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[CANADIAN CREDIT AGREEMENT]
 

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CREDIT AGREEMENT
 
dated as of July 28, 2006
 
among
 
STORM CAT ENERGY CORPORATION,
 
THE LENDERS PARTY HERETO,
 
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH,
 
as Canadian Administrative Agent
 
and
 
JPMORGAN CHASE BANK, N.A.,
 
as Global Administrative Agent
 

 

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J.P. MORGAN SECURITIES INC.,
 
as Sole Book Manager and Lead Arranger
 

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TABLE OF CONTENTS
 

   
Page
 ARTICLE I
DEFINITIONS
Section 1.1
Defined Terms
1
Section 1.2
Classification of Loans and Borrowings
14
Section 1.3
Terms Generally
14
Section 1.4
U.S. Credit Agreement Definitions
14
     
 ARTICLE II
 THE CREDITS
Section 2.1
Commitments
15
Section 2.2
Loans and Borrowings
15
Section 2.3
Requests for Borrowings
16
Section 2.4
Letters of Credit
16
Section 2.5
Funding of Borrowings
20
Section 2.6
Interest Elections
21
Section 2.7
Global Borrowing Base
22
Section 2.8
Termination and Reduction of Commitments
23
Section 2.9
Repayment of Loans; Evidence of Debt
23
Section 2.10
Prepayment of Loans
24
Section 2.11
Fees
27
Section 2.12
Interest
28
Section 2.13
Alternate Rate of Interest
29
Section 2.14
Illegality
30
Section 2.15
Increased Costs
30
Section 2.16
Break Funding Payments
31
Section 2.17
Taxes
32
Section 2.18
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
33
Section 2.19
Mitigation Obligations; Replacement of Lenders
35
Section 2.20
Currency Conversion and Currency Indemnity
36
Section 2.21
Bankers’ Acceptances
37
     
 ARTICLE III 
REPRESENTATIONS AND WARRANTIES
Section 3.1
Organization; Powers
42
Section 3.2
Authorization; Enforceability
42
Section 3.3
Approvals; No Conflicts
42
Section 3.4
Properties
43
Section 3.5
Compliance with Laws and Agreements
43
Section 3.6
Unfunded Pension Liabilities
43
Section 3.7
Disclosure
43
Section 3.8
Priority; Security Matters
43
Section 3.9
Solvency
43
Section 3.10
Representations and Warranties in U.S. Credit Agreement
44

 
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 ARTICLE IV
 CONDITIONS
Section 4.1
Effectiveness
44
Section 4.2
Initial Loan
44
Section 4.3
Each Credit Event
46
     
 ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1
Compliance Certificate; Notices and Other Information
47
Section 5.2
Notice of Default
48
Section 5.3
Existence; Conduct of Business
48
Section 5.4
Casualty and Condemnation
48
Section 5.5
Books and Records; Inspection Rights
48
Section 5.6
Compliance with Laws
48
Section 5.7
Use of Proceeds and Letters of Credit
49
Section 5.8
Additional Subsidiaries
49
Section 5.9
Further Assurances
49
Section 5.10
Covenants in U.S. Credit Agreement
50
     
 ARTICLE VI
[NOT USED]
     
 ARTICLE VII
NEGATIVE COVENANTS
Section 7.1
Transactions with Affiliates
50
Section 7.2
Restrictive Agreements
50
Section 7.3
No Action to Affect Security Documents
51
     
 ARTICLE VIII
EVENTS OF DEFAULT
Section 8.1
Listing of Events of Default
51
Section 8.2
Action if Bankruptcy
53
Section 8.3
Action if Other Event of Default
53
     
 ARTICLE IX
AGENTS
     
 ARTICLE X
MISCELLANEOUS
Section 10.1
Notices
56
Section 10.2
Waivers; Amendments
58
Section 10.3
Expenses; Indemnity; Damage Waiver
59
Section 10.4
Successors and Assigns
61
Section 10.5
Survival
63
Section 10.6
Counterparts; Effectiveness
63
Section 10.7
Severability
64
Section 10.8
Right of Setoff
64

 
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Section 10.9
GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
64
Section 10.10
WAIVER OF JURY TRIAL
65
Section 10.11
Headings
65
Section 10.12
Confidentiality
65
Section 10.13
Interest Rate Limitation
66
Section 10.14
Collateral Matters; Hedging Agreements
67
Section 10.15
Arranger; Other Agents
67
Section 10.16
Intercreditor Agreement; Loan Documents
68
Section 10.17
NO ORAL AGREEMENTS
68

 
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LIST OF DEFINED TERMS
 

 
Page
$
14
Acceptance Date
1
Accepting Lender
1
Administrative Questionnaire
1
Agents
1
Agreed Currency
36
Agreement
1
Allocated Canadian Borrowing Base
1
Allocated U.S. Borrowing Base
2
Applicable Lending Office
2
Applicable Percentage
2
Applicable Rate
2
Arranger
2
Assignment and Assumption
2
Authorized Officer
3
Availability Period
3
BA Borrowing
14
BA Exposure
3
BA Loan
40
BA Maturity Date
3
BA Net Proceeds
3
Bankers’ Acceptance Liability
3
Bankers’ Acceptance Rate
3
Bankers’ Acceptance Request
38
Bankers’ Acceptances
4
Borrower
1
Borrowing
4
Borrowing Request
4
Business Day
4
C$
4
Canadian Administrative Agent
4
Canadian Borrowing Base Deficiency
4
Canadian Dollars
4
Canadian Lien Searches
4
Canadian Prime
5
Canadian Prime Borrowing
15
Canadian Prime Loan
15
Canadian Prime Rate
5
Casualty Event
5
Change in Control
5
Change in Law
5
Collateral
5
Combined Commitments
5
Combined Credit Agreements
6

 
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Combined Credit Exposure
6
Combined Lenders
6
Combined Loan Documents
6
Combined Loans
6
Combined Obligations
6
Commitment
6
Commitment Fee
27
Credit Exposure
6
Currency
7
DBNA
41
Debenture
7
Default
7
Dollars
14
Election Notice
25
Equivalent Amount
7
Eurodollar
7
Eurodollar Borrowing
14
Eurodollar Loan
14
Event of Default
52
Excluded Taxes
7
Facility Guaranty
7
Federal Funds Effective Rate
8
Fee Letter
8
Financing Transactions
8
Foreign Lender
8
Foreign Subsidiary
8
Global Administrative Agent
8
Global Borrowing Base
8
Global Borrowing Base Deficiency
8
Global Borrowing Base Utilization Percentage
8
Global Effective Date
8
Global Effectiveness Notice
9
Guarantor
9
Hedging Agreement
9
Hedging Obligations
9
Income Tax Act (Canada)
9
Indemnified Taxes
9
Indemnitee
60
Information
66
Initial Reserve Report
9
Intercreditor Agreement
9
Interest Election Request
9
Interest Payment Date
10
Interest Period
10
Issuing Bank
10
Judgment Currency
37

 
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LC Disbursement
10
LC Exposure
10
Lender Affiliate
11
Lenders
11
Letter of Credit
11
LIBO Rate
11
Loan Document
11
Loan Parties
11
Loans
11
Material Adverse Effect
12
Maturity Date
12
Net Proceeds
12
Note
12
Obligations
12
Other Currency
37
Participant
63
Pledge Agreement
12
Principal Amount
13
Principal Office
13
Register
63
Required Lenders
13
Restricted Subsidiary
13
Schedule I Lender
13
Security Documents
13
Stamping Fee
13
Subsidiary
13
Type
13
U.S. Base Rate
13
U.S. Borrower
14
U.S. Credit Agreement
14
U.S. Dollars
14
U.S. Lenders
14
U.S. Loan Documents
14
U.S. Obligations
14
U.S. Security Documents
14
U.S.$
14
Unutilized Commitment
13
USBR
14
USBR Borrowing
15
USBR Loan
14

 
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EXHIBITS AND SCHEDULES

EXHIBITS:
 
Exhibit A
 
Form of Compliance Certificate
Exhibit B
 
Form of Assignment and Assumption
Exhibit C-1
 
Form of Borrowing Request
Exhibit C-2
 
Form of Interest Election Request
Exhibit D
 
Form of Facility Guaranty
Exhibit E
 
Form of Pledge Agreement
Exhibit F
 
Power of Attorney Terms - Bankers’ Acceptances
Exhibit G
 
Form of Bankers’ Acceptance Request
Exhibit H
 
Calculation of Net Proceeds of Bankers’ Acceptances
Exhibit I
 
Details of Issue of Bankers’ Acceptance

 
SCHEDULE:
 
Schedule 2.1
Commitments

 
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CREDIT AGREEMENT
 
THIS CREDIT AGREEMENT, dated as of July 28, 2006, is among STORM CAT ENERGY
CORPORATION, a corporation amalgamated under the laws of British Columbia
(“Borrower”), the LENDERS party hereto, JPMORGAN CHASE BANK, N.A., TORONTO
BRANCH, as Canadian Administrative Agent, and JPMORGAN CHASE BANK, N.A., as
Global Administrative Agent.
 
WITNESSETH:
 
WHEREAS, Borrower has requested that the Lenders provide certain loans to and
extensions of credit on behalf of the Borrower; and
 
WHEREAS, the Lenders have agreed to make such loans and extensions of credit
subject to the terms and conditions of this Agreement.
 
NOW, THEREFORE, in consideration of the mutual promises herein contained and for
other valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
 
ARTICLE I
Definitions
 
SECTION 1.1 Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:
 
“Acceptance Date” means any date, which must be a Business Day, on which a
Bankers’ Acceptance is or is to be issued.
 
“Accepting Lender” means any Lender which has accepted a Bankers’ Acceptance
under this Agreement.
 
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Global Administrative Agent.
 
“Agents” means each of the Global Administrative Agent, the Canadian
Administrative Agent and any other agent appointed hereunder from time to time.
 
“Agreed Currency” is defined in Section 2.20(a).
 
“Agreement” means this Credit Agreement, as it may be amended, supplemented,
restated or otherwise modified and in effect from time to time.
 
“Allocated Canadian Borrowing Base” means from time to time the “Allocated
Canadian Borrowing Base” as determined in accordance with Section 2.7(d)(ii) of
the U.S. Credit Agreement.
 
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“Allocated U.S. Borrowing Base” means from time to time the “Allocated U.S.
Borrowing Base” as determined in accordance with Section 2.7(d)(i) of the U.S.
Credit Agreement.
 
“Applicable Lending Office” means, for each Lender and for each Type of Loan,
such office of such Lender (or of an Affiliate of such Lender) as such Lender
may from time to time specify in writing to the Global Administrative Agent, the
Canadian Administrative Agent and Borrower as the office by which its Loans of
such Type are to be made and/or issued and maintained.
 
“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitment. If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently set forth in the Register, giving effect to
any assignments made in accordance with Section 10.4 or any decreases in
Commitments made in accordance with this Agreement.
 
“Applicable Rate” means, for any day and with respect to any Eurodollar Loans,
any Canadian Prime Loans, any USBR Loans, any Bankers’ Acceptance or any
Commitment Fees payable hereunder, as the case may be, the applicable rate per
annum set forth below in the Global Borrowing Base Utilization Grid with respect
to “Eurodollar Loans,” “Canadian Prime Loans,” “USBR Loans,” “Bankers’
Acceptances Stamping Fee” or “Commitment Fee,” as the case may be, based on the
Global Borrowing Base Utilization Percentage then in effect on such date:
Global Borrowing Base Utilization Grid 
 
Global Borrowing Base Utilization Percentage
   
<50
%
 
≥50% <75
%
 
≥75% <90
%
 
≥90
%
Eurodollar Loans
   
1.250
%
 
1.500
%
 
1.750
%
 
2.000
%
Canadian Prime Loans
   
0
%
 
0
%
 
0.250
%
 
0.500
%
USBR Loans
   
0
%
 
0
%
 
0.250
%
 
0.500
%
Bankers’ Acceptance Stamping Fee
   
1.250
%
 
1.500
%
 
1.750
%
 
2.000
%
Commitment Fee
   
0.300
%
 
0.375
%
 
0.375
%
 
0.500
%

Each change in the Applicable Rate shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change.
 
“Arranger” means J.P. Morgan Securities Inc.
 
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 10.4), and accepted by the Global Administrative Agent and the
Canadian Administrative Agent, in substantially the form of Exhibit B or any
other form approved by the Global Administrative Agent and the Canadian
Administrative Agent.
 
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“Authorized Officer” means, with respect to Borrower, the Chief Executive
Officer, the President or the Chief Financial Officer of Borrower or any other
officer of Borrower specified as such to the Canadian Administrative Agent in
writing by any of the aforementioned officers of Borrower.
 
“Availability Period” means the period from and including the Global Effective
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
 
“BA Exposure” means, with respect to any Accepting Lender, the Principal Amount
of Bankers’ Acceptances and BA Loans to be paid by Borrower to the Canadian
Administrative Agent at the Principal Office, for which Borrower has not
reimbursed such Accepting Lender.
 
“BA Loan” is defined in Section 2.21(h) hereof.
 
“BA Maturity Date” means the date on which a Bankers’ Acceptance is payable.
 
“BA Net Proceeds” means, in respect of any Bankers’ Acceptance, the amount
determined as of the applicable Acceptance Date in accordance with the formula
set forth in Exhibit H, subject to deduction of the Stamping Fees applicable to
such Bankers’ Acceptance in accordance with Section 2.21(b).
 
“Bankers’ Acceptance Liability” means, with respect to any Bankers’ Acceptance,
the obligation of Borrower to pay to the Canadian Administrative Agent at the
Principal Office the Principal Amount of such Bankers’ Acceptance for which
Borrower has not reimbursed the Accepting Lender.
 
“Bankers’ Acceptance Rate” means:
 
(a) for a Lender which is a Schedule I Lender, the arithmetic average of the
rates for the Lenders that are Schedule I Lenders as quoted on Reuters Services
page CDOR as at 10:00 a.m. on the Acceptance Date for the appropriate term of
the requested Bankers’ Acceptance; and
 
(b) for a Lender which is not a Schedule I Lender, the arithmetic average of the
actual discount rates applicable to Bankers’ Acceptances accepted by the Lenders
that are not Schedule I Lenders as at 10:00 a.m. on the Acceptance Date for the
appropriate term of the requested Bankers’ Acceptance, but not to exceed the sum
of (i) Banker’s Acceptance Rate in paragraph (a) of this definition plus (ii) 10
basis points per annum.
 
“Bankers’ Acceptance Request” is defined in Section 2.21(b) and contains the
information set forth in Exhibit G.
 
“Bankers’ Acceptances” means bankers’ acceptances denominated in Canadian
Dollars in the form of either a depository bill, as defined in the Depository
Bills and Notes Act (Canada), or a blank non-interest bearing bill of exchange,
as defined in the Bills of Exchange Act (Canada), in either case issued by
Borrower and accepted by a Lender (and, if applicable, purchased by a Lender) at
the request of Borrower, such depository bill or bill of exchange to be
substantially in the standard form of such Lender.
 
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“Bankruptcy and Insolvency Act (Canada)” means, collectively, the Bankruptcy and
Insolvency Act (Canada) and the Companies’ Creditor Arrangement Act (Canada),
each as amended from time to time and any similar statute of Canada or any
province thereof.
 
“Borrower” is defined in the preamble.
 
“Borrowing” means Loans of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, BA Loans or Bankers’
Acceptances, as to which a single Interest Period is in effect.
 
“Borrowing Request” means a request by Borrower for a Borrowing in accordance
with Section 2.3, in substantially the form of Exhibit C-1 or any other form
approved by the Canadian Administrative Agent and the Global Administrative
Agent.
 
“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Dallas, Texas, New York, New York and Toronto, Canada
are authorized or required by law to remain closed; provided that, (a) when used
in connection with a Eurodollar Loan, the term “Business Day” shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market, (b) when used in connection with a Canadian Prime Loan,
BA Loan or Banker’s Acceptance, the term “Business Day” shall also exclude any
day on which commercial banks in Calgary, Canada and Toronto, Canada are
authorized or required by law to remain closed, and (c) when used in connection
with a USBR Loan, the term “Business Day” shall also exclude any day on which
commercial banks in Calgary, Canada, Toronto, Canada, Dallas, Texas and New
York, New York are authorized or required by law to remain closed.
 
“Canadian Administrative Agent” means JPMorgan Chase Bank, N.A., Toronto Branch,
in its capacity as Canadian administrative agent for the Lenders hereunder, and
any successor thereto.
 
“Canadian Borrowing Base Deficiency” means the amount by which (a) the aggregate
Credit Exposure of the Lenders exceeds (b) the then-current Allocated Canadian
Borrowing Base.
 
“Canadian Dollars” or “C$” refers to lawful money of Canada.
 
“Canadian Lien Searches” means central and local current financing statement
searches from each province in which any Collateral or a Borrowing Base Property
owned by Borrower or any Restricted Subsidiary of Borrower is located, and such
other jurisdictions as the Global Administrative Agent may request, covering
each Loan Party, together with copies of all financing statements listed in such
searches.
 
“Canadian Prime”, when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Canadian Prime Rate.
 
“Canadian Prime Rate” means the greater of (a) per annum floating rate of
interest established from time to time by the Canadian Administrative Agent as
the base rate the Canadian Administrative Agent will use to determine rates of
interest on Canadian Dollar loans to its customers in Canada and (b) the sum of
(i) the discount rate expressed as a rate of interest per annum payable by the
purchasers of thirty-day bankers’ acceptances, duly accepted by the Canadian
Administrative Agent, as established by the Canadian Administrative Agent and
(ii) 100 basis points. Without notice to Borrower or any other Person, the
Canadian Prime Rate shall change automatically from time to time as and in the
amount by which said prime rate shall fluctuate. The Canadian Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Canadian Administrative Agent may make
commercial loans and other loans at rates of interest at, above or below the
Canadian Prime Rate. For purposes of this Agreement, any change in any interest
rate due to a change in the Canadian Prime Rate shall be effective on the date
such change in the Canadian Prime Rate is announced.
 
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“Casualty Event” means any loss, casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar proceeding
of, any Collateral having a fair market value in excess of U.S. $500,000 (or its
equivalent in other currencies).
 
“Change in Control” means (a) the failure of Borrower to own or control,
directly or indirectly, 100% of the outstanding Equity Interests of any other
Loan Party, or (b) a “Change in Control” under the U.S. Credit Agreement.
 
“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or,
for purposes of Section 2.15(b), by any Applicable Lending Office of such Lender
or any Issuing Bank or by such Lender’s or any Issuing Bank’s holding company,
if any) with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the date of
this Agreement.
 
“Collateral” means any and all “Mortgaged Property” and “Collateral,” as defined
in all Security Documents.
 
“Combined Commitments” means, with respect to each Combined Lender, the
commitment of such Combined Lender to make Loans (or in the case of U.S.
Lenders, “Loans” (as defined in the U.S. Credit Agreement)), expressed as an
amount representing the maximum aggregate amount of such Combined Lender’s
Credit Exposure (or in the case of U.S. Lenders, “Credit Exposure” (as defined
in the U.S. Credit Agreement)) under the Combined Credit Agreements (with
amounts outstanding in Canadian Dollars being converted into an Equivalent
Amount (calculated by the Global Administrative Agent) of U.S. Dollars solely
for this purpose), as such commitment may be reduced or terminated from time to
time pursuant to the Combined Loan Documents. The amount of each Combined
Lender’s Commitment is set forth on Schedule 2.1 to the applicable Combined
Credit Agreement or in an Assignment and Assumption (as defined in this
Agreement and the U.S. Credit Agreement) pursuant to which such Combined Lender
shall have assumed its Combined Commitment, as applicable, subject to reduction
and termination from time to time pursuant to this Agreement and the U.S. Credit
Agreement. The initial aggregate amount of the Combined Lenders’ Combined
Commitments is U.S.$250,000,000.
 
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“Combined Credit Agreements” means this Agreement and the U.S. Credit Agreement.
 
“Combined Credit Exposure” means at any time the sum of (a) the Equivalent
Amount in U.S. Dollars of the aggregate Credit Exposure of all Lenders hereunder
and (b) the aggregate “Credit Exposure” (as defined in the U.S. Credit
Agreement) of all U.S. Lenders.
 
“Combined Lenders” means the Lenders hereunder and the U.S. Lenders.
 
“Combined Loan Documents” means the Loan Documents and the U.S. Loan Documents.
 
“Combined Loans” means the loans made by the Combined Lenders to Borrower and
U.S. Borrower pursuant to the Combined Loan Documents.
 
“Combined Obligations” means the aggregate of the Equivalent Amount of the
Obligations (expressed in U.S. Dollars) and the U.S. Obligations.
 
“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans, to acquire participations in Letters of Credit hereunder, and to
accept Bankers’ Acceptances or make BA Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender’s Credit Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.8, (b) reduced or increased from time to time pursuant to assignments
by or to such Lender pursuant to Section 10.4, and (c) terminated pursuant to
Section 8.2 or Section 8.3. The initial amount of each Lender’s Commitment is
set forth on Schedule 2.1, or in the Register following any Assignment and
Assumption to which such Lender is a party. The initial aggregate amount of the
Commitments of the Lenders is U.S.$0.
 
“Commitment Fee” is defined in Section 2.11(a).
 
“Credit Exposure” means, with respect to any Lender at any time, the Equivalent
Amount in U.S. Dollars of the sum of (a) the outstanding principal amount of
such Lender’s Loans (excluding BA Loans and Bankers’ Acceptances) plus (b) its
LC Exposure plus (c) its BA Exposure at such time.
 
“Currency” means, with respect to any Loan, Letter of Credit or Bankers’
Acceptance, whether such Loan, Letter of Credit or Bankers’ Acceptance is
denominated in Canadian Dollars or U.S. Dollars.
 
“DBNA” is defined in Section 2.21(l).
 
“Debenture” means any Demand Debenture and Negative Pledge delivered pursuant to
the Loan Documents, substantially in form and substance satisfactory to the
Canadian Administrative Agent and the Global Administrative Agent, in each case
as amended, supplemented, restated or otherwise modified from time to time in
accordance with the Loan Documents. The term “Debentures” shall include each and
every Debenture executed and delivered pursuant to the Loan Documents.
 
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“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
 
“Equivalent Amount” means as at any date the amount of Canadian Dollars into
which an amount of U.S. Dollars may be converted, or the amount of U.S. Dollars
into which an amount of Canadian Dollars may be converted, in either case at The
Bank of Canada mid-point noon spot rate of exchange for such date in Toronto at
approximately 12:00 noon, Toronto time on such date.
 
“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the LIBO Rate.
 
“Event of Default” has the meaning assigned to such term in Section 8.1.
 
“Excluded Taxes” means, with respect to any Agent, any Lender, any Issuing Bank
or any other recipient of any payment to be made by or on account of any
obligation of Borrower hereunder, (a) income, capital or franchise taxes imposed
on (or measured by) its net income or capital by the federal, or any provincial,
government of Canada, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its Applicable Lending Office is located, and (b)
any branch profits taxes imposed by the federal, or any provincial, government
of Canada or any similar tax imposed by any other jurisdiction in which Borrower
is located.
 
“Facility Guaranty” means a guaranty dated as of the Global Effective Date or
otherwise delivered pursuant to the Loan Documents, made by each Guarantor in
favor of the Global Administrative Agent, substantially in the form of Exhibit
D, as amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms of this Agreement and the other Loan Documents. The
term “Facility Guaranties” shall include each and every Facility Guaranty
executed and delivered hereunder.
 
“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System of the
United States arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Global Administrative Agent from
three Federal funds brokers of recognized standing selected by it.
 
“Fee Letter” means that certain Fee Letter dated as of July 28, 2006, by and
between Borrower and JPMorgan Chase Bank, N.A., as such letter may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the Loan Documents.
 
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“Financing Transactions” means the execution, delivery and performance by each
Loan Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.
 
“Foreign Lender” means any Lender that is a non-resident in Canada for purposes
of the Income Tax Act (Canada) and not an “authorized foreign bank” under
Section 2 of the Bank Act (Canada). For purposes of this definition, Canada and
each province thereof shall be deemed to constitute a single jurisdiction.
 
“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a
jurisdiction other than Canada or any province thereof.
 
“Global Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity
as global administrative agent for the Combined Lenders, and its successors.
 
“Global Borrowing Base” means the “Global Borrowing Base” (as defined in the
U.S. Credit Agreement) as determined from time to time pursuant to Section 2.7
of the U.S. Credit Agreement.
 
“Global Borrowing Base Deficiency” means, at the time of determination, the
amount by which (a) the Combined Credit Exposure of all Combined Lenders exceeds
(b) the then-current Global Borrowing Base.
 
“Global Borrowing Base Utilization Percentage” means, at any time of
determination, an amount (expressed as a percentage) equal to the quotient of
(a) the Combined Credit Exposure divided by (b) the Global Borrowing Base.
 
“Global Effective Date” means the date on which the conditions specified in
Section 4.2 of each Combined Credit Agreement are satisfied (or waived in
accordance with Section 10.2 of each Combined Credit Agreement).
 
“Global Effectiveness Notice” means a notice and certificate of Borrower
properly executed by an Authorized Officer of Borrower, addressed to the
Combined Lenders and delivered to the Global Administrative Agent whereby
Borrower certifies satisfaction and/or waiver of all the conditions precedent to
the effectiveness under Section 4.2 of each Combined Credit Agreement.
 
“Guarantor” means collectively (a) U.S. Borrower and (b) each other Restricted
Subsidiary of Borrower that executes and delivers a Facility Guaranty, including
each Restricted Subsidiary that is required to execute a Facility Guaranty
pursuant to Section 5.8.
 
“Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement
between Borrower or its Restricted Subsidiaries and any Person.
 
“Hedging Obligations” means, with respect to any Person, all liabilities
(including but not limited to obligations and liabilities of such Person arising
in connection with or as a result of early or premature termination of a Hedging
Agreement, whether or not occurring as a result of a default thereunder) of such
Person under a Hedging Agreement.
 
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“Highest Lawful Rate” is defined in Section 10.13(b).
 
“Income Tax Act (Canada)” means the Income Tax Act (Canada), as amended from
time to time.
 
“Indemnified Taxes” means Taxes other than Excluded Taxes.
 
“Indemnitee” is defined in Section 10.13(b).
 
“Information” is defined in Section 10.12.
 
“Initial Reserve Report” means the Independent Reserve Report delivered to the
Global Administrative Agent dated effective as of June 30, 2006, with respect to
the Oil and Gas Properties of Borrower and its Restricted Subsidiaries, a true
and correct copy of which has been delivered to the Global Administrative Agent,
the Canadian Administrative Agent and the Lenders.
 
“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
even date herewith by and among the Global Administrative Agent, Canadian
Administrative Agent, and the Combined Lenders, as amended, supplemented,
restated or otherwise modified from time to time in accordance with the Loan
Documents.
 
“Interest Election Request” means a request by Borrower to convert or continue a
Borrowing in accordance with Section 2.6, in substantially the form of Exhibit
C-2 or any other form approved by the Global Administrative Agent and the
Canadian Administrative Agent.
 
“Interest Payment Date” means (a) with respect to any Canadian Prime Loan or
USBR Loan, the last day of each March, June, September and December, (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three (3) months’ duration, each
day prior to the last day of such Interest Period that occurs at intervals of
three (3) months’ duration after the first day of such Interest Period, and (c)
with respect to any BA Loan, the maturity date of the Bankers’ Acceptances
issued concurrently with the advance of such BA Loan.
 
“Interest Period” means (a) with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two or three months (or,
with the consent of each Lender, six months) thereafter, as Borrower may elect
and (b) with respect to any BA Loan, each period commencing on the date such BA
Loan is made or converted from another Type of Loan or the last day of the next
preceding Interest Period for such BA Loan and ending on the date not less than
30 days or more than 90 days thereafter, as Borrower may select as provided in
Section 2.6; provided, that (a) if any Interest Period would end on a day other
than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, (b) any Interest Period pertaining to a Eurodollar
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period, (c) no Interest Period may end later
than the last day of the Availability Period, and (d) the Interest Period for a
BA Loan shall end on the BA Maturity Date of the Bankers’ Acceptances issued
concurrently therewith. For purposes hereof, the date of a Borrowing initially
shall be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.
 
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“Issuing Bank” means JPMorgan Chase Bank, N.A., Toronto Branch and each Lender
that agrees to act as an issuer of Letters of Credit hereunder at the request of
the Global Administrative Agent and the Canadian Administrative Agent, in each
case in its capacity as the issuer of Letters of Credit hereunder. Any Issuing
Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank”
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.
 
“Judgment Currency” is defined in Section 2.20(b).
 
“LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter
of Credit.
 
“LC Exposure” means, at any time, the Equivalent Amount in U.S. Dollars of the
sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at
such time plus (b) the aggregate amount of all LC Disbursements that have not
yet been reimbursed by or on behalf of Borrower at such time. The LC Exposure of
any Lender at any time shall be its Applicable Percentage of the total LC
Exposure at such time.
 
“Lender Affiliate” means, with respect to any Lender, (a) an Affiliate of such
Lender or (b) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by such Lender or an Affiliate of such
Lender, and with respect to any Lender that is a fund which invests in bank
loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.
 
“Lenders” means the Persons listed on Schedule 2.1 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.
 
“Letter of Credit” means any letter of credit issued pursuant to this Agreement.
 
“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Page 3750 of the Telerate Service (or on any
successor or substitute page of such Service, or any successor to or substitute
for such Service, providing the British Bankers Association Interest Settlement
Rate for such Service, as determined by the Global Administrative Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity equal to such Interest
Period. In the event that such rate is not available at such time for any
reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such
Interest Period shall be the rate at which dollar deposits of U.S.$5,000,000 and
for a maturity equal to such Interest Period are offered by the principal London
office of the Global Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
 
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“Loan Document” means (a) this Agreement, the Notes, the Security Documents, the
Fee Letter, the Intercreditor Agreement, the Facility Guaranties, the Hedging
Agreements between Borrower or any of its Restricted Subsidiaries and any Lender
or any Affiliate of a Lender, any Borrowing Request, any Interest Election
Request, any election notice, any agreement with respect to fees described in
Section 2.11, and (b) each other agreement, document or instrument delivered by
Borrower or any other Loan Party in connection with this Agreement, as amended,
supplemented, restated or otherwise modified from time to time. For avoidance of
doubt, the term “Loan Document” shall not include the U.S. Loan Documents.
 
“Loan Parties” means Borrower, each Guarantor and, after the date of this
Agreement, any other Affiliate or Restricted Subsidiary of Borrower that
executes a Loan Document, for so long as such Loan Document is in effect.
 
“Loans” means (a) the loans (including, without limitation, the Canadian Prime
Loans, the Eurodollar Loans, the USBR Loans and the BA Loans) made by the
Lenders to Borrower pursuant to this Agreement and (b) the acceptance and
purchase by the Lenders of Bankers’ Acceptances pursuant hereto.
 
“Material Adverse Effect” means a material adverse effect on (a) the business,
Property, operations or condition, financial or otherwise, of Borrower and its
Subsidiaries taken as a whole, (b) the ability of the Loan Parties (as defined
herein and in the U.S. Credit Agreement) to perform any of their respective
obligations under the Combined Loan Documents or (c) the rights of or benefits
available to the Combined Lenders under any of the Combined Loan Documents, as
the case may be.
 
“Maturity Date” means July 28, 2010.
 
“Net Proceeds” means, with respect to any event, (a) the cash proceeds received
by Borrower and its Restricted Subsidiaries in respect of such event including
(i) any cash received in respect of any non cash proceeds, but only as and when
received, (ii) in the case of a casualty, insurance proceeds and (iii) in the
case of a condemnation or similar event, condemnation awards and similar
payments, net of (b) the sum of (i) all reasonable fees and out of pocket
expenses paid by Borrower and its Restricted Subsidiaries to third parties
(other than Affiliates) in connection with such event, (ii) in the case of a
sale, transfer or other disposition of an asset (including pursuant to a sale
and leaseback transaction or a casualty or a condemnation or similar
proceeding), the amount of all payments required to be made by Borrower and its
Restricted Subsidiaries as a result of such event to repay Indebtedness (other
than Loans) secured by such asset or otherwise subject to mandatory prepayment
as a result of such event, (iii) the amount of all taxes paid (or reasonably
estimated to be payable) by Borrower and its Restricted Subsidiaries, and (iv)
the amount of any reserves established by Borrower and its Restricted
Subsidiaries to fund contingent liabilities reasonably estimated to be payable,
in each case during the year that such event occurred or the next succeeding
year and that are directly attributable to such event (as determined reasonably
and in good faith by the chief financial officer of Borrower).
 
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“Note” means any promissory note delivered pursuant to Section 2.9(e).
 
“Obligations” means, at any time, the sum of (a) the aggregate Credit Exposure
of the Lenders under the Loan Documents plus (b) all accrued and unpaid interest
and fees owing to the Lenders under the Loan Documents plus (c) all Hedging
Obligations in connection with all Hedging Agreements between Borrower or any of
its Restricted Subsidiaries and any Lender or any Affiliate of a Lender plus (d)
all other obligations (monetary or otherwise) of Borrower or any Restricted
Subsidiary to any Lender or any Agent, whether or not contingent, arising under
or in connection with any of the Loan Documents.
 
“Other Currency” is defined in Section 2.20(a).
 
“Participant” is defined in Section 10.4(e).
 
“Pledge Agreement” means any Pledge Agreement delivered pursuant to the Loan
Documents, substantially in the form of Exhibit E, in each case as amended,
supplemented, restated or otherwise modified from time to time in accordance
with the Loan Documents. The term “Pledge Agreements” shall include each and
every Pledge Agreement executed and delivered pursuant to the Loan Documents.
 
“Principal Amount” means, for a Bankers’ Acceptance, the face amount thereof,
for a BA Loan, the principal amount thereof determined in accordance with
Section 2.21(g), and for any other Loans, the outstanding principal amount
thereof.
 
“Principal Office” means the principal office of the Canadian Administrative
Agent, which on the date of this Agreement is located at 200 Bay Street, Royal
Bank Plaza, Suite 1800, Toronto, Ontario M5J 2J2.
 
“Register” has the meaning set forth in Section 10.4(c).
 
“Required Lenders” means, at any time, Combined Lenders having in the aggregate
at least 66-2/3% of the aggregate total Combined Commitments under the Combined
Loan Documents, or, if the Combined Commitments have been terminated, Combined
Lenders holding at least 66-2/3% of the aggregate unpaid principal amount of the
outstanding Combined Credit Exposure.
 
“Restricted Subsidiary” means any Subsidiary of Borrower that is not an
Unrestricted Subsidiary.
 
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“Schedule I Lender” means a Lender which is a Canadian chartered bank listed on
Schedule I to the Bank Act (Canada), as amended from time to time.
 
“Security Documents” means each Facility Guaranty, each Debenture, each Pledge
Agreement, each U.S. Security Document and each other instrument or document
executed and delivered pursuant to Section 5.8 or Section 5.9 or pursuant to the
Loan Documents to secure any of the Obligations.
 
“Stamping Fee” means, in respect of any Bankers’ Acceptance or BA Loan, the fee
payable by Borrower described in Section 2.21(b).
 
“Subsidiary” means any subsidiary of Borrower.
 
“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the LIBO Rate or the Canadian Prime Rate or the
Bankers’ Acceptance Rate or the U.S. Base Rate.
 
“Unutilized Commitment” means, at the time of determination, the Equivalent
Amount in U.S. Dollars of the amount by which (a) the lower of (i) the aggregate
amount of the Commitments of all Lenders at such time, and (ii) the amount of
the Allocated Canadian Borrowing Base as then in effect at such time, exceeds
(b) the amount of the aggregate Credit Exposure of the Lenders at such time.
 
“U.S. Base Rate” means, with respect to USBR Loans, the greater of:
 
(a) the annual rate of interest announced from time to time by the Canadian
Administrative Agent as being its reference rate then in effect for determining
interest rates on U.S. Dollar denominated commercial loans made by the Canadian
Administrative Agent in Canada; and
 
(b) a rate of interest per three hundred sixty-five (365) day period equal to
the Federal Funds Effective Rate (equated, for these purposes, to a rate based
on a year of 365 days rather than 360 days) plus 1/2 of 1%.
 
“U.S. Borrower” means Storm Cat Energy (USA) Corporation, a Colorado
corporation.
 
“USBR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined in reference to the U.S. Base Rate.
 
“U.S. Credit Agreement” means that certain Credit Agreement of even date
herewith between U.S. Borrower, Borrower, the U.S. Lenders and the Global
Administrative Agent, as it may be amended, supplemented, restated or otherwise
modified and in effect from time to time.
 
“U.S. Dollars” or “U.S.$” or “$” or “Dollars” refers to lawful money of the
United States of America.
 
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“U.S. Lenders” means the financial institutions from time to time party to the
U.S. Credit Agreement, and their respective successors and permitted assigns.
 
“U.S. Loan Documents” means the “Loan Documents,” as defined in the U.S. Credit
Agreement.
 
“U.S. Obligations” means, at any time, the sum of (a) the aggregate “Credit
Exposure” of the U.S. Lenders under the U.S. Loan Documents plus (b) all accrued
and unpaid interest and fees owing to the U.S. Lenders under the U.S. Loan
Documents plus (c) all Hedging Obligations (as defined in the U.S. Credit
Agreement) in connection with all Hedging Agreements (as defined in the U.S.
Credit Agreement) between U.S. Borrower, Borrower or any of its Restricted
Subsidiaries (as defined in the U.S. Credit Agreement) and any U.S. Lender or
any Affiliate of a U.S. Lender plus (d) all other obligations (monetary or
otherwise) of Borrower or any of its Restricted Subsidiaries to any U.S. Lender
or any of the “Agents” under the U.S. Credit Agreement, whether or not
contingent, arising under or in connection with any of the U.S. Loan Documents.
 
“U.S. Security Documents” means the “Security Documents,” as defined in the U.S.
Credit Agreement.
 
SECTION 1.2 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings may be classified and referred to by Type (e.g.,
a “Eurodollar Loan” or “Eurodollar Borrowing” or “BA Loan” or “BA Borrowing” or
“USBR Loan” or “USBR Borrowing” or “Canadian Prime Loan” or “Canadian Prime
Borrowing”).
 
SECTION 1.3 Terms Generally. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall”. Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, provided such successors and assigns are permitted by the Loan
Documents, (c) the words “herein”, “hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, and (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement.
 
SECTION 1.4 U.S. Credit Agreement Definitions. Unless the context otherwise
requires, capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the U.S. Credit Agreement.
 
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ARTICLE II
The Credits
 
SECTION 2.1 Commitments. Subject to the terms and conditions set forth herein,
(a) each Lender agrees to make Loans (including BA Loans made in accordance with
Section 2.21) to Borrower and (b) each Accepting Lender agrees to accept
Bankers’ Acceptances presented to it by Borrower pursuant to Section 2.21, in
each case from time to time during the Availability Period in an aggregate
principal amount that will not result in (i) the Credit Exposure of any Lender
exceeding the lower of (A) the Commitment of such Lender, or (B) such Lender’s
Applicable Percentage of the Allocated Canadian Borrowing Base then in effect,
or (ii) the aggregate amount of the Credit Exposure of all Lenders exceeding the
lesser of (1) the aggregate amount of the Allocated Canadian Borrowing Base then
in effect and (2) the aggregate amount of the Commitments of the Lenders. Within
the foregoing limits and subject to the terms and conditions set forth herein,
Borrower may repay (but not prepay) Bankers’ Acceptances and BA Loans and may
borrow, prepay and reborrow Loans.
 
SECTION 2.2 Loans and Borrowings.
 
(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by
the Lenders ratably in accordance with their respective Applicable Percentages.
The failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required.
 
(b) Subject to Section 2.13 and Section 2.14, each Borrowing shall be comprised
entirely of Canadian Prime Loans, Eurodollar Loans or USBR Loans as Borrower may
request in accordance herewith or shall be comprised of Bankers’ Acceptances and
BA Loans made in accordance with Section 2.21. Each Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate
of such Lender to make such Loan; provided that any exercise of such option
shall not affect the obligation of Borrower to repay such Loan in accordance
with the terms of this Agreement.
 
(c) At the commencement of each Interest Period for any Eurodollar Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
U.S.$500,000 and not less than U.S.$1,000,000 (including any continuation or
conversion of existing Loans made in connection therewith). At the time that
each Canadian Prime Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of C$500,000 and not less than C$1,000,000
(including any continuation or conversion of existing Loans made in connection
therewith); provided that a Canadian Prime Borrowing may be in an aggregate
amount that is equal to the Equivalent Amount in Canadian Dollars of the entire
Unutilized Commitment, if less. At the time that each USBR Borrowing is made,
such Borrowing shall be in an aggregate amount that is an integral multiple of
U.S.$500,000 and not less than U.S.$1,000,000 (including any continuation or
conversion of existing Loans made in connection therewith); provided that a USBR
Borrowing may be in an aggregate amount that is equal to the entire Unutilized
Commitment, if less. Borrowings of more than one Type may be outstanding at the
same time; provided that there shall not at any time be more than a total of
five (5) Eurodollar Borrowings outstanding.
 
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(d) Notwithstanding any other provision of this Agreement, Borrower shall not be
entitled to request, or to elect to convert or continue, any Eurodollar
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
 
SECTION 2.3 Requests for Borrowings. To request a Borrowing, Borrower shall
notify the Global Administrative Agent and the Canadian Administrative Agent of
such request by telephone (a) in the case of a Eurodollar Borrowing, not later
than 1:00 p.m., Toronto time, three Business Days before the date of the
proposed Borrowing or (b) in the case of a Canadian Prime Borrowing or USBR
Borrowing, not later than 11:00 a.m., Toronto time, on the date of the proposed
Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall
be confirmed promptly by hand delivery or telecopy (or other electronic
transmission approved by the Global Administrative Agent and the Canadian
Administrative Agent) to the Global Administrative Agent and the Canadian
Administrative Agent of a written Borrowing Request executed by an Authorized
Officer of Borrower, substantially in the form of Exhibit C-1 or otherwise in a
form approved by the Global Administrative Agent and the Canadian Administrative
Agent. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.2:
 
(i) the aggregate amount of the requested Borrowing (which amount will be in the
appropriate Currency as required pursuant to the last sentence of this Section
2.3);
 
(ii) the date of such Borrowing, which shall be a Business Day;
 
(iii) whether such Borrowing is to be a Canadian Prime Borrowing, a USBR
Borrowing or a Eurodollar Borrowing; and
 
(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”.
 
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be a Canadian Prime Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then Borrower
shall be deemed to have selected an Interest Period of one month’s duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Canadian Administrative Agent shall advise each Lender of the
details thereof and of the amount of such Lender’s Loan (which shall be made in
the appropriate Currency based on the Currency of the Borrowings being
requested) to be made as part of the requested Borrowing. Notwithstanding
anything herein to the contrary, Canadian Prime Loans and BA Loans may only be
denominated in Canadian Dollars and USBR Loans and Eurodollar Loans may only be
denominated in U.S. Dollars.
 
SECTION 2.4 Letters of Credit.
 
(a) General. Subject to the terms and conditions set forth herein, Borrower may
request the issuance of Letters of Credit for its own account or the account of
any Restricted Subsidiary, in a form reasonably acceptable to the Global
Administrative Agent, the Canadian Administrative Agent and the Issuing Bank, at
any time and from time to time during the Availability Period. In the event of
any inconsistency between the terms and conditions of this Agreement and the
terms and conditions of any form of letter of credit application or other
agreement submitted by Borrower to, or entered into by Borrower with, the
Issuing Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
 
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(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), Borrower shall, prior to 1:00
p.m., Toronto time, at least three (3) Business Days prior to the proposed date
of issuance or modification, hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the relevant
Issuing Bank) to an Issuing Bank, the Canadian Administrative Agent and the
Global Administrative Agent (reasonably in advance of the requested date of
issuance, amendment, renewal or extension) a notice requesting the issuance of a
Letter of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, and specifying the date of issuance, amendment, renewal or extension
(which shall be a Business Day), the date on which such Letter of Credit is to
expire (which shall comply with paragraph (c) of this Section), the amount of
such Letter of Credit, the Loan Party for whose account such Letter of Credit
shall be issued, the name and address of the beneficiary thereof and such other
information (including, if applicable, the Currency of such Letter of Credit
(which shall be Canadian Dollars or U.S. Dollars) as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, Borrower also shall submit a letter of credit application on the
Issuing Bank’s standard form in connection with any request for a Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only if
(and upon issuance, amendment, renewal or extension of each Letter of Credit
Borrower shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension (i) the LC Exposure shall not
exceed the least of (A) the aggregate Commitments hereunder, (B) the Allocated
Canadian Borrowing Base as then in effect at such time and (C) U.S.$10,000,000;
and (ii) the aggregate Credit Exposure of the Lenders shall not exceed the
lesser of (x) the aggregate Commitments of the Lenders or (y) the Allocated
Canadian Borrowing Base then in effect.
 
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close
of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) five (5) Business
Days prior to the Maturity Date. 
 
(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants
to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Canadian Administrative
Agent, for the account of the Issuing Bank in the Currency in which such Letter
of Credit is denominated, such Lender’s Applicable Percentage of each LC
Disbursement made by such Issuing Bank and not reimbursed by Borrower on the
date due as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.
 
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(e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, Borrower shall reimburse such LC Disbursement in the
Currency in which such Letter of Credit is denominated by paying to the Canadian
Administrative Agent an amount equal to such LC Disbursement not later than
12:00 noon, Toronto time, on the date that such LC Disbursement is made, if
Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m.,
Toronto time, on such date; or, if such notice has not been received by Borrower
prior to such time on such date, then not later than 12:00 noon, Toronto time,
on the Business Day immediately following the day that Borrower receives such
notice; provided that, unless such LC Disbursement is less than C$500,000 or
U.S.$500,000, as applicable, Borrower may, subject to the conditions to
Borrowing set forth herein, request in accordance with Section 2.3 that such
payment be financed with a Borrowing in an equivalent amount and, to the extent
so financed, Borrower’s obligation to make such payment shall be discharged and
replaced by the resulting Borrowing. If Borrower fails to make such payment when
due (or fails to request a Canadian Prime or USBR Borrowing as provided herein),
the Canadian Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from Borrower in respect thereof and such
Lender’s Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Canadian Administrative Agent its
Applicable Percentage of the payment then due from Borrower, in the same manner
as provided in Section 2.5 with respect to Loans made by such Lender in the
appropriate Currency (and Section 2.5 shall apply, mutatis mutandis, to the
payment obligations of the Lenders), and the Canadian Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the Lenders.
Promptly following receipt by the Canadian Administrative Agent of any payment
from Borrower pursuant to this paragraph (or promptly following the Canadian
Administrative Agent’s receipt from the Lenders of proceeds from a requested
Borrowing), the Canadian Administrative Agent shall distribute such payment to
the Issuing Bank or, to the extent that Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of Canadian Prime Loans or USBR Loans as contemplated
above) shall not constitute a Loan and shall not relieve Borrower of its
obligation to reimburse such LC Disbursement.
 
(f) Obligations Absolute. Borrower’s obligation to reimburse LC Disbursements as
provided in paragraph (e) of this Section shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit or this
Agreement or any other Loan Document, or any term or provision herein or
therein, (ii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent or invalid in any respect or any statement
therein proving to be untrue or inaccurate in any respect, (iii) payment by an
Issuing Bank under a Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit, or
(iv) any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section, constitute
a legal or equitable discharge of, or provide a right of setoff against,
Borrower’s obligations hereunder. Neither the Agents, the Lenders or any Issuing
Bank nor any of their Related Parties shall have any liability or responsibility
by reason of or in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder (irrespective of
any of the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of such Issuing Bank; provided that the foregoing shall not be
construed to excuse such Issuing Bank from liability to Borrower to the extent
of any direct or actual damages (as opposed to special, indirect, consequential
or punitive damages, claims in respect of which are hereby waived by Borrower to
the extent permitted by applicable law) suffered by Borrower that are caused by
such Issuing Bank’s failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of gross
negligence or willful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
 
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(g) Disbursement Procedures. An Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. Such Issuing Bank shall promptly notify the
Canadian Administrative Agent and Borrower by telephone (confirmed by telecopy)
of such demand for payment and whether such Issuing Bank has made or will make
an LC Disbursement thereunder; provided that any failure to give or delay in
giving such notice shall not relieve Borrower of its obligation to reimburse
such Issuing Bank and the Lenders with respect to any such LC Disbursement.
 
(h) Interim Interest. If an Issuing Bank shall make any LC Disbursement, then,
unless Borrower shall reimburse such LC Disbursement in full on the date such LC
Disbursement is made, the unpaid amount thereof shall bear interest, for each
day from and including the date such LC Disbursement is made to but excluding
the date that Borrower reimburses such LC Disbursement, at the rate per annum
set forth in Section 2.12(c). Interest accrued pursuant to this paragraph shall
be for the account of the Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to paragraph (e) of this
Section to reimburse the Issuing Bank shall be for the account of such Lender to
the extent of such payment.
 
(i) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that Borrower receives notice from the Global
Administrative Agent, the Canadian Administrative Agent or the Required Lenders
(or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure
representing 66-2/3% or more of the total LC Exposure) demanding the deposit of
cash collateral pursuant to this paragraph, Borrower shall deposit in an account
with the Canadian Administrative Agent, in the name of the Canadian
Administrative Agent and for the benefit of the Lenders, an amount in cash (in
the applicable Currency) equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to Borrower described
in Section 8.1(g). Borrower also shall deposit cash collateral pursuant to this
paragraph as and to the extent required by Section 2.10, and any such cash
collateral so deposited and held by the Canadian Administrative Agent hereunder
shall constitute part of the Global Borrowing Base for purposes of determining
compliance with Section 2.5. Each such deposit shall be held by the Canadian
Administrative Agent as collateral for the payment and performance of the
obligations of Borrower under this Agreement. The Canadian Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole
discretion of the Canadian Administrative Agent and at Borrower’s risk and
expense, such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in such account. Moneys in such account shall
be applied by the Canadian Administrative Agent to reimburse the Issuing Bank
for LC Disbursements for which it has not been reimbursed and, to the extent not
so applied, shall be held for the satisfaction of the reimbursement obligations
of Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing 66-2/3% or more of the total LC Exposure), be applied to satisfy
other obligations of Borrower under this Agreement. If Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to Borrower within three (3) Business Days after all Events of
Default have been cured or waived. If Borrower is required to provide an amount
of cash collateral hereunder pursuant to Section 2.5, such amount (to the extent
not applied as aforesaid) shall be returned to Borrower as and to the extent
that, after giving effect to such return, Borrower would remain in compliance
with Section 2.5 and no Default shall have occurred and be continuing.
 
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SECTION 2.5 Funding of Borrowings.
 
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds by 12:00 noon,
Toronto time, to the account of the Canadian Administrative Agent most recently
designated by it for such purpose by notice to the Lenders, which Loan shall be
in the appropriate Currency (based on the relevant Borrowing Request). The
Canadian Administrative Agent will make such Loans available to Borrower by
promptly crediting the amounts so received, in like funds, to an account of
Borrower maintained with the Canadian Administrative Agent in Toronto; provided
that Canadian Prime Loans and/or USBR Loans made to finance the reimbursement of
an LC Disbursement as provided in Section 2.4(e) shall be remitted by the
Canadian Administrative Agent to the applicable Issuing Bank.
 
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(b) Unless the Canadian Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Canadian Administrative Agent such Lender’s share of such
Borrowing, the Canadian Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Canadian Administrative Agent, then
the applicable Lender and Borrower severally agree to pay to the Canadian
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to Borrower to but excluding the date of payment to the Canadian Administrative
Agent, at (i) in the case of such Lender, the greater of the costs incurred by
the Canadian Administrative Agent for making such Lender’s share of such
Borrowing or a rate determined by the Canadian Administrative Agent in
accordance with banking industry rules on interbank compensation or (ii) in the
case of Borrower, the interest rate applicable to Loans made in such Borrowing.
If such Lender pays such amount to the Canadian Administrative Agent, then such
amount shall constitute such Lender’s Loan included in such Borrowing.
 
(c) Borrowings, conversion or continuations of Loans, and prepayments of Loans
of different Currencies at the same time hereunder shall be deemed to be
separate Borrowings, continuations, conversions and prepayments, respectively,
one for each Currency.
 
SECTION 2.6 Interest Elections.
 
(a) Borrower may elect to convert a Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. Borrower may, subject to the
requirements of Section 2.2(c), elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
 
(b) To make an election pursuant to this Section, Borrower shall notify the
Global Administrative Agent and the Canadian Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.3 if Borrower were requesting a Borrowing of the Type resulting
from such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Global Administrative Agent and the
Canadian Administrative Agent of a written Interest Election Request executed by
an Authorized Officer of Borrower, substantially in the form of Exhibit C-2 or
otherwise in a form approved by the Global Administrative Agent and the Canadian
Administrative Agent.
 
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.2:
 
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(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);
 
(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;
 
(iii) whether the resulting Borrowing is to be a Canadian Prime Borrowing or
USBR Borrowing or a Eurodollar Borrowing; and
 
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.
 
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then Borrower shall be deemed to have selected
an Interest Period of one month’s duration.
 
(d) Promptly following receipt of an Interest Election Request, the Canadian
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.
 
(e) If Borrower fails to deliver a timely Interest Election Request with respect
to a Eurodollar Borrowing prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end of
such Interest Period such Borrowing shall be converted to a USBR Borrowing.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Global Administrative Agent or the Canadian
Administrative Agent, at the request of the Required Lenders, so notifies
Borrower, then, so long as such Event of Default is continuing, (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
and (ii) unless the Indebtedness has been accelerated pursuant to Section 8.3,
each Eurodollar Borrowing shall be converted to a USBR Borrowing at the end of
the Interest Period applicable thereto.
 
SECTION 2.7 Global Borrowing Base.
 
(a) Effectiveness. Notwithstanding anything to the contrary in this Agreement,
for so long as any of the Combined Commitments are in effect and/or any Combined
Obligation is outstanding, the Global Borrowing Base shall be determined in
accordance with, and as provided in, Section 2.7 of the U.S. Credit Agreement.
 
(b) Maximum Credit. The Global Borrowing Base shall represent the maximum amount
of credit in the form of loans, letters of credit and bankers’ acceptances
(subject to the aggregate Combined Commitments and subject to the other
provisions hereof or of the U.S. Credit Agreement) that the Combined Lenders
will be required to extend to Borrower or U.S. Borrower pursuant to the Combined
Loan Documents at any one time prior to the Maturity Date.
 
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SECTION 2.8 Termination and Reduction of Commitments.
 
(a) Unless previously terminated in accordance with this Agreement, the
Commitments shall terminate on the Maturity Date.
 
(b) Borrower may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall be in an
amount that is an integral multiple of U.S.$500,000 and not less than
U.S.$1,000,000 and (ii) Borrower shall not terminate or reduce the Commitments
if, after giving effect to any concurrent prepayment of the Loans in accordance
with Section 2.10, the aggregate Credit Exposure of the Lenders would exceed the
aggregate Commitments of the Lenders.
 
(c) Borrower shall notify the Global Administrative Agent and the Canadian
Administrative Agent of any election to terminate or reduce the Commitments
under paragraph (b) of this Section at least two (2) Business Days prior to the
effective date of such termination or reduction, specifying such election and
the effective date thereof. Promptly following receipt of any notice, the
Canadian Administrative Agent shall advise the Lenders of the contents thereof.
Each notice delivered by Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitments delivered by Borrower
may state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by Borrower (by notice to
the Global Administrative Agent and the Canadian Administrative Agent on or
prior to the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments shall be permanent. Each reduction
of the Commitments shall be made ratably among each of the Lenders in accordance
with each such Lender’s Applicable Percentage.
 
SECTION 2.9 Repayment of Loans; Evidence of Debt.
 
(a) Borrower hereby unconditionally promises to pay to the Canadian
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Loan and Borrowing of such Lender on the Maturity Date.
 
(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.
 
(c) The Canadian Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Canadian
Administrative Agent hereunder for the account of the Lenders and each Lender’s
share thereof. In the event of any inconsistency between the account maintained
by any Lender and the account maintained by the Canadian Administrative Agent,
the account maintained by the Canadian Administrative Agent shall control,
absent manifest error.
 
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(d) The entries made in the accounts maintained pursuant to paragraphs (b) or
(c) of this Section shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of any Lender or
the Canadian Administrative Agent to maintain such accounts or any error therein
shall not in any manner affect the obligation of Borrower to repay the Loans in
accordance with the terms of this Agreement.
 
(e) Any Lender may request that Loans made by it be evidenced by one or more
promissory notes. In such event, Borrower shall prepare, execute and deliver to
such Lender promissory notes payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns and in a
form approved by the Global Administrative Agent and the Canadian Administrative
Agent). Thereafter, the Loans evidenced by such promissory notes and interest
thereon shall at all times (including after assignment pursuant to Section 10.4)
be represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if any such promissory note is a registered
note, to such payee and its registered assigns).
 
SECTION 2.10 Prepayment of Loans.
 
(a) Borrower shall have the right at any time and from time to time to prepay
any Borrowing in whole or in part, subject to the requirements of this Section.
Borrower shall not be permitted to prepay any Bankers’ Acceptance or BA Loans at
any time.
 
(b) If either a Global Borrowing Base Deficiency or a Canadian Borrowing Base
Deficiency occurs, then Borrower shall take the following actions:
 
(i) in the case of a Global Borrowing Base Deficiency resulting from a
redetermination or reduction of the Global Borrowing Base, Borrower shall,
within ten (10) days following the Deficiency Notification Date (as defined in
the U.S. Credit Agreement), provide written notice (the “Election Notice”) to
the Global Administrative Agent and the Canadian Administrative Agent stating
the action which Borrower proposes to take to remedy such deficiency, and
Borrower shall thereafter, at its option, either (A) within thirty (30) days
following the delivery of the Election Notice, prepay Combined Loans in an
aggregate principal amount equal to such deficiency, together with interest on
the principal amount paid accrued to the date of such prepayment, (B) eliminate
such deficiency by making three (3) consecutive monthly mandatory prepayments of
the Combined Loans, together with interest on the principal amount paid accrued
to the date of such prepayment, each such payment to be in the amount of 1/3rd
of the amount of such deficiency, commencing on the last day of the month in
which the Election Notice is delivered, and continuing on the last day of each
month thereafter, (C) within ninety (90) days following the delivery of the
Election Notice, submit (and pledge as Collateral) additional Oil and Gas
Properties owned by Borrower or any other Loan Party for consideration in
connection with the determination of the Global Borrowing Base which the Global
Administrative Agent, the Canadian Administrative Agent and the Combined Lenders
deem sufficient in their sole discretion to eliminate such deficiency, or
(D) within ninety (90) days following the delivery of the Election Notice,
eliminate such deficiency through a combination of prepayments and submission of
additional Oil and Gas Properties as set forth in subclauses (A) and (C) above,
and, if after prepaying the Combined Loans (other than Bankers’ Acceptances)
pursuant to subclauses (A), (B) or (D) above, a Global Borrowing Base Deficiency
remains as a result of a BA Exposure, Borrower shall pay to the Canadian
Administrative Agent an amount equal to such remaining Global Borrowing Base
Deficiency to be held as cash collateral as provided in Section 2.21(m), and, if
after prepaying all of the Combined Loans (other than Bankers’ Acceptances) and
providing cash collateral for all Bankers’ Acceptances pursuant to this Section,
a Global Borrowing Base Deficiency remains as a result of any LC Exposure or any
“LC Exposure” under the U.S. Credit Agreement, Borrower shall pay to the Global
Administrative Agent an amount equal to such remaining Global Borrowing Base
Deficiency to be held as cash collateral as provided in Section 2.4(i);
 
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(ii) in the case of a Canadian Borrowing Base Deficiency resulting from a
redetermination or reduction of the Global Borrowing Base, take the action
described under clause (i) above (except that prepayments shall be made in
respect of Loans made pursuant to this Agreement);
 
(iii) in the case of a Canadian Borrowing Base Deficiency resulting from an
asset disposition pursuant to Section 2.7(g) of the U.S. Credit Agreement,
utilize the Net Proceeds of such asset disposition to take the action described
under clause (i) above (except that prepayments shall first be made in respect
of Loans made pursuant to this Agreement); provided that if a prepayment or
deposit is required under this clause (iii), then Borrower shall be obligated to
make such prepayment and/or deposit of cash collateral on the Business Day
immediately following the receipt by Borrower or any other Loan Party of any Net
Proceeds from such asset disposition;
 
(iv) in the case of a Canadian Borrowing Base Deficiency resulting from a
reallocation of the Global Borrowing Base pursuant to Section 2.7(d) of the U.S.
Credit Agreement, prepay Loans in an aggregate principal amount equal to such
deficiency, together with interest on the principal amount paid accrued to the
date of such prepayment, and if a Canadian Borrowing Base Deficiency remains
after prepaying all of the Loans as a result of any LC Exposure, pay to the
Global Administrative Agent an amount equal to such remaining Canadian Borrowing
Base Deficiency to be held as cash collateral as provided in Section 2.4(i); it
being understood that Borrower shall be obligated to make such prepayment and/or
deposit of cash collateral on the effective date of such reallocation;
 
(v) notwithstanding anything in this Section 2.10 to the contrary, in the event
that a Canadian Borrowing Base Deficiency exists at a time when no Global
Borrowing Base Deficiency exists, then, to the extent that such action would
cure (in whole or in part) such Canadian Borrowing Base Deficiency, Borrower may
reallocate the Global Borrowing Base between the Allocated U.S. Borrowing Base
and the Allocated Canadian Borrowing Base by providing the Global Administrative
Agent and the Canadian Administrative Agent with its election to do so (which
election will designate the relevant reallocations) on the Business Day on which
such Canadian Borrowing Base Deficiency occurs; provided, however, that no
reallocation shall be permitted to the extent such reallocation would cause the
aggregate “Credit Exposure” of the U.S. Lenders under the U.S. Credit Agreement
to be greater than the lesser of the aggregate “Commitments” thereunder and the
Allocated U.S. Borrowing Base; and
 
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(vi) in the case of a Global Borrowing Base Deficiency or any Canadian Borrowing
Base Deficiency not resulting from a reason described in clauses (i), (ii),
(iii) or (iv) above, Borrower will prepay within thirty (30) days the Loans and
“Loans” under the U.S. Credit Agreement in an aggregate principal amount equal
to such Global Borrowing Base Deficiency or Canadian Borrowing Base Deficiency
together, in each case, with unpaid interest thereon accrued to the date of such
prepayment and, if after prepaying all such Loans and “Loans” under the U.S.
Credit Agreement, a Global Borrowing Base Deficiency remains as a result of any
LC Exposure, pay to the Global Administrative Agent an amount equal to such
remaining Global Borrowing Base Deficiency to be held as cash collateral as
provided in Section 2.4(i).
 
(c) Notwithstanding any other provision of this Section 2.10, if at any time the
Credit Exposure of any Lender exceeds its Commitment, Borrower will forthwith
prepay the Loans of such Lender in an aggregate principal amount equal to such
excess, together with interest on the principal amount paid accrued to the date
of such prepayment, and if any excess remains after prepaying all of such Loans
as a result of any LC Exposure of such Lender, pay to the Global Administrative
Agent an amount equal to such remaining excess to be held as cash collateral for
such Lender as provided in Section 2.4(i). Borrower shall make prepayments
pursuant to this clause (c) prior to making prepayments pursuant to clause (b)
above.
 
(d) Borrower shall notify the Global Administrative Agent and the Canadian
Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 1:00 p.m., Toronto time, two Business Days before the date of prepayment or
(ii) in the case of prepayment of a Canadian Prime Borrowing or USBR Borrowing,
not later than 11:00 a.m., Toronto time, on the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid (which
amount shall be in a minimum principal amount of U.S.$1,000,000 or C$1,000,000,
as the case may be (or the aggregate amount of the Obligations hereunder at such
time, if a lesser amount), and in U.S.$500,000 or C$500,000 increments in excess
thereof (or such other lesser amount in excess thereof in the event that
prepayment is with respect to all Obligations hereunder)); provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.8, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.8. Promptly following receipt of any such notice
relating to a Borrowing, the Canadian Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
be in an amount that would be permitted in the case of an advance of a Borrowing
of the same Type as provided in Section 2.2. Each prepayment of a Borrowing
shall be applied ratably to the Loans included in the prepaid Borrowing.
Prepayments shall be accompanied by accrued interest to the extent required by
Section 2.12 and by any other amounts then due under this Agreement (including
all amounts due under Section 2.16).
 
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SECTION 2.11 Fees.
 
(a) Borrower agrees to pay to the Canadian Administrative Agent for the account
of each Lender a commitment fee (the “Commitment Fee”), which shall accrue at
the Applicable Rate for Commitment Fees on the daily amount equal to the
Applicable Percentage of such Lender of the Unutilized Commitment during the
period from and including the Global Effective Date to but excluding the date on
which the Commitments terminate. Accrued Commitment Fees shall be payable in
arrears on the last day of March, June, September and December of each year and
on the date on which the Commitments terminate, commencing on the first such
date to occur after the date of this Agreement; provided that any Commitment
Fees accruing after the date on which the Commitments terminate shall be payable
on demand. All Commitment Fees shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).
 
(b) Borrower agrees to pay (i) to the Canadian Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit, which shall accrue at the Applicable Rate for Eurodollar
Loans on the average daily amount of such Lender’s LC Exposure during the period
from and including the date of this Agreement to but excluding the later of the
date on which the Commitments terminate and the date on which the Lenders cease
to have any LC Exposure, (ii) from and after the date one or more Persons (in
addition to JPMorgan Chase Bank, N.A., Toronto Branch) becomes a Lender
hereunder, to the Issuing Bank a fronting fee equal to the greater of
(A) U.S.$500 or C$500, depending on the Currency in which the relevant Letter of
Credit is denominated, and (B) the rate of 0.125% per annum on the face amount
of each Letter of Credit issued by the Issuing Bank, and (iii) to the Issuing
Bank, such Issuing Bank’s standard fees with respect to the administration,
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Accrued participation fees shall be payable in arrears
on the last day of each March, June, September and December of each year,
commencing on the first such date to occur after the date of this Agreement;
provided that all such fees shall be payable on the date on which the
Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand. Fronting fees with respect to
any Letter of Credit shall be payable at the time of issuance of such Letter of
Credit. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within ten (10) days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
 
(c) Borrower agrees to pay to the Global Administrative Agent and/or the
Arranger, for its own account and for the account of each Lender, as applicable,
fees in the amounts and at the times separately agreed upon among Borrower, the
Global Administrative Agent and the Arranger, including, without limitation, the
amounts agreed upon in the Fee Letter.
 
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(d) Unless otherwise set forth herein, all fees payable hereunder shall be paid
on the dates due, in immediately available funds in U.S. Dollars, to the Global
Administrative Agent or the Canadian Administrative Agent (or the Issuing Bank,
in the case of fees payable to it), as the case may be, for distribution, in the
case of Commitment Fees and participation fees, to the Lenders entitled thereto.
Fees paid shall not be refundable under any circumstances.
 
SECTION 2.12 Interest.
 
(a) Subject to Section 2.12(f), (g) and (h) and Section 10.13, the Loans
comprising each Canadian Prime Borrowing shall bear interest at the Canadian
Prime Rate plus the Applicable Rate for Canadian Prime Loans, and Loans
comprising each USBR Borrowing shall bear interest at the USBR plus the
Applicable Rate for U.S. Base Rate Loans.
 
(b) Subject to Section 2.12(f), (g) and (h) and Section 10.13, the Loans
comprising each Eurodollar Borrowing shall bear interest at the LIBO Rate for
the Interest Period in effect for such Borrowing plus the Applicable Rate for
Eurodollar Loans.
 
(c) Notwithstanding the foregoing, but subject to Section 2.12(f), (g) and (h)
and Section 10.13, if any principal of or interest on any Loan or any fee or
other amount payable by Borrower hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of overdue principal of any Loan, the rate otherwise applicable to such
Loan as provided in the preceding paragraphs of this Section plus, to the extent
permitted by applicable law, 2% or (ii) in the case of any other amount, the
rate applicable to Canadian Prime Loans as provided in paragraph (a) of this
Section plus, to the extent permitted by applicable law, 2%.
 
(d) Subject to Section 2.12(f), (g) and (h) and Section 10.13, accrued interest
on each Loan (other than a Loan consisting of the acceptance of a Bankers’
Acceptance) shall be payable in arrears on each Interest Payment Date for such
Loan and upon termination of the Commitments; provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand of the
Canadian Administrative Agent or the Required Lenders (through the Canadian
Administrative Agent), (ii) in the event of any repayment or prepayment of any
Loan, accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
 
(e) Subject to Section 2.12(f), (g) and (h) and Section 10.13, all interest
hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Canadian Prime Rate or the U.S. Base Rate
and interest associated with BA Loans shall be computed on the basis of a year
of 365 days (or 366 days in a leap year), and in each case shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day). The applicable Canadian Prime Rate, U.S. Base Rate or LIBO Rate shall
be determined by the Canadian Administrative Agent, and such determination shall
be conclusive absent manifest error.
 
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(f) To the extent permitted by applicable law, any provision of the Interest Act
(Canada) or the Court Order Interest Act (British Columbia) which restricts any
rate of interest set forth herein shall be inapplicable to this Agreement and is
hereby waived by Borrower.
 
(g) The theory of deemed reinvestment shall not apply to the calculation of
interest or payment of fees or other amounts hereunder, notwithstanding anything
contained in this Agreement, acceptance or other evidence of indebtedness or in
any other Loan Document now or hereafter taken by any Agent or any Lender for
the obligations of Borrower under this Agreement, or any other instrument
referred to herein, and all interest and fees payable by Borrower to the
Lenders, shall accrue from day to day, computed as described herein in
accordance with the “nominal rate” method of interest calculation.
 
(h) Where, in this Agreement, a rate of interest or fees is to be calculated on
the basis of a 360-day year, such rate is, for the purpose of the Interest Act
(Canada), equivalent to the said rate (i) multiplied by the actual number of
days in the one year period beginning on the first day of the period of
calculation and (ii) divided by 360.
 
SECTION 2.13 Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:
 
(a) the Canadian Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the LIBO Rate for such Interest Period;
 
(b) the Canadian Administrative Agent is advised by the Required Lenders that
the LIBO Rate for such Interest Period will not adequately and fairly reflect
the cost to such Lenders of making or maintaining their Loans included in such
Borrowing for such Interest Period; or
 
(c) the Canadian Administrative Agent determines in good faith (which
determination shall be conclusive) that by reason of circumstances affecting the
interbank dollar market generally, deposits in U.S. Dollars in the London
interbank dollar market are not being offered for the applicable Interest Period
and in an amount equal to the amount of the Eurodollar Loan requested by
Borrower,
 
then the Canadian Administrative Agent shall give prompt notice thereof to
Borrower and the Lenders by telephone or telecopy and, if given by telephone, as
promptly as practicable thereafter in writing and, until the Canadian
Administrative Agent notifies Borrower and the Lenders that the circumstances
giving rise to such notice no longer exist, (i) any Interest Election Request
that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing for the affected Interest Period shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing,
such Borrowing shall be made as a Eurodollar Loan having the shortest Interest
Period which is not unavailable under clauses (a) through (c) of this Section,
and if no Interest Period is available, as a USBR Borrowing.
 
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SECTION 2.14 Illegality.
 
(a) Notwithstanding any other provision of this Agreement to the contrary, if
(i) by reason of the adoption of any applicable Governmental Rule or any change
in any applicable Governmental Rule or in the interpretation or administration
thereof by any Governmental Authority or compliance by any Lender with any
request or directive (whether or not having the force of law) of any central
bank or other Governmental Authority or (ii) circumstances affecting the London
interbank dollar market or the position of a Lender therein shall at any time
make it unlawful or impracticable in the sole discretion of a Lender exercised
in good faith for such Lender or its Applicable Lending Office to (A) honor its
obligation to make Eurodollar Loans either generally or for a particular
Interest Period provided for hereunder, or (B) maintain Eurodollar Loans either
generally or for a particular Interest Period provided for hereunder, then such
Lender shall promptly notify Borrower thereof through the Canadian
Administrative Agent and such Lender’s obligation to make or maintain Eurodollar
Loans having an affected Interest Period hereunder shall be suspended until such
time as such Lender may again make and maintain Eurodollar Loans having an
affected Interest Period (in which case the provisions of Section 2.14(b) hereof
shall be applicable). Before giving such notice pursuant to this Section 2.14,
such Lender will designate a different available Applicable Lending Office for
the affected Eurodollar Loans of such Lender or take such other action as
Borrower may request if such designation or action will avoid the need to
suspend such Lender’s obligation to make Eurodollar Loans hereunder and will
not, in the sole opinion of such Lender exercised in good faith, be
disadvantageous to such Lender (provided, that such Lender shall have no
obligation so to designate an Applicable Lending Office for Eurodollar Loans
located in the United States of America).
 
(b) If the obligation of any Lender to make or maintain any Eurodollar Loans
shall be suspended pursuant to Section 2.14(a) hereof, all Loans having an
affected Interest Period which would otherwise be made by such Lender as
Eurodollar Loans shall be made instead as USBR Loans (and, if such Lender so
requests by notice to Borrower with a copy to the Global Administrative Agent
and the Canadian Administrative Agent, each Eurodollar Loan having an affected
Interest Period of such Lender then outstanding shall be automatically converted
into a USBR Loan on the last day of the Interest Period for such Eurodollar
Loans unless earlier conversion is required by applicable law) and, to the
extent that Eurodollar Loans are so made as (or converted into) USBR Loans, all
payments of principal which would otherwise be applied to such Eurodollar Loans
shall be applied instead to such USBR Loans.
 
SECTION 2.15 Increased Costs.
 
(a) If any Change in Law shall:
 
(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
LIBO Rate) or any Issuing Bank; or
 
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(ii) impose on any Lender or any Issuing Bank or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such Lender
or any Letter of Credit or participation therein;
 
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan or BA Loan or Bankers’
Acceptance (or of maintaining its obligation to make any such Loan or BA Loan or
Bankers’ Acceptance ) or to increase the cost to such Lender or such Issuing
Bank of participating in, issuing or maintaining any Letter of Credit or BA Loan
or Bankers’ Acceptance, or to reduce the amount of any sum received or
receivable by such Lender or such Issuing Bank hereunder (whether of principal,
interest or otherwise), then Borrower will pay to such Lender or such Issuing
Bank such additional amount or amounts as will compensate such Lender or such
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
 
(b) If any Lender or any Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or such Issuing Bank’s capital or on the capital of
such Lender’s or such Issuing Bank’s holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender or such Issuing Bank or such Lender’s or such
Issuing Bank’s holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s or such Issuing Bank’s policies and the
policies of such Lender’s or such Issuing Bank’s holding company with respect to
capital adequacy), then Borrower will pay to such Lender or such Issuing Bank,
as the case may be, such additional amount or amounts as will compensate such
Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding
company for any such reduction suffered.
 
(c) A certificate of a Lender or an Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or such Issuing Bank or such
Lender’s or such Issuing Bank’s holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered to Borrower
and shall be conclusive absent manifest error. Borrower shall pay such Lender or
such Issuing Bank, as the case may be, the amount shown as due on any such
certificate within ten (10) days after receipt thereof.
 
(d) Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or such Issuing Bank’s right to demand such compensation; provided that
Borrower shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or such Issuing Bank, as the
case may be, notifies Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or such Issuing Bank’s
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
 
SECTION 2.16 Break Funding Payments. In the event of (a) the payment (including
prepayment) of any principal of any Eurodollar Loan or BA Loan or Bankers’
Acceptance other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any
Eurodollar Loan or BA Loan or Bankers’ Acceptance other than on the last day of
the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.10(b) and is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan or BA Loans or Bankers’ Acceptances other than on the last day
of the Interest Period applicable thereto as a result of a request by Borrower
pursuant to Section 2.19 then, in any such event, Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event. In the case of
a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the London interbank market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to Borrower,
the Global Administrative Agent and the Canadian Administrative Agent and shall
be conclusive absent manifest error. Borrower shall pay such Lender the amount
shown as due on any such certificate within ten (10) days after receipt thereof.
Nothing in this Section 2.16 confers upon the Borrower any right to prepay a BA
Loan or a Bankers’ Acceptance.
 
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SECTION 2.17 Taxes.
 
(a) Any and all payments by or on account of any obligation of Borrower
hereunder or under any other Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section), the Global Administrative Agent,
the Canadian Administrative Agent, each Lender or Issuing Bank (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions and
(iii) Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law; provided that if a Lender is in
breach of its representation and warranty under Section 2.17(e), then Borrower
shall only be obligated to comply with clauses (ii) and (iii) of this Section
2.17(a) with respect to payments to be made to such Lender.
 
(b) In addition, Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.
 
(c) Borrower shall indemnify the Global Administrative Agent, the Canadian
Administrative Agent, each Lender and each Issuing Bank, within ten (10) days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Global Administrative Agent, the Canadian Administrative
Agent, such Lender or such Issuing Bank, as the case may be, on or with respect
to any payment by or on account of any obligation of Borrower hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority; provided
that if a Lender is in breach of its representation and warranty under Section
2.17(e), then Borrower shall have no obligations under this Section 2.17(c) with
respect to any payments or liabilities described herein made or owed by such
Lender. A certificate as to the amount of such payment or liability delivered to
Borrower by a Lender or an Issuing Bank, or by either the Global Administrative
Agent or the Canadian Administrative Agent on its own behalf or on behalf of a
Lender or an Issuing Bank, shall be conclusive absent manifest error.
 
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(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by Borrower to a Governmental Authority, if available, Borrower shall deliver to
the Global Administrative Agent and the Canadian Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Global Administrative
Agent and the Canadian Administrative Agent.
 
(e) Each Lender represents and warrants that it is not a Foreign Lender.
 
(f) If Borrower at any time pays an amount under Section 2.17(a), (b) or (c) to
any Lender, the Global Administrative Agent, the Canadian Administrative Agent
or any Issuing Bank, and such payee receives a refund of or credit for any part
of any Indemnified Taxes or Other Taxes which such payee determines in its sole
judgment is made with respect to such amount paid by Borrower, such Lender, the
Global Administrative Agent, the Canadian Administrative Agent or any Issuing
Bank, as the case may be, shall pay to Borrower the amount of such refund or
credit promptly, and in any event within 60 days, following the receipt of such
refund or credit by such payee.
 
SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
 
(a) Borrower shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
Section 2.16 or Section 2.17, or otherwise) prior to the time expressly required
hereunder or under such other Loan Document for such payment (or, if no such
time is expressly required, prior to 12:00 noon, Toronto time), on the date when
due, in immediately available funds in the appropriate Currency, without set off
or counterclaim. Any amounts received after such time on any date may, in the
discretion of the Canadian Administrative Agent, be deemed to have been received
on the next succeeding Business Day for purposes of calculating interest
thereon. All such payments shall be made to the Canadian Administrative Agent
c/o JPMorgan Chase Bank, N.A., Toronto Branch, 200 Bay Street, Royal Bank Plaza,
Suite 1800, Mail Code ON1-1800, Toronto, Ontario, M5J 2J2, Attention: Indrani
Lazarus, Telephone: 416.981.2329, Fax: 416.981.9174, with a copy to JPMorgan
Chase Bank, N.A., Toronto Branch, 200 Bay Street, Royal Bank Plaza, South Tower,
Suite 2000, Toronto, Ontario, M5J 2J2, Attention: Michael Tam, Telephone:
416.981.2323, Fax: 416.981.2375, with a further copy to JPMorgan Chase Bank,
N.A., 1717 Main Street, 4th Floor, Mail Code TX1-2448, Dallas, Texas 75201,
Attention: Scott Fowler, Telephone: 214.290.2162, Fax: 214.290.2332, with a
further copy to JPMorgan Chase Bank, N.A., 10 South Dearborn, Floor 19, Chicago,
Illinois 60603-2003, Attention: Susan Dugan, Telephone: 312.385.7143, Fax:
312.385.7096, except payments to be made directly to an Issuing Bank as
expressly provided herein and payments pursuant to Section 2.15, Section 2.16 or
Section 2.17(a), Section 2.17(c) and Section 10.3 shall be made directly to the
Persons entitled thereto and payments pursuant to other Loan Documents shall be
made to the Persons specified therein. The Canadian Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. Except as set
forth in clause (a) of the definition of “Interest Period”, if any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made in
the appropriate Currency as required pursuant to the Loan Documents.
 
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(b) If at any time insufficient funds are received by and available to the
Canadian Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.
 
(c) If any Lender shall, by exercising any right of set off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders to the extent necessary
so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements; provided that
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to Borrower or any Subsidiary or Affiliate thereof (as to which the
provisions of this paragraph shall apply). Borrower consents to the foregoing
and agrees, to the extent it may effectively do so under applicable law, that
any Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of Borrower
in the amount of such participation.
 
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(d) Unless the Canadian Administrative Agent shall have received notice from
Borrower prior to the date on which any payment is due to the Canadian
Administrative Agent for the account of the Lenders or an Issuing Bank hereunder
that Borrower will not make such payment, the Canadian Administrative Agent may
assume that Borrower has made such payment on such date in accordance herewith
and may, in reliance upon such assumption, distribute to the Lenders or an
Issuing Bank, as the case may be, the amount due. In such event, if Borrower has
not in fact made such payment, then each of the Lenders or each of the Issuing
Banks, as the case may be, severally agrees to repay to the Canadian
Administrative Agent forthwith on demand the amount so distributed to such
Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Global Administrative Agent, at the greater of the costs incurred
by the Canadian Administrative Agent for making such distributed amount and a
rate determined by the Global Administrative Agent in accordance with banking
industry rules on interbank compensation.
 
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.4(d), (e), Section 2.5(b), Section 2.18(d) or Section
10.3(c) then the Canadian Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Canadian Administrative Agent for the account of such Lender to
satisfy such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid.
 
SECTION 2.19 Mitigation Obligations; Replacement of Lenders.
 
(a) If any Lender requests compensation under Section 2.15, or if Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different Applicable Lending
Office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or Affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.15 or Section 2.17, as the case
may be, in the future and (ii) would not subject such Lender to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender.
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.
 
(b) If (i) any Lender asserts that events have occurred suspending its
obligation to make or maintain Eurodollar Loans under Section 2.14 when
substantially all other Lenders have not also done so, (ii) any Lender requests
compensation under Section 2.15, (iii) Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.17, or (iv) any Lender defaults in its
obligation to fund Loans hereunder, then Borrower may, at its sole expense and
effort, upon notice to such Lender, the Canadian Administrative Agent and the
Global Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the terms of Section 10.4), all its
interests, rights and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (1) Borrower shall have received the
prior written consents of the Global Administrative Agent and the Canadian
Administrative Agent, which consents shall not unreasonably be withheld or
delayed, (2) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder as of such time, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or Borrower (in the case of all other
amounts), (3) the assignee and assignor shall have entered into an Assignment
and Assumption, and (4) in the case of any such assignment resulting from a
claim for compensation under Section 2.15 or payments required to be made
pursuant to Section 2.17, such assignment will result in a reduction in such
compensation or payments.
 
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SECTION 2.20 Currency Conversion and Currency Indemnity.
 
(a) Payments in Agreed Currency. Borrower shall make payment relative to any
Obligation in the currency (the “Agreed Currency”) in which the Obligation was
effected. If any payment is received on account of any Obligation in any
currency (the “Other Currency”) other than the Agreed Currency (whether
voluntarily or pursuant to an order or judgment or the enforcement thereof or
the realization of any Collateral or the liquidation of Borrower or otherwise
howsoever), such payment shall constitute a discharge of the liability of
Borrower hereunder and under the other Loan Documents in respect of such
obligation only to the extent of the amount of the Agreed Currency which the
relevant Lender or Agent, as the case may be, is able to purchase with the
amount of the Other Currency received by it on the Business Day next following
such receipt in accordance with its normal procedures and after deducting any
premium and costs of exchange.
 
(b) Conversion of Agreed Currency into Judgment Currency. If, for the purpose of
obtaining or enforcing judgment in any court in any jurisdiction, it becomes
necessary to convert into a particular currency (the “Judgment Currency”) any
amount due in the Agreed Currency then the conversion shall be made on the basis
of the rate of exchange prevailing on the next Business Day following the date
such judgment is given and in any event Borrower shall be obligated to pay the
Agents and the Lenders any deficiency in accordance with Section 2.20(c). For
the foregoing purposes “rate of exchange” means the rate at which the relevant
Lender or Agent, as applicable, in accordance with its normal banking procedures
is able on the relevant date to purchase the Agreed Currency with the Judgment
Currency after deducting any premium and costs of exchange.
 
(c) Circumstances Giving Rise to Indemnity. To the fullest extent permitted by
applicable law, if (i) any Lender or any Agent receives any payment or payments
on account of the liability of Borrower hereunder pursuant to any judgment or
order in any Other Currency, and (ii) the amount of the Agreed Currency which
the relevant Lender or Agent, as applicable, is able to purchase on the Business
Day next following such receipt with the proceeds of such payment or payments in
accordance with its normal procedures and after deducting any premiums and costs
of exchange is less than the amount of the Agreed Currency due in respect of
such liability immediately prior to such judgment or order, then Borrower on
demand shall, and Borrower hereby agrees to, indemnify the Lenders and the
Agents from and against any loss, cost or expense arising out of or in
connection with such deficiency.
 
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(d) Indemnity Separate Obligation. To the fullest extent permitted by applicable
law, the agreement of indemnity provided for in Section 2.20(c) shall constitute
an obligation separate and independent from all other obligations contained in
this Agreement, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by the Lenders or Agents or
any of them from time to time, and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due hereunder or under any judgment or order.
 
SECTION 2.21 Bankers’ Acceptances. Subject to the terms and conditions of this
Agreement, the Commitments may be utilized, upon the request of Borrower, in
addition to the Loans provided for by Section 2.2 and the issuance of Letters of
Credit provided for by Section 2.4, for the acceptance by the Lenders of
Bankers’ Acceptances issued by Borrower, provided that in no event shall (i) the
aggregate amount of all Bankers’ Acceptance Liabilities together with the
Equivalent Amount in U.S. Dollars of the aggregate principal amount of the Loans
(excluding Bankers’ Acceptances and BA Loans) and the aggregate amount of all LC
Exposure exceed (A) in the event that availability under this Agreement and the
U.S. Credit Agreement is governed by the Global Borrowing Base, the lesser of
(1) the aggregate amount of the Allocated Canadian Borrowing Base then in effect
and (2) the aggregate amount of the Commitments of the Lenders or (B) otherwise,
the aggregate amount of the Commitments of the Lenders, and (ii)  Bankers’
Acceptances shall have maturities of 30, 60, or 90 days from the Acceptance Date
(and shall in no event mature on a date after the Maturity Date). Whenever
Borrower is required to furnish a notice to the Canadian Administrative Agent
pursuant to the following additional provisions of this Section, it shall give a
copy of such notice to the Global Administrative Agent. The following additional
provisions shall apply to Bankers’ Acceptances:
 
(a) In order to facilitate and expedite the issuance and acceptance of Bankers’
Acceptances hereunder, Borrower agrees to the terms and conditions of the Power
of Attorney with respect to the Bankers’ Acceptance attached hereto as Exhibit
F.
 
(b) When Borrower wishes to make a Borrowing by way of Bankers’ Acceptances,
Borrower shall submit to the Canadian Administrative Agent and the Global
Administrative Agent prior written notice with respect to the issuance of the
Bankers’ Acceptances (such written notice a “Bankers’ Acceptance Request”) by
not later than 1:00 p.m., Toronto time, three (3) Business Days’ prior to the
Acceptance Date. Each Bankers’ Acceptance Request shall be irrevocable and
binding on Borrower. Borrower shall indemnify each Lender against any loss or
expense incurred by such Lender as a result of any failure by Borrower to
fulfill or honor before the date specified as the Acceptance Date, the
applicable conditions set forth in Article IV, if, as a result of such failure
the requested Bankers’ Acceptance is not made on such date. Unless otherwise
agreed among the Canadian Administrative Agent, the Global Administrative Agent
and the Lenders, the aggregate amount of all Bankers’ Acceptances issued on any
Acceptance Date hereunder shall be in amounts not less than C$1,000,000 and in
integral multiples of C$500,000, and shall be accepted pro rata by all Lenders
relative to their respective Applicable Percentage, rounded, upwards or
downwards, as the case may be, to the nearest C$500,000. Upon receipt of a
Bankers’ Acceptance Request, the Canadian Administrative Agent shall advise each
Lender of the contents thereof. There shall not at any time be more than a total
of six (6) Bankers’ Acceptances outstanding.
 
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(c) [Intentionally omitted.]
 
(d) On the Acceptance Date at 10:30 a.m., Toronto time, the Canadian
Administrative Agent shall determine the Bankers’ Acceptance Rate for each of
the Accepting Lenders. Not later than 2:00 p.m., Toronto time, each such
Accepting Lender shall accept and purchase its share of the Bankers’ Acceptances
that are issued and shall make available to the Canadian Administrative Agent,
in accordance with Section 2.5, the BA Net Proceeds of the purchase of Bankers’
Acceptances on such day by such Lender. The Canadian Administrative Agent shall
transfer to Borrower those BA Net Proceeds of the Bankers’ Acceptances and shall
notify Borrower and each such Lender by facsimile or telephone (if by telephone,
to be confirmed subsequently in writing) of the details of the issue, pursuant
to a notice in substantially the form attached hereto as Exhibit I. Each
Accepting Lender may at any time and from time to time hold, sell, rediscount or
otherwise dispose of any or all Bankers’ Acceptances accepted and purchased by
it.
 
On the Acceptance Date, Borrower shall pay each Accepting Lender and each Lender
providing a BA Loan a Stamping Fee with respect to each Bankers’ Acceptance and
each BA Loan and each Lender is hereby authorized to deduct such Stamping Fee
prior to remitting the BA Net Proceeds to the Canadian Administrative Agent.
 
For each Bankers’ Acceptance or BA Loan, the Stamping Fee payable by Borrower
shall be the product obtained by multiplying:
 
(i) the applicable Bankers’ Acceptance Stamping Fee specified in the definition
of Applicable Rate in effect from time to time; by
 
(ii) the Principal Amount of that Bankers’ Acceptance or BA Loan;
 
and prorating that product for the number of days in the term from and including
the Acceptance Date to but not including the BA Maturity Date of that Bankers’
Acceptance or the Interest Period for the BA Loan, as the case may be, on the
basis of a year of 365 days.
 
(e) On each day during the period commencing with the issuance by Borrower of
any Bankers’ Acceptance and until such Bankers’ Acceptance Liability shall have
been paid by Borrower, the Commitment of each Accepting Lender that is able to
extend credit by way of Bankers’ Acceptances shall be deemed to be utilized for
all purposes of this Agreement in an amount equal to the Principal Amount of
such Bankers’ Acceptance.
 
The Commitment of any Lender providing a BA Loan rather than Bankers’
Acceptances shall be deemed utilized during this period in an amount equal to
the Principal Amount of such BA Loan.
 
(f) Borrower agrees to pay on the BA Maturity Date for each Bankers’ Acceptance,
to the Canadian Administrative Agent for account of each Accepting Lender, an
amount equal to the Bankers’ Acceptance Liability for such Bankers’ Acceptance.
 
Borrower hereby waives presentment for payment of Bankers’ Acceptances by the
Accepting Lenders and any defense to payment of amounts due to an Accepting
Lender in respect of a Bankers’ Acceptance which might exist by reason of such
Bankers’ Acceptance being held at maturity by the Accepting Lender which
accepted it and agrees not to claim from such Lenders any days of grace for the
payment at maturity of Bankers’ Acceptances.
 
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(g) In the event Borrower fails to notify the Canadian Administrative Agent in
writing not later than 1:00 p.m., Toronto time, on the Business Day prior to any
BA Maturity Date that Borrower intends to pay with Borrower’s own funds the
Bankers’ Acceptance Liabilities due on such BA Maturity Date or fails to make
such payment, Borrower shall be deemed for all purposes to have given the
Canadian Administrative Agent notice of a borrowing of a Canadian Prime Loan
pursuant to Section 2.3 for an amount equal to the Principal Amount of such
Bankers’ Acceptances; provided that:
 
(i) the BA Maturity Date for such Bankers’ Acceptances shall be considered to be
the date of such borrowing;
 
(ii) the proceeds of such Canadian Prime Loan shall be used to pay the amount of
the Bankers’ Acceptance Liability due on such BA Maturity Date;
 
(iii) if after giving effect to such Canadian Prime Loan, a Canadian Borrowing
Base Deficiency would exist, the Global Administrative Agent shall so advise
Borrower and Borrower shall comply with the provisions of Section 2.10;
 
(iv) each Lender which has made a maturing BA Loan (in accordance with Section
2.21(h) hereof) shall continue to extend credit to Borrower by way of a Canadian
Prime Loan (without further advance of funds to Borrower) in the Principal
Amount equal to its Applicable Percentage of the total amount of credit
requested to be extended by Bankers’ Acceptances when the BA Loan was made; and
 
(v) the Canadian Administrative Agent shall promptly and in any event within
three (3) Business Days following the BA Maturity Date of such Bankers’
Acceptances, notify Borrower in writing of the making of such Canadian Prime
Loan pursuant to this Section 2.21(g).
 
(h) If, in the sole judgment of a Lender, such Lender is unable, as a result of
applicable law or customary market practice, to extend credit by way of Bankers’
Acceptance in accordance with this Agreement, such Lender shall give notice to
such effect to the Canadian Administrative Agent and Borrower prior to 1:00
p.m., Toronto time, on the date of the requested credit extension (which notice
may, if so stated therein, remain in effect with respect to subsequent requests
for extension of credit by way of Bankers’ Acceptance until revoked by notice to
the Global Administrative Agent, the Canadian Administrative Agent and Borrower)
and shall make available to the Canadian Administrative Agent, in accordance
with Section 2.1 hereof prior to 2:00 p.m., Toronto time, on the date of such
requested credit extension a Canadian Dollar loan (a “BA Loan”) in the Principal
Amount equal to such Lender’s Applicable Percentage of the total amount of
credit requested to be extended by way of Bankers’ Acceptances. The Stamping Fee
for that BA Loan shall be calculated on that Principal Amount. Such BA Loan
shall have an Interest Period equal to the term of the Bankers’ Acceptances for
which it is a substitute and shall bear interest throughout such Interest Period
applicable to that BA Loan at a rate per annum equal to the Bankers’ Acceptance
Rate for such Bankers’ Acceptances plus the Applicable Rate. On the maturity
date of the Bankers’ Acceptances issued concurrently with the advance of the BA
Loan, Borrower shall pay to each Lender which made a BA Loan, in satisfaction of
the BA Loan and accrued interest thereon, an amount equal to the Principal
Amount of such BA Loan, failing which such Principal Amount shall be converted
to a Canadian Prime Loan. The amount of the proceeds of that BA Loan to be
disbursed to Borrower on the Acceptance Date shall be the same amount as if that
Lender had accepted and purchased its Lender’s Applicable Percentage of the
requested Bankers’ Acceptances at a discount from the Principal Amount of that
Bankers’ Acceptance calculated at a discount rate per annum equal to the
Bankers’ Acceptance Rate for the term of such Bankers’ Acceptances in the same
manner that BA Net Proceeds are calculated; provided that the Principal Amount
of such BA Loan shall be the same amount as the face amount of the Bankers’
Acceptance which such Lender would have accepted but for this Section 2.21(h).
 
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(i) [Intentionally omitted.]
 
(j) [Intentionally omitted.]
 
(k) If a Lender determines in good faith, which determination shall be final,
conclusive and binding upon Borrower, and notifies Borrower that, by reason of
circumstances affecting the money market:
 
(i) there is no market for Bankers’ Acceptances generally or of a requested
duration; or
 
(ii) the demand for Bankers’ Acceptances is insufficient to allow the sale or
trading of the Bankers’ Acceptances created and purchased hereunder generally or
in connection with a requested duration;
 
then:
 
(x) the right of Borrower to request Bankers’ Acceptances or a BA Loan of the
affected duration from that Lender shall be suspended until such Lender
determines that the circumstances causing such suspension no longer exist and
such Lender so notifies Borrower; and
 
(y) any Bankers’ Acceptance Request for an affected duration which is
outstanding shall be canceled and the Bankers’ Acceptances or BA Loan requested
therein shall not be made and a Bankers’ Acceptance or BA Loan having the
shortest duration available (or if none) a Canadian Prime Loan shall be made in
its place.
 
(l) It is the intention of the Canadian Administrative Agent, the Lenders and
Borrower that, except to the extent a Lender advises otherwise, pursuant to the
Depository Bills and Notes Act (“DBNA”), all Bankers’ Acceptances accepted by
the Lenders under this Agreement shall be issued in the form of a “depository
bill” (as defined in the DBNA), deposited with the Canadian Depository for
Securities Ltd. and made payable to CDS & Co. In order to give effect to the
foregoing, the Canadian Administrative Agent shall, subject to the approval of
Borrower and the Lenders, establish and notify Borrower and the Lenders of any
procedure, consistent with the terms of this Agreement and the requirements of
the DBNA, as is reasonably necessary to accomplish such intention, including,
without limitation:
 
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(i) any instrument held by the Canadian Administrative Agent or a Lender for
purposes of Bankers’ Acceptances shall have marked prominently and legibly on
its face and within its text, at or before the time of issue, the words “This is
a depository bill subject to the Depository Bills and Notes Act (Canada)”;
 
(ii) any reference to the authentication of the Bankers’ Acceptances will be
removed; and
 
(iii) any reference to “bearer” will be removed and no Bankers’ Acceptance shall
be marked with any words prohibiting negotiation, transfer or assignment of it
or of an interest in it.
 
(m) If any Event of Default shall occur and be continuing, on the Business Day
that Borrower receives notice from the Global Administrative Agent, the Canadian
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with BA Exposure representing 66-2/3% or more of
the total BA Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, Borrower shall deposit in an account with the Canadian Administrative
Agent, in the name of the Canadian Administrative Agent and for the benefit of
the Lenders, an amount in cash equal to the BA Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default described in Section 8.1(g).
Borrower shall also deposit cash collateral pursuant to this paragraph as and to
the extent required by Section 2.10, and any such cash collateral so deposited
and held by the Canadian Administrative Agent hereunder shall constitute part of
the Global Borrowing Base for purposes of determining compliance with Section
2.10. Each such deposit shall be held by the Canadian Administrative Agent as
collateral for the payment and performance of the obligations of Borrower under
this Agreement. The Canadian Administrative Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such account.
Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the Canadian
Administrative Agent and at Borrower’s risk and expense, such deposits shall not
bear interest. Interest or profits, if any, on such investments shall accumulate
in such account. Moneys in such account shall be applied by the Canadian
Administrative Agent for the satisfaction of the obligations of Borrower with
respect to the BA Exposure at such time or, if the maturity of the Loans has
been accelerated (but subject to the consent of Lenders with BA Exposure
representing 66-2/3% or more of the total BA Exposure), be applied to satisfy
other obligations of Borrower under this Agreement. If Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to Borrower within three (3) Business Days after all Events of
Default have been cured or waived. If Borrower is required to provide an amount
of cash collateral hereunder pursuant to Section 2.10, such amount (to the
extent not applied as aforesaid) shall be returned to Borrower as and to the
extent that, after giving effect to such return, Borrower would remain in
compliance with Section 2.10 and no Default shall have occurred and be
continuing.
 
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ARTICLE III
Representations and Warranties
 
In order to induce the Global Administrative Agent, the Canadian Administrative
Agent, the other Agents, any Issuing Bank and the Lenders to enter into this
Agreement and to make Loans (including making BA Loans and accepting Bankers’
Acceptances) and issue or participate in any Letters of Credit hereunder,
Borrower represents and warrants to the Global Administrative Agent, the
Canadian Administrative Agent, any Issuing Bank and the Lenders as set forth in
this Article.
 
SECTION 3.1 Organization; Powers. Each of Borrower and its Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
 
SECTION 3.2 Authorization; Enforceability. The execution, delivery and
performance by Borrower of this Agreement and each other Loan Document executed
or to be executed by it, and the execution, delivery and performance by each
other Loan Party of each Loan Document executed or to be executed by it, are
within Borrower’s and each such other Loan Party’s corporate, limited liability
company and/or partnership powers, and have been duly authorized by all
necessary corporate, limited liability company and/or partnership action, and if
required, stockholder, member and/or partner action. This Agreement and each
other Loan Document executed or to be executed by it has been duly executed and
delivered by Borrower and constitutes, and each other Loan Document executed or
to be executed by any other Loan Party, when executed and delivered by such
other Loan Party, will constitute, a legal, valid and binding obligation of
Borrower or such Loan Party (as the case may be), enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
 
SECTION 3.3 Approvals; No Conflicts. The execution, delivery and performance by
Borrower of this Agreement and each other Loan Document executed or to be
executed by it, and the execution, delivery and performance by each other Loan
Party of each Loan Document executed or to be executed by such other Loan Party,
(a) do not require any Governmental Approval or third party approvals, except
such as have been obtained or made and are in full force and effect and except
filings necessary to perfect Liens created under the Loan Documents, (b) will
not violate any applicable Governmental Rule or the Organic Documents of
Borrower or any such other Loan Party or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon Borrower or any such Loan Party or
its assets, or give rise to a right thereunder to require any payment to be made
by Borrower or any such other Loan Party, (d) will not result in the creation or
imposition of any Lien on any asset of Borrower or any such other Loan Party
except Liens created under the Loan Documents.
 
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SECTION 3.4 Properties. Each of Borrower and its Restricted Subsidiaries owns
its Properties free and clear of all Liens (other than Liens permitted by
Section 7.2 of the U.S. Credit Agreement).
 
SECTION 3.5 Compliance with Laws and Agreements. Each of Borrower and its
Restricted Subsidiaries is in compliance with all Governmental Rules applicable
to such Person or its Property and all indentures, agreements and other
instruments binding upon it or its Property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. No Default has occurred and is continuing.
 
SECTION 3.6 Unfunded Pension Liabilities. The unfunded pension or similar
liabilities of Borrower and its Subsidiaries do not in the aggregate exceed an
amount which could reasonably be expected to have a Material Adverse Effect.
 
SECTION 3.7 Disclosure. Borrower has disclosed to the Lenders, the Canadian
Administrative Agent and the Global Administrative Agent all agreements, court
orders, judgments, instruments and corporate or other restrictions to which
Borrower or any of its Subsidiaries is subject, and all other matters known to
any of them relating to any of the foregoing, which agreements, court orders,
judgments, instruments, restrictions and other matters individually or in
aggregate could reasonably be expected to result in a Material Adverse Effect.
None of the documents, reports, financial statements, certificates or other
information furnished by or on behalf of Borrower or any of its Subsidiaries to
the Global Administrative Agent, the Canadian Administrative Agent or any Lender
in connection with the negotiation of this Agreement or any other Loan Document
or delivered hereunder or thereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
 
SECTION 3.8 Priority; Security Matters. The Combined Obligations are and shall
be at all times secured by Liens in all Collateral located in Canada or the
United States to the extent perfection has or will occur by the filing of a UCC
financing statement in the state of incorporation or formation of each
applicable Loan Party (as defined herein and in the U.S. Credit Agreement),
filing a mortgage in real property records of the county in which such real
property or fixtures is located (or adjacent in the case of properties located
on the Outer Continental Shelf), filing of an instrument to create a floating
charge under the laws of Canada (or any applicable Province), or by possession,
and, except for Liens permitted by Section 7.2 of the U.S. Credit Agreement, all
such Liens shall be first priority Liens.
 
SECTION 3.9 Solvency. Immediately after the consummation of the Financing
Transactions to occur on the Global Effective Date, (a) no Loan Party will have
unreasonably small capital with which to conduct the business in which such Loan
Party is engaged as such business is now conducted and is proposed to be
conducted following the Global Effective Date; and (b) Borrower and each other
Loan Party will be Solvent.
 
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SECTION 3.10 Representations and Warranties in U.S. Credit Agreement. Borrower
represents and warrants that each of the representations and warranties
contained in the U.S. Credit Agreement, including, without limitation, Article
III of the U.S. Credit Agreement, pertaining or otherwise applicable to Borrower
and its Restricted Subsidiaries is true, correct and complete in all respects
(except with respect to such representations and warranties which expressly
relate to an earlier date, in which case such representations and warranties are
true, correct and complete as of such earlier date).
 
ARTICLE IV
Conditions
 
SECTION 4.1 Effectiveness. This Agreement shall become effective on the date on
which each of the following conditions is satisfied (or waived in accordance
with Section 10.2):
 
(a) Certain Loan Documents. The Global Administrative Agent (or its counsel)
shall have received from each party thereto either a counterpart of each of the
following documents duly executed on behalf of such party or written evidence
satisfactory to the Global Administrative Agent (which may include telecopy
transmission of a signed signature page of such document) that each such party
has duly executed for delivery to the Global Administrative Agent a counterpart
of each of the following documents which documents must be acceptable to the
Global Administrative Agent in its sole and absolute discretion: this Agreement,
the U.S. Credit Agreement and the Intercreditor Agreement.
 
(b) Fees and Expenses. The Global Administrative Agent, the Canadian
Administrative Agent, the Arranger and the Lenders shall have received all fees,
including the fees agreed upon in the Fee Letter, and other amounts due and
payable pursuant to this Agreement or any other Loan Document on or prior to the
date hereof, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses (including reasonable fees, charges and disbursements of
counsel) required to be reimbursed or paid by any Loan Party hereunder or under
any other Combined Loan Document.
 
SECTION 4.2 Initial Loan. The obligations of (a) the Lenders to make Loans
(including making BA Loans and accepting Bankers’ Acceptances) or (b) any
Issuing Bank to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 10.2):
 
(i) Certain Loan Documents. The Global Administrative Agent (or its counsel)
shall have received from each party thereto either a counterpart of each of the
following documents duly executed on behalf of such party or written evidence
satisfactory to the Global Administrative Agent (which may include telecopy
transmission of a signed signature page of such document) that each such party
has duly executed for delivery to the Global Administrative Agent a counterpart
of each of the following documents: a Facility Guaranty from each Guarantor and
the Fee Letter.
 
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(ii) U.S. Loan Documents. The Global Administrative Agent shall have received
copies of the executed U.S. Loan Documents (other than the U.S. Credit
Agreement) and the conditions for making Loans provided in the U.S. Credit
Agreement shall have been contemporaneously satisfied.
 
(iii) Opinions of Counsel. The Global Administrative Agent shall have received
opinions, dated the Global Effective Date, addressed to the Global
Administrative Agent, the Canadian Administrative Agent, and the Combined
Lenders, from (A) Bull, Houser & Tupper LLP, counsel to Borrower, (B) Hogan &
Hartson L.L.P., U.S. counsel to Borrower, and (C) Blake, Cassels & Graydon, LLP,
counsel to the Canadian Lenders and the U.S. Lenders, in each case in form and
substance acceptable to the Global Administrative Agent, the Canadian
Administrative Agent and its counsel.
 
(iv) Organizational Documents. The Global Administrative Agent shall have
received a certificate of an Authorized Officer of each Loan Party dated as of
the Global Effective Date, certifying:
 
(A) that attached to each such certificate is (1) a true and complete copy of
the Organic Documents of such Loan Party, as the case may be, as in effect on
the Global Effective Date, (2) a true and complete copy of a certificate from
the Governmental Authority of Canada or the province of such entity’s
organization certifying that such entity is duly organized and validly existing
in such jurisdiction, and (3) a true and complete copy of a certificate from the
appropriate Governmental Authority of each province (without duplication)
certifying that such entity is duly qualified and in good standing to transact
business in such province as an extra-provincial corporation, if the failure to
be so qualified or in good standing could reasonably be expected to have a
Material Adverse Effect;
 
(B) that attached to such certificate is a true and complete copy of resolutions
duly adopted by the board of directors or management committee of such Loan
Party, as applicable, authorizing the execution, delivery and performance of
such of the Loan Documents to which such Loan Party is or is intended to be a
party; and
 
(C) as to the incumbency and specimen signature of each officer of such Loan
Party executing such of the Loan Documents to which such Loan Party is or is
intended to be a party.
 
(v) Canadian Lien Searches. The Global Administrative Agent shall have received
(A) the Canadian Lien Searches, all dated reasonably close to the Global
Effective Date, in the discretion of the Global Administrative Agent and in form
and substance satisfactory to the Global Administrative Agent, and (B) evidence
reasonably satisfactory to the Global Administrative Agent that the Liens
indicated by the financing statements (or similar documents) in such Canadian
Lien Searches are permitted by Section 7.2 of the U.S. Credit Agreement or have
been released.
 
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(vi) Priority; Security Interest. The Collateral shall be free and clear of all
Liens, except Liens permitted by Section 7.2 of the U.S. Credit Agreement. All
filings, notices, recordings and other action necessary to perfect the Liens in
the Collateral shall have been made, given or accomplished or arrangements for
the completion thereof satisfactory to the Global Administrative Agent, the
Canadian Administrative Agent and its counsel shall have been made and all
filing fees and other expenses related to such actions either have been paid in
full or arrangements have been made for their payment in full which are
satisfactory to the Global Administrative Agent and the Canadian Administrative
Agent.
 
(vii) Initial Reserve Report. The Global Administrative Agent, the Canadian
Administrative Agent and the Lenders shall have received and shall be satisfied
with the contents, results and scope of the Initial Reserve Report.
 
(viii) Global Effectiveness Notice. The Global Administrative Agent shall have
received the Global Effectiveness Notice.
 
(ix) Other Documents. The Global Administrative Agent and the Canadian
Administrative Agent shall have received such other legal opinions, information,
approvals, instruments and documents as the Global Administrative Agent, the
Canadian Administrative Agent or its counsel may have reasonably requested.
 
(x) Satisfactory Legal Form. All documents executed or submitted pursuant hereto
by and on behalf of Borrower or any other Loan Party shall be in form and
substance reasonably satisfactory to the Global Administrative Agent and its
counsel.
 
The Global Administrative Agent shall notify Borrower and the Lenders of the
Global Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of (A) the Lenders to make Loans
and (B) any Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.2) at or prior to 2:00 p.m., Dallas, Texas time, on
July 28, 2006 (and, in the event such conditions are not so satisfied or waived,
the Commitments shall terminate at such time).
 
SECTION 4.3 Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Banks to issue, amend, renew
or extend any Letter of Credit, is subject to receipt of the request therefor in
accordance herewith and to the satisfaction of the following conditions:
 
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(a) Representations and Warranties. At the time of and immediately after giving
effect to such Borrowing or the issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, the representations and warranties of each
Loan Party set forth in the Loan Documents to which it is a party shall be true
and correct on and as of such date after giving effect to such funding and to
the intended use thereof as if made on and as of such date (or, if stated to
have been made expressly as of an earlier date, were true and correct as of such
date).
 
(b) No Defaults. At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
 
(c) No Material Adverse Effect. At the time of and immediately after giving
effect to such Borrowing or the issuance, amendment, renewal or extension of
such Letter of Credit, no event or events shall have occurred which individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect.
 
(d) Borrowing Request. The Global Administrative Agent and the Canadian
Administrative Agent shall have received a Borrowing Request for any Borrowing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by Borrower
on the date thereof as to the matters specified in paragraphs (a), (b) and (c)
of this Section.
 
ARTICLE V
Affirmative Covenants
 
Borrower agrees with the Global Administrative Agent, the Canadian
Administrative Agent, any Issuing Bank and each Lender that, until the
Commitments have expired or been terminated and Obligations shall have been paid
and performed in full and all Letters of Credit shall have expired or terminated
and all LC Disbursements shall have been reimbursed and no Bankers’ Acceptances
Liabilities are outstanding, Borrower will perform the obligations set forth in
this Article.
 
SECTION 5.1 Compliance Certificate; Notices and Other Information. Borrower will
furnish to each Lender, the Global Administrative Agent and the Canadian
Administrative Agent the following financial statements, reports, notices and
information:
 
(a) Concurrently with any delivery of financial statements under clause (a) or
(b) of Section 5.1 of the U.S. Credit Agreement (which shall also be delivered
to the Canadian Administrative Agent for delivery to the Lenders under this
Agreement), Borrower shall deliver a compliance certificate substantially in the
form of Exhibit A hereto certifying as to whether a Default has occurred and, if
a Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto; and
 
(b) Promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of Borrower or any
Restricted Subsidiary, including, without limitation, any requested Internal
Reserve Report, or compliance with the terms of this Agreement, as the Global
Administrative Agent, the Canadian Administrative Agent or any Lender may
reasonably request.
 
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SECTION 5.2 Notice of Default. Promptly, and in any event within three (3)
Business Days of Borrower or any of its Restricted Subsidiaries becoming aware
of a Default, Borrower will furnish to the Global Administrative Agent and each
Lender written notice thereof, which written notice shall be accompanied by a
statement of an Authorized Officer of Borrower setting forth the details of the
event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.
 
SECTION 5.3 Existence; Conduct of Business. Borrower will, and will cause each
of its Restricted Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect (a) its legal existence and
(b) the rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its business, except where
the failure to so preserve, renew or keep in full force and effect such rights,
licenses, permits, privileges, franchises, patents, copyrights, trademarks or
trade names could not reasonably be expected to result in a Material Adverse
Effect.
 
SECTION 5.4 Casualty and Condemnation. Borrower (a) will furnish to the Global
Administrative Agent and the Lenders written notice promptly, and in any event
within three (3) Business Days of the occurrence, of any Casualty Event to any
Collateral or the commencement of any action or proceeding for the taking of any
material portion of the Collateral or any part thereof or interest therein under
power of eminent domain or by condemnation or similar proceeding and (b) will
ensure that the Net Proceeds of any such event (whether in the form of insurance
proceeds, condemnation awards or otherwise) are collected and applied in
accordance with the applicable provisions of the Combined Loan Documents.
 
SECTION 5.5 Books and Records; Inspection Rights. Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its business and activities. Borrower will, and will cause each of
its Restricted Subsidiaries to, permit any representatives or agents designated
by the Global Administrative Agent, the Canadian Administrative Agent or any
Lender (including any consultants, accountants, lawyers and appraisers), upon
reasonable prior notice and at the reasonable cost and expense of Borrower, to
visit and inspect its Properties, including, without limitation, the Oil and Gas
Properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at reasonable times and without disruption to the conduct of
Borrower’s business; provided, however, so long as no Default shall have
occurred and be continuing, the Global Administrative Agent, the Canadian
Administrative Agent and Lenders agree to limit such visits to one (1) during
each fiscal year of Borrower for which Borrower shall pay the reasonable cost
and expense of the Global Administrative Agent, the Canadian Administrative
Agent or Lender.
 
SECTION 5.6 Compliance with Laws. Borrower will, and will cause each of its
Subsidiaries to, comply with all Governmental Rules applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
 
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SECTION 5.7 Use of Proceeds and Letters of Credit. Borrower will, and will cause
each Subsidiary to, use the proceeds of the Loans (a) to reimburse each Issuing
Bank for LC Disbursements in accordance with Section 2.4(e), or (b) for
Borrower’s and its Subsidiaries’ general corporate purposes, including any
acquisitions. No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that is prohibited by Section 5.11 of the U.S.
Credit Agreement. Letters of Credit will be issued only to support normal and
customary oil and gas operations including, but not limited to, credit support
for insurance or similar items required in support of Borrower’s operations,
undertaken by Borrower or any of its Subsidiaries in the ordinary course of its
business.
 
SECTION 5.8 Additional Subsidiaries. If any additional Restricted Subsidiary is
formed or acquired after the Global Effective Date, then Borrower will cause
such Subsidiary (a) to execute a Facility Guaranty within fifteen (15) Business
Days after such Subsidiary is formed or acquired, (b) to execute a Debenture and
a Pledge Agreement (to the extent necessary to comply with Section 5.15(c) of
the U.S. Credit Agreement) and promptly take such actions to create and perfect
Liens on such Subsidiary’s assets to secure the Obligations as the Global
Administrative Agent shall reasonably request and (c) to pledge or cause to be
pledged, pursuant to such foregoing Debentures and Pledge Agreements, all Equity
Interests in such Restricted Subsidiary within fifteen (15) Business Days after
such Subsidiary is formed or acquired.
 
SECTION 5.9 Further Assurances.
 
(a) Borrower will, and will cause each Loan Party to, execute any and all
further documents, financing statements, agreements and instruments, and take
all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Global
Administrative Agent, the Canadian Administrative Agent or the Required Lenders
may reasonably request, to effect the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Documents or the validity or priority of
any such Lien, all at the expense of the Loan Parties. Borrower also agrees to
provide to the Global Administrative Agent and the Canadian Administrative
Agent, from time to time upon reasonable request of the Global Administrative
Agent or the Canadian Administrative Agent, information which is in the
possession of Borrower or its Restricted Subsidiaries or otherwise reasonably
obtainable by any of them, reasonably satisfactory to the Global Administrative
Agent and the Canadian Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents. The
Security Documents shall remain in effect at all times unless otherwise released
pursuant to the terms of this Agreement.
 
(b) Borrower hereby authorizes the Global Administrative Agent, the Canadian
Administrative Agent and the Lenders to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of Borrower or any other Loan Party where
permitted by law. A carbon, photographic or other reproduction of the Security
Documents or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law. The Global
Administrative Agent will promptly send Borrower any financing or continuation
statements it files without the signature of Borrower or any other Loan Party
and the Global Administrative Agent will promptly send Borrower the filing or
recordation information with respect thereto.
 
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SECTION 5.10 Covenants in U.S. Credit Agreement. Until the payment in full in
cash of all Obligations and the termination or expiration of all Commitments and
Letters of Credit and Bankers’ Acceptances, Borrower covenants and agrees that
Borrower will perform, comply with, observe and fulfill, and will cause each of
its Restricted Subsidiaries to perform, comply with, observe and fulfill, each
of the covenants, agreements and obligations contained in the U.S. Credit
Agreement (or, if the U.S. Credit Agreement has been terminated, the covenants,
agreements and obligations in effect immediately prior to the termination of the
U.S. Credit Agreement) including, without limitation, Article V, Article VI and
Article VII of the U.S. Credit Agreement, pertaining or otherwise applicable to
Borrower and its Restricted Subsidiaries. Borrower hereby irrevocably and
unconditionally agrees to be bound by such covenants, agreements and obligations
applicable to it and such covenants, agreements, and obligations applicable to
it in such capacity are hereby reaffirmed by Borrower.
 
ARTICLE VI
[Not Used]
 
ARTICLE VII
Negative Covenants
 
Borrower agrees with the Global Administrative Agent, the Canadian
Administrative Agent, any Issuing Bank, and each Lender that, until the
Commitments have expired or been terminated and Obligations shall have been paid
and performed in full and all Letters of Credit shall have expired or terminated
and all LC Disbursements shall have been reimbursed and no Bankers’ Acceptances
Liabilities are outstanding, Borrower will perform the obligations set forth in
this Article.
 
SECTION 7.1 Transactions with Affiliates. Borrower will not, and will not permit
any Restricted Subsidiary to, sell, lease or otherwise transfer any Property or
assets to, or purchase, lease or otherwise acquire any Property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) transactions in the ordinary course of business and that are at
prices and on terms and conditions not less favorable to Borrower or such
Restricted Subsidiary than could be obtained on an arm’s-length basis from
unrelated third parties, (b) transactions between or among Borrower and the
Restricted Subsidiaries not involving any other Affiliate, (c) any Restricted
Payment permitted by Section 7.8 of the U.S. Credit Agreement, and (d) any
Investment permitted by Section 7.4 of the U.S. Credit Agreement.
 
SECTION 7.2 Restrictive Agreements. Borrower will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits or restricts (a) the
ability of Borrower or any Restricted Subsidiary to create, incur or permit to
exist any Lien in favor of the Global Administrative Agent and/or the Canadian
Administrative Agent for the benefit of the Combined Lenders upon any of its
Property, or (b) the ability of any Restricted Subsidiary to make Restricted
Payments to Borrower or any other Restricted Subsidiary or to Guarantee
Indebtedness of Borrower or any other Restricted Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Combined Loan Document or any Senior Notes Document, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date of
this Agreement identified on Schedule 7.10 of the U.S. Credit Agreement (but
shall apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition), (iii) the foregoing
shall not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Restricted Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Restricted Subsidiary that is to
be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing
shall not apply to restrictions or conditions imposed by any agreement relating
to secured Indebtedness or other obligations permitted by this Agreement or the
U.S. Credit Agreement if such restrictions or conditions apply only to the
Property or assets securing such Indebtedness or other obligation, and
(v) clause (a) of the foregoing shall not apply to customary provisions in
leases or other agreements restricting the assignment thereof.
 
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SECTION 7.3 No Action to Affect Security Documents. Except for transactions
expressly permitted hereby, Borrower shall not, and shall not permit any of its
Subsidiaries to, do anything to adversely affect the priority of the Liens
created by the Security Documents given or to be given in respect of the
Obligations.
 
ARTICLE VIII
Events of Default
 
SECTION 8.1 Listing of Events of Default. Each of the following events or
occurrences described in this Section 8.1 shall constitute an “Event of
Default”:
 
(a) Non-Payment of Obligations. Any Loan Party shall default in the payment or
prepayment when due of any principal of any Loan (including BA Loans and
Bankers’ Acceptances) or of any reimbursement obligation with respect to any
Letter of Credit or Bankers’ Acceptance; or Borrower shall default in the
payment when due of any interest, fee or of any other obligation hereunder or
under any other Loan Document and such default continues for a period of three
(3) days.
 
(b) Breach of Warranty. Any representation or warranty of any Loan Party made or
deemed to be made hereunder or in any other Loan Document or any other writing
or certificate furnished by or on behalf of any Loan Party to the Global
Administrative Agent, the Canadian Administrative Agent, any other Agent or any
Lender for purposes of or in connection with this Agreement or any such other
Loan Document is or shall be false or misleading when made.
 
(c) Non-Performance of Covenants and Obligations. Any Loan Party shall default
in the due performance and observance of any of its obligations under Section
5.1, Section 5.2, Section 5.3, Section 5.7, or under Article VII, or under
Article V, Article VI or Article VII of the U.S. Credit Agreement.
 
(d) Non-Performance of Other Covenants and Obligations. Any Loan Party shall
default in the due performance and observance of any other agreement contained
herein or in any other Loan Document, and such default shall continue unremedied
for a period of 30 days after notice thereof shall have been given to Borrower
by the Global Administrative Agent or the Required Lenders.
 
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(e) Default on Other Indebtedness. Any Loan Party shall default in the payment
when due of any principal of or interest on any of its other Indebtedness
aggregating U.S.$500,000 or more, or in the payment when due of U.S.$500,000 or
more in the aggregate under one or more Hedging Agreements; or any event
specified in any note, agreement, indenture or other document evidencing or
relating to any such Indebtedness shall occur if the effect of such event is to
cause, or (with the giving of any notice or the lapse of time or both) to permit
the holder or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause, such Indebtedness to become due, or to be
prepaid in full (whether by redemption, purchase, offer to purchase or
otherwise), prior to its stated maturity.
 
(f) [Intentionally omitted.]
 
(g) Bankruptcy and Insolvency. Any Loan Party shall (i) generally fail to pay,
or admit in writing its inability or unwillingness to generally pay, debts as
they become due; (ii) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, receiver and manager, sequestrator or other custodian for
any Loan Party, or any substantial part of the property of any thereof, or make
a general assignment for the benefit of creditors; (iii) in the absence of such
application, consent or acquiescence, permit or suffer to exist the appointment
of a trustee, receiver, receiver and manager, sequestrator or other custodian
for any Loan Party, or for a substantial part of the property of any thereof,
and such trustee, receiver, receiver and manager, sequestrator or other
custodian shall not be discharged within 60 days, provided that each Loan Party
hereby expressly authorizes the Global Administrative Agent and the Canadian
Administrative Agent to appear in any court conducting any relevant proceeding
during such 60-day period to preserve, protect and defend the rights of the
Combined Lenders under the Loan Documents; (iv) permit or suffer to exist the
commencement of any bankruptcy, reorganization, debt arrangement or other case
or proceeding under any bankruptcy or insolvency law (including the Bankruptcy
and Insolvency Act (Canada)), or any dissolution, winding up or liquidation
proceeding, in respect of any Loan Party, and, if any such case or proceeding is
not commenced by such Loan Party, such case or proceeding shall be consented to
or acquiesced in by such Loan Party or shall result in the entry of an order for
relief or shall remain for 60 days undismissed, provided that each Loan Party
hereby expressly authorizes the Global Administrative Agent and the Canadian
Administrative Agent to appear in any court conducting any such case or
proceeding during such 60-day period to preserve, protect and defend the rights
of the Combined Lenders under the Loan Documents; or (v) take any corporate or
partnership action authorizing, or in furtherance of, any of the foregoing.
 
(h) Judgments. One or more judgments or orders for the payment of money in
excess of U.S.$500,000 in the aggregate (exclusive of amounts fully covered by
valid and collectible insurance in respect thereof subject to customary
deductibles or fully covered by an indemnity with respect thereto reasonably
acceptable to the Required Lenders) shall be rendered against any Loan Party and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order, or (ii) such judgment shall have become final and
non-appealable and shall have remained outstanding for a period of 60
consecutive days.
 
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(i) Change in Control. A Change in Control shall occur.
 
(j) Failure of Liens. The Liens created by the Security Documents shall at any
time not constitute a valid and perfected Lien on the collateral intended to be
covered thereby (to the extent perfection by filing, registration, recordation
or possession is required herein or therein) in favor of the Global
Administrative Agent or, except for expiration in accordance with its terms, any
of the Security Documents shall for whatever reason be terminated or cease to be
in full force and effect, or the enforceability thereof shall be contested by
any Loan Party.
 
(k) Event of Default under U.S. Loan Documents. Any “Event of Default” as
defined in the U.S. Loan Documents shall occur; provided that the occurrence of
a “Default” as defined in the U.S. Loan Documents shall constitute a Default
under this Agreement; provided further that if such “Default” or “Event of
Default” is cured or waived under the U.S. Loan Documents, as applicable, then
such “Default” or “Event of Default” shall no longer constitute a Default or an
Event of Default, respectively, under this Agreement.
 
SECTION 8.2 Action if Bankruptcy. If any Event of Default described in Section
8.1(g) shall occur, the Commitments (if not theretofore terminated) shall
automatically terminate and the outstanding principal amount of all outstanding
Loans and all other Obligations hereunder shall automatically be and become
immediately due and payable, without demand, protest or presentment or notice of
any kind, all of which are hereby expressly waived by Borrower and its
Subsidiaries. Without limiting the foregoing, the Lenders shall be entitled to
exercise any and all other remedies available to them under the Loan Documents
and applicable law.
 
SECTION 8.3 Action if Other Event of Default. If any Event of Default (other
than any Event of Default described in Section 8.1(g)) shall occur for any
reason, whether voluntary or involuntary, and be continuing, the Required
Lenders, may, by notice to Borrower declare (a) the Commitments (if not
theretofore terminated) to be terminated and/or (b) all of the outstanding
principal amount of the Loans (including BA Loans and Bankers’ Acceptances) and
all other Obligations hereunder to be due and payable, whereupon the Commitments
shall terminate and the full unpaid amount of such Loans and other Obligations
shall be and become immediately due and payable, without demand, protest or
presentment or notice of any kind, all of which are hereby waived by Borrower
and its Subsidiaries. Without limiting the foregoing, the Lenders shall be
entitled to exercise any and all other remedies available to them under the Loan
Documents and applicable law.
 
ARTICLE IX
Agents
 
Each of the Lenders, the Issuing Banks and the other Agents hereby irrevocably
appoints JPMorgan Chase Bank, N.A. as the Global Administrative Agent and
JPMorgan Chase Bank, N.A., Toronto Branch, as the Canadian Administrative Agent,
and authorizes each such Agent to take such actions on its behalf and to
exercise such powers as are delegated to such Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
 
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Any bank serving as an Agent hereunder shall have the same rights and powers in
its capacity as a Lender as any other Lender and may exercise the same as though
it were not an Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with Borrower or any
Subsidiary or other Affiliate thereof as if it were not an Agent hereunder.
 
The Agents shall not have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing,
(a) the Agents shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (b) each Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that such Agent is required to exercise
following its receipt of written instructions from the Required Lenders (or such
other number or percentage of the Combined Lenders as shall be necessary under
the circumstances as provided in Section 10.2), and (c) except as expressly set
forth in the Loan Documents, the Agents shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to
Borrower or any of its Subsidiaries that is communicated to or obtained by the
bank serving as such Agent or any of its Related Parties in any capacity. Each
Agent shall not be liable for any action taken or not taken by it with the
consent or at the request of the Required Lenders (or such other number or
percentage of the Combined Lenders as shall be necessary under the circumstances
as provided in Section 10.2) or in the absence of its own gross negligence or
willful misconduct; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES
HERETO THAT EACH OF THE AGENTS BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE
(OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR
CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. Each Agent shall
be deemed not to have knowledge of any Default unless and until written notice
thereof is given to such Agent by Borrower or a Lender, and such Agent shall not
be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to such Agent.
 
The Global Administrative Agent, the Canadian Administrative Agent and the other
Agents shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person. The Global Administrative Agent, the Canadian
Administrative Agent and the other Agents also may rely upon any statement made
to it orally or by telephone and believed by it to be made by the proper Person,
and shall not incur any liability for relying thereon. The Global Administrative
Agent, the Canadian Administrative Agent and the other Agents may consult with
legal counsel (who may be counsel for Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.
 
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Any Agent may perform any and all of its duties and exercise its rights and
powers by or through any one or more sub-agents appointed by such Agent. Any
Agent and any such sub agent may perform any and all of its duties and exercise
its rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of such Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as an Agent.
 
Subject to the appointment and acceptance of a successor Global Administrative
Agent or the Canadian Administrative Agent as provided in this paragraph, the
Global Administrative Agent or the Canadian Administrative Agent may resign at
any time by notifying the Combined Lenders and Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Global Administrative Agent or retiring Canadian
Administrative Agent gives notice of its resignation, then the retiring Global
Administrative Agent or the Canadian Administrative Agent may, on behalf of the
Combined Lenders and the Issuing Banks, appoint a successor Global
Administrative Agent or the Canadian Administrative Agent, respectively, which
shall be a bank with an office in New York, New York or Toronto, Canada,
respectively, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Global Administrative Agent or the Canadian Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Global
Administrative Agent or the Canadian Administrative Agent, as the case may be,
and the retiring Global Administrative Agent or the retiring Canadian
Administrative Agent shall be discharged from its duties and obligations
hereunder (other than its obligations under Section 10.12). The fees payable by
Borrower to a successor Global Administrative Agent or successor Canadian
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between Borrower and such successor. After the Global
Administrative Agent’s or Canadian Administrative Agent’s resignation hereunder,
the provisions of this Article and Section 10.3 shall continue in effect for the
benefit of such retiring Global Administrative Agent or retiring Canadian
Administrative Agent, its sub agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Global Administrative Agent or the Canadian Administrative Agent,
respectively.
 
Each Lender acknowledges that it has, independently and without reliance upon
any Agent or any other Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and the Intercreditor Agreement. Each Lender also acknowledges
that it will, independently and without reliance upon any Agent or any other
Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any other Loan Document or any
related agreement or any document furnished hereunder or thereunder.
 
Each of the Lenders, for itself and on behalf of any of its Affiliates, and the
Issuing Banks hereby irrevocably appoints the Global Administrative Agent and
the Canadian Administrative Agent to act as its agent under the Intercreditor
Agreement and authorizes the Global Administrative Agent and the Canadian
Administrative Agent to execute the Intercreditor Agreement on its behalf and to
take such actions on its behalf and to exercise such powers as are delegated to
the Global Administrative Agent or Canadian Administrative Agent, as the case
may be, by the terms hereof and thereof, together with such actions and powers
as are reasonably incidental thereto.
 
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ARTICLE X
Miscellaneous
 
SECTION 10.1 Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
 
(a) if to Borrower, to:
 
Storm Cat Energy Corporation
1125 17th Street, Suite 2310
Denver, Colorado 80202
Attention: Paul Wiesner
Telephone: 303-991-5070
Facsimile: 303-991-5075

with copy to:

Hogan & Hartson L.L.P.
One Tabor Center, Suite 1500
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Richard Mattera
Telephone: 303.454.2471
Facsimile: 303.899.7333

with an additional copy to:

Bull, Housser & Tupper LLP
3000 Royal Center
1055 West Georgia Street
Vancouver British Columbia
Canada V6E 3R3
Attention: David M. Hunter
Telephone: 604.641.4963
Facsimile: 604.646.2634

(b) if to the Global Administrative Agent, to:
 
JPMorgan Chase Bank, N.A.
10 South Dearborn
Floor 19
Chicago, Illinois 60603-2003
Attention: Susan Dugan
Telephone: 312.385.7143
Facsimile: 312.385.7096

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with a copy to:

JPMorgan Chase Bank, N.A.
1717 Main Street, 4th Floor
Mail Code TX1-2448
Dallas, Texas 75201
Attention: Scott Fowler
Telephone: 214.290.2162
Facsimile: 214.290.2332

(c) if to the Canadian Administrative Agent, to:
 
JPMorgan Chase Bank, N.A., Toronto Branch
200 Bay Street
Royal Bank Plaza, Suite 1800
Mail Code ON1-1800
Toronto, Ontario M5J 2J2
Attention: Lehong Zhang
Telephone: 416.981.2329
Facsimile: 416.981.2339

with a copy to:

JPMorgan Chase Bank, N.A., Toronto Branch
200 Bay Street
Royal Bank Plaza South Tower, Suite 2000
Toronto, Ontario M5J 2J2
Attention: Michael Tam
Telephone: 416.981.2323
Facsimile: 416.981.2375

(d) if to any other Lender, to it at its address (or telecopy number) provided
to the Global Administrative Agent, the Canadian Administrative Agent and
Borrower or as set forth in its Administrative Questionnaire; and
 
(e) if to any U.S. Lender, to it at its address (or telecopy number) provided to
the Global Administrative Agent and Borrower or as set forth in its
“Administrative Questionnaire” as defined in the U.S. Credit Agreement.
 
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
 
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SECTION 10.2 Waivers; Amendments.
 
(a) No failure or delay by the Global Administrative Agent, the Canadian
Administrative Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Global Administrative Agent, the
Canadian Administrative Agent, the Issuing Banks and the Lenders hereunder and
under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
any Loan Document or consent to any departure by any Loan Party therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Global Administrative Agent, the Canadian Administrative Agent, any Lender
or any Issuing Bank may have had notice or knowledge of such Default at the
time.
 
(b) Neither this Agreement nor any of the Combined Loan Documents nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Borrower and the Required Lenders or by Borrower and the Global
Administrative Agent and the Canadian Administrative Agent with the consent of
the Required Lenders, or, in the case of any other Combined Loan Document,
pursuant to an agreement or agreements in writing entered into by the relevant
Loan Parties thereto and the Required Lenders or by the relevant Loan Parties
thereto and the Global Administrative Agent and the Canadian Administrative
Agent with the consent of the Required Lenders; provided that the same waiver,
amendment or modification is requested by Borrower in connection with each of
the Combined Credit Agreements; and provided further that no such agreement
shall (i) increase the Commitment of any Lender without the written consent of
such Lender, (ii) reduce, or otherwise release Borrower from its obligation to
pay, the principal amount of any Loan or LC Disbursement or reduce the rate of
interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby, (iii) postpone the scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.18(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each
Lender, (v) change any of the provisions of this Section 10.2, Section 2.10
(unless a lesser vote is otherwise required pursuant to this Section 10.2) or
the definition of “Required Lenders” or any other provision of any Combined Loan
Document specifying the number or percentage of Lenders, U.S. Lenders or
Combined Lenders required to determine or redetermine the Global Borrowing Base,
the Allocated U.S. Borrowing Base or the Allocated Canadian Borrowing Base or
required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Combined Lender, (vi) release any Loan Party from its Facility Guaranty
(except as expressly provided in the U.S. Credit Agreement or in such Facility
Guaranty), or limit its liability in respect of such Facility Guaranty, without
the written consent of each Combined Lender, or (vii) except as expressly
provided herein, in the Intercreditor Agreement or in the Security Documents,
release all or any part of the Collateral from the Liens of the Security
Documents, without the written consent of each Combined Lender; provided,
further, that no such agreement shall change any provision regarding remedies
for a Global Borrowing Base Deficiency or a Canadian Borrowing Base Deficiency
pursuant to Section 2.10, without the written consent of the Borrowing Base
Required Lenders (as defined in the U.S. Credit Agreement); provided further
that no such agreement shall amend, waive, modify or otherwise affect the rights
or duties of any Agent (as defined herein and in the U.S. Credit Agreement) or
any Issuing Bank (as defined herein and in the U.S. Credit Agreement) without
the prior written consent of such Agent (as defined herein and in the U.S.
Credit Agreement) or any Issuing Bank (as defined herein and in the U.S. Credit
Agreement), as the case may be; provided further that the Global Administrative
Agent shall have the right to execute and deliver any release of Lien (or other
similar instrument) without the consent of any Lender to the extent such release
is required to permit Borrower or a Restricted Subsidiary to consummate a
transaction permitted by this Agreement or the other Combined Loan Documents.
 
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SECTION 10.3 Expenses; Indemnity; Damage Waiver.
 
(a) Borrower shall pay (i) all reasonable legal, printing, recording,
syndication, travel, advertising and other reasonable out of pocket expenses
incurred by the Agents, the Arranger and their Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Agents and the
Arranger (on a solicitor and his own client basis), in connection with the
syndication of the credit facilities provided for herein, the preparation,
execution, delivery and administration of this Agreement, the Loan Documents and
each other document or instrument relevant to this Agreement or the Loan
Documents and any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), (ii) all reasonable out of-pocket expenses incurred by an
Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, (iii) the filing,
recording, refiling or rerecording of the Debentures, the Pledge Agreements and
the other Security Documents and/or any financing statements relating thereto
and all amendments, supplements and modifications to, and all releases and
terminations of, any thereof and any and all other documents or instruments of
further assurance required to be filed or recorded or refiled or rerecorded by
the terms hereof or of the Debentures, the Pledge Agreements and the other
Security Documents, and (iv) all out-of-pocket expenses incurred by the Agents,
any Issuing Bank or any Lender, including the fees, charges and disbursements of
any counsel for the Agents, any Issuing Bank or any Lender (on a solicitor and
his own client basis), in connection with the enforcement or protection of its
rights in connection with the Loan Documents, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
 
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(b) Borrower shall indemnify the Agents, each Issuing Bank, the Arranger and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the reasonable out-of-pocket fees, charges and disbursements of any
counsel for any Indemnitee (on a solicitor and his own client basis), incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Financing Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by an Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any Mortgaged Property or any other property currently or formerly
owned or operated by Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to Borrower or any of its Subsidiaries, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity and release shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee (IT BEING UNDERSTOOD THAT IT IS THE INTENTION OF THE PARTIES
HERETO THAT EACH OF THE INDEMNITEES BE INDEMNIFIED IN THE CASE OF ITS OWN
NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE
IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL).
 
(c) To the extent that Borrower fails to pay any amount required to be paid by
Borrower to the Global Administrative Agent, the Canadian Administrative Agent
or an Issuing Bank under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Global Administrative Agent, the Canadian
Administrative Agent or such Issuing Bank, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Global Administrative Agent, the Canadian Administrative Agent or
such Issuing Bank in its capacity as such.
 
(d) To the extent permitted by applicable law, Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Financing
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
 
(e) All amounts due under this Section shall be payable not later than fifteen
(15) days after written demand therefor.
 
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SECTION 10.4 Successors and Assigns.
 
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues any
Letter of Credit), except that Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of the
Global Administrative Agent, each Issuing Bank and each Combined Lender (and any
attempted assignment or transfer by Borrower without such consent shall be null
and void). Nothing in this Agreement, expressed or implied, shall be construed
to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of an Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Global Administrative Agent, the
Issuing Banks and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
 
(b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) to any Person who is not a
Foreign Lender; provided that (i) except in the case of an assignment to a
Lender or a Lender Affiliate, each of Borrower (unless an Event of Default has
occurred and is continuing), the Canadian Administrative Agent and the Global
Administrative Agent (and, in the case of an assignment of all or a portion of a
Commitment or any Lender’s obligations in respect of its LC Exposure, the
Issuing Banks) must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or a Lender Affiliate or an assignment of the entire
remaining amount of the assigning Lender’s Commitment or Loans, the amount of
the Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Global Administrative Agent) shall be in
increments of U.S.$1,000,000 and not less than U.S.$5,000,000 unless each of
Borrower (unless an Event of Default has occurred and is continuing)and the
Global Administrative Agent otherwise consent, (iii) each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Agreement, except that this
clause (iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of its Commitments or Loans in conformity with the Intercreditor
Agreement, (iv) the parties to each assignment shall execute and deliver to the
Global Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of U.S.$3,500, (v) the assignee, if it shall not
be a Lender, shall deliver to the Global Administrative Agent an Administrative
Questionnaire, and (vi) after giving effect to any assignment hereunder, the
assigning Lender shall have a Commitment of at least U.S.$5,000,000 unless each
of Borrower and the Global Administrative Agent otherwise consents; and
provided further that any consent of Borrower otherwise required under this
paragraph shall not be required if an Event of Default under Section 8.1 has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Assumption, the assignee thereunder shall be a party hereto
and to the other Loan Documents and, to the extent of the interest assigned by
such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement and the other Loan Documents (and, in the case
of an Assignment and Assumption covering all of the assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Section 2.15,
Section 2.16, Section 2.17, Section 2.18, Section 2.20 and Section 10.3 and be
subject to the terms of Section 10.12). Any assignment or transfer by a Lender
of rights or obligations under this Agreement that does not comply with this
paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
 
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(c) The Global Administrative Agent and the Canadian Administrative Agent,
acting for this purpose as an agent of Borrower, shall maintain at one of its
offices in Dallas, Texas and Toronto, Canada, respectively, a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, and Borrower, the Global Administrative Agent, the Canadian
Administrative Agent, the Issuing Banks and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement and the other Loan Documents,
notwithstanding notice to the contrary. The Register shall be available for
inspection by Borrower, any Issuing Bank and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
 
(d) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Global Administrative Agent and the Canadian Administrative Agent
shall accept such Assignment and Assumption and record the information contained
therein in the Register and will provide prompt written notice to Borrower of
the effectiveness of such assignment. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
 
(e) Any Lender may, without the consent of Borrower, the Global Administrative
Agent, the Canadian Administrative Agent or any Issuing Bank, sell
participations to one or more banks or other entities which are resident in
Canada for purposes of the Income Tax Act (Canada) (a “Participant”) in all or a
portion of such Lender’s rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans owing to it); provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, and (iii) Borrower, the Global
Administrative Agent, the Canadian Administrative Agent, the Issuing Banks and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the second proviso to Section
10.2(b) that affects such Participant. Subject to paragraph (f) of this Section,
Borrower agrees that each Participant shall be entitled to the benefits of
Section 2.15, Section 2.16 and Section 2.17 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.8 and Section 10.12 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.
 
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(f) A Participant shall not be entitled to receive any greater payment under
Section 2.15, Section 2.16 or Section 2.17 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant.
 
(g) Any Lender may at any time pledge or assign a Lien in all or any portion of
its rights under this Agreement to secure obligations of such Lender, and this
Section shall not apply to any such pledge or assignment; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
 
SECTION 10.5 Survival. All covenants, agreements, representations and warranties
made by the Loan Parties in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that any Agent, any Issuing Bank, the Arranger or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. The provisions of Section 2.15, Section 2.16,
Section 2.17, Section 2.18, Section 2.20, Section 10.3 and Section 10.12 and
Article IX shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
 
SECTION 10.6 Counterparts; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. Except as provided in Section 4.1, this
Agreement shall become effective when it shall have been executed by the Global
Administrative Agent and the Canadian Administrative Agent and when the Global
Administrative Agent and the Canadian Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
 
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SECTION 10.7 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
 
SECTION 10.8 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each of the Agents, the Issuing Banks, the Lenders and their
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of Borrower or any of its Restricted Subsidiaries against
any and all the obligations of Borrower now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured; provided, however, that any such set off and application shall be
subject to the provisions of Section 2.18. 
 
SECTION 10.9 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
 
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE PROVINCE OF BRITISH COLUMBIA AND OF CANADA APPLICABLE THEREIN.
 
(b) BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE PROVINCE OF
BRITISH COLUMBIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY LOAN DOCUMENT, OR
FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURTS OF THE
PROVINCE OF BRITISH COLUMBIA. EACH OF THE PARTIES HERETO AGREES THAT, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENTS OR ANY LENDER MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST
BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
 
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(c) BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b)
OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
 
(d) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
PROVINCE OF BRITISH COLUMBIA. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.
 
SECTION 10.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
 
SECTION 10.11 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
 
SECTION 10.12 Confidentiality. Each of the Agents, the Issuing Banks, and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any Hedging
Agreement(g) with the consent of Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section by any Person or (ii) becomes available to any Agent, any Issuing Bank
or any Lender on a nonconfidential basis from a source other than Borrower or
any of its Affiliates. For purposes of this Section, “Information” means all
information received from Borrower or its Affiliate relating to Borrower and its
Subsidiaries or their business, other than any such information that is
available to any Agent, any Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by Borrower or any of its Affiliates; provided that,
in the case of information received from Borrower after the date of this
Agreement, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information. 
 
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SECTION 10.13 Interest Rate Limitation. It is the intention of the parties
hereto to conform strictly to applicable interest, usury and criminal laws and,
anything herein to the contrary notwithstanding, the obligations of Borrower and
the Guarantors to a Lender, any Issuing Bank or any Agent under this Agreement
or any Loan Document shall be subject to the limitation that payments of
interest shall not be required to the extent that receipt thereof would be
contrary to provisions of law applicable to such Lender, such Issuing Bank or
Agent limiting rates of interest which may be charged or collected by such
Lender, such Issuing Bank or Agent. Accordingly, if the transactions
contemplated hereby or thereby would be illegal, unenforceable, usurious or
criminal under laws applicable to a Lender, any Issuing Bank or any Agent
(including the laws of any jurisdiction whose laws may be mandatorily applicable
to such Lender or Agent notwithstanding anything to the contrary in this
Agreement or any other Loan Document then, in that event, notwithstanding
anything to the contrary in this Agreement or any other Loan Document, it is
agreed as follows:
 
(a) the provisions of this Section shall govern and control;
 
(b) the aggregate of all consideration which constitutes interest under
applicable law that is contracted for, taken, reserved, charged or received
under this Agreement or any Loan Document or otherwise in connection with this
Agreement or any Loan Document by such Lender, such Issuing Bank or such Agent
shall under no circumstances exceed the maximum amount of interest allowed by
applicable law (such maximum lawful interest rate, if any, with respect to each
Lender, each Issuing Bank and the Agents herein called the “Highest Lawful
Rate”), and any excess shall be cancelled automatically and if theretofore paid
shall be credited to Borrower by such Lender, such Issuing Bank or such Agent
(or, if such consideration shall have been paid in full, such excess refunded to
Borrower);
 
(c) all sums paid, or agreed to be paid, to such Lender, such Issuing Bank or
such Agent for the use, forbearance and detention of the indebtedness of
Borrower to such Lender, such Issuing Bank or such Agent hereunder or under any
Loan Document shall, to the extent permitted by laws applicable to such Lender,
such Issuing Bank or such Agent, as the case may be, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until payment
in full so that the actual rate of interest is uniform throughout the full term
thereof;
 
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(d) if at any time the interest provided pursuant to this Section or any other
clause of this Agreement or any other Loan Document, together with any other
fees or compensation payable pursuant to this Agreement or any other Loan
Document and deemed interest under laws applicable to such Lender, such Issuing
Bank or such Agent, exceeds that amount which would have accrued at the Highest
Lawful Rate, the amount of interest and any such fees or compensation to accrue
to such Lender, such Issuing Bank or such Agent pursuant to this Agreement or
such other Loan Document shall be limited, notwithstanding anything to the
contrary in this Agreement or any other Loan Document, to that amount which
would have accrued at the Highest Lawful Rate, but any subsequent reductions, as
applicable, shall not reduce the interest to accrue to such Lender, such Issuing
Bank or such Agent pursuant to this Agreement or such other Loan Document below
the Highest Lawful Rate until the total amount of interest accrued pursuant to
this Agreement or such other Loan Document, as the case may be, and such fees or
compensation deemed to be interest equals the amount of interest which would
have accrued to such Lender or Agent if a varying rate per annum equal to the
interest provided pursuant to any other relevant Section hereof (other than this
Section) or thereof, as applicable, had at all times been in effect, plus the
amount of fees which would have been received but for the effect of this
Section; and
 
(e) with the intent that the rate of interest herein shall at all times be
lawful, and if the receipt of any funds owing hereunder or under any other
agreement related hereto (including any of the other Loan Documents) by such
Lender, such Issuing Bank or such Agent would cause such Lender to charge
Borrower a criminal rate of interest, the Lenders, the Issuing Banks and the
Agents agree that they will not require the payment or receipt thereof or a
portion thereof which would cause a criminal rate of interest to be charged by
such Lender, such Issuing Bank or such Agent, as applicable, and if received
such affected Lender, such Issuing Bank or Agent will return such funds to
Borrower so that the rate of interest paid by Borrower shall not exceed a
criminal rate of interest from the date this Agreement was entered into.
 
SECTION 10.14 Collateral Matters; Hedging Agreements. The benefit of the
Security Documents and of the provisions of this Agreement relating to the
Collateral shall also extend to and be available to those Lenders or their
Affiliates which are counterparties to the Hedging Agreements on a pro rata
basis in respect of any Hedging Obligations of Borrower or any of its Restricted
Subsidiaries that are in effect at such time as such Person (or its Affiliate)
is a Lender, but only while such Person or its Affiliate is a Lender; provided
that it is the intention of the Lenders that receipt of payment in respect of
Hedging Obligations of Borrower and its Restricted Subsidiaries under any
Hedging Agreement with a Combined Lender, or any Affiliate of a Combined Lender
from realization of any Collateral, shall be subject to the terms of the
Intercreditor Agreement and the Security Documents. 
 
SECTION 10.15 Arranger; Other Agents. None of the Persons identified on the
facing page or the signature pages of this Agreement as the “Sole Book Manager
and Lead Arranger” or any future documentation agent or syndication agent shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement or any other Loan Document other than, except in the case of the
Arranger, those applicable to all Lenders as such. Without limiting the
foregoing, none of the Arranger or any future documentation agent or syndication
agent shall have or be deemed to have any fiduciary relationship with any Lender
or Borrower or any of its Subsidiaries. Borrower and each Lender acknowledges
that it has not relied, and will not rely, on any of the Arranger or any future
documentation agent or syndication agent in deciding to enter into this
Agreement or in taking or not taking any action hereunder or under the Loan
Documents.
 
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SECTION 10.16 Intercreditor Agreement; Loan Documents. Each Lender on behalf of
itself and any Affiliate which is a counterparty to a Hedging Agreement
acknowledges and agrees that the Global Administrative Agent has entered into
the Intercreditor Agreement and the Security Documents on behalf of itself, the
other Agents, Lenders and Affiliates thereof that are parties to a Hedging
Agreement, and each of them (by their signature hereto or acceptance of the
benefits of the Security Documents) hereby agrees to be bound by the terms of
the Intercreditor Agreement and such Security Documents, acknowledge receipt of
copies of the Intercreditor Agreement and such Security Documents and consents
to the rights, powers, remedies, indemnities and exculpations given to the
Global Administrative Agent thereunder. For so long as the Intercreditor
Agreement shall be in effect, the terms and conditions of this Agreement and the
other Loan Documents are subject to the terms of the Intercreditor Agreement. In
the event of any inconsistency between this Agreement or any other Loan Document
and the terms of the Intercreditor Agreement, the Intercreditor Agreement shall
control. In the event of any inconsistency between this Agreement and the terms
of any other Loan Document, this Agreement shall control.
 
SECTION 10.17 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
 
[SIGNATURES BEGIN ON FOLLOWING PAGE]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
 

        STORM CAT ENERGY CORPORATION,
a corporation amalgamated under the laws of British Columbia  
   
   
    By:   /s/ Paul Wiesner  

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Paul Wiesner,   Chief Financial Officer

 
 
[Signature Page to Canadian Credit Agreement]
 
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        JPMORGAN CHASE BANK, N.A.,
as Global Administrative Agent  
   
   
    By:   /s/ J. Scott Fowler  

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J. Scott Fowler, Senior Vice President    

 

[Signature Page to Canadian Credit Agreement]

S-2

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JPMORGAN CHASE BANK, N.A., TORONTO BRANCH,
as Canadian Administrative Agent and as a Lender
 
   
   
    By:   /s/ Michael N. Tam  

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Name Michael N. Tam   Title: Senior Vice President

 
[Signature Page to Canadian Credit Agreement]

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