations), or
to the extent applicable, is required to be included with such Person in
accordance with Section 414(m) and (o) of the Code and the regulations
promulgated thereunder.

"Euro-Currency Business Day" means and refers to any U.S. Business Day
in the case of A Loans and B Loans or any Canadian Business Day in the case of C
Loans, in each case on which dealings in U.S. Dollar deposits or Canadian Dollar
deposits, as the case may be, are carried out in the applicable interbank
market.

"Euro-Currency Rate Borrowing" means and refers to any A Borrowing or B
Borrowing designated by Borrower as a Borrowing based upon the U.S.
Euro-Currency Rate or any C Borrowing.

"Euro-Currency Rate Loan" means and refers to any A Loan or B Loan
bearing interest at the U.S. Euro-Currency Rate or any C Loan.

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

"Exchange Act" means and refers to the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute, and the rules and
regulations thereunder.

"Exchange Rate" means and refers to the nominal rate of exchange of
Agent or Canadian Bank, as the context requires, in a chosen exchange market for
the purchase by Agent or Canadian Bank (by cable or transfer) of any Canadian
Dollars at 12:00 noon, San Francisco time or Chicago time, one (1) U.S. Business
Day prior to any date of determination, expressed as the number of Canadian

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 22

Dollars, or fraction thereof, per one (1) U.S. Dollar or the number of U.S.
Dollars, or fraction thereof, per one (1) Canadian Dollar, as applicable.

"Facility Fee" shall have the meaning set forth in Section 2.17.

"Federal Funds Rate" means and refers to, for any period, a fluctuating
interest rate per annum equal, for each day during such period, to 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 for such
day (or, if such day is not a U.S. Business Day, for the next preceding U.S.
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a U.S. Business Day, the average of the
quotations for such date on such transactions received by Agent from three
federal funds brokers of recognized standing selected by it.

"Federal Reserve Board" means and refers to the Board of Governors of
the Federal Reserve System, or any successor thereto.

"Fee(s)" means and refers to, depending on the context, any or all of
the Agency Fee, the Facility Fee, the Increased Facility Fee, the Canadian
Facility Fee, the Commitment Fees, or the Letter of Credit Fees.

"First Interstate" means and refers to First Interstate Bank of Texas,
N.A., a national banking association.

"First Restatement" shall have the meaning set forth in the introduction
to this Agreement.

"First Restatement Date" means and refers to August 12, 1994, the date
of the First Restatement on or after the effective time of the merger of Total
into a wholly-owned subsidiary of Borrower effected on such date.

"Fund", "Trust Fund", or "Super Fund" mean and refer to the Hazardous
Substance Superfund, established pursuant to 42 U.S.C. Section 9631 and the
Post-Closure Liability Fund, established pursuant to 42 U.S.C. Section 9641.
The above provisions have been amended or repealed by SARA and the "Fund,"
"Trust Fund," or "Super Fund" are now maintained pursuant to Section 9507 of the
Code.

"GAAP" means and refers to generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other U.S. entity as may be

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 23

approved by a significant segment of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.

"Hazardous Substance" shall have the meaning set forth in 42 U.S.C.
Section 9601(14).

"Hazardous Waste" shall have the meaning set forth in 42 U.S.C.
Section 6903(5).

"Highest Lawful Rate" means and refers to, with respect to any Bank,
the maximum non-usurious interest rate, as in effect from time to time, which
may be charged, contracted for, reserved, received, or collected by such Bank
in connection with this Agreement, the Notes, or any of the other Loan
Documents.

"Inactive Subsidiaries" means and refers to each of the Subsidiaries
of Borrower identified in the Disclosure Statement as Inactive Subsidiaries, so
long as such Subsidiaries have no material assets or obligations and are not
makers of any promissory note payable to Borrower or any Subsidiary Guarantor,
other than a promissory note evidencing Debt permitted under Section
7.3(c)(iv).

"Increased Facility Fee" shall have the meaning set forth in Section
2.17.

"Indemnified Liabilities" shall have the meaning set forth in Section
11.2.

"Indemnitee(s)" shall have the meaning set forth in Section 11.2.

"Intangible Assets" means and refers to, with respect to any Person,
that portion of the book value of all of such Person's assets which would be
treated as intangibles under GAAP, including all items such as goodwill, all
trademarks, trade names, brands, trade secrets, customer lists, computer
software, copyrights, patents, licenses and rights with respect to any of the
foregoing, all unamortized debt discount and expenses and all write-ups (other
than write-ups resulting from foreign currency translations and write-ups of
assets of a going concern business within 12 months after the acquisition
thereof in accordance with GAAP) subsequent to March 31, 1994 in the book value
of any asset.

"Interest Payment Date" means and refers to, with respect to any
Euro-Currency Rate Loan, the last day of the Interest Period applicable to such
Loan; provided, however, that, in the case of any Interest Period in excess of
three (3) months, "Interest Payment Date" shall also include each three-month
anniversary of the commencement of that Interest Period.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 24

"Interest Period" means and refers to, with respect to each
Euro-Currency Rate Borrowing, the period commencing on the date of such
Euro-Currency Rate Borrowing and, subject to availability of funds, ending one
(1), two (2), three (3), or six (6) months thereafter, as Borrower or a Canadian
Obligor may elect pursuant to the applicable Notice of Borrowing; provided,
however, that:

(i) any Interest Period which would otherwise end on a day
which is not a Euro- Currency Business Day shall be extended to the
next succeeding Euro-Currency Business Day unless such Euro-Currency
Business Day falls in another calendar month in which case such
Interest Period shall end on the next preceding Euro-Currency Business
Day;

(ii) any Interest Period which begins on the last
Euro-Currency Business Day of the calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall, subject to clause (iii)
below, end on the last Euro-Currency Business Day of the calendar
month in which it would have ended if there were a numerically
corresponding day in such calendar month; and

(iii) if any Interest Period includes a date on which a
payment of principal or interest on the Loan is required to be made
under this Agreement, but does not begin or end on such date, then (x)
the principal amount of each Euro-Currency Rate Borrowing required to
be repaid on such date shall have an Interest Period ending on such
date; and (y) the remainder (if any) of such Euro- Currency Rate
Borrowing shall have an Interest Period determined as set forth above;
provided, however, that the foregoing shall not be deemed to relieve
Borrower or Canadian Obligors from any of their respective
obligations under Section 2.20.

"Investment" means and refers to, with respect to any Person, any direct
or indirect purchase or other acquisition by that Person of, or beneficial
interest in, stock or other Securities of any other Person, or any direct or
indirect loan, advance or capital contribution by that Person to any other
Person, including all indebtedness and accounts receivable from that other
Person which are not current assets or did not arise from sales to that other
Person in the ordinary and usual course of business. The amount of any
Investment shall be the original cost of such Investment, plus the cost of all
additions thereto and less the amount of any return of capital on such
Investment and the book value of any portion of such Investment that is sold or
disposed of, without any adjustments for increases or

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 25

decreases in value, or write-ups, write-downs, or write-offs with respect to
such Investment.

"Issuing Bank" means and refers to, any U.S. Issuing Bank or the
Canadian Issuing Bank.

"Joint Venture" means and refers to joint ventures, limited liability
companies or partnerships engaged in an energy related business except for
businesses or activities regulated by the Nuclear Regulatory Commission or any
successor thereto. Notwithstanding the foregoing, Watson shall be deemed to be
a Joint Venture so long as Borrower or any of its Subsidiaries owns stock
thereof and Watson is deemed not to be a Subsidiary of Borrower.

"L/C Request Certificate" means and refers to (a) with respect to U.S.
Letters of Credit, an irrevocable notice from Borrower, CRC-Evans, Total or TEST
to Agent and any applicable U.S. Issuing Bank of Borrower's request that such
Issuing Bank issue a U.S. Letter of Credit or (b) with respect to Canadian
Letters of Credit, an irrevocable notice from Borrower or a Canadian Obligor to
Agent and Canadian Issuing Bank of Borrower's or such Canadian Obligor's request
that Canadian Issuing Bank issue a Canadian Letter of Credit, each substantially
in the form of Exhibit E, executed by a Responsible Officer of Borrower or a
Canadian Obligor, as the case may be, and delivered to Agent and the appropriate
Issuing Bank pursuant to Section 2.1(c) or 2.3(c).

"Letter of Credit" means and refers to any U.S. Letter of Credit or any
Canadian Letter of Credit.

"Letter of Credit Fees" means and refers to the U.S. Letter of Credit
Fee and the Canadian Letter of Credit Fee.

"LIBOR Reserve Percentage" means and refers to, as of the date of
determination thereof, the maximum percentage (rounded upward to the nearest
one-hundredth (1/100) of one percent (1%)), as determined by Agent in accordance
with its usual procedures (which determination shall be conclusive in the
absence of manifest error), which is in effect on such date as prescribed by the
Federal Reserve Board for determining the reserve requirements (including
supplemental, marginal, and emergency reserve requirements) with respect to
eurocurrency funding (currently referred to as "eurocurrency liabilities") of a
member bank in the Federal Reserve System.

"Lien" means and refers to any lien, mortgage, pledge, security
interest, charge, or encumbrance of any kind (including any conditional sale or
other title retention agreement or any lease in the nature thereof) and any
agreement to give or refrain

SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 26

from giving any lien, mortgage, pledge, security interest, charge, or other
encumbrance of any kind.

"Loan" means and refers to any A Loan, any B Loan or any C Loan.

"Loan Documents" means and refers to this Agreement, the Notes, the
Collateral Documents and any agreement, instrument or other document executed in
connection herewith or therewith.

"Majority Banks" means and refers to, as of the date of determination
thereof, Banks having at least sixty- five percent (65%) of the Total Commitment
on the date of determination or, in the event of an acceleration of the Loans
pursuant to Section 8.1, on the date of such acceleration, immediately prior
thereto.

"Margin Stock" shall have the meaning ascribed thereto in Regulations G,
T, or U of the Federal Reserve Board (12 CFR, Ch. 11, Part 221).

"Maturity Date" means and refers to March 30, 1998, or such earlier date
on which the Total Commitment is terminated pursuant to Section 2.12 or Section
8.2.

"Monthly Payment Date" means and refers to (a) the first day of each
calendar month at any time that any Loans or any portion of the Total Commitment
are outstanding and (b) the Maturity Date.

"Multiemployer Plan" means and refers to a "multiemployer plan" as
defined in Section 4001(a) (3) of ERISA or a "multi-employer pension plan" as
defined in Section 3(37) of ERISA, Section 414 of the Code, or any similar type
of plan established and regulated under the laws of any foreign country, which
is maintained for employees of such Person or any of its ERISA Affiliates.

"Net Cash Proceeds" means and refers to: (a) the gross cash proceeds
received from: (i) the sale or disposition of any business, property, or asset
of Borrower or any of its Subsidiaries; or (ii) the sale and lease-back of the
Real Property; plus (b) without duplication, all payments received subsequent to
such sale or disposition representing any deferred portion of the purchase price
therefor; minus (c) a reasonable reserve for Taxes payable incident to such sale
or disposition; minus (d) the reasonable costs and expenses incurred by Borrower
or any of its Subsidiaries to third Persons in connection with such sale or
disposition; and minus (e) the amount paid concurrent with such sale or
disposition to retire any Debt secured by Permitted Liens on the business,
property, asset, or Real Property to be sold or disposed of, all as reflected in
a certificate delivered pursuant to Section 7.9.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 27

"Note" means and refers to any A Note, the B Note or the C Note.

"Notice of Borrowing" means and refers to (a) an irrevocable notice from
Borrower to Agent of Borrower's intention to borrow all or any portion of the A
Loans or B Loans, substantially in the form of Exhibit F, executed by a
Responsible Officer of Borrower and delivered to Agent pursuant to Section 2.9
or (b) an irrevocable notice from Borrower or any Canadian Obligor to Canadian
Bank of Borrower's or such Canadian Obligor's intention to borrow all or any
portion of the C Loans, substantially in the form of Exhibit F, executed by a
Responsible Officer of Borrower or such Canadian Obligor and delivered to
Canadian Bank, with a copy to Agent, pursuant to Section 2.9.

"Notice of Conversion/Continuation" means and refers to (a) a written
notice from Borrower to Agent substantially in the form of Exhibit G, executed
by a Responsible Officer of Borrower, and delivered to Agent pursuant to Section
2.10 or (b) a written notice from Borrower or a Canadian Obligor to Canadian
Bank substantially in the form of Exhibit G, executed by a Responsible Officer
of Borrower or such Canadian Obligor, and delivered to Canadian Bank, with a
copy to Agent, pursuant to Section 2.10.

"Officer's Compliance Certificate" means and refers to a certificate of
a Responsible Officer of Borrower in substantially the form of Exhibit K.

"Operating Lease" means and refers to, as applied to any Person, any
lease of any property (whether real, personal, or mixed) which is not a
Capitalized Lease, other than any such lease under which that Person is the
lessor.

"Original Credit Agreement" shall have the meaning set forth in the
Preliminary Statement hereto.

"PBGC" means and refers to the Pension Benefit Guaranty Corporation as
defined in Title IV of ERISA, or any successor thereto.

"Pension Plan" or "Plan" means and refers to any pension, retirement,
disability, health, welfare, life insurance or other employee benefit plan,
defined benefit, defined contribution, profit sharing, deferred compensation,
stock option, employee stock ownership, employee stock purchase, restricted
stock, bonus or other incentive plan, vacation benefit, fringe benefit,
severance, thrift or other employee benefit plan or arrangement, excluding any
Multiemployer Plan, but including any plan similar to any of those plans
described above which is established or maintained under the laws of any foreign
country, irrespective of whether any of the foregoing is funded, which was, is
or will be sponsored, maintained, or

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 28

contributed to by Borrower or its ERISA Affiliates (excluding any plans in which
personnel of Borrower or its ERISA Affiliates are not participating) in which
any personnel of Borrower or its ERISA Affiliates participate or from which any
such personnel may derive a benefit.

"Permitted Liens" shall have the meaning set forth in Section 7.2.

"Person" means and refers to natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, vehicle
trusts, business trusts or other organizations irrespective of whether they are
legal entities, and governments and agencies and political subdivisions thereof.

"Pledge Agreements" means and refers to the Borrower Pledge Agreement,
the Subsidiary Pledge Agreement and the Canadian Pledge Agreement.

"Pollutants or Contaminants" shall have the meaning set forth in 42
U.S.C. Section 9601(33).

"Prime Rate" means and refers to, for any period, a fluctuating interest
rate per annum as shall be in effect from time to time, which rate shall at all
times be equal to the higher of: (a) the rate of interest publicly announced by
Agent at its headquarters office in San Francisco from time to time as its
"prime rate"; and (b) one quarter (1/4) of one percent (1%) per annum above the
Federal Funds Rate. The "prime rate" is one of Agent's base rates and serves as
the basis upon which effective rates of interest are calculated for those loans
making reference thereto. The "prime rate" is evidenced by the recording
thereof after its announcement in such internal publication or publications as
Agent may designate and may not be the lowest of Agent's base rates. Any change
in any of the interest rates chargeable hereunder resulting from a change in the
"prime rate" shall become effective as of 12:01 a.m., San Francisco time, on the
day on which each change in the "prime rate" is announced by Agent.

"Quarterly Payment Date" means and refers to the first (1st) day of each
March, June, September and December at any time that any portion of the Total
Commitment or any Loans is outstanding.

"RCRA" means and refers to the Resource Conservation and Recovery Act of
1976, as amended, set forth at 42 U.S.C. Section 9601 et seq., including any
rules or regulations issued in connection therewith, and all references to
sections thereof

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 29

shall include such sections and any predecessor provisions thereto.

"Real Property" means and refers to each of those parcels of real
property owned by Borrower or one of its Subsidiaries.

"Reimbursement Obligation" means the U.S. Reimbursement Obligation or
the Canadian Reimbursement Obligation.

"Reportable Event" means and refers to any event under Section 4043
(excluding subsection (b)(7)) of ERISA.

"Responsible Officer" means and refers to the Chairman, President, Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer, Controller,
or Treasurer of Borrower or a Canadian Obligor, as the case may be, or such
other senior officer of Borrower or a Canadian Obligor, as the case may be,
designated by a Responsible Officer in a writing delivered to Agent and, in the
case of a Canadian Obligor, to Canadian Bank.

"SARA" means and refers to the Superfund Amendment and Reauthorization
Act of 1986, as amended from time to time, set forth in Public Law 99-499 et
seq., and all rules and regulations promulgated thereunder.

"SEC" means and refers to the federal Securities and Exchange
Commission, and any successor thereto.

"Second Restatement Date" means and refers to the date hereof.

"Securities" means and refers to common and preferred stock, notes,
bonds, debentures, commercial paper, and other obligations, instruments or
evidences of indebtedness, including debt instruments of public and private
issuers, warrants, put and call options, and other options relating thereto or
any combination thereof.

"Securities Act" means and refers to the Securities Act of 1933, as
amended from time to time, including any rules and regulations promulgated in
connection therewith and any successor statute.

"Solvent" means and refers to, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair
saleable value of the assets of such person is not less than the amount that
will be required to pay the probable liability of such person on its debts as
they become absolute and matured, (c) such Person

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 30

does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature and (d) such Person is not engaged in business or a transaction, for
which such Person's property would constitute an unreasonably small capital.

"Standby Letter of Credit" means and refers to any letter of credit
issued for the purpose of supporting: (a) workers' compensation liabilities of
Borrower or its Subsidiaries; (b) the obligations of Borrower or its
Subsidiaries to third party insurers; or (c) performance, payment, deposit, or
surety obligations of Borrower or its Subsidiaries, in any case if required by
law or governmental rule or regulation or if in accordance with the custom or
practice in the industry of Borrower or its Subsidiaries, as applicable.

"Stated Amount" means and refers to the maximum amount available to be
drawn under each Letter of Credit, without regard to whether any conditions to
drawing could then be met.

"Subsidiary" means and refers to any corporation or other entity (a) a
majority of whose stock or other equity interests having ordinary voting power
(other than stock or other equity interests having such power only by reason of
the happening of a contingency) are, as of the date of determination thereof,
owned by a Person or one or more of such Person's Subsidiaries or (b) of which
the results of operations for financial reporting purposes is or, in accordance
with GAAP, should be consolidated with the results of operations of such
Person. A Subsidiary is "wholly-owned," as such term is used herein, if
ownership of such stock or other equity interests, other than directors
qualifying shares or shares held for residence requirements, is one hundred
percent (100%) held. On and as of the First Restatement Date, Subsidiaries of
Borrower shall include Total and its Subsidiaries. Notwithstanding the
foregoing, Watson shall be deemed not to be a Subsidiary of Borrower so long as
(i) its results of operations for financial reporting purposes are not, and in
accordance with GAAP should not be, consolidated with the results of operations
of Borrower and (ii) the ownership of Borrower and its Subsidiaries in the
stock thereof does not increase beyond their ownership as of the First
Restatement Date.

"Subsidiary Guarantors" means and refers to the following wholly-owned
Subsidiaries of Borrower: CRC-Evans, Enterra Oil Field Rental Company (formerly
known as Oil Field Rental Services Company), a Delaware corporation, Total,
Enterra Compression Company, a Delaware corporation, successor by merger to
Lantana Corporation, a Texas corporation, Gas Compressors Incorporated, a Texas
corporation, and TEST, and each additional wholly-owned Subsidiary of Borrower
that is required to execute a Subsidiary Guaranty pursuant to Section 6.13.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 31

"Subsidiary Guaranty" means and refers to the Second Amended and
Restated Guaranty executed by the Subsidiary Guarantors in substantially the
form of Exhibit H.

"Subsidiary Pledge Agreement" means and refers to the Second Amended and
Restated Pledge Agreement executed by the Subsidiary Guarantors in substantially
the form of Exhibit I.

"Taxes" means and refers to any taxes, charges, fees, levies, duties,
imports, withholding, or other assessments, including without limitation those
amounts based upon or measured by net or gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, withholding, payroll, employment, excise,
occupation, premium or property, together with any interest, penalties,
additions to tax and additional amounts imposed by any federal, state, local,
municipal or provincial or foreign taxing authority upon any Person.

"TCB" means and refers to Texas Commerce Bank National Association, a
national banking association.

"Termination Event" means and refers to: (a) a Reportable Event with
respect to a Pension Plan; (b) the withdrawal of Borrower or any of its ERISA
Affiliates from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; (c) the filing by Borrower
or any of its ERISA Affiliates of a notice of intent to terminate a Pension Plan
or the treatment of a Pension Plan amendment as a termination under Section
4041 of ERISA; (d) the institution of proceedings to terminate a Pension Plan
under Title IV of ERISA by the PBGC; or (e) any other event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan.

"TEST" means and refers to Total Engineering Services, Team, Inc., a
Louisiana corporation.

"Total" means and refers to Enterra Petroleum Equipment Group, Inc., a
Delaware corporation, formerly known as Total Energy Services Company.

"Total Commitment" shall mean, at the time any determination thereof is
to be made, the total amount of the A Commitment plus the B Commitment plus the
C Commitment.

"Total Credit Facility" means and refers to the Credit Agreement, dated
as of December 21, 1993, by and among Total, Enterra Compression Company,
successor by merger to Lantana Corporation, the financial institutions party
thereto, First Interstate as administrative agent and TCB as syndication agent
and the documents executed in connection therewith.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 32

"Total IRB/Stockholder Indebtedness" means and refers to (a) Total Debt
in respect of Industrial Revenue Bonds in the principal amount of U.S.$3,485,000
as of December 31, 1993, as the same may be reduced thereafter, secured by a
letter of credit in the Stated Amount of U.S.$3,554,000 and (b) Total Debt
evidenced by certain unsecured notes payable to former stockholders of Enterra
Compression Company, formerly known as Lantana Corporation, in the principal
amount of U.S.$2,073,000 as of December 31, 1993, as the same may have been or
may be reduced thereafter.

"Unmatured Event of Default" means and refers to an event, act, or
occurrence which with the giving of notice or the lapse of time (or both) would
or could become an Event of Default.

"Unpaid Drawings" means all drawings under any Letter of Credit paid by
the appropriate Issuing Bank for which such Issuing Bank has not been reimbursed
by Borrower or a Canadian Obligor, as the case may be.

"U.S. Banks" means and refers to all of the Banks other than the
Canadian Bank.

"U.S. Base LIBOR" means and refers to, for any applicable Interest
Period, the rate, per annum (rounded upward to the nearest one-hundredth of one
percent (1/100%)), as determined by Agent in accordance with its usual
procedures (which determination shall be conclusive in the absence of manifest
error), at which Agent is offered U.S. Dollar deposits in an interbank market
dealing in U.S. Dollar deposits in foreign banks (or foreign branches of United
States banks) and owned by a non-resident of the United States of America. Such
interbank market shall be chosen by Agent and the determination made at
approximately 9:00 a.m., San Francisco time, two (2) applicable Euro-Currency
Business Days prior to the beginning of the applicable Interest Period for the
proposed Euro-Currency Rate Borrowing for delivery on the first day of such
Interest Period, for a term comparable thereto, and in an amount comparable to
the amount of such Euro-Currency Rate Borrowing.

"U.S. Basic Rate" means and refers to, for any period, a fluctuating
interest rate, per annum, equal to the lesser of: (a) the Prime Rate; and (b)
the Highest Lawful Rate.

"U.S. Business Day" means and refers to a day, other than a Saturday or
Sunday, on which major commercial banks are open for business in each of
Houston, Texas, San Francisco, California and Chicago, Illinois.

"U.S. Commitment Fee" shall have the meaning set forth in Section 2.18.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 33

"U.S. Dollar(s) and U.S.$" means and refers to United States of America
dollars or such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts in
the United States of America.

"U.S. Euro-Currency Rate" means and refers to, for any applicable
Interest Period, an interest rate, per annum, equal to the lesser of: (a) the
rate (rounded upwards if necessary to the nearest whole one-sixteenth of one
percent (1/16%)), determined as the quotient of: (i) U.S. Base LIBOR; divided by
(ii) the number equal to one hundred percent (100%) minus the LIBOR Reserve
Percentage; plus three-quarters of one percent (.75%) per annum; and (b) the
Highest Lawful Rate. The U.S. Euro-Currency Rate shall be adjusted
automatically on the effective date of any change in the LIBOR Reserve
Percentage, such adjustment to affect any Euro-Currency Rate Loans bearing
interest at the U.S. Euro- Currency Rate outstanding on such effective date.
Each determination of a U.S. Euro-Currency Rate by Agent, including any
determination as to the applicability or allocability of reserves to
eurocurrency liabilities or as to the amount of such reserves, shall be
conclusive and final in the absence of manifest error.

"U.S. Issuing Bank" means and refers to, with respect to any U.S. Letter
of Credit, Wells Fargo, First Interstate or TCB, as the case may be.

"U.S. Letter of Credit" means and refers to each Standby Letter of
Credit denominated in U.S. Dollars issued or outstanding pursuant to Section
2.1(c), including without limitation each Letter of Credit referred to in
Section 2.28 and De Minimis Letters of Credit.

"U.S. Letter of Credit Amount" means and refers to, as of the date of
determination thereof, U.S.$30,000,000 minus the amount of the Contingent
Obligations existing under Section 7.4(e).

"U.S. Letter of Credit Fee" shall have the meaning set forth in Section
2.19.

"U.S. Letter of Credit Usage" means and refers to, as of the date of
determination thereof, the sum of: (a) the aggregate Stated Amount of each
outstanding U.S. Letter of Credit; and (b) the aggregate amount of all Unpaid
Drawings on U.S. Letters of Credit.

"U.S. Overdue Rate" shall have the meaning set forth in Section 2.7.

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<PAGE> 34

"U.S. Reimbursement Obligation" shall have the meaning set forth in
Section 2.1(c)(ii).

"Watson" means and refers to Watson Packer, Inc., a Texas corporation.

"Wells Fargo" means and refers to Wells Fargo Bank, N.A., a national
banking association.

"Working Capital Ratio" means and refers to the ratio, as of any date,
of Consolidated Current Assets to Consolidated Current Liabilities.

1.2 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, to the
singular include the plural, the part includes the whole, "including" is not
limiting, and "or" has the inclusive meaning represented by the phrase
"and/or". References in this Agreement to "determination" by Agent, any
Issuing Bank or Majority Banks, as applicable, include good faith estimates by
Agent, such Issuing Bank or Majority Banks, as applicable (in the case of
quantitative determinations) and good faith beliefs by Agent, such Issuing Bank
or Majority Banks, as applicable (in the case of qualitative determinations).
The words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Article, section, subsection, exhibit, and schedule
references are to this Agreement unless otherwise specified.

Any references in this Agreement, the Notes, or any of the other Loan
Documents to any of the following documents includes any and all alterations,
amendments, changes, extensions, modifications, renewals, restatements, or
supplements thereto or thereof, as applicable: this Agreement, the Notes, any
other Loan Documents and any and all financing statements, notices or other
instruments or documents executed in connection herewith or therewith.

1.3 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP as in effect from time
to time, including, without limitation, applicable statements, bulletins, and
interpretations issued by the Financial Accounting Standards Board and
bulletins, opinions, interpretations, and statements issued by the American
Institute of Certified Public Accountants or its committees. When used herein,
the term "financial statements" shall include any notes and schedules thereto.

1.4 Disclosure Statement and Exhibits. The Disclosure Statement
delivered by Borrower hereunder and all of the exhibits

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<PAGE> 35

and schedules referenced in or attached to this Agreement shall be deemed
incorporated herein by reference.

1.5 Independence of Covenants. All covenants contained in this
Agreement and each of the other Loan Documents shall be given independent effect
so that if a particular action or condition is not permitted by any covenant,
the fact that such action or condition would be permitted by an exception to, or
otherwise be within the limitations of, another covenant shall not constitute
permission under the covenant which does not permit such action or condition.

1.6 Currency Computations. In the event that any provision of
this Agreement shall require, at any time, a determination involving an amount
denominated in Canadian Dollars relative to an amount denominated in U.S.
Dollars, such determination shall be made using the Equivalent Amount in U.S.
Dollars of the amount denominated in Canadian Dollars as of the date of
determination, unless otherwise provided for herein.

ARTICLE II

AMOUNT AND TERMS OF LOANS

2.1 A Facility.

(a) A Commitment. Subject to the terms and conditions
hereof, each U.S. Bank agrees to make A Loans in U.S. Dollars to Borrower, pro
rata in proportion to their share of the A Commitment, from the Second
Restatement Date to but not including the Maturity Date, at such times and in
such amounts as Borrower may request in accordance with Section 2.9, which
amounts may be borrowed, repaid without penalty or premium, and reborrowed
subject to the limitations set forth herein; provided, however, that: (i) the
aggregate principal amount at any time outstanding of all A Loans made by any
U.S. Bank shall not exceed such Bank's pro rata share of the A Commitment then
in effect; and (ii) the aggregate principal amount of any A Borrowing shall not
exceed the positive difference between: (A) the A Commitment then in effect;
minus (B) the sum of the aggregate principal amount of all outstanding A Loans,
plus the U.S. Letter of Credit Usage, immediately prior to such A Borrowing.
Subject to Section 2.1(c), each A Borrowing bearing interest at the U.S. Basic
Rate shall be in a minimum principal amount of U.S.$500,000 and, thereafter, in
integral multiples of U.S.$100,000, and each A Borrowing bearing interest at the
U.S. Euro-Currency Rate shall be in a minimum principal amount of U.S.$1,000,000
and, thereafter, in integral multiples of U.S.$100,000.

(b) Authorization and Issuance of A Notes. Borrower has
authorized the issuance of A Notes in the aggregate principal amount not to
exceed U.S.$140,000,000. On the Second Restatement

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Date, Borrower shall issue a separate A Note, payable to the order of each U.S.
Bank, substantially in the form of Exhibit D-1 attached hereto, with appropriate
insertions. Each such A Note shall be in an amount equal to such U.S. Bank's
pro rata share of the A Commitment. Borrower shall deliver each such Note to
Agent for delivery to the appropriate U.S. Bank. The A Note delivered to each
U.S. Bank shall evidence only the aggregate outstanding principal balance of the
A Loans made, from time to time, by such U.S. Bank to Borrower, together with
interest thereon.

(i) Subject to the terms and conditions hereof, Borrower and
U.S. Banks hereby acknowledge that, from time to time from and after the
Second Restatement Date up to but not including the Maturity Date, a
U.S. Issuing Bank shall, at the request of Borrower, issue U.S. Letters
of Credit for the account of Borrower or one of its Subsidiaries.
Notwithstanding the foregoing, a U.S. Issuing Bank shall not issue any
U.S. Letter of Credit if, after giving effect to such issuance: (A) the
sum of (x) the principal amount of the A Loans outstanding on such date,
plus (y) the amount of any A Loans requested simultaneously with the
request for issuance of such U.S. Letter of Credit, plus (z) the U.S.
Letter of Credit Usage would exceed the A Commitment then in effect; or
(B) the U.S. Letter of Credit Usage would exceed the U.S. Letter of
Credit Amount. Immediately upon the issuance of each U.S. Letter of
Credit under this Section 2.1(c), other than a De Minimis Letter of
Credit, each U.S. Bank shall be deemed, and hereby agrees, to have
irrevocably purchased from the appropriate Issuing Bank a participation
interest in such U.S. Letter of Credit and the drawings thereunder in an
amount which is in the same proportion to such U.S. Letter of Credit as
such U.S. Bank's pro rata share of the A Commitment bears to the A
Commitment, to the same extent and with the same effect as if such U.S.
Bank had issued its share of such U.S. Letter of Credit. Each De
Minimis Letter of credit shall be for the sole account of the U.S.
Issuing Bank therefor.

(ii) Borrower shall reimburse the U.S. Issuing Bank for each
amount that the U.S. Issuing Bank pays in respect of any draft drawn
under any U.S. Letter of Credit, other than a De Minimis Letter of
Credit, on the date of payment of such amount (each such obligation to
reimburse the U.S. Issuing Bank in respect of a drawing under a U.S.
Letter of Credit being a "U.S. Reimbursement Obligation"). Subject to
the next sentence of this Section 2.1(c)(ii), each U.S.

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Reimbursement Obligation owing with respect to any drawing under a U.S.
Letter of Credit and not paid by 11:00 a.m., San Francisco time, on the
date of payment shall bear interest from the date of payment of such
drawing to the third day after the date of payment at the U.S. Basic
Rate and thereafter at the U.S. Overdue Rate until the date on
which such U.S. Reimbursement Obligation is paid in full, payable on
demand. Upon receipt of notice from a U.S. Issuing Bank that a
conforming draw has been made under any U.S. Letter of Credit, other
than a De Minimis Letter of Credit, which obligates such U.S. Issuing
Bank to make payment thereunder and that Borrower, CRC-Evans, Total or
TEST shall not have provided such U.S. Issuing Bank with the funds to
make such payment (whether through the application of amounts pledged
hereunder or otherwise), each U.S. Bank shall remit to Agent, for the
account of such U.S. Issuing Bank, in immediately available funds, an
amount which is in the same proportion to the amount drawn under such
U.S. Letter of Credit as such U.S. Bank's pro rata share of the A
Commitment bears to the A Commitment, plus interest on such amount,
payable from the date of such drawing to the date such amount is repaid
to Agent by such U.S. Bank in accordance with Section 2.11. Borrower and
U.S. Banks hereby agree that all amounts paid by or on behalf of U.S.
Banks under and pursuant to each such U.S. Letter of Credit shall be
deemed to be A Loans bearing interest at the U.S. Basic Rate made
pursuant to Section 2.1(a). Each U.S. Bank's obligation to make the
payments referred to in this Section 2.1(c)(ii) shall be as set forth in
Section 2.1(a), except that such obligation of each U.S. Bank shall
continue despite the occurrence of any Event of Default or Unmatured
Event of Default or any inability of Borrower to require that such U.S.
Bank fulfill its A Commitment, including any inability resulting from
the operation of the federal Bankruptcy Code Section 365(c)(2) (11
U.S.C. Section 365(c)(2)) or otherwise. In the event that any U.S.
Bank fails to make any payment required by this Section 2.1(c), such
U.S. Issuing Bank shall be entitled to recover such amount on demand
from such U.S. Bank in accordance with Section 2.11. It is further
agreed between U.S. Banks and Borrower that an amount equal to the
amount of the U.S. Letter of Credit Usage attributable to U.S. Letters
of Credit issued or outstanding under this Section 2.1(c) shall be
reserved under the A Commitment and shall not be available for borrowing
for any purpose other than repayment of drawings under the U.S. Letters
of Credit issued or outstanding pursuant to this Section 2.1(c);
provided, however, that any such reserved amount shall not be available
for borrowing

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 38

for the purpose of repayment of drawings under any De Minimis Letters
of Credit.

(iii) Each U.S. Letter of Credit shall be issued upon written
notice by Borrower, CRC-Evans, Total or TEST by way of an L/C Request
Certificate, given by telecopy, mail, or personal service, and delivered
to the appropriate U.S. Issuing Bank and Agent, to the attention of the
Persons set forth on Exhibit M not later than 9:00 a.m., San Francisco
time, three (3) U.S. Business Days prior to the date on which such U.S.
Letter of Credit is to be issued, and such request shall specify that a
U.S. Letter of Credit is requested and state the issuance date and
maximum amount thereof and the name and address of the beneficiary. Any
such request delivered by CRC-Evans, Total or TEST shall be confirmed in
writing by Borrower by delivery of an L/C Request Certificate to Agent
and U.S. Issuing Bank not later than the date of the first report
required to be delivered thereafter pursuant to Section 6.10.

If the notice provided for in this Section 2.1(c)(iii) with
respect to a U.S. Letter of Credit is received by the U.S. Issuing Bank
and Agent not later than 9:00 a.m., San Francisco time, on a U.S.
Business Day, such day shall be treated as the first U.S. Business Day
of the required notice period. In any other event, such notice will be
treated as having been received at the opening of business of the next
U.S. Business Day.

In lieu of delivering the above-described L/C Request
Certificate, Borrower, CRC-Evans, Total or TEST, as the case may be, by
one of its Responsible Officers or any other Person authorized to act on
behalf of Borrower, CRC-Evans, Total or TEST, may give the U.S. Issuing
Bank and Agent telephonic notice by the required time of any proposed
U.S. Letter of Credit under this Section 2.1(c); provided, however, that
such notice shall be confirmed in writing by delivery of an L/C Request
Certificate to such U.S. Issuing Bank and Agent on the same date as of
such telephonic request.

Each U.S. Issuing Bank and Agent shall incur no liability to
Borrower in acting upon any such telephonic notice which such U.S.
Issuing Bank or Agent believes in good faith to have been given by a
Responsible Officer or other Person authorized to act on behalf of
Borrower, CRC-Evans, Total or TEST or for otherwise acting in good
faith under this

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 39

Section 2.1(c)(iii) and in issuing any U.S. Letter of Credit pursuant to
any telephonic notice. Any L/C Request Certificate (or telephonic
notice in lieu thereof) shall be irrevocable.

(iv) Each U.S. Letter of Credit issued on or after the Second
Restatement Date is to be issued only upon satisfaction of the following
conditions:

(A) This Agreement shall have become effective
pursuant to Section 4.1 and all of the applicable conditions
precedent in Section 4.2 shall have been satisfied on the date
of the issuance of such U.S. Letter of Credit;

(B) Borrower shall have submitted an application
and executed such other documents, instruments, and agreements
as may be required by the appropriate U.S. Issuing Bank, all in
form and substance satisfactory to such U.S. Issuing Bank; and

(C) Such U.S. Letter of Credit shall be in such
form, contain such terms and support such transactions as shall
be satisfactory to the U.S. Issuing Bank consistent with its
then current practices and procedures with respect to letters of
credit of the same type.

(v) As to each U.S. Letter of Credit issued pursuant to an L/C
Request Certificate delivered by CRC-Evans, Total or TEST, CRC-Evans,
Total or TEST, as the case may be, may be reflected as the account party
in such U.S. Letter of Credit; provided, however, that all draws on such
U.S. Letter of Credit shall be funded under this Agreement as A Loans
to Borrower or through the payment of the U.S. Reimbursement Obligations
of Borrower, as the case may be, which shall be guaranteed by CRC-Evans,
Total or TEST as provided in the Subsidiary Guaranty.

(vi) Each U.S. Letter of Credit shall be administered by the
U.S. Issuing Bank in respect thereof on behalf of U.S. Banks. All
Letter of Credit Fees received on account of the issuance of each U.S.
Letter of Credit shall be, (A) in the case of De Minimis Letters of
Credit, retained by the U.S. Issuing Bank therefor and (B) in the case
of all other U.S. Letters of Credit, allocated by such U.S. Issuing Bank
to each U.S. Bank based upon such U.S. Bank's pro rata share of the A
Commitment. If, for any reason, a U.S. Bank fails to pay its liability
on a U.S. Letter of Credit in accordance with Section 2.1(c)(ii), then,
and

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 40

notwithstanding the provisions of Section 2.11, the U.S. Issuing Bank
in respect thereof shall automatically be subrogated to the right of
such defaulting U.S. Bank to repayment, in full, of the related
Reimbursement Obligation or acquired A Loan prior to the distribution of
any repayments to the defaulting U.S. Bank.

(vii) U.S. Letters of Credit shall not have an expiry date
later than the Maturity Date; provided, however, that U.S Letters of
Credit may have an expiry date later than the Maturity Date (but not
later than one (1) year thereafter) so long as, on or before the
Maturity Date, Borrower shall secure its obligations owing to U.S. Banks
in connection with such U.S. Letter of Credit by pledging to and
depositing with Agent, on behalf of U.S. Banks, cash or cash equivalents
in the Stated Amount of the U.S. Letter of Credit (the Stated Amount to
be determined as of the Maturity Date).

(viii) In determining whether to pay under any U.S. Letter of
Credit, the U.S. Issuing Bank in respect thereof shall be responsible
only to determine that the documents and certificates required to be
delivered under that U.S. Letter of Credit have been delivered and that
they comply, on their face, with the requirements of that U.S. Letter of
Credit.

2.2 B Facility.

(a) B Commitment. Subject to the terms and conditions
hereof, Canadian Bank agrees to make B Loans in U.S. Dollars to Borrower from
the Second Restatement Date to but not including the Maturity Date, at such
times and in such amounts as Borrower may request in accordance with Section
2.9, which amounts may be borrowed, repaid without penalty or premium, and
reborrowed subject to the limitations set forth herein; provided, however, that:
(i) the aggregate principal amount at any time outstanding of all B Loans made
by Canadian Bank shall not exceed the B Commitment; and (ii) the aggregate
principal amount of any B Borrowing shall not exceed the positive difference
between: (A) the B Commitment then in effect; minus (B) the aggregate principal
amount of all outstanding B Loans immediately prior to such B Borrowing. Each B
Borrowing bearing interest at the U.S. Basic Rate shall be in a minimum
principal amount of U.S.$100,000 and, thereafter, in integral multiples of
U.S.$20,000, and each B Borrowing bearing interest at the U.S. Euro-Currency
Rate shall be in a minimum principal amount of U.S.$200,000 and, thereafter, in
integral multiples of U.S.$20,000.

(b) Authorization and Issuance of B Notes. Borrower has
authorized the issuance of a B Note in the principal amount

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 41

not to exceed U.S.$35,000,000, representing the largest U.S. Dollar amount to
which the B Commitment may be raised pursuant to reallocations under Section
2.13. On the Second Restatement Date, U.S. Borrower shall issue a B Note,
payable to the order of Canadian Bank, substantially in the form of Exhibit D-2,
with appropriate insertions. Borrower shall deliver such B Note to Agent for
delivery to Canadian Bank. The B Note shall evidence only the aggregate
outstanding principal balance of the B Loans made, from time to time, by
Canadian Bank to Borrower, together with interest thereon.

2.3 C Facility.

(a) C Commitment. Subject to the terms and conditions
hereof, Canadian Bank agrees to make C Loans in Canadian Dollars to Borrower and
each of the Canadian Obligors from the Second Restatement Date to but not
including the Maturity Date, at such times and in such amounts as Borrower or a
Canadian Obligor may request in accordance with Section 2.9, which amounts may
be borrowed, repaid without penalty or premium, and reborrowed subject to the
limitations set forth herein; provided, however, that: (i) the aggregate
principal amount at any time outstanding of all C Loans made by Canadian Bank
shall not exceed the C Commitment then in effect; and (ii) the principal amount
of any C Borrowing shall not exceed the positive difference between (A) the C
Commitment then in effect; minus (B) the sum of the aggregate principal amount
of all outstanding C Loans, plus the Canadian Letter of Credit Usage,
immediately prior to such C Borrowing. Subject to Section 2.3(c)(ii), each C
Borrowing shall be in a minimum principal amount equal to Cdn.$1,000,000 and,
thereafter, in integral multiples of Cdn.$100,000.

(b) Authorization and Issuance of C Note. Borrower and
Canadian Obligors have authorized the issuance of the C Note in the aggregate
principal amount not to exceed Cdn.$47,425,000, representing the Equivalent
Amount in Canadian Dollars of U.S.$35,000,000 as of July 17, 1995, which
Canadian Dollar amount may be raised pursuant to reallocations of the B
Commitment and the C Commitment pursuant to Section 2.13. On the Second
Restatement Date, Borrower and Canadian Obligors shall issue a C Note, payable
to the order of Canadian Bank, substantially in the form of Exhibit D-3 attached
hereto, with appropriate insertions. Borrower and Canadian Obligors shall
deliver the C Note to Agent for delivery to Canadian Bank. The C Note shall
evidence only the aggregate outstanding principal balance of the C Loans made,
from time to time, by Canadian Bank to Borrower and Canadian Obligors, together
with interest thereon.

(i) Subject to the terms and conditions hereof, Borrower, each
Canadian Obligor and Canadian

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 42

Bank hereby acknowledge that, from time to time from and after the
Second Restatement Date up to but not including the Maturity Date,
the Canadian Issuing Bank shall, at the request of Borrower or any
Canadian Obligor, issue Canadian Letters of Credit for the account of
Borrower or such Canadian Obligor or one of their respective
Subsidiaries. Notwithstanding the foregoing, the Canadian Issuing Bank
shall not issue any Canadian Letter of Credit if, after giving effect
to such issuance: (A) the sum of (x) the principal amount of the C
Loans outstanding on such date, plus (y) the principal amount of any C
Loans requested simultaneously with the request for issuance of such
Canadian Letter of Credit, plus (z) the Canadian Letter of Credit
Usage would exceed the C Commitment then in effect; or (B) the
Canadian Letter of Credit Usage would exceed the Canadian Letter of
Credit Amount.

(ii) Borrower and Canadian Obligors shall, jointly and
severally, reimburse the Canadian Issuing Bank for each amount that
the Canadian Issuing Bank pays in respect of any draft drawn under any
Canadian Letter of Credit issued on the date of payment of such amount
(each such obligation to reimburse the Canadian Issuing Bank in
respect of a drawing under a Canadian Letter of Credit being a
"Canadian Reimbursement Obligation"). Subject to the next sentence of
this Section 2.3(c), each Canadian Reimbursement Obligation owing with
respect to any drawing under a Canadian Letter of Credit and not paid
by 1:00 p.m., Chicago time, on the date of payment shall bear interest
from the date of payment of such drawing to the third day after the
date of payment at the Canadian L/C Rate and thereafter at the
Canadian Overdue Rate until the date on which such Canadian
Reimbursement Obligation is paid in full, payable on demand. Upon a
conforming draw under any Canadian Letter of Credit which obligates
the Canadian Issuing Bank to make payment thereunder and Borrower and
Canadian Obligors shall not have provided such Canadian Issuing Bank
with the funds to make such payment (whether through the application
of amounts pledged hereunder or otherwise) all amounts paid by or on
behalf of the Canadian Issuing Bank under and pursuant to such
Canadian Letter of Credit shall be deemed to be a C Loan bearing
interest at the Canadian L/C Rate made by Canadian Bank pursuant to
Section 2.3(a). It is further agreed between Canadian Bank and
Borrower and Canadian Obligors that an amount equal to the Canadian
Letter of Credit Usage attributable to Canadian Letters of Credit
outstanding shall be reserved under the C Commitment and shall not be
available for borrowing for any purpose other than

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repayment of drawings under the Canadian Letters of Credit
issued or outstanding pursuant to this Section 2.3(c).

(iii) Each Canadian Letter of Credit shall be issued upon
written notice by Borrower or any Canadian Obligor, by way of an L/C
Request Certificate, given by telecopy, mail, or personal service, and
delivered to the Canadian Issuing Bank and Agent, to the attention of
the Persons set forth on Exhibit M not later than 11:00 a.m., Chicago
time, three (3) Canadian Business Days prior to the date on which such
Canadian Letter of Credit is to be issued, and such request shall
specify that a Canadian Letter of Credit is requested and state the
issuance date and maximum amount thereof and the name and address of
the beneficiary.

If the notice provided for in this Section 2.3(c)(iii) with
respect to a Canadian Letter of Credit is received by Canadian Issuing
Bank and Agent not later than 11:00 a.m., Chicago time, on a Canadian
Business Day, such day shall be treated as the first Canadian Business
Day of the required notice period. In any other event, such notice
will be treated as having been received at the opening of business of
the next Canadian Business Day.

In lieu of delivering the above-described L/C Request
Certificate, Borrower and each Canadian Obligor by one of its
Responsible Officers or any other Person authorized to act on behalf
of Borrower or such Canadian Obligor may give the Canadian Issuing
Bank and Agent telephonic notice by the required time of any proposed
Canadian Letter of Credit under this Section 2.3(c); provided,
however, that such notice shall be confirmed in writing by delivery of
an L/C Request Certificate to the Canadian Issuing Bank and Agent on
the same date as of such telephonic request.

The Canadian Issuing Bank and Agent shall incur no liability to
Borrower or any Canadian Obligor in acting upon any such telephonic
notice which the Canadian Issuing Bank or Agent believes in good faith
to have been given by a Responsible Officer or other Person authorized
to act on behalf of Borrower or any such Canadian Obligor or for
otherwise acting in good faith under this Section 2.3(c) and in
issuing any Canadian Letter of Credit pursuant to any telephonic such
notice. Any L/C Request Certificate (or telephonic notice in lieu
thereof) shall be irrevocable.

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(iv) Each Canadian Letter of Credit issued on or after the
Second Restatement Date is to be issued only upon satisfaction of the
following conditions:

(A) This Agreement shall have become
effective pursuant to Section 4.1 and all of the applicable
conditions precedent in Section 4.2 shall have been satisfied on
the date of the issuance of such Canadian Letter of Credit;

(B) The Borrower or a Canadian Obligor shall have
submitted an application and executed such other documents,
instruments, and agreements as may be required by the Canadian
Issuing Bank, all in form and substance satisfactory to the
Canadian Issuing Bank; and

(C) Such Canadian Letter of Credit shall be in such
form, contain such terms and support such transactions as shall
be satisfactory to the Canadian Issuing Bank consistent with its
then current practices and procedures with respect to letters of
credit of the same type.

(v) Each Canadian Letter of Credit shall be administered by
the Canadian Issuing Bank. All Letter of Credit Fees received on
account of the issuance of each Canadian Letter of Credit shall be
retained by the Canadian Issuing Bank.

(vi) Canadian Letters of Credit shall not have an expiry date
later than the Maturity Date; provided, however, that Canadian Letters
of Credit may have an expiry date later than the Maturity Date (but
not later than one (1) year thereafter) so long as, on or before the
Maturity Date, the Canadian Obligors shall secure their obligations
owing to the Canadian Bank in connection with such Canadian Letter of
Credit by pledging to and depositing with Agent, on behalf of Canadian
Issuing Bank, cash or cash equivalents in the Stated Amount of such
Canadian Letter of Credit (the Stated Amount to be determined as of
the Maturity Date).

(vii) In determining whether to pay under any Canadian Letter
of Credit, the Canadian Issuing Bank in respect thereof shall be
responsible only to determine that the documents and certificates
required to be delivered under that Canadian Letter of Credit have
been delivered and that they comply, on their face, with the
requirements of that Canadian Letter of Credit.

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2.4 Termination. Subject to the provisions of Section 2.12 and
Section 8.2, the Total Commitment shall terminate on the Maturity Date and any
Loans then outstanding, plus interest accrued thereon, shall be due and payable,
without demand, on such date.

2.5 Rate Designation. With respect to each A Borrowing or B
Borrowing under the Credit Facility, Borrower shall designate such borrowing as
an A Borrowing or a B Borrowing, and whether such Borrowing is a Basic Rate
Borrowing or a Euro-Currency Rate Borrowing, in the Notice of Borrowing or the
Notice of Continuation/Conversion given to Agent in accordance with Sections 2.9
or 2.10, as applicable. With respect to each C Borrowing, Borrower and each
Canadian Obligor shall designate such Borrowing as a C Borrowing in the Notice
of Borrowing or the Notice of Continuation/Conversion given to Canadian Bank,
under a copy to Agent, in accordance with Sections 2.9 or 2.10, as applicable.

2.6 Interest Rates; Payment of Principal and Interest on Loans.

(a) The obligations of Borrower to repay all of the A Loans
and the B Loans shall be evidenced by the A Notes and B Notes, respectfully,
which shall be payable to the order of each U.S. Bank or Canadian Bank, as the
case may be, at Agent's San Francisco main branch located at 420 Montgomery
Street, San Francisco, California 94163, or at such other office of Agent as may
be designated, from time to time, by Agent, for the account of each such Bank,
not later than 9:00 a.m., San Francisco time, on the date of payment. The
obligation of Borrower and Canadian Obligors to repay all of the C Loans shall
be evidenced by the C Note which shall be payable to the order of Canadian Bank
at such Bank's Chicago branch located at Harris Bank, 115 South LaSalle Street,
Chicago, Illinois 60603, or at such other office of Canadian Bank as may be
designated, from time to time, by Canadian Bank not later than 1:00 p.m.,
Chicago time, on the date of payment. Each Bank shall record the principal
amount of its Loan or Loans outstanding on the Second Restatement Date, the rate
designation thereof, the date it was made, and, if applicable, the last day of
the Interest Period applicable thereto, on the appropriate schedule annexed to
its Note. Additional Loans made by each Bank, the rate designations thereof,
the date they are made, and, if applicable, the last day of the Interest
Period(s) applicable thereto, and payments and prepayments of principal or
interest with respect to each such Loan shall be evidenced by notations made by
each Bank on the appropriate schedule annexed to its Note or Notes; provided,
however, that any failure by a Bank to make any such notation (whether with
respect to its outstanding Loan or any subsequent Loans or payments or
prepayments of principal or interest) on such schedule shall not in any way
affect, impair, or enlarge

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 46

Borrower's or the Canadian Obligors' obligations under this Agreement or the
Notes.

(b) Each A Loan or B Loan that is a Basic Rate Loan shall
bear interest upon the unpaid principal balance thereof from the date advanced,
at the U.S. Basic Rate. Interest due on the Basic Rate Loans shall be due and
payable monthly, in arrears, commencing on the first Monthly Payment Date
immediately following the Second Reinstatement Date and continuing on each
Monthly Payment Date thereafter up to and including the Monthly Payment Date
preceding the Maturity Date, and on the Maturity Date. Unless prepaid in
accordance with the terms hereof, the outstanding principal balance of all Basic
Rate Loans shall be due and payable, in full, on the Maturity Date.

(c) Each Euro-Currency Rate Loan shall be made for an
Interest Period commencing on the date of the Euro-Currency Rate Borrowing and,
subject to the availability of funds, ending one (1), two (2), three (3) or six
(6) months thereafter, as designated by Borrower or Canadian Obligor, as the
case may be, in the applicable Notice of Borrowing; provided, however, that no
such Interest Period may extend beyond the Maturity Date. Each A Loan or B Loan
that is a Euro-Currency Rate Loan shall bear interest, upon the unpaid principal
balance thereof from the date advanced, at the U.S. Euro-Currency Rate. Each C
Loan shall bear interest, upon the unpaid principal balance thereof from the
date advanced, at the Canadian Euro-Currency Rate. Interest due on each
Euro-Currency Rate Loan shall be due and payable, in arrears, on each Interest
Payment Date applicable to that Euro-Currency Rate Loan. Principal with respect
to each Euro-Currency Rate Loan shall be due and payable on the last day of the
Interest Period applicable to that Euro-Currency Rate Loan. The outstanding
principal balance of all Euro-Currency Rate Loans on the Maturity Date shall be
due and payable, in full, on the Maturity Date. Notwithstanding anything to the
contrary contained in this Agreement, neither Borrower nor Canadian Obligors may
have more than ten (10) Euro-Currency Rate Loans outstanding at any one time.

2.7 Overdue Rates. Except as provided in Section 2.1(c)(ii) or
Section 2.3(c)(ii), any payments of principal, interest, Fees, or other amounts
not paid when due or declared due, whether at maturity, by acceleration, by
lapse of time or otherwise, shall bear interest thereafter, without affecting
any of the other rights and remedies provided for herein and in the Notes, as
follows: (a) in the case of A Loans, B Loans and related Fees and other
amounts, at a rate (the "U.S. Overdue Rate") equal to the lesser of (i) the U.S.
Basic Rate, plus two (2) percent per annum and (ii) the Highest Lawful Rate; and
(b) in the case of C Loans and related Fees and other amounts, at a rate (the
"Canadian Overdue Rate") equal to the lesser of (i) the Canadian Euro-Currency
Rate otherwise

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<PAGE> 47

applicable to each such C Loan plus two (2) percent per annum and (ii) the
Highest Lawful Rate. Interest payable at the U.S. Overdue Rate or the Canadian
Overdue Rate shall be payable on demand.

2.8 Computation of Interest and Fees; Maximum Interest Rate.

(a) All computations of interest with respect to the Basic
Rate Loans, computations with respect to the Fees, and all computations of
interest due under Section 2.7 for any period shall be calculated on the basis
of a year of three hundred sixty-five (365) or three hundred sixty-six (366)
days, as applicable, for the actual number of days elapsed in such period. All
computations of interest with respect to Euro-Currency Rate Loans for any period
shall be calculated on the basis of a year of three hundred sixty (360) days,
for the actual number of days elapsed in such period, except when such
computation would cause the Highest Lawful Rate to be exceeded on all or any
portion of the Euro-Currency Rate Loans, in which event interest shall be
computed with respect to such Euro-Currency Rate Loans (or portion thereof) as
if each year consisted of 365 or 366 days, as the case may be. Any interest
rate calculated on the basis of a year of three hundred sixty (360) days with
respect to C Loans, expressed as a yearly rate for purposes of the Interest Act
(Canada) shall be such rate multiplied by the actual number of days in the
calendar year of calculation divided by three hundred sixty (360). Interest
shall accrue from the first day of the making of a Loan to the date of repayment
of such Loan in accordance with the provisions hereof; provided, however, that
if a Loan is repaid on the same day on which it is made, then one (1) day's
interest shall be paid on that Loan.

(b) It is the intention of the parties hereto to conform
strictly to all applicable law. Accordingly, Borrower and Canadian Obligors
shall not be obligated to pay, and no Bank shall be entitled to charge, collect,
or receive, interest (it being understood that interest shall be calculated as
the aggregate of all charges which constitute interest under applicable law that
are contracted for, charged, reserved, received or paid) in excess of the
Highest Lawful Rate. If any excess of interest in such respect is provided for,
or shall be adjudicated to be so provided for, in this Agreement, the Notes or
in any of the other Loan Documents, then in such event (i) the provisions of
this Section 2.8(b) shall govern and control, (ii) neither Borrower nor Canadian
Obligors, nor their successors or assigns or any other party liable for the
payment of the Notes, shall be obligated to pay the amount of such interest to
the extent that it is in excess of the Highest Lawful Rate, (iii) any excess
shall be deemed a mistake and canceled automatically and, if theretofore paid,
shall be credited on the applicable A Notes, B Note or C Note by Banks (or if
the Notes or

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<PAGE> 48

Note shall have been paid in full, refunded to Borrower or a Canadian Obligor,
as appropriate) and (iv) the effective rate of interest shall be automatically
subject to reduction to the Highest Lawful Rate as now or hereafter construed by
courts of appropriate jurisdiction. All sums paid or agreed to be paid to Banks
for the use, forbearance or detention of the indebtedness evidenced by the A
Notes, B Note or C Note shall, to the extent permitted by the applicable law
applicable to the loan transactions contemplated hereby, be amortized, prorated,
allocated and spread throughout the full term of the applicable Notes or Note.

For purposes of this Section 2.8, the term "applicable law" shall mean
that law in effect from time to time and applicable to the loan transactions
contemplated hereby which lawfully permits the charging and collection of the
highest permissible, lawful, non-usurious rate of interest on such loan
transactions and this Agreement, including laws of the State of Texas and to the
extent controlling, the laws of the United States of America and, if ever deemed
to be applicable by a court of competent jurisdiction, the laws of any province
in Canada and of Canada. Banks hereby notify and disclose to Borrower and
Canadian Obligors that, for purposes of application of Section 1.04 of the Texas
Credit Code, Article 5069 of the Revised Civil Statutes of Texas, 1925, as
amended (the "Act"), the applicable rate ceiling hereunder shall be the
"indicated rate ceiling" (as such term is used in the Act) from time to time in
effect as limited by Section 1.04(b) of the Act; provided that, if permitted by
law, Banks may from time to time implement any ceiling under the Act and revise
the index, formula or provision of law used to compute such rate by notice to
the Borrower as provided in such Act. The provisions of Chapter 15 of the Act
are specifically declared by the parties hereto not to be applicable to this
Agreement, the Notes, or any other Loan Document or to the transactions
contemplated hereby or thereby.

2.9 Notice of Borrowing Requirements.

(a) Each A Borrowing or B Borrowing that is a Basic Rate
Borrowing shall be made on a U.S. Business Day, and each Euro-Currency Rate
Borrowing shall be made on an applicable Euro-Currency Business Day.

(b) Each Borrowing shall be made upon written notice, by way
of a Notice of Borrowing, given by telecopy, mail, or personal service, and
delivered to Agent, in the case of an A Borrowing or B Borrowing, or to Canadian
Bank with a copy to Agent, in the case of a C Borrowing, to the attention of the
Persons set forth on Exhibit M as follows:

(i) for an A Borrowing or a B Borrowing that is a Basic Rate
Borrowing, Agent shall be given notice

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

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not later than 9:00 a.m., San Francisco time, on the date on which
such Borrowing is to be made, and such notice shall specify whether an
A Borrowing or B Borrowing is requested, and that a Basic Rate
Borrowing is requested and state the effective date and the amount
thereof (subject to the provisions of this Article II);

(ii) for an A Borrowing or a B Borrowing that is a
Euro-Currency Rate Borrowing, Agent shall be given notice not later
than 9:00 a.m., San Francisco time, at least two (2) applicable
Euro-Currency Business Days prior to the date on which such Borrowing
is to be made, and such notice shall specify whether an A Borrowing or
B Borrowing is requested, and that a Euro-Currency Rate Borrowing is
requested and state the amount and proposed Interest Period thereof
(subject to the provisions of this Article II);

(iii) for a C Borrowing, Canadian Bank shall be given notice,
with a copy to Agent, not later than 11:00 a.m., Chicago time, at
least two (2) applicable Euro-Currency Business Days prior to the date
on which such Borrowing is to be made, and such notice shall specify
that a C Borrowing is requested, and state the amount and proposed
Interest Period thereof (subject to the provisions of this Article
II).

(c) If the notice provided for in Section 2.9(b) with
respect to an A Borrowing or B Borrowing is received by Agent not later than
9:00 a.m., San Francisco time, on a U.S. Business Day or Euro-Currency Business
Day, as applicable, such day shall be treated as the first U.S. Business Day or
Euro-Currency Business Day, as the case may be, of the required notice period.
If the notice provided for in Section 2.9(b) with respect to a C Borrowing is
received by Canadian Bank not later than 11:00 a.m., Chicago time, on an
applicable Euro-Currency Business Day, such day shall be treated as the first
Euro-Currency Business Day of the required notice period. In any other event,
any such notice will be treated as having been received at the opening of
business of the next U.S. Business Day or Euro-Currency Business Day, as
applicable.

In lieu of delivering the above-described Notice of Borrowing, Borrower
or a Canadian Obligor, by one of its Responsible Officers or any other
individual authorized to act on its behalf, may give Agent or Canadian Bank, as
the case may be, telephonic notice, delivered to the attention of the Persons
set forth on Exhibit M, by the required time of any proposed Borrowing under
this Section 2.9; provided, however, that such notice shall be confirmed in
writing by delivery of a Notice of

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<PAGE> 50

Borrowing to Agent or Canadian Bank with a copy to Agent, as the case may be, on
the same date as any such telephonic request.

Neither Agent nor Canadian Bank shall incur any liability to Borrower or
any Canadian Obligor in acting upon any telephonic notice referred to above
which Agent or Canadian Bank believes in good faith to have been given by a
Responsible Officer or other person authorized to act on behalf of Borrower or a
Canadian Obligor or for otherwise acting in good faith under this Section 2.9
and in making any Loan pursuant to any telephonic notice. Any Notice of
Borrowing (or telephonic notice in lieu thereof) shall be irrevocable and
Borrower and Canadian Obligors shall be obligated to make a Borrowing in
accordance therewith.

2.10 Conversion or Continuation.

(a) Subject to the provisions of Section 2.21, Borrower
shall have the option: (i) to convert to a Euro-Currency Rate Loan all or any
part of its outstanding Basic Rate Loans equal to U.S.$1,000,000 and in integral
multiples of U.S.$100,000 in excess of such amount, in the case of A Loans, and
equal to U.S.$200,000 and in integral multiples of U.S.$20,000 in excess of such
amount, in the case of B Loans; (ii) to convert to a Basic Rate Loan all or any
part of its outstanding Euro-Currency Rate Loans equal to U.S.$500,000 and in
integral multiples of U.S.$100,000 in excess of such amount; (iii) upon the
expiration of any Interest Period applicable to one of its Euro-Currency Rate
Loans that are A Loans or B Loans, to continue all or any portion of that
Euro-Currency Rate Loan as a Euro-Currency Rate Loan, and the succeeding
Interest Period of such continued Loan shall commence on the expiration date of
the Interest Period previously applicable thereto; provided, however, that a
Euro-Currency Rate Loan may only be converted or continued, as the case may be,
on the expiration date of the Interest Period applicable thereto; provided,
further, however, that no outstanding Loan may be continued as, or be converted
into a Euro-Currency Rate Loan when any Event of Default or Unmatured Event of
Default has occurred and is continuing; provided, further, however, that if
Borrower fails to deliver the appropriate Notice of Conversion/Continuation or
the telephonic notice in respect thereof, pursuant to the required notice
period, before the expiration of the Interest Period of a Euro-Currency Rate
Loan, such Euro-Currency Rate Loan shall automatically be converted to a Basic
Rate Loan.

(b) Subject to the provisions of Section 2.21, Borrower and
Canadian Obligors shall have the option, upon the expiration of any Interest
Period applicable to one of its C Loans to continue all or any portion of that C
Loan, and the succeeding Interest Period of such continued C Loan shall commence
on the expiration date of the Interest Period previously

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<PAGE> 51

applicable thereto; provided, however, that a C Loan may only be continued on
the expiration date of the Interest Period applicable thereto; provided,
further, however, that if Borrower or Canadian Obligors fail to deliver the
appropriate Notice of Continuation or the telephonic notice in respect thereof,
pursuant to the required notice period, before the expiration of the Interest
Period of a C Loan, such C Loan shall automatically be continued as a
Euro-Currency Rate Loan with an Interest Period of one (1) month; provided,
further, however, that no outstanding C Loan may be continued when any Event of
Default or Unmatured Event of Default has occurred and is continuing.
Notwithstanding the foregoing, C Loans may only be continued in a minimum
principal amount equal to Cdn.$1,000,000 and, thereafter, in integral multiples
of Cdn.$100,000. No such C Borrowing may be made, and no C Loan may be
continued to the extent that, after giving effect thereto, the then outstanding
principal amount of C Loans would exceed the positive difference between (A) the
C Commitment then in effect and (B) the Canadian Letter of Credit Usage
immediately prior thereto.

(c) Borrower shall deliver a written notice, by way of a
Notice of Conversion/Continuation, given by telecopy, mail or personal service,
and delivered to Agent, to the attention of the Persons set forth on Exhibit M
no later than 9:00 a.m., San Francisco time, on the proposed conversion date (in
the case of a conversion to a Basic Rate Loan) and at least two (2) applicable
Euro-Currency Business Days in advance of the proposed conversion/continuation
date (in the case of a conversion to, or a continuation of, a Euro-Currency Rate
Loan). Borrower or a Canadian Obligor, as the case may be, shall deliver a
written notice, by way of a Notice of Conversion/Continuation, given by
telecopy, mail or personal service, and delivered to Canadian Bank with a copy
to Agent, to the attention of the Persons set forth on Exhibit M no later than
11:00 a.m., Chicago time, at least two (2) applicable Euro-Currency Business
Days in advance of the proposed continuation date (in the case of a continuation
of a C Loan). A Notice of Conversion/Continuation shall specify: (i) the
proposed conversion/continuation date (which shall be a U.S. Business Day or a
Euro-Currency Business Day, as applicable); (ii) the amount and type of the Loan
to be converted/continued; (iii) the nature of the proposed
conversion/continuation; and (iv) in the case of a conversion to, or
continuation of, a Euro-Currency Rate Loan, the requested Interest Period.

In lieu of delivering the above-described Notice of
Conversion/Continuation, Borrower or a Canadian Obligor, by one of its
Responsible Officers or any other individual authorized to act on behalf of
Borrower or such Canadian Obligor, may give Agent or Canadian Bank and Agent, as
the case may be, telephonic notice, delivered to the attention of the Persons
set forth on Exhibit M by the required time of any proposed

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 52

conversion/continuation under this Section 2.10; provided, however, that such
notice shall be confirmed in writing by delivery of a Notice of
Conversion/Continuation to Agent or Canadian Bank with a copy to Agent, as the
case may be, on the same date as any such telephonic request.

(d) Neither Agent nor Canadian Bank shall incur any
liability to Borrower or any Canadian Obligor in acting upon any telephonic
notice referred to above which Agent or a Canadian Bank believes in good faith
to have been given by a Responsible Officer or other person authorized to act on
behalf of Borrower or any Canadian Obligor or for otherwise acting in good faith
under this Section 2.10 and in converting/continuing pursuant to any telephonic
notice. Any Notice of Conversion/Continuation (or telephonic notice in lieu
thereof) shall be irrevocable and Borrower and Canadian Obligors shall be
obligated to convert or continue in accordance therewith.

2.11 Loans by Banks.

(a) Agent shall promptly notify each U.S. Bank of that U.S.
Bank's pro rata portion of an A Borrowing requested pursuant to Section 2.9.
Not later than 11:00 a.m., San Francisco time, on the date specified in such
notice as the date on which the A Borrowing so requested is to be made, each
U.S. Bank, subject to the terms and conditions hereof, shall make its pro rata
portion of the A Borrowing available, in immediately available funds, to Agent
at its main branch located at 420 Montgomery Street, San Francisco, California
94163. Agent shall promptly notify Canadian Bank of a B Borrowing requested
pursuant to Section 2.9. Not later than 11:00 a.m., San Francisco time, on the
date specified as the date on which the B Borrowing so requested is to be made,
Canadian Bank, subject to the terms and conditions hereof, shall make the B
Borrowing available, in immediately available funds, to Agent at its main branch
located at 420 Montgomery Street, San Francisco, California 94163.

(b) The U.S. Issuing Bank shall promptly notify Agent and
each U.S. Bank of that U.S. Bank's pro rata portion of a drawing made under a
U.S. Letter of Credit other than a De Minimis Letter of Credit. Not later than
11:00 a.m., San Francisco time, on the date specified in such notice as the date
on which such drawing is to be paid, each U.S. Bank, subject to the terms and
conditions hereof, shall make its pro rata portion of such drawing available, in
immediately available funds, to Agent, for the account of such U.S. Issuing
Bank, at its main branch located at 420 Montgomery Street, San Francisco,
California 94163. In the event that such U.S. Issuing Bank is unable to notify
U.S. Banks in time sufficient to permit U.S. Banks to timely remit their portion
of the drawing to Agent, then each U.S. Bank shall be required to make payment
to Agent of its pro rata portion of the drawing under such U.S. Letter of
Credit,

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 53

together with interest thereon accrued from the date the drawing is paid to the
date Agent receives payment from such U.S. Bank at the Federal Funds Rate, no
later than 11:00 a.m., San Francisco time, on the U.S. Business Day immediately
following the date of receipt of the notice from such U.S. Issuing Bank. In the
event that any U.S. Bank fails to make any payment to Agent, as specified above,
such U.S. Issuing Bank shall be entitled to recover such amount on demand from
such U.S. Bank together with interest thereon until paid at the Federal Funds
Rate.

(c) Each U.S. Bank's obligation to make any A Loan pursuant
hereto is separate, and not joint or joint and several, and is not conditioned
upon the performance by each, any, or all of the other U.S. Banks of their
obligations to make A Loans or by Canadian Bank of its obligations to make B
Loans or C Loans. Canadian Bank's obligation to make any B Loan or C Loan is
not conditioned upon the performance by each, any, or all of the U.S. Banks of
their obligations to make A Loans. The failure by any U.S. Bank to perform its
obligation to make Loans will not affect or increase the A Commitment of any
other U.S. Bank. Agent shall notify U.S. Banks of the failure by any U.S. Bank
to perform its obligation to make an A Loan required to be made by it hereunder
and any U.S. Bank (other than a U.S. Bank that has failed to perform its
obligation to make its A Loan) may, if it desires, assume, in such proportion as
the holders of at least sixty-five percent (65%) of the aggregate unpaid
principal amount of A Loans outstanding, as of the date of determination, may
agree, the obligation to make A Loans of the non-performing U.S. Bank or U.S.
Banks, but no U.S. Bank shall be obligated to do so; provided, however, that the
decision of a U.S. Bank to so assume the obligations of the non-performing U.S.
Bank will not affect the liability of such non-performing U.S. Bank.

2.12 Prepayments and Termination or Voluntary Reduction of
Commitments.

(a) Borrower shall have the right, at any time and from time
to time, to prepay in whole or in part any of the outstanding A Loans or B
Loans. Borrower shall give notice to Agent (i) for prepayment of Basic Rate
Loans, not later than 9:00 a.m., San Francisco time, on the date on which such
prepayment is to be made and (ii) for prepayment of Euro-Currency Rate Loans,
not later than 9:00 a.m., San Francisco time, at least two (2) applicable
Euro-Currency Business Days prior to the date on which such prepayment is to be
made, stating the proposed date of such prepayment, the aggregate principal
amount of such prepayment and which outstanding Loans shall be prepaid. If such
notice is given, Borrower shall prepay in whole, or ratably in part, the
outstanding principal amount of the Loans in accordance with such notice,
together with accrued interest to the date of such prepayment on the principal
amount prepaid and, in the case of Euro-Currency Rate Loans, any amounts payable
under

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 54

Section 2.20, provided, however, that (A) any prepayment of A Loans that are
Basic Rate Loans shall be in a minimum principal amount of U.S.$500,000 and,
thereafter, in integral multiples of U.S.$100,000; (B) any prepayment of B Loans
that are Basic Rate Loans shall be in a minimum principal amount of U.S.$100,000
and, thereafter, in integral multiples of U.S.$20,000; (C) any prepayment of A
Loans that are Euro-Currency Rate Loans shall be in a minimum principal amount
of U.S.$1,000,000 and, thereafter, in integral multiples of U.S.$100,000; and
(D) any prepayment of B Loans that are Euro-Currency Rate Loans shall be in a
minimum principal amount of U.S.$200,000 and, thereafter, in integral multiples
of U.S.$20,000.

(b) Borrower and Canadian Obligors shall have the right, at
any time and from time to time, to prepay in whole or in part any of the
outstanding C Loans. Borrower and Canadian Obligors shall give notice to
Canadian Bank, with a copy to Agent, not later than 11:00 a.m., Chicago time, at
least two (2) applicable Euro-Currency Business Days prior to the date on which
such prepayment is to be made, stating the proposed date of such prepayment, the
aggregate principal amount of such prepayment and which outstanding Loans shall
be prepaid. If such notice is given, Borrower and Canadian Obligors shall
prepay in whole or in part, the outstanding principal amount of the C Loans in
accordance with such notice, together with accrued interest to the date of such
prepayment on the principal amount prepaid and any amounts payable under Section
2.20, provided, however, that any prepayment of C Loans shall be in a minimum
principal amount of Cdn.$1,000,000 and, thereafter, in integral multiples of
Cdn.$100,000.

(c) Borrower shall have the right, at any time and from time
to time, to permanently reduce, in whole or in part, the unfunded portion of the
A Commitment or the B Commitment; provided, however, that the A Commitment shall
not be reduced pursuant to this Section 2.12(c) to an amount that is less than
the then outstanding principal amount of the A Loans plus the U.S. Letter of
Credit Usage and the B Commitment shall not be reduced pursuant to this Section
2.12(c) to an amount that is less than the then outstanding principal amount of
the B Loans. Borrower shall give Agent not less than five (5) U.S. Business
Days prior written notice designating the date (which shall be a U.S. Business
Day) of such reduction and the amount of such reduction. Such reduction shall be
effective on the date specified in Borrower's notice given in compliance
herewith. Any such reduction shall be in a minimum amount of U.S.$1,000,000 or
integral multiples thereof. Any reduction of the A Commitment pursuant to this
Section 2.12(c) shall reduce each U.S. Bank's share of the A Commitment
proportionately.

(d) Borrower and Canadian Obligors shall have the right, at
any time and from time to time, to permanently reduce,

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<PAGE> 55

in whole or in part, the unfunded portion of the C Commitment; provided,
however, that the C Commitment shall not be reduced pursuant to this Section
2.12(d) to an amount that is less than the then outstanding principal amount of
the C Loans plus the Canadian Letter of Credit Usage. Borrower and Canadian
Obligors shall give Canadian Bank, with copy to Agent, not less than five (5)
Canadian Business Days prior written notice designating the date (which shall be
a Canadian Business Day) of such reduction and the amount of such reduction.
Such reduction shall be effective on the date specified in Borrower's and
Canadian Obligors' notice given in compliance herewith. Any such reduction
shall be in a minimum amount of Cdn.$1,000,000 or integral multiples thereof.

2.13 Voluntary Reallocation of B Commitment and C Commitment.
Borrower and Canadian Obligors shall have the right, at any time and from time
to time, to reallocate the unused and unreserved portion of the B Commitment to
the C Commitment or the unused and unreserved portion of the C Commitment to the
B Commitment in accordance with this Section 2.13; provided, however, that

(a) no Event of Default or Unmatured Event of
Default shall have occurred and be continuing;

(b) immediately after giving effect to the
reallocation, the sum of the amount of the B Commitment plus the
Equivalent Amount in U.S. Dollars as of the date of such reallocation,
of the C Commitment shall not exceed (i) U.S.$35,000,000 minus (ii)
the sum of (A) the amount of any reduction in the B Commitment
theretofore made pursuant to Section 2.12(c), 2.15 or 2.22 and (B) the
Equivalent Amount in U.S. Dollars, as of the date of any such
reduction, of any reduction in the C Commitment theretofore made
pursuant to Section 2.12(d), 2.15 or 2.22; and

Such reallocation shall be made at the Exchange Rate in effect on the date of
such reallocation. Borrower and Canadian Obligors shall give Agent and
Canadian Bank prior written notice of not less than two (2) U.S. Business Days
and two (2) Canadian Business Days, respectively, designating the date (which
shall be both a U.S. Business Day and a Canadian Business Day) of such
reallocation and the estimated amount of such reallocation. Such reallocation
shall be effective on the date specified in Borrower's and Canadians Obligors'
notice given in compliance herewith; provided that Borrower and Canadian
Obligors then give Agent and Canadian Bank written notice specifying the actual
amount of such reallocation. Any reallocation as it affects the B Commitment
shall be in a minimum amount of U.S.$1,000,000. Upon the effective date of any
such reallocation, Canadian Bank is authorized to, and shall amend Exhibit C-2
by making a notation thereon to state the effected changes to the B

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 56

Commitment and C Commitment in accordance with the notice received from Borrower
and Canadian Obligors, and shall deliver a copy of such amended Exhibit C-2 to
Agent on such date. Notwithstanding the foregoing, if any reallocation pursuant
to this Section 2.13 shall cause the C Commitment to exceed the maximum
principal amount provided in the C Note, such reallocation shall not be
effective until Canadian Obligors shall issue an amended C Note in the aggregate
principal amount not to exceed the then C Commitment, together with such
certifications, opinions and other documents with respect thereto as Agent or
Canadian Bank may reasonably request.

2.14 Canadian Exposure. Canadian Bank shall calculate from time
to time, and in any event not less frequently than as of each Quarterly Payment
Date, the Equivalent Amount in U.S. Dollars, as of the date of determination, of
all C Loans outstanding and the then Canadian Letter of Credit Usage. Upon
making each such calculation, Canadian Bank shall promptly inform Borrower, each
Canadian Obligor, Agent and Banks of the results thereof.

2.15 Commitment Reductions; Mandatory Prepayments.

(a) Borrower and Canadian Obligors shall make mandatory
prepayments of their respective Loans, without penalty or premium (but subject
to Section 2.20), in an aggregate amount equal to the Net Cash Proceeds in
excess of U.S.$10,000,000 arising from the sale or other disposition of any
business, property, or assets of Borrower or any of its Subsidiaries pursuant to
Section 7.9(a)(ii). Borrower shall make payment of the Loans in the amount
required within two (2) U.S. Business Days of Borrower's or its Subsidiaries'
receipt of such Net Cash Proceeds.

(b) The amount of mandatory prepayments required to be made
pursuant to Section 2.15(a) (irrespective of whether there are any Loans
outstanding at the time such mandatory prepayment is required to be made) shall,
at the time provided for such prepayment, be applied among the Notes pro rata in
accordance with the aggregate unpaid principal amount of Loans then outstanding
(computed using the Equivalent Amount of outstanding C Loans as of the date of
such prepayment) and shall reduce each Bank's share of the Total Commitment in a
like amount; provided that such reduction shall not cause the A Commitment to be
less than the U.S. Letter of Credit Usage or the C Commitment to be less than
the Canadian Letter of Credit Usage, and Borrower and Canadian Obligors shall
secure their respective obligations in connection with the Letters of Credit
then outstanding by pledging to and depositing with Agent, on behalf of Banks,
or Canadian Bank, as appropriate, cash or cash equivalents in the applicable
currency in the amount that the A Commitment or C Commitment would otherwise
(but for this proviso) be reduced.

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<PAGE> 57

2.16 Agency Fee. Borrower shall pay an annual agency fee
("Agency Fee") to Agent, for its own account. The Agency Fee shall be equal to
U.S.$20,000, per annum, payable in advance. Agent acknowledges that the Agency
Fee was paid on the First Restatement Date. The Agency Fee shall be payable on
each anniversary of the First Restatement Date prior to the Maturity Date.

2.17 Facility Fees.

(a) Agent acknowledges that Borrower paid a one-time fee ("Facility
Fee") that was distributed by Agent to each U.S. Bank as of the First
Restatement Date based upon such Bank's pro rata share of the A Commitment, less
in the case of Wells Fargo and First Interstate their respective shares of the A
Commitment as in effect immediately prior to the First Restatement Date. The
Facility Fee was equal to U.S.$100,000.

(b) Agent acknowledges that Borrower paid a one-time fee
("Increased Facility Fee") that was distributed by Agent to each U.S. Bank as of
September 30, 1994, the date of the First Amendment to the First Restatement
based upon such U.S. Bank's pro rata share of the increase in the A Commitment
effected by such amendment. The Increased Facility Fee was equal to
U.S.$25,000.

(c) Borrower shall pay a one-time fee ("Canadian Facility Fee") to
Canadian Bank. The Canadian Facility Fee shall be equal to U.S.$25,000.00 and
shall be payable on the Second Restatement Date.

2.18 Commitment Fees.

(a) Agent acknowledges that on the First Restatement Date,
Borrower paid the accrued and unpaid commitment fee under Section 2.15 of the
Original Credit Agreement in accordance therewith. From and after the First
Restatement Date, Borrower shall pay a fee (the "U.S. Commitment Fee") in U.S.
Dollars to Agent, to be distributed by Agent to each Bank based upon such
Bank's pro rata share of the A Commitment. The U.S. Commitment Fee shall be
equal to one-fourth of one percent (1/4%), per annum, multiplied by the unused
and unreserved portion of the A Commitment.

(b) From and after the Second Restatement Date, Borrower shall pay
a fee (the "Canadian Commitment Fee") in U.S. Dollars to Agent, to be
distributed by Agent to Canadian Bank. The Canadian Commitment Fee shall be
equal to one-fourth of one percent (1/4%), per annum, multiplied by the sum of
the unused portion of the B Commitment plus the Equivalent Amount in U.S.
Dollars, as of the applicable Quarterly Payment Date, of the unused portion of
the C Commitment.

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(c) The Commitment Fees shall be payable, in arrears, on
each Quarterly Payment Date up to and including the Quarterly Payment Date
immediately preceding the Maturity Date, and shall also be payable on the
Maturity Date.

2.19 Letter of Credit Fee.

(a) Subject to Section 2.28, Borrower shall pay a fee in
U.S. Dollars (the "U.S. Letter of Credit Fee") (i) to the U.S. Issuing Bank, in
respect of any De Minimis Letter of Credit issued thereby and (ii) to the
appropriate U.S. Issuing Bank, to be distributed by the Issuing Bank to each
U.S. Bank based upon such U.S. Bank's pro rata share of the A Commitment in
respect of all other U.S. Letters of Credit issued thereby. With respect to any
U.S. Letter of Credit, the U.S. Letter of Credit Fee shall be computed from the
date of issuance through the expiry date and shall be equal to the greater of:
(i) an amount equal to one percent (1%) per annum of the Stated Amount of such
Letter of Credit or (ii) U.S.$300.

(b) Canadian Obligors shall pay a fee in Canadian Dollars
(the "Canadian Letter of Credit Fee") to the Canadian Issuing Bank in respect of
any Canadian Letter of Credit. With respect to any Canadian Letter of Credit,
the Canadian Letter of Credit Fee shall be computed from the date of issuance
through the expiry date and shall be equal to the greater of: (i) an amount
equal to one percent (1%) per annum of the Stated Amount of such Canadian Letter
of Credit or (ii) the Equivalent Amount in Canadian Dollars of U.S.$300 as of
the date of issuance of the applicable Letter of Credit.

(c) The Letter of Credit Fees shall be payable in advance on
the date of issuance of each such Letter of Credit; provided that in respect of
any Letter of Credit canceled prior to its expiry date, the portion of the
Letter of Credit Fee attributable to the period following the date of
cancellation shall be refunded to Borrower or Canadian Obligors, as the case may
be.

2.20 Euro-Currency Costs. Borrower and Canadian Obligors shall
reimburse each Bank (by payment to Agent for the account of such Bank in the
case of A Loans or B Loans or by payment to Canadian Bank in the case of C
Loans) for any increase in such Bank's costs (which shall include Taxes, other
than taxes imposed on the overall net income of such Bank, fees or charges), or
any loss or expense (including any loss or expense incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by such Bank to
fund or maintain outstanding its pro rata share of the principal amount of the
Loans, or any portion thereof) incurred by it directly or indirectly resulting
from the making of any Euro-Currency Rate Loan to Borrower or any Canadian
Obligor, respectively, due to: (a) the introduction of, or any

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 59

change after the date hereof in any law, regulation or treaty or the
interpretation thereof by any governmental or other authority (irrespective of
whether having the force of law); (b) the introduction of, or any change after
the date hereof in the application of, any law, regulation, or treaty or the
interpretation thereof by any governmental or other authority (irrespective of
whether having the force of law); (c) compliance by such Bank with any request
or directive (irrespective of whether having the force of law) of any monetary
or fiscal agency or authority promulgated after the date hereof; (d) violations
by Borrower or any Canadian Obligor, respectively, of the terms or conditions of
this Agreement; or (e) any prepayment (other than a prepayment made pursuant to
Section 2.21) of a Euro-Currency Rate Loan at any time prior to the end of the
applicable Interest Period.

The amount of such costs, losses, or expenses shall be determined solely
by Bank asserting such claim for reimbursement based upon the assumption that
such Bank funded one hundred percent (100%) of each Euro-Currency Rate Loan in
the Euro-Currency market. In attributing such Bank's general costs relating to
its eurocurrency operations to any transaction under this Agreement, or
averaging any costs over a period of time, such Bank may use any reasonable
attribution or averaging methods which it deems appropriate and practical. Each
Bank shall notify Borrower or Canadian Obligors, as the case may be, of the
amount due such Bank pursuant to this Section 2.20 in respect of any
Euro-Currency Rate Loan as soon as practicable, but in any event within
forty-five (45) days after the last day of the Interest Period of such Loan, and
Borrower or Canadian Obligors, as the case may be, shall pay to such Bank the
amount due within fifteen (15) days of receipt of such notice. A certificate as
to the amounts payable pursuant to the foregoing sentence shall be submitted by
such Bank to Borrower or Canadian Obligors, as the case may be, and shall be
conclusive in the absence of manifest error.

2.21 Special Euro-Currency Circumstances. In the event that any
law, regulation, treaty, or directive, or any change therein or in the
interpretation or application thereof, shall at any time in the reasonable
opinion of any Bank make it unlawful or impractical for such Bank to fund or
maintain a Euro-Currency Rate Loan in the Euro-Currency market or to continue
such funding or maintaining, or to determine or charge interest rates based upon
the Euro-Currency Rate, such Bank shall give notice of such circumstances to
Borrower, Canadian Obligors, Agent, and each other Bank and (a) in the case of
any Euro-Currency Rate Loan which is outstanding, Borrower or Canadian Obligors,
as the case may be, shall, if requested by such Bank, prepay such Bank's
Euro-Currency Rate Loan on or before the date specified in such request,
together with interest accrued thereon, and the date so specified shall be
deemed to be the last day of the Interest

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<PAGE> 60

Period of that Euro-Currency Rate Loan, and, with respect to any such A Loans or
B Loans, concurrently with any such prepayment, such Bank shall make a Basic
Rate Loan to Borrower in a principal amount equal to the principal amount of the
Euro-Currency Rate Loans so prepaid, and (b) such Bank shall not be obligated to
make any further Euro-Currency Rate Loans to Borrower or Canadian Obligors in
respect of the currency involved until such Bank shall determine that it would
no longer be unlawful or impractical to do so.

2.22 Increased Risk-Based Capital Cost. If, after the date of
the Original Credit Agreement, the cost to any Bank of maintaining its
respective portion of the Total Commitment is increased because of regulatory
action of the Federal Reserve Board or other regulatory entity (whether
presently promulgated or promulgated after the date of the Original Credit
Agreement), with respect to risk-based capital requirements for binding loan
commitments or letters of credit, such Bank may, by written notice given to
Borrower or Canadian Obligors, as the case may be, require Borrower or Canadian
Obligors, as the case may be, to pay on demand, an amount equal to such Bank's
additional cost incurred during the fiscal quarter such notice is given and
during each fiscal quarter thereafter. Each such Bank shall state in the notice
required by this Section 2.22, in reasonable detail, the cause and amount of
such additional cost. At any time after receipt of such notice, Borrower or
Canadian Obligors, as the case may be, may, at its or their option, elect to
terminate that portion of the Total Commitment as is held by such Bank.

2.23 Taxes.

(a) All payments made by Borrower or any Canadian Obligor in
connection with this Agreement shall be made free and clear of, and without
liability or reduction for or on account of, any present or future income, stamp
or other Taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any country (or by any political subdivision or taxing authority thereof or
therein), excluding Taxes on, or measured by, or with respect to overall net
income (including franchise taxes based on net income) of Agent or any Bank
(including any applicable withholding) imposed by (a) the United States of
America or any political subdivision or taxing authority thereof or therein
(including Puerto Rico), or (b) the countries in which any Bank's lending or
principal executive offices may be located and are conducting business or any
political subdivision or taxing authority thereof or therein (such non-excluded
Taxes being referred to herein as "Non-Excluded Taxes"). If any such
Non-Excluded Taxes are required to be deducted or withheld from any payment
hereunder to Agent or to or on behalf of any Bank, the amount of such payment
shall be increased to the extent the Agent

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

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or such Bank determines is necessary in order that the amount of such payment to
Agent or to or on behalf of such Bank (after payment of all Taxes) shall equal
the amount which would have been received by Agent or such Bank in the absence
of such Taxes, or any such other amounts payable. To the extent Agent or any
Bank is entitled to a deduction, credit or other quantifiable tax benefit as the
result of the incurrence of Non-Excluded Taxes that reduces the amount of
excluded Taxes payable by Agent or Bank compared to the amount of excluded Taxes
that would otherwise have been payable by Agent or such Bank in the absence of
such Non-Excluded Taxes, Agent or such Bank shall refund to Borrower or the
appropriate Canadian Obligor from the amount paid to it by Borrower or such
Canadian Obligor in respect thereof an amount equal to such reduction in
excluded Taxes at the time it is realized by Agent or such Bank, as the case may
be. Whenever any such Non-Excluded Taxes are payable by Borrower or a Canadian
Obligor, as promptly as possible thereafter, Borrower or such Canadian Obligor
shall send to Agent, for its own account or for the account of Agent or such
Bank, or to such Bank a certified copy of the original official receipt, if any,
received by Borrower or such Canadian Obligor showing payment thereof. If
Borrower or any Canadian Obligor fails to pay Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to Agent or Banks the required
receipts or other required documentary evidence, Borrower and Canadian Obligors
shall indemnify Banks for any incremental Non-Excluded Taxes that may become
payable by Agent or Banks, and all costs and expenses related thereto (including
reasonable attorneys' fees), as a result of any such failure.

(b) Without prejudice to the provisions of Section 2.23(a), if
Agent or any Bank is required by law to make any payments on account of
Non-Excluded Taxes on or in relation to any sum received or receivable under or
with respect to this Agreement, or any liability for Non-Excluded Taxes in
respect of any such payment is imposed, levied or assessed against Agent or any
Bank, then Borrower or the applicable Canadian Obligor will pay such additional
amounts as Agent or such Bank determines to be necessary so that the amount
received by Agent or such Bank hereunder, less any such Non-Excluded Taxes
imposed or paid, including any Non-Excluded Taxes imposed or paid on such
additional amounts, equals the amount to which Agent or such Bank would be
entitled absent such Non-Excluded Taxes. Such amount shall be paid when such
Non-Excluded Taxes becomes due, or upon receipt of notice from Agent or such
Bank of the imposition or payment of such Non-Excluded Taxes, whichever is
earlier.

(c) Notwithstanding Section 2.23(a), Borrower shall withhold tax
with respect to payments to any foreign Bank signatory to this Agreement or
holding any A Note or B Note in accordance with the United States federal
income tax laws in effect and shall have no obligation to make payments to such

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 62

foreign Bank that are free and clear of such withheld amounts, provided that
Borrower has given to such foreign Bank at least ten (10) days' written notice
of its intent to withhold such Taxes and, prior to the date of payment, such
foreign Bank does not deliver to Agent and Agent does not deliver to Borrower
duly executed certificates in duplicate to the effect that as of that date such
foreign Bank is entitled to receive all payments made hereunder without
deduction or withholding of United States federal income tax: (i) pursuant to
the terms of an applicable tax treaty in effect with the United States of
America (in which case such certificates shall be accompanied by two executed
copies of Form 1001 of the Internal Revenue Service), (ii) under Code Section
1441(c) (in which case such certificates shall be accompanied by two executed
copies of Form 4224 of the Internal Revenue Service), or (iii) pursuant to an
exemption certificate received from the Internal Revenue Service (in which case
such certificates shall be accompanied by a copy of said exemption
certificate). During the term of this Agreement, each foreign Bank shall file
such additional Forms 1001 or 4224 as the case may be, as may be required by
law or reasonably requested by Borrower. Each foreign Bank, upon becoming
aware of the occurrence of any event requiring a change in its prior
certificate, shall promptly deliver to Agent for delivery to Borrower duly
executed certificates to the effect that (as the case may be):

(i) such foreign Bank is not capable of receiving future
payments hereunder without deduction or withholding of United States
federal income tax; or

(ii) such foreign Bank is capable of receiving all payments
hereunder payable to it without deduction or withholding of United
States federal income tax, pursuant to a tax treaty of the United
States, pursuant to Code Section 1441(c), or pursuant to an exemption
certificate received from the Internal Revenue Service, a copy of
which shall be attached to such certificate,

provided that a failure of any foreign Bank to deliver such certificate shall
not in any manner affect Borrower's obligation to provide the notice described
above.

In the event that the Internal Revenue Service notifies Borrower that
Borrower improperly failed to withhold tax with respect to payments to such
foreign Bank as a result of a failure or inability of a foreign Bank to provide
one or more of the certifications described above following the receipt of
written notice from Borrower: (i) Borrower shall timely and fully pay such tax
to the Internal Revenue Service and such foreign Bank shall, upon notice of such
payment by Borrower, immediately pay to Borrower an amount necessary in order
that the amount of such

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 63

payment to Borrower after payment of all Taxes with respect to such payment
shall equal the amount that Borrower has paid to the Internal Revenue Service
pursuant to this clause; and (ii) Borrower shall have no obligation to make
payments to such foreign Bank that are free and clear of such withheld amounts,
until such foreign Bank delivers to Agent for delivery to Borrower the duly
executed certificates described in this subsection that entitle a foreign Bank
to receive all payments made hereunder without deduction or withholding of
United States federal income tax.

2.24 Holidays. Except as otherwise required for Euro-Currency
Rate Loans hereunder, any principal, interest, Fees or other amounts due
hereunder in respect of an A Loan or B Loan which would otherwise become due on
a day other than a U.S. Business Day or in respect of a C Loan which would
otherwise become due on a day other than a Canadian Business Day, shall instead
become due on the next succeeding U.S. Business Day or Canadian Business Day, as
the case may be, and such adjustment shall be reflected in the computation of
interest; provided, however, that in the event that any such maturity date
shall, subsequent to the specification thereof by Agent or Canadian Bank, as the
case may be, for any reason no longer constitute a U.S. Business Day or a
Canadian Business Day, Agent or Canadian Bank may change such specified maturity
date in accordance with this Section 2.24.

2.25 Place of Borrowings. All A Borrowings and B Borrowings made
hereunder shall be disbursed by credit to the account of Borrower, which deposit
account shall be maintained by Borrower with Agent at Agent's office at 420
Montgomery Street, San Francisco, California 94163, or as may otherwise be
agreed to by Borrower and Agent. All C Borrowings made hereunder shall be
disbursed by credit to the account of Borrower or the appropriate Canadian
Obligor, which deposit account shall be maintained by such Canadian Obligor with
Canadian Bank at Canadian Bank's office at Harris Bank, 115 South LaSalle
Street, Chicago, Illinois 60603 or as may otherwise be agreed to by such
Canadian Obligor and Canadian Bank.

2.26 Time and Place of Payments.

(a) Borrower shall make each payment hereunder relating to
the A Commitment or B Commitment or on the A Notes or the B Note by making, or
causing to be made, the amount thereof available to Agent in U.S. Dollars in
immediately available funds at Agent's office at 420 Montgomery Street, San
Francisco, California 94163, not later than 9:00 a.m., San Francisco time, on
the day of payment. With respect to payments relating to the A Commitment or on
the A Notes, Agent shall promptly distribute to each U.S. Bank, in similar
funds, its pro rata share, based upon outstanding A Loans, of each such payment
received by Agent

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 64

for the account of U.S. Banks. With respect to payments relating to the B
Commitment or on the B Note, Agent shall promptly distribute to Canadian Bank,
in similar funds, such payment received by Agent for the account of Canadian
Bank. In the event that Agent fails to make any payment to any Bank, as
specified above, such Bank shall be entitled to recover such amounts on demand
from Agent together with interest thereon, until paid, at the Federal Funds
Rate.

(b) Borrower and Canadian Obligors shall make each payment
relating to the C Commitment or on the C Note by making, or causing to be made,
the amount thereof available to Canadian Bank in Canadian Dollars in immediately
available funds at Canadian Bank's office at Harris Bank, 115 South LaSalle
Street, Chicago, Illinois 60603 not later than 1:00 p.m., Chicago time, on the
day of payment.

(c) Without limitation of Banks' rights of setoff provided
for and contemplated by Section 12.14, Agent shall have the right for the
benefit of Banks and U.S. Issuing Banks, and Canadian Bank shall have the right,
to charge any account of Borrower or a Canadian Obligor, as the case may be,
maintained with Agent or Canadian Bank, respectively, for the amount of any
payment due hereunder or on the Notes.

2.27 Survivability. Borrower's obligations under Sections
2.20, 2.22, and 2.23 shall survive repayment of the Loans made hereunder.

2.28 Outstanding Amounts.

(a) The U.S. Banks made Loans to Borrower as provided in
the First Restatement and, as of 8:00 a.m. San Francisco time on the Second
Restatement Date, U.S.$123,800,000 aggregate principal amount of such Loans are
outstanding. All of such Loans shall be deemed to be A Loans outstanding under
Section 2.1 for all purposes of this Agreement and the other Loan Documents and
shall be subject to the terms and conditions of this Agreement.

(b) First Interstate has issued Letters of Credit that are
outstanding under the First Restatement in an aggregate Stated Amount of
U.S.$12,597,678, including Letters of Credit in the aggregate Stated Amount of
U.S.$162,244 which are De Minimis Letters of Credit, and, as of the Second
Restatement Date, no amounts have been drawn thereunder. TCB has issued letters
of credit outstanding in the Stated Amount of U.S.$29,727.19, which are De
Minimis Letters of Credit and as of the Second Restatement Date, no amounts have
been drawn thereunder. All such letters of credit shall be deemed to be U.S.
Letters of Credit outstanding under Section 2.1(c) for all purposes of this
Agreement and the other Loan Documents (with such De Minimis Letters of Credit

55
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE> 65
issued by First Interstate and the letter of credit issued by TCB being deemed
De Minimis Letters of Credit) and shall be subject to the terms and conditions
of this Agreement, and Borrower assumes all U.S. Reimbursement Obligations with
respect thereto irrespective of whether such letters of credit were
originally issued for Borrower's, CRC-Evans', Total's or TEST's account.

ARTICLE III

NATURE OF CANADIAN OBLIGATIONS

3.1 Joint and Several Obligations. Any and all of the
obligations of Borrower and Canadian Obligors with respect to C Loans and
Canadian Letters of Credit hereunder, under the C Note or under any other Loan
Document applicable to C Loans or Canadian Letters of Credit shall be joint and
several (the "Joint and Several Obligations"). Borrower and each Canadian
Obligor confirm and agree that Borrower and Canadian Obligors are not acting,
nor do they intend to act, as sureties or guarantors of any other such entity,
or in any capacity such that any of them has the rights of a surety or
guarantor. Borrower and each Canadian Obligor are each primarily liable to
Canadian Bank, Canadian Issuing Bank, Agent and Banks for any and all of the
Joint and Several Obligations. Without limiting the generality of the
foregoing:

(a) The Joint and Several Obligations of each of Borrower
and Canadian Obligors are independent of the Joint and Several Obligations of
each other such entity and, unless precluded by law, a separate action or
actions may be brought and prosecuted against Borrower or any of the Canadian
Obligors whether any action is brought against any other such entity, or
whether any other such entity is joined in any such action or actions.

(b) To the fullest extent permitted by law, the Joint and
Several Obligations of each of Borrower and Canadian Obligors shall be absolute
and unconditional irrespective of any of the following, in respect of itself or
another such entity:

(i) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Joint and Several
Obligations, or any other amendment or waiver of, or any consent to
departure from, this Agreement, the C Note, or any other Loan
Document, including, but not limited to, any increase or decreases in
the Joint and Several Obligations, the C Commitment or the C Note;

(ii) any taking and holding of Collateral or guarantees, or
any amendment, alteration, exchange, substitution, transfer,
enforcement, waiver,

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 66

subordination, termination or release of any Collateral or
guarantees, or any non-perfection of any Collateral, or any consent
to departure from any guarantee;

(iii) any manner of application of Collateral, or proceeds
thereof, to all or any of the Joint and Several Obligations, or the
manner of sale of any Collateral or the release of any Collateral
from the Liens created by the Collateral Documents, whether for
purposes of sales or other dispositions of assets pursuant to this
Agreement or for any other purpose;

(iv) any consent by Canadian Bank, Issuing Bank, Agent or
Banks to the change, restructure or termination of the corporate
structure or existence of Borrower or any Canadian Obligor, or any
Subsidiary thereof, and any corresponding restructure of the Joint
and Several Obligations, any amalgamation with another company of
Borrower or any Canadian Obligor or any Subsidiary thereof, or any
other restructure or refinancing of the Joint and Several Obligations
or any portion thereof;

(v) any modification, compromise, settlement or release by
Canadian Bank, Canadian Issuing Bank, Agent or Banks by operation of
law or otherwise, collection or other liquidation of the Joint and
Several Obligations or the liability of Borrower or any Canadian
Obligor, or of any Collateral, in whole or in part, and any refusal
of payment by Canadian Bank, Canadian Issuing Bank, Agent or Banks in
whole or in part, from any obligor or guarantor in connection with
any of the Joint and Several Obligations, whether or not with notice
to, or further assent by, or any reservation of rights against,
Borrower or any Canadian Obligor; and

(vi) any other circumstance (including, but not limited to,
any statute of limitations) other than payment in full, which might
otherwise constitute a defense available to, or a discharge of, any
Canadian Obligor or Borrower.

(c) If at any time any payment of any of the Joint and
Several Obligations is rescinded or must otherwise be returned by Canadian
Bank, Canadian Issuing Bank, Agent or Banks upon the insolvency, bankruptcy or
reorganization of Borrower or any Canadian Obligor, or otherwise, the Joint and
Several Obligations of Borrower and each Canadian Obligor with respect to such
payment shall continue to be effective or be reinstated, as the case may be.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<PAGE> 67

(d) Each of Borrower and Canadian Obligors hereby expressly
waives any right to require Canadian Bank, Canadian Issuing Bank, Agent or
Banks to proceed against any of each other entity or any other Person, or
proceed against or exhaust any Collateral, or pursue any other remedy in the
power of Canadian Bank, Canadian Issuing Bank, Agent or Banks.

(e) Borrower and Canadian Obligors hereby expressly waive,
to the fullest extent permitted by law, the requirements of Chapter 34 of the
Texas Business and Commerce Code, as amended, Rule 31 of the Texas Rules of
Civil Procedure, as amended, and Section 17.001 of the Texas Civil Practice and
Remedies Code, as amended.

(f) TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF
BORROWER AND CANADIAN OBLIGORS HEREBY EXPRESSLY WAIVES ANY CLAIM OR OTHER
RIGHTS WHICH IT MAY NOW OR HEREAFTER ACQUIRE AGAINST ANY SUCH OTHER ENTITY THAT
ARISE FROM THE EXISTENCE, PAYMENT, PERFORMANCE OR ENFORCEMENT OF BORROWER'S OR
SUCH CANADIAN OBLIGOR'S JOINT AND SEVERAL OBLIGATIONS UNDER THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, INCLUDING, WITHOUT LIMITATION, ANY RIGHT OF
SUBROGATION, REIMBURSEMENT EXONERATION, CONTRIBUTION, INDEMNIFICATION, ANY
RIGHT TO PARTICIPATE IN ANY CLAIM OR REMEDY OF CANADIAN BANK, AGENT, BANKS OR
ISSUING BANKS, OR ANY COLLATERAL, WHETHER OR NOT SUCH CLAIM, REMEDY OR RIGHT
ARISES IN EQUITY, OR UNDER CONTRACT, STATUTE OR COMMON LAW.

ARTICLE IV

CONDITIONS PRECEDENT

4.1 Conditions Precedent to Effectiveness. The effectiveness
of the amendment and restatement of the First Restatement effected hereby, and
the obligation of each Bank to make Loans or issue or participate in Letters of
Credit hereunder on or after the Second Restatement Date, is subject to the
fulfillment, to the satisfaction of Banks, of each of the following conditions
on or before the Second Restatement Date:

(a) Borrower shall have duly executed and delivered the A
Notes and B Note to Agent and Canadian Obligors shall have duly executed and
delivered the C Note to Agent;

(b) Borrower shall have duly executed and delivered to
Agent the Borrower Pledge Agreement, together with certificates representing
the shares or interests pledged thereby (to the extent such interests are
represented by certificates) and instruments evidencing the Debt pledged
thereby, each accompanied by appropriate instruments of transfer executed in
blank or endorsed in blank, as the case may be, and such other agreements,
documents or instruments as Agent or any Bank may deem necessary or advisable;

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<PAGE> 68

(c) Subsidiary Guarantors shall have duly executed and
delivered to Agent the Subsidiary Guaranty and the Subsidiary Pledge Agreement,
together with certificates representing the shares or interests pledged thereby
(to the extent such interests are represented by certificates) and instruments
evidencing the Debt pledged thereby, each accompanied by appropriate
instruments of transfer executed in blank or endorsed in blank, as the case may
be, and such other agreements, documents or instruments, as Agent or any Bank
may deem necessary or advisable;

(d) Canadian Obligors shall have duly executed and
delivered to Agent, the Canadian Pledge Agreement, together with instruments
evidencing the Debt pledged thereby, accompanied by appropriate instruments of
transfer endorsed in blank and such other agreements, documents or instruments
as Agent or Canadian Bank may deem necessary or advisable in order to give
effect to the pledge, assignment and maintenance of the priority in respect
thereof pursuant to the Canadian Pledge Agreement;

(e) Borrower and Subsidiary Guarantors shall have delivered
evidence of the completion of, or that all requisite action that Agent or any
Bank may deem necessary or desirable is being taken to make, all such
recordings and filings of or with respect to any Collateral that Agent or any
Bank may deem necessary or desirable in order to give effect to the pledge,
assignment and maintenance of the priority in respect thereof pursuant to any
of the Collateral Documents;

(f) Agent shall have received favorable written opinions
addressed to Agent and Banks, dated the Second Restatement Date, of counsel to
Borrower, Subsidiary Guarantors and Canadian Obligors, to the effects set forth
in Exhibit J, or otherwise in form and substance satisfactory to Agent;

(g) Agent shall have received a certificate of corporate
status with respect to Borrower, each Canadian Obligor and each Subsidiary
Guarantor, dated within five (5) days before the Second Restatement Date, or
confirmed by facsimile if facsimile confirmation is available, by the Secretary
of State or other governmental official of the jurisdiction of incorporation of
Borrower, such Canadian Obligor or such Subsidiary Guarantor, as applicable,
such certificate to be issued by the Secretary of State or other governmental
official, as appropriate, which certificate shall indicate that Borrower or
such Subsidiary Guarantor, as applicable, is duly incorporated and is in good
standing in such jurisdiction;

(h) Agent shall have received a certificate of a
Responsible Officer of Borrower certifying that, (i) as of the Second
Restatement Date, Borrower and each Subsidiary Guarantor is in good standing
both in the jurisdiction in which it was incorporated or formed and as a
foreign corporation in each state

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in which its respective failure to be duly qualified or licensed would have a
material adverse effect on the properties, business, operations, or condition
(financial or otherwise) of Borrower and its Subsidiaries, taken as a whole,
and (ii) the representations and warranties of Borrower and each of the
Subsidiary Guarantors contained in this Agreement and in the Collateral
Documents, to which it is a party, are true and correct in all material
respects at and as of the Second Restatement Date (except to the extent such
representations and warranties expressly relate solely to an earlier date);

(i) Agent shall have received a certificate of a
Responsible Officer of each Canadian Obligor certifying that (i) as of the
Second Restatement Date, such Canadian Obligor is in good standing both in the
jurisdiction in which it was incorporated or formed and as a foreign
corporation in each province in which its respective failure to be duly
qualified or licensed would have a material adverse effect on the properties,
business, operations, or condition (financial or otherwise) of such Canadian
Obligor and its Subsidiaries, taken as a whole, and (ii) the representations
and warranties of such Canadian Obligor contained in this Agreement and in the
Collateral Documents, to which it is a party, are true and correct in all
material respects at and as of the Second Restatement Date (except to the
extent such representations and warranties expressly relate solely to an
earlier date);

(j) Agent shall have received copies of the charter
documents of Borrower, each Canadian Obligor, each Subsidiary Guarantor, and
any and all amendments to any of the foregoing, certified by Borrower's, such
Canadian Obligor's or such Subsidiary Guarantor's Secretary, as applicable;

(k) Agent shall have received copies of the by-laws or
similar document governing corporate actions of Borrower, each Canadian Obligor
and each Subsidiary Guarantor, and any and all amendments thereto, certified by
Borrower's, such Canadian Obligor's or such Subsidiary Guarantor's Secretary,
as applicable;

(l) Agent shall have received a certificate from the
respective Secretary of Borrower, each Canadian Obligor and each Subsidiary
Guarantor attesting to the resolutions of Borrower's, such Canadian Obligor's
or such Subsidiary Guarantor's board of directors, as applicable, authorizing
the execution and delivery of this Agreement, the Notes, and all other Loan
Documents, to the extent each is a party hereto or thereto, and authorizing
specific officers to execute same;

(m) Agent shall have received from Borrower, each Canadian
Obligor and each Subsidiary Guarantor, signature and incumbency certificates,
certified by the respective Secretary of

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each, respecting the Responsible Officers of Borrower and such Canadian Obligor
and the senior officers of such Subsidiary Guarantor, as applicable, executing
this Agreement, the Notes, and all other Loan Documents, to the extent each is
a party hereto or thereto;

(n) Agent shall have received an Officer's Compliance
Certificate from Borrower, dated as of the Second Restatement Date, duly
executed by a Responsible Officer of Borrower, (i) certifying that no Event of
Default or Unmatured Event of Default under the First Restatement or this
Agreement has occurred and is continuing, and (ii) providing the calculations
made by Borrower by which Borrower has determined it is in compliance with the
financial covenants contained in the First Restatement and this Agreement as of
the Second Restatement Date;

(o) Agent and Canadian Bank shall have received full
payment of all of their respective fees (including the Canadian Facility Fee),
costs, and expenses (including the fees and expenses of Agent's and Canadian
Bank's counsel, including allocated amounts for their respective in-house
counsel) incurred in connection with the preparation, negotiation, execution,
and delivery of this Agreement, the Notes, and all other Loan Documents;

(p) each of the Loan Documents shall be in full force and
effect;

(q) no material adverse change shall have occurred, since
December 31, 1994, in the properties, business, operations, or condition
(financial or otherwise) of Borrower and its Subsidiaries, taken as a whole;
provided, however, that the restructuring of the Borrower and its Subsidiaries
in calendar year 1995 and the corresponding asset write-downs, as announced by
Borrower on June 26, 1995, shall not be deemed to be a material adverse change
for purposes of this Section 4.1(q);

(r) Agent and each Bank shall have received a Disclosure
Statement, certified by a Responsible Officer of Borrower and each Canadian
Obligor, to be complete and correct as of the Second Restatement Date, and in
the form and substance satisfactory to Banks and their counsel;

(s) all other documents and legal matters in connection
with the transactions contemplated by this Agreement shall have been executed,
delivered, or recorded or filed and shall be in form and substance reasonably
satisfactory to Agent and its counsel and each Bank.

4.2 Conditions Precedent to All Loans and Issuances of Letters
of Credit. The obligation of each Bank to make each Loan and participate in
each Letter of Credit, and of any Issuing Bank

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to issue each Letter of Credit, hereunder is subject to the fulfillment, at or
prior to the time of the making of such Loan or issuance (or, in the case of
the outstanding Loans and Letters of Credit referred to in Section 2.28, the
Second Restatement Date), of each of the following further conditions:

(a) the representations and warranties of Borrower,
Canadian Obligors and each of Borrower's Subsidiaries contained in this
Agreement and in the Collateral Documents to which it is a party, shall be true
and correct in all material respects at and as of the date of such Loan or
issuance, as though made on and as of such date (except to the extent that such
representations and warranties expressly relate solely to an earlier date);

(b) no Event of Default and no Unmatured Event of Default
shall have occurred and be continuing on the date of such Loan or issuance, nor
shall either result from the making of such Loan or issuance;

(c) both before and after giving effect to any such Loan or
issuance, Borrower, Canadian Obligors and each of Borrower's Subsidiaries shall
be in compliance with all of the requirements of each of the covenants
contained in this Agreement; and

(d) Borrower or a Canadian Obligor, as the case may be,
shall have executed and delivered to Agent or Canadian Bank with a copy to
Agent, as the case may be, a Notice of Borrowing pursuant to the terms of
Section 2.9 or Borrower, CRC-Evans, Total, TEST or a Canadian Obligor, as the
case may be, shall have executed and delivered to Issuing Bank and Agent an L/C
Request Certificate and an application and other agreements, documents and
instruments pursuant to the terms of Sections 2.1(c), 2.1(c)(iii), 2.3(c) and
2.3(c)(iii), as the case may be. On the date of issuance requested for a
Letter of Credit in any L/C Request Certificate, Borrower and Canadian Obligors
shall be deemed to have made a representation and warranty that each of the
statements in subsections (a), (b) and (c) of this Section 4.2 are true and
correct in all material respects as of such date.

4.3 Conditions Precedent to Certain Loans. The obligation of
each Bank to make any Loan hereunder the proceeds of which are to be used to
acquire Margin Stock, and to make any Loan to Borrower thereafter until such
time as Borrower certifies in writing that it no longer owns any Margin Stock,
is, in addition to the conditions set forth in Section 4.2, subject to the
fulfillment of each of the following further conditions at or prior to the time
of the making of each such Loan:

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(a) the making of any Loans hereunder shall not violate any
state or federal laws or regulations (including the Exchange Act or Regulations
G, T, U, or X of the Federal Reserve Board);

(b) Borrower shall take all steps and do all things
necessary to comply with all provisions of any state or federal laws or
regulations (including the Exchange Act or Regulations G, T, U, or X of the
Federal Reserve Board) applicable to it in connection with its Margin Stock;
and

(c) Agent shall have received a duly executed Regulation U
Valuation Certificate from Borrower substantially in the form of Exhibit L,
dated as of the date of the making of each such Loan, and evidencing that the
aggregate value of Borrower's Margin Stock is within the exception contained in
Section 221.2(g)(2)(i) of Regulation U of the Federal Reserve Board or any
successor section of Regulation U of the Federal Reserve Board (and similar
exceptions contained in Regulations G and T of the Federal Reserve Board, to
the extent applicable) and representing and warranting that none of Borrower's
Subsidiaries owns any Margin Stock.

4.4 Determinations Under Section 4.1. For purposes of
determining compliance with the conditions specified in Section 4.1, each Bank
shall be deemed upon execution hereof to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
Banks unless an officer of Agent responsible for the transactions contemplated
by this Agreement and the other Loan Documents shall have received notice from
such Bank on or before the Second Restatement Date specifying its objection
thereto and such objection shall not have been withdrawn by notice to Agent to
that effect.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BORROWER

In order to induce Agent and each of Banks to enter into this
Agreement, (a) Borrower represents and warrants that no Event of Default or
Unmatured Event of Default under the First Restatement has occurred and is
continuing as of the date hereof and (b) Borrower makes, and each Canadian
Obligor, as to matters relating to such Canadian Obligor, makes, the following
representations and warranties, which, except as set forth in the Disclosure
Statement with a specific reference to the Section of this Article V affected
thereby, are true, correct, and complete as of the Second Restatement Date, and
at and as of the date of each Loan and each issuance of a Letter of Credit made
thereafter, as though made on and as of the date of such Loan or

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issuance (except to the extent that such representations and warranties
expressly relate solely to an earlier date), such representations and
warranties to survive the execution and delivery of this Agreement, the Notes,
and the making of the Loans and the issuance of the Letters of Credit:

5.1 Organization, Powers, Good Standing, and Subsidiaries.

5.1.1 Organization and Powers. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own and operate its properties, and
to carry on its business as now conducted. Borrower has all requisite
corporate power and authority to enter into this Agreement and the Loan
Documents to which it is a party, to issue the Notes, and to carry out the
transactions contemplated hereby and thereby. Each of the Subsidiary
Guarantors has all requisite corporate power and authority to enter into the
Loan Documents, to the extent that they are parties thereto, and to carry out
their respective obligations contemplated thereby. Each of Borrower and its
Subsidiaries possesses all franchises, certificates, licenses, permits, and
other authorizations from governmental or regulatory authorities, where the
absence to possess such franchise, certificate, license, permit, or
authorization would have a material adverse effect on the properties, business,
operations, or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole, and neither Borrower nor any of its
Subsidiaries is in violation thereof in any material respect.

5.1.2 Good Standing. Each of Borrower and its Subsidiaries
is duly qualified to do business and in good standing in each jurisdiction
where the absence to be so qualified would have a material adverse effect on
the properties, business, operations, or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole.

5.1.3 Subsidiaries. On the Second Restatement Date, Borrower
has no Subsidiaries other than those which are identified in the Disclosure
Statement. The Disclosure Statement correctly sets forth the number of shares
of each class of common and preferred stock authorized for each of Borrower's
Subsidiaries as applicable, the number outstanding and the percentage of the
outstanding shares of each such class owned (directly or indirectly) by
Borrower or one or more of Borrower's Subsidiaries as of the Second Restatement
Date. On the Second Restatement Date, the capital stock of Borrower and the
capital stock of each of its Subsidiaries that is owned by Borrower or another
Subsidiary is duly authorized, validly issued, and fully paid and
non-assessable. Neither Borrower, nor any of its Subsidiaries, individually or
collectively, owns or holds, directly or indirectly, any capital stock or
equity security of,

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or any equity interest in, any corporation or business other than Borrower's
Subsidiaries or Investments permitted under Section 7.3.

5.2 Authorization of Borrowing, etc.

5.2.1 Authorization of Borrowing. The execution, delivery,
and performance by Borrower and each Canadian Obligor of this Agreement, the
Notes and the other Loan Documents to which it is a party have been duly
authorized by all necessary corporate action.

5.2.2 Authorization of Loan Documents by Subsidiary
Guarantors. The execution, delivery, and performance by each of the Subsidiary
Guarantors of the Loan Documents, to the extent that they are parties thereto,
have been duly authorized by all necessary corporate action.

5.2.3 No Conflict - Borrower. The execution, delivery, and
performance by Borrower of this Agreement, the Notes and the other Loan
Documents to which it is a party do not and will not: (a) violate any provision
of federal, state, or local law or regulation (including Regulations G, T, U,
and X of the Federal Reserve Board) applicable to Borrower, the articles of
incorporation, or bylaws (or other charter documents) of Borrower, or any
order, judgment, or decree of any court or other agency of government binding
on Borrower; (b) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
Borrower; (c) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any of Borrower's properties or assets other than
Permitted Liens; or (d) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Borrower, except for
those consents or approvals which have been obtained.

5.2.4 No Conflict - Canadian Obligors. The execution,
delivery, and performance by each Canadian Obligor of this Agreement, the Notes
and the other Loan Documents to which it is a party do not and will not: (a)
violate any provision of foreign, federal, provincial, state, or local law or
regulation applicable to any Canadian Obligor, the articles of incorporation,
or bylaws (or other charter documents) of any Canadian Obligor, or any order,
judgment, or decree of any court or other agency of government binding on any
Canadian Obligor; (b) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Contractual Obligation
of any Canadian Obligor; (c) result in or require the creation or imposition of
any Lien of any nature whatsoever upon any of Canadian Obligors' properties or
assets other than Permitted Liens; or (d) require any approval of stockholders
or any approval or consent of any Person under any Contractual

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Obligation of any Canadian Obligor, except for those consents or approvals
which have been obtained.

5.2.5 No Conflict - Subsidiary Guarantors. The execution,
delivery, and performance by each of the Subsidiary Guarantors of the Loan
Documents, to the extent that they are parties thereto, do not and will not:
(a) violate any provision of federal, state, or foreign law or regulation
applicable to any of the Subsidiary Guarantors, the articles of incorporation,
or bylaws (or other charter documents) of any of the Subsidiary Guarantors, or
any order, judgment or decree of any court or other agency of government
binding on any of the Subsidiary Guarantors; (b) be in conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Borrower or any of Borrower's Subsidiaries;
(c) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any of Borrower's or its Subsidiaries' properties or assets
other than Permitted Liens; or (d) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Borrower
or any of its Subsidiaries, except for those consents or approvals which have
been obtained.

5.2.6 Governmental Consents. Other than such as may have
previously been obtained or are set forth on the Disclosure Statement, the
execution, delivery, and performance by Borrower, Canadian Obligors and the
Subsidiary Guarantors of this Agreement, the Notes, and the other Loan
Documents, to which it is a party, do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
federal, state, foreign, or other governmental authority or regulatory body.

5.2.7 Binding Obligations.

(a) This Agreement, the Notes, and the other
Loan Documents to which it is a party are, or when executed and delivered by
Borrower will be, the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws or equitable principles
relating to or affecting creditors' rights generally.

(b) This Agreement, the Notes and the other
Loan Documents to which they are a party are, or when executed and delivered by
each of the Canadian Obligors will be, the legally valid and binding
obligations of each Canadian Obligor, enforceable against each Canadian Obligor
in accordance with their respective terms, except as enforcement may be limited
by equitable principles or by bankruptcy, insolvency,

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reorganization, moratorium, or similar laws or equitable principles relating to
or affecting creditors' rights generally.

(c) The Loan Documents, to the extent that
they are parties thereto, when executed and delivered by each of the Subsidiary
Guarantors will be the legally valid and binding obligations of the Subsidiary
Guarantors, to the extent that they are parties thereto, enforceable against
them in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or affecting
creditors' rights generally.

5.2.8 Lien Priority.

(a) The Liens granted by Borrower to Agent, on
behalf of Banks, in stock or other certificates and Debt evidenced by
promissory notes, which liens can be perfected by delivery thereof (and
assuming such certificates and promissory notes have been delivered to Agent),
are valid, perfected, first priority Liens.

(b) The Liens granted by Canadian Obligors to
Canadian Bank in Debt evidenced by promissory notes, which Liens can be
perfected by delivery thereof (and assuming such promissory notes have been
delivered to Agent), are valid, perfected, first priority Liens.

(c) The Liens granted by the Subsidiary
Guarantors to Agent, on behalf of Banks, in stock or other certificates and
Debt evidenced by promissory notes, which liens can be perfected by delivery
thereof (and assuming such certificates and promissory notes have been
delivered to Agent), are valid, perfected, first priority Liens.

5.3 Financial Condition. Borrower has delivered to Banks the
following financial statements of Borrower and its Subsidiaries: the
consolidated balance sheet of Borrower and its Subsidiaries as of December 31,
1994 and March 31, 1995, and the related consolidated statements of operations,
cash flows, and stockholders' equity for the year and three months,
respectively, then ended, together, in the case of the December 31, 1994
statements, with the opinion of KPMG Peat Marwick, independent certified
accountants. The foregoing financial statements were prepared in accordance
with GAAP. All financial statements heretofore or hereafter provided to Banks
present or will present fairly, in all material respects, the consolidated
financial position of Borrower and its Subsidiaries as at the date thereof, and
the results of their operations and their cash flows, for the period then
ended, and, except for the monthly financial statements provided by Borrower
which shall be prepared consistent with Borrower's past practices, all
financial

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statements provided to Banks shall be prepared in conformity with GAAP
consistently applied. As of the Second Restatement Date, neither Borrower nor
any of its Subsidiaries has any material Contingent Obligation, liability for
Taxes, long-term lease, or forward or long-term commitment out of the ordinary
course of business, which is not (i) reflected or reserved in the foregoing
financial statements, or (ii) specifically set forth in the Disclosure
Statement.

5.4 Changes, etc. There have been no changes in the
businesses, operations, or consolidated financial condition of Borrower and its
Subsidiaries taken as a whole since the preparation of the most recent
financial statements referred to in Section 5.3, which, either in any case or
in the aggregate, are materially adverse to Borrower and its Subsidiaries,
taken as a whole, provided, however, that the restructuring of the Borrower and
its subsidiaries in calendar year 1995 and the corresponding asset write-downs,
as announced by Borrower on June 26, 1995, shall not be deemed to be materially
adverse for purposes of this Section 5.4.

5.5 Title to Properties; Liens. Except for Permitted Liens,
all of the properties and assets of Borrower and each of its Subsidiaries are
free from all Liens of any nature whatsoever. Except as set forth in the
Disclosure Statement, Borrower and each of its Subsidiaries has good title to
all of the material personal property and assets and good and marketable title
to all of the material real property reflected in the financial statements
dated as of December 31, 1994, referred to in Section 5.3, as being owned by
them. On and after the Second Restatement Date, Borrower and each of its
Subsidiaries shall have good title to all of the material personal property and
assets and good and marketable title to all of the material real property
reflected in Borrower's and its Subsidiaries' books and records as being owned
by them, except for properties and assets disposed of in the ordinary course of
business and except for Permitted Liens.

5.6 Litigation; Adverse Facts. Except as set forth in the
Disclosure Statement: (a) there is no action, suit, proceeding or arbitration
(irrespective of whether purportedly on behalf of Borrower or any of its
Subsidiaries) at law or in equity or before or by any federal, state,
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality domestic or foreign, pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or any of its Subsidiaries
which could reasonably be expected to have a material adverse effect on the
properties, business, operations, or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole, or which could reasonably be
expected to materially adversely affect Borrower's or any Canadian Obligor's
ability to perform its obligations hereunder,

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under the Notes, or any of the other Loan Documents, or the ability of any of
the Subsidiary Guarantors to perform its respective obligations under any of
the Loan Documents, to which it is a party; and (b) neither Borrower, nor any
Subsidiary of Borrower, is: (i) in violation of any applicable law in a manner
which would reasonably be expected to materially adversely affect the
properties, business, operations, or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole; or (ii) subject to or in
default with respect to any final judgment, writ, injunction, decree, rule, or
regulation of any court or federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, in a manner which could reasonably be expected to have a material
adverse effect on the properties, business, operations, or condition (financial
or otherwise) of Borrower and its Subsidiaries, taken as a whole. There is no
action, suit, proceeding, or investigation pending or, to the knowledge of
Borrower, threatened against Borrower or any Subsidiary of Borrower, which
could reasonably be expected to affect the validity or the enforceability of
this Agreement, the Notes or any of the other Loan Documents.

5.7 Payment of Taxes. All tax returns and reports of Borrower
and any of its Subsidiaries (and all taxpayers with which Borrower or any of
its Subsidiaries is or has been included on consolidated, combined, unitary or
similar return) required to be filed by any of them have been timely filed, and
all Taxes shown to be due on such returns and reports, and all other Taxes,
assessments, fees, amounts required to be withheld and paid to a governmental
agency or regulatory authority, and other governmental charges upon Borrower
and its Subsidiaries, and upon their respective properties, assets, income and
franchises which are due and payable have been paid when due and payable,
except to the extent permitted by Section 6.4. None of such returns or reports
contains, or will contain, a disclosure statement under Section 6662 of the
Code (or any predecessor statute) or similar provision of state, local or
foreign law. Borrower is not aware of any circumstances which would cause
Borrower or any of its Subsidiaries to incur a material liability for Taxes
other than by reason of normal business operations of Borrower and its
Subsidiaries. Borrower does not know of any proposed, asserted, or assessed
tax deficiency against it or any of its Subsidiaries that would be material to
the properties, business, operations, or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole. Neither Borrower, nor any of
its Subsidiaries, is a party to, bound by, or obligated under any tax sharing,
tax indemnification or similar agreement or arrangement (except any agreements
among Borrower and its wholly-owned Subsidiaries for federal tax purposes).

5.8 Performance. Neither Borrower, nor any of its
Subsidiaries, is in default in the performance, observance, or

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fulfillment of any of the obligations, covenants, or conditions contained in
any of its Contractual Obligations, and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute such a default,
except where the consequences, direct or indirect, of such default or defaults,
if any, would not have a material adverse effect on the properties, business,
operations, or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole.

5.9 Governmental Regulation. Neither Borrower, nor any of its
Subsidiaries, is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or to any federal or state statute or
regulation limiting its ability to incur Debt for borrowed money.

5.10 Securities Activities. Neither Borrower, nor any of its
Subsidiaries, is engaged principally, or as one of its principal activities, in
the business of extending or arranging for the extension of credit for the
purpose of "purchasing" or "carrying" any Margin Stock or securities (within
the meanings of Regulations G, T, U or X of the Federal Reserve Board as now or
from time to time in effect). Except as permitted by Section 7.3(j), no part
of any Borrowing will be used by Borrower or any Canadian Obligor to purchase
or carry any Margin Stock or securities, or to extend credit to others for the
purpose of purchasing or carrying any such Margin Stock or securities.

5.11 Employee Benefit Plans.

5.11.1 Borrower and its ERISA Affiliates are in
compliance with (a) the terms and conditions of all Pension Plans and
Multiemployer Plans with respect to which they are a party, have any
responsibility, liability, or contribution obligation, or are otherwise bound,
where the failure to so comply would have a material adverse effect on the
properties, business, operations or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole, and (b) the provisions of
ERISA with respect to all Pension Plans and Multiemployer Plans, the failure to
comply with which would have a material adverse effect on the properties,
business, operations or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole. With respect to each of their Pension Plans
and Multiemployer Plans, Borrower and each of its ERISA Affiliates: (i) have
fulfilled in all material respects their obligations under the minimum funding
standards of ERISA, the plan documents, and any collective bargaining
agreements; (ii) have not incurred any material past due liability to the PBGC,
plan participant or beneficiary, or to any Pension Plan or Multiemployer Plan;
and (iii) have not had asserted against them any penalty for failure to meet
their minimum funding requirements under ERISA, and each Pension Plan and
Multiemployer Plan is able to pay benefits

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thereunder when due under the plan documents to the extent that the failure to
comply with the foregoing would have a material adverse effect on the
properties, business, operations or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole.

5.11.2 No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan administered by Borrower,
any of its ERISA Affiliates, or any administrator designated by Borrower or any
of its ERISA Affiliates which would reasonably be expected to result in any
obligations of Borrower or any of its ERISA Affiliates to the PBGC which would
reasonably be expected to have a material adverse effect upon the properties,
business, operations or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole.

5.11.3 Liabilities for accrued benefits (irrespective of
whether vested) under all Pension Plans (excluding unfunded deferred
compensation agreements, welfare plans, or other arrangements of similar nature
not subject to the funding requirements of ERISA) that have assets less than
such liabilities (irrespective of whether vested) and that are administered by
Borrower or any of its ERISA Affiliates or any administrator designated by
Borrower or any of its ERISA Affiliates do not exceed the assets thereunder by
more than the greater of: (a) U.S.$500,000; or (b) five percent (5%) of
Consolidated Net Worth.

5.11.4 Neither Borrower nor any of its ERISA Affiliates has
incurred or reasonably expects to incur any withdrawal liability under ERISA or
other contribution obligation to any Multiemployer Plan which would reasonably
be expected to have material adverse effect on the properties, business,
operations or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole.

5.11.5 To the extent that any Pension Plan (which is a
"welfare plan" under Section 3(1) of ERISA or similar foreign law) is insured,
Borrower and its ERISA Affiliates do not have unpaid premiums in excess of
U.S.$100,000 that are required to be paid for all periods through and including
the Second Restatement Date. To the extent that any Pension Plan (which is a
"welfare plan" as defined above) is not or has not been funded with insurance,
Borrower and its ERISA Affiliates do not have unmade contributions in excess of
U.S.$100,000 that are required to be paid for all periods through and including
the Second Restatement Date and that such Pension Plans, to the extent that
their funding is based on actuarial principles, are based on reasonable and
prudent assumptions that are actuarially sound at the Second Restatement Date.
Borrower and its ERISA Affiliates, in combination, do not have unfunded
liabilities for post-retirement

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medical benefits, plant closing benefits, and unfunded deferred compensation
agreements, in the aggregate, in excess of the greater of (a) U.S.$500,000 or
(b) five percent (5%) of Consolidated Net Worth.

5.12 Disclosure. No representation or warranty of Borrower or
any Canadian Obligor contained in this Agreement or any other document,
certificate or written statement furnished to Agent or Banks, or any of them,
by or on behalf of Borrower or any Canadian Obligor with respect to the
properties, business, operations, or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole, for use in connection with the
transactions contemplated by this Agreement, contains any untrue statement of a
material fact or omits to state a material fact (known to Borrower or any
Canadian Obligor in the case of any document not furnished by Borrower or such
Canadian Obligor) necessary in order to make the statements contained herein or
therein not misleading. As of the Second Restatement Date, there is no fact
known to Borrower (other than matters of a general economic nature or relating
to the energy services, pipeline construction or gas compression industries, as
a whole) which materially adversely affects the properties, business,
operations, or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole, which has not been disclosed herein or in such
other documents, certificates, and statements furnished to Agent, Banks, or any
of them, for use in connection with the transactions contemplated hereby.

5.13 Debt. Neither Borrower nor any of its Subsidiaries has any
Debt outstanding on the Second Restatement Date other than the Debt disclosed
in the latest of the financial statements referred to in Section 5.3 or in the
Disclosure Statement. On or after the Second Restatement Date, Borrower and
its Subsidiaries will not have any Debt outstanding other than the Debt
permitted by Section 7.1.

5.14 Trademarks, etc. Borrower and each of its Subsidiaries own
or hold licenses in all necessary trademarks, trade names, registered
copyrights, patents, patent rights, licenses and other proprietary rights
required to conduct its and their respective businesses and to operate its and
their respective properties as now conducted and without known material
conflict with the rights of others, except where the failure to own or hold
licenses in any such trademarks, tradenames, registered copyrights, patents,
patent rights, licenses or other proprietary rights would not have a material
adverse effect on the properties, business, operations, or condition (financial
or otherwise) of Borrower and its Subsidiaries, taken as a whole. The
consummation of the transactions contemplated by this Agreement and the other
Loan Documents will not alter or impair any of such rights of Borrower or any
of its Subsidiaries. Neither Borrower nor any of its Subsidiaries has been
charged or has received a written or oral

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threat to be charged with any material infringement of, nor has any of them
knowingly infringed on any unexpired trademark, trademark registration, trade
name, patent, registered copyright, copyright registration, or other
proprietary right of any Person which could reasonably be expected to have a
material adverse effect on the properties, business, operations, or condition
(financial or otherwise) of Borrower and its Subsidiaries, taken as a whole.

5.15 Existing Defaults. Neither Borrower nor any of its
Subsidiaries is in default under any Contractual Obligation to which it is a
party or by which it or any of the properties owned by it may be bound, the
effect of which would reasonably be expected to have a material adverse effect
on the properties, business, operations or condition (financial or otherwise)
of Borrower and its Subsidiaries, taken as a whole. Neither Borrower nor any
of its Subsidiaries is in violation of any law, ordinance, rule or regulation
to which it or any of its properties is subject, the failure to comply with
which would reasonably be expected to have a material adverse effect on the
properties, business, operations or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole.

5.16 Leases. Borrower and each of its Subsidiaries enjoy
peaceful and undisturbed possession under all material leases to which any of
them is a party or under which any of them is operating. All of such leases
are valid and subsisting, and neither Borrower, nor any of its Subsidiaries,
has received any notice of a material default under any of such leases, and, to
the best of their knowledge, no material default by Borrower or any of its
Subsidiaries exists under any of them.

5.17 Burdensome Agreements, etc. On the Second Restatement
Date, Borrower and its Subsidiaries are not, individually or in combination,
party to any unusual or unduly burdensome agreement or undertaking, or subject
to any unusual or unduly burdensome court order, writ, injunction, or decree of
any court or governmental instrumentality, domestic or foreign, which
materially and adversely affects the properties, business, operations, or
condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a
whole.

5.18 Fire, Explosion, and Labor Disputes. Neither the business
nor the properties or operations of Borrower or its Subsidiaries is presently
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 (irrespective of whether covered by insurance), other
than matters of a general economic nature or relating to the energy services or
pipeline construction industry as a whole, which materially and adversely
affects the properties, business, operations or condition (financial or
otherwise) of Borrower and

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its Subsidiaries, taken as a whole. As of the Second Restatement Date, none of
Borrower or its Subsidiaries is a party to any collective bargaining agreement.

5.19 Environmental Condition.

5.19.1 Except as set forth in the Disclosure Statement,
none of the Real Property, or other properties or assets of Borrower or any of
its Subsidiaries, has, to the best of Borrower's knowledge, ever been used by
previous owners or operators in the disposal of or to refine, generate,
manufacture, produce, store, handle, treat, transfer, release, process, or
transport any Hazardous Waste, and neither Borrower nor any of its Subsidiaries
now use or have in the past used such Real Property, or other of their
properties or assets, for the purpose of disposal of, refining, generating,
manufacturing, producing, storing handling, treating, transferring, releasing,
processing, or transporting any Hazardous Waste, other than the generation,
storage or handling of Hazardous Waste the release of which would not result in
potential remediation costs and related costs and liabilities, in the
aggregate, in excess of U.S.$5,000,000 outstanding at any particular time.

5.19.2 Except as set forth in the Disclosure Statement,
none of the Real Property, or other properties or assets of Borrower, or any of
its Subsidiaries, (a) has been designated, listed, or identified in any manner
under and pursuant to RCRA or CERCLA as a Hazardous Waste or Hazardous
Substance disposal or removal site, Superfund cleanup site, or, to our
knowledge, a candidate for removal or closure under or pursuant to RCRA or
CERCLA, or (b) is so designated, listed, or identified as such a site or, to
our knowledge, such a candidate in any manner by the EPA under or pursuant to
any other Environmental Protection Statute.

5.19.3 Except as set forth in the Disclosure Statement, no
Lien arising under or in connection with any Fund or Environmental Protection
Statute has attached to any revenues or to any real or personal property owned
by Borrower or any of its Subsidiaries.

5.19.4 Except as set forth in the Disclosure Statement,
neither Borrower, nor any of its Subsidiaries has received a summons, citation,
notice, directive, letter, or other communication, written or oral, from the
EPA or any Canadian federal or provincial governmental authority or any other
federal or state governmental agency or instrumentality, authorized pursuant to
an Environmental Protection Statute, concerning any intentional or
unintentional action or omission by Borrower or any of its Subsidiaries
resulting in the releasing, spilling, leaking, pumping, pouring, emitting,
emptying, dumping, or otherwise disposing of Hazardous Waste or Hazardous
Substance

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into the Environment resulting in Damage thereto or to the fish, shellfish,
wildlife, biota, and other natural resources, which, if the acts or omissions
discussed therein were determined to be true, would result in potential
remediation costs and related costs and liabilities, in the aggregate, in
excess of U.S.$5,000,000 outstanding at any particular time.

5.19.5 Except as set forth in the Disclosure Statement,
none of the Real Property or assets of Borrower or any of its Subsidiaries has
been or is, to the best of Borrower's knowledge, subject to any requirement for
notification or reporting under the underground storage tank program, 42 U.S.C.
Sections 6991-6991i, or under Sections 304, 311, 312 or 313 of the Emergency
Planning and Community Right to Know Act, 42 U.S.C. Sections 11004, 11021 or
11023, or under Section 103 of CERCLA, 42 U.S. Section 9603, and their
implementing regulations except where such requirement has been complied with
or the failure to comply with such requirement would not result in liabilities
and related costs, in the aggregate, in excess of U.S.$5,000,000 outstanding at
any particular time.

5.20 Partnerships and Ventures. Neither Borrower, nor any of
its Subsidiaries, is a general or limited partner in any partnership or a joint
venture in any joint venture except for revenue sharing arrangements entered
into in the ordinary course of business, consistent with past practices or
partnerships or joint ventures permitted under Section 7.17.

5.21 No Default. No Event of Default or Unmatured Event of
Default has occurred and is continuing.

5.22 Ownership Of Margin Stock. None of the property or assets
of any of Borrower's Subsidiaries consists of Margin Stock. As of the Second
Restatement Date, none of the property or assets of Borrower consists of
Margin Stock.

5.23 Solvency. The Borrower and its Subsidiaries, taken as a
whole, are, and after receipt and application of the Loans will be, Solvent.

ARTICLE VI

AFFIRMATIVE COVENANTS OF BORROWER

Borrower, and each Canadian Obligor, as to matters relating to such
Canadian Obligor, covenant and agree that, so long as any portion of the Total
Commitment shall be in effect or any Letter of Credit shall be outstanding and
until payment in full of the Loans, the Notes and all amounts drawn and unpaid
in respect of any Letter of Credit, it shall, and shall cause its Subsidiaries
to, perform each and all of the following:

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6.1 Accounting Records. Borrower shall and shall cause each of
its Subsidiaries to maintain adequate books and records in accordance with
GAAP, consistently applied.

6.2 Financial Statements; Duty to Report. Borrower shall
furnish Agent and each Bank:

(a) as soon as practicable and, in any event, within
forty-five (45) days after the close of each calendar month, other than the
month of December, and within ninety (90) days after the close of each month of
December: (i) consolidated statements of operations, cash flows and
stockholders' equity of Borrower and its Subsidiaries for such monthly period
and year to date and (ii) a consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such monthly period, all in reasonable detail,
and certified by the Chief Financial Officer of Borrower to have been prepared
in accordance with GAAP consistent with Borrower's past practices; the
financial statements provided under this Section 6.2(a) to be accompanied by
such consolidating (whether by business segment, subsidiary or otherwise)
financial statements as Borrower shall prepare for its board of directors or
its senior management in respect of each such calendar month;

(b) as soon as practicable and, in any event, within ninety
(90) days after the close of each fiscal year of Borrower, a copy of the annual
report for such year for Borrower and its Subsidiaries, including therein: (i)
consolidated statements of operations, cash flows and stockholders' equity for
such fiscal year and (ii) a consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year, and setting forth in
comparative form, if applicable, the corresponding figures for the previous
year, all in reasonable detail, provided that the delivery of the financial
statements contained or incorporated in Borrower's report on Form 10-K as filed
with the SEC and complying with the rules and regulations of the SEC applicable
thereto shall be deemed to comply with the foregoing requirements of this
Section 6.2(b) in respect of such fiscal year if the other requirements of this
Section 6.2(b) are satisfied; the consolidated statements and balance sheet to
be audited by independent, nationally recognized, certified public accountants,
and certified, without a "going concern" qualification or other qualification
or exception of similar gravity or any qualification arising out of the scope
of the audit (but not arising out of changes in financial accounting
standards), by such accountants to have been prepared in accordance with GAAP,
consistently applied, together with a certificate of such accounting firm to
Agent and Banks, stating that in the ordinary and usual course of the regular
audit of the business of Borrower and its Subsidiaries, which audit was
conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that an

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Event of Default or an Unmatured Event of Default has occurred and is
continuing, or if, in the opinion of such accounting firm, an Event of Default
or an Unmatured Event of Default has occurred and is continuing, a statement as
to the nature thereof (provided, however, that such accountants shall not be
liable based upon such certificate by reason of their failure to obtain
knowledge of any such Event of Default or Unmatured Event of Default that would
not be disclosed in the course of their audit examination) and stating that,
based on their audit examination, nothing has come to their attention which
causes them to believe that the information contained in the year-end
certificates delivered therewith pursuant to Section 6.2(c) is not correct;

(c) contemporaneously with each third monthly and year-end
financial report required by Section 6.2(a) and (b), a certificate of the Chief
Financial Officer of Borrower stating (i) that he or she has individually
reviewed the provisions of this Agreement, the Notes, and the other Loan
Documents, (ii) that a review of the activities of Borrower and its
Subsidiaries during such year or quarterly period, as the case may be, has been
made by or under such individual's supervision, with a view to determining
whether Borrower has fulfilled all of its obligations under this Agreement, the
Notes, and the other Loan Documents, (iii) whether to the best of his/her
knowledge Borrower's Subsidiaries have fulfilled all of their obligations under
the other Loan Documents, to the extent that each is a party thereto, and (iv)
that to the best of his/her knowledge Borrower and its Subsidiaries have
observed and performed each undertaking contained in this Agreement, the Notes,
and the Loan Documents, to the extent that each is a party thereto, and
Borrower and its Subsidiaries are not in default in the observance or
performance of any of the provisions hereof or thereof, or if Borrower or any
of its Subsidiaries shall be so in default, specifying all such defaults and
events of which such individual may have knowledge or belief;

(d) promptly after sending or making available or filing of
the same, copies of all reports, notices, proxy statements, and financial
statements that Borrower or any of its Subsidiaries sends or makes available to
their respective shareholders and all regular and periodic reports and all
filings pursuant to Sections 13 or 15(d) of the Exchange Act and registration
statements and prospectuses that any such Person files with the SEC, or any
governmental authority succeeding to any of its functions, and all press
releases and other statements made available generally by Borrower or its
Subsidiaries to the public concerning material developments in their business
or of any condition or event which is required to be disclosed in a current
report filed by Borrower or any

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Subsidiary Guarantor with the SEC on Form 8-K (Items 1, 2, 3 and 4 of such Form
as in effect on the Second Restatement Date) if Borrower or any Subsidiary
Guarantor were required to file such reports under the Exchange Act;

(e) notice, as soon as practicable and, in any event,
within five (5) days after any Responsible Officer of Borrower has knowledge
of: (i) the occurrence of any Event of Default or any Unmatured Event of
Default; or (ii) any default or event of default as defined in any evidence of
Debt of Borrower or any of its Subsidiaries or under any agreement, indenture,
or other instrument under which such Debt has been issued, irrespective of
whether such Debt is accelerated or such default waived. In either event,
Borrower shall also supply Agent and Banks with a statement from the Chief
Financial Officer of Borrower setting forth the details thereof and the action
which Borrower or such Subsidiary proposes to take with respect thereto;

(f) as soon as practicable and, in any event, within
forty-five (45) days after the end of each calendar month and of each of the
first three (3) quarterly accounting periods of Borrower in each fiscal year
and within ninety (90) days after the end of each of Borrower's fiscal years, a
report, in the form of an Officer's Compliance Certificate, indicating
Borrower's financial status as measured by and Borrower's compliance with the
quantitative financial covenants set forth in Section 7.6 and containing
sufficient detail as to explain the calculation of such financial covenants,
which report shall be certified as true and correct by the Chief Financial
Officer of Borrower to the best of his or her knowledge or belief;

(g) notice, as soon as practicable, of any notice, claim,
action, condition, report or investigation indicating any potential or actual
liability arising in connection with (i) non-compliance with or violation of
the requirements of any Environmental Protection Statute which has resulted in
or presents a reasonable likelihood of resulting in a material adverse effect
on the properties, business, operations or condition (financial or otherwise)
of Borrower and its Subsidiaries, taken as a whole, (ii) the release of any
Hazardous Substance, Hazardous Wastes, or Pollutants or Contaminants into the
Environment which has resulted in or presents a reasonable likelihood of
resulting in a material adverse effect on the properties, business, operations
or condition (financial or otherwise) of Borrower and its Subsidiaries, taken
as a whole, or which release Borrower would have a duty to report under any
Environmental Protection Statute, or (iii) the existence of any Environmental
lien on any assets of Borrower which has resulted in or presents a reasonable
likelihood of resulting in a material adverse effect on the properties,
business, operations or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole;

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(h) promptly upon receipt thereof, copies of all reports or
letters submitted to Borrower by its independent public accountants in
connection with each annual, interim, or special audit of the financial
statements of Borrower or its Subsidiaries made by such accountants, including
the comment letter submitted by such accountants to management in respect of
Borrower's or its Subsidiaries' internal control matters in connection with
their annual audit; and Borrower agrees to obtain such a letter in connection
with each of its annual audits;

(i) prompt written notice of any condition or event (other
than conditions or events of a general economic nature or relating to the
energy services, pipeline construction or compression industries as a whole)
which has resulted or may reasonably be expected to result in (i) a material
adverse change in the properties, business, operations or condition (financial
or otherwise) of Borrower and its Subsidiaries, taken as a whole or (ii) an
Event of Default or Unmatured Event of Default;

(j) prompt written notice of any claims, proceedings, or
disputes against, or to the knowledge or belief of Borrower threatened, or
affecting, Borrower or any of its Subsidiaries, which could reasonably be
expected to have a material adverse effect on the properties, business,
operations or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole, (without in any way limiting the foregoing,
claims, proceedings, or disputes involving monetary amounts of U.S.$1,000,000,
or more, in excess of any insurance coverage therefor, shall be deemed to be
material for purposes of this clause (j)), or any material labor controversy of
which Borrower has knowledge resulting in or threatening to result in a strike
against Borrower or any of its Subsidiaries, or any proposal of which Borrower
has knowledge by any public authority to acquire any of the material assets or
business of Borrower or any of its Subsidiaries;

(k) promptly upon becoming aware of the occurrence of any
of the following events, a written notice specifying the nature thereof, and,
when known, any action taken or threatened by the Internal Revenue Service,
Department of Labor, PBGC, or other party with respect thereto: (i) Reportable
Event with respect to a Pension Plan; (ii) "prohibited transaction," as such
term is defined in Section 4975 of the Code, which prohibited transaction
could subject Borrower or any of its ERISA Affiliates to a material civil
penalty assessed pursuant to Section 502(i) or (l) of ERISA or a material tax
imposed by Section 4975 of the Code in connection with any of Borrower's or
any of its ERISA Affiliates' Pension Plans or any trust created thereunder;
(iii) failure to timely pay the required annual payment or the full amount of a
required installment for any Pension Plan or Multiemployer Plan in any plan
year by the due date as required under the terms of the plan, collective
bargaining agreement, or Section 412 of the Code;

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(iv) any material additional premium that must be paid to the PBGC under
Section 4006(a)(3)(E) of ERISA; or (v) the imposition of any lien on the
assets of Borrower or any of its ERISA Affiliates under ERISA or the Code; or
(vi) any breach of a representation or warranty in Section 5.11, assuming, for
purposes of this paragraph, that such representation or warranty was being
repeated on a continual basis for the life of this Agreement;

(l) promptly, copies of: (i) all notices received by
Borrower or any of its ERISA Affiliates of the PBGC's (or a foreign country's)
intent to terminate any of Borrower's or any of its ERISA Affiliates' Pension
Plans or to have a trustee appointed to administer any of Borrower's or any of
its ERISA Affiliates' Pension Plans, or of the PBGC's demand for payment or
liability under Sections 4062, 4063, or 4064 of ERISA; (ii) at the request of
Agent or any Bank, each annual report (IRS Form 5500 series or similar series
under the applicable laws of any foreign country and all accompanying
schedules), the most recent actuarial reports, the most recent financial
information concerning the financial status of each of Borrower's and its ERISA
Affiliates' Pension Plans or Multiemployer Plans (to the extent that this
information can be obtained), and schedules showing the amounts contributed to
each of Borrower's and any of its ERISA Affiliates' Pension Plans or
Multiemployer Plans by or on behalf of Borrower or its ERISA Affiliates; (iii)
all notices received by Borrower or any of its ERISA Affiliates concerning the
imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA
or similar liability under the laws of any foreign country; (iv) all notices
required to be sent to employees for an employer's failure to make a required
installment or other payment required to meet the minimum funding standard
under Section 302 of ERISA; and (v) all notifications required to be made to
the PBGC for failure to make a required installment or other payment under
Section 412(n) of the Code;

(m) contemporaneously with the delivery of the annual
audited report required by Section 6.2(b), consolidated and, to the extent
prepared for Borrower's board of directors or senior management, consolidating
plans and financial forecasts, including a balance sheet, income statement, and
cash flow projections covering proposed fundings, repayments, additional
advances, investments, and other cash receipts and disbursements for each
quarter of the forthcoming year and evidencing Borrower's compliance with
Section 6.6(c), as customarily prepared by the management of Borrower for
internal use and any other similar reports prepared by management of Borrower
pursuant to any provisions of any instrument or document relating to any Debt
of Borrower or any of its Subsidiaries;

(n) promptly upon becoming aware of any Person's seeking to
obtain or threatening to seek to obtain a decree or order for relief with
respect to Borrower or any of its

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Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, a written notice
thereof specifying what action Borrower or any such Subsidiary is taking or
proposes to take with respect thereto;

(o) promptly, copies of all amendments to the articles of
incorporation or by-laws of Borrower or any of the Subsidiary Guarantors;

(p) contemporaneously with each third monthly and year-end
financial report required by Section 6.2(a) and (b), a certificate signed by
the Chief Financial Officer of Borrower separately identifying and describing
all material Contingent Obligations of Borrower or any of its Subsidiaries;

(q) promptly, and in any event within thirty (30) days
after the receipt thereof, a copy of any notice, summons, citation, directive,
letter, or other form of communication from the EPA, or any other governmental
agency or instrumentality, in any way concerning any action or omission on the
part of Borrower or any of its Subsidiaries in connection with Hazardous
Substances or Hazardous Wastes or concerning the presence of same on any Real
Property or other properties or assets of Borrower or any of its Subsidiaries,
or concerning the filing of a Lien upon, against or in connection with
Borrower, its Subsidiaries, or any of their leased or owned real or personal
property, in connection with a Super Fund, or concerning any potential or
actual liability referred to in Section 6.2(g), or from any governmental agency
concerning the presence of any regulated substances or compounds on any Real
Property or other properties or assets of Borrower or any of its Subsidiaries;

(r) contemporaneously with each third monthly and year-end
financial report required by Section 6.2(a) and (b), a schedule prepared by a
Responsible Officer indicating all advances and repayments made under the
intercompany revolving promissory notes referred to in Section 7.3(c)(v) during
the immediately preceding quarterly accounting period; and

(s) as soon as practicable and, in any event, within ten
(10) days after any Responsible Officer of Borrower has knowledge of the
occurrence of any of the events described in Section 8.1.2, 8.1.7, 8.1.8,
8.1.9, or 8.1.10 with respect to any Inactive Subsidiary, notice of the
occurrence of any such event.

(t) with reasonable promptness, such other information and
data with respect to Borrower or any of its Subsidiaries as from time to time
may be reasonably requested by Agent or any Bank.

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6.3 Corporate Existence, etc. Except as permitted under
Section 7.7, Borrower shall, and shall cause each of its Subsidiaries other
than the Inactive Subsidiaries to, preserve and keep in full force and effect
at all times its and their corporate existence and any rights and franchises
material to its or their businesses.

6.4 Payment of Taxes and Claims. Borrower shall, and shall
cause each of its Subsidiaries to, pay all Taxes, assessments, and other
governmental charges, involving amounts in excess of U.S.$500,000 in the
aggregate, imposed upon it or any of its properties or assets or in respect of
any of its businesses or income before any penalty or interest accrues thereon,
and all other claims (including claims for labor, services, materials, and
supplies) involving amounts in excess of U.S.$1,000,000 in the aggregate, for
sums which have become due and payable and which by law have or may become a
Lien upon any of its properties or assets, prior to the time when any interest,
penalty or fine shall be incurred with respect thereto; provided, however,
that, unless such Taxes have become a federal tax Lien on, or subject to a
statutory priority in favor of any governmental authority with respect to, any
of Borrower's or its Subsidiaries' properties or assets, no such Tax,
assessment, charge, or claim need be paid if the same is being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted and if an adequate reserve or other appropriate provision, if any,
shall have been made therefor as required in order to be in conformity with
GAAP.

6.5 Maintenance of Properties. Borrower shall, and shall cause
each of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition all of those properties and assets useful or
necessary to its business or the business of its Subsidiaries except for
property and assets which in the aggregate are not material to the business,
operations or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole, or which in the ordinary course of Borrower's
or its Subsidiaries' business would not be so maintained or repaired.

6.6 Insurance. Borrower shall, and shall cause each of its
Subsidiaries to, maintain or cause to be maintained, with financially sound and
reputable insurers satisfactory to the Majority Banks, insurance with respect
to its properties and business and the properties and business of its
Subsidiaries against loss or damage of the kinds customarily insured against by
corporations of established reputations engaged in the same or similar
businesses and similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other corporations.
Borrower shall, upon request made from time to time, deliver to Agent or any
Bank, copies of certificates describing all insurances then in effect.

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6.7 Inspection. Borrower and each Canadian Obligor will permit
any Persons designated by Agent or any Bank to visit and inspect any of the
properties of Borrower or any of its Subsidiaries or of any Canadian Obligor,
including its and their financial and accounting records, and to make copies
and take extracts therefrom, and to discuss its and their affairs, finances,
and accounts with its and their officers and independent public accountants,
all upon reasonable notice and as often as may be reasonably requested.
Borrower, Canadian Obligors, Agent and Banks agree to use reasonable efforts to
preserve the accountant/client privilege, if any, which Borrower or Canadian
Obligors may have in relation to such financial and accounting information.

6.8 Compliance with Laws, etc. Borrower shall, and shall cause
its Subsidiaries to, comply in all material respects with the requirements of
all applicable laws, rules, regulations and orders of any governmental
authority, noncompliance with which would materially adversely affect the
properties, business, operations, or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole; provided, however, that this
Section 6.8 shall not prevent Borrower or any of its Subsidiaries from, in
good faith and reasonable diligence, contesting the validity of application of
any such laws, rules, regulations or orders by appropriate legal proceedings.

6.9 Pollution and Other Regulations. Borrower shall, and shall
cause each of its Subsidiaries to, comply in all material respects with all
applicable Environmental Protection Statutes, and all laws, rules, regulations,
or directives with respect to equal employment opportunity and employee safety
in all jurisdictions in which Borrower or any of its Subsidiaries do business;
provided, however, that this Section 6.9 shall not prevent Borrower or any of
its Subsidiaries from, in good faith and with reasonable diligence, contesting
the validity or application of any such laws, rules, regulations or directives
by appropriate legal proceedings.

6.10 Schedule of Letters of Credit. With each delivery of
financial statements pursuant to Section 6.2(a), Borrower shall deliver to
Agent, on behalf of Banks, (i) a schedule setting forth the following
information with respect to each Standby Letter of Credit (including Letters of
Credit) issued for the account of Borrower or any of its Subsidiaries and
outstanding as of the date such schedule is delivered (including any Standby
Letter of Credit issued concurrently with the delivery of such schedule): (a)
the name of the Person (which Person shall be Borrower or any of its
Subsidiaries) for whose account each such Standby Letter of Credit was issued;
(b) the name of the issuer of each such Standby Letter of Credit; (c) the
maximum amount available to be drawn under each such Standby Letter of Credit
on the date of its issuance; and (d) the expiry date of each such

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Standby Letter of Credit; and (ii) a certification by a Responsible Officer of
Borrower and each Canadian Obligor that the representations and warranties of
Borrower and each of its Subsidiaries and each Canadian Obligor contained in
this Agreement and in the Collateral Documents to the extent each is a party
thereto are true and correct as of the date of the certification (except to the
extent such representations and warranties expressly relate solely to an
earlier date).

6.11 Further Assurances. At any time or from time to time upon
the request of Agent or any Bank, Borrower shall, and shall cause its
Subsidiaries to, execute and deliver such further documents and do such other
acts and things as Agent or any Bank may reasonably request in order to effect
fully the purposes of this Agreement, the Notes, and the other Loan Documents,
and to provide for repayment of the Loans made hereunder with interest thereon
in accordance with the terms of this Agreement and the Notes.

6.12 Repatriation of Earnings. To the extent necessary to make
principal or interest payments to Banks when due on any of the A Loans or B
Loans made under the Credit Facility, Borrower shall repatriate or shall cause
its Subsidiaries to repatriate earnings from its foreign Subsidiaries
sufficient to make such payments.

6.13 Additional Subsidiary Guarantors. If, after the Second
Restatement Date, the aggregate amount of assets of any wholly-owned Subsidiary
of Borrower that is not a Subsidiary Guarantor shall equal or exceed
U.S.$25,000,000, based upon a fair valuation thereof, Borrower shall cause such
Subsidiary to execute and deliver to Agent, on behalf of Banks, the Subsidiary
Guaranty and any other appropriate Collateral Documents in respect of its
Collateral requested by Agent in form and substance satisfactory to Agent and
deliver all such Collateral to Agent, on behalf of the Banks; provided that
this Section 6.13 shall not apply to any foreign Subsidiary to the extent that
it is prohibited, or would suffer a material adverse consequence, under the
laws of its jurisdiction of organization from compliance with this Section
6.13.

ARTICLE VII

NEGATIVE COVENANTS OF BORROWER

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7.1 Debt. Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume, permit, guarantee, or otherwise become,
or remain, directly or indirectly, liable with respect to any Debt, except:

(a) Borrower may become and remain liable with respect to
Debt evidenced by this Agreement, the A Notes and the B Note;

(b) Canadian Obligors may become and remain liable with
respect to Debt evidenced by this Agreement and the C Note.

(c) Borrower's Subsidiaries may become and remain liable
with respect to Debt owed to Borrower or any of the Subsidiary Guarantors or
under loans and advances permitted pursuant to Sections 7.3(c)(ii), 7.3(c)(iv)
or 7.3(c)(v), so long as such Debt is evidenced by promissory notes and is
unsecured, such Debt to be used by such Subsidiaries as permitted under Section
7.15;

(d) The Subsidiary Guarantors may become and remain liable
with respect to Debt created by the Subsidiary Guaranty;

(e) Borrower and its Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by Section 7.4;

(f) Borrower and its Subsidiaries may remain liable with
respect to Debt set forth in the Disclosure Statement, other than Debt
described under Section 7.3(c), and any renewal thereof on substantially
similar terms as in effect on the Second Restatement Date;

(g) Borrower may become and remain liable with respect to
Debt owed to any Subsidiary of Borrower, so long as such Debt is evidenced by a
promissory note, is unsecured and is subordinated in right of payment to the
prior payment in full of the Debt evidenced by the Notes and this Agreement on
terms acceptable to Agent and Majority Banks, it being understood that the
terms of subordination and the form of promissory note attached as Exhibit N
have been reviewed and are acceptable to Majority Banks;

(h) Borrower and its Subsidiaries may become and remain
liable with respect to Debt secured by the Permitted Liens referred to in
Section 7.2(l) or (o), and any renewal thereof on terms substantially similar
to the terms as of the date of acquisition of the property subject thereto;

(i) Borrower and its domestic Subsidiaries may become and
remain liable with respect to Debt incurred in the ordinary course of business,
other than Debt described under Section 7.1(a), (b), (c) or (g), in an amount
not to exceed, in

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the aggregate, U.S.$20,000,000 at any time outstanding less any other Debt
outstanding pursuant to Section 7.1(f) and (k);

(j) Borrower may become and remain liable with respect to
Debt, which Debt shall be subordinate to the Debt evidenced by the Notes and
this Agreement, on terms and conditions (including, interest rate,
amortization, subordination provisions, and otherwise) and in such amounts, all
subject to documentation, satisfactory to the Majority Banks and such Banks'
counsel;

(k) Borrower's foreign Subsidiaries may become and remain
liable with respect to Debt, other than Debt described under Sections 7.1(b) or
7.1(c), in an amount not to exceed, in the aggregate, U.S.$20,000,000 at any
time outstanding less any other Debt outstanding pursuant to Sections 7.1(f)
and 7.1(i); provided, however, that, in the event of a default on such Debt,
the sole recourse of the Person to whom such Debt is owed is to the respective
assets of such foreign Subsidiaries;

(l) Borrower and its Subsidiaries may become and remain
liable with respect to Debt resulting from Capitalized Leases; and

(m) A Subsidiary of Borrower may remain liable with respect
to Debt existing at the time of its acquisition or creation in accordance with
Section 7.3(d), (g), (j) or (k) and not created in anticipation thereof;

provided, however, that, the aggregate amount of Debt (including Debt incurred
pursuant to Section 7.17) of Borrower and its Subsidiaries (including related
joint venture entities of which they may be a part), other than Debt incurred
pursuant to Section 7.1(a), (b), (c), (d), (g), and (j) and the Total
IRB/Stockholder Indebtedness, shall not exceed U.S.$20,000,000 at any time
outstanding. If Borrower creates or acquires a Subsidiary after the Second
Restatement Date in accordance with Section 7.3(d), (g), (j) or (k), Borrower
may request, and the Majority Banks shall consider, and may (but shall not be
obligated to) agree to, a modification of the foregoing proviso so as to permit
Debt or Contingent Obligations prohibited by the foregoing proviso but
otherwise permitted by Section 7.1(m) or Section 7.4(f).

7.2 Liens. Borrower shall not, and shall not permit any of its
Subsidiaries (other than CRC-Evans Canada Ltd., an Alberta corporation, so long
as it does not have any Debt owing to Borrower, any Canadian Obligor or any
Subsidiary Guarantor) to, create, incur, assume or permit to exist, directly or
indirectly, any Lien on or with respect to any of its properties or assets, of
any kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except:

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(a) Liens for Taxes, assessments, or governmental charges
or claims the payment of which is not, at such time, required by Section 6.4;

(b) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen, and other Liens imposed by law and incurred in the
ordinary course of business for sums not yet delinquent or being contested in
good faith, if reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have been made therefor;

(c) Liens (other than any Lien that would violate Section
7.16 or result in an Event of Default under Section 8.1.12) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance, and other types of social security, or to
secure the performance of immaterial statutory obligations, immaterial surety
and appeal bonds, and bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);

(d) any attachment or judgment Lien in existence less than
thirty (30) days after the entry thereof or with respect to which execution has
been stayed and Liens incurred to secure any immaterial surety appeal and
supersedeas bonds or other instruments serving a similar purpose in connection
with the appeal of any such judgment;

(e) leases or subleases granted to others in the ordinary
course of business not interfering with the ordinary course of business of
Borrower or any of its Subsidiaries;

(f) easements, rights-of-way, restrictions and other
similar charges or encumbrances not interfering in any material respect with
the ordinary course of business of Borrower or any of its Subsidiaries;

(g) Liens granted by Borrower pursuant to the Collateral
Documents;

(h) Liens granted by Canadian Obligors pursuant to the
Collateral Documents;

(i) Liens granted by Subsidiary Guarantors pursuant to the
Collateral Documents;

(j) banker's liens in the nature of rights of set-off
arising in the ordinary course of business of Borrower or any of its
Subsidiaries;

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(k) the Liens reflected in the Disclosure Statement
securing Debt existing on the Second Restatement Date, and any renewal thereof
on substantially similar terms as in effect on the Second Restatement Date;
provided that the Liens identified in the Disclosure Schedule as being required
to be terminated within a specified period after the Second Restatement Date
are so terminated; and provided further that no such Lien shall secure Debt in
excess of the amount secured as of the Second Restatement Date;

(l) Liens on items of property taken by or granted to a
Person other than Agent, on behalf of Banks, who, by making advances or
incurring an obligation gives value to enable Borrower, or any of its
Subsidiaries, to acquire rights in or the use of such items of property after
the Second Restatement Date; provided that such Liens do not attach to any
other item of property of Borrower or any of its Subsidiaries;

(m) Liens granted to a Person, other than Agent, on behalf
of Banks, or Canadian Bank, in cash or cash equivalents of Borrower or its
Subsidiaries, to secure the Contingent Obligations permitted under Section
7.4(e); provided, however, that at no time may the Liens permitted under this
clause 7.2(m) encumber cash or cash equivalents in an aggregate U.S. Dollar
amount materially in excess of the Contingent Obligation; provided further that
no Lien shall be permitted under this clause (m) in respect of any such
Contingent Obligation unless (i) Borrower is advised in writing by each Issuing
Bank that such Issuing Bank (1) will not issue a Letter of Credit representing
such Contingent Obligation because of a failure to satisfy Section
2.1(c)(iv)(C) or Section 2.3(c)(iv)(C) in respect thereof in the case of (and
notwithstanding) Borrower's satisfaction of the other conditions of this
Agreement for issuance thereof or (2) would not issue such Letter of Credit
because of a failure to satisfy Section 2.1(c)(iv)(C) or Section 2.3(c)(iv)(C)
in respect thereof in the case of Borrower's or Canadian Obligors' inability to
satisfy such other conditions, and (ii) no Event of Default or Unmatured Event
of Default shall have occurred and be continuing or would result from the
issuance of such Contingent Obligation;

(n) Liens on the properties and assets of any Subsidiary
existing at the time of acquisition or creation of such Subsidiary in
accordance with Section 7.3(d), (g), (j) or (k) and not in anticipation
thereof; and

(o) Liens on any property existing at the time, and not
created in anticipation, of the acquisition thereof by Borrower or any of its
Subsidiaries;

provided that the foregoing exceptions shall not include a Lien in favor of the
PBGC or any Pension Plan. The items described in

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clauses (a) through (o) of this Section 7.2 are collectively referred to herein
as the "Permitted Liens".

7.3 Investments. Borrower shall not, and shall not permit any
of its Subsidiaries to, make or own, directly or indirectly, any Investment in
any Person, except:

(a) Borrower and each of its Subsidiaries may make and own
Investments in:

(i) marketable direct obligations issued or unconditionally
guaranteed by the United States Government or issued by any agency
thereof and backed by the full faith and credit of the United States,
in each case maturing within one (l) year from the date of
acquisition thereof;

(ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one (1)
year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from
either Standard & Poor's Corporation or Moody's Investors Service,
Inc.;

(iii) commercial paper maturing no more than one (l) year
from the date of creation thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either Standard
& Poor's Corporation or Moody's Investors Service, Inc.;

(iv) certificates of deposit, repurchase agreements, or
bankers' acceptances maturing within one (l) year from the date of
acquisition thereof or issued by any Bank, or by any bank organized
under the laws of the United States of America or any state thereof
or the District of Columbia which has combined capital and surplus of
not less than U.S.$500,000,000;

(v) short term master notes of Persons which, at the time of
acquisition of the Investment, have one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc.;

(vi) money market funds organized under the laws of the
United States of America or any state thereof that invest primarily
in any of the Investments permitted under clauses (i), (ii), (iii),
(iv) and (v) of this Section 7.3(a); or

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(vii) high-grade, short-term investment securities having
substantially equivalent safety as any of the Investments permitted
under clauses (i), (ii), (iii), (iv), (v) and (vi) of this Section
7.3(a) of the type or quality marketed or sponsored by any of the
Banks.

(b) Borrower and each of its Subsidiaries may maintain any
Investment existing on the Second Restatement Date, which Investments are set
forth in the Disclosure Statement;

(c) (i) Borrower and the Subsidiary Guarantors may make
equity contributions, loans or advances to any of their respective directly
owned Subsidiaries so long as any such equity or Debt is evidenced by stock
certificates or promissory notes, as the case may be, and such stock
certificates and promissory notes are pledged and delivered as Collateral
pursuant to the Borrower Pledge Agreement or the Subsidiary Pledge Agreement;
(ii) Canadian Obligors may make loans or advances to any of their respective
directly owned Subsidiaries so long as any such Debt is evidenced by promissory
notes and such promissory notes are pledged and delivered as Collateral
pursuant to the Canadian Pledge Agreement; (iii) any Subsidiary of Borrower may
make loans or advances to Borrower so long as such Debt satisfies the
requirements of Section 7.1(g); (iv) so long as no Event of Default or
Unmatured Event of Default has occurred and is continuing, and so long as no
Event of Default or Unmatured Event of Default shall result from any such
Investment, Borrower or any Subsidiary of Borrower may make loans and advances
to any Inactive Subsidiary of Borrower disclosed on the Disclosure Statement in
an amount not to exceed U.S.$50,000 at any time outstanding to any one Inactive
Subsidiary, provided that the aggregate amount of all such loans and advances
made after the First Restatement Date shall not exceed U.S.$500,000 at any time
outstanding; and (v) so long as no Event of Default or Unmatured Event of
Default has occurred and is continuing, and so long as no Event of Default or
Unmatured Event of Default shall result from any such Investment, any
Subsidiary of Borrower which holds a revolving promissory note of any other
Subsidiary of Borrower disclosed on the Disclosure Statement may make advances
under such note after the Second Restatement Date in an amount not to exceed
the unfunded balance thereof set forth on the Disclosure Statement, plus the
amount of repayments of principal on such note after the Second Restatement
Date, provided that such advances shall not be funded directly or indirectly
from the proceeds of any Investment by the Borrower or any Subsidiary Guarantor
except to the extent of the sum of (A) such unfunded balance as of the Second
Restatement Date and (B) the amount of repayments of principal received by the
Borrower or any Subsidiary Guarantor from the advancing Subsidiary after the
Second Restatement Date in respect of a promissory note pledged

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pursuant to the Borrower Pledge Agreement or the Subsidiary Pledge Agreement;

(d) Borrower, Borrower's Subsidiaries (other than an
Inactive Subsidiary), or a newly formed Subsidiary of Borrower may make
acquisitions so long as: (i) such acquisitions (1) do not constitute or result
in an Event of Default or Unmatured Event of Default; (2) are of properties,
assets or the capital stock of Persons engaged in an energy related business,
except for businesses or activities regulated by the Nuclear Regulatory
Commission or any successor thereto; provided, however, that if less than one
hundred percent (100%) of the capital stock of a Person is to be acquired: (A)
such capital stock shall be non-marketable Securities; and (B) if the
acquisition is considered, in the sole discretion of Agent and Banks, to be
hostile, Borrower's or its Subsidiary's, as applicable, ownership of such
non-marketable Securities shall empower Borrower or its Subsidiary to elect a
majority of the members of the board of directors of such Person and shall
empower Borrower or its Subsidiary to direct, or cause the direction of, the
management and policies of such Person; (3) are not considered, in the sole
discretion of Agent and Banks, to be hostile acquisitions of the capital stock
of a customer of Agent or any Bank; (ii) if the acquisition is to be made by,
or results in, a newly formed Subsidiary of Borrower, Borrower shall have
complied with the requirements of Section 7.3(g); and (iii) Borrower shall have
delivered to Agent prior written notice of such intended acquisition providing
Agent reasonable time to review and analyze such intended acquisition and
Borrower's compliance with the terms of this Agreement; provided further that
Borrower may make Investments permitted by Section 7.3(j) or (k). For purposes
of this Section 7.3(d), "non-marketable Securities" shall mean Securities other
than Margin Stock;

(e) Borrower and its Subsidiaries may make or maintain
Investments permitted under Section 7.17;

(f) Borrower and each of its Subsidiaries (other than an
Inactive Subsidiary) may make advances to their respective employees in the
ordinary course of business of Borrower and each such Subsidiary, respectively,
and in accordance with the past practices of Borrower and each such Subsidiary,
respectively; provided, however, that the aggregate U.S. Dollar amount of
advances made to any one employee by Borrower or its Subsidiaries may not
exceed U.S. $500,000 at any time outstanding; and provided further however,
that the aggregate U.S. Dollar amount of advances made by Borrower and its
Subsidiaries to all employees may not exceed U.S. $2,000,000 at any time
outstanding;

(g) Upon prior written notice given to Agent by Borrower,
which notice provides Agent reasonable time to review and analyze Borrower's
proposed creation of such new Subsidiary

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and Borrower's compliance with the terms and conditions of this Agreement: (i)
Borrower may create Subsidiaries to complete acquisitions permitted by Section
7.3(d); and (ii) Borrower, or the Subsidiary Guarantors, may create additional
directly owned Subsidiaries and may transfer properties or assets thereto for
use in the ordinary course of such transferee's business, so long as (1)
concurrent with each such creation, Borrower or the Subsidiary Guarantors shall
pledge the stock or other equity interest of the new Subsidiary (which pledge
shall be limited, in the case of the creation of a foreign Subsidiary to the
pledge of stock or other equity interest in an amount not to exceed sixty-five
percent (65%) of the stock or other equity interest of such foreign Subsidiary
and shall not include Margin Stock) to Agent, on behalf of Banks, pursuant to
the Borrower Pledge Agreement or the Subsidiary Pledge Agreement and (2)
Borrower shall cause the new domestic wholly-owned Subsidiaries which own or
acquire assets having a value, based upon the fair valuation thereof, equal to
or greater than U.S.$25,000,000 to execute and deliver to Agent, on behalf of
Banks, the Subsidiary Guaranty and any other appropriate Collateral Documents
requested by Agent and shall deliver all Collateral subject thereto to Agent,
on behalf of Banks;

(h) Borrower or its Subsidiaries may make and maintain
Investments in any Person arising from the settlement of amounts, in the
context of a bankruptcy, insolvency, or workout proceeding, owed by such Person
to Borrower, or any such Subsidiary in respect of the sale or lease of goods or
services in the ordinary course of business by Borrower or any such Subsidiary
to such Person;

(i) Borrower and its Subsidiaries may make and maintain
other Investments in the ordinary course of business, in an amount not to
exceed, in the aggregate, U.S.$2,000,000 at any time outstanding;

(j) So long as no Event of Default or Unmatured Event of
Default shall have occurred and be continuing, and so long as no Event of
Default or Unmatured Event of Default shall result from any such Investment,
Borrower may make and maintain one or more Investments, with the proceeds of
the A Loans and B Loans, in an amount not to exceed U.S.$10,000,000 in the
aggregate, in the Margin Stock of one or more Persons so long as such
Investment is not considered, in the sole discretion of Agent, to be hostile in
respect of a customer of Agent or any Bank, and subject to the prior written
notice to Banks of the identity of such Person or Persons and the consent of
the Majority Banks to use the proceeds of the Loans to acquire Margin Stock in
the Person identified, which consent will not be unreasonably withheld or
delayed; and

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(k) Borrower may make and maintain one or more Investments
in Margin Stock of Persons engaged in an energy related business (including the
transactions permitted under Section 7.5(f)), except for businesses or
activities regulated by the Nuclear Regulatory Commission or any successor
thereto, so long as: (i) the amount of any such Investment does not exceed, at
the time when made, the difference between (1) Borrower's cash and cash
equivalents reflected on its most recent consolidated balance sheet minus (2)
the outstanding balance of the A Loans and B Loans, after giving effect to any
Borrowing under Section 7.3(j), plus the U.S. Letter of Credit Usage; (ii) such
Investment is not made with the proceeds of the Loans (unless the Investment is
made in accordance with Section 7.3(j)); (iii) such Investments are not
acquisitions considered, in the sole discretion of Agent, to be hostile
acquisitions of Margin Stock of a customer of Agent or any Bank; (iv)
concurrent with an acquisition of Margin Stock hereunder, Borrower delivers to
Agent a certificate substantially in the form of Exhibit L evidencing
Borrower's compliance with Regulation U of the Federal Reserve Board (and
Regulations G and T of the Federal Reserve Board, to the extent applicable) and
representing and warranting that none of Borrower's Subsidiaries owns any
Margin Stock; and (v) at the time of the making of such Investment, no Event of
Default or Unmatured Event of Default shall have occurred or be continuing or
shall result from such Investment.

7.4 Contingent Obligations. Borrower shall not, and shall not
permit any of its Subsidiaries to, create or become or be liable, directly or
indirectly, with respect to any Contingent Obligation, except:

(a) Contingent Obligations resulting from the endorsement
of instruments for collection in the ordinary course of business;

(b) Contingent Obligations disclosed in the financial
statements delivered prior to the Second Restatement Date referred to in
Section 5.3 or described in the Disclosure Statement, and any refinancing,
renewals or extensions of such Contingent Obligations on terms substantially
similar to the terms in effect as of the Second Restatement Date;

(c) Contingent Obligations incurred in the ordinary course
of business of Borrower and its Subsidiaries, subject to Section 6.4(e);

(d) Contingent Obligations of Borrower and the Subsidiary
Guarantors resulting from their guaranties of the Debt incurred hereunder or
with respect to the U.S. Letters of Credit issued or outstanding hereunder, and
Contingent Obligations of the Canadian Obligors with respect to the Canadian
Letters of Credit issued or outstanding hereunder;

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(e) Contingent Obligations of Borrower, or its
Subsidiaries, to a Person(s), other than Agent, on behalf of U.S. Banks, or
Canadian Bank, respecting Standby Letters of Credit issued from and after the
Second Restatement Date for its (their) account; provided, however, that at no
time shall the aggregate U.S. Dollar amount of the Contingent Obligations
permitted under Section 7.4(b), Section 7.4(c) and this Section 7.4(e) exceed
the positive difference between (i) U.S.$20,000,000 and (ii) the U.S. Letter of
Credit Usage plus the Canadian Letter of Credit Usage; and

(f) Contingent Obligations of any Subsidiary acquired or
created by Borrower in accordance with Section 7.3(d), (g), (j) or (k) after
the Second Restatement Date and existing at the time of such acquisition or
creation, and not in anticipation thereof.

7.5 Dividends. Borrower shall not, and shall not permit any of
its Subsidiaries to, make or declare any dividend (in cash, return of capital,
or any other form of property) directly or indirectly, on, or make any other
payment or distribution on account of, or set aside assets for a sinking or
other similar fund for the purchase, redemption, retirement of, or redeem,
purchase, retire, or otherwise acquire any shares or interest of any class of
Borrower's or its Subsidiaries' capital stock, whether now or hereafter
outstanding, or grant or issue any warrant, right, or option pertaining thereto
or other security convertible into any of the following, or make any other
distribution in respect thereof, either directly or indirectly whether in cash
or property or in obligations; provided, however, that so long as no Event of
Default or Unmatured Event of Default shall have occurred and be continuing,
and so long as no Event of Default or Unmatured Event of Default shall result
therefrom, the foregoing shall not restrict the ability of:

(a) Borrower or any Subsidiary of Borrower to pay cash
dividends directly to the stockholders of Borrower, provided, however, that the
aggregate amount of such dividends, per annum, shall not exceed the greater of
(i) U.S.$10,000,000 or (ii) seventy-five percent (75%) of Consolidated Net
Income for the fiscal year ended immediately prior to the fiscal year in which
such dividends are paid;

(b) any Subsidiary of Borrower to make any dividend or
other distribution, so long as such dividend or distribution is paid to
Borrower or another Subsidiary of Borrower;

(c) Borrower to make any dividend or other distribution to
its shareholders consisting of shares of capital stock or rights to acquire its
capital stock;

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(d) Borrower to pay dividends or make other distributions
on preferred stock issued in compliance with Section 7.7(d) solely in
accordance with the terms and conditions of such preferred stock;

(e) Borrower to grant or issue warrants, rights, and
options with respect to its common stock or preferred stock issued in
compliance with Section 7.7(d); and

(f) Borrower to purchase, redeem, retire, or otherwise
acquire shares of its capital stock so long as: (i) the U.S. Dollar amount of
such purchase, redemption, retirement, or other acquisition does not exceed, at
the time when made, the difference between (1) Borrower's cash and cash
equivalents reflected on its balance sheet minus (2) the outstanding balance of
the A Loans or B Loans plus the U.S. Letter of Credit Usage; (ii) the aggregate
U.S. Dollar amount of all such purchases, redemptions, retirements and other
acquisitions of the capital stock of Borrower does not exceed U.S.$10,000,000;
(iii) concurrent with any purchase or other acquisition of Margin Stock
hereunder, Borrower delivers to Agent a certificate substantially in the form
of Exhibit L evidencing Borrower's compliance with Regulation U of the Federal
Reserve Board (and Regulations G and T of the Federal Reserve Board to the
extent applicable) and representing and warranting that none of Borrower's
Subsidiaries owns any Margin Stock; and (iv) at the time of the making of such
purchase, redemption, retirement or other acquisition, no Event of Default or
Unmatured Event of Default shall have occurred or be continuing or shall result
from such purchase, redemption, retirement or other acquisition.

7.6 Financial Covenants.

(a) Ratio of Consolidated Total Liabilities to
Consolidated Net Worth. Borrower shall not permit, on the final day of any
calendar month, the ratio of: (i) the Consolidated Total Liabilities of
Borrower and its Subsidiaries, on the date of determination, to (ii)
Consolidated Net Worth, on such date, to be greater than one and two-tenths to
one (1.2:1.0).

(b) Consolidated Net Worth. On the final day of each
calendar month, Borrower's Consolidated Net Worth shall not be less than the
sum of: (i) U.S.$246,690,000; (ii) fifty percent (50%) of the sum of
Borrower's positive Consolidated Net Income, if any, for each calendar month
beginning September 1994; and (iii) one hundred percent (100%) of the increase
in stockholders' equity resulting from the issuance or sale by Borrower of its
capital stock after the First Restatement Date (whether for cash, property or
securities or pursuant to any other transaction).

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(i) Consolidated Cash Flow for the 12-month period then ended; to (ii)
Consolidated Interest Expense for such period plus the U.S. Dollar amount of
the scheduled reductions in Debt of Borrower or its Subsidiaries due to third
Persons during such period (excluding any scheduled reduction in the principal
of the Total Credit Facility through the First Restatement Date), to be less
than two to one (2.0:1.0).

(d) Working Capital Ratio. Borrower shall not permit, on
the final day of any calendar month, its Working Capital Ratio to be less than
one and three-tenths to one (1.3 to 1.0).

(e) EBITDA Ratio. Borrower shall not permit, on the
final day of any of its fiscal quarters, the ratio of (i) Consolidated Debt on
such date to (ii) EBITDA for the 12-month period then ended, to exceed two and
four- tenths to one (2.4 to 1.0).

7.7 Restriction on Fundamental Changes. Borrower shall not, and
shall not permit any Subsidiary (other than an Inactive Subsidiary) to, change
the nature of its business, enter into any merger, consolidation,
reorganization or recapitalization or reclassify its capital stock or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial part
of its business, property, or assets, whether now owned or hereafter acquired,
or acquire by purchase or otherwise all or substantially all the business,
property of, assets of, or stock or other evidence of beneficial ownership of,
any Person, except:

(a) Any Subsidiary of Borrower may be merged or
consolidated with or into Borrower or any of its other Subsidiaries, or be
liquidated, wound up, or dissolved, or all or substantially all of its
business, property or assets may be conveyed, sold, assigned, leased,
transferred, or otherwise disposed of, in one transaction or a series of
transactions, to Borrower or any of its other Subsidiaries other than an
Inactive Subsidiary; provided, however, that in the case of such a merger or
consolidation to which Borrower, any Canadian Obligor, any Subsidiary Guarantor
or any other Subsidiary whose stock or other equity interests have been pledged
as Collateral is a party, Borrower, such Canadian Obligor, such Subsidiary
Guarantor or such other Subsidiary shall be the continuing or surviving
corporation and the surviving corporation shall take all steps reasonably
necessary or desirable to continue the perfection of Agent's Liens, for the
benefit of Banks and Issuing Banks, and Canadian Bank's Liens, on any
Collateral affected by such merger or consolidation;

(b) Borrower and its Subsidiaries may make any Investment
permitted under Section 7.3;

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(d) With the prior written consent of Majority Banks,
Borrower may issue preferred stock in an amount and containing such terms and
conditions (including dividend rate and redemption features) acceptable in the
discretion of the Majority Banks.

7.8 Sales and Lease-Backs. Borrower shall not, and shall not
permit any of its Subsidiaries to, become or remain liable, directly or
indirectly, as lessee or as guarantor or other surety with respect to any
Operating Lease of any property (whether real, personal, or mixed real and
personal) whether now owned or hereafter acquired: (a) which Borrower or any of
its Subsidiaries has sold or transferred or is to sell or transfer to any other
Person, or (b) which Borrower or any of its Subsidiaries intends to use for
substantially the same purpose as any other property which has been or is to be
sold or transferred by Borrower or any such Subsidiary to any Person in
connection with such lease, unless such sale or transfer is permitted pursuant
to Section 7.9, without aggregation.

7.9 Sale of Assets.

(a) Except as permitted by Section 7.7(a), Borrower shall
not, and shall not permit any of its Subsidiaries to, sell, assign, transfer,
convey, or otherwise dispose of its or their assets, whether now owned or
hereafter acquired, except for:

(i) the sale or other disposition by Borrower or
any of its Subsidiaries of properties or assets in the ordinary and
usual course of business;

(ii) the sale or other disposition of any of the
properties, businesses, or assets of Borrower or its Subsidiaries,
outside of the ordinary and usual course of business, for not less
than the fair valuation thereof; provided, however, that Borrower
shall pay to Agent one hundred percent (100%) of the Net Cash Proceeds
in excess of U.S.$10,000,000 in the aggregate, arising from such sales
or other dispositions during any fiscal year of Borrower to reduce the
Loans in accordance with, and subject to the limitations of, Section
2.15; and
(iii) the sale or other disposition to any of
Borrower's Subsidiaries of any of the properties, businesses, or
assets of Borrower or any of its Subsidiaries in accordance with the
terms and conditions of Section 7.3(g).

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(b) At the time of any sale or other disposition under
Section 7.9(a)(ii), above, Borrower shall deliver to Agent a certificate, duly
executed by a Responsible Officer of Borrower, setting forth in detail the
determination of the Net Cash Proceeds of such sale or other disposition, and
such other information as is necessary to demonstrate compliance with
Section 2.15.

7.10 Transactions with Shareholders and Affiliates. Except as
permitted hereunder or as set forth in the Disclosure Statement, Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction (including the purchase, sale,
lease, or exchange of any property or the rendering of any service) with any
holder of five percent (5%) or more of any class of equity securities of
Borrower or with any Affiliate of Borrower on terms that are less favorable to
Borrower or any of its Subsidiaries, as the case may be, than those terms which
might be obtained at the time from Persons who are not such a holder or
Affiliate, or if such transaction is not one in which terms could be obtained
from such other Person, on terms that are not negotiated in good faith on an
arm's length basis.

7.11 Disposal of Subsidiary Debt or Securities. Except as
permitted hereunder, Borrower shall not:

(a) directly or indirectly sell, assign, pledge,
transfer, or otherwise encumber or dispose of or forgive any Debt of or claim
against or any shares or other securities of (or warrants, rights, or options
to acquire shares or other equity interests of) any of its Subsidiaries;
provided, however, that Borrower may (i) forgive any Debt of or claim against
any wholly-owned Subsidiary whose stock or other equity interests are pledged
as Collateral in accordance herewith and (ii) dispose of its interest in the
stock or other equity interests of Inactive Subsidiaries for fair value; or

(b) permit any of its Subsidiaries directly or indirectly
to sell, assign, pledge, transfer or otherwise encumber or dispose of or
forgive any Debt of or claim against Borrower or any of Borrower's Subsidiaries
or any share or other securities (or warrants, rights or options to acquire
shares or other equity interests) of Borrower's Subsidiaries or of any other
such Subsidiary; provided, however, that such Subsidiaries may (i) forgive any
Debt of or claim against Borrower or any of its Subsidiaries whose stock or
other equity interests are pledged as Collateral in accordance herewith, and
(ii) dispose of its interest in the stock or other equity interests of Inactive
Subsidiaries for fair value.

7.12 Conduct of Business. Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any business other

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than the businesses in which they are engaged as of the Second Restatement
Date, or any businesses or activities substantially similar or related or
incidental thereto, or if such Subsidiaries became Subsidiaries after the
Second Restatement Date, the businesses or activities in which they were
engaged as of the date they became Subsidiaries of Borrower and any businesses
or activities substantially similar or related or incidental thereto.

7.13 Amendments or Waivers of Certain Documents. Borrower will
not agree to any amendment to, or waive any of its rights with respect to, the
terms and provisions regarding interest rates, principal or interest payment
amounts, total principal amounts or similar terms and provisions of the Debt,
and related indentures or agreements, referred to in Section 7.1(j), if any, or
any amendments or waivers with respect to any of the foregoing, without in each
case obtaining the prior written consent of the Majority Banks to such
amendment or waiver; provided, however, that no such consent shall be required
with respect to any amendment thereof to conform such agreements to the terms
of this Agreement.

7.14 Prepayment of Debt. Borrower shall not, and shall not
permit any of its Subsidiaries to, (i) prepay or repay any Debt that is
subordinate to the Debt evidenced by the Notes and this Agreement or any
Contingent Obligation; (ii) enter into or modify any agreement in a way which
would be materially adverse to the interests of Banks or as a result of which
the terms of payment of any Debt are accelerated; or (iii) amend the terms of
any intercompany note pledged as Collateral hereunder, so as to permit any such
amendment to become effective prior to the physical attachment of such
amendment to such intercompany note in the possession of Agent, except that:

(a) Borrower and its Subsidiaries may prepay or repay any
such subordinate Debt to the extent of regularly scheduled payments and any
mandatory prepayments, or any Contingent Obligation to the extent that it
ceases to be contingent and is matured, and then only to the extent that each
is obligated therefor; and

(b) Borrower's Subsidiaries may repay or prepay Debt owed
to Borrower or any Subsidiary Guarantor.

7.15 Use of Proceeds.

(a) Borrower shall use the proceeds of the A Loans and B
Loans made hereunder solely:

(i) for Borrower's general corporate purposes;

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(ii) to make loans to its Subsidiaries: (A) for such
Subsidiary's general corporate purposes other than acquisitions; and
(B) for acquisitions to be made by such Subsidiary so long as such
acquisitions are in compliance with the terms and conditions of
Section 7.3(d);

(iii) for Standby Letters of Credit required by Borrower or
its Subsidiaries in the ordinary course of their respective
businesses; and

(iv) to make and maintain an Investment, other than loans to
its Subsidiaries to the extent permitted in clause (ii) of this
Section 7.15(a), permitted in accordance with Section 7.3.

(b) Canadian Obligors shall use the proceeds of the C Loans
made hereunder solely:

(i) for Canadian Obligors' general corporate purposes;

(ii) to make loans to their respective Subsidiaries: (A) for
such Subsidiary's general corporate purposes other than acquisitions;
and (B) for acquisitions to be made by such Subsidiary so long as
such acquisitions are in compliance with the terms and conditions of
Section 7.3(d);

(iii) for Standby Letters of Credit required by Canadian
Obligors or their respective Subsidiaries in the ordinary course of
business; and

(iv) to make and maintain an Investment, other than loans to
their respective Subsidiaries to the extent permitted in clause (ii)
of Section 7.15(b), permitted in accordance with Section 7.3.

7.16 ERISA. Borrower shall not, and shall not permit any of its
ERISA Affiliates to,

(a) engage in any transaction which it knows or should
reasonably know could subject it or any of its ERISA Affiliates to either a
civil penalty assessed pursuant to Section 502(i) and (l) of ERISA or a tax
imposed by Section 4975 of the Code or any penalty, tax, or other form of
financial obligation under the laws of any foreign country, which would have a
material adverse effect on the properties, business, operations or condition
(financial or otherwise) of Borrower and its Subsidiaries, taken as a whole;

(b) permit the aggregate present value of all benefit
liabilities on a termination basis (as defined in Section

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4001(a)(16) of ERISA and determined on the basis of assumptions prescribed by
the PBGC under Section 4044 of ERISA) under all Pension Plans (excluding
unfunded deferred compensation agreements, welfare plans, or other arrangements
of similar nature not subject to the funding requirements of ERISA) that have
assets less than such benefits (irrespective of whether vested) to exceed the
current fair market value of the assets of such Pension Plans allocable to such
benefits by an aggregate amount of more than the greater of (i) U.S.$500,000 or
(ii) five percent (5%) of Consolidated Net Worth;

(c) fail to make any payments to any Multiemployer Plan
that Borrower or any of its ERISA Affiliates may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto
which would have a material adverse effect on the properties, business,
operations or condition (financial or otherwise) Borrower and its Subsidiaries,
taken as a whole;

(d) voluntarily terminate or permit to be terminated any
one or more of their Pension Plans, if such termination would result in the
imposition of liens on Borrower or any of its ERISA Affiliates under Section
4068 of ERISA or the applicable laws of any foreign country, in an amount which
when aggregated with all such prior liens imposed from previous Pension Plan
terminations (voluntary or involuntary) would materially affect the ability of
Borrower or any of its Subsidiaries to comply at any time with any of the
provisions of this Agreement;

(e) fail to make required contributions to any Pension
Plan subject to Section 412(n) of the Code that with the passage of time
reasonably could result in a lien upon the assets of Borrower or any of its
ERISA Affiliates which would have a material adverse effect on the properties,
business, operations or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole;

(f) adopt an amendment to any Pension Plan where the
amount of the security required to be provided to such Pension Plan under
Section 401(a)(29) of the Code is in excess of U.S.$500,000; or

(g) cause, suffer, or permit the unfunded present value
of all liabilities for post-retirement medical benefits, unfunded deferred
compensation arrangements, plant closing benefits, and Multiemployer Plan
withdrawal liability, in the aggregate for Borrower and all ERISA Affiliates,
to exceed the greater of (i) U.S.$500,000 or (ii) five percent (5%) of
Consolidated Net Worth.

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7.17 Partnerships. Neither Borrower nor any of its Subsidiaries
shall be or become a general or limited partner in any partnership or a joint
venture in any joint venture except:

(a) revenue sharing arrangements entered into in the
ordinary course of business, consistent with past practices; or

(b) Borrower's Subsidiaries may enter into or be a party
to Joint Ventures so long as: (i) Borrower shall give Agent prompt written
notice of such Subsidiary's entrance into such Joint Venture; (ii) neither
Borrower nor its Subsidiaries shall loan, advance or make capital contributions
to such Joint Ventures in excess of U.S.$20,000,000 in the aggregate at any
time outstanding, less any other Debt incurred or outstanding as described in
the last paragraph of Section 7.1; (iii) if such Subsidiary is a Subsidiary
Guarantor, its stock or other equity interest in such Joint Venture is pledged
to Agent, on behalf of Banks, pursuant to the Subsidiary Pledge Agreement; and
(iv) no Event of Default or Unmatured Event of Default shall have occurred and
be continuing hereunder nor shall result from such Subsidiary's entry into such
Joint Venture.

7.18 Restrictive Agreements. Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into or be a party to any agreement
which restricts the ability of such Subsidiary to make payments to Borrower by
way of dividends, advances, reimbursements, or otherwise, other than this
Agreement.

7.19 Margin Regulation. Borrower shall not, and shall not permit
any of its Subsidiaries to, make any Investment which might cause the
Borrowings hereunder to violate Regulations G, T, U, or X of the Federal
Reserve Board or any other regulations of such board or to violate the Exchange
Act. No portion of the proceeds of any of the Loans shall be used by Borrower
in any manner which might cause the Borrowing, the application of such
proceeds, or the transactions contemplated by this Agreement to violate
Regulations G, T, U, or X of the Federal Reserve Board or any other regulation
of such board or to violate the Exchange Act.

If, notwithstanding Borrower's, Banks', and Agent's intent to comply with
Regulation U of the Federal Reserve Board (and Regulations G and T of the
Federal Reserve Board, to the extent applicable), the transactions contemplated
by this Agreement would violate Regulation U of the Federal Reserve Board (or
Regulation G or T of the Federal Reserve Board, to the extent applicable),
then, without any further action by the parties hereto, the following Sections
of this Agreement shall be amended as set forth below and such amendments shall
be deemed to have been effective as of the Second Restatement Date:

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(a) The word "and" shall be added at the end of Section
7.2(o), and a new Section 7.2(p) inserted as follows:

"(p) Borrower may grant Liens on or with respect
to any of its property or assets consisting of Margin
Stock;";

(b) The last sentence of Section 7.2 shall be deleted and
the following new sentence added in lieu thereof:

The items described in clauses (a) through (p)
of this Section 7.2 are collectively referred to herein
as the "Permitted Liens."; and

(c) Section 7.9(a) shall be amended by deleting the period
at the end of such Section and adding "; and" and a new Section 7.9(a)(iv)
thereto as follows:

"(iv) the sale or other disposition by Borrower
of any of its properties or assets consisting of
Margin Stock."

7.20 Concentration of Assets. Borrower shall not, and shall not
permit any of its Subsidiaries to, allow the book value of the consolidated
assets of the Borrower and its Subsidiaries (other than Intangible Assets)
located or held in any country other than the United States, Canada or Great
Britain to exceed fifteen percent (15%) of the total book value of all such
consolidated assets (other than Intangible Assets).

ARTICLE VIII

EVENTS OF DEFAULT

8.1 Events of Default. The occurrence of any one or more of
the following events, acts, or occurrences shall constitute an event of default
(an "Event of Default") hereunder:

8.1.1 Failure to Make Payments When Due.

(a) Borrower or any Canadian Obligor shall
fail to pay any amount owing by it hereunder or under any of the Notes with
respect to the principal of any Loans when such amount is due, whether at
stated maturity, as a result of a mandatory prepayment requirement, or
otherwise; or Borrower or any Canadian Obligor shall fail to pay any of its
Reimbursement Obligations within three (3) days of the date when due; or

(b) Borrower or any Canadian Obligor shall
fail to pay, within five (5) days of the date when due, any amount owing by it
hereunder or under any of the Notes with respect to

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interest on any of the Loans or any Reimbursement Obligation or with respect to
the Fees or any other amounts other than principal (including, fees, costs, and
expenses payable to Agent) payable in connection herewith when such amount is
due; or

8.1.2 Default in Other Agreements.

(a) Borrower or any of its Subsidiaries other
than an Inactive Subsidiary shall default (as principal or guarantor or other
surety) in the payment when due (subject to any applicable notice or grace
period), whether at stated maturity or otherwise, of any monetary obligation on
(howsoever designated) any Debt, whether such indebtedness now exists or shall
hereafter be created; provided, however, that no default under this clause (a)
shall occur or result from a default in the payment of any monetary obligation
on any Debt of, or Debt guaranteed by Borrower, or any of its wholly-owned
Subsidiaries, which, when added to the amount of all other such Debt in
default, does not exceed U.S.$1,000,000 and no default under this clause (a)
shall occur or result from a default in the payment of any monetary obligation
on and Debt of, or Debt guaranteed by, any partially-owned Subsidiary of
Borrower, which when added to the amount of all other such Debt in default,
does not exceed U.S.$5,000,000; or

(b) An event of default, as defined in any
agreement, mortgage, indenture, interest rate swap agreement, instrument, or
other agreement relating thereto under which there may be issued, or by which
there may be secured or evidenced, any Debt of, or Debt guaranteed by,
Borrower, or any of its Subsidiaries other than an Inactive Subsidiary, whether
such Debt now exists or shall hereafter be created, shall occur and such Debt
is declared due and payable prior to its stated maturity or due date; provided,
however, that no default under this clause (b) shall occur or result from a
default in any Debt of, or Debt guaranteed by, Borrower or any of its
wholly-owned Subsidiaries, which, when added to the amount of all other such
Debt in default, does not exceed $1,000,000 and no default under this clause
(b) shall occur or result from a default in any Debt of, or Debt guaranteed by,
any partially-owned Subsidiary of Borrower which, when added to the amount of
all other such Debt in default, does not exceed $5,000,000; or

8.1.3 Breach of Certain Covenants. Borrower, or any of its
Subsidiaries, shall fail to perform or comply with any covenant, term, or
condition contained in Section 6.2(e) or Article VII of this Agreement and
(except in the case of Sections 6.2(e) and 7.6) such default shall not have
been remedied within ten (10) U.S. Business Days after receipt of notice from
Agent of such default; or

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8.1.4 Breach of Warranty. Any financial statement,
representation, warranty, or certification made or furnished by Borrower or any
of its Subsidiaries under this Agreement or in any statement, document, letter,
or other writing or instrument furnished or delivered to any Bank or to Agent
pursuant to or in connection with this Agreement or as an inducement to Agent
or any Bank to enter into this Agreement contains as of the date thereof any
untrue statement of a material fact or omits to state a material fact (known to
Borrower, or its Subsidiaries, in the case of any document not furnished by
them) necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, effective, or
reaffirmed, not misleading; or

8.1.5 Other Defaults Under Agreement.

(a) Borrower, or any of its Subsidiaries,
shall default in the performance of or compliance with any term contained in
this Agreement other than (i) those referred to above in Sections 8.1.1, 8.1.3
and 8.1.4, and (ii) those set forth in Sections 6.2(a), (b), (c) or (e), 6.5,
6.6, 6.7, 6.11 or 7.6 and such default shall not have been remedied or waived
within ten (10) U.S. Business Days after receipt of notice from Agent of such
default; or

(b) Borrower, or any of its Subsidiaries,
shall default in the performance of or compliance with any term contained in
Sections 6.2(a), (b), (c), 6.5, 6.6, or 6.11 and such default shall not have
been remedied or waived within five (5) U.S. Business Days after receipt of
notice from Agent of such default; or

8.1.6 Default Under Collateral Documents. Borrower, any of
the Canadian Obligors or any of the Subsidiary Guarantors shall fail to observe
or perform any term, covenant, condition, agreement, or obligation to be
observed or performed by it or them as applicable, under the Collateral
Documents, to the extent that each is a party thereto, and (a) such failure
arises out of the granting by Borrower, any of the Canadian Obligors or any of
the Subsidiary Guarantors, of a Lien with respect to any of the Collateral, in
favor of any Person, except for Permitted Liens; or (b) such failure arises out
of any other act or failure to act of Borrower, any of the Canadian Obligors or
any of the Subsidiary Guarantors, which act adversely affects the Liens granted
in favor of Banks by Borrower, or the Subsidiary Guarantors; provided, however,
that the failure to comply with any further assurance provisions contained in
the Collateral Documents shall, per se, be deemed to materially adversely
affect such Liens; or (c) such failure arises other than under circumstances
set forth in clauses (a) and (b) above and continues for ten (10) U.S. Business
Days after notice of such failure from Agent; or (d) such failure arises other
than under

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circumstances set forth in clauses (a) and (b) above and continues for fifteen
(15) U.S. Business Days after Agent is notified of such failure by Borrower or
its Subsidiary; or

8.1.7 Inability to Pay Debts. Borrower or any of its
Subsidiaries other than an Inactive Subsidiary shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or

8.1.8 Involuntary Bankruptcy; Appointment of Receiver, etc.

(a) If an involuntary case seeking the
liquidation or reorganization of Borrower, or any of its Subsidiaries other
than an Inactive Subsidiary, under Chapter 7 or Chapter 11, respectively, of
the federal Bankruptcy Code or any similar proceeding shall be commenced
against Borrower, or any of its Subsidiaries other than an Inactive Subsidiary,
under any other applicable law, including without limitation the Bankruptcy and
Insolvency Act (Canada) and the Companies' Creditors Arrangement Act (Canada),
and any of the following events occur: (i) Borrower, or any of its Subsidiaries
other than an Inactive Subsidiary, as applicable, consents to the institution
of the involuntary case; (ii) the petition commencing the involuntary case is
not timely controverted; (iii) the petition commencing the involuntary case is
not dismissed within sixty (60) days of its filing; provided, however, that,
during the pendency of such period, Banks shall be relieved of the Total
Commitment; (iv) an interim trustee is appointed to take possession of all or a
substantial portion of the property or to operate all or any substantial
portion of the business of Borrower, or any of its Subsidiaries other than an
Inactive Subsidiary; or (v) an order for relief shall have been issued or
entered therein; or

(b) A decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, custodian, trustee, or other officer having similar powers over
Borrower, or any of its Subsidiaries other than an Inactive Subsidiary, to take
possession of all or a substantial portion of the property or to operate all or
a substantial portion of the business of Borrower, or any of its Subsidiaries
other than an Inactive Subsidiary, shall have been entered and, within sixty
(60) days from the date of entry, is not vacated, discharged, or bonded
against, or any similar relief shall be granted against Borrower, or any of its
Subsidiaries other than an Inactive Subsidiary, under any applicable federal or
state law and, within sixty (60) days from the date of entry, is not vacated,
discharged, or bonded against; provided, however, that, during the pendency of
such period, Banks shall be relieved of the Total Commitment; or

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8.1.9 Voluntary Bankruptcy; Appointment of Receiver, etc.
Borrower, or any of its Subsidiaries other than an Inactive Subsidiary, shall
institute a voluntary case seeking liquidation or reorganization under Chapter
7 or Chapter 11, respectively, of the federal Bankruptcy Code; or Borrower, or
any of its Subsidiaries other than an Inactive Subsidiary, shall file a
petition, answer, or complaint, or notice thereof, including without limitation
a notice of intention under the Bankruptcy and Insolvency Act (Canada), or
shall otherwise institute any similar proceeding under any other applicable
federal, state, provincial or municipal law, including without limitation the
Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement
Act (Canada), or shall consent thereto; or Borrower, or any of its Subsidiaries
other than an Inactive Subsidiary, shall consent to the conversion of an
involuntary case to a voluntary case; or Borrower, or any of its Subsidiaries
other than an Inactive Subsidiary, shall consent or acquiesce to the
appointment of a receiver, liquidator, sequestrator, custodian, trustee, or
other officer with similar powers to take possession of all or a substantial
portion of the property or to operate all or a substantial portion of the
business of Borrower, or any of its Subsidiaries other than an Inactive
Subsidiary; or Borrower, or any of its Subsidiaries other than an Inactive
Subsidiary, shall make a general assignment for the benefit of creditors; or
the board of directors of Borrower, or any of its Subsidiaries other than an
Inactive Subsidiary (or any committee thereof), adopts any resolution or
otherwise authorizes action to approve any of the foregoing; or

8.1.10 Judgments and Attachments.

(a) Borrower, or any of its Subsidiaries other
than an Inactive Subsidiary, shall suffer any money judgment(s), writ(s), or
warrant(s) of attachment, or similar process(es) involving payment of money in
an amount in excess of U.S.$1,000,000, which such amount in excess of
U.S.$1,000,000 is not fully covered by insurance, and shall not discharge,
vacate, bond, or stay the same within a period of sixty (60) days or, in any
event, within ten (10) days of the date of any proposed sale thereunder; or

(b) A judgment creditor shall obtain
possession of any material portion of the properties or assets of Borrower, and
its Subsidiaries other than an Inactive Subsidiary, taken as a whole, by any
means, including levy, distrait, replevin, or self-help; or

8.1.11 Dissolution. Any order, judgment, or decree shall be
entered decreeing the dissolution or division of Borrower, or any of its
Subsidiaries other than an Inactive Subsidiary, and such order shall remain
undischarged or unstayed for a period in excess of sixty (60) days; or

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8.1.12 ERISA Liabilities.

(a) Any Reportable Event (or similar
occurrence under the applicable laws of a foreign country) occurs which can
reasonably be expected to result in a liability by Borrower, or any of its
ERISA Affiliates, to the PBGC (or foreign regulatory authority), which would
reasonably be expected to have a material adverse effect on the properties,
business, operations or condition (financial or otherwise) of Borrower and its
Subsidiaries, taken as a whole, and which Majority Banks determine, in good
faith, constitutes grounds for the termination of any Pension Plan by the PBGC
(or foreign regulatory authority) or for the appointment of a trustee to
administer any Pension Plan; or

(b) Any Pension Plan maintained by Borrower,
or any of its ERISA Affiliates, shall be terminated or a trustee appointed by
an appropriate United States district court, or pursuant to the applicable law
of a foreign country, to administer any Pension Plan, or the PBGC shall
institute proceedings to terminate any Pension Plan or to appoint a trustee to
administer any Pension Plan if, as of the date thereof, Borrower's, or any of
its ERISA Affiliates', liability or the aggregate liability of Borrower and its
ERISA Affiliates for unfunded benefit liabilities (calculated under assumptions
prescribed by the PBGC under ERISA Section 4044) under all such Pension Plans
exceeds the then current fair market value of assets accumulated in such
Pension Plans by more than the greater of (i) U.S.$500,000 or (ii) five percent
(5%) of Consolidated Net Worth (or in the case of a termination involving
Borrower, or any of its ERISA Affiliates as a Substantial Employer (within the
meaning of ERISA), the withdrawing employer's proportionate share of such
excess shall exceed such amount); or

(c) Failure to make full payment (including
all required installments) when due of all amounts which, under the provisions
of any Pension Plan, Multiemployer Plan, agreement relating thereto, or
applicable law, Borrower, or any of its ERISA Affiliates, is required to pay as
contributions thereto, which failure would have a material adverse effect on
the properties, business, operations or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole; or

(d) Borrower, or any of its ERISA Affiliates,
creates any accumulated funding deficiency as defined by ERISA, irrespective of
whether waived, with respect to any Pension Plan, which would have a material
adverse effect on the properties, business, operations or condition (financial
or otherwise) of Borrower and its Subsidiaries, taken as a whole; or

(e) Borrower, or any of its ERISA Affiliates,
as an employer under a Multiemployer Plan, shall have made a

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complete or partial withdrawal from such Multiemployer Plan and the plan
sponsor of such Multiemployer Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability in an annual
amount exceeding U.S.$500,000 or, at any time, the then aggregate annual amount
of all such withdrawal liabilities for Borrower and its ERISA Affiliates
together exceeds U.S.$500,000; or

(f) Any Lien on the properties or assets of
Borrower, or any of its Subsidiaries, shall arise under ERISA or the Code and
shall exceed U.S.$500,000; or

(g) The present value of the unfunded
liability for all post-retirement medical benefits, unfunded deferred
compensation arrangements, and plant closing benefits, in the aggregate, for
Borrower and all of its ERISA Affiliates, taken as a whole, exceeds the greater
of (i) U.S.$500,000 or (ii) five percent (5%) of Consolidated Net Worth.

8.1.13 Termination of Collateral Documents. Any of the
Collateral Documents shall cease to be in full force and effect for any reason
other than: (a) any act or omission of Agent necessary for the perfection of
Liens in favor of Agent, on behalf of Banks; or (b) a release or termination
thereof upon the full payment and satisfaction of the Debt due hereunder and
under the Notes to Banks; or (c) upon the written consent of the Majority
Banks;

8.1.14 Change in Control. A Change in Control shall occur.

8.2 Remedies. Upon the occurrence of an Event of Default:

(a) If such Event of Default arises under Sections 8.1.7,
8.1.8 or 8.1.9, then the unpaid principal amount of and any accrued interest on
the Loans shall automatically become immediately due and payable, without
presentment, demand, protest, notice of dishonor, notice of intent to
accelerate, notice of acceleration, or other requirements of any kind, all of
which are hereby expressly waived by Borrower and each Canadian Obligor, and
the obligation of any Bank to make any further Loan hereunder and the
obligation of any Issuing Bank to issue any Letter of Credit hereunder, shall
thereupon terminate and, in addition, Borrower and Canadian Obligors shall
forthwith deposit with Agent with respect to each Letter of Credit then
outstanding, cash or cash equivalents, to be held by Agent for the benefit of
the appropriate Issuing Bank and Banks as security for, and to provide for the
payment of, Borrower's and Canadian Obligors' obligations under such Letters of
Credit; and

(b) In the case of any other Event of Default, the
Majority Banks may request Agent to, and Agent shall thereupon,

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by written notice to Borrower, declare all of the Loans to be and the same
shall forthwith become, due and payable, together with any and all accrued
interest thereon, without presentment, demand, protest, notice of dishonor,
notice of intent to accelerate, notice of acceleration, or any other
requirements of any kind, all of which are hereby expressly waived by Borrower,
and the obligation of Banks to make any further Loan hereunder and the
obligation of any Issuing Bank to issue any Letter of Credit hereunder, shall
thereupon terminate and, in addition, Majority Banks may request Agent to, and
Agent shall thereupon, by written notice to Borrower, demand that Borrower and
Canadian Obligors deposit with Agent and Borrower forthwith upon such demand
shall deposit, or cause to be deposited, with Agent with respect to each Letter
of Credit then outstanding, cash or cash equivalents, to be held by Agent for
the benefit of each Issuing Bank and Banks as security for, and to provide for
the payment of, Borrower's and Canadian Obligors' obligations under such
Letters of Credit.

Notwithstanding the foregoing, if, at any time after acceleration of
the maturity of any Note, Borrower shall pay all arrears of interest and all
payments on account of principal which shall have become due other than by
acceleration (with interest on principal at the rate specified herein) and all
Events of Default and Unmatured Events of Default (other than nonpayment of
principal and accrued interest under the Notes, due and payable solely by
virtue of acceleration) have been remedied or waived pursuant to Section 12.1,
then the Majority Banks, by written notice to Borrower, may rescind and annul
the acceleration and its consequences; provided, however, that such action
shall not affect any subsequent Event of Default or Unmatured Event of Default
or impair any right consequent thereon.

Upon acceleration, Agent, upon the request of the Majority Banks (and,
with respect to the Canadian Pledge Agreement, upon the request of Canadian
Bank), without notice to or demand upon Borrower or Canadian Obligors, or any
of them, which notice is expressly waived by Borrower and Canadian Obligors,
may proceed, to protect, exercise, and enforce the rights and remedies
hereunder and under the Notes or the other Loan Documents and any other rights
and remedies as are provided by law or equity. The Majority Banks may
determine, in their sole discretion, the order and manner in which Banks'
rights and remedies are to be exercised, other than rights and remedies arising
solely under the Canadian Pledge Agreement, and all payments received by Agent
or Banks in respect thereof, or any one or more of them, shall be applied as
follows (regardless of how each Bank may treat the payments for the purpose of
its own accounting): first, to all costs and expenses (including, reasonable
attorneys' fees, costs of maintaining, preserving or disposing of any of the
Collateral, and costs of settlement) incurred by Agent, or Banks, or any of

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them, in enforcing any Debt of, or in collecting any payments due from,
Borrower or any Canadian Obligor hereunder or under the Notes or under the
other Loan Documents by reason of such Event of Default; second, to all Fees
due and owing to Banks and Agent (in the case of Commitment Fees, pro rata
among the aggregate of such outstanding Fees in respect of the A Commitment, B
Commitment and the Equivalent Amount in U.S. Dollars, as of the date of receipt
of payment by Agent, of the C Commitment, and, in the case of Letter of Credit
Fees, pro rata among the aggregate of outstanding U.S. Letters of Credit and
the Equivalent Amount in U.S. Dollars, as of the date of receipt of payment by
Agent, of the Canadian Letters of Credit); third, to accrued interest on the
Loans (pro rata among the aggregate of such outstanding interest in respect of
the A Loans, B Loans and the Equivalent Amount in U.S. Dollars, as of the date
of receipt of payment by Agent, of the C Loans); fourth, to principal amounts
outstanding with respect to the Loans (pro rata among the aggregate of such
outstanding principal in respect of the A Loans, B Loans and the Equivalent
Amount in U.S. Dollars, as of the date of receipt of payment by Agent, of the C
Loans); fifth, to Contingent Obligations of Borrower and Canadian Obligors with
respect to outstanding Letters of Credit (pro rata among the aggregate of such
outstanding Contingent Obligations in respect of U.S. Letters of Credit and the
Equivalent Amount in U.S. Dollars, as of the date of receipt of payment by
Agent, of the Canadian Letters of Credit) to the extent that they are not fully
collateralized by cash or cash equivalents; and sixth, to other Debt of
Borrower or any Canadian Obligor then due and owing to Agent, or Banks, or any
of them. Canadian Bank may determine, in its sole discretion, the order and
manner in which its rights and remedies arising solely under the Canadian
Pledge Agreement are to be exercised, and all payments received by Agent or
Canadian Bank in respect thereof shall be applied as determined by Canadian
Bank.

Borrower and Canadian Obligors recognize that in the event Borrower or
any Canadian Obligor fails to pay, perform, observe, or discharge any or all of
the obligations under this Agreement or any of the Loan Documents, any remedy
at law may prove to be inadequate relief to Agent, Issuing Banks, and Banks.
Borrower and Canadian Obligors therefore agree that Agent, Issuing Banks, and
Banks, if Agent, Issuing Banks, or Banks so request, shall be entitled to
temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.

ARTICLE IX

THE AGENT AND THE BANKS

9.1 Appointment and Powers of Agent. Each Bank hereby
irrevocably designates and appoints Agent as its agent hereunder and hereby
authorizes Agent to execute and deliver or accept, on

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behalf of each Bank, the Collateral Documents and any other Loan Documents and
to take such action on its behalf and to exercise such rights, remedies,
powers, and privileges hereunder as are specifically authorized to be exercised
by Agent by the terms hereof or thereof, together with such rights, remedies,
powers, and privileges as are reasonably incidental thereto. Agent may execute
any of its respective duties as agent hereunder by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of such counsel concerning all matters pertaining to the agencies
hereby created and its duties hereunder, and Agent shall not be liable for any
action taken or omitted to be taken in accordance with the advice of counsel
selected by it.

Except as required by the specific terms of this Agreement, Agent shall
have no duty to exercise any right, power, remedy, or privilege granted to it
hereby, or to ascertain whether any Event of Default or Unmatured Event of
Default has occurred and is continuing or otherwise to inquire into the
performance or observance on the part of Borrower or any Canadian Obligor of
any term, covenant, condition, or agreement on its part to be performed or
observed, or to take any affirmative action hereunder, unless requested or
directed to do so by the Majority Banks or all Banks, as provided herein, and
shall not, without the prior approval of the Majority Banks or all Banks, as
provided herein, consent to any departure by Borrower or any Canadian Obligor
from the terms hereof, waive any default on the part of Borrower or any
Canadian Obligor hereunder or amend, modify, supplement, or terminate, or agree
to any surrender of, this Agreement, the Notes, or any other Loan Documents.

Agent and Co-Agent have and shall have the same rights and powers under
this Agreement, the Notes, and any other Loan Documents with respect to their
pro rata shares of the A Commitment and A Loans hereunder as each other U.S.
Bank and may exercise the same as though they were not the agent and the
co-agent; and the terms "Bank" or "Banks" include Wells Fargo, or any successor
agent, and First Interstate in their respective individual capacities
hereunder, even if there are no other Banks which are party hereto. Agent and
Co-Agent and their respective Affiliates may accept deposits from, lend money
to, and generally engage in any kind of business with Borrower or any of its
Subsidiaries or Affiliates, as applicable, as if they were not the agent and
the co-agent hereunder and without any duty to account therefor to Banks.

Neither Agent, Co-Agent, nor any of their respective directors,
officers, agents, or employees shall be liable for any action taken or omitted
to be taken by them hereunder or in connection herewith, except for their own
gross negligence or willful misconduct; nor shall Agent or Co-Agent be
responsible to any Person for the representations, warranties, or other

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statements made by any other Person or for the due execution or delivery,
validity, effectiveness, genuineness, value, sufficiency, or enforceability
against Borrower, or any of its Subsidiaries, of this Agreement, the Notes, or
any other Loan Documents.

Each Bank hereby agrees, in the ratio that such Bank's pro rata share
of the Total Commitment bears to the Total Commitment, to indemnify and hold
Agent and Co-Agent harmless, as agent or co-agent hereunder, from and against
any and all losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, damages, costs, and expenses (including reasonable
attorneys' fees and expenses) incurred or suffered by Agent or Co-Agent in such
capacity as a result of any action taken or omitted to be taken by Agent or
Co-Agent in such capacity, or otherwise incurred or suffered by, made upon, or
assessed against Agent or Co-Agent in such capacity (whether or not the
negligence of Agent or Co-Agent was the sole or contributing cause in respect
thereof); provided, however, that no Bank shall be liable for any portion of
any such losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, damages, costs, or expenses resulting from or
attributable to gross negligence or willful misconduct on the part of Agent,
Co-Agent or their respective directors, officers, agents or employees. Without
limiting the generality of the foregoing, each Bank hereby agrees, in the ratio
aforesaid, to reimburse Agent promptly following its demand for any
out-of-pocket expenses (including reasonable attorneys' fees and expenses)
incurred by Agent hereunder and not reimbursed to Agent by Borrower. Each
Bank's obligations under this paragraph shall survive the termination of this
Agreement and the discharge of Borrower's obligations hereunder.

9.2 Nature of Duties; Independent Credit Investigation.
Neither Agent nor Co-Agent shall have any duties or responsibilities, except
those expressly set forth in this Agreement. The duties of Agent shall be
mechanical and administrative in nature; Agent and Co-Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Bank; and
nothing in this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon Agent any obligations in respect of this Agreement
except as expressly set forth herein. Each Bank expressly acknowledges: (a)
that each of Agent and Co-Agent has not made any representations or warranties
to it and that no act by Agent or Co-Agent hereafter taken, including any
review of the affairs of Borrower, shall be deemed to constitute any
representation or warranty by Agent or Co-Agent to any Bank; (b) that it has
made and will make its own independent investigation of the financial condition
and affairs, and its own appraisal of the creditworthiness, of Borrower and
Canadian Obligors in connection with this Agreement; and (c) that Agent and
Co-Agent shall have no duty or responsibility, either

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initially or on a continuing basis, to provide any Bank with any credit or
other information except as provided herein, whether coming into its possession
before the making of any Loans hereunder or at any time or times thereafter.

9.3 Actions in Discretion of Agent; Instructions from Banks.
Agent agrees, upon the written request of the Majority Banks, to take any
action of the type specified as being within Agent's rights, powers, or
discretion herein. In the absence of a request by the Majority Banks, Agent
shall have authority, in its sole discretion, to take or not to take any such
action, unless this Agreement specifically requires the consent of the Majority
Banks or all Banks. Any action taken or failure to act pursuant to such
instructions or discretion shall be binding on all Banks and on all holders of
Notes. Agent shall not in any event be required to take or refrain from taking
any action which would, in Agent's opinion, expose Agent to liability not
specifically indemnified against pursuant to Section 9.1 hereof, be
inconsistent with Agent's practice in similar situations when acting solely for
its own account, or be contrary to the provisions of any Loan Document or to
applicable law. No Bank shall have any right of action whatsoever against
Agent as a result of Agent acting or refraining from acting hereunder in
accordance with the instructions of the Majority Banks or all Banks, as
applicable, or in the absence of such instructions, in the absolute discretion
of Agent, subject to the provisions of Section 9.1.

9.4 Exculpatory Provisions. Each of Agent and Co-Agent shall
be under no obligation to any Bank to ascertain the existence or possible
existence of any Event of Default or Unmatured Event of Default. Agent shall
not be deemed to have knowledge of the occurrence of an Event of Default or
Unmatured Event of Default unless a required payment by Borrower to Agent has
not been made or unless Agent has received notice from a Bank or Borrower and
stating that such notice is a "Notice of Default." In the event that such a
payment default occurs or that Agent receives such a notice of the occurrence
of an Event of Default or Unmatured Event of Default, Agent shall give prompt
notice thereof to Banks. Agent shall (subject to Section 12.1) take such
action with respect to such Event of Default or Unmatured Event of Default as
shall be directed by the Majority Banks, provided that, unless and until Agent
shall have received such directions, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Event of Default or Unmatured Event of Default as it shall deem advisable and
in the best interests of Banks.

9.5 Reliance by Agent. Agent shall be entitled to rely upon
any communication, instrument, paper, writing, telegram, telex or teletype
message, resolution, notice, consent, certificate, letter, cablegram,
statement, order, other document,

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conversation by telephone, or otherwise, believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons.
Agent shall be fully justified in failing or refusing to take any action
hereunder unless it shall first be indemnified to its satisfaction by Banks (in
the ratio provided in Section 9.1) against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
actions.

9.6 Excess Payments. If while an Event of Default shall have
occurred and be continuing any Bank or other holder of a Note shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
offset or otherwise) on account of principal or interest on any Note or payment
of Commitment Fees or Letter of Credit Fees in excess of its pro rata share (as
determined in accordance with Section 8.2(b)) of payments and other recoveries
obtained by all Banks or holders of Notes, such Bank or other holder shall
purchase from the other Banks or holders such participations in the Notes or
Note held by them as shall be necessary to cause such purchasing Bank or holder
to share the excess payment or other recovery ratably (as so determined) with
each other Bank or holder (computed using the Equivalent Amount in U.S. Dollars
as of the date of payment or other recovery of all amounts received or
outstanding in Canadian Dollars); provided, however, that if all or any portion
of the excess payment or other recovery is thereafter recovered from such
purchasing Bank or holder, the purchase shall be rescinded and the purchase
price restored to such Bank or other holder to the extent of such recovery, but
without interest. Borrower agrees that any Bank or holder so purchasing a
participation from another Bank or holder pursuant to this Section 9.6 may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including setoff) with respect to such participation as fully as if such Bank
or holder were the direct creditor of Borrower in the amount of such
participation.

9.7 Obligations Separate. The obligations of each Bank under
this Agreement are separate, and neither any Bank nor Agent or Co-Agent shall
be responsible for the obligation or commitment of any other Person under this
Agreement, nor will the failure of any Bank to perform any of its obligations
hereunder relieve Agent or any other Bank from the performance of its
respective obligations hereunder. Nothing contained in this Agreement, and no
action taken by Banks, Agent or Co-Agent pursuant to this Agreement, the Notes
or any of the other Loan Documents or in connection herewith or therewith shall
be deemed to constitute Banks, together or with Agent or Co-Agent, a
partnership, association, joint venture, or other entity.

9.8 Resignation by Agent. Agent may resign its agency at any
time by giving at least thirty (30) days prior written notice of its intention
to do so to each Bank and to Borrower. Such

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resignation shall become effective upon the earlier of: (a) the appointment by
the Majority Banks of a successor Agent (which successor Agent shall be a Bank)
or (b) the effective date set forth in Agent's notice of resignation; provided,
however, that unless an Event of Default has occurred and is continuing,
Agent's resignation shall not become effective prior to the appointment by the
Majority Banks of a successor Agent. After any resigning Agent's resignation
hereunder as Agent, the provisions of this Article IX shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Agent hereunder. Upon such appointment, the term "Agent" shall for all
purposes of this Agreement thereafter mean such successor.

ARTICLE X

BANKS' REPRESENTATIONS

10.1 Investment Representation. Each Bank hereby represents
that it will acquire its Note or Notes for its own account for investment and
not with a view to the public distribution of such Note or Notes; provided,
however, that the disposition of the Note or Notes held by such Bank shall at
all times be within such Bank's exclusive control subject to Section 10.2. Each
Bank's acquisition of its Note or Notes shall constitute its reaffirmation of
the foregoing representation as of the date of such acquisition.

10.2 Participation in Notes; Compliance with Law.
Notwithstanding the provisions of Section 10.1, each Bank shall have the right
at any time to do either or both of the following: (a) furnish one or more
purchasers or potential purchasers of all or any portion of the Loans or the
Notes or of a participation interest therein with any and all information
concerning Borrower or its Subsidiaries which has been supplied by Borrower to
Agent or any Bank subject to any such purchaser agreeing to comply with the
provisions of Section 10.3; or (b) to sell, assign, syndicate, transfer, or
negotiate all or any portion of such Bank's interests in the Loans or the Notes
or to sell, assign, transfer, or grant participations in all or any portion of
such Bank's interests in the Loans or the Notes in accordance with the terms
and conditions of Section 12.5. To the extent that after the Second
Restatement Date other financial institutions express an interest in being a
"Bank" hereunder, Borrower, Canadian Obligors and Agent agree to execute such
amendments or new documentation (including new Notes and a new Exhibit C-1 or
Exhibit C-2) to reflect and join such financial institutions as parties hereto
and to reflect properly their pro rata benefits and obligations hereunder.

10.3 Confidentiality. Each Bank agrees that material,
non-public information regarding Borrower, its operations, assets,

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and existing and contemplated business plans shall be treated by such Bank in a
confidential manner, and shall not be disclosed by it to Persons who are not
parties to this Agreement, except: (a) to counsel for and other advisors,
accountants and auditors to such Bank; (b) to any regulatory authority having
jurisdiction over such Bank; (c) as may be required by statute, decision or
judicial or administrative order, rule or regulation; (d) as may be agreed to
in advance by Borrower; (e) as to any such information which is or becomes
generally available; and (f) in connection with any assignment, prospective
assignment, sale, prospective sale, participation or prospective participation
of a Bank's interests hereunder.

10.4 Release of Liens. From and after the First Restatement
Date, Wells Fargo shall, upon Borrower's request and at Borrower's expense, (a)
deliver to Borrower any documents or instruments evidencing any collateral
required under the Amended and Restated Credit Agreement, dated as of January
15, 1991, between Borrower on the one hand and financial institutions signatory
thereto and Wells Fargo, as agent, on the other hand, and not required under
the First Restatement or this Agreement and (b) execute and deliver to Borrower
such agreements, documents and instruments as Borrower may reasonably request
to evidence or effect the release of Liens in favor of Wells Fargo in such
collateral, including all mortgages and deeds of trust executed and delivered
by Borrower or any of its Subsidiaries in connection with the Original Credit
Agreement.

ARTICLE XI

EXPENSES AND INDEMNITIES

11.1 Expenses. Irrespective of whether the transactions
contemplated hereby shall be consummated, Borrower agrees to pay on demand: (a)
all the actual and reasonable out-of-pocket costs and expenses of preparation
of this Agreement, the Notes and all other Loan Documents; (b) the cost of
delivering the Notes to Banks pursuant to the provisions of this Agreement; (c)
the reasonable fees, expenses, and disbursements of counsel to Agent (including
in- house counsel to Agent) in connection with the negotiation, preparation,
printing, reproduction, execution, delivery, and administration of this
Agreement, the Notes, the Letters of Credit, and all other Loan Documents, and
any amendments and waivers hereto or thereto; (d) the reasonable fees,
expenses, and disbursements of counsel to Canadian Bank (including in-house
counsel to Canadian Bank) in connection with the negotiation and preparation of
this Agreement, the Notes and all other Loan Documents (e) filing, recording,
publication, search, and title fees paid or incurred by or on behalf of Agent
or Banks in connection with the transactions contemplated by this Agreement,
the Notes, and all other Loan Documents; (e) the reasonable costs and expenses
incurred by Agent, on behalf of

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Banks, in connection with audits, inspections, and appraisals contemplated by
this Agreement, the Notes, the all other Loan Documents; (f) all other
reasonable costs and expenses incurred by Agent and each Issuing Bank in
connection with the Letters of Credit, other than customary issuance,
maintenance and other administrative (but not enforcement) costs included in
the Letter of Credit Fee; (g) all other actual and reasonable out-of-pocket
expenses incurred by Banks in connection with the negotiation, preparation, and
execution of this Agreement, the Notes, all other Loan Documents, and the
making of the Loans hereunder; and (h) all costs and expenses (including
reasonable fees and disbursements of counsel (including allocated costs of
in-house counsel of Agent and Banks) and costs of settlement) incurred by Agent
or Banks in enforcing this Agreement, the Notes, and all other Loan Documents
or collecting any Debt of Borrower.

11.2 Indemnity. To the extent permitted by applicable law, in
addition to the payment of expenses pursuant to Section 11.1, and irrespective
of whether the transactions contemplated hereby shall be consummated, Borrower
agrees to indemnify, exonerate, pay, and hold Banks, Agent, Co-Agent, each
Issuing Bank and any holder of any interest in the Notes, and the officers,
directors, employees, and agents of Banks, Agent, Co-Agent, each Issuing Bank
and such holders (collectively the "Indemnitees" and individually an
"Indemnitee") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, causes of action, judgments, suits,
claims, costs, expenses, and disbursements of any kind or nature whatsoever
(including reasonable fees and disbursements of counsel (including allocated
costs of in-house counsel to Agent, Co-Agent and Banks) for such Indemnitees in
connection with any investigative, administrative, or judicial proceeding,
irrespective of whether such Indemnitee shall be designated a party thereto),
which may be imposed on, incurred by, or asserted against such Indemnitee in
any manner relating to or arising out of any of the Total Commitment, the use
or intended use of the proceeds of the Loans, the issuance of Letters of
Credit, the consummation of the transactions contemplated by this Agreement, or
the merger of Total into a wholly-owned Subsidiary of Borrower on August 12,
1994, or any of the other transactions contemplated thereby, or any acquisition
or disposition or proposed acquisition or disposition (whether or not
consummated) of any Person, business or other operating unit whether or not any
proceeds of any Loans are applied or proposed to be applied thereto, directly
or indirectly, by Borrower or any of its Subsidiaries (WHETHER OR NOT THE
NEGLIGENCE OF SUCH INDEMNITEE WAS THE SOLE OR CONTRIBUTING CAUSE IN RESPECT
THEREOF) (the "Indemnified Liabilities"); provided, however, that Borrower
shall have no obligation hereunder with respect to an Indemnitee for any
Indemnified Liabilities proximately caused by the gross negligence or willful
misconduct of such Indemnitee. Each Indemnitee will promptly notify Borrower
of each event of which

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it has knowledge which may give rise to a claim under the indemnification
provisions of this Section 11.2; provided however, that if an Indemnitee fails
to give notice Borrower shall be entitled to offset any incremental losses
incurred by Borrower as a result of such failure against amounts otherwise
payable under this Section 11.2. If any investigative, judicial or
administrative proceeding arising from any of the foregoing is brought against
any Indemnitee indemnified or intended to be indemnified pursuant to this
Section 11.2, Borrower will resist and defend such action, suit, or proceeding
or cause the same to be resisted and defended by counsel designated by Borrower
(which counsel shall be reasonably satisfactory to the Indemnitee or intended
Indemnitee). Each Indemnitee will use its best efforts to cooperate in the
defense of any such action, suit, or proceeding. To the extent that the
undertaking to indemnify, pay, and hold harmless set forth above may be
unenforceable because it is violative of any law or public policy, Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. The
obligations of Borrower under this Section 11.2 shall survive the termination
of this Agreement and the discharge of Borrower's other obligations hereunder.

ARTICLE XII

MISCELLANEOUS

12.1 Waivers; Modifications in Writing. No failure or delay on
the part of Agent, any Bank, any Issuing Bank or any holder of any Note in
exercising any right, power, or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power, or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power, or remedy. The remedies provided for under this Agreement,
in the Notes, and in the other Loan Documents, are cumulative and are not
exclusive of any remedies that may be available to Agent, any Bank or any
Issuing Bank at law, in equity, or otherwise. No amendment, modification,
supplement, termination, consent, or waiver of or to any provision of this
Agreement, the Notes, or any other Loan Document, nor consent to any departure
therefrom, nor release of any obligor or Collateral thereunder, shall in any
event be effective unless the same shall be in writing and signed by or on
behalf of the Majority Banks; provided, however, that no such amendment,
modification, supplement, termination, waiver, or consent, as the case may be,
which has the effect of: (a) reducing the rate or amount or extending the
stated maturity or due date of any sum payable by Borrower or any Canadian
Obligor, to any Bank hereunder or under the Notes (other than the Agency Fee,
which shall only require the consent of Agent); or (b) increasing the amount,
or extending the stated expiration or termination date, of each Bank's

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commitment hereunder; or (c) changing this Section 12.1 or Section 12.5 or the
definitions of the terms "A Commitment," "B Commitment," "C Commitment," "Total
Commitment," "Event of Default," or "Majority Banks," shall be effective unless
the same shall be signed by or on behalf of all of Banks; provided further,
however, that no such amendment, modification, supplement, termination, waiver,
or consent, as the case may be, which has the effect of: (a) increasing the
duties or obligations of Agent hereunder; (b) increasing the standard of care
or performance required on the part of Agent hereunder; (c) releasing any of
the Collateral, other than in accordance with the other provisions hereof; or
(d) reducing or eliminating the indemnities or immunities to which Agent is
entitled hereunder (including, any amendment or modification of this Section
12.1), shall be effective unless the same shall be signed by or on behalf of
Agent; provided, further, however, that Exhibit C-2 may be amended as provided
in Section 2.13. Any waiver of any provision of this Agreement, the Notes, or
the other Loan Documents, and any consent to any departure by Borrower or any
Canadian Obligor from the terms of any provisions of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on Borrower or any Canadian Obligor, in any case
shall entitle Borrower or any Canadian Obligor, to any other or further notice
or demand in similar or other circumstances. Any amendment, modification,
termination, waiver, or consent effected in accordance with this Section 12.1
shall be binding upon each holder of any Note, each future holder of any Note,
Borrower and each Canadian Obligor.

12.2 Failure or Delay. No failure or delay on the part of
Banks, Agent, or any holder of any Note in the exercise of any power, right, or
privilege under this Agreement, the Notes, or the other Loan Documents, shall
impair such power, right, or privilege or shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right, or privilege
preclude other or further exercise of any other power, right, or privilege.

12.3 Notices, etc. Except to the extent provided in Sections
2.9 or 2.10, all notices, demands, instructions, and other communications
required or permitted to be given to or made upon any party hereto shall be in
writing and (except for financial statements and other related informational
documents to be furnished pursuant hereto which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by registered or
certified mail, postage prepaid, return receipt requested, or by telecopy, or
telegram (with messenger delivery specified) and shall be deemed to be given
for purposes of this Agreement on the day that such writing is received by the
intended recipient thereof. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing

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provisions of this Section 12.3, notices, demands, instructions, and other
communications in writing shall be given to or made upon the respective parties
hereto at their respective addresses (or to their respective telecopier
numbers) indicated on Exhibit M attached hereto.

12.4 Confirmations. Borrower, Canadian Obligors and each holder
of a Note agree that, upon written request received from time to time by one
from another, each will confirm to one another in writing (with a copy of each
such confirmation sent to Agent) the aggregate unpaid principal amount of the
Loans then outstanding under any Note. Each holder of a Note agrees that, upon
written request received from time to time by it from Borrower, to make any
Note held by it (including the schedule attached thereto) available for
reasonable inspection by Borrower at the office of such holder.

12.5 Benefit of Agreement.

(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto; provided, however, that neither Borrower nor any Canadian
Obligor may assign or transfer any interest hereunder without the prior written
consent of Banks and, provided further, however, that, although any Bank may
grant participations in its rights hereunder, (i) such Bank shall remain a
"Bank" for all purposes hereunder and the participant shall not constitute a
"Bank" hereunder, (ii) any such grant of a participation shall not require
Borrower to file a registration statement with the SEC or qualify the Loans or
Notes under the blue sky laws of any State, (iii) such Bank, together with its
Affiliates, shall continue at all times to hold beneficial interests in Loans
and the Total Commitment having an aggregate principal amount of not less than
an amount equal to: (y) twenty percent (20%) (or such lesser percentage as may
be approved by Borrower and Agent) multiplied by (z) that Bank's original pro
rata share of the Total Commitment, and (iv) no Bank shall grant any
participation (other than to an Affiliate of such Bank) under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement except to the extent such amendment or waiver would (aa) change the
final maturity date of the Loans hereunder in which such participant is
participating; (bb) reduce the interest rate applicable to Loans hereunder in
which such participant is participating; or (cc) release all or substantially
all of the Collateral or guarantees (except as expressly provided in the
operative documents) supporting the Loans hereunder in which such participant
is participating. In the case of any such participation, the participant shall
not have any rights under this Agreement or any of the other documents entered
into in connection herewith (the participant's rights against such Bank in
respect of such participation to be those set forth in the agreement executed
by such Bank in favor

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of the participant relating thereto) and all amounts
payable to any Bank hereunder shall be determined as if such Bank had not sold
such participation.

(b) Notwithstanding the foregoing, any Bank may assign a
portion of its rights and obligations hereunder to (i) one or more Banks or
(ii) with the prior written consent of Borrower and Agent (which consent will
not be unreasonably withheld), to one or more commercial banks, insurance
companies, savings and loan associations, savings banks or other financial
institutions each of which assignees shall become a party to this Agreement as
a "Bank" by execution of an Assignment and Assumption Agreement executed by
such assignee, such transferor Bank, and Agent (and, in the case of an assignee
that is not then a Bank, by Borrower also); provided, however, that (x) the
parties to each such Assignment and Assumption Agreement shall deliver to Agent
a processing fee of U.S.$3,000, (y) at such time Exhibit C-1 or Exhibit C-2, as
applicable, shall be modified to reflect the pro rata share of the A Commitment
of such new Bank and of the existing Banks, if appropriate, and (z) if any such
institution becomes a Bank while Loans or any portion of the Total Commitment
are outstanding hereunder, new Notes will be issued to such new Bank and to the
assigning Bank in conformity with the requirements of Article II to the extent
needed to reflect their revised pro rata share of the A Commitment, B
Commitment or C Commitment, as appropriate, and, if applicable, Loans. To the
extent of any assignment pursuant to this Section 12.5, the assigning Bank
shall be relieved of its obligations hereunder with respect to its assigned
portion of the Total Commitment.

12.6 Availability of Funds. Unless Agent shall have been notified
by a Bank prior to the date upon which any A Loan or B Loan is to be made that
such Bank does not intend to make available to Agent such Bank's portion of
such A Loan or B Loan, Agent may assume that such Bank has made or will make
such proceeds available to Agent on such date and Agent may, in reliance upon
such assumption (but shall not be required to), make available to Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to Agent by such Bank, Agent shall be entitled to recover such amount
on demand from such Bank (or, if such Bank fails to pay such amount forthwith
upon such demand, from Borrower), together with interest thereon, in respect of
each day during the period commencing on the date such amount was made
available to Borrower, and ending on the date Agent recovers such amount, at a
rate, per annum, equal to the Federal Funds Rate (or in the case of payment by
Borrower, the U.S. Basic Rate). The provisions of this Section 12.6 are solely
for the benefit of Banks and Issuing Banks and their assigns and are not
intended to benefit Borrower, its successors and assigns, or any other Person.

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12.7 Judgment.

(a) If for the purpose of obtaining judgment in any court
it is necessary to convert a sum due hereunder in one currency into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be the Exchange Rate as
of the date of such judgment.

(b) The obligation of Borrower, any Canadian Obligor or
any Subsidiary Guarantor in respect of any sum due to any Bank or Agent
hereunder shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than that in which such sum is denominated in accordance with
the applicable provisions of this Agreement (the "Agreement Currency"), be
discharged only to the extent that on the U.S. Business Day or Canadian
Business Day, as the case may be, following receipt by such Bank or Agent, as
the case may be, of any sum adjudged to be so due in the Judgment Currency such
Bank or Agent, as the case may be, may in accordance with normal banking
procedures purchase the Agreement Currency with the Judgment Currency; if the
amount of the Agreement Currency so purchased is less than the sum originally
due to such Bank or Agent, as the case may be, in the Agreement Currency,
Borrower, such Canadian Obligor or such Subsidiary Guarantor, as the case may
be, agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify such Bank or Agent, as the case may be, against such loss, and if the
amount of the Agreement Currency so purchased exceeds the sum originally due to
any Bank or Agent, as the case may be, such Bank or Agent, as the case may be,
agrees to remit to Borrower, such Canadian Obligor or such Subsidiary
Guarantor, as the case may be, such excess.

12.8 Headings. Article and Section headings used in this Agreement
and the table of contents preceding this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement for any
purpose or affect the construction of this Agreement.

12.9 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.

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12.10 Governing Law and Venue.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF
AMERICA.

(b) The Borrower and each Canadian Obligor hereby
expressly and irrevocably agree and consent that any suit, action or proceeding
arising out of or relating to this Agreement, the Notes, the other Loan
Documents or the transactions contemplated herein or therein may be instituted
by Agent or any Bank in any State or Federal court sitting in the County of
Dallas, State of Texas, United States of America and, by the execution and
delivery of this Agreement, Borrower and each Canadian Obligor expressly waive
any objection that any of them may have now or hereafter to the laying of the
venue or to the jurisdiction of any such suit, action or proceeding, and
irrevocably submits generally and unconditionally to the jurisdiction of any
such court in any such suit, action or proceeding. BORROWER AND EACH CANADIAN
OBLIGOR HEREBY WAIVE ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING
BROUGHT BEFORE THE COURTS REFERRED TO IN THIS SECTION 12.10 ON THE BASIS FORUM
NON CONVENIENS.

(c) Borrower agrees that service of process may be made
on Borrower by personal service of a copy of the summons and complaint or other
legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to the address of Borrower specified on
Exhibit M hereto, or by any other method of service provided for under the
applicable laws in effect in the State of Texas. Each Canadian Obligor hereby
irrevocably appoints Borrower, located at the address of Borrower specified on
Exhibit M, as its agent for service of process in the State of Texas and agrees
that service of process may be made on such Canadian Obligor by personal
service of a copy of the summons and complaint or other legal process in any
such suit, action or proceeding, or by registered or certified mail (postage
prepaid) to the addresses of such Canadian Obligor or Borrower specified in
Exhibit M hereto or by any other method of service provided for under the
applicable laws in effect in the State of Texas.

(d) Nothing contained in subsections (b) or (c) hereof
shall preclude Agent or any Bank from bringing any suit, action or proceeding
arising out of or relating to this Agreement, the Notes or any of the other
Loan Documents in the courts of any place where Borrower or Canadian Obligors
or any of their respective property or assets may be found or located. To the
extent permitted by the applicable laws of any such jurisdiction, Borrower and
Canadian Obligors hereby irrevocably submit to the jurisdiction of any such
court and expressly waive, in respect of any such suit, action or proceeding,
the jurisdiction of any other court or courts which now or hereafter, by reason
of their

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present or future domicile, or otherwise, may be available to them.

(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT, THE NOTES OR ANY OF THE
OTHER LOAN DOCUMENTS OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE
FOREGOING, BORROWER AND EACH CANADIAN OBLIGOR HEREBY AGREE, TO THE EXTENT
PERMITTED BY LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.

12.11 Severability of Provisions. Any provision of this Agreement
which is illegal, invalid, prohibited, or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
illegality, invalidity, prohibition, or unenforceability without invalidating
or impairing the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

12.12 Changes in Accounting Principles. If any changes in
accounting principles from those used in the preparation of the financial
statements referred to in this Agreement are hereafter occasioned by the
promulgation of rules, regulations, pronouncements, or opinions of or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or agencies with similar
functions), or there shall occur any change in Borrower's or any of its
Subsidiaries' fiscal or tax years and, as a result of any such changes, there
shall result in a change in the method of calculating any of the financial
covenants, negative covenants, standards, or other terms or conditions found in
this Agreement, then the parties hereto agree to enter into negotiations in
order to amend such provisions so as to equitably reflect such changes with the
desired result that the criteria for evaluating Borrower's financial condition
shall be the same after such changes as if such changes had not been made.

12.13 Survival of Agreements, Representations, and Warranties. All
agreements, representations, and warranties made herein shall survive the
execution and delivery of this Agreement, the making of the Loans and the
issuance of Letters of Credit hereunder, and the execution and delivery of the
Notes.

12.14 Set Off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Bank and each holder or transferee of
any Note or any Person with any interest in any Note (whether by way of
participation or otherwise) is hereby authorized by Borrower and each Canadian
Obligor at any time or from time to time, without notice to

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Borrower or any Canadian Obligor, or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other indebtedness at any time held or owing by that Bank, or that
subsequent holder to or for the credit or the account of Borrower or any
Canadian Obligor, or against and on account of the Debt of Borrower or any
Canadian Obligor, to that Bank, or that subsequent holder under this Agreement
and the Notes, including all claims of any nature or description arising out of
or connected with this Agreement or the Notes, irrespective of whether that
Bank or that subsequent holder shall have made any demand under this Agreement;
provided, however, that Banks agree, for their mutual benefit, to refrain from
exercising such rights unless authorized to do so by the Majority Banks.

12.15 Obligations Separate. The obligations of each Bank under this
Agreement are separate, and neither any Bank, Co-Agent nor Agent shall be
responsible for the obligation or commitment of any other Person under this
Agreement. Nothing contained in this Agreement, and no action taken by Banks
pursuant to this Agreement, the Notes or any of the other Loan Documents or in
connection herewith or therewith shall be deemed to constitute Banks, with
Borrower, to be a partnership, association, joint venture, or other entity.
The relationship between Borrower or any Canadian Obligor and each Bank, and
Borrower or any Canadian Obligor and each Issuing Bank, is solely that of
debtor and creditor, and neither Agent, Co-Agent, any Issuing Bank, nor any
Bank has any fiduciary or other special relationship with Borrower or any
Canadian Obligor, and no term or condition of any of the Loan Documents shall
be construed so as to deem the relationship between Borrower or any Canadian
Obligor and any Bank, or Borrower or any Canadian Obligor and any Issuing Bank,
to be other than that of debtor and creditor.

12.16 Publicity. Except for disclosures required to be made under
the Federal Securities laws, any applicable state securities laws or any
applicable rules of the New York Stock Exchange, any publicity release,
advertisement, filing, public statement, or announcement made by or at the
request of Borrower, or any of its Subsidiaries, or Affiliates regarding this
Agreement or the financing provided under this Agreement which makes reference
to Agent, Co-Agent or Banks, or any Bank, or describes the financing provided
by Banks, shall be first reviewed by and must be satisfactory to Agent;
provided, however, that Agent and Banks acknowledge and agree that Borrower or
any of its Subsidiaries may be legally obligated to disclose such information
irrespective of Agent's and Banks' failure to approve such filing, public
statement, or announcement.

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12.17 FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT, THE NOTES AND
THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" FOR THE PURPOSES OF
SECTION 26.02(A) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE
FINAL AGREEMENT BETWEEN 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.

12.18 Limitation of Liability. None of Agent, Co-Agent, any Issuing
Bank, any Bank, or any Affiliate, officer, director, employee, attorney, or
agent thereof (collectively, the "Bank Related Parties," and each, a "Bank
Related Party") shall have any liability with respect to, and Borrower and each
Canadian Obligor hereby waive, release, and agree not to sue any of them upon,
any claim for any special, indirect, incidental, or consequential damages
suffered or incurred by Borrower or any Canadian Obligor in connection with,
arising out of, or in any way related to, this Agreement, the Notes or any of
the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents.

[SIGNATURES ON NEXT PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first hereinabove set forth.

ENTERRA CORPORATION,
a Delaware corporation

By: ______________________________
Title: _______________________

ENTERRA CANADA LIMITED, an Alberta
corporation

By: ______________________________
Title: _______________________

CHERCO-BARBER LTD., an Alberta
corporation

By: ______________________________
Title: _______________________

WELLS FARGO BANK, N.A.,
a national banking association, in
its individual capacity and as
Agent

By: ______________________________
Title: _______________________

FIRST INTERSTATE BANK OF TEXAS,
N.A., a national banking
association, in its individual
capacity and as Co-Agent

By: ______________________________
Title: _______________________

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<PAGE> 138

BANK ONE, TEXAS, N.A., a national
banking association

By: ______________________________
Title: _______________________

TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national
banking association

By: ______________________________
Title: _______________________

BANK OF MONTREAL

By: ______________________________
Title: _______________________

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT

<ARTICLE> 5
<CIK> 0000353181
<NAME> ENTERRA CORPORATION
<MULTIPLIER> 1,000

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