Exhibit 10.2
Execution Version
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 6, 2011
AMONG
QUICKSILVER RESOURCES CANADA INC.,
as BORROWER,
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH,
as ADMINISTRATIVE AGENT,
THE BANK OF NOVA SCOTIA,
as SYNDICATION AGENT,
THE TORONTO-DOMINION BANK AND CANADIAN IMPERIAL BANK OF COMMERCE,
as CO-DOCUMENTATION AGENTS,
AND
THE LENDERS PARTY HERETO
JOINT BOOKRUNNERS
J.P.  MORGAN SECURITIES LLC AND THE BANK OF NOVA SCOTIA

 

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TABLE OF CONTENTS

                      Page  
 
  Article 1        
 
  Definitions and Accounting Matters        
 
           
Section 1.01
  Terms Defined Above     1  
Section 1.02
  Certain Defined Terms     1  
Section 1.03
  Types of Loans and Borrowings     29  
Section 1.04
  Terms Generally; Rules of Construction     29  
Section 1.05
  Accounting Terms and Determinations; GAAP     30  
 
           
 
  Article 2        
 
  The Credits        
 
           
Section 2.01
  Commitments     30  
Section 2.02
  Loans and Borrowings     30  
Section 2.03
  Requests for Borrowings     31  
Section 2.04
  Interest Elections     32  
Section 2.05
  Funding of Borrowings     33  
Section 2.06
  Termination and Reduction of Aggregate Maximum Credit Amounts     34  
Section 2.07
  Borrowing Base     35  
Section 2.08
  Letters of Credit     36  
Section 2.09
  Increase in the Maximum Credit Amounts     41  
Section 2.10
  Defaulting Lenders     42  
Section 2.11
  Currency Conversion and Currency Indemnity     44  
 
           
 
  Article 3        
 
  Payments of Principal and Interest; Prepayments; Fees        
 
           
Section 3.01
  Repayment of Loans     45  
Section 3.02
  Interest     45  
Section 3.03
  Alternate Rate of Interest     46  
Section 3.04
  Prepayments     47  
Section 3.05
  Fees     49  
 
           
 
  Article 4        
 
  Payments; Pro Rata Treatment; Sharing of Set-Offs        
 
           
Section 4.01
  Payments Generally; Pro Rata Treatment; Sharing of Set-offs     50  
Section 4.02
  Presumption of Payment by the Borrower     51  
Section 4.03
  Certain Deductions by the Administrative Agent     51  
Section 4.04
  Disposition of Proceeds     51  

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  Article 5        
 
  Increased Costs; Break Funding Payments; Payments; Taxes; Illegality        
 
           
Section 5.01
  Increased Costs     52  
Section 5.02
  Break Funding Payments     53  
Section 5.03
  Taxes     53  
Section 5.04
  Mitigation Obligations; Replacement of Lenders     55  
Section 5.05
  Illegality     56  
 
           
 
  Article 6        
 
  Conditions Precedent        
 
           
Section 6.01
  Effective Date     56  
Section 6.02
  Each Credit Event     58  
 
           
 
  Article 7        
 
  Representations and Warranties        
 
           
Section 7.01
  Organization; Powers     59  
Section 7.02
  Authority; Enforceability     59  
Section 7.03
  Approvals; No Conflicts     60  
Section 7.04
  Financial Condition; No Material Adverse Effect     60  
Section 7.05
  Litigation     60  
Section 7.06
  Environmental Matters     60  
Section 7.07
  Compliance with the Laws and Agreements     61  
Section 7.08
  Taxes     61  
Section 7.09
  Disclosure; No Material Misstatements     62  
Section 7.10
  Subsidiaries     62  
Section 7.11
  Insurance     62  
Section 7.12
  Location of Business and Offices     62  
Section 7.13
  Properties; Title, Etc     62  
Section 7.14
  Compliance with Benefit Plans; ERISA     63  
Section 7.15
  Solvency     64  
Section 7.16
  Priority; Security Matters     64  
 
           
 
  Article 8        
 
  Affirmative Covenants        
 
           
Section 8.01
  Financial Statements; Other Information     65  
Section 8.02
  Notices of Material Events     67  
Section 8.03
  Existence; Conduct of Business     68  
Section 8.04
  Payment of Obligations     68  
Section 8.05
  Operation and Maintenance of Properties     68  
Section 8.06
  Insurance     68  
Section 8.07
  Books and Records; Inspection Rights     69  
Section 8.08
  Compliance with Laws     69  

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Section 8.09
  Environmental Matters     69  
Section 8.10
  Further Assurances     70  
Section 8.11
  Reserve Reports     70  
Section 8.12
  [Intentionally left blank]     71  
Section 8.13
  Additional Collateral; Additional Guarantors     71  
Section 8.14
  ERISA and Benefit Plan Compliance     73  
Section 8.15
  Unrestricted Subsidiaries     74  
Section 8.16
  Section 1031 Exchange     74  
Section 8.17
  Use of Proceeds     74  
Section 8.18
  Fiscal Year     74  
Section 8.19
  New Parent Joinder     74  
 
           
 
  Article 9        
 
  Negative Covenants        
 
           
Section 9.01
  Financial Covenants     75  
Section 9.02
  Debt     75  
Section 9.03
  Liens     77  
Section 9.04
  Dividends and Distributions     79  
Section 9.05
  Repayment of Debt; Amendment of Indentures     80  
Section 9.06
  Investments, Loans and Advances     81  
Section 9.07
  Designation and Conversion of Restricted and Unrestricted Subsidiaries     83
 
Section 9.08
  Nature of Business; International Operations     84  
Section 9.09
  Mergers, Etc.     84  
Section 9.10
  Sale of Properties and Termination of Oil and Gas Swap Agreements     85  
Section 9.11
  Transactions with Affiliates     87  
Section 9.12
  Negative Pledge Agreements; Dividend Restrictions     87  
Section 9.13
  Swap Agreements     87  
Section 9.14
  Ownership of the Borrower and Restricted Subsidiaries     88  
Section 9.15
  Amendments to Organizational Documents     88  
 
           
 
  Article 10        
 
  Events of Default; Remedies        
 
           
Section 10.01
  Events of Default     88  
Section 10.02
  Remedies     90  
 
           
 
  Article 11        
 
  The Agents        
 
           
Section 11.01
  Appointment; Powers     91  
Section 11.02
  Duties and Obligations of Administrative Agent     91  
Section 11.03
  Action by Administrative Agent     92  
Section 11.04
  Reliance by Administrative Agent     92  
Section 11.05
  Subagents     93  

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Section 11.06
  Resignation of Administrative Agent     93  
Section 11.07
  Agents as Lenders     93  
Section 11.08
  No Reliance     93  
Section 11.09
  Administrative Agent May File Proofs of Claim     94  
Section 11.10
  Authority Of Administrative Agent To Release Collateral And Liens     94  
Section 11.11
  The Arrangers, Syndication Agent and Co-Documentation Agents     95  
 
           
 
  Article 12        
 
  Miscellaneous        
 
           
Section 12.01
  Notices     95  
Section 12.02
  Waivers; Amendments     96  
Section 12.03
  Expenses, Indemnity; Damage Waiver     97  
Section 12.04
  Successors and Assigns     99  
Section 12.05
  Survival; Revival; Reinstatement     102  
Section 12.06
  Counterparts; Integration; Effectiveness     103  
Section 12.07
  Severability     103  
Section 12.08
  Right of Setoff     103  
Section 12.09
  GOVERNING LAW; JURISDICTION     104  
Section 12.10
  Headings     105  
Section 12.11
  Confidentiality     105  
Section 12.12
  Interest Rate Limitation     105  
Section 12.13
  EXCULPATION PROVISIONS     106  
Section 12.14
  Collateral Matters; Swap Agreements     107  
Section 12.15
  No Third Party Beneficiaries     107  
Section 12.16
  USA Patriot Act Notice     107  
Section 12.17
  Anti-Money Laundering Legislation     107  
Section 12.18
  No Fiduciary Duty     108  
 
           
Annex I
  List of Maximum Credit Amounts        
 
           
Exhibit A
  Form of Note        
Exhibit B
  Form of Borrowing Request        
Exhibit C
  Form of Interest Election Request        
Exhibit D
  Form of Compliance Certificate        
Exhibit E-1
  Security Instruments        
Exhibit E-2
  Form of Guaranty Agreement        
Exhibit F
  Form of Assignment and Assumption        
Exhibit G
  Form of Pledge Agreement        

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Schedule 1.02-a
  Initial Guarantors        
Schedule 1.02-b
  Existing Secured Swap Providers        
Schedule 3.05
  Grandfathered Letters of Credit        
Schedule 7.10
  Subsidiaries and Partnerships; Unrestricted Subsidiaries        
Schedule 7.11
  Insurance        
Schedule 9.02
  Existing Debt        
Schedule 9.03
  Liens        
Schedule 9.06
  Investments        
Schedule 9.08
  Nature of Business        

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     THIS CREDIT AGREEMENT dated as of September 6, 2011, is among QUICKSILVER
RESOURCES CANADA INC., a corporation organized under the laws of the Province of
Alberta, Canada (the “Borrower”); each of the Lenders from time to time party
hereto; JPMORGAN CHASE BANK, N.A., Toronto Branch, as administrative agent for
the Lenders (in such capacity, together with its successors in such capacity,
the “Administrative Agent”); THE BANK OF NOVA SCOTIA, as syndication agent for
the Lenders (in such capacity, the “Syndication Agent”); and THE
TORONTO-DOMINION BANK and CANADIAN IMPERIAL BANK OF COMMERCE, as
co-documentation agents for the Lenders (in such capacity, the “Co-Documentation
Agents”).  The joint lead arrangers for the credit facility provided under this
Agreement are J.P.  MORGAN SECURITIES LLC and THE BANK OF NOVA SCOTIA
(collectively, the “Joint Lead Arrangers”).  
R E C I T A L S
     A.     The Borrower has requested that the Lenders provide certain loans to
and extensions of credit on behalf of the Borrower.  
     B.     The Lenders have agreed to make such loans and extensions of credit
subject to the terms and conditions of this Agreement.  
     C.     In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:
ARTICLE 1
Definitions and Accounting Matters
     Section 1.01   Terms Defined Above.  As used in this Agreement, each term
defined above has the meaning indicated above.  
     Section 1.02   Certain Defined Terms.  As used in this Agreement, the
following terms have the meanings specified below:
     “Administrative Questionnaire” means an Administrative Questionnaire in a
form supplied by the Administrative Agent.  
     “Affected Loans” has the meaning assigned such term in Section 5.05.  
     “Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.  
     “Agents” means, collectively, the Administrative Agent, the Syndication
Agent and the Co-Documentation Agents; and “Agent” means the Administrative
Agent, the Syndication Agent or any Co-Documentation Agent, as the context
requires.  
     “Aggregate Maximum Credit Amounts” at any time shall equal the sum of the
Maximum Credit Amounts, as the same may be reduced or terminated pursuant to
Section 2.06 or increased pursuant to Section 2.09.  
     “Agreed Currency” is defined in Section 2.11(a).  

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     “Agreement” means this Credit Agreement, as the same may from time to time
be amended, modified, supplemented or restated.  
     “Applicable Margin” means, for any day with respect to the commitment fees
payable hereunder, or with respect to any Canadian Prime Loan, CDOR Loan,
U.S.  Prime Loan or Eurodollar Loan, as the case may be, the rate per annum set
forth in the appropriate column below under the caption “Commitment Fee Rate”,
“Canadian Prime Spread,” “CDOR Spread,” “U.S.  Prime Spread”, or “Eurodollar
Spread”, as the case may be, for the Borrowing Base Utilization Percentage then
in effect:

                                                      Canadian       U.S.    
Borrowing Base   Commitment   Prime   CDOR   Prime   Eurodollar Utilization
Percentage   Fee Rate   Spread   Spread   Spread   Spread
Greater than 90%
    0.500 %     1.75 %     2.75 %     1.75 %     2.75 %
Greater than 75% but less than or equal to 90%
    0.500 %     1.50 %     2.50 %     1.50 %     2.50 %
Greater than 50% and less than or equal to 75%
    0.500 %     1.25 %     2.25 %     1.25 %     2.25 %
Greater than 25% and less than or equal to 50%
    0.500 %     1.00 %     2.00 %     1.00 %     2.00 %
Less than or equal to 25%
    0.500 %     0.75 %     1.75 %     0.75 %     1.75 %

Each change in the Applicable Margin 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.  
     “Applicable Percentage” means, with respect to any Lender, the percentage
of the Aggregate Maximum Credit Amounts represented by such Lender’s Maximum
Credit Amount as such percentage is set forth on Annex I; provided that in the
case of Section 2.10 when a Defaulting Lender shall exist, “Applicable
Percentage” as used in such Section 2.10 shall mean the percentage of the
Aggregate Maximum Credit Amounts (disregarding any Defaulting Lender’s Maximum
Credit Amounts) represented by such Lender’s Maximum Credit Amount.  
     “Approved Counterparty” means (a) any Lender, (b) any Affiliate of a
Lender, or (c) any counterparty with a rating of its senior, unsecured,
long-term indebtedness for borrowed money that is not guaranteed by any other
Person or subject to any other credit enhancement of better than or equal to
“BBB-” or “Baa3” by S&P and Moody’s, respectively.  
     “Approved Fund” means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.  
     “Approved Petroleum Engineers” means (a) LaRoche Petroleum Consultants
Limited and (b) any other independent petroleum engineers or other independent
petroleum consultant(s) reasonably acceptable to the Administrative Agent.  
     “Arrangers” means the Joint Lead Arrangers and Joint Bookrunners.  
     “ASC” means the Financial Accounting Standards Board Accounting Standards
Codification, as in effect from time to time.  

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     “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 12.04(b)), and accepted by the Administrative Agent, in the
form of Exhibit F or any other form approved by the Administrative Agent.  
     “Availability Period” means the period from and including the Effective
Date to but excluding the Termination Date.  
     “Bank Products” means treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions,
return items, overdrafts and interstate depository network services).  
     “Bank Products Obligation” means an obligation in respect of a Bank Product
provided by a Bank Products Provider.  
     “Bank Products Provider” means any Lender or Affiliate of a Lender that
provides Bank Products to any Credit Party.  
     “Borrowing” means Loans of the same Type, made, converted or continued on
the same date and, in the case of Eurodollar Loans or CDOR Loans, as to which a
single Interest Period is in effect.  
     “Borrowing Base” means at any time an amount determined in accordance with
Section 2.07, as the same may be adjusted from time to time pursuant to
Section 9.02(n).  
     “Borrowing Base Deficiency” occurs if at any time the total Revolving
Credit Exposures exceeds the Borrowing Base then in effect.  
     “Borrowing Base Utilization Percentage” means, as of any day, the fraction
expressed as a percentage, the numerator of which is the total Revolving Credit
Exposures of the Lenders on such day, and the denominator of which is the
Borrowing Base in effect on such day.  
     “Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.  
     “Business Day” means any day that is not a Saturday, Sunday or a federal
holiday or any other day on which commercial banks in Calgary, Toronto, Montreal
or Chicago are closed; provided that 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.  
     “Calgary” means Calgary, Alberta, Canada.  
     “Canadian Base Rate” means, for any day, a rate per annum equal to the
greater of (a) the Canadian Prime Rate in effect on such day and (b) the sum of
(i) the CDOR Rate for a one month interest period beginning on such date and
(ii) 100 basis points.  Any change in the Canadian Base Rate due to a change in
the Canadian Prime Rate or the CDOR Rate shall be effective from and including
the effective date of such change in the Canadian Prime Rate or the CDOR Rate,
respectively.  
     “Canadian Benefit Plans” means any employee benefit plan, maintained or
contributed to by any Credit Party that is not a Canadian Pension Plan and which
is primarily for the benefit of the employees or former employees of any Credit
Party employed in Canada who participate or are eligible to

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participate, including all profit sharing, incentive compensation, savings,
supplemental retirement, retiring allowance, severance, deferred compensation,
welfare, bonus, supplementary unemployment benefit plans or arrangements and all
life, health, dental and disability plans and arrangements primarily for the
benefit of such employees.  
     “Canadian Dollars” or “C$” refers to lawful money of Canada.  
     “Canadian Lien Searches” means searches for Liens from Alberta, British
Columbia, and such other jurisdictions in which any Oil and Gas Property owned
by any Credit Party is located, as the Administrative Agent may reasonably
request, covering the Credit Parties.  
     “Canadian Pension Plan” means any pension plan to which any Credit Party
contributes or has made contributions on behalf of its employees and required to
be registered under Canadian provincial or federal pension benefits standards
legislation and which is contributed to by (or to which there is or may be an
obligation to contribute by) the Credit Parties, other than a multi-employer
pension plan as defined under such legislation.  
     “Canadian Pension Plan Termination Event” means an event which would
reasonably be expected to entitle a Person (without the consent of any Credit
Party) to wind-up or terminate a Canadian Pension Plan in full or in part, or
the institution of any steps by any Governmental Authority to terminate or order
the termination or wind-up of, in full or in part, any Canadian Pension Plan, or
an event respecting any Canadian Pension Plan which would result in the
revocation of the registration of such Canadian Pension Plan or which could
otherwise reasonably be expected to adversely affect the tax status of any such
Canadian Pension Plan.  
     “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 Base Rate.  
     “Canadian Prime Rate” means the rate of interest per annum publicly
announced from time to time by the bank then serving as Administrative Agent as
the prime rate it will use to determine the rates of interest on Canadian Dollar
loans to its customers in Canada; each change in the Canadian Prime Rate shall
be effective from and including the date such change is publicly announced as
being effective.  Such rate is set by the bank then serving as Administrative
Agent as a general reference rate of interest, taking into account such factors
as the bank then serving as Administrative Agent may deem appropriate; it being
understood that (x) many of the bank then serving as Administrative Agent’s
commercial or other loans are priced in relation to such rate, (y) it is not
necessarily the lowest or best rate actually charged to any customer and (z) the
bank then serving as Administrative Agent may make various commercial or other
loans at rates of interest having no relationship to such rate.  
     “Capital Leases” means, in respect of any Person, all leases that are or
should be in accordance with GAAP recorded as capital leases on the balance
sheet of the Person liable (whether contingent or otherwise) for the payment of
rent thereunder.  
     “Casualty Event” means any loss, casualty or other damage to, or any
nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Oil and Gas Property of any Credit Party.

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     “CDOR”, 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 CDOR Rate.  
     “CDOR Rate” means for the relevant interest period, the Canadian deposit
offered rate which, in turn means on any day the sum of: (a) the annual rate of
interest determined with reference to the arithmetic average of the discount
rate quotations of all institutions listed in respect of the relevant interest
period for Canadian Dollar-denominated bankers’ acceptances displayed and
identified as such on the “Reuters Screen CDOR Page” as defined in the
International Swap Dealer Association, Inc.  definitions, as modified and
amended from time to time, as of 10:00 a.m.  Toronto local time on such day and,
if such day is not a Business Day, then on the immediately preceding Business
Day (as adjusted by the Administrative Agent after 10:00 a.m.  Toronto local
time to reflect any error in the posted rate of interest or in the posted
average annual rate of interest); plus (b) solely with respect to a Lender that
is not a Schedule I Lender, 0.10% per annum; provided that if such rates are not
available on the Reuters Screen CDOR Page on any particular day, then the
Canadian deposit offered rate component of such rate on that day shall be
calculated as the cost of funds quoted by the Administrative Agent to raise
Canadian Dollars for the applicable interest period as of 10:00 a.m.  Toronto
local time on such day for commercial loans or other extensions of credit to
businesses of comparable credit risk; or if such day is not a Business Day, then
as quoted by the Administrative Agent on the immediately preceding Business
Day.  
     “Change in Control” means (a) prior to a Qualified IPO, QRI shall cease to
own, directly or indirectly, more than 50% of the issued and outstanding Equity
Interests of the Borrower and (b) from and after a Qualified IPO, the occurrence
of any of the following: (i) any “person” or “group” of related persons (as such
terms are used in Section 13(d) and 14(d) of the Exchange Act), other than one
or more Permitted Holders, is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group
shall be deemed to have “beneficial ownership” of all Equity Interests that such
person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 35% of the total voting power of the Equity Interests of New Parent (or its
successor by merger, consolidation or purchase of all or substantially all of
its assets) (for the purposes of this clause (b)(i) such person or group shall
be deemed to beneficially own any Equity Interest of New Parent held by a parent
entity of New Parent, if such person or group “beneficially owns” (as defined
above), directly or indirectly, more than 50% of the voting power of the Equity
Interests of such parent entity); (ii) a majority of the members of the board of
directors of the Borrower are not Continuing Directors; (iii) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Credit Parties taken as a whole to any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act);
(iv) the adoption by the stockholders of the Borrower of a plan or proposal for
the liquidation or dissolution of the Borrower; (v) New Parent shall cease to
own, directly or indirectly, 100% of the issued and outstanding Equity Interests
of the Borrower; or (vi) a “Change in Control” or similar event occurs under and
as defined in any indenture or similar governing document in respect of
Permitted Additional Debt but only to the extent, in the case of this clause
(vi), the occurrence of any such event gives rise to an obligation of any Credit
Party to redeem, repay or repurchase, or otherwise offer to redeem, repay or
repurchase, all or any portion of such Permitted Additional Debt, which
redemption, repayment or repurchase is not otherwise permitted by the terms of
this Agreement.  
     “Change in Law” means (a) the adoption of any law, rule or regulation after
the Effective Date (including, without limitation, any rule or regulation
adopted by any Governmental Authority after the Effective Date under the
framework of the U.S.  Dodd-Frank Wall Street Reform and Consumer Protection Act
or in connection with the Bank for International Settlements, the Basel
Committee on

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Banking Supervision or Canadian or foreign regulatory authorities, in each case,
pursuant to Basel III), (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
Effective Date or (c) compliance by any Lender or any Issuing Bank (or, for
purposes of Section 5.01(b), by any lending office of such Lender or by such
Lender’s or such 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 Effective Date (including,
without limitation, any requests, guidelines or directives made or issued after
the Effective Date in connection with the U.S.  Dodd-Frank Wall Street Reform
and Consumer Protection Act or promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision or Canadian or foreign
regulatory authorities, in each case, pursuant to Basel III).  
     “Chicago” means Chicago, Illinois.  
     “Code” means the United States Internal Revenue Code of 1986, as amended
from time to time, and any successor statute.  
     “Commitment” means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender’s Revolving Credit Exposure hereunder, as such commitment may be
(a) modified from time to time pursuant to Section 2.06 or Section 2.09 and
(b) modified from time to time pursuant to assignments by or to such Lender
pursuant to Section 12.04(b).  The amount representing each Lender’s Commitment
shall be the lesser of such Lender’s Maximum Credit Amount and such Lender’s
Applicable Percentage of the then effective Borrowing Base.  
     “Commitment Fee Rate” has the meaning set forth in the definition of
“Applicable Margin”.  
     “Consolidated Net Income” means with respect to the Borrower (or, from and
after the New Parent Joinder, New Parent) and the Consolidated Restricted
Subsidiaries, for any period, the aggregate of the net income (or loss) of the
Borrower (or, from and after the New Parent Joinder, New Parent) and the
Consolidated Restricted Subsidiaries after allowances for taxes for such period
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from such net income (or loss) (to the extent otherwise
included therein) the following (without duplication):
     (a)     the net income (or loss) for such period of any Person which is not
a Consolidated Restricted Subsidiary, except that the amount of dividends,
distributions or other payments in respect of equity actually paid in cash
during such period by such other Person to the Borrower (or, from and after the
New Parent Joinder, New Parent) or to a Consolidated Restricted Subsidiary (or
to the extent any non-cash dividend, distribution or other payment made during
such period by such other Person to the Borrower (or, from and after the New
Parent Joinder, New Parent) or to a Consolidated Restricted Subsidiary was
converted into cash by the Borrower (or, from and after the New Parent Joinder,
New Parent) or such Consolidated Restricted Subsidiary during such period) shall
be included in such net income (or loss), as the case may be;
     (b)     the net income (but not loss) during such period of any
Consolidated Restricted Subsidiary to the extent that the declaration or payment
of dividends or similar distributions or transfers or loans by that Consolidated
Restricted Subsidiary is not at the time permitted by the terms of its charter
or any agreement, instrument or Governmental Requirement applicable to such
Consolidated Restricted Subsidiary or is otherwise restricted or prohibited;
     (c)     any extraordinary gains (net of extraordinary losses) during such
period;

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     (d)     non-cash gains, losses or adjustments, including non-cash gains,
losses or adjustments under authoritative guidance from the FASB as a result of
changes in the fair market value of derivatives and any gains or losses
attributable to writeups or writedowns of assets, including ceiling test
writedowns and writedowns under authoritative guidance from the FASB as a result
of accounting for oil and gas activities, goodwill and other intangible assets,
and property, plant and equipment (for the avoidance of doubt, realized gains or
losses will be counted in Consolidated Net Income in the quarter that cash is
actually received or paid);
     (e)     any premium or penalty paid, capitalized interest, write off of
deferred financing costs or other financial recapitalization charges in
connection with redeeming or retiring any indebtedness prior to its stated
maturity;
     (f)     any non-cash employee, officer or director based compensation; and
     (g)     any gain realized (net of losses) in connection with asset sales.  
     “Consolidated Restricted Subsidiaries” means any Restricted Subsidiaries
that are Consolidated Subsidiaries.  
     “Consolidated Subsidiaries” means each Subsidiary of the Borrower (or, from
and after the New Parent Joinder, New Parent), whether now existing or hereafter
created or acquired, the financial statements of which are or shall be (or
should have been) consolidated with the financial statements of the Borrower
(or, from and after the New Parent Joinder, New Parent) in accordance with
GAAP.  
     “Continuing Directors” means the individuals (i) who were members of the
board of directors or other equivalent governing body of the Borrower on the
Effective Date, (ii) whose election or nomination to such board or body was
approved by individuals referred to in clause (i) above constituting at the time
of such election or nomination at least a majority of such board or body or
(iii) whose election or nomination to such board or body was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of such board or body.  
     “Control” means the power to direct the management and policies of a
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms “Controlling” and
“Controlled” have meanings correlative of the foregoing.  
     “Credit Parties” means (a) prior to the New Parent Joinder, the Borrower
and its Restricted Subsidiaries and (b) from and after the New Parent Joinder,
New Parent, the Borrower and the other Restricted Subsidiaries.  
     “Criminal Code (Canada)” means the Criminal Code R.S.C.  1985, c.  C-46, as
amended from time to time.  
     “Currency” means, with respect to any Loan or Letter of Credit, whether
such Loan or Letter of Credit is denominated in Canadian Dollars or Dollars.  
     “Debt” means, for any Person, the sum of the following (without
duplication):
     (a)     all obligations of such Person for borrowed money or evidenced by
bonds, debentures, notes or other similar instruments;

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     (b)     all obligations of such Person (whether contingent or otherwise) in
respect of unreimbursed draws under letters of credit, bankers’ acceptances,
surety or other bonds and similar instruments;
     (c)     all amounts owed by such Person representing the deferred purchase
price of Property or services (other than liabilities of such Person to trade
creditors arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities) that are either (i) not
greater than 90 days past the invoice or billing date or (ii) are being
contested in good faith by appropriate proceedings and adequate reserves
therefore have been established under GAAP);
     (d)     all obligations under Capital Leases;
     (e)     all obligations under all leases which shall have been, or should
have been, in accordance with GAAP, treated as operating leases on the financial
statements of the Person liable (whether contingently or otherwise) for the
payment of rent thereunder and which were properly treated as indebtedness for
borrowed money for purposes of federal income taxes, if the lessee in respect
thereof is obligated to either purchase for an amount in excess of, or pay upon
early termination an amount in excess of, 80% of the residual value of the
Property subject to such operating lease upon expiration or early termination of
such lease;
     (f)     obligations to deliver commodities, goods or services, including,
without limitation, Hydrocarbons, in consideration of one or more advance
payments, other than gas balancing arrangements in the ordinary course of
business;
     (g)     all Debt (as defined in the other clauses of this definition) of
others secured by a Lien on any Property of such Person, whether or not such
Debt is assumed by such Person to the extent of the lesser of the fair market
value of the property subject to such Lien and the amount of such Debt;
     (h)     all Debt (as defined in the other clauses of this definition) of
others Guaranteed by such Person to the extent of the lesser of the amount of
such Debt and the maximum stated amount of such Guarantee;
     (i)     any Debt of a partnership for which such Person is liable either by
agreement, by operation of law or by a Governmental Requirement but only to the
extent of such liability;
     (j)     Disqualified Capital Stock; and
     (k)     the undischarged balance of any production payment created by such
Person or for the creation of which such Person directly or indirectly received
payment.  
     The Debt of any Person shall include all obligations of such Person of the
character described above notwithstanding that any such obligation is not
included as a liability of such Person under GAAP.  For the avoidance of doubt,
“Debt” does not include obligations in respect of Swap Agreements, indemnities
incurred in the ordinary course of business or in connection with the
disposition of assets, any non-cash employee, officer or director compensation,
any compensation paid to employees, officers or directors pursuant to stock
appreciation rights, or, except to the extent set forth in the foregoing clause
(e), obligations under operating leases.  
     “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.  

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     “Default Rate” means a rate per annum equal to 2% plus the rate applicable
to Canadian Prime Loans as provided in Section 3.02(a).  
     “Defaulting Lender” means any Lender, as reasonably determined by the
Administrative Agent, that has (a) failed to comply with its obligation to fund
any portion of its Loans or participations in Letters of Credit within two
(2) Business Days of the date required to be funded by it hereunder,
(b) notified the Borrower, the Administrative Agent, any Issuing Bank, or any
Lender in writing that it does not intend to comply with any portion of its
funding obligations under this Agreement or has made a public statement to the
effect that it does not intend to comply with any portion of its funding
obligations under this Agreement, (c) failed, within three (3) Business Days
after written request by the Administrative Agent, to confirm that it will
comply with the terms of this Agreement relating to its obligations to fund
prospective Loans and participations in the then outstanding Letters of Credit;
provided, that any such Lender will cease to be a Defaulting Lender under this
clause (c) upon receipt of such confirmation by the Administrative Agent,
(d) otherwise failed to pay over to the Administrative Agent or any other Lender
any other amount required to be paid by it hereunder within two (2) Business
Days of the date when due, or (e) (i) become or is insolvent or has a parent
company that has become or is insolvent or (ii) become the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee
or custodian appointed for it, or has taken any action in furtherance of, or
indicating its consent to, approval of or acquiescence in any such proceeding or
appointment or has a parent company that has become the subject of a bankruptcy
or insolvency proceeding, or has had a receiver, conservator, trustee or
custodian appointed for it, or has taken any action in furtherance of, or
indicating its consent to, approval of or acquiescence in any such proceeding or
appointment; provided that a Lender shall not be a Defaulting Lender solely by
virtue of the ownership or acquisition of an Equity Interest in such Lender or a
parent company thereof by a Governmental Authority or an instrumentality
thereof.  For avoidance of doubt (A) an assignee of a Defaulting Lender shall
not be deemed to be a Defaulting Lender solely by virtue of the fact that it is
an assignee of a Defaulting Lender, (B) neither the reallocation of funding
obligations provided for in Section 2.10 as a result of a Lender being a
Defaulting Lender nor the performance by non-Defaulting Lenders of such
reallocated funding obligations will by themselves cause the relevant Defaulting
Lender to become a non-Defaulting Lender and (C) when a Defaulting Lender ceases
to be a Defaulting Lender (due to assignment to a new or existing Lender,
commitment reduction pursuant to Section 2.10 or otherwise), all cash collateral
deposited with respect to LC Exposure pursuant to Section 2.10(b) shall be
promptly released to the Borrower (unless such cash collateral is otherwise
required to remain on deposit pursuant to any other provision hereof) and all
commitment reallocations under Section 2.10 shall be promptly adjusted.  
     “Disqualified Capital Stock” means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is 91 days after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans, LC
Exposure or other obligations hereunder outstanding and all of the Commitments
are terminated.  
     “Dollars” or “$” refers to lawful money of the United States of America.  
     “Domestic Subsidiary” means any Restricted Subsidiary that is organized
under the laws of Canada or any province thereof.  

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     “EBITDAX” means, for any period, the sum of Consolidated Net Income for
such period plus (i) the following expenses or charges to the extent deducted in
determining Consolidated Net Income in such period (without duplication):
interest; sales, franchise and income taxes; depreciation; depletion;
amortization; exploration expenses; seismic, geologic and geophysical services
performed in connection with oil and gas exploration; accretion of asset
retirement obligations in accordance with ASC Topic 410, Accounting for Asset
Retirement Obligations, and any similar accounting in prior periods; and other
non-cash expenses, adjustments, losses or charges and minus (ii) all non-cash
income included in the calculation of Consolidated Net Income; provided,
however, that if any such Person shall have consummated any Material Acquisition
or Material Disposition during such period, EBITDAX shall be subject to pro
forma adjustments for such acquisition or disposition, as if such acquisition or
disposition had occurred on the first day of such period and shall also include
adding back to Consolidated Net Income any non-recurring or one-time cash or
non-cash charges or expenses associated with such acquisition or disposition;
provided, however, that such pro forma adjustments shall be in a manner
satisfactory to the Administrative Agent.  
     “Effective Date” means the date on which the conditions specified in
Section 6.01 are satisfied (or waived in accordance with Section 12.02).  
     “Engineering Reports” has the meaning assigned such term in
Section 2.07(c)(i).  
     “Environmental Complaint” means any written complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other communication from any federal, provincial,
territorial, state or municipal authority or any other party against any Credit
Party involving (a) a Hazardous Discharge from or onto any real property owned,
leased or operated at any time by any Credit Party, or (b) a Hazardous Discharge
caused, in whole or in part, by any Credit Party or by any Person acting on
behalf of or at the instruction of any Credit Party, or (c) any violation of any
Environmental Law by any Credit Party.  
     “Environmental Laws” means any and all Governmental Requirements pertaining
in any way to health and safety (with respect to exposure to hazardous
substances), the environment or the preservation or reclamation of natural
resources, as applicable in any jurisdictions in which any Credit Party is
conducting or at any time has conducted business, or where any Oil and Gas
Property of any Credit Party is located, including, as applicable, with respect
to the Credit Parties conducting business, or any Oil and Gas Property of any
Credit Party located, in Canada, the Environmental Protection and Enhancement
Act, R.S.A.  2000, c.  E-12, as amended, (“EPEA”), the Oil and Gas Conservation
Act, R.S.A.  2000, c.  E-12, as amended (“OGCA”) and the Canadian Environmental
Protection Act, 1999.  S.C.  1999.  c.  33, as amended, and with respect to the
Credit Parties conducting business, or any Oil and Gas Property of any Credit
Party located, in the United States, the Oil Pollution Act of 1990, as amended
(“OPA”), the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”), the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976, as amended (“RCRA”), the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as
amended.  With respect to the Credit Parties conducting business, or any Oil and
Gas Property of any Credit Party located, in Canada, the term “oil” has the
meaning specified in OGCA, the term “release” has the meanings specified in
EPEA, the terms “solid waste” and “disposal” (or “disposed”) have the meanings,
or comparable meanings, specified under applicable provincial or territorial
Environmental Law in Canada; provided, however, that to the extent the
applicable Environmental Laws of the province, territory or local jurisdiction
in which any Oil and Gas Property of any Credit Party is located establish an
equivalent meaning for “oil”, “release”, or “disposal” which is

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broader than that specified above, such broader meaning shall apply to the
extent applicable to such province, territory or local jurisdiction.  With
respect to the Credit Parties conducting business, or any Oil and Gas Property
of any Credit Party located, in the United States, the term “oil” has the
meaning specified in OPA, the terms “release” (or “threatened release”) have the
meanings specified in CERCLA, the terms “solid waste” and “disposal” (or
“disposed”) have the meanings specified under applicable state Environmental Law
in the United States; provided, however, that to the extent the applicable
Environmental Laws of the province, state or local jurisdiction in which any Oil
and Gas Property of any Credit Party is located establish an equivalent meaning
for “oil”, “release”, or “disposal” which is broader than that specified above,
such broader meaning shall apply to the extent applicable to such state or local
jurisdiction.  
     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Credit Party resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment, or (e) any contract or
agreement pursuant to which liability is assumed or imposed with respect to any
of the foregoing.  
     “Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.  Convertible debt shall not constitute “Equity Interests” for
purposes hereof.  
     “ERISA” means the United States Employee Retirement Income Security Act of
1974, as amended, and any successor statute.  
     “ERISA Affiliate” means each trade or business (whether or not
incorporated) which together with any Credit Party would be deemed to be a
“single employer” within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.  
     “ERISA Event” means (a) a “Reportable Event” described in section 4043 of
ERISA and the regulations issued thereunder with respect to a Pension Plan,
(b) the withdrawal of any Credit Party or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a “substantial employer” as defined in
section 4001(a)(2) of ERISA or from a Multiemployer Plan, (c) the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under section 4041 of ERISA, (d) the institution of
proceedings to terminate a Pension Plan by the PBGC, (e) receipt by any Credit
Party or any ERISA Affiliate of a notice of withdrawal liability pursuant to
Section 4202 of ERISA, (f) any other event or condition which might constitute
grounds under section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan, (g) the incurrence or assumption
by any Credit Party or any ERISA Affiliate of any liability under Title IV of
ERISA with respect to any Pension Plan or Multiemployer Plan (other than to make
contributions in the ordinary course of business for the payment of current
premiums which are not past due), (h) the occurrence of a non-exempt prohibited
transaction under section 406 of ERISA or section 4975 of the Code that is
reasonably likely to result in liability to any Credit Party, (i) the failure
with respect to a Pension Plan, to satisfy the minimum funding standard under
section 412 of the Code or section 302 of ERISA, or (j) the receipt by any
Credit Party or any ERISA Affiliate of any notice concerning the determination
that a Multiemployer Plan is in endangered or critical status, within the
meaning of section 305 of ERISA, or insolvent or in reorganization, within the
meaning of Title IV of ERISA.  

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     “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 such term in Section 10.01.  
     “Excepted Liens” means:
     (a)     Liens for Taxes, assessments or other governmental charges or
levies which (i) are not delinquent or which are being contested in good faith
by appropriate action and for which adequate reserves have been maintained in
accordance with GAAP or (ii) result from a failure by the third-party lessor of
any Oil and Gas Property to pay such Taxes, assessments or other governmental
charges or levies owing by such third-party lessor, which is satisfied within
60 days after a Responsible Officer of the Borrower becomes aware thereof;
     (b)     Liens incurred or deposits made in connection with workers’
compensation, unemployment insurance or other social security, old age pension
or public liability obligations which are not delinquent or in default (except
to the extent that non-payment of such obligations is permitted by
Section 8.04);
     (c)     statutory landlord’s Liens, operators’, vendors’, carriers’,
warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s,
journeymen’s, landlord’s and construction Liens, Liens on pipelines and pipeline
facilities or other like Liens, in each case arising by operation of law in the
ordinary course of business or incident to the exploration, development,
operation and maintenance of Properties each of which is in respect of
obligations that are not delinquent or in default (except to the extent that
non-payment of such obligations is permitted by Section 8.04);
     (d)     contractual Liens which arise in the ordinary course of business
under operating agreements, joint venture agreements, oil and gas partnership
agreements, oil and gas leases, farm-out and farm-in agreements, division
orders, contracts for the sale, transportation or exchange of oil and natural
gas, unitization and pooling declarations and agreements, area of mutual
interest agreements, overriding royalty agreements, marketing agreements,
processing agreements, net profits agreements, development agreements, gas
balancing or deferred production agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or other
geophysical permits or agreements, and other agreements which are usual and
customary in the oil and gas business and are for claims which are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP,
provided that any such Lien referred to in this clause does not (i) materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by any Credit Party or (ii) materially impair the value of
such Property subject thereto;
     (e)     Liens arising solely by virtue of any statutory or common law
provision relating to banker’s liens, rights of set-off or similar rights and
remedies and burdening only deposit accounts or other funds maintained with a
creditor depository institution;
     (f)     (i) Immaterial Title Deficiencies and (ii) other minor defects in
title which (A) for purposes of this Agreement, shall include, but not be
limited to, easements, restrictions, zoning restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any Property of any Credit
Party for the purpose of roads, streets, alleys, highways, telephone lines,
power lines, pipelines, transmission lines, transportation lines, distribution
lines for the removal of gas, oil, coal or other minerals

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or timber, and other like purposes, or for the joint or common use of real
estate, rights of way, facilities and equipment, surface leases and other
similar rights in respect of surface operations, (B) in the aggregate do not
materially impair the use of such Property for the purposes of which such
Property is held by any Credit Party and (C) in the aggregate do not materially
impair the value of such Property subject thereto;
     (g)     (i) Liens on cash or securities pledged to secure performance of
tenders, surety bonds, government contracts, performance and return of money
bonds, bids, trade contracts, leases, statutory obligations, regulatory
obligations, and other obligations of a like nature incurred, in each case, in
the ordinary course of business, and (ii) Liens on cash or securities pledged to
secure performance of appeal bonds, injunction bonds and other obligations of a
like nature, including, in the case of clauses (i) and (ii), cash on deposit
with a court or any Person in lieu of or in connection with any of the items
referenced in this clause (g);
     (h)     judgment and attachment Liens not giving rise to an Event of
Default under Section 10.01(k); and
     (i)     Liens arising from or perfected by precautionary United States
Uniform Commercial Code financing statement filings (or similar filings or
registrations in other jurisdictions including Canada) or other similar filings
regarding operating leases entered into by the Credit Parties in the ordinary
course of business covering only the Property under lease and accessions
thereto, rights under warranties with respect thereto, proceeds thereof and
other similar rights and interests;
     provided, that (i) no intention to subordinate the first priority Lien in
the collateral granted in favor of the Administrative Agent and the Secured
Parties pursuant to the Security Instruments is to be hereby implied or
expressed by the permitted existence of such Excepted Liens, and (ii) the term
“Excepted Liens” shall not include any Lien securing Debt for borrowed money
other than the Secured Indebtedness.  
     “Excess Cash” means at any time, the greater of (x) 0 and (y) (a) the
aggregate amount of the Borrower’s (or, from and after the New Parent Joinder,
New Parent’s) and the Consolidated Restricted Subsidiaries’ unrestricted cash
and unrestricted Investments of the types described in Sections 9.06(b), (c),
(e), (f), (g), (h) and (i) on hand minus (b) the aggregate amount of the
Borrower’s (or, from and after the New Parent Joinder, New Parent’s) and the
Consolidated Restricted Subsidiaries’ accounts payable, accrued expenses, and
liabilities incurred in the ordinary course of business (x) which are not
greater than ninety (90) days past the date of invoice or billing and
(y) excluding any reserves and accruals with respect to amounts which the
Borrower reasonably expects not to be paid minus (c) C$25,000,000.  
     “Exchange Act” the Securities Exchange Act of 1934, as amended.  
     “Excluded Taxes” means, with respect to the Administrative Agent, any
Lender, any Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower or any Guarantor hereunder or under
any other Loan Document, (a) taxes imposed on (or measured by) net income or
capital (however denominated) and franchise taxes, in each case imposed by
Canada or such other jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or in which its applicable
lending office is located, or in which it is domiciled, is a resident or
national of, or engaged in business or maintaining a permanent establishment or
other physical presence in or otherwise having some present or former connection
with (otherwise than by the mere receipt of payments under the Loan Documents);
(b) any Canadian withholding tax imposed by reason of a Foreign Lender not
dealing at arm’s length, within the meaning of the Income Tax Act

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(Canada), with the Credit Party at the time of such payment; and (c) any branch
profits taxes imposed by Canada or any similar tax imposed by any other
jurisdiction in which the Borrower or any Guarantor is located.  
     “Existing Credit Agreement” means the Amended and Restated Credit Agreement
dated as of February 9, 2007 among the Borrower, JPMorgan Chase Bank, N.A.,
Toronto Branch, as administrative agent and the lenders and other agents party
thereto, as amended.  
     “Existing Midstream Assets” means all tangible and intangible property
owned by the Credit Parties on the Effective Date and used in (a) gathering,
compressing, treating, processing and transporting natural gas, crude,
condensate and natural gas liquids; (b) fractionating and transporting natural
gas, crude, condensate and natural gas liquids; and (c) marketing natural gas,
crude, condensate and natural gas liquids, including, without limitation,
gathering lines, pipelines, storage facilities, surface leases, rights-of-way,
easements and servitudes related to each of the foregoing, and also including
the pipeline known as the Maxhamish Pipeline (as it exists on the Effective
Date, and as it may thereafter exist having regard to the additional compressors
and equipment to be installed and construction and other work to be done for its
completion, and which tangible and intangible property includes all line pipe,
compressors and other tangible equipment and property now or hereafter comprised
therein or ancillary thereto, and all related rights-of-way, easements and
similar rights relating to the use of and access to the surface of the land in
or on which the Maxhamish Pipeline is located) and a gathering agreement signed
or to be signed by and between the Borrower and an Unrestricted Subsidiary in
respect of the gathering and other handling of the Borrower’s Hydrocarbons
production in the said Maxhamish Pipeline.  For purposes of clarity, “Existing
Midstream Assets” shall be deemed not to include any Oil and Gas Properties of
the types described in clauses (a) through (e) of the definition of Oil and Gas
Properties, other than the said gathering agreement and any other contracts and
agreements that relate to the sale, purchase, transportation, gathering,
exchange, or processing of Hydrocarbons hereinafter entered into by the Borrower
or a Subsidiary with the partnership referred to in the definition of Midstream
Joint Venture.  
     “Existing U.S. Credit Agreement” means the Amended and Restated Credit
Agreement dated as of February 9, 2007 among QRI, JPMorgan Chase Bank, N.A., as
administrative agent and the lenders and other agents party thereto, as
amended.  
     “FASB” means the Financial Accounting Standards Board.  
     “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.  
     “Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.  
     “Financial Statements” means the financial statement or statements of the
Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a).  
     “Foreign Lender” means any Lender that is not a resident of Canada or
deemed to be a resident of Canada for purposes of Part XIII of the Income Tax
Act (Canada), other than a resident of the U.S. for purposes of the
Canada-United States Income Tax Convention that is fully entitled to the
benefits of such income tax convention with regard to any amounts that may
become payable to it under the Loan Documents.  For purposes of this definition,
Canada and each province thereof shall be deemed to constitute a single
jurisdiction.  

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     “Foreign Plan” means any employee benefit plan, program, policy,
arrangement or agreement contributed to by any Credit Party with respect to
employees employed outside Canada and the United States.  
     “GAAP” means generally accepted accounting principles in the United States
of America or Canada, as applicable, as in effect from time to time subject to
the terms and conditions set forth in Section 1.05.  
     “Governmental Authority” means, as applicable, the governments of the
United States of America and/or Canada, any other nation or any political
subdivision thereof, whether provincial, territorial, state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of government over any Credit Party, any of
their Properties, any Agent, any Issuing Bank or any Lender.  
     “Governmental Requirement” means any applicable law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement of any Governmental Authority, whether now or hereinafter in effect,
including, without limitation, environmental laws, energy regulations and
occupational, safety and health standards or controls, of any Governmental
Authority.  
     “Grandfathered Letters of Credit” means the letters of credit issued by
JPMorgan under the Existing Credit Agreement outstanding on the Effective Date
and set forth on Schedule 3.05.  
     “Guarantee” by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions, by “comfort letter”
or other similar undertaking of support or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided, that the term “Guarantee” shall
not include (x) endorsements of instruments for collection or deposit in the
ordinary course of business or (y) indemnities given in connection with asset
sales or otherwise provided in the ordinary course of business.  The terms
“Guarantee” and “Guaranteed” used as a verb shall have a correlative meaning.  
     “Guarantors” means the entities listed on Schedule 1.02-a, any other Person
that must guarantee the Secured Indebtedness in order for the Borrower to comply
with Section 8.13 and any other Person that executes the Guaranty Agreement
guaranteeing the payment of the Secured Indebtedness.  QRI shall not be a
Guarantor.  
     “Guaranty Agreement” means an agreement executed by the Guarantors in
substantially the form of Exhibit E-2 unconditionally guaranteeing on a joint
and several basis, payment of the Secured Indebtedness, as the same may be
amended, modified or supplemented from time to time.  
     “Hazardous Discharge” means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Material

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from or onto any real property owned, leased or operated at any time by any
Credit Party or any real property owned, leased or operated by any other
Person.  
     “Hazardous Material” means all explosive or radioactive substances or
wastes, all hazardous or toxic substances, pollutants, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other hazardous or toxic substances or wastes (including
oil and natural gas exploration, production and development wastes) of any
nature, in each case, to the extent regulated pursuant to any Environmental Law,
and any petroleum, petroleum products or petroleum distillates.  
     “Highest Lawful Rate” means, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Secured Indebtedness under laws applicable to such Lender which are presently in
effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws allow as of the date hereof.  
     “Hydrocarbon Interests” means all rights, titles, interests and estates now
or hereafter acquired in and to Hydrocarbons, oil and gas leases, mineral
leases, or other liquid or gaseous Hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.  
     “Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.  
     “Immaterial Title Deficiencies” means minor defects or deficiencies in
title which do not diminish by more than 5% the aggregate value of the Oil and
Gas Properties evaluated in the Reserve Report used in the most recent
determination of the Borrowing Base.  
     “Income Tax Act (Canada)” means the Income Tax Act (Canada) and regulations
promulgated thereunder, as amended from time to time.  
     “Increasing Lender” has the meaning set forth in Section 2.09.  
     “Indemnified Taxes” means Taxes other than Excluded Taxes.  
     “Initial Reserve Report” means the Reserve Report with respect to the value
of certain Oil and Gas Properties of the Borrower and its Restricted
Subsidiaries as of July 1, 2011.  
     “Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.  
     “Interest Payment Date” means (a) with respect to any Canadian Prime Loan
or U.S. Prime Loan, the last day of each March, June, September and December,
and (b) with respect to any CDOR Loan or 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 CDOR Borrowing or Eurodollar Borrowing with an Interest Period of
more than three months’ duration, each day prior to the last day of such
Interest Period that occurs at intervals of three months’ duration after the
first day of such Interest Period.  

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     “Interest Period” means with respect to any CDOR Borrowing or 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, three, six
or, if available to all Lenders, nine or 12 months or one or two weeks
thereafter, as the Borrower may elect; 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, and (b) any Interest Period
pertaining to a CDOR Borrowing or 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.  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.  
     “Interim Redetermination” has the meaning assigned such term in
Section 2.07(b).  
     “Interim Redetermination Date” means the date on which a Borrowing Base
that has been redetermined pursuant to an Interim Redetermination becomes
effective as provided in Section 2.07(d).  
     “Intermediate HoldCo” means any Restricted Subsidiary of New Parent which
owns, directly or indirectly, any Equity Interests in the Borrower.  
     “Investment” means, for any Person any investment including, without
limitation: (a) the acquisition (whether for cash, Property, services or
securities or otherwise) of Equity Interests of any other Person; (b) the making
of any deposit with, or advance, loan or capital contribution to, purchase or
other acquisition of any other Debt or equity participation or interest in, or
other extension of credit to, any other Person; (c) the purchase or acquisition
(in one or a series of transactions) of Property of another Person that
constitutes a business unit or (d) the entering into of any Guarantee of Debt or
other liability of any other Person.  
     “IPO Tax Payments” means (a) a payment, whether direct or indirect, to or
on behalf of QRI or any of its Affiliates (other than the Borrower) pursuant to
any indemnity or payment obligations of New Parent to QRI or any of its
Affiliates (other than the Borrower) with respect to any Canadian taxes
(including penalties and interest) imposed on QRI or any of its Affiliates
(other than the Borrower) in connection with the Qualified IPO done in
connection with the transfer by QRI to New Parent, directly or indirectly
through a Parent HoldCo, of 100% of the Equity Interests in the Borrower
together with any Debt permitted by Section 9.02(t) that may be created in
respect of such Equity Interests in contemplation of the Qualified IPO or any of
the transactions related thereto as permitted hereunder (a “Canadian Tax
Payment”), provided that the Canadian Tax Payment that results from the dividend
declared and paid by the Borrower to QRI as permitted by Section 9.04(h) (the
“Dividend Withholding Tax Payment”) will be made solely from the proceeds of the
Qualified IPO, or (b) a payment from the Borrower to New Parent for the purpose
of permitting or enabling New Parent to make a Canadian Tax Payment, other than
the Dividend Withholding Tax Payment.  
     “Issuing Bank” means JPMorgan and each Lender that agrees to act as an
issuer of Letters of Credit hereunder at the request of the Borrower, in each
case, in its capacity as an issuer of Letters of Credit hereunder, and its
successors in such capacity as provided in Section 2.08(i).  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.  

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     “Joinder Agreement” has the meaning set forth in Section 2.09(a).  
     “Joint Bookrunners” means J.P.  Morgan Securities LLC and The Bank of Nova
Scotia, in their capacity as the joint bookrunners hereunder.  
     “JPMorgan” means JPMorgan Chase Bank, N.A., Toronto Branch, in its
individual capacity.  
     “Judgment Currency” is defined in Section 2.11(b).  
     “LC Commitment” at any time means C$100,000,000.  
     “LC Disbursement” means a payment made by any Issuing Bank pursuant to a
Letter of Credit issued by such Issuing Bank.  
     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn and
unexpired stated 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 the 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.  
     “Lenders” means the Persons listed on Annex I and any Person that shall
have become a party hereto pursuant to Section 2.09 or 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, including any Grandfathered Letters of Credit.  
     “Letter of Credit Agreements” means all letter of credit applications and
other agreements (including any amendments, modifications or supplements
thereto) submitted by the Borrower, or entered into by the Borrower, with any
Issuing Bank relating to any Letter of Credit issued by such Issuing Bank.  
     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing at Reuters Reference Screen LIBOR01 (or on
any successor or substitute screen of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those
currently provided on such screen of such service, as determined by the
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 comparable 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 (rounded
upwards, if necessary, to the next 1/16 of 1%) at which Dollar deposits in the
approximate amount of such Eurodollar Borrowing and for a maturity comparable to
such Interest Period are offered by the principal London office of the
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.  
     “Lien” means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (a) the lien,
security interest or floating charge arising from a mortgage, debenture,
encumbrance, pledge,

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security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (b) production payments and the like payable
out of Oil and Gas Properties.  The term “Lien” shall include easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations.  For the purposes of this Agreement, the Credit Parties shall be
deemed to own subject to a Lien any asset which is acquired or held subject to
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.  
     “Loan Documents” means this Agreement, the Notes, all Letter of Credit
Agreements, the Letters of Credit and the Security Instruments.  
     “Loans” means the loans made by the Lenders to the Borrower pursuant to
this Agreement.  
     “Majority Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having more than 50% of the Aggregate Maximum Credit
Amounts; and at any time while any Loans or LC Exposure is outstanding, Lenders
holding more than 50% of the outstanding aggregate principal amount of the Loans
and participation interests in Letters of Credit (without regard to any sale by
a Lender of a participation in any Loan under Section 12.04(c)); provided that
the Maximum Credit Amounts and the principal amount of the Loans and
participation interests in Letters of Credit of the Defaulting Lenders (if any)
shall be excluded from the determination of Majority Lenders.  
     “Material Acquisition” means the acquisition of the Equity Interests of a
Person or the acquisition of assets from a Person, in each case for
consideration of at least C$17,500,000.  
     “Material Adverse Effect” means a material adverse effect on (a) the
business, operations, Property or financial condition of the Credit Parties
taken as a whole; provided that changes in the prices of Hydrocarbons will not
constitute a Material Adverse Effect, (b) the validity or enforceability of any
of the Loan Documents or the ability of the Credit Parties to perform any of
their respective obligations under any Loan Document or (c) the rights and
remedies of or benefits available to the Administrative Agent, any other Agent,
any Issuing Bank or any Lender under any Loan Document.  
     “Material Debt” means Debt (other than the Loans and Letters of Credit) or
obligations in respect of one or more Swap Agreements, of any one or more of the
Credit Parties in an aggregate principal amount exceeding C$25,000,000.  For
purposes of determining Material Debt, the “principal amount” of the obligations
of any Credit Party in respect of any Swap Agreement at any time shall be the
net amount (after giving effect to any netting agreements on collateral
arrangements) that such Credit Party would be required to pay if such Swap
Agreement were terminated at such time.  
     “Material Disposition” means the sale, lease, assignment, conveyance or
transfer of the Equity Interests of a Person or the assets of a Person, in each
case for consideration of at least C$17,500,000.  
     “Material Restricted Subsidiary” means, at any time, each Restricted
Subsidiary that is a Domestic Subsidiary and owns assets representing 7.5% or
more of the total assets of the Credit Parties or whose EBITDAX represents 7.5%
or more of the EBITDAX of the Credit Parties.  For purposes of this definition,
the total EBITDAX of the Credit Parties shall be determined as of the end of the
Borrower’s most recent fiscal quarter for which financial statements are
available.  
     “Maturity Date” means the fifth anniversary of the Effective Date.  
     “Maximum Credit Amount” means, as to each Lender, the amount set forth
opposite such Lender’s name on Annex I under the caption “Maximum Credit
Amounts”, as the same may be (a)

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reduced or terminated from time to time in connection with a reduction or
termination of the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b),
(b) increased pursuant to Section 2.09, (c) modified from time to time pursuant
to any assignment permitted by Section 12.04(b) or (d) established pursuant to a
Joinder Agreement executed by an Increasing Lender pursuant to Section 2.09.  
     “Midstream Joint Venture” means a contemplated transaction on terms
substantially similar (and not materially less favorable to the Borrower than)
those disclosed by the Borrower to the Lenders prior to the Effective Date, that
will involve (a) the Investment by the Borrower of the Existing Midstream Assets
and not more than $50,000 cash to two separate formed or to-be-formed
Unrestricted Subsidiaries, (b) the contribution by such formed or to-be-formed
Unrestricted Subsidiaries of the Existing Midstream Assets and such cash to a
formed or to-be-formed partnership into which a third party will contribute cash
in exchange for an interest in the partnership, (c) the entering into of certain
agreements pursuant to which the Borrower will agree to dedicate and to cause
its Subsidiaries to dedicate certain of the production arising from or
attributable to their working interest shares of natural gas to such
Unrestricted Subsidiaries or such partnership and to have certain of its
Hydrocarbons production (i) gathered and transported in certain of the Existing
Midstream Assets and (ii) processed and treated in future midstream assets of
such partnership and (d) the entering into of certain operating agreements and
transition services agreements with respect to the operations of such
partnership.  
     “Minimum Liquidity” means, as of any date of determination, the sum of
(a) the aggregate unused amount of the Commitments under this Agreement as of
such date (but only to the extent that the Borrower is permitted to borrow such
amounts under the terms of this Agreement including, without limitation,
Section 6.02 hereof) plus (b) all unrestricted and unencumbered cash and
Investments of the type described in Section 9.06(b), (c), (e), (f), (g), (h),
and (i) reflected on the Borrower’s balance sheet as of such date.  
     “Montreal” means Montreal, Quebec, Canada.  
     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto
that is a nationally recognized rating agency.  
     “Mortgaged Property” means any Property owned by the Borrower or any
Guarantor which is subject to the Liens existing and to exist under the terms of
the Security Instruments.  
     “Multiemployer Plan” means a Plan which is a multiemployer plan as defined
in section 3(37) or 4001(a)(3) of ERISA.  
     “Net Debt” means, with respect to the Borrower (or, from and after the New
Parent Joinder, New Parent) and the Consolidated Restricted Subsidiaries at any
time, (a) Total Debt, minus (b) the amount of Permitted Intercompany Debt
outstanding at such time, minus (c) Excess Cash.  
     “New Borrowing Base Notice” has the meaning assigned such term in
Section 2.07(d).  
     “New Parent” means a direct parent of the Borrower (other than QRI) to
which 100% of the Equity Interests in the Borrower will be transferred by QRI in
contemplation of a Qualified IPO; which New Parent will, at all times following
a Qualified IPO, own, directly or indirectly (through one or more Intermediate
HoldCos), 100% of the Equity Interests in the Borrower.  
     “New Parent Joinder” has the meaning assigned such term in Section 8.19.  

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     “Non-Recourse Debt” means any Debt of any Subsidiary which does not own any
Oil and Gas Properties included in Borrowing Base in which a Credit Party made
an Investment which Debt is (a) secured solely by the assets acquired with the
proceeds of such Debt and (b) with respect to which (i) no Credit Party shall
have any liability to any Person for repayment of all or any portion of such
Debt beyond the assets so secured and (ii) the holders thereof (A) shall have
recourse only to, and the right to require the obligations of such Subsidiary to
be performed, satisfied or paid only out of, the assets so secured and (B) shall
have no direct or indirect recourse (including by way of indemnity or guaranty)
to any Credit Party, whether for principal, interest, fees, expenses or
otherwise; provided, however, that any such Debt shall not cease to be
“Non-Recourse Debt” solely as a result of the instrument governing such Debt
containing terms pursuant to which such Debt becomes recourse upon (1) fraud or
misrepresentation by the Subsidiary in connection with such Debt, (2) such
Subsidiary failing to pay taxes or other charges that result in the creation of
Liens on any portion of the specific property securing such Debt or failing to
maintain any insurance on such property required under the instruments securing
such Debt, (3) the conversion of any of the collateral for such Debt, (4) such
Subsidiary failing to maintain any of the collateral for such Debt in the
condition required under the instruments securing the Debt, (5) any income
generated by the specific property securing such Debt being applied in a manner
not otherwise allowed in the instruments securing such Debt, (6) the violation
of any Environmental Law or otherwise affecting the environmental condition of
the specific property securing the Debt or (7) the rights of the holder of such
Debt to the specific property becoming impaired, suspended or reduced by any
act, omission or misrepresentation of such Person; provided further, however,
that, upon the occurrence of any of the foregoing clauses (1) through (7) above,
any such Debt shall cease to be “Non-Recourse Debt”.  
     “Notes” means the promissory notes of the Borrower described in
Section 2.02(d) and being substantially in the form of Exhibit A, together with
all amendments, modifications, replacements, extensions and rearrangements
thereof.  
     “OFAC” means the Office of Foreign Assets Control of the United States
Department of Treasury.  
     “Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests;
(c) all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, transportation,
exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests; (e) all Hydrocarbons in and under and which may be produced and saved
or attributable to the Hydrocarbon Interests, including all oil in tanks, and
all rents, issues, profits, proceeds, products, revenues and other incomes from
or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses and surface buildings, structures and the contents thereof which
contents are not otherwise Oil and Gas Properties situated on such Hydrocarbon
Interests or Property) and (x) including any and all oil wells, gas wells,
injection wells or other wells, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment,

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appliances, tools, implements, cables, wires, towers, casing, tubing and rods,
surface leases, rights-of-way, easements and servitudes together with all
additions, substitutions, replacements, accessions and attachments to any and
all of the foregoing and (y) excluding any of the foregoing assets described in
clause (x) manufactured for sale to third parties to the extent not used by the
manufacturing Person in connection with the operating, working or development of
any of such Hydrocarbon Interests or Property; provided that notwithstanding
anything to the contrary contained herein, “Oil and Gas Properties” shall not
include cash, deposit accounts or securities accounts.  
     “Oil and Gas Swap Agreement” means a Swap Agreement pursuant to which any
Person hedges the price to be received by it for future production of
Hydrocarbons.  
     “Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any such Person’s
jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement of
formation or organization and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.  
     “Other Currency” is defined in Section 2.11(a).  
     “Other Taxes” means any and all present or future stamp, court or
documentary, intangible, recording, filing taxes or any other excise or Property
taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery, performance, enforcement or registration or, from the
receipt or perfection of a security interest under, or otherwise with respect
to, this Agreement and any other Loan Document.  
     “Parent HoldCo” means a direct parent of the New Parent which owns,
directly or indirectly, any Equity Interests in the New Parent.  
     “Participant” has the meaning set forth in Section 12.04(c)(i).  
     “Participant Register” has the meaning set forth in
Section 12.04(c)(iii).  
     “PBGC” means the Pension Benefit Guaranty Corporation, or any successor
thereto.  
     “Pension Plan” means any employee pension benefit plan as defined in
section 3(2) of ERISA (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 302 of ERISA or Section 412 of the
Code and in respect of which any Credit Party or any ERISA Affiliate of the
foregoing may have liability, including any liability by reason of having been a
substantial employer pursuant to section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under section 4069 of ERISA.  
     “Permitted Additional Debt” means Debt permitted to be incurred pursuant to
Section 9.02(n).  
     “Permitted Holders” means (a) QRI, the Borrower or any Restricted
Subsidiary of the Borrower (or, from and after the New Parent Joinder, New
Parent), (b) a trustee or other fiduciary holding securities under any employee
benefit plan (or related trust) sponsored or maintained by any Credit Party, (c)

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Mercury Exploration Company, Mercury Production Company, Quicksilver Energy,
L.P., The Discovery Fund, Pennsylvania Avenue Limited Partnership, Pennsylvania
Management Company, the estate of Frank Darden, Lucy Darden, Ann Darden Self,
Glenn Darden or Thomas Darden, (d) with respect to the natural persons listed in
the foregoing clause (c), their respective successors, assigns or designees
which, in each case, are Controlled Affiliates of any Person referred to in the
foregoing clause (c), and their respective heirs, beneficiaries, trust, estates,
and (e) with respect to the Persons listed in the foregoing clause (c) that are
not natural persons, their respective successors, assigns or designees which, in
each case, are Controlled Affiliates of any Person referred to in the foregoing
clause (c).  
     “Permitted Intercompany Debt” means existing intercompany Debt owing from
the Borrower to QRI which is identified and listed on Schedule 9.02 hereof,
which Debt (a) shall not exceed an aggregate principal amount of $250,000,000,
(b) shall not accrue interest at a rate greater than 2% per annum, (c) shall be
expressly subordinate to the Secured Indebtedness on terms acceptable to the
Administrative Agent and (d) shall be fully converted to Equity Interests in the
Borrower on or prior to the earliest of (i) June 30, 2012, (ii) the occurrence
of a Qualified IPO, and (iii) the issuance or incurrence of any Permitted
Additional Debt.  
     “Permitted Investments” means the Investments permitted by Section 9.06.  
     “Permitted Liens” means with respect to (a) any Oil and Gas Property of the
Credit Parties of the types described in clauses (a), (b), (c), (e) and (f) of
the definition of “Oil and Gas Properties” evaluated in the Reserve Report used
in the most recent determination of the Borrowing Base, the Liens permitted
under clauses (a), (b), (c), (f), (g), and (i) of Section 9.03, (b) any Equity
Interests issued by the Borrower or by any Restricted Subsidiary, Liens of the
type described in clause (a) of the definition of “Excepted Liens” and (c) all
property and assets (other than those referred to in the foregoing clauses
(a) and (b)), Liens of the type listed under Section 9.03.  
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.  
     “Plan” means any employee pension benefit plan, as defined in section 3(2)
of ERISA, other than a Canadian Pension Plan or Canadian Benefit Plan, which
(a) is currently or hereafter sponsored, maintained or contributed to by a
Credit Party or an ERISA Affiliate or (b) was at any time during the six
calendar years preceding the date hereof, sponsored, maintained or contributed
to by a Credit Party or an ERISA Affiliate.  
     “Pledge Agreement” means any Pledge Agreement to be entered into among one
or more of New Parent, any Intermediate HoldCo, the Borrower and the Restricted
Subsidiaries (to the extent that any of the foregoing own Equity Interests in
the Borrower or any Restricted Subsidiary) and the Administrative Agent in
substantially the form of Exhibit G with such modifications as may be necessary
or agreeable to account for a pledgor not being organized under the laws of
Canada (or a province thereof) (or otherwise in form and substance acceptable to
the Administrative Agent) granting Liens and a security interest on the Equity
Interests issued by the Borrower and Restricted Subsidiaries in favor of the
Administrative Agent for the benefit of the Secured Parties to secure the
Secured Indebtedness, as the same may be amended, modified or supplemented from
time to time.  
     “Principal Office” means the principal office of the Administrative Agent,
which on the date of this Agreement is located at 200 Bay Street, Floor 18,
Royal Bank Plaza, South Tower, Toronto, Ontario M5J 2J2 Canada.  

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     “Property” means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including, without
limitation, cash, securities, accounts and contract rights.  
     “Proposed Borrowing Base” has the meaning assigned to such term in
Section 2.07(c)(i).  
     “Proposed Borrowing Base Notice” has the meaning assigned to such term in
Section 2.07(c)(ii).  
     “Proved Hydrocarbon Interests” means, collectively, all Hydrocarbon
Interests which constitute “proved reserves,” “proved developed producing
reserves,” “proved developed nonproducing reserves,” and “proved undeveloped
reserves,” as such terms are defined from time to time by the Society of
Petroleum Engineers of the American Institute of Mining Engineers.  
     “Proved Producing Hydrocarbon Interests” means all Hydrocarbon Interests
which constitute “proved developed producing reserves” as such term is defined
from time to time by the Society of Petroleum Engineers of the American
Institute of Mining Engineers.  
     “QRI” means Quicksilver Resources Inc., a Delaware corporation.  
     “QRI Pledge Agreement” means a pledge agreement in form and substance
satisfactory to the Administrative Agent pursuant to which QRI will pledge as
collateral all of the Equity Interests in the Borrower owned by it (prior to the
transfer of such Equity Interests to New Parent) to the Administrative Agent for
the benefit of the Secured Parties to secure the Secured Indebtedness, which QRI
Pledge Agreement shall be non-recourse to QRI except to the extent of the Equity
Interests pledged thereunder.  
     “Qualified IPO” means the first underwritten sale to the public of Equity
Interests in New Parent which results in net cash proceeds to New Parent of not
less than C$200,000,000, and after which the Equity Interests in New Parent are
listed on a recognized U.S. or Canadian national securities exchange or the
NASDAQ Stock Market.  
     “Reclassification” means the owner of an Oil and Gas Property evaluated in
the Reserve Report used in the most recent determination of the Borrowing Base
changing from a Restricted Subsidiary to an Unrestricted Subsidiary as a result
of either (a) the Borrower designating such previously Restricted Subsidiary as
an Unrestricted Subsidiary in accordance with Section 9.07(b), or (b) such
previously Restricted Subsidiary merging with an Unrestricted Subsidiary, with
the Unrestricted Subsidiary being the continuing or surviving Person in
accordance with Section 9.09(a).  “Reclassified” shall have the correlative
meaning thereto, and an Oil and Gas Property is “Reclassified” if a
Reclassification occurs with respect to its owner.  
     “Recognized Value” means, (a) with respect to Oil and Gas Properties
evaluated in the most recently delivered Reserve Report, the discounted present
value of the estimated net cash flow to be realized from the production of
Hydrocarbons from such Oil and Gas Properties as determined by the
Administrative Agent for purposes of determining the portion of the then
effective Borrowing Base which it attributes to such Oil and Gas Properties in
accordance with Section 2.07, and (b) with respect to any other Oil and Gas
Properties, the discounted present value of the estimated net cash flow to be
realized from the production of Hydrocarbons from such Oil and Gas Properties as
determined by the Administrative Agent in the same manner as if it were
evaluating such Oil and Gas Properties for purposes of determining the Borrowing
Base.  
     “Redemption” means with respect to any Debt, the repurchase, redemption,
prepayment, repayment, defeasance or any other acquisition or retirement for
value (or the segregation of funds with

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respect to any of the foregoing) of such Debt; provided that any conversion of
Permitted Intercompany Debt into Equity Interests of the Borrower shall not
constitute a Redemption of such Permitted Intercompany Debt.  “Redeem” has the
correlative meaning thereto.  
     “Redetermination Date” means, with respect to any Scheduled Redetermination
or any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.07(d).  
     “Register” has the meaning assigned such term in Section 12.04(b)(iv).  
     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, partners,
agents and advisors (including attorneys, accountants and experts) of such
Person and such Person’s Affiliates.  
     “Required Lenders” means, at any time while no Loans or LC Exposure is
outstanding, Lenders having at least 66 2/3% of the Aggregate Maximum Credit
Amounts; and at any time while any Loans or LC Exposure is outstanding, Lenders
holding at least 66 2/3% of the outstanding aggregate principal amount of the
Loans and participation interests in Letters of Credit (without regard to any
sale by a Lender of a participation in any Loan under Section 12.04(c));
provided that the Maximum Credit Amounts and the principal amount of the Loans
and participation interests in Letters of Credit of the Defaulting Lenders (if
any) shall be excluded from the determination of Required Lenders.  
     “Reserve Report” means a report, in form and substance reasonably
satisfactory to the Administrative Agent, setting forth, as of the dates set
forth in Section 8.11(a) (or such other date in the event of an Interim
Redetermination), the oil and gas reserves attributable to the Oil and Gas
Properties of the Credit Parties, together with a projection of the rate of
production and future net income, taxes, operating expenses and capital
expenditures with respect thereto as of such date, based upon the pricing
assumptions consistent with SEC reporting requirements at the time.  For the
avoidance of doubt, any reference in this Agreement (including Section 8.13 and
Section 9.10) to Oil and Gas Properties described, included or evaluated in a
Reserve Report shall be deemed to refer solely to Proved Hydrocarbon Interests
and to exclude possible or probable oil and gas reserves attributable to such
Oil and Gas Properties.  
     “Responsible Officer” means, as to any Person, the Chief Executive Officer,
the President, any Financial Officer or any Vice President of such Person (a
“Specified Responsible Officer”) or any (a) other officer specified as such to
the Administrative Agent in writing by a Specified Responsible Officer, or
(b) other employee specified as such to the Administrative Agent in writing by
the chief financial officer and by one other Financial Officer; provided that
any written designation of any officer or employee other than a Specified
Responsible Officer as a “Responsible Officer” shall include a specimen
signature of such other officer or employee which is certified by a Specified
Responsible Officer.  Unless otherwise specified, all references to a
Responsible Officer herein shall mean a Responsible Officer of the Borrower.  
     “Restricted Payment” means any dividend or other distribution (whether in
cash, securities or other Property) with respect to any Equity Interests in any
Credit Party, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in any such Credit Party or any option, warrant or other right
to acquire any such Equity Interests in any such Credit Party; provided that
cash payments in connection with restricted stock units, phantom stock plans or
similar compensation arrangements shall not constitute Restricted Payments.  

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     “Restricted Subsidiary” means any Subsidiary of the Borrower (or, from and
after the New Parent Joinder, New Parent) that is not an Unrestricted
Subsidiary.  
     “Revolving Credit Exposure” means, with respect to any Lender at any time,
the sum of (i) the outstanding principal amount of such Lender’s Loans and
(ii) its LC Exposure, in each case at such time.  
     “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.  
     “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.  
     “Scheduled Redetermination” has the meaning assigned such term in
Section 2.07(b).  
     “Scheduled Redetermination Date” means the date on which a Borrowing Base
that has been redetermined pursuant to a Scheduled Redetermination becomes
effective as provided in Section 2.07(d).  
     “SEC” means the Securities and Exchange Commission or any successor
Governmental Authority.  
     “Section 1031 Counterparty” means an entity that is not an Affiliate of the
Borrower and that will serve as an exchange accommodation titleholder in
connection with the Section 1031 Exchange.  
     “Section 1031 Exchange” means a transaction intended to qualify for
nonrecognition of gain or loss under Section 1031 of the Code pursuant to which
a Credit Party would exchange Oil and Gas Properties owned by it for Oil and Gas
Properties owned by a third party.  
     “Secured Indebtedness” means any and all amounts owing or to be owing by
any Credit Party or any non-Credit Party Guarantor (whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising): (a) to any Agent, any Issuing
Bank or any Lender under any Loan Document, including, without limitation, all
interest on any of the Loans (including any interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of any Credit Party or any non-Credit Party
Guarantor (or could accrue but for the operation of applicable bankruptcy or
insolvency laws), whether or not such interest is allowed or allowable as a
claim in any such case, proceeding or other action); (b) to any Secured Swap
Provider under any Swap Agreement, but excluding any additional transactions or
confirmations entered into (i) after such Secured Swap Provider ceases to be a
Lender or an Affiliate of a Lender or (ii) after assignment by a Secured Swap
Provider to a Person that is not a Lender or an Affiliate of a Lender at the
time of such assignment; (c) to any Bank Products Provider in respect of Bank
Products; and (d) all renewals, extensions and/or rearrangements of any of the
above.  
     “Secured Parties” means the Lenders, Bank Product Providers and the Secured
Swap Providers.  
     “Secured Swap Provider” means (a) any Person that is a party to a Swap
Agreement with any Credit Party that entered into such Swap Agreement (whether
at the time the transaction was entered into or thereafter by novation) while
such Person was a Lender or an Affiliate of a Lender (or a lender or an
Affiliate of a lender under the Existing Credit Agreement or the Existing
U.S.  Credit Agreement), whether or not such Person at any time ceases to be a
Lender or an Affiliate of a Lender, as the case may be, (b) certain
counterparties to existing Swap Agreements with QRI or the Borrower (and who
were lenders or affiliates of lenders under the Existing Credit Agreement),
which Swap Agreements and

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counterparties are set forth on Schedule 1.02-b, whether or not such
counterparty is a Lender or an Affiliate of a Lender on or after the Effective
Date (provided, that such counterparties shall only remain Secured Swap
Providers pursuant to this clause (b) for a period of ninety (90) days following
the Effective Date (which period shall continue thereafter if an Event of
Default exists on such 90th day until such Event of Default is cured or waived
in accordance with Section 12.02), or (c) any assignee of any Person described
in clauses (a) and (b) above so long as such assignee is a Lender or an
Affiliate of a Lender at the time of such assignment.  
     “Security Instruments” means the Guaranty Agreement, each Pledge Agreement,
the QRI Pledge Agreement, debentures, mortgages, deeds of trust and other
agreements, instruments or certificates described or referred to in Exhibit E-1,
and any and all other agreements, instruments or certificates now or hereafter
executed and delivered by the Borrower or any other Person (other than Swap
Agreements with the Lenders or any Affiliate of a Lender or participation or
similar agreements between any Lender and any other lender or creditor with
respect to any Secured Indebtedness pursuant to this Agreement and other than
agreements in respect of Bank Products Obligations) in connection with, or as
security for the payment or performance of the Secured Indebtedness, the Notes,
this Agreement, or reimbursement obligations under the Letters of Credit, as
such agreements may be amended, modified, supplemented or restated from time to
time.  
     “Subsidiary” means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, managers or other governing body
of such Person (irrespective of whether or not at the time Equity Interests of
any other class or classes of such Person have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower (or, from and after the New
Parent Joinder, New Parent) or one or more of its Subsidiaries or by the
Borrower (or, from and after the New Parent Joinder, New Parent) and one or more
of its Subsidiaries and (b) any partnership of which the Borrower (or, from and
after the New Parent Joinder, New Parent) or any of its Subsidiaries is a
general partner.  Unless otherwise indicated herein, each reference to the term
“Subsidiary” shall mean a Subsidiary of the Borrower (or, from and after the New
Parent Joinder, New Parent).  
     “Swap Agreement” means any agreement with respect to any financial
derivative transaction, including any swap, forward, future or similar
agreement, whether exchange traded, “over-the-counter” or otherwise, involving,
or settled by reference to, one or more rates, currencies, commodities, equity
or debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that stock option
or other benefit or compensation plans providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of any Credit Party shall not constitute a Swap Agreement.  
     “Sweep Accounts” means deposit accounts, the proceeds of which are
transferred nightly to an interest-bearing concentration account maintained by
the Administrative Agent or another Lender (provided that upon an Event of
Default such Lender shall, at the request of the Administrative Agent, enter
into a control agreement with the Administrative Agent and the applicable Credit
Party, as appropriate, in form and substance reasonably satisfactory to the
Administrative Agent), and re-transferred each morning to such Credit Party’s,
as applicable, deposit accounts, all on terms and conditions reasonably
satisfactory to the Administrative Agent.  
     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.  

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     “Termination Date” means the earlier of the Maturity Date and the date of
termination of the Commitments.  
     “Toronto” means Toronto, Ontario, Canada.  
     “Total Debt” means at any date, all Debt of the Borrower (or, from and
after the New Parent Joinder, New Parent) and its Consolidated Restricted
Subsidiaries, other than the types of Debt set forth in clauses (e), (f) (to the
extent permitted under Section 9.02(q)), and (g) of the definition thereof,
determined on a consolidated basis.  
     “Transactions” means, with respect to (a) the Borrower, the execution,
delivery and performance by the Borrower of this Agreement and each other Loan
Document to which it is a party, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder, and the grant of Liens
by the Borrower on Mortgaged Properties and other Properties pursuant to the
Security Instruments, and (b) each Guarantor, the execution, delivery and
performance by such Guarantor of each Loan Document to which it is a party, the
guaranteeing of the Secured Indebtedness and the other obligations under the
Guaranty Agreement by such Guarantor and such Guarantor’s grant of the security
interests and provision of collateral pursuant to the Security Instruments, and
the grant of Liens by such Guarantor on Mortgaged Properties and other
Properties pursuant to the Security Instruments.  
     “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 Canadian Base Rate, the CDOR Rate, the U.S.  Base
Rate or the LIBO Rate.  
     “Unfunded Current Liability” means the amount, if any, by which (a) the
greater of the solvency liability or the going concern liability of a Canadian
Pension Plan as at the date of the most recently filed actuarial valuation, in
either case determined in accordance with the actuarial methods and assumptions
used by the actuary for the Canadian Pension Plan in the most recent actuarial
valuation of the Canadian Pension Plan filed with, and accepted for filing by,
the relevant pension regulatory authority, exceeds (b) the fair market value of
the assets of the Canadian Pension Plan as at the same date.  
     “Unrestricted Subsidiary” means any Subsidiary of the Borrower (or, from
and after the New Parent Joinder, New Parent) designated as such on
Schedule 7.10 or which the Borrower (or, from and after the New Parent Joinder,
New Parent) has designated in writing to the Administrative Agent to be an
Unrestricted Subsidiary pursuant to Section 9.07.  
     “U.S.  Base Rate” means, for any day, a rate per annum equal to the greater
of (a) the U.S.  Prime Rate in effect on such day, and (b) the LIBO Rate for a
one month Interest Period beginning on such day plus one hundred basis points
(or if such day is not a Business Day, the immediately preceding Business Day);
provided that, for the avoidance of doubt, the LIBO Rate for any day shall be
based on the rate appearing at Reuters Reference Screen LIBOR01 (or on any
successor or substitute screen of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those
currently provided on such screen of such service, as determined by the
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 on such day, as the rate for Dollar
deposits with a one-month maturity; provided further that, in the event that
such rate is not available at such time for any reason, then the LIBO Rate for
such day shall be based on the rate (rounded upwards, if necessary, to the next
1/16 of 1%) at which Dollar deposits in the approximate amount of the applicable
U.S.  Prime Borrowing with a one month maturity are offered by the principal
London office of the Administrative Agent in immediately available funds in the
London interbank market at approximately

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11:00 a.m., London time, on such day (or the immediately preceding Business Days
if such day is not a day on which banks are open for dealings in Dollar deposits
in the London interbank market).  Any change in the U.S.  Base Rate due to a
change in the U.S.  Prime Rate or the LIBO Rate shall be effective from and
including the effective date of such change in the U.S.  Prime Rate or the LIBO
Rate, respectively.  
     “U.S.  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 U.S.  Base Rate.  
     “U.S.  Prime Rate” means the rate of interest per annum publicly announced
from time to time by the bank then serving as Administrative Agent as the prime
rate in effect at its principal office in New York City; each change in the
U.S.  Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.  Such rate is set by the bank then
serving as Administrative Agent as a general reference rate of interest, taking
into account such factors as the bank then serving as Administrative Agent may
deem appropriate; it being understood that (x) many of the bank then serving as
Administrative Agent’s commercial or other loans are priced in relation to such
rate, (y) it is not necessarily the lowest or best rate actually charged to any
customer and (z) the bank then serving as Administrative Agent may make various
commercial or other loans at rates of interest having no relationship to such
rate.  
     Section 1.03   Types of Loans and Borrowings.  For purposes of this
Agreement, Loans and Borrowings, respectively, may be classified and referred to
by Type (e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).  
     Section 1.04   Terms Generally; Rules of Construction.  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” as used in this Agreement 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 in the Loan Documents),
(b) any reference herein to any law shall be construed as referring to such law
as amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time, (c) any reference herein to any Person shall be construed to
include such Person’s successors and assigns (subject to the restrictions
contained in the Loan Documents), (d) 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, (e) with
respect to the determination of any time period, the word “from” means “from and
including” and the word “to” means “to and including” and (f) any reference
herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to,
this Agreement.  No provision of this Agreement or any other Loan Document shall
be interpreted or construed against any Person solely because such Person or its
legal representative drafted such provision.  In addition, all terms used herein
relating to rules, regulations laws, taxes, GAAP and other similar items shall
be deemed to mean, as applicable, the rules, regulations, laws, taxes, GAAP or
such similar item of the United States, Canada or any other jurisdiction
reasonably acceptable to the Administrative Agent pursuant to Section 9.08, as
the context so requires.  

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     Section 1.05   Accounting Terms and Determinations; GAAP.  Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the Financial Statements except for changes in which Borrower’s independent
certified public accountants concur and which are disclosed in such Financial
Statements or to the Administrative Agent on the next date on which financial
statements are required to be delivered to the Lenders pursuant to
Section 8.01(a); provided that, if (i) the Borrower notifies the Administrative
Agent that the Borrower requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or in
the application thereof on the operation of or calculation of compliance with
such provision or (ii) the Administrative Agent notifies the Borrower that the
Majority Lenders request an amendment to any provision hereof for such purpose,
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.  Notwithstanding anything herein to
the contrary, for the purposes of calculating any of the ratios tested under
Section 9.01, and the components of each of such ratios, the following shall be
excluded: all Unrestricted Subsidiaries, and their Subsidiaries (including their
assets, liabilities, income, expenses, losses, cash flows, and the elements
thereof), except as set forth in clause (a) of the definition of Consolidated
Net Income.  
ARTICLE 2
The Credits
     Section 2.01   Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower during the Availability
Period in an aggregate principal amount that will not result in (i) such
Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or
(ii) the total Revolving Credit Exposures exceeding the total
Commitments.  Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, repay and reborrow the
Loans.  
     Section 2.02   Loans and Borrowings.  (a) Borrowings; Several
Obligations.  Each Loan shall be made as part of a Borrowing consisting of Loans
made by the Lenders ratably in accordance with their respective
Commitments.  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 are several and no Lender shall be responsible for any
other Lender’s failure to make Loans as required.  
     (b)     Types of Loans.  Subject to Section 3.03, each Borrowing shall be
comprised entirely of Canadian Prime Loans, CDOR Loans, U.S.  Prime Loans or
Eurodollar Loans as the Borrower may request in accordance herewith.  Each
Lender at its option may make any CDOR Loan or 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 the
Borrower to repay such Loan in accordance with the terms of this Agreement.  No
such designation or transfer shall result in any liability on the part of the
Borrower for increased costs or expenses resulting solely from such designation
or transfer (except any such transfer which is made by a Lender pursuant to
Section 5.04 or Section 5.05, or otherwise for the purpose of complying with any
Governmental Requirement).  Increased costs for expenses resulting from a Change
in Law occurring subsequent to any such designation or transfer shall be deemed
not to result solely from such designation or transfer.  

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     (c)     Minimum Amounts; Limitation on Number of Borrowings.  Each Canadian
Prime Borrowing shall be in an aggregate amount that is an integral multiple of
C$100,000 and not less than C$500,000; provided that a Canadian Prime Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.08(e).  Each CDOR Borrowing shall be
in an aggregate amount that is an integral multiple of C$1,000,000 and not less
than C$3,000,000.  Each U.S.  Prime Borrowing shall be in an aggregate amount
that is an integral multiple of $100,000 and not less than $500,000; provided
that a U.S.  Prime Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Commitments or that is required to finance
the reimbursement of an LC Disbursement as contemplated by
Section 2.08(e).  Each Eurodollar Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $3,000,000.  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 10 CDOR Borrowings or 10
Eurodollar Borrowings outstanding.  Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to elect to convert
or continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.  
     (d)     Notes.  If requested by a Lender, the Loans made by such Lender
shall be evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit A, dated, in the case of (i) any Lender party hereto as of
the date of this Agreement, as of the Effective Date, and (ii) any other Lender,
as of the date such Lender becomes a party hereto, payable to such Lender in a
principal amount equal to its Maximum Credit Amount as in effect on such date,
and otherwise duly completed.  In the event that any Lender’s Maximum Credit
Amount increases or decreases for any reason (whether pursuant to Section 2.06,
Section 2.09, Section 12.04(b) or otherwise), the Borrower shall deliver or
cause to be delivered, to the extent such Lender is then holding a Note and upon
the written request of such Lender, on the effective date of such increase or
decrease, a new Note payable to such Lender in a principal amount equal to its
Maximum Credit Amount after giving effect to such increase or decrease, and
otherwise duly completed.  Upon receipt of such replacement Note, such Lender
shall return the replaced Note to the Borrower.  The date, amount, Type,
interest rate and, if applicable, Interest Period of each Loan made by each
Lender, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books for its Note, and, prior to any transfer,
may be endorsed by such Lender on a schedule attached to such Note or any
continuation thereof or on any separate record maintained by such
Lender.  Failure to make any such notation or to attach a schedule shall not
affect any Lender’s or the Borrower’s rights or obligations in respect of such
Loans or affect the validity of such transfer by any Lender of its Note.  
     Section 2.03   Requests for Borrowings.  To request a Canadian Prime
Borrowing, a CDOR Borrowing, a U.S.  Prime Borrowing or a Eurodollar Borrowing,
the Borrower shall notify the Administrative Agent of such request by telephone
(a) in the case of a CDOR Borrowing or 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 a U.S.  Prime
Borrowing, not later than 12:00 p.m.  noon, Toronto time, on the date of the
proposed Borrowing; provided that no such notice shall be required for any
deemed request of a Canadian Prime Borrowing or a U.S.  Prime Borrowing, as
applicable, to finance the reimbursement of an LC Disbursement as provided in
Section 2.08(e).  Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery, electronic mail or telecopy to
the Administrative Agent of a written Borrowing Request substantially in the
form of Exhibit B and signed by the Borrower.  Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02:
     (i)     the aggregate amount of the requested Borrowing (which amount will
be in the appropriate Currency as required pursuant to the third to last
sentence of this Section 2.03);

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     (ii)     the date of such Borrowing, which shall be a Business Day;
     (iii)     whether such Borrowing is to be a Canadian Prime Borrowing, a
CDOR Borrowing, a U.S.  Prime Borrowing or a Eurodollar Borrowing;
     (iv)     in the case of a CDOR Borrowing or 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”; and
     (v)     the location and number of the Borrower’s account to which funds
are to be disbursed, which shall comply with the requirements of Section 2.05.  
     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 CDOR Borrowing or Eurodollar Borrowing,
then the Borrower shall be deemed to have selected an Interest Period of one
month’s duration.  Notwithstanding anything herein to the contrary, (x) Canadian
Prime Loans and CDOR Loans may only be denominated in Canadian Dollars and
(y) U.S.  Prime Loans and Eurodollar Loans may only be denominated in
Dollars.  Each Borrowing Request shall be deemed to constitute a representation
and warranty by the Borrower that the matters specified in Section 6.02(a)
through (d) will be satisfied on the date of Borrowing specified in such
Borrowing Request.  Promptly following receipt of a Borrowing Request in
accordance with this Section 2.03, the Administrative Agent shall advise each
Lender of the details thereof and of the amount of such Lender’s Loan to be made
as part of the requested Borrowing.  
     Section 2.04   Interest Elections.  (a) Conversion and Continuance.  Each
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a CDOR Borrowing or a Eurodollar Borrowing, shall
have an initial Interest Period as specified in such Borrowing
Request.  Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a CDOR
Borrowing or a Eurodollar Borrowing, may elect Interest Periods therefor, all as
provided in this Section 2.04.  The Borrower may 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.  No such conversion or continuation shall be
deemed the making of a new Borrowing for purposes of this Agreement, including
without limitation Article 6.  
     (b)     Interest Election Requests.  To make an election pursuant to this
Section 2.04, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the 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, electronic mail or telecopy to
the Administrative Agent of a written Interest Election Request in substantially
the form of Exhibit C and signed by the Borrower.  
     (c)     Information in Interest Election Requests.  Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:
     (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 Section 2.04(c)(iii) and
(iv) shall be specified for each resulting Borrowing);

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     (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, a CDOR Borrowing, a U.S.  Prime Borrowing or a Eurodollar Borrowing;
and
     (iv)     if the resulting Borrowing is a CDOR Borrowing or a Eurodollar
Borrowing, the Interest Period to be applicable thereto after giving effect to
such election, which, subject to Section 2.04(e)(ii), shall be a period
contemplated by the definition of the term “Interest Period”.  
     If any such Interest Election Request requests a CDOR Borrowing or a
Eurodollar Borrowing but does not specify an Interest Period or the Interest
Period specified in such Interest Election Request is not available to all
Lenders, then the Borrower shall be deemed to have selected an Interest Period
of one month’s duration.  
     (d)     Notice to Lenders by the Administrative Agent.  Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.  
     (e)     Effect of Failure to Deliver Timely Interest Election Request and
Events of Default and Borrowing Base Deficiencies on Interest Election.  If the
Borrower fails to deliver a timely Interest Election Request with respect to a
CDOR Borrowing or 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 Canadian
Prime Borrowing or U.S.  Prime Borrowing, as applicable.  Notwithstanding any
contrary provision hereof, if (i) an Event of Default has occurred and is
continuing and the Administrative Agent, at the request of the Majority Lenders,
so notifies the Borrower: (A) no outstanding Borrowing may be converted to or
continued as a CDOR Borrowing or a Eurodollar Borrowing (and any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a CDOR Borrowing or a Eurodollar Borrowing
shall be ineffective) and (B) unless repaid, each CDOR Borrowing and Eurodollar
Borrowing shall be converted to a Canadian Prime Borrowing or a U.S.  Prime
Borrowing, as applicable, at the end of the Interest Period applicable thereto
and (ii) a Borrowing Base Deficiency exists and the Administrative Agent, at the
request of the Majority Lenders, so notifies the Borrower, no outstanding
Borrowing may be converted to or continued as a CDOR Borrowing or a Eurodollar
Borrowing with an Interest Period longer than one month.  
     Section 2.05   Funding of Borrowings.  
     (a)     Funding by Lenders.  Each Lender shall make each Loan to be made by
it hereunder on the proposed date thereof by wire transfer of immediately
available funds (in the appropriate Currency based on the relevant Borrowing
Request) by 2:00 p.m., Toronto time, to the account of the Administrative Agent
most recently designated by it for such purpose by notice to the Lenders.  The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent and designated by the Borrower in the
applicable Borrowing Request; provided that Canadian Prime Loans or U.S.  Prime
Loans, as applicable, made to finance the reimbursement of an LC Disbursement as
provided in Section 2.08(e) shall be remitted by the Administrative Agent to the
Issuing Bank that made such LC Disbursement.  Nothing herein shall be deemed to
obligate any Lender to obtain the funds for its Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for its Loan in any particular place or manner.  

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     (b)     Presumption of Funding by the Lenders.  Unless the Administrative
Agent shall have received notice from a Lender prior to the proposed date (or
with respect to a Canadian Prime Borrowing or a U.S.  Prime Borrowing, prior to
the proposed time) of any Borrowing that such Lender will not make available to
the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with Section 2.05(a) and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount.  In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the 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 the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the costs incurred by the Administrative Agent for making such
Lender’s share of such Borrowing and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation or
(ii) in the case of the Borrower, the interest rate applicable to Canadian Prime
Loans.  If such Lender pays such amount to the 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 2.06   Termination and Reduction of Aggregate Maximum Credit
Amounts.  (a) Scheduled Termination of Commitments.  Unless previously
terminated, the Commitments shall terminate on the Maturity Date.  If at any
time the Aggregate Maximum Credit Amounts are terminated or reduced to zero,
then the Commitments shall terminate on the effective date of such termination
or reduction.  
     (b)     Optional Termination and Reduction of Aggregate Credit
Amounts.  (i) The Borrower may at any time terminate, or from time to time
reduce, the Aggregate Maximum Credit Amounts; provided that (A) each reduction
of the Aggregate Maximum Credit Amounts shall be in an amount that is an
integral multiple of C$1,000,000 and not less than C$3,000,000 and (B) the
Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if,
after giving effect to any concurrent prepayment of the Loans in accordance with
Section 3.04(c), the total Revolving Credit Exposures would exceed the total
Commitments.  
     (ii)     The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Aggregate Maximum Credit Amounts under
Section 2.06(b)(i) at least three 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 Administrative Agent
shall advise the Lenders of the contents thereof.  Each notice delivered by the
Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable; provided
that a notice of termination of the Aggregate Maximum Credit Amounts delivered
by the Borrower may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied.  Any termination or
reduction of the Aggregate Maximum Credit Amounts shall be permanent and may not
be reinstated.  Each reduction of the Aggregate Maximum Credit Amounts shall be
made ratably among the Lenders in accordance with each Lender’s Applicable
Percentage.  

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     Section 2.07   Borrowing Base.  (a) Initial Borrowing Base.  For the period
from and including the Effective Date to but excluding the first Redetermination
Date, the amount of the Borrowing Base shall be C$225,000,000.  Notwithstanding
the foregoing, the Borrowing Base may be subject to further adjustments from
time to time, whether before or after such Redetermination Date, pursuant to
Section 9.02(n) or Section 9.10.  
     (b)     Scheduled and Interim Redeterminations.  Subject to
Section 2.07(d), the Borrowing Base shall be redetermined semi-annually (a
“Scheduled Redetermination”) on or about the date that is 45 days following the
Borrower’s delivery of a Reserve Report in accordance with Section 8.11(a).  In
addition, (i) the Borrower may, by notifying the Administrative Agent thereof,
and (ii) the Administrative Agent may, at the direction of the Required Lenders,
by notifying the Borrower thereof, each elect to cause the Borrowing Base to be
redetermined one time between Scheduled Redeterminations (an “Interim
Redetermination”) in accordance with this Section 2.07.  
     (c)     Scheduled and Interim Redetermination Procedure.  (i) Each
Scheduled Redetermination and each Interim Redetermination shall be effectuated
as follows: Upon receipt by the Administrative Agent of (A) the Reserve Report
and the certificate required to be delivered by the Borrower to the
Administrative Agent, in the case of a Scheduled Redetermination, pursuant to
Section 8.11(a) and (c), and, in the case of an Interim Redetermination,
pursuant to Section 8.11(b) and (c), and (B) such other reports, data and
supplemental information including, without limitation, the information provided
pursuant to Section 8.11(c) as may, from time to time, be reasonably requested
by the Required Lenders (the Reserve Report, such certificate and such other
reports, data and supplemental information being the “Engineering Reports”), the
Administrative Agent shall evaluate the information contained in the Engineering
Reports and shall propose a new Borrowing Base (the “Proposed Borrowing Base”)
based upon such information and such other information that is deemed
appropriate by the Administrative Agent in its sole discretion in good faith and
consistent with its normal oil and gas lending criteria as it exists at the
particular time (including, without limitation, the status of title information
with respect to the Oil and Gas Properties as described in the Engineering
Reports, if applicable, and the existence of any other Debt, the Borrower’s
other assets, liabilities, fixed charges, cash flow, business, properties,
prospects, management and ownership, hedged and unhedged exposure to price,
price and production scenarios, interest rate and operating cost changes).  In
no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit
Amounts.  
     (ii)     The Administrative Agent shall notify the Borrower and the Lenders
of the Proposed Borrowing Base (the “Proposed Borrowing Base Notice”):
     (A)     in the case of a Scheduled Redetermination (1) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.11(a) in a timely and complete
manner, then on or before 30 days after the receipt of such Engineering Reports
(or as promptly thereafter as may be reasonably practicable) or (2) if the
Administrative Agent shall not have received the Engineering Reports required to
be delivered by the Borrower pursuant to Section 8.11(a) in a timely and
complete manner, then promptly after the Administrative Agent has received
complete Engineering Reports from the Borrower and has had a reasonable
opportunity to determine the Proposed Borrowing Base in accordance with
Section 2.07(c)(i); and
     (B)     in the case of an Interim Redetermination, promptly, and in any
event, within 30 days after the Administrative Agent has received the required
Engineering Reports (or as promptly thereafter as may be reasonably
practicable).  

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     (iii)     Any Proposed Borrowing Base that would increase the Borrowing
Base then in effect must be approved or deemed to have been approved by all of
the Lenders as provided in this Section 2.07(c)(iii); and any Proposed Borrowing
Base that would decrease or maintain the Borrowing Base then in effect must be
approved or be deemed to have been approved by the Required Lenders as provided
in this Section 2.07(c)(iii).  Upon receipt of the Proposed Borrowing Base
Notice, each Lender shall have 15 days to agree with the Proposed Borrowing Base
or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing
Base.  If, at the end of such 15 days, any Lender has not communicated its
approval or disapproval in writing to the Administrative Agent, such silence
shall be deemed to be an approval of the Proposed Borrowing Base.  If, at the
end of such 15-day period, all of the Lenders, in the case of a Proposed
Borrowing Base that would increase the Borrowing Base then in effect, or the
Required Lenders, in the case of a Proposed Borrowing Base that would decrease
or maintain the Borrowing Base then in effect, have approved or deemed to have
approved, as aforesaid, then the Proposed Borrowing Base shall become the new
Borrowing Base effective on the date specified in Section 2.07(d).  If, however,
at the end of such 15-day period, the Required Lenders, in the case of a
decrease or reaffirmation of the Borrowing Base, or all Lenders, in the case of
an increase to the Borrowing Base, have not approved or deemed to have approved,
as aforesaid, then the Administrative Agent shall poll the Lenders to ascertain
the highest Borrowing Base then acceptable to all Lenders, in the case of an
increase to the Borrowing Base, or to a number of Lenders sufficient to
constitute the Required Lenders, in the case of a decrease or reaffirmation of
the Borrowing Base, and such amount shall become the new Borrowing Base,
effective on the date specified in Section 2.07(d).  The consent of the
Borrower, in its sole discretion, shall be required for any increase in the
Borrowing Base.  
     (d)     Effectiveness of a Redetermined Borrowing Base.  After a
redetermined Borrowing Base is approved or is deemed to have been approved by
the Required Lenders or all Lenders, as applicable, pursuant to
Section 2.07(c)(iii) (and, in the case of an increase, the Borrower), the
Administrative Agent shall notify the Borrower and the Lenders of the amount of
the redetermined Borrowing Base (the “New Borrowing Base Notice”), and such
amounts shall become the new Borrowing Base, effective and applicable to the
Borrower, the Agents, each Issuing Bank and the Lenders:
     (i)     in the case of a Scheduled Redetermination, (A) if the
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Borrower pursuant to Section 8.11(a) and (c) in a timely and
complete manner, then on the date of such New Borrowing Base Notice, or (B) if
the Administrative Agent shall not have received the Engineering Reports
required to be delivered by the Borrower pursuant to Section 8.11(a) and (c) in
a timely and complete manner, then on the Business Day next succeeding the date
of such New Borrowing Base Notice; and
     (ii)     in the case of an Interim Redetermination, on the Business Day
next succeeding the date of such New Borrowing Base Notice.  
     Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 9.02(n) or Section 9.10,
whichever occurs first.  Notwithstanding the foregoing, no Scheduled
Redetermination or Interim Redetermination shall become effective until the New
Borrowing Base Notice related thereto is received by the Borrower.  
     Section 2.08   Letters of Credit.  

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     (a)     General.  Subject to the terms and conditions set forth herein, the
Borrower may request any Issuing Bank to issue Canadian Dollar or Dollar
denominated Letters of Credit for its own account or for the account of any of
its Restricted Subsidiaries, in a form reasonably acceptable to the
Administrative Agent and such Issuing Bank, at any time and from time to time
during the Availability Period; provided, however, that no Letter of Credit
shall be issued if, after such issuance, the LC Exposure would exceed the lesser
of (A) the LC Commitment and (B) an amount equal to the aggregate Commitments
minus the aggregate Loans then outstanding.  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 the
Borrower to, or entered into by the Borrower with, an Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall
control.  
     (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), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the applicable Issuing Bank) to
any Issuing Bank and the Administrative Agent (not less than three Business Days
in advance of the requested date of issuance, amendment, renewal or extension) a
notice:
     (i)     requesting the issuance of a Letter of Credit or identifying the
Letter of Credit issued by such Issuing Bank to be amended, renewed or extended;
     (ii)     specifying the date of issuance, amendment, renewal or extension
(which shall be a Business Day);
     (iii)     specifying the date on which such Letter of Credit is to expire
(which shall comply with Section 2.08(c));
     (iv)     specifying the amount and Currency of such Letter of Credit; and
     (v)     specifying the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit.  
Each such notice shall be deemed to constitute a representation and warranty by
the Borrower that the matters specified in Section 6.02(a) through (d) will be
satisfied on the date specified in clause (ii) of the immediately preceding
sentence and that the LC Exposure will not exceed the LC Commitment on such
date.  No letter of credit issued by an Issuing Bank (if the Issuing Bank is not
the Administrative Agent) shall be deemed to be a “Letter of Credit” issued
under this Agreement unless such Issuing Bank has confirmed with the
Administrative Agent that the condition set forth in Section 6.02(d) hereof is
satisfied and that the LC Exposure does not exceed the LC Commitment (after
giving effect to the issuance of such letter of credit).  If requested by any
Issuing Bank, the Borrower also shall submit a letter of credit application on
such Issuing Bank’s standard form in connection with any request for a Letter of
Credit.  
     (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) the date
that is five Business Days prior to the Maturity Date; provided, however, that
any Letter of Credit with a one-year tenor may provide for the renewal thereof
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (ii) above).  

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     (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 that issues such Letter of Credit
or the Lenders, each Issuing Bank that issues a Letter of Credit hereunder
hereby grants to each Lender, and each Lender hereby acquires from such 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 Administrative Agent,
in the Currency in which such Letter of Credit is denominated, for the account
of any Issuing Bank that issues a Letter of Credit hereunder, such Lender’s
Applicable Percentage of each LC Disbursement made by such Issuing Bank and not
reimbursed by the Borrower on the date due as provided in Section 2.08(e), or of
any reimbursement payment required to be refunded to the Borrower for any
reason.  Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this Section 2.08(d) 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, the existence of a
Borrowing Base Deficiency or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.  
     (e)     Reimbursement.  If any Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit issued by such Issuing Bank, the Borrower shall
reimburse such LC Disbursement by paying to the Administrative Agent an amount
(in the Currency in which the applicable Letter of Credit is denominated) equal
to such LC Disbursement not later than 2:00 p.m., Toronto time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 11:00 a.m., Toronto time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 2:00 p.m., Toronto time, on (i) the Business Day that the
Borrower receives such notice, if such notice is received prior to 11:00 a.m.,
Toronto time, on the day of receipt, or (ii) the Business Day immediately
following the day that the Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided that the Borrower
may request that such payment be financed with a Canadian Prime Borrowing (with
respect to Letters of Credit denominated in Canadian Dollars) or a U.S.  Prime
Borrowing (with respect to Letters of Credit denominated in Dollars) in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to
make such payment shall be discharged and replaced by the resulting Canadian
Prime Borrowing or U.S.  Prime Borrowing, as applicable.  For purposes of the
first sentence of Section 2.01, the amount of such Canadian Prime Borrowing or
U.S.  Prime Borrowing, as applicable, shall be considered, but the amount of the
LC Disbursement to be concurrently reimbursed shall not be considered.  If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Lender of the applicable LC Disbursement, the payment then due from
the Borrower in respect thereof and such Lender’s Applicable Percentage
thereof.  Promptly following receipt of such notice, each Lender shall pay to
the Administrative Agent its Applicable Percentage of the payment then due from
the Borrower, in the same manner as provided in Section 2.05 with respect to
Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to
the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank that issued such Letter of Credit the amounts
so received by it from the Lenders.  Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
Section 2.08(e), the Administrative Agent shall distribute such payment to the
Issuing Bank that issued such Letter of Credit or, to the extent that Lenders
have made payments pursuant to this Section 2.08(e) to reimburse such Issuing
Bank, then to such Lenders and such Issuing Bank as their interests may
appear.  Any payment made by a Lender pursuant to this Section 2.08(e) to
reimburse an Issuing Bank for any LC Disbursement (other than the funding of
Canadian Prime Loans or U.S.  Prime Loans as contemplated above) shall not
constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.  

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     (f)     Obligations Absolute.  The Borrower’s obligation to reimburse LC
Disbursements as provided in Section 2.08(e) 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, any Letter
of Credit Agreement or this Agreement, or any term or provision 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 being
untrue or inaccurate in any respect, (iii) payment by any Issuing Bank under a
Letter of Credit issued by such Issuing Bank against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, 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 2.08(f), constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder.  Neither the Administrative Agent, the Lenders nor 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 any Issuing Bank; provided that the foregoing shall not be
construed to excuse any Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the 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 any Issuing Bank (as finally determined by a court of
competent jurisdiction), such Issuing Bank shall be deemed to have exercised all
requisite 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 that issued such Letter
of Credit 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.  
     (g)     Disbursement Procedures.  Each Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit issued by such Issuing Bank.  Such
Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by electronic mail or 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 the Borrower of its obligation to reimburse such Issuing Bank
and the Lenders with respect to any such LC Disbursement.  
     (h)     Interim Interest.  If any Issuing Bank shall make any LC
Disbursement, then, until the Borrower shall have reimbursed such Issuing Bank
for such LC Disbursement (either with its own funds or a Borrowing under
Section 2.08(e)), 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 the Borrower reimburses such LC Disbursement, at the rate per annum
then applicable to (x) Canadian Prime Loans (if the related Letter of Credit was
denominated in Canadian Dollars) or (y) U.S.  Prime Loans (if the related Letter
of Credit was denominated in Dollars).  Interest accrued pursuant to this
Section 2.08(h) shall be for the account of such Issuing Bank, except that
interest accrued on and after the date of payment by any

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Lender pursuant to Section 2.08(e) to reimburse such Issuing Bank shall be for
the account of such Lender to the extent of such payment.  
     (i)     Replacement of an Issuing Bank.  Any Issuing Bank may be replaced
or resign at any time by written agreement among the Borrower, the
Administrative Agent, such retiring or replaced Issuing Bank and, in the case of
a replacement, the successor Issuing Bank.  The Administrative Agent shall
notify the Lenders of any such resignation or replacement of an Issuing
Bank.  At the time any such resignation or replacement shall become effective,
the Borrower shall pay all unpaid fees accrued for the account of the retiring
or replaced Issuing Bank pursuant to Section 3.05(b).  In the case of the
replacement of an Issuing Bank, from and after the effective date of such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the replaced Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the resignation or replacement of an Issuing Bank hereunder, the
retiring or replaced Issuing Bank shall remain a party hereto and shall continue
to have all the rights and obligations of an Issuing Bank under this Agreement
with respect to Letters of Credit issued by it prior to such resignation or
replacement, but shall not be required to issue additional Letters of Credit.  
     (j)     Cash Collateralization.  If (i) any Event of Default shall occur
and be continuing and the Borrower receives notice from the Administrative Agent
or the Majority Lenders demanding the deposit of cash collateral pursuant to
this Section 2.08(j), or (ii) the Borrower is required to pay to the
Administrative Agent the excess attributable to an LC Exposure in connection
with any prepayment pursuant to Section 3.04(c), then the Borrower shall
deposit, in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash (in
the applicable Currency) equal to, in the case of an Event of Default, the LC
Exposure, and in the case of a payment required by Section 3.04(c), the amount
of such excess as provided in Section 3.04(c), 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 the Borrower or any
Guarantor described in Section 10.01(h) or Section 10.01(i).  The Borrower
hereby grants to the Administrative Agent, for the benefit of each Issuing Bank
and the Lenders, an exclusive first priority and continuing perfected security
interest in and Lien on such account and all cash, checks, drafts, certificates
and instruments, if any, from time to time deposited or held in such account,
all deposits or wire transfers made thereto, any and all investments purchased
with funds deposited in such account, all interest, dividends, cash,
instruments, financial assets and other Property from time to time received,
receivable or otherwise payable in respect of, or in exchange for, any or all of
the foregoing, and all proceeds, products, accessions, rents, profits, income
and benefits therefrom, and any substitutions and replacements therefor.  The
Borrower’s obligation to deposit amounts pursuant to this Section 2.08(j) shall
be absolute and unconditional, without regard to whether any beneficiary of any
such Letter of Credit has attempted to draw down all or a portion of such amount
under the terms of a Letter of Credit, and, to the fullest extent permitted by
applicable law, shall not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which any Credit Party may now or hereafter
have against any such beneficiary, any Issuing Bank, the Administrative Agent,
the Lenders or any other Person for any reason whatsoever.  Such deposit shall
be held as collateral securing the payment and performance of the Credit
Parties’ obligations under this Agreement and the other Loan Documents.  The
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 Administrative Agent and at the Credit
Parties’ risk and expense, such deposits shall not bear interest.  Interest or
profits, if any, on such investments shall accumulate in such

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account.  Moneys in such account shall be applied by the Administrative Agent to
reimburse, on a pro rata basis, each 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 the Credit Parties for the
LC Exposure at such time or, if the maturity of the Loans has been accelerated,
be applied to satisfy other obligations of the Borrower and the Guarantors under
this Agreement or the other Loan Documents.  In the event of any such payment by
the Borrower of amounts contingently owing under outstanding Letters of Credit
and in the event that thereafter drafts or other demands for payment complying
with the terms of such Letters of Credit are not made on or prior to the
respective expiration dates thereof, the Administrative Agent agrees, if no
Default is then continuing and the Borrower does not have any obligation at such
time to provide cash collateral under Section 2.10 hereof, or if no other
amounts are then outstanding under this Agreement, the Notes or the Loan
Documents, to remit to the Borrower amounts for which the contingent obligations
evidenced by the Letters of Credit have ceased (but only to the extent of the
amount of cash collateral then on deposit with the Administrative Agent in
respect of such Letters of Credit).  If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, and the Borrower is not otherwise required to pay to the Administrative
Agent the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c), then such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived.  
     Section 2.09   Increase in the Maximum Credit Amounts.  (a) The Borrower
may, with the consent of the Administrative Agent (such consent not to be
unreasonably withheld, conditioned or delayed), on no more than five occasions
during the period beginning on the Effective Date to and including the date that
is six months prior to the Maturity Date, by written notice to the
Administrative Agent executed by the Borrower and one or more financial
institutions (any such financial institution executing such notice being called
an “Increasing Lender”), which may include any Lender, cause the Maximum Credit
Amounts to be extended by the Increasing Lenders if such Increasing Lender is
not already a Lender (or cause the Maximum Credit Amounts of the Increasing
Lenders that are already Lenders to be increased, as the case may be) in an
amount for each Increasing Lender set forth in such notice; provided, that
(i) each extension of new Maximum Credit Amounts or increase in existing Maximum
Credit Amounts pursuant to this paragraph shall result in the aggregate Maximum
Credit Amounts being increased by no less than C$13,000,000, (ii) the sum of all
new Maximum Credit Amounts and increases in existing Maximum Credit Amounts
pursuant to this paragraph shall not exceed C$250,000,000 without the approval
of all Lenders, (iii) each Increasing Lender, if not already a Lender, shall be
subject to the approval of the Administrative Agent, and each Issuing Bank
(which approval shall not be unreasonably withheld, conditioned or delayed),
(iv) each Increasing Lender, if not already a Lender hereunder, shall become a
party to this Agreement by completing and delivering to the Administrative Agent
a duly executed joinder agreement in a form reasonably satisfactory to the
Administrative Agent and the Borrower (a “Joinder Agreement”), (v) any Lender
requested by the Borrower to become an Increasing Lender may elect, or decline,
such request in its sole discretion and (vi) no Default has occurred and is
continuing.  
     (b)     Upon the effectiveness of any Joinder Agreement to which any
Increasing Lender is a party, (i) such Increasing Lender shall thereafter be
deemed to be a party to this Agreement and shall be entitled to all rights,
benefits and privileges accorded a Lender hereunder and subject to all
obligations of a Lender hereunder and (ii) Annex I shall be deemed to have been
amended to reflect the Maximum Credit Amount of such Increasing Lender as
provided in such Joinder Agreement.  Upon the effectiveness of any increase
pursuant to this Section 2.09 in the Maximum Credit Amount of a Lender already a
party hereto, Annex I shall be deemed to have been amended to reflect the
increased Maximum Credit Amount of such Lender.  Notwithstanding the foregoing,
no increase in the Aggregate Maximum Credit Amounts (or in the Maximum Credit
Amount of any Lender) shall become effective under this Section unless, on the
date of

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such increase, the Administrative Agent shall have received (i) a certificate,
dated as of the effective date of such increase and executed by a Financial
Officer of the Borrower, to the effect that the conditions set forth in
paragraphs (a) and (c) of Section 6.02 shall be satisfied (with all references
in such paragraphs to a Borrowing being deemed to be references to such increase
and attaching resolutions of the Borrower approving such increase) and (ii) if
requested by the Administrative Agent, a legal opinion in form and substance
reasonably satisfactory to the Administrative Agent.  The Administrative Agent
shall provide notice to the Borrower and the Lenders of the effectiveness of any
such Joinder Agreement and/or any increase in the Aggregate Maximum Credit
Amounts (or in the Maximum Credit Amount of any Lender) and the foregoing shall
be effective as of the date of such notice.  
     (c)     The Borrower shall prepay any Loans outstanding prior to the
effectiveness of such increase or extension, together with any amounts due
pursuant to Section 5.02, with new Loans made pursuant to Section 2.01 ratably
in accordance with the Maximum Credit Amounts in effect following such extension
or increase.  
     Section 2.10   Defaulting Lenders.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:
     (a)     Commitment fees will cease to accrue on the unfunded portion of the
Commitment of the Defaulting Lender pursuant to Section 3.05(a) and such
Defaulting Lender shall not be entitled to receive any commitment fee pursuant
to Section 3.05(a);
     (b)     If any LC Exposure exists at the time a Lender is a Defaulting
Lender then solely for purposes of computing the amount of the obligation of
each non-Defaulting Lender to acquire, refinance or fund participations in
Letters of Credit pursuant to Section 2.08:
     (i)     all or any part of the LC Exposure of such Defaulting Lender shall
be reallocated among the non-Defaulting Lenders in accordance with their
respective Applicable Percentages but only to the extent that (x) the sum of all
non-Defaulting Lenders’ Revolving Credit Exposures does not exceed the total of
all non-Defaulting Lenders’ Commitments, (y) each non-Defaulting Lender’s total
Revolving Credit Exposure may not in any event exceed the Commitment of such
Non-Defaulting Lender as in effect at the time of such reallocation and (z) the
conditions set forth in Section 6.02 are satisfied at such time;
     (ii)     if the reallocation described in clause (i) above cannot, or can
only partially, be effected, the Borrower shall within three Business Days
following notice by the Administrative Agent given no later than 1:00 p.m.,
Toronto time cash collateralize such Defaulting Lender’s LC Exposure (after
giving effect to any partial reallocation pursuant to clause (i) above) in
accordance with the procedures set forth in Section 2.08(j) for so long as such
LC Exposure is outstanding;
     (iii)     if the Borrower cash collateralizes any portion of such
Defaulting Lender’s LC Exposure pursuant to this Section 2.10(b), the Borrower
shall not be required to pay any fees to such Defaulting Lender pursuant to
Section 3.05(b) with respect to such Defaulting Lender’s LC Exposure during the
period such Defaulting Lender’s LC Exposure is cash collateralized; if the LC
Exposure of the non-Defaulting Lenders is reallocated pursuant to this
Section 2.10, then the fees payable to the Lenders pursuant to Section 3.05(a)
and Section 3.05(b) shall be adjusted in accordance with such non-Defaulting
Lenders’ Applicable Percentages with the balance of such fee, if any, being
retained by the Borrower for its own account or, to the extent any LC Exposure

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shall then be outstanding, being payable to each applicable Issuing Bank for its
own account to the extent such fee relates to the amount of such LC Exposure; or
     (iv)     if any Defaulting Lender’s LC Exposure is neither cash
collateralized nor reallocated pursuant to this Section 2.10, then, without
prejudice to any rights or remedies of any Issuing Bank or any Lender hereunder,
all commitment fees that otherwise would have been payable to such Defaulting
Lender (solely with respect to the portion of such Defaulting Lender’s
Commitment that was utilized by such LC Exposure) and Letter of Credit fees
payable under Section 3.05(b) with respect to such Defaulting Lender’s LC
Exposure shall be payable to each applicable Issuing Bank until such LC Exposure
is cash collateralized and/or reallocated.  
     (c)     Notwithstanding any provision of this Agreement to the contrary, so
long as any Lender is a Defaulting Lender, no Issuing Bank shall be required to
issue, amend or increase any Letter of Credit unless it is satisfied that the
related exposure will be 100% covered by the Commitments of the non-Defaulting
Lenders and/or cash collateral will be provided by the Borrower in accordance
with Section 2.08(j), and participating interests in any such newly issued or
increased Letter of Credit shall be allocated among non-Defaulting Lenders in a
manner consistent with Section 2.10(b)(i) (and Defaulting Lenders shall not
participate therein).  
     (d)     Any amount payable to such Defaulting Lender hereunder (whether on
account of principal, interest, fees or otherwise and including any amount that
would otherwise be payable to such Defaulting Lender pursuant to Section 4.01(c)
or Section 10.02(c), but excluding Section 5.04(b)) will, in lieu of being
distributed to such Defaulting Lender, be retained by the Administrative Agent
in a segregated account and, subject to any applicable requirements of law, be
applied at such time or times as may be determined by the Administrative Agent
(i) first, to the payment of any amounts owing by such Defaulting Lender to the
Administrative Agent hereunder, (ii) second, pro rata, to the payment of any
amounts owing by such Defaulting Lender to each Issuing Bank hereunder,
(iii) third, to cash collateralize such Defaulting Lender’s LC Exposure in
accordance with Section 2.08(j), (iv) fourth, as the Borrower may request (so
long as no Default exists), to the funding of any Loan in respect of which such
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by the Administrative Agent, (v) fifth, if so
determined by the Administrative Agent and the Borrower, held in an interest
bearing account and released pro rata in order to (A) satisfy such Defaulting
Lender’s potential future funding obligations with respect to Loans under this
Agreement and (B) cash collateralize such Defaulting Lender’s future LC Exposure
in accordance with Section 2.08(j), (vi) sixth, to the payment of any amounts
then owing to the Lenders or any Issuing Bank as a result of any final and
non-appealable judgment of a court of competent jurisdiction obtained by any
Lender or Issuing Bank against such Defaulting Lender as a result of such
Defaulting Lender’s breach of its obligations under this Agreement,
(vii) seventh, to the payment of any amounts then owing to the Borrower as a
result of any final and non-appealable judgment of a court of competent
jurisdiction obtained by the Borrower against such Defaulting Lender as a result
of such Defaulting Lender’s breach of its obligations under this Agreement and
(viii) eighth, to such Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that if such payment is (x) a prepayment of the
principal amount of any Loans or reimbursement obligations in respect of LC
Disbursement that a Defaulting Lender has not fully funded its participation
obligations and (y) in the case of such Loans which were made at a time when the
conditions set forth in Section 6.02 were satisfied or waived, such payment will
be applied solely to prepay the Loans of, and reimbursement obligations owed to,
all non-Defaulting Lenders pro rata prior to being applied to the prepayment of
any Loans, or reimbursement obligations owed to, any Defaulting Lender.  Any
payments, prepayments or other amounts paid or payable to any Defaulting Lender
that are applied (or held) to pay amounts owed by such Defaulting Lender or to
post cash collateral pursuant to Section 2.10 shall be

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deemed paid to and redirected by such Defaulting Lender, and each Lender
irrevocably consents to the foregoing.  
     (e)     If any Lender is a Defaulting Lender, then the Borrower may, at its
sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to be replaced in accordance with Section 5.04(b).  
     (f)     In the event that the Administrative Agent, the Borrower and the
Issuing Banks each agrees that a Defaulting Lender has adequately remedied all
matters that caused such Lender to be a Defaulting Lender, then the LC Exposure
of the Lenders shall be readjusted to reflect the inclusion of such Defaulting
Lender’s Commitment and on such date such Defaulting Lender shall purchase at
par such of the Loans of the other Lenders as the Administrative Agent shall
determine may be necessary in order for such Lender to hold such Loans in
accordance with its Applicable Percentage; provided, that no adjustments will be
made retroactively with respect to fees accrued or payments made by or on behalf
of the Borrower while such Lender was a Defaulting Lender; and provided,
further, that except to the extent otherwise expressly agreed by the affected
parties, no change hereunder from Defaulting Lender to Lender will constitute a
waiver or release of any claim that the Borrower, the Administrative Agent, the
Issuing Banks, or any other Lender may have against such Defaulting Lender or
cause such Defaulting Lender to be a non-Defaulting Lender except as expressly
set forth above.  
     Section 2.11   Currency Conversion and Currency Indemnity.  
     (a)     Payments in Agreed Currency.  The Borrower shall, and shall cause
the other Credit Parties to, make payment relative to any Secured Indebtedness
in the currency (the “Agreed Currency”) in which such Secured Indebtedness was
effected.  If any payment is received on account of any Secured Indebtedness 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 under the Security Instruments or the
liquidation of the Borrower or otherwise howsoever), such payment shall
constitute a discharge of the liability of the Credit Parties 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 any Credit Party
shall be obligated to pay the Agents and the Lenders any deficiency in
accordance with Section 2.11(c).  For the foregoing purposes “rate of exchange”
means the lowest 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 the 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

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Agreed Currency due in respect of such liability immediately prior to such
judgment or order, then the Borrower on demand shall, and the 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; provided that
if the amount of the Agreed Currency so purchased is greater than the amount of
the Agreed Currency due in respect of such liability immediately prior to such
judgment or order, then the Agents or the Lenders, as the case may be, agree to
return the amount of any excess to the Borrower (or to any other Person who may
be entitled thereto under applicable law).  
     (d)     Indemnity Separate Obligation.  To the fullest extent permitted by
applicable law, the agreement of indemnity provided for in Section 2.11(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.  
     (e)     Other Currency Conversion.  Any amount of money to be used in
determining compliance with this Agreement may be denominated in either $ or C$
and, in accordance with such determination, may be converted from $ to C$ or
vice-versa, as applicable, at the then-current rate of exchange on the date
thereof.  For the foregoing purposes “rate of exchange” means the rate at which
the Borrower or any other Credit Party, as applicable, in accordance with its
normal business procedures is able on the relevant date to purchase the relevant
currency after deducting any premium and costs of exchange.  
ARTICLE 3
Payments of Principal and Interest; Prepayments; Fees
     Section 3.01   Repayment of Loans.  The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Termination Date.  
     Section 3.02   Interest.  
     (a)     Canadian Prime Loans.  The Loans comprising each Canadian Prime
Borrowing shall bear interest at the Canadian Base Rate plus the Applicable
Margin for Canadian Prime Loans, but in no event to exceed the Highest Lawful
Rate.  
     (b)     CDOR Loans.  The Loans comprising each CDOR Borrowing shall bear
interest at the CDOR Rate for the Interest Period in effect for such Borrowing
plus the Applicable Margin for CDOR Loans, but in no event to exceed the Highest
Lawful Rate.  
     (c)     U.S.  Prime Loans.  The Loans comprising each U.S.  Prime Borrowing
shall bear interest at the U.S.  Base Rate plus the Applicable Margin for
U.S.  Prime Loans, but in no event to exceed the Highest Lawful Rate.  
     (d)     Eurodollar Loans.  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 Margin for Eurodollar Loans, but in no event to
exceed the Highest Lawful Rate.  
     (e)     Default Rate.  Notwithstanding the foregoing, but subject to
Sections 3.02(h), (i) and (j), if any principal of or interest on any Loan or
any fee or other amount payable by the Borrower or any

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Guarantor hereunder or under any other Loan Document 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 lesser of (A) the rate
otherwise applicable to such Loan as provided in the preceding paragraphs of
this Section plus 2% or (B) the Highest Lawful Rate or (ii) in the case of any
other amount, the lesser of (A) the Default Rate or (B) the Highest Lawful
Rate.  
     (f)     Interest Payment Dates.  Subject to Sections 3.02(h), (i) and (j),
accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and on the Termination Date; provided that
(i) interest accrued pursuant to Section 3.02(e) shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than an
optional prepayment of a Canadian Prime Loan or a U.S.  Prime Loan prior to the
Termination Date), 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 CDOR Loan or 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 (but only to the extent so
converted).  
     (g)     Interest Rate Computations.  Subject to Sections 3.02(h), (i) and
(j), all interest hereunder shall be computed on the basis of a year of
360 days, unless such computation would exceed the Highest Lawful Rate, in which
case interest shall be computed on the basis of a year of 365 days (or 366 days
in a leap year), except that (i) interest computed by reference to the
U.S.  Base Rate at times when the U.S.  Base Rate is based on the U.S.  Prime
Rate and (ii) interest computed by reference to the Canadian Base Rate or the
CDOR Rate 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 Base Rate, CDOR Rate, U.S.  Base Rate or LIBO Rate shall be determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error, and be binding upon the parties hereto.  
     (h)     To the extent permitted by applicable law, any provision of the
Interest Act (Canada) or the Judgment Interest Act (Alberta) which restricts any
rate of interest set forth herein shall be inapplicable to this Agreement and is
hereby waived by the Borrower.  
     (i)     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 the Borrower under this
Agreement, or any other instrument referred to herein, and all interest and fees
payable by the Borrower to the Lenders, shall accrue from day to day, computed
as described herein in accordance with the “nominal rate” method of interest
calculation.  
     (j)     Where, in this Agreement, a rate of interest or fees is to be
calculated on the basis of a 365/366-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 365 or 366, as applicable.  
     Section 3.03   Alternate Rate of Interest.  If prior to the commencement of
any Interest Period for a CDOR Borrowing or a Eurodollar Borrowing:

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     (a)     the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the CDOR Rate or the LIBO Rate, as applicable, for such
Interest Period; or
     (b)     the Administrative Agent is advised by the Majority Lenders that
the CDOR Rate or the LIBO Rate, as applicable, 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;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone, electronic mail or telecopy as promptly as practicable
thereafter and, until the Administrative Agent notifies the 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 CDOR Borrowing or a Eurodollar
Borrowing, as applicable, shall be ineffective, and (ii) if any Borrowing
Request requests a CDOR Borrowing or a Eurodollar Borrowing, as applicable, such
Borrowing shall be made as a Canadian Prime Borrowing.  
     Section 3.04   Prepayments.  
     (a)     Optional Prepayments.  The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with Section 3.04(b).  
     (b)     Notice and Terms of Optional Prepayment.  The Borrower shall notify
the Administrative Agent by telephone (confirmed by electronic mail or telecopy)
of any prepayment hereunder (i) in the case of prepayment of a CDOR Borrowing or
a Eurodollar Borrowing, not later than 1:00 p.m., Toronto time, three Business
Days before the date of prepayment, or (ii) in the case of prepayment of a
Canadian Prime Borrowing or a U.S.  Prime Borrowing, not later than 1:00 p.m.,
Toronto time, one Business Day before the date of prepayment.  Each such notice
shall be irrevocable and shall specify the Borrowing to be prepaid, the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid; provided that, if a notice of prepayment is given in connection with
a conditional notice of termination of the Commitments as contemplated by
Section 2.06(b), then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.06(b).  Promptly following
receipt of any such notice relating to a Borrowing, the 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 2.02.  The
Administrative Agent shall apply each prepayment of a Borrowing ratably to the
Loans included in the Borrowing specified in the Borrower’s notice of
prepayment.  Prepayments shall be accompanied by accrued interest to the extent
required by Section 3.02.  
     (c)     Mandatory Prepayments.  
     (i)     If, after giving effect to any termination or reduction of the
Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total
Revolving Credit Exposures exceeds the total Commitments, then the Borrower
shall (A) prepay the Borrowings on the date of such termination or reduction in
an aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC Exposure, pay
to the Administrative Agent on behalf of the Lenders an amount equal to such
excess to be held as cash collateral as provided in Section 2.08(j).  

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     (ii)     Upon any redetermination of or adjustment to the amount of the
Borrowing Base in accordance with Section 2.07 or Section 9.10 (solely as a
result of a Casualty Event), if the total Revolving Credit Exposures exceeds the
redetermined or adjusted Borrowing Base, then the Borrower shall, at its option,
either (A) make (or cause to be made) a single payment of principal in an amount
equal to such Borrowing Base Deficiency and, if any Borrowing Base Deficiency
remains after prepaying all of the Borrowings as a result of an LC Exposure, pay
to the Administrative Agent on behalf of the Lenders an amount equal to such
remaining excess to be held as cash collateral as provided in Section 2.08(j),
in each case, within thirty (30) days following its receipt of the New Borrowing
Base Notice in accordance with Section 2.07(d) or the date the adjustment occurs
(the “Deficiency Notification Date”), (B) make (or cause to be made) six
payments of principal each of which shall be in an amount equal to one-sixth
(1/6th) of such Borrowing Base Deficiency commencing on the 15th day of a
calendar month that is at least thirty (30) days following the Deficiency
Notification Date and on the 15th day of each of the five calendar months
thereafter, (C) within forty-five (45) days following the Deficiency
Notification Date, submit (and pledge as Collateral) additional Oil and Gas
Properties owned by a Credit Party which is or shall become a Guarantor
contemporaneously with such submission pursuant to Section 8.13, which Oil and
Gas Properties (x)(1) are located in British Columbia, Alberta or in another
province in Canada that at such time allows for a secured lender to receive the
benefit of a floating charge over real property located in such province and
(2) were not previously subject to a floating charge in favor of the
Administrative Agent, or (y) are located in any other province in Canada, the
United States or any other country or jurisdiction reasonably acceptable to the
Administrative Agent; provided that with respect to Oil and Gas Properties
submitted and pledged pursuant to this clause (y), (1) the Administrative Agent
shall be reasonably satisfied that fixed charges, collateral agreements or other
Security Instruments create first priority, perfected Liens (subject only to
Permitted Liens) on at least 80% of the total value of the Proved Hydrocarbon
Interests relating to such Oil and Gas Properties (including any such Oil and
Gas Properties subject to floating charges) and (2) the Administrative Agent
shall have received title information as the Administrative Agent may reasonably
require satisfactory to the Administrative Agent setting forth the status of
title to at least 75% of the total value of such Oil and Gas Properties, in
either case, for consideration in connection with the determination of the
Borrowing Base which the Administrative Agent and the Required Lenders deem
satisfactory, in their sole discretion, to eliminate such Borrowing Base
Deficiency or (D) within thirty (30) or forty-five (45) days following the
Deficiency Notification Date, as applicable, eliminate such Borrowing Base
Deficiency through a combination of a payment and submission of additional Oil
and Gas Properties as set forth in clauses (A) and (C) above; provided that all
payments required to be made pursuant to this Section 3.04(c)(ii) must be made
on or prior to the Termination Date.  Not later than 15 days following the
Deficiency Notification Date, the Borrower shall provide written notice to the
Administrative Agent setting forth its election pursuant to the immediately
preceding sentence.  
     (iii)     Upon any adjustments to the Borrowing Base pursuant to
Section 9.02(n) or Section 9.10 (other than adjustments resulting directly from
Casualty Events), if the total Revolving Credit Exposures exceeds the Borrowing
Base as adjusted, then the Borrower shall (A) prepay the Borrowings in an
aggregate principal amount equal to such Borrowing Base Deficiency, and (B) if
any excess remains after prepaying all of the Borrowings as a result of an LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an amount
equal to such excess to be held as cash collateral as provided in
Section 2.08(j).  The Borrower shall be obligated to make such prepayment and/or
deposit of cash collateral (x) within thirty (30) days following the effective
date of any such adjustment to the Borrowing Base under Section 9.02(n) or
(y) prior to or contemporaneously with such adjustment to the Borrowing Base
under Section 9.10 (other than

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adjustments resulting directly from Casualty Events); provided that all payments
required to be made pursuant to this Section 3.04(c)(iii) must be made on or
prior to the Termination Date.  
     (iv)     If, as a result of any currency fluctuation, the total Revolving
Credit Exposures exceeds 105% of the Borrowing Base at any time, then the
Borrower shall (A) prepay the Borrowings in an aggregate principal amount equal
to such excess, and (B) if any excess remains after prepaying all of the
Borrowings as a result of an LC Exposure, pay to the Administrative Agent on
behalf of the Lenders an amount equal to such excess to be held as cash
collateral as provided in Section 2.08(j).  
     (v)     Each prepayment of Borrowings pursuant to this Section 3.04(c)
shall be applied, first, ratably to any Canadian Prime Borrowings and
U.S.  Prime Borrowings then outstanding, and, second, to any CDOR Borrowings and
Eurodollar Borrowings then outstanding, and if more than one CDOR Borrowing or
Eurodollar Borrowing is then outstanding, to each such CDOR Borrowing or
Eurodollar Borrowing in order of priority beginning with the CDOR Borrowing or
Eurodollar Borrowing with the highest interest rate applicable thereto and
ending with the CDOR Borrowing or Eurodollar Borrowing with the lowest interest
rate applicable thereto.  
     (vi)     Each prepayment of Borrowings pursuant to this Section 3.04(c)
shall be applied ratably to the Loans included in the prepaid
Borrowings.  Prepayments pursuant to this Section 3.04(c) shall be accompanied
by accrued interest to the extent required by Section 3.02.  
     (d)     No Premium or Penalty.  Prepayments permitted or required under
this Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.  
     Section 3.05   Fees.  
     (a)     Commitment Fees.  The Borrower agrees to pay to the Administrative
Agent for the account of each Lender (other than a Defaulting Lender to the
extent set forth in Section 2.10) a commitment fee, which shall accrue at the
applicable Commitment Fee Rate on the average daily amount of the unused
Commitment of such Lender during the period from and including the Effective
Date to but excluding the Termination Date.  Accrued commitment fees shall be
payable in arrears on the third Business Day following the last day of March,
June, September and December of each year and on the Termination Date,
commencing on the first such date to occur after the Effective Date.  All
commitment fees shall be computed on the basis of a year of 360 days, unless
such computation would exceed the Highest Lawful Rate, in which case interest
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).  
     (b)     Letter of Credit Fees.  The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender (other than a Defaulting
Lender to the extent set forth in Section 2.10) a participation fee with respect
to its participations in Letters of Credit, which shall accrue at the same
Applicable Margin used to determine the interest rate applicable to Eurodollar
Loans on the average daily amount of such Lender’s LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements which has been
funded by such Lender) during the period from and including the Effective Date
to but excluding the later of the date on which such Lender’s Commitment
terminates and the date on which such Lender ceases to have any LC Exposure,
(ii) to each Issuing Bank a fronting fee, which shall accrue at the rate per
annum agreed to with such Issuing Bank on the average daily amount of that
portion of the LC Exposure attributable to such Issuing Bank (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Effective Date to but

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excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure attributable to such Issuing Bank,
provided that (x) if the expiration date of the Letter of Credit is less than
one year after its date of issuance and the aggregate fronting fee otherwise
payable through its expiration would be less than C$500, then the Borrower shall
pay to such Issuing Bank C$500 upon the issuance of such Letter of Credit in
lieu of the fronting fee otherwise payable and (y) no fronting fee shall be
payable with respect to any Grandfathered Letters of Credit on the Effective
Date or thereafter, until and unless such Grandfathered Letter of Credit is
extended, renewed or reissued hereunder, and (iii) to each Issuing Bank, for its
own account, its standard fees with respect to the issuance, amendment, renewal
or extension of any Letter of Credit or processing of drawings
thereunder.  Participation fees and fronting fees accrued through and including
the last day of March, June, September and December of each year shall be
payable in arrears on the third Business Day following such last day, commencing
on the first such date to occur after the Effective Date; provided that all such
fees shall be payable on the Termination Date and any such fees accruing after
the Termination Date shall be payable on demand.  Any other fees payable to an
Issuing Bank pursuant to this Section 3.05(b) shall be payable within 10 days
after demand.  All participation fees and fronting fees shall be computed on the
basis of a year of 360 days, unless such computation would exceed the Highest
Lawful Rate, in which case interest shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).  
     (c)     Administrative Agent Fees.  The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.  
ARTICLE 4
Payments; Pro Rata Treatment; Sharing of Set-Offs
     Section 4.01   Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.  
     (a)     Payments by the Borrower.  The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 5.01,
Section 5.02, Section 5.03 or otherwise) prior to 3:00 p.m., Toronto time, on
the date when due (for purposes of computing interest and fees, each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day), in immediately available funds, without
defense, deduction, recoupment, set-off or counterclaim.  Fees, once paid, shall
be fully earned and shall not be refundable under any circumstances, absent
manifest error.  Any amounts received after such time on any date may, in the
discretion of the 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 Administrative Agent at its offices specified
in Section 12.01, except payments to be made directly to an Issuing Bank as
expressly provided herein and except that payments pursuant to Section 5.01,
Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the
Persons entitled thereto.  The 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.  If any payment hereunder 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 hereunder shall be made in the Agreed Currency.  
     (b)     Application of Insufficient Payments.  If at any time insufficient
funds are received by and available to the 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

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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)     Sharing of Payments by Lenders.  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 Section 4.01(c) shall not be construed to apply to any
payment made by the 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
any Credit Party or Affiliate thereof (as to which the provisions of this
Section 4.01(c) shall apply).  The 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 the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.  
     Section 4.02   Presumption of Payment by the Borrower.  Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or any Issuing Bank that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or such Issuing Bank, as the case may be, the amount
due.  In such event, if the Borrower has not in fact made such payment, then
each of the Lenders or such Issuing Bank, as the case may be, severally agrees
to repay to the 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 Administrative Agent, at a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.  
     Section 4.03   Certain Deductions by the Administrative Agent.  If any
Lender shall fail to make any payment required to be made by it hereunder,
pursuant to Section 2.05(a), Section 2.08(d), Section 2.08(e) or Section 4.02 or
otherwise, then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
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 4.04   Disposition of Proceeds.  The Security Instruments contain
an assignment by the Borrower and/or the other Guarantors unto and in favor of
the Administrative Agent for the benefit of the Secured Parties of all of the
Borrower’s or each other Guarantor’s interest in and to production and all
proceeds attributable thereto which may be produced from or allocated to the
Mortgaged Property.  The Security Instruments further provide in general for the
application of such proceeds to the satisfaction of

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the Secured Indebtedness and other obligations described therein and secured
thereby.  Notwithstanding anything to the contrary contained in the Security
Instruments, until the occurrence of an Event of Default, (a) the Administrative
Agent and the Lenders agree that they will neither notify the purchaser or
purchasers of production from or allocated to the Mortgaged Property nor take
any other action to cause the proceeds thereof to be remitted to the
Administrative Agent or the Lenders, but the Lenders will instead permit such
proceeds to be paid to the Borrower or such other Credit Party and (b) the
Lenders hereby authorize the Administrative Agent to take such actions as may be
necessary to cause such proceeds to be paid to the Borrower and/or such other
Credit Party.  
ARTICLE 5
Increased Costs; Break Funding Payments; Payments; Taxes; Illegality
     Section 5.01   Increased Costs.  
     (a)     Changes in Law.  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; or
     (ii)     impose on any Lender or the London interbank market any other
condition affecting this Agreement, CDOR Loans made by such Lender or Eurodollar
Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any CDOR Loan or Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to reduce the amount of any
sum received or receivable by such Lender (whether of principal, interest or
otherwise, but not including Excluded Taxes), then the Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.  
     (b)     Capital Requirements.  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 from
time to time the 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)     Certificates.  A certificate of a Lender or any Issuing Bank
setting forth the amount or amounts necessary to compensate such Lender or such
Issuing Bank or its holding company, as the case may be, as specified in
Section 5.01(a) or (b) shall be delivered to the Borrower and shall be
conclusive absent manifest error.  The Borrower shall pay such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 30 days after receipt thereof.  

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     (d)     Effect of Failure or Delay in Requesting Compensation.  Failure or
delay on the part of any Lender or any Issuing Bank to demand compensation
pursuant to this Section 5.01 shall not constitute a waiver of such Lender’s or
such Issuing Bank’s right to demand such compensation; provided that the
Borrower shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section 5.01 for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or such Issuing Bank, as
the case may be, notifies the 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 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.  
     Section 5.02   Break Funding Payments.  In the event of (a) the payment
(including prepayment) of any principal of any CDOR Loan or any Eurodollar Loan
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 CDOR Loan or any
Eurodollar Loan into a Canadian Prime Loan or a U.S.  Prime Loan other than on
the last day of the Interest Period applicable thereto, (c) the failure to
borrow as a result of a failure to satisfy the conditions set forth in
Section 6.02, any CDOR Loan or any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto, or (d) the assignment of any CDOR Loan or any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 5.04(a),
then, in any such event, the Borrower shall compensate each Lender for the loss,
cost and expense attributable to such event (exclusive of any lost profits or
opportunity costs or processing or other related fees).  In the case of a CDOR
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 (A) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the CDOR 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 (B) 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 Canadian Dollar deposits of a
comparable amount and period from other banks in the CDOR market.  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 eurodollar
market.  
     A certificate of any Lender setting forth any amount or amounts that such
Lender is entitled to receive pursuant to this Section 5.02 shall be delivered
to the Borrower and shall be conclusive absent manifest error.  The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
Business Days after receipt thereof.  
     Section 5.03   Taxes.  
     (a)     Payments Free of Taxes.  Any and all payments by or on account of
any obligation of any Credit Party under any Loan Document shall be made free
and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if any Credit Party shall be required to deduct any

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Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased, as a payment of additional interest, as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.03(a)), the Administrative Agent,
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) such Credit Party
shall make such deductions and (iii) such Credit Party shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.  
     (b)     Payment of Other Taxes by the Borrower.  The Borrower shall pay any
Other Taxes to the relevant Governmental Authority in accordance with applicable
law.  
     (c)     Indemnification by the Borrower.  The Borrower shall indemnify the
Administrative Agent, each Lender and each Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the 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 the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this
Section 5.03) 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 the Borrower shall not be required to
indemnify the Administrative Agent, any Lender or any Issuing Bank for any
amounts under this Section 5.03(c) to the extent that such Person fails to
notify the Borrower of its intent to make a claim for indemnification under this
Section 5.03(c) within 180 days after a claim is asserted against such Person by
the relevant Governmental Authority.  A certificate of the Administrative Agent,
a Lender or an Issuing Bank as to the amount of such payment or liability under
this Section 5.03, together with, to the extent available, reasonable supporting
documentation relating to such payment or liability, shall be delivered to the
Borrower and shall be conclusive absent manifest error.  
     (d)     Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the 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 Administrative Agent.  
     (e)     Each Lender shall severally indemnify the Administrative Agent,
within 10 days after demand therefor, for (i) any Indemnified Taxes attributable
to such Lender (but only to the extent that the Borrower has not already
indemnified the Administrative Agent for such Indemnified Taxes and without
limiting the obligation of the Borrower to do so), (ii) any Taxes attributable
to such Lender’s failure to comply with the provisions of Section 12.04(c)
relating to the maintenance of a Participant Register and (iii) any Excluded
Taxes attributable to such Lender, in each case, that are payable or paid by the
Administrative Agent in connection with any Loan Document, and any reasonable
expenses arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the amount of such payment or liability
delivered to any Lender by the Administrative Agent shall be conclusive absent
manifest error.  Each Lender hereby authorizes the Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender under any
Loan Document or otherwise payable by the Administrative Agent to the Lender
from any other source against any amount due to the Administrative Agent under
this paragraph (e).  
     (f)     Tax Refunds.  If the Administrative Agent or a Lender determines,
in its sole discretion, that it has received a refund of any Indemnified Taxes
or Other Taxes as to which it has been indemnified

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by the Borrower or with respect to which the Borrower has paid additional
amounts pursuant to Section 5.03, it shall pay over such refund to the Borrower
(but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under Section 5.03 with respect to the Indemnified Taxes or
Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Borrower, upon the request of the Administrative
Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority.  This Section 5.03(f) shall not be construed to require
the Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.  
     (g)     Tax Certifications.  The Administrative Agent, each Lender and each
Issuing Bank agrees to provide, upon reasonable request, the Administrative
Agent and any Credit Party with (i) any forms or certifications reasonably
necessary for the Administrative Agent or such Credit Party to determine the
applicable rate of any withholding tax, including, if applicable, the
availability of a reduced rate pursuant to an applicable tax treaty and (ii) any
other information or documents reasonably requested in connection with such
Lender’s or such Issuing Bank’s status as a Foreign Lender (or as a Lender that
is not a Foreign Lender).  
     Section 5.04   Mitigation Obligations; Replacement of Lenders.  
     (a)     Designation of Different Lending Office.  If any Lender requests
compensation under Section 5.01, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 5.03, then such Lender shall use reasonable
efforts to designate a different 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 5.01 or Section 5.03, 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.  The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender solely as a result
of such designation or assignment.  
     (b)     Replacement of Lenders.  If (i) any Lender requests compensation
under Section 5.01, or (ii) the Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 5.03, or (iii) any Lender is a Defaulting Lender, or
(iv) any Lender has asserted that any adoption or change of the type described
in Section 5.05 has occurred, or (v) any Lender fails to approve an amendment,
waiver or other modification to this Agreement and at least the Required Lenders
have approved such amendment, waiver or other modification, or (vi) any Lender
fails to approve an increase of the Borrowing Base and at least the Required
Lenders have approved such increase, then the Borrower may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 12.04(b)), all its interests,
rights and obligations under this Agreement to an assignee that shall (A) assume
such obligations and (B) in the case of clauses (v) and (vi), consent to such
amendment, waiver, modification, increase, decrease or reaffirmation (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (i) if such assignee is not a Lender, the Borrower shall have received the
prior written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements, accrued

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interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for compensation
under Section 5.01 or payments required to be made pursuant to Section 5.03,
such assignment will result in a reduction in such compensation or payments.  A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.  
     Section 5.05   Illegality.  Notwithstanding any other provision of this
Agreement:
     (a)     In the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain CDOR Loans
or Eurodollar Loans either generally or having a particular Interest Period
hereunder, then (i) such Lender shall promptly notify the Borrower and the
Administrative Agent thereof and such Lender’s obligation to make such CDOR
Loans or Eurodollar Loans, as applicable, shall be suspended (the “Affected
Loans”) until such time as such Lender may again make and maintain such CDOR
Loans or Eurodollar Loans, as applicable, and (ii) all Affected Loans which
would otherwise be made by such Lender shall be made instead as Canadian Prime
Loans (and, if such Lender so requests by notice to the Borrower and the
Administrative Agent, all Affected Loans of such Lender then outstanding shall
be automatically converted into Canadian Prime Loans on the date specified by
such Lender in such notice) and, to the extent that Affected Loans are so made
as (or converted into) Canadian Prime Loans, all payments of principal which
would otherwise be applied to such Lender’s Affected Loans shall be applied
instead to its Canadian Prime Loans; and
     (b)     If it becomes unlawful for any Lender or its applicable lending
office to honor its obligation to make any Loans to the Borrower, then such
Lender shall promptly notify the Borrower and the Administrative Agent thereof
and such Lender’s obligation to make Loans shall be suspended until such time as
such Lender may again make and maintain Loans to the Borrower.  The Borrower
shall have no obligation to pay to such Lender the commitment fee described in
Section 3.05(a) that would otherwise accrue during such period of suspension.  
ARTICLE 6
Conditions Precedent
     Section 6.01   Effective Date.  The obligations of the Lenders to make
Loans, and of any Issuing Bank to issue or assume 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 12.02):
     (a)     The Administrative Agent, the Arrangers and the Lenders shall have
received all commitment, facility and agency fees and all other fees and amounts
due and payable on or prior to the Effective Date, including, to the extent
invoiced at least one (1) Business Day prior to such date, reimbursement or
payment of all out-of-pocket expenses for which invoices have been presented
required to be reimbursed or paid by the Borrower hereunder (including, without
limitation, the fees and expenses of Vinson & Elkins L.L.P., and Blake, Cassels
& Graydon LLP, counsel to the Administrative Agent).  
     (b)     The Administrative Agent shall have received a certificate of the
secretary or an assistant secretary of the Borrower and of each Guarantor dated
as of the Effective Date setting forth (i) resolutions of its board of directors
(or comparable governing body) with respect to the authorization of the Borrower
or such Guarantor to execute and deliver the Loan Documents to which the
Borrower or such Guarantor is a party and to enter into the transactions
contemplated in those documents, (ii) the officers of the Borrower or such
Guarantor who are authorized to sign the Loan Documents to which the Borrower or
such

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Guarantor is a party, (iii) specimen signatures of such authorized officers and
(iv) the articles or certificate of incorporation and bylaws (or comparable
organizational documents) of the Borrower and such Guarantor.  The
Administrative Agent and the Lenders may conclusively rely on such certificate
until the Administrative Agent receives notice in writing from the Borrower to
the contrary.  
     (c)     The Administrative Agent shall have received certificates of the
appropriate governmental agencies with respect to the existence, qualification
and good standing of the Borrower and each Guarantor.  
     (d)     The Administrative Agent shall have received from each party hereto
counterparts (in such number as may be requested by the Administrative Agent) of
this Agreement signed on behalf of such party.  
     (e)     The Administrative Agent shall have received duly executed Notes
payable to each Lender requesting a Note at least three (3) Business Days prior
to such date in a principal amount equal to its Maximum Credit Amount dated as
of the Effective Date.  
     (f)     The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of the Security Instruments, including the Guaranty
Agreement, the QRI Pledge Agreement, the debentures and the other Security
Instruments described on Exhibit E-1.  In connection with the execution and
delivery of the Security Instruments, the Administrative Agent shall:
     (i)     be reasonably satisfied that the Security Instruments create first
priority, perfected Liens taken by way of a floating charge (subject only to
Permitted Liens) on substantially all of the total value of the Proved
Hydrocarbon Interests of the Borrower and the Guarantors evaluated in the
Initial Reserve Report; and
     (ii)     have received certificates, together with undated, blank stock
powers for each such certificate, representing all of the issued and outstanding
Equity Interests of the Borrower and each Restricted Subsidiary.  
     (g)     The Administrative Agent shall have received evidence reasonably
satisfactory to it that any consent or approval of, registration or filing with,
or any other action by, any Governmental Authority or any other third Person
necessary in connection with the Transactions shall have been obtained and are
in full force and effect other than those third party approvals or consents
that, if not made or obtained, would not reasonably be expected to have a
Material Adverse Effect.  
     (h)     The Administrative Agent shall have received an opinion of
(i) Davis Polk & Wardwell LLP, special counsel to QRI with respect to the QRI
Pledge Agreement and (ii) Bennett Jones LLP, special Canadian counsel to the
Borrower, each dated the Effective Date and in form and substance reasonably
satisfactory to the Administrative Agent.  The Borrower hereby requests Davis
Polk & Wardwell LLP and Bennett Jones LLP to deliver such opinions.  
     (i)     The Administrative Agent shall have received a certificate of
insurance coverage of the Borrower and its Restricted Subsidiaries evidencing
that the Borrower and its Restricted Subsidiaries are carrying insurance in
accordance with Section 7.11.  
     (j)     The Administrative Agent shall have received title information as
the Administrative Agent may reasonably require satisfactory to the
Administrative Agent setting forth the status of title to at

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least 75% of the total value of the Proved Hydrocarbon Interests of the Borrower
and the Guarantors evaluated in the Initial Reserve Report.  
     (k)     The Administrative Agent shall have received appropriate Canadian
Lien Searches reflecting no prior Liens encumbering the personal property
related to the Oil and Gas Properties of the Borrower and the Guarantors for
Alberta and British Columbia, other than those being assigned or released on or
prior to the Effective Date or Liens permitted by Section 9.03.  
     (l)     The Administrative Agent shall have received (i) the audited
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows of QRI and its consolidated subsidiaries for the most
recent fiscal year of each ended prior to the Effective Date as to which such
financial statements are available, (ii) the unaudited interim consolidated
balance sheet and related statements of operations, stockholders’ equity and
cash flows of QRI and its consolidated subsidiaries for each quarterly period
ended subsequent to the date of the financial statements delivered pursuant to
clause (i) as to which such financial statements are available and (iii) copies,
to the extent of any, of all financial statements (including pro forma financial
statements), reports, notices and proxy statements sent by QRI to its
stockholders concerning this Agreement filed at least one (1) Business Day prior
to such date; provided, that, any documents shall be deemed to have been
delivered to the Administrative Agent to the extent any of the foregoing are
publicly available on the SEC’s EDGAR website or QRI’s website on the Internet
at www.qrinc.com.  
     (m)     The Administrative Agent shall have received a certificate, signed
by a Responsible Officer of the Borrower, stating that no event or condition has
occurred since December 31, 2010, which would reasonably be expected to have a
Material Adverse Effect.  
     (n)     The Administrative Agent shall have received evidence that the
Existing Credit Agreement has been or concurrently with entry into this
Agreement on such date is being terminated and all Liens securing obligations
under the Existing Credit Agreement have been or concurrently with entry into
this Agreement on such date are being released.  
     Without limiting the generality of the provisions of Section 11.04, for
purposes of determining compliance with the conditions specified in this
Section 6.01, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required under this Section 6.01 to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the Effective Date specifying its
objection thereto.  All documents executed or submitted pursuant to this
Section 6.01 by and on behalf of the Borrower or any of the Guarantors shall be
in form and substance reasonably satisfactory to the Administrative Agent and
its counsel.  The obligations of the Lenders to make Loans and of 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 12.02)
at or prior to 3:00 p.m., Toronto time, on September 30, 2011 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).  The Administrative Agent shall notify the Borrower and the
Lenders of the Effective Date, and such notice shall be conclusive and
binding.  
     Section 6.02   Each Credit Event.  The obligation of each Lender to make a
Loan on the occasion of any Borrowing (including the initial funding) (excluding
any Loan made pursuant to Section 2.08(e)), and of any Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:

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     (a)     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.  
     (b)     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 event or events, which alone or in the aggregate would
reasonably be expected to have a Material Adverse Effect shall have occurred.  
     (c)     The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement and in the other Loan Documents shall be
true and correct in all material respects on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, except that (i) to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, such
representations and warranties shall continue to be true and correct in all
material respects as of such specified earlier date and (ii) to the extent that
any such representation and warranty is qualified by materiality, such
representation and warranty (as so qualified) shall continue to be true and
correct in all respects.  
     (d)     The pro forma total Revolving Credit Exposures (after giving effect
to the requested Borrowing or the issuance of the requested Letter of Credit (or
any amendment, renewal or extension of any Letter of Credit that increases the
LC Exposure)) shall not exceed the aggregate Commitments.  
     (e)     The receipt by the Administrative Agent of a Borrowing Request in
accordance with Section 2.03 or a request for a Letter of Credit (or an
amendment, extension or renewal of a Letter of Credit) in accordance with
Section 2.08(b), as applicable.  
     Each Borrowing (excluding any Loan made pursuant to Section 2.08(e)) and
each issuance, amendment, renewal or extension of any Letter of Credit shall be
deemed to constitute a representation and warranty by the Borrower on the date
thereof as to the matters specified in Section 6.02(a) through (d).  
ARTICLE 7
Representations and Warranties
     The Borrower (and, from and after the New Parent Joinder, New Parent)
represents and warrants to the Lenders that:
     Section 7.01   Organization; Powers.  Each of the Credit Parties is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority, and has
all material governmental licenses, authorizations, consents and approvals
necessary, to own its assets and to carry on its business as now conducted, and
is qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where failure to be in good
standing or have such power, authority, licenses, authorizations, consents,
approvals and qualifications would not reasonably be expected to have a Material
Adverse Effect.  
     Section 7.02   Authority; Enforceability.  The Transactions are within each
Credit Party’s corporate, partnership or limited liability company powers and
have been duly authorized by all necessary corporate, partnership or limited
liability company and, if required, stockholder, partner or member action.  Each
Loan Document to which any Credit Party is a party has been duly executed and
delivered by such Credit Party and constitutes a legal, valid and binding
obligation of such Credit Party, as

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applicable, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, fraudulent transfer or conveyance,
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 and an implied covenant of good faith and fair dealing.  
     Section 7.03   Approvals; No Conflicts.  The Transactions:
     (a)     do not require any consent or approval of, registration or filing
with, or any other action by, any Governmental Authority or any other third
Person, nor is any such consent, approval, registration, filing or other action
necessary for the validity or enforceability of any Loan Document or the
consummation of the transactions contemplated thereby, except such as have been
obtained or made and are in full force and effect other than (i) the recording
and filing of the Security Instruments as required by this Agreement and
(ii) those approvals or consents that, if not made or obtained, would not
reasonably be expected to have a Material Adverse Effect;
     (b)     will not violate (i) the charter, by-laws or other organizational
documents of any Credit Party or (ii) any applicable Governmental Requirement or
any order of any Governmental Authority applicable to or binding upon any Credit
Party, except in the case of clause (ii), violations that would not reasonably
be expected to have a Material Adverse Effect;
     (c)     will not violate or result in a default under any indenture,
agreement or other instrument pursuant to which any Material Debt is
outstanding, binding upon any Credit Party or their Properties, or give rise to
a right thereunder to require any payment to be made by the Credit Parties,
except violations that would not reasonably be expected to have a Material
Adverse Effect; and
     (d)     will not result in the creation or imposition of any Lien on any
Oil and Gas Property of any Credit Party (other than the Liens created or
permitted by the Loan Documents).  
     Section 7.04   Financial Condition; No Material Adverse Effect.  (a) The
financial statements the Borrower has furnished to the Administrative Agent
pursuant to Section 6.01(k) present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP (subject, in the case of unaudited financial statements, to
year end audit adjustments and the absence of footnotes).  
     (b)     Since December 31, 2010, there has been no event or events, which
alone or in the aggregate would reasonably be expected to have, a Material
Adverse Effect.  
     Section 7.05   Litigation.  Except as disclosed in QRI’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2010, there are no actions,
suits, investigations or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting any Credit Party that (a) would reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or
(b) involve any Loan Document or the Transactions.  
     Section 7.06   Environmental Matters.  Except as disclosed in QRI’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2010, or as would not
be reasonably expected to have a Material Adverse Effect:
     (a)     neither any Oil and Gas Property of any Credit Party nor the
operations conducted by any Credit Party thereon, and, to the knowledge of the
Borrower, no operations of any prior owner, lessee, or

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operator of any such properties (i) is in violation of any order or requirement
relating to Environmental Laws of any court or Governmental Authority or any
Environmental Laws or (ii) to the knowledge of Borrower, has been in violation
of any order or requirement relating to Environmental Laws of any court or
Governmental Authority or any Environmental Laws;
     (b)     neither any Credit Party nor any Oil and Gas Property of any Credit
Party nor the operations currently conducted thereon or, to the knowledge of the
Borrower, conducted thereon by any prior owner or operator of such Oil and Gas
Property or operation, are subject to any existing, pending or, to the
Borrower’s knowledge, threatened Environmental Complaint;
     (c)     all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required by Environmental Laws to be obtained or filed
in connection with the operation or use of any and all Oil and Gas Property of
the Credit Parties, including, without limitation, any past or present
treatment, storage, disposal or release into the environment of a Hazardous
Material, have been duly obtained or filed, and each Credit Party is in
compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations;
     (d)     all Hazardous Materials, if any, generated at any and all Oil and
Gas Property of the Credit Parties by any Credit Party in the past have been
transported, treated and disposed of in accordance with Environmental Laws and,
to the knowledge of the Borrower, do not pose an imminent and substantial
endangerment to public health or welfare or the environment, and, to the
knowledge of the Borrower, in connection with such transport, treatment and
disposal, all such transport carriers and treatment and disposal facilities have
been and are operating in compliance with Environmental Laws, do not pose an
imminent and substantial endangerment to public health or welfare or the
environment and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Authority in connection
with any Environmental Laws;
     (e)     to the Borrower’s knowledge, there has been no Hazardous Discharge
on or to any Oil and Gas Property of any Credit Party, in each case, except in
compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment; and
     (f)     to the Borrower’s knowledge, no Credit Party has any contingent
liability under Environmental Law in connection with any Hazardous Discharge.  
     Section 7.07   Compliance with the Laws and Agreements.  Each of the Credit
Parties is in compliance with all Governmental Requirements applicable to it or
its Oil and Gas Properties (including, to the extent applicable to them, FCPA
and OFAC) and all agreements and other instruments binding upon it or its Oil
and Gas Properties, and possesses all licenses, permits, franchises, exemptions,
approvals and other governmental authorizations necessary for the ownership of
its Oil and Gas Properties and the conduct of its business, except where the
failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.  
     Section 7.08   Taxes.  Each of the Credit Parties has timely filed or
caused to be filed all Tax returns and reports required to have been filed (or
obtained extensions with respect thereto) and has paid or caused to be paid all
Taxes and all remittances required to have been paid by it, except (a) Taxes
that are being contested in good faith by appropriate proceedings and for which
the applicable Credit Party has set aside on its books adequate reserves in
accordance with GAAP or (b) to the extent that the failure to do so would not
reasonably be expected to result in a Material Adverse Effect.  No action to
enforce any Tax Lien has been commenced.  

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     Section 7.09   Disclosure; No Material Misstatements.  Taken as a whole,
none of the reports, financial statements, certificates or other written
information (other than projections) furnished by or on behalf of any Credit
Party to the Administrative Agent or any Lender or any of their Affiliates in
connection with the negotiation of this Agreement or any other Loan Document or
delivered hereunder or under any other Loan Document (as modified or
supplemented by other information so furnished), when furnished (and, with
respect to any such information delivered to the Administrative Agent or any
Lender or any of their Affiliates prior to the Effective Date, on the Effective
Date), 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 materially misleading (other than omissions that
pertain to matters of a general economic nature or matters of public knowledge
that generally affect any of the industry segments of the Credit Parties);
provided that, with respect to projected financial information, prospect
information, geological and geophysical data and engineering projections, the
Borrower represents only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time, recognizing that
(a) there are industry-wide risks normally associated with the types of business
conducted by the Credit Parties and (b) projections concerning volumes
attributable to the Oil and Gas Properties of the Credit Parties and production
and cost estimates contained in each Reserve Report are necessarily based upon
professional opinions, estimates and projections and that the Credit Parties do
not warrant that such opinions, estimates and projections will ultimately prove
to have been accurate.  
     Section 7.10   Subsidiaries.  Schedule 7.10 lists the name, jurisdiction of
organization and organizational identification number of each Subsidiary as of
the Effective Date and identifies each such Subsidiary as either a Restricted or
Unrestricted Subsidiary.  
     Section 7.11   Insurance.  All insurance reasonably necessary in the Credit
Parties’ ordinary course of business is in effect and all premiums due on such
insurance have been paid.  Schedule 7.11 sets forth a list of all such insurance
policies maintained by the Borrower and its Restricted Subsidiaries as of the
Effective Date.  
     Section 7.12   Location of Business and Offices.  As of the Effective Date,
the Borrower’s jurisdiction of organization is Alberta, Canada; the name of the
Borrower as listed in the public records of its jurisdiction of organization is
Quicksilver Resources Canada Inc.; the address of the Borrower’s chief executive
office is: One Palliser Square, Suite 2000, 125-9th Avenue, SE, Calgary, Alberta
T2G OP8, Canada; and the corporate access number of the Borrower in Alberta,
Canada is 2014451096.  As of the Effective Date, each Restricted Subsidiary’s
jurisdiction of organization, name as listed in the public records of its
jurisdiction of organization, organizational identification number in its
jurisdiction of organization, and the location of its principal place of
business and chief executive office is stated on Schedule 7.10.  
     Section 7.13   Properties; Title, Etc.  Except as would not have a Material
Adverse Effect and provided that no representation or warranty is made with
respect to any Oil and Gas Property or interest to which no proved oil or gas
reserves are properly attributed:
     (a)     Each of the Credit Parties has good and defensible title to the
material Oil and Gas Properties evaluated in the Reserve Report used in the most
recent determination of the Borrowing Base and good title to all its personal
Properties that are necessary to permit the Credit Parties to conduct their
business in all material respects in the same manner as its business has been
conducted prior to the date hereof, in each case, subject to Immaterial Title
Deficiencies and free and clear of all Liens except Liens permitted by
Section 9.03 (subject to the penultimate

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sentence thereof).  Subject to Immaterial Title Deficiencies and after giving
full effect to Liens permitted by Section 9.03 (subject to the penultimate
sentence thereof), the Credit Party specified as the owner owns the net
interests in production attributable to the Hydrocarbon Interests as reflected
in the most recently delivered Reserve Report.  The ownership of such Oil and
Gas Properties shall not obligate such Credit Party to bear the costs and
expenses relating to the maintenance, development and operations of each such
Oil and Gas Property in an amount materially in excess of the working interest
of each Oil and Gas Property set forth in the most recently delivered Reserve
Report that is not offset by a corresponding proportionate increase in such
Credit Party’s net revenue interest in such Oil and Gas Property; provided that
any applicable Credit Party shall have the right or obligation to bear costs
disproportionate to such Credit Party’s working interest with respect to any
Hydrocarbon Interest for a period of time in order to earn, or in connection
with the acquisition of, an interest in such Hydrocarbon Interest as evidenced
by written agreement.  
     (b)     All material leases and agreements necessary for the conduct of the
business of the Credit Parties are valid and subsisting, in full force and
effect, and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases.  
     (c)     The rights and Properties presently owned, leased or licensed by
the Credit Parties, including, without limitation, all easements and rights of
way, include all rights and Properties necessary to permit the Credit Parties to
conduct their business in the same manner as its business has been conducted
prior to the date hereof.  
     (d)     Each Credit Party owns, or is licensed to use, (i) all trademarks,
tradenames, copyrights, patents and other intellectual Property material to its
business, and the use thereof by each such Credit Party does not infringe upon
the rights of any other Person and (ii) all databases, geological data,
geophysical data, engineering data, seismic data, maps, interpretations and
other technical information the use of which is material to their businesses as
presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons.  
     Section 7.14   Compliance with Benefit Plans; ERISA.  Except as could not
reasonably be expected to have a Material Adverse Effect, (a) the Canadian
Pension Plans, if any, are duly registered under the Income Tax Act (Canada) and
all applicable provincial or federal pension benefits standards legislation and
no event has occurred which is reasonably likely to cause the loss of such
registered status; (b) all obligations of the Credit Parties (including any
applicable fiduciary, funding, investment and administration obligations)
required to be performed in connection with the Canadian Pension Plans, if any,
have been performed in accordance with applicable laws and regulations; (c) no
promises of benefit improvements under the Canadian Pension Plans, if any, or
the Canadian Benefit Plans have been made; (d) all reports and disclosures
relating to the Canadian Pension Plans and Canadian Benefit Plans required by
any applicable laws or regulations have been filed or distributed in accordance
with applicable laws and regulations; (e) no Credit Party has made any improper
withdrawals prohibited by applicable law, or applications of, the assets of any
of the Canadian Pension Plans; (f) no Canadian Pension Plan Termination Event
has occurred; (g) no Credit Party has any knowledge that the Canadian Pension
Plans, if any, are the subject of an investigation, any other proceeding, an
action or a claim other than a routine claim for benefits; (h) all contributions
or premiums required to be made by any Credit Party to the Canadian Pension
Plans and the Canadian Benefit Plans have been made within the time limits
required by, and in accordance with, the terms of such plans and applicable laws
and regulations; and (i) all employee contributions to the Canadian Pension
Plans, if any, required to be made by way of authorized payroll deduction have
been properly withheld and fully paid into such plans within the time limits
required by, and in accordance with, the terms of such plans and applicable laws
and regulations.  No Credit Party contributes or has made contributions on
behalf of its employees to a multi-employer pension

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plan, as such term is defined under applicable Canadian provincial or federal
pension benefits standards legislation.  No Canadian Pension Plan has an
Unfunded Current Liability that would, individually or when taken together with
any other liabilities referenced in this Section 7.14, reasonably be anticipated
to have a Material Adverse Effect.  There has been no failure to administer or
operate the Foreign Plans in accordance with the terms thereof except for any
failure to so administer or operate the Foreign Plans as could not reasonably be
expected to have a Material Adverse Effect.  As of the date hereof, neither the
Borrower nor any Subsidiary nor any ERISA Affiliate of the Borrower or any
Subsidiary maintains sponsors, or contributes to (or has at any time in the
six-year period preceding the date hereof, maintained, sponsored, or contributed
to) any Pension Plan or Multiemployer Plan.  Except in such instances where an
action, omission or failure would not reasonably be expected to have a Material
Adverse Effect, each Plan maintained by any Credit Party or any ERISA Affiliate
of any Credit Party is in compliance with the terms of such Plan and the
applicable provisions of ERISA and the Code with respect to each Plan.  No ERISA
Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected to
occur, would reasonably be expected to result in a Material Adverse
Effect.  Except in such instances where an action, omission or failure would not
reasonably be expected to have a Material Adverse Effect, (i) each Plan that is
intended to be “qualified” within the meaning of Section 401(a) of the Code is,
and has been during the period from its adoption to date, so qualified, both as
to form and operation, and all necessary governmental approvals, including a
favorable determination as to the qualification under the Code of such Plan and
each amendment thereto, have been or will be timely obtained, and (ii) the
actuarial present value of the benefit liabilities (within the meaning of
section 4041 of ERISA) under each Plan which is subject to Title IV of ERISA
does not, as of the end of the most recently ended fiscal year, exceed the
current value of the assets (computed on a plan termination basis in accordance
with Title IV of ERISA) of such Plan allocable to such benefit
liabilities.  Neither any Credit Party nor any ERISA Affiliate of any Credit
Party maintains or contributes to any Plan that provides a post-employment
health benefit, other than a benefit required under Section 601 of ERISA, or
maintains or contributes to a Plan that provides health benefits that is not
fully funded except where the failure to fully fund such Plan would not
reasonably be expected to have a Material Adverse Effect.  As of the date
hereof, neither the Borrower nor any Restricted Subsidiary nor any ERISA
Affiliate of the Borrower or any Restricted Subsidiary maintains a multiple
employer welfare benefit arrangement within the meaning of Section 3(40)(A) of
ERISA.  
     Section 7.15   Solvency.  After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to amounts
that could reasonably be received by reason of indemnity, offset, insurance or
any similar arrangement), at a fair valuation, of the Credit Parties, taken as a
whole, will exceed the aggregate Debt of the Credit Parties on a consolidated
basis, as the Debt becomes absolute and matures, (b) each of the Credit Parties
will not have incurred Debt beyond its ability to pay such Debt (after taking
into account the timing and amounts of cash to be received by each of the Credit
Parties and the amounts to be payable on or in respect of its liabilities, and
giving effect to amounts that could reasonably be received by reason of
indemnity, offset, insurance or any similar arrangement) as such Debt becomes
absolute and matures and (c) each of the Credit Parties will not have
unreasonably small capital for the conduct of its business.  
     Section 7.16   Priority; Security Matters.  The Secured Indebtedness is and
shall be at all times secured by valid, perfected first priority Liens (taken by
way of a floating charge over real property or otherwise) in favor of the
Administrative Agent, covering and encumbering the Mortgaged Properties and
other Properties pledged pursuant to the Security Instruments, to the extent
perfection has occurred or will occur, by the recording of a debenture or
mortgage, the filing of a PPSA or UCC financing statement or by possession (in
each case, to the extent available in the applicable jurisdiction); provided,
that the priority of the Liens in favor of the Administrative Agent may be
subject to Permitted Liens.  

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ARTICLE 8
Affirmative Covenants
     Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
     Section 8.01   Financial Statements; Other Information.  The Borrower (or,
from and after the New Parent Joinder, New Parent) will furnish to the
Administrative Agent:
     (a)     Annual Financial Statements.  (i) Prior to a Qualified IPO, as soon
as available, but in any event in accordance with then applicable law and not
later than 20 days after the date on which QRI files its Annual Report on Form
10-K with the SEC (but in no event more than 120 days after the end of the
applicable fiscal year), (A) the Borrower’s audited consolidated balance sheet
and related statements of operations, stockholders’ equity and cash flows as of
the end of and for the fiscal year most recently ended, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by Deloitte & Touche LLP or other independent public accountants of
recognized national standing (without a “going concern” or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Borrower (or, from and after the New Parent Joinder, New Parent) and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied and (B) upon the written request of the Administrative
Agent, the Borrower’s unaudited consolidating balance sheet and related
statements of operations as of the end of and for the fiscal year most recently
ended (which consolidating statements shall also demonstrate eliminating
entries, if any, with respect to any Consolidated Subsidiaries that are
Unrestricted Subsidiaries).  
     (ii)     From and after a Qualified IPO, as soon as available, but in any
event in accordance with then applicable law and not later than 20 days after
the date on which New Parent files its Annual Report on Form 10-K with the SEC
(or applicable Canadian equivalent) (but in no event more than 120 days after
the end of the applicable fiscal year), (A) the New Parent’s audited
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for the fiscal year most recently
ended, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Deloitte & Touche LLP or other
independent public accountants of recognized national standing (without a “going
concern” or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the New Parent and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied and (B) upon the written request of the Administrative Agent, the New
Parent’s unaudited consolidating balance sheet and related statements of
operations as of the end of and for the fiscal year most recently ended (which
consolidating statements shall also demonstrate eliminating entries, if any,
with respect to any Consolidated Subsidiaries that are Unrestricted
Subsidiaries).  
     (b)     Quarterly Financial Statements.  (i) Prior to a Qualified IPO, as
soon as available, but in any event in accordance with then applicable law and
not later than 10 days after QRI files each Quarterly Report on Form 10-Q with
the SEC (but in no event more than 60 days after the end of the applicable
fiscal quarter), (A) the Borrower’s unaudited consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for the fiscal quarter most recently ended and the then elapsed
portion of such fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the

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previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower (or, from and after the New Parent Joinder, New
Parent) and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes and (B) upon the written request of the Administrative
Agent, the Borrower’s unaudited consolidating balance sheet and related
statements of operations as of the end of and for the fiscal quarter most
recently ended (which consolidating statements shall also demonstrate
eliminating entries, if any, with respect to any Consolidated Subsidiaries that
are Unrestricted Subsidiaries).  
     (ii)     From and after a Qualified IPO, as soon as available, but in any
event in accordance with then applicable law and not later than 10 days after
New Parent files each Quarterly Report on Form 10-Q with the SEC (or applicable
Canadian equivalent) (but in no event more than 60 days after the end of the
applicable fiscal quarter), (A) New Parent’s unaudited consolidated balance
sheet and related statements of operations, stockholders’ equity and cash flows
as of the end of and for the fiscal quarter most recently ended and the then
elapsed portion of such fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of New Parent and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes and (B) upon the written request of the Administrative Agent, New
Parent’s unaudited consolidating balance sheet and related statements of
operations as of the end of and for the fiscal quarter most recently ended
(which consolidating statements shall also demonstrate eliminating entries, if
any, with respect to any Consolidated Subsidiaries that are Unrestricted
Subsidiaries).  
     (c)     Certificate of Financial Officer — Compliance.  Concurrently with
any delivery of financial statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer in substantially the form of Exhibit D hereto
(i) 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 (ii) setting forth reasonably detailed
calculations demonstrating compliance with Section 9.01.  
     (d)     Certificate of Insurer — Insurance Coverage.  Within 60 days of the
annual renewal thereof, a certificate of insurance coverage from each insurer
with respect to the insurance required by Section 8.06, in form and substance
satisfactory to the Administrative Agent, and, if requested by the
Administrative Agent or any Lender, all copies of the applicable policies.  
     (e)     Notice of Casualty Events.  Prompt written notice, and in any event
within five Business Days, of the occurrence of any Casualty Event with respect
to Oil and Gas Properties having an estimated Canadian Dollar value in excess of
C$15,000,000 or the commencement of any action or proceeding that would
reasonably be expected to result in a Casualty Event with respect to Oil and Gas
Properties having an estimated Canadian Dollar value in excess of
C$15,000,000.  
     (f)     Notice of Incurrence of Debt Resulting in Borrowing Base
Reduction.  Written notice of the incurrence by any Credit Party of any Debt
pursuant to Section 9.02(n) which results in an automatic reduction in the
Borrowing Base pursuant to such Section, which written notice shall include the
stated amount of such Debt and be delivered promptly after the pricing of such
Debt, but in no event later than one (1) day prior to settlement of such Debt.  

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     (g)     Information Regarding Credit Parties.  (i) Prompt written notice
(and in any event within ten (10) days following any such change) of any change
(A) in any Credit Party’s corporate name or (B) in the address of any Credit
Party’s chief executive office, and (ii) prompt written notice (and in any event
within thirty (30) days following any such change) of any change (A) in any
Credit Party’s identity or corporate structure or in the jurisdiction in which
such Person is incorporated or formed or (B) in any Credit Party’s jurisdiction
of organization or such Person’s organizational identification number in such
jurisdiction of organization.  
     (h)     Other Requested Information.  Promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of any Credit Party (including, without limitation, any
Canadian Pension Plan, Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA), as the Administrative Agent or
any Lender may reasonably request.  
     Documents required to be delivered pursuant to Section 8.01 may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which (A) the Borrower (or, from and after a
Qualified IPO, New Parent) posts such documents, or provides a link thereto on
the Borrower’s (or, from and after a Qualified IPO, New Parent’s) website on the
Internet or (B) such documents are publically available on the SEC’s EDGAR
website or, as applicable, on the website of the System for Electronic Document
Analysis and Retrieval (SEDAR) or (ii) on which such documents are delivered to
the Administrative Agent, including in electronic form.  Once received by the
Administrative Agent, the Administrative Agent shall post such documents on the
Borrower’s behalf on an Internet or intranet website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided
that the Borrower shall deliver such documents in a form acceptable to the
Administrative Agent.  Except for such compliance certificates, the
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by the Borrower with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.  
     Section 8.02   Notices of Material Events.  Promptly following a
Responsible Officer becoming aware of the occurrence thereof, the Borrower will
furnish to the Administrative Agent written notice of the following:
     (a)     the occurrence of any Default;
     (b)     the filing or commencement of any action, suit, proceeding,
investigation or arbitration by or before any arbitrator or Governmental
Authority against or affecting the Borrower or any Affiliate thereof not
previously disclosed in writing to the Lenders or any material adverse
development in any action, suit, proceeding, investigation or arbitration
(whether or not previously disclosed to the Lenders) that, in either case, if
adversely determined, would reasonably be expected to result in a Material
Adverse Effect; and
     (c)     the filing or commencement of any action, suit, proceeding,
investigation or arbitration by or before any arbitrator or Governmental
Authority involving or relating to the Loan Documents.  
     (d)     any other development that results in, or would reasonably be
expected to result in, a Material Adverse Effect.  

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     Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer 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 8.03   Existence; Conduct of Business.  The Borrower will, and will
cause each other Credit Party to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business and maintain, if necessary, its qualification to do business in
each other jurisdiction in which its Oil and Gas Properties are located or the
ownership of such Properties requires such qualification, except where the
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.09.  
     Section 8.04   Payment of Obligations.  The Borrower will, and will cause
each other Credit Party to, pay its obligations, including Tax liabilities and
remittance liabilities of the Credit Parties, before the same shall become
delinquent or in default, except where (i) (A) the validity or amount thereof is
being contested in good faith by appropriate proceedings, and (B) such Credit
Party has set aside on its books adequate reserves with respect thereto in
accordance with GAAP or (ii) the failure to make payment would not reasonably be
expected to result in a Material Adverse Effect or result in the seizure or levy
of any Oil and Gas Property of any Credit Party that was evaluated in the
Reserve Report used in the most recent determination of the Borrowing Base.  
     Section 8.05   Operation and Maintenance of Properties.  The Borrower will
and will cause each other Credit Party to, in all material respects:
(a) promptly pay and discharge, or make reasonable efforts to cause to be paid
and discharged, when due all delay rentals, royalties and expenses accruing
under the leases or other agreements affecting or pertaining to its material Oil
and Gas Properties evaluated in the Reserve Report used in the most recent
determination of the Borrowing Base, provided that, in the case of delay
rentals, the Borrower and/or the applicable Credit Party shall only be required
to pay and discharge, or make reasonable efforts to pay and discharge, delay
rentals as and to the extent the Borrower or such other Credit Party determines
in good faith that payment and discharge thereof is in the Borrower’s or such
other Credit Party’s, as applicable, best interest, (b) perform, or make
reasonable and customary efforts to cause to be performed, the obligations of
the Borrower or any such other Credit Party required by each and all of the
assignments, deeds, leases, subleases, contracts and agreements affecting its
interests in its material Oil and Gas Properties evaluated in the Reserve Report
used in the most recent determination of the Borrowing Base, (c) do all other
things necessary to keep unimpaired, except for Liens permitted by the Loan
Documents, its rights with respect to its material Oil and Gas Properties
evaluated in the Reserve Report used in the most recent determination of the
Borrowing Base and prevent any forfeiture thereof or a default thereunder,
(d) keep and maintain all Oil and Gas Property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted
and (e) to the extent the Borrower is not the operator of any Property, the
Borrower shall use reasonable efforts to cause the operator to comply with this
Section 8.05, except (x) to the extent a portion of such Oil and Gas Properties
is no longer capable of producing Hydrocarbons in economically reasonable
amounts, (y) for dispositions permitted by this Agreement or (z) when the
failure to do so would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.  
     Section 8.06   Insurance.  The Borrower will, and will cause each other
Credit Party to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations.  The loss payable clauses or provisions in said
insurance policy or policies insuring any of the collateral for the Loans shall
be endorsed in favor of the Administrative

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Agent as its interests in the collateral may appear and such policies shall name
the Administrative Agent and the Lenders as “additional insureds” and provide
that the insurer will endeavor to give at least 30 days prior notice of any
cancellation to the Administrative Agent.  
     Section 8.07   Books and Records; Inspection Rights.  The Borrower will,
and will cause each other Credit Party 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.  The Borrower will, and
will cause each other Credit Party to, permit any representatives designated by
the Administrative Agent or any Lender (coordinated through and together with
the Administrative Agent), upon reasonable prior notice, to visit and inspect
its 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 such reasonable times during the Borrower’s
or such other Credit Party’s normal business hours (and in a manner so as to the
extent practicable, not to unreasonably interfere with the normal business
operations of the Borrower or such other Credit Party) not more than one
(1) time per fiscal year; provided, that to the extent an Event of Default then
exists, as often as reasonably requested.  The Lenders shall bear the cost of
such inspections and examinations unless an Event of Default then exists, in
which event the Borrower shall bear such cost.  
     Section 8.08   Compliance with Laws.  The Borrower will, and will cause
each other Credit Party to, comply with all Governmental Requirements applicable
to it or its Oil and Gas Properties, except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.  
     Section 8.09   Environmental Matters.  (a) Except to the extent that the
failure to do so would not reasonably be expected to have a Material Adverse
Effect, (i) the Borrower shall, and shall cause each other Credit Party to,
comply with all applicable Environmental Laws, including, without limitation,
(x) all licensing, permitting, notification, and similar requirements of
Environmental Laws, and (y) all provisions of Environmental Laws regarding
storage, discharge, release, transportation, treatment and disposal of Hazardous
Materials and (ii) the Borrower shall, and shall cause each other Credit Party
to, promptly pay and discharge when due all claims, liabilities and obligations
with respect to any clean-up or remediation measures necessary to comply with
applicable Environmental Laws, provided that such payment or discharge shall not
be required to the extent that (A) the amount, applicability or validity thereof
is being contested in good faith by appropriate proceedings promptly initiated
and diligently conducted and (B) Borrower or such other Credit Party, as and to
the extent required in accordance with GAAP, shall have set aside on its books
reserves (segregated to the extent required by GAAP) deemed by them to be
adequate with respect thereto.  
     (b)     To the extent the Borrower or another Credit Party is not the
operator of any Property, none of the Credit Parties shall be obligated to
directly perform any undertakings contemplated by the covenants and agreements
contained in this Section 8.09 which are performable only by such operators or
are beyond the control of the Credit Parties.  Notwithstanding the above and
except to the extent that the failure to do so would not reasonably be expected
to have a Material Adverse Effect, the Borrower shall be obligated to enforce
such operators’ contractual obligations to maintain, develop and operate the Oil
and Gas Properties subject to such operating agreements, and the Borrower shall,
and shall cause the other Credit Parties to, use commercially reasonable efforts
to cause the operator to comply with this Section 8.09.  
     (c)     To the extent reasonably requested by the Administrative Agent, the
Borrower will, and will cause each other Credit Party to, provide environmental
assessment, audit or test reports of any Oil and Gas Properties of the Borrower
or any other Credit Party, provided an Event of Default then exists or

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the Administrative Agent has a reasonable suspicion that either an Event of
Default or a breach of any representation or warranty set forth in Section 7.06
hereof then exists.  
     (d)     In connection with any acquisition by Borrower or any other Credit
Party of any Oil and Gas Property for consideration of at least C$17,500,000,
other than an acquisition of additional interests in Oil and Gas Properties in
which any Credit Party previously held an interest, to the extent Borrower or
such other Credit Party obtains or is provided with the same, the Borrower
shall, promptly following Borrower’s or such other Credit Party’s obtaining or
being provided with the same, deliver to the Administrative Agent such final and
non-privileged material environmental reports of such Oil and Gas Properties as
are reasonably requested by the Administrative Agent.  
     Section 8.10   Further Assurances.  (a) The Borrower at its sole expense
will, and will cause each other Credit Party to, promptly execute and deliver to
the Administrative Agent all such other documents, agreements and instruments
reasonably requested by the Administrative Agent to comply with, cure any
defects or accomplish the conditions precedent, covenants and agreements of the
Borrower or any other Credit Party, as the case may be, in the Loan Documents,
including the Notes, or to further evidence and more fully describe the
collateral intended as security for the Secured Indebtedness, or to correct any
omissions in this Agreement or the Security Instruments, or to state more fully
the obligations secured therein, or to perfect, protect or preserve any Liens
created pursuant to this Agreement or any of the Security Instruments or the
priority thereof, or to make any recordings, file any notices or obtain any
consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.  
     (b)     The Borrower hereby authorizes the Administrative Agent to file one
or more financing or continuation statements, and amendments thereto, or any
equivalent thereto in Canada or any province thereof relative to all or any part
of the Mortgaged Property without the signature of the Borrower or any other
Guarantor where permitted by law.  A carbon, photographic or other reproduction
of the Security Instruments or any financing statement covering the Mortgaged
Property or any part thereof shall be sufficient as a financing statement where
permitted by law.  
     Section 8.11   Reserve Reports.  (a) On or before May 1, 2012 and April 1st
of each year thereafter, the Borrower shall furnish to the Administrative Agent
a Reserve Report prepared by one or more Approved Petroleum Engineers (the
“Prepared Reserve Report”) as of January 1st of such year.  On or before October
1st of each year, commencing October 1, 2012, the Borrower shall furnish to the
Administrative Agent and the Lenders a Reserve Report as of July 1st of such
year prepared by or under the supervision of the chief engineer of the Borrower
in accordance with the procedures used in the most recent Prepared Reserve
Report.  It is understood that projections concerning volumes attributable to
the Oil and Gas Properties and production and cost estimates contained in each
Reserve Report are necessarily based upon professional opinions, estimates and
projections and that the Credit Parties do not warrant that such opinions,
estimates and projections will ultimately prove to have been accurate.  
     (b)     In the event of an Interim Redetermination requested by the
Administrative Agent or the Borrower pursuant to Section 2.07(b), the Borrower
shall, upon the request of the Administrative Agent, furnish to the
Administrative Agent and the Lenders a Reserve Report (i) prepared by or under
the supervision of the chief engineer of the Borrower and in accordance with the
procedures used in the immediately preceding Prepared Reserve Report delivered
pursuant to Section 8.11(a), and (ii) which shall have an “as of” date as
required by the Administrative Agent, no later than a date mutually agreed to by
the Borrower and the Administrative Agent.  If the Administrative Agent does not
request an updated Reserve Report pursuant to the immediately preceding
sentence, the Administrative Agent and the

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Lenders may base such Interim Redetermination on the Reserve Report most
recently delivered by the Borrower hereunder.  
     (c)     With the delivery of each Reserve Report, the Borrower shall
provide to the Administrative Agent and the Lenders a certificate from a
Responsible Officer certifying that in all material respects: (i) the
information contained in the Reserve Report and any other information delivered
in connection therewith is true and correct, (ii) subject to Immaterial Title
Deficiencies, the Borrower or a Guarantor owns good and defensible title to the
Oil and Gas Properties evaluated in such Reserve Report and such Properties are
free of all Liens except for Permitted Liens and Liens securing the Secured
Indebtedness, (iii) except as set forth on an exhibit to the certificate, on a
net basis there are no gas imbalances, take or pay or other prepayments in
excess of one half bcf of gas in the aggregate with respect to its Oil and Gas
Properties evaluated in such Reserve Report which would require the Borrower or
any Guarantor to deliver Hydrocarbons either generally or produced from such Oil
and Gas Properties at some future time without then or thereafter receiving full
payment therefor, (iv) attached to the certificate is a list of all marketing
agreements entered into subsequent to the later of the date hereof or the most
recently delivered Reserve Report which pertain to the sale of production at a
fixed price and have a maturity date of longer than six (6) months from the date
of such certificate and (v) a true and complete list of all Oil and Gas Swap
Agreements of the Borrower and each other Credit Party is included, which list
contains the material terms thereof (including the type, remaining term,
counterparty, mark-to-market value as of the end of the second month immediately
preceding the date of such certificate and notional amounts or volumes), any
credit support agreements relating thereto, any margin required or supplied
under any credit support document, and the counterparty to each such
agreement.  
     (d)     The Reserve Reports may only include Oil and Gas Properties that
are (x) located in British Columbia, Canada, Alberta, Canada, or another
province in Canada that at such time allows for a secured lender to receive the
benefit of a floating charge over real property located in such province, and
for which such floating charge is created by a debenture or other Security
Instrument and is of record (as necessary) as contemplated under
Section 6.01(f)(i) or (y) located in any other province in Canada, the United
States or any other country or jurisdiction reasonably acceptable to the
Administrative Agent; provided that with respect to Oil and Gas Properties set
forth in this clause (y), (i) the Administrative Agent shall be reasonably
satisfied that fixed charges, collateral agreements or other Security
Instruments create first priority, perfected Liens (subject only to Permitted
Liens) on at least 80% of the total value of the Proved Hydrocarbon Interests
relating to such Oil and Gas Properties (including any such Oil and Gas
Properties subject to floating charges) and (ii) the Administrative Agent shall
have received title information as the Administrative Agent may reasonably
require satisfactory to the Administrative Agent setting forth the status of
title to at least 75% of the total value of such Oil and Gas Properties;
provided, that with respect to such Oil and Gas Properties referred to in the
foregoing clauses (x) and (y), the Administrative Agent shall have received such
other closing documents, certificates, and legal opinions as shall be reasonably
requested by, and in form and substance reasonably satisfactory to, the
Administrative Agent.  
     Section 8.12   [Intentionally left blank].
     Section 8.13   Additional Collateral; Additional Guarantors.  (a)
[Reserved].  
     (b)     If the Borrower or any other Credit Party becomes the owner of a
Restricted Subsidiary, then the Borrower shall, or shall cause such other Credit
Party to, promptly, but in any event no later than 30 days after the date of
becoming an owner thereof (or such longer period as the Administrative Agent may
agree in its discretion), (i) pledge 100% of the Equity Interests of such new
Restricted Subsidiary (including, without limitation, delivery of original stock
certificates evidencing the Equity Interests of

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such new Restricted Subsidiary, together with appropriate undated stock powers
for each certificate duly executed in blank by the registered owner thereof) and
(ii) execute and deliver such other additional closing documents, certificates
and legal opinions as shall reasonably be requested by the Administrative
Agent.  If any Person other than QRI (or, from and after the New Parent Joinder,
New Parent) at any time acquires or otherwise possesses any of the Equity
Interests issued by the Borrower (including an Intermediate HoldCo), the
Borrower shall cause each such Person to promptly, but in any event no later
than 30 days after the date of becoming an owner thereof (or such longer period
as the Administrative Agent may agree in its discretion), (i) pledge 100% of the
Equity Interests in the Borrower owned by such person pursuant to a Pledge
Agreement (including, without limitation, delivery of original stock
certificates evidencing the Equity Interests of the Borrower, together with an
appropriate undated stock power for each certificate duly executed in blank by
the registered owner thereof) and (ii) execute and deliver such other additional
closing documents, certificates, and legal opinions as shall reasonably be
requested by the Administrative Agent.  
     (c)     The Borrower shall cause the following Persons to guarantee the
Secured Indebtedness pursuant to the Guaranty Agreement:
     (i)     each Material Restricted Subsidiary;
     (ii)     any Person required to guarantee the Secured Indebtedness in order
for the Borrower to be in compliance with Section 9.05(b);
     (iii)     any Person that guarantees any Permitted Additional Debt;
     (iv)     any Restricted Subsidiary that places a Lien on its Oil and Gas
Properties to secure the Secured Indebtedness;
     (v)     one or more additional Restricted Subsidiaries to the extent
necessary to cause (A) the total assets of the Restricted Subsidiaries that are
not Guarantors to be less than 15% of the combined assets of the Credit Parties
and (B) the combined EBITDAX of such Restricted Subsidiaries to be less than 15%
of the combined EBITDAX of the Credit Parties; and
     (vi)     each Intermediate HoldCo, New Parent and, following the occurrence
of a Qualified IPO, any subsequent direct owner of Equity Interests in the
Borrower.  
     (d)     In connection with any guaranty required by Section 8.13(c), the
Borrower shall, or shall cause such Subsidiary or other Person to promptly, but
in any event no later than 30 days (or such longer period as the Administrative
Agent may agree in its discretion) after the event requiring such guaranty,
execute and deliver (i) a supplement to the Guaranty Agreement and (ii) such
other additional closing documents, certificates and legal opinions as shall
reasonably be requested by the Administrative Agent.  If at any time any Person
is not otherwise required to guarantee the Secured Indebtedness hereunder
(whether pursuant to the other provisions of this Section 8.13 or otherwise) or
under any other Loan Document, then upon receipt by the Administrative Agent of
evidence satisfactory to it that such Person has been fully and finally released
from its guarantee obligations in respect of any Permitted Additional Debt, such
Person shall be released from its guarantee obligations with respect to the
Secured Indebtedness and the Administrative Agent shall, at the sole cost and
expense of the Borrower, execute such further documents and do all such further
acts so as to reasonably evidence such release.  
     (e)     If a Default or Event of Default has occurred and is continuing and
the Majority Lenders consider it necessary for their adequate protection, the
Borrower, at the request of the Administrative

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Agent, will forthwith grant or cause to be granted to the Administrative Agent
for the benefit of the Secured Parties, a fixed Lien (subject only to Permitted
Liens) in such of the applicable Credit Party’s property as the Administrative
Agent, in its sole discretion, determines as security for all then present and
future Secured Indebtedness of the Credit Parties to the Secured Parties.  In
this connection, the Borrower will, and will cause each other Credit Party to:
     (i)     provide the Administrative Agent with such information as is
reasonably required by the Administrative Agent to identify the property to be
charged pursuant to this Section 8.13(e);
     (ii)     do all such things as are reasonably required to grant, or cause
such Credit Party to grant, in favor of the Agent, the Secured Parties, a fixed
Lien (subject only to Permitted Liens) in respect of such property to be so
charged pursuant to this Section 8.13(e);
     (iii)     provide the Administrative Agent with all corporate or
partnership resolutions and other action, as reasonably required, for any Credit
Party to grant the fixed Lien (subject only to Permitted Liens) in the property
identified by the Administrative Agent to be so charged;
     (iv)     provide the Administrative Agent with such security instruments
and other documents which the Administrative Agent, acting reasonably, deems are
necessary to give full force and effect to the provisions of this
Section 8.13(e);
     (v)     assist the Administrative Agent in the registration or recording of
such agreements and instruments in such public registry offices in Canada or any
province thereof or any other jurisdiction as the Administrative Agent, acting
reasonably, deems necessary to give full force and effect to the provisions of
this Section 8.13(e); and
     (vi)     pay all reasonable costs and expenses incurred by the
Administrative Agent in connection with the preparation, execution and
registration of all agreements, documents and instruments made in connection
with this Section 8.13(e).  
     Section 8.14   ERISA and Benefit Plan Compliance.  The Borrower will
promptly furnish to the Administrative Agent immediately upon becoming aware of
the occurrence of any ERISA Event or Canadian Pension Plan Termination Event
that alone or together with any other ERISA Events or Canadian Pension Plan
Termination Events that have occurred, would reasonably be expected to result in
liability of any Credit Party or any ERISA Affiliates in an aggregate amount
which would reasonably be expected to have a Material Adverse Effect, a written
notice signed by a Responsible Officer, specifying the nature thereof, what
action the applicable Credit Party or any ERISA Affiliate is taking or proposes
to take with respect thereto, and, when known, any action taken or proposed by
the Internal Revenue Service, the Department of Labor, the PBGC or any
equivalent agency or authority with jurisdiction over Canadian Pension Plans
with respect thereto.  With respect to each Pension Plan, the Borrower will, and
will cause each other Credit Party and ERISA Affiliate to, (a) satisfy in full
and in a timely manner, without incurring any late payment or underpayment
charge or penalty that would reasonably be expected to have a Material Adverse
Effect and without giving rise to any Lien securing an amount in excess of
C$15,000,000, all of the contribution and funding requirements of section 412 of
the Code (determined without regard to subsections (d), (e), (f) and
(k) thereof) and of section 302 of ERISA (determined without regard to sections
303, 304 and 306 of ERISA), and (b) pay, or cause to be paid, to the PBGC in a
timely manner, without incurring any late payment or underpayment charge or
penalty that would reasonably be expected to have a Material Adverse Effect, all
premiums required pursuant to sections 4006 and 4007 of ERISA.  With respect to
each Canadian Pension Plan, the Borrower will not (i) terminate, or permit any
other Credit Party to terminate, any Canadian Pension Plan in a manner, or take

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any other action with respect to any Canadian Pension Plan, which would
reasonably be expected to have a Material Adverse Effect, (ii) fail to make, or
permit any other Credit Party to fail to make, full payment when due of all
amounts which, under the provisions of any Canadian Pension Plan, agreement
relating thereto or applicable law, the Borrower or any other Credit Party is
required to pay as contributions thereto, except where the failure to make such
payments could not reasonably be expected to have a Material Adverse Effect, or
(iii) permit to exist, or allow any other Credit Party to permit to exist, any
Unfunded Current Liability, whether or not waived, with respect to any Canadian
Pension Plan in an amount which would reasonably be expected to cause a Material
Adverse Effect.  
     Section 8.15   Unrestricted Subsidiaries.  The Borrower (or, from and after
the New Parent Joinder, New Parent):
     (a)     will cause the management, business and affairs of each of the
Borrower (or, from and after the New Parent Joinder, New Parent) and its
Restricted Subsidiaries to be conducted in such a manner (including, without
limitation, by keeping separate books of account, furnishing separate financial
statements of Unrestricted Subsidiaries to creditors and potential creditors
thereof and by not permitting Properties of the Borrower (or, from and after the
New Parent Joinder, New Parent) and its respective Restricted Subsidiaries to be
commingled) so that each Unrestricted Subsidiary that is a corporation will be
treated as a corporate entity separate and distinct from the Borrower (or, from
and after the New Parent Joinder, New Parent) and the Restricted Subsidiaries;
     (b)     will not, and will not permit any of the Restricted Subsidiaries
to, incur, assume, guarantee or be or become liable for any Debt of any of the
Unrestricted Subsidiaries; and
     (c)     will not permit any Unrestricted Subsidiary to hold any Equity
Interest in, or any Debt of, the Borrower or any other Credit Party.  
     Section 8.16   Section 1031 Exchange.  If the Borrower elects to
participate in a Section 1031 Exchange with respect to any Oil and Gas
Properties, then on or before 180 days following the acquisition by the
Section 1031 Counterparty of such Oil and Gas Properties from the Borrower, the
Borrower shall receive from the Section 1031 Counterparty (a) Oil and Gas
Properties having a substantially equivalent value to the Oil and Gas Properties
that the Section 1031 Counterparty acquired from the Borrower, (b) payment in
full in cash of the note given by the Section 1031 Counterparty to the Borrower
or (c) any combination of Oil and Gas Properties and a partial cash prepayment
of such note, such that the Oil and Gas Properties received and such partial
cash prepayment have an aggregate value not less than the value of the Oil and
Gas Properties that the Section 1031 Counterparty acquired from the Borrower.  
     Section 8.17   Use of Proceeds.  The Borrower will use the proceeds of the
Loans and will use Letters of Credit for general corporate purposes, including
acquisitions, Investments, working capital, repayment of Debt and the making of
Restricted Payments, in each case to the extent not otherwise prohibited
hereunder; provided that the aggregate amount of LC Exposure under all Letters
of Credit used as credit support for any Credit Party’s obligations under any
Swap Agreement shall not exceed an amount equal to (a) C$7,500,000 minus (b) the
amount of cash or treasury securities subject to Liens permitted by
Section 9.03(k).  
     Section 8.18   Fiscal Year.  The Borrower’s fiscal year shall end on
December 31.  
     Section 8.19   New Parent Joinder.  Promptly, and in any event prior to the
earlier to occur of (a) the date on which 100% of the Equity Interests in the
Borrower is transferred from QRI to New Parent and (b) the date of a Qualified
IPO, the Borrower will cause New Parent to execute and deliver to the

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Administrative Agent (i) a Pledge Agreement (or supplement thereto), (ii) a
Guaranty Agreement (or supplement thereto) as required by Section 8.13(c) and
(iii) such other additional closing documents, certificates, and legal opinions
as shall reasonably be requested by the Administrative Agent.  New Parent’s
execution and delivery of the foregoing agreements and other documentation is
herein referred to collectively as the “New Parent Joinder”.  In order to
facilitate the transfer of the Equity Interests in the Borrower from QRI to New
Parent, the Administrative Agent undertakes and agrees that it will promptly
redeliver to the Borrower, on or prior to the date on which such transfer is
scheduled to occur but subject to customary escrow arrangements, the share
certificates in the Borrower together with undated, blank stock powers for each
such certificate, in each case previously delivered to the Administrative Agent
by QRI.  
ARTICLE 9
Negative Covenants
     Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder and all other amounts
payable under the Loan Documents have been paid in full and all Letters of
Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
     Section 9.01   Financial Covenants.  (a) Net Debt to EBITDAX Ratio.  The
Borrower (or, from and after the New Parent Joinder, New Parent) will not, as of
the last day of any fiscal quarter, permit its ratio of (i) Net Debt as of the
last day of the fiscal quarter then ending (ii) to EBITDAX for the period of
four fiscal quarters then ending, commencing with the four fiscal quarter period
ending September 30, 2011, to be greater than 4.5 to 1.0.  
     (b)     Current Ratio.  The Borrower (or, from and after the New Parent
Joinder, New Parent) will not permit, as of the last day of any fiscal quarter,
its ratio of (i) consolidated current assets (including the unused amount of the
total Commitments (but only to the extent that the Borrower is permitted to
borrow such amount under the terms of this Agreement, including, without
limitation, Section 6.02 hereof), but excluding current assets resulting from
the requirements of ASC Topic 815 and ASC Topic 410) to (ii) consolidated
current liabilities (excluding current maturities of long term debt and current
liabilities resulting from the requirements of ASC Topic 815 and ASC Topic 410)
to be less than 1.0 to 1.0, commencing with the fiscal quarter ending
September 30, 2011; provided that for purposes of calculating such ratio, the
current assets and current liabilities of all Unrestricted Subsidiaries shall be
excluded as set forth in Section 1.05.  
     Section 9.02   Debt.  The Borrower will not, and will not permit any other
Credit Party to, incur, create, assume or suffer to exist any Debt, except:
     (a)     the Notes or other Secured Indebtedness;
     (b)     the Guarantee by the Borrower or any other Credit Party of any Debt
of any other Credit Party that is otherwise permitted hereunder so long as such
Guarantee guarantees not more than the percentage of such Debt that equals the
percentage of common equity owned directly or indirectly by the Borrower or such
other Credit Party in such other Credit Party at the time such Guarantee is
executed;
     (c)     Debt of any Credit Party to any other Credit Party;

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     (d)     Debt outstanding on the date hereof and set forth on Schedule 9.02,
including without limitation the Permitted Intercompany Debt (subject to the
limitations in the definition of “Permitted Intercompany Debt”);
     (e)     Debt of a Person which becomes a Restricted Subsidiary after the
date hereof, provided that (i) such Debt existed at the time such Person became
a Restricted Subsidiary and was not created in anticipation thereof,
(ii) immediately after giving effect to the acquisition of such Person by a
Credit Party, no Default or Event of Default shall have occurred and be
continuing and (iii) that all Debt incurred under this clause (e), together with
all Debt incurred pursuant to clause (j) below, does not exceed in the aggregate
at any one time outstanding the greater of (x) C$10,000,000 and (y) 5% of the
Borrowing Base then in effect;
     (f)     endorsements of negotiable instruments for collection in the
ordinary course of business;
     (g)     Debt consisting of performance bonds, surety bonds, appeal bonds,
injunctions bonds and other obligations of a like nature provided by any Credit
Party;
     (h)     Non-Recourse Debt in an aggregate amount outstanding at any time
not to exceed C$5,000,000;
     (i)     Debt constituting Permitted Investments;
     (j)     Debt incurred to finance the acquisition, construction or
improvement of fixed or capital assets (including, without limitation,
obligations in connection with Capital Leases) secured by Liens permitted by
Section 9.03(h); provided that all Debt incurred under this clause (j), together
with all Debt incurred pursuant to clause (e) above, does not exceed in the
aggregate at any one time outstanding the greater of (x) C$10,000,000 and (y) 5%
of the Borrowing Base then in effect;
     (k)     other Debt not to exceed in the aggregate at any one time
outstanding the greater of (x) C$20,000,000 and (y) 7% of the Borrowing Base
then in effect;
     (l)     Debt associated with worker’s compensation claims, unemployment
insurance laws or similar legislation incurred in the ordinary course of
business;
     (m)     Taxes, assessments or other governmental charges which are not yet
due or are being contested in good faith in accordance with Section 7.08;
     (n)     Debt and any guarantees thereof by the Guarantors (including any
Persons becoming Guarantors simultaneously with the incurrence of such Debt),
provided that: (i) immediately before, and after giving effect to, the
incurrence of any such Debt (and any concurrent repayment of Debt with the
proceeds of such incurrence), no Default exists or would exist, (ii) such Debt
is not secured by any Lien, (iii) such Debt does not have any scheduled
amortization of principal prior to the Maturity Date, (iv) such Debt has a
stated maturity no earlier than 91 days after the Maturity Date, (v) such Debt
does not have mandatory redemption events that are not Events of Default
hereunder, (vi) such Debt does not prohibit prior repayment of Loans, and
(vii) at the time any such Debt is incurred, the Borrowing Base then in effect
shall be automatically reduced by the lesser of (A) an amount equal to the
product of 0.25 multiplied by the stated principal amount of such Debt, rounded
to the nearest C$1,000,000 and (B) if requested by the Borrower, an amount
(which may be zero) approved by the Required Lenders, and the Borrowing Base as
so reduced shall become the new Borrowing Base immediately upon the date of such
issuance or assumption, effective and applicable to the Borrower, the Agents,
each Issuing Bank and the Lenders on

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such date until the next redetermination or modification thereof hereunder.  For
purposes of this Section 9.02(n), the “stated principal amount” shall mean the
stated face amount of such Debt without giving effect to any original issue
discount;
     (o)     Any renewals, refinancings or extensions of (but, except to the
extent permitted herein, not increases in (except to cover premiums or
penalties)) any Debt described in clauses (d), (e), (j) or (n) of this
Section 9.02 (other than Permitted Intercompany Debt); provided, however, that
any refinancing of Debt described in clause (n) shall comply with the provisions
of such clause (n);
     (p)     Debt consisting of the financing of insurance premiums if the
amount financed does not exceed the premium payable for the current policy
period;
     (q)     Debt consisting of obligations to deliver commodities, goods or
services, including, without limitation, Hydrocarbons, in consideration of one
or more advance payments, so long as delivery of such commodities, goods or
services is due within 60 days of such advance payment;
     (r)     Debt consisting of deferred put premiums on Swap Agreements entered
into by any Credit Party with Approved Counterparties;
     (s)     Debt incurred by the Borrower or any Credit Party as a result of
credit support (in the form of cash) provided by, or on behalf of,
counterparties pursuant to any Swap Agreement, not to exceed the amount of such
cash held by the Borrower or such other Credit Party; and
     (t)     Debt incurred, created or suffered to exist by the Borrower to or
in favor of (i) QRI prior to the transfer by QRI to New Parent, directly or
indirectly through a Parent HoldCo, of 100% of the Equity Interests of the
Borrower in contemplation of the Qualified IPO provided that such Debt does not
exceed the value of the Equity Interests in the Borrower immediately prior to
the first incurrence or creation of such Debt (the “Qualified IPO Related
Debt”), (ii) New Parent (and, as applicable, a Parent HoldCo) upon the transfer
of the Qualified IPO Related Debt from QRI to New Parent, directly or indirectly
through a Parent HoldCo, together with 100% of the Equity Interests in the
Borrower; provided that (x) at all times such Debt is subordinated in right of
payment to the Secured Indebtedness on terms satisfactory to the Administrative
Agent, acting reasonably, and (y) such Debt is settled and cancelled promptly
after the completion of the transfer of 100% of the Equity Interests of the
Borrower to New Parent.  For greater certainty, the foregoing proviso will not
restrict the Borrower from settling the Qualified IPO Related Debt by the
issuance of Equity Interests in the Borrower.  
     For the avoidance of doubt, to the extent any Debt could be attributable to
more than one subsection of this Section 9.02, the Credit Parties may categorize
all or any portion of such Debt to any one or more subsections of this
Section 9.02 as it elects and unless as otherwise expressly provided, in no
event shall (x) the same portion of any Debt be deemed to utilize or be
attributable to more than one subsection of this Section 9.02 or (y) any Credit
Party utilize Section 9.02(k) for the purposes of issuing unsecured senior notes
or unsecured subordinated notes in the capital markets.  
     Section 9.03   Liens.  The Borrower will not, and will not permit any other
Credit Party to, create, incur, assume or permit to exist any Lien on any of its
Properties (now owned or hereafter acquired), except:
     (a)     Liens created by the Security Instruments.  
     (b)     Excepted Liens.  

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     (c)     Lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Report including, without
limitation, any royalty, overriding royalty, net profits interest, production
payment, carried interest or reversionary working interest in existence as of
the Effective Date or as a result of or in accordance with a Credit Party’s
acquisition of the property burdened thereby.  
     (d)     Liens securing Non-Recourse Debt permitted by Section 9.02(h).  
     (e)     Pledges or deposits in the ordinary course of business securing
liabilities to insurance carriers under insurance or self-insurance
arrangements.  
     (f)     Any Lien existing on any Oil and Gas Property or asset prior to the
acquisition thereof by any Credit Party or existing on any Oil and Gas Property
or asset of any Person that becomes a Restricted Subsidiary after the date
hereof prior to the time such Person becomes a Restricted Subsidiary; provided
that (i) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Restricted Subsidiary, as applicable,
(ii) such Lien shall not apply to any other Oil and Gas Property or assets of
any Credit Party and (iii) such Lien shall secure only those obligations which
it secures on the date of such acquisition or the date such Person becomes a
Restricted Subsidiary, as applicable, and extensions, renewals and replacements
of such obligations that are not in excess of the outstanding principal amount
of such obligations as of such acquisition date or date such Person becomes a
Restricted Subsidiary (provided, that such obligations and such extensions,
renewals, and replacements thereof so secured by such Lien, together with the
Debt secured by Liens described in clause (h) below, shall at no time exceed in
the aggregate the greater of (x) C$10,000,000 and (y) 5% of the Borrowing Base
then in effect).  
     (g)     Liens in existence on the date hereof listed on Schedule 9.03.  
     (h)     Liens on fixed or capital assets acquired, constructed or improved
by any Credit Party; provided that (i) such Liens secure Debt permitted by
Section 9.02(j) hereof, (ii) such Liens and the Debt secured thereby are
incurred prior to or within 180 days after such acquisition, construction or
improvement, (iii) the Debt secured thereby does not exceed 100% of the cost of
acquiring, constructing or improving such fixed or capital assets, (iv) such
Liens shall not apply to any other property or assets of any Credit Party, and
(v) the Debt secured by such Liens, together with the obligations and
extensions, renewals and replacements of such obligations described in clause
(f) above, shall at no time exceed in the aggregate the greater of (x)
C$10,000,000 and (y) 5% of the Borrowing Base then in effect.  
     (i)     Liens arising pursuant to Section 9.343 of the Texas Uniform
Commercial Code or other similar statutory provisions of other states or
provinces with respect to production purchased from others.  
     (j)     Liens on real property and improvements thereon (other than on Oil
and Gas Properties).  
     (k)     Liens relating to any cash or treasury securities used as credit
support for any Swap Agreement in an aggregate amount not to exceed the
difference of (i) C$7,500,000 minus (ii) the aggregate amount of LC Exposure
under all Letters of Credit used as credit support for any Credit Party’s
obligations under any Swap Agreement.  
     (l)     Liens not otherwise included in this Section 9.03 so long as the
sum of (i) the lesser of (A) the aggregate outstanding principal amount of the
obligations of the Credit Parties secured thereby and (B) the aggregate fair
market value (determined as of the date such Lien is incurred) of the assets
subject thereto (as to the Credit Parties) plus (ii) the amount of cash that is
subject to Liens permitted by Section

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9.03(k) at such time plus (iii) the aggregate amount of LC Exposure under all
Letters of Credit used to post collateral or margin to secure any Credit Party’s
obligations under any Swap Agreement, does not exceed in the aggregate at any
one time the greater of (x) C$10,000,000 and (y) 6.25% of the Borrowing Base
then in effect.  
     Notwithstanding the foregoing, (i) no Liens may at any time attach to
(A) any Oil and Gas Properties of the Credit Parties of the types described in
clauses (a), (b), (c), (e) and (f) of the definition of Oil and Gas Properties
evaluated in the Reserve Report used in the most recent determination of the
Borrowing Base, or (B) any Equity Interests issued by the Borrower to QRI, New
Parent or to any other Person, or by any Restricted Subsidiary to any other
Credit Party other than, in the case of clause (A) or (B) above, Permitted
Liens, and (ii) in no event may any Liens on any Property of a Credit Party
secure any obligation of any Credit Party under any Swap Agreement other than
Liens created pursuant to the Security Instruments and Liens permitted under
Section 9.03(k).  For the avoidance of doubt, to the extent any Lien could be
attributable to more than one subsection of this Section 9.03, the Credit
Parties may categorize all or any portion of such Lien to any one or more
subsections of this Section 9.03 as it elects and unless as otherwise expressly
provided, in no event shall the same portion of any Lien be deemed to utilize or
be attributable to more than one subsection of this Section 9.03.  
     Section 9.04   Dividends and Distributions.  The Borrower will not, and
will not permit any of the other Credit Parties to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, return any capital
to its stockholders or make any distribution of its Property to its Equity
Interest holders, except:
     (a)     the Borrower and New Parent may declare and pay dividends with
respect to its Equity Interests payable solely in additional shares of its
Equity Interests or any other non-cash form (other than Disqualified Capital
Stock);
     (b)     the Borrower (but only from and after the New Parent Joinder) and
Restricted Subsidiaries may declare and pay unlimited dividends, fees and other
amounts ratably with respect to their Equity Interests and may distribute any
other Property to its direct or indirect Equity Interest holders that are Credit
Parties;
     (c)     the Borrower and New Parent may make Restricted Payments pursuant
to and in accordance with stock option plans, equity plans or other benefit or
compensation plans providing for payments on account of services provided by
current or former directors, officers, employees or consultants of the Credit
Parties or any of their Affiliates;
     (d)     to the extent not permitted by clauses (a) to (c) above, the
Borrower (prior to the New Parent Joinder), New Parent (from and after the New
Parent Joinder) may make (i) Restricted Payments up to an aggregate amount of
C$7,500,000 and (ii) additional Restricted Payments (not including Restricted
Payments made under the foregoing clause (i)) up to an aggregate amount equal to
(1) the greater of (x) C$10,000,000 and (y) 6.25% of the Borrowing Base then in
effect plus (2) an amount equal to fifty percent (50%) of the net proceeds
received by New Parent from the sale or issuance of Equity Interests of New
Parent (other than the Qualified IPO) if, in the case of Restricted Payments
made under this clause (ii), (A) no Default has occurred and is continuing at
the time such Restricted Payment is made or would result from the making of such
Restricted Payment, (B) the Borrower’s Minimum Liquidity after giving effect to
such Restricted Payment is not less than the greater of (x) 30% of the Borrowing
Base then in effect and (y) C$65,000,000, and (C) after giving effect to such
Restricted Payment, the Borrower is in pro forma compliance with Section 9.01;

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     (e)     any Credit Party may purchase or otherwise acquire Equity Interests
in any Subsidiary using additional shares of its Equity Interests;
     (f)     any Credit Party may dividend, distribute or transfer the Equity
Interests of an Unrestricted Subsidiary;
     (g)     the Borrower and New Parent may make its respective IPO Tax
Payments; and
     (h)     prior to the transfer by QRI to New Parent of 100% of the Equity
Interests of the Borrower, the Borrower may (i) declare and pay a dividend
payable solely in Equity Interests of the Borrower to QRI so as to increase the
stated capital of the Borrower to the fair market value of the Equity Interests
immediately prior to such dividend, and (ii) distribute to QRI any Debt
permitted by Section 9.02(t) as a return of capital in respect of the Equity
Interests of the Borrower then held by QRI.  
     For the avoidance of doubt, to the extent any Restricted Payment could be
attributable to more than one subsection of this Section 9.04, the Credit
Parties may categorize all or any portion of such Restricted Payment to any one
or more subsections of this Section 9.04 as it elects and unless as otherwise
expressly provided, in no event shall the same portion of any Restricted Payment
be deemed to utilize or be attributable to more than one subsection of this
Section 9.04.  
     Section 9.05   Repayment of Debt; Amendment of Indentures.  The Borrower
will not, and will not permit any other Credit Party to:
     (a)     call, make or offer to make any Redemption (whether in whole or in
part) of Permitted Intercompany Debt, or any optional or voluntary Redemption
(whether in whole or in part) of any Permitted Additional Debt, provided,
however, that the Credit Parties may (i) Redeem Permitted Additional Debt up to
an aggregate amount of C$7,500,000, (ii) Redeem additional Permitted Additional
Debt if, in the case of Redemptions made under this clause (ii), (A) no Default
has occurred and is continuing at the time such Redemption is made or would
result from the making of such Redemption, (B) the Borrower’s Minimum Liquidity
after giving effect to such Redemption is not less than the greater of (1) 30%
of the Borrowing Base then in effect and (2) C$65,000,000 and (C) after giving
effect to such Redemption, the Borrower is in pro forma compliance with
Section 9.01, and (iii) Redeem Permitted Additional Debt in connection with any
refinancing thereof permitted pursuant to Section 9.02(o); provided further that
the Borrower shall have the right to (x) prior to the conversion referred to in
clause (y) below, pay current interest on the Permitted Intercompany Debt at the
rate specified therein and (y) convert the Permitted Intercompany Debt into
Equity Interests of the Borrower at any time, which Equity Interests shall not
have any mandatory right or right at the option of the holder thereof to receive
cash dividends or other cash distributions.  
     (b)     amend, modify, waive or otherwise change, consent or agree to any
amendment, modification, waiver or other change to, any of the terms of the
Permitted Additional Debt if (i) the effect thereof would be to shorten its
maturity to be less than 91 days after the Maturity Date or average life or
increase the amount of any payment of principal thereof or increase the rate or
shorten any period for payment of interest thereon, (ii) such action requires
the payment of a consent fee that has not been approved by the Administrative
Agent (such approval not to be unreasonably withheld), or (iii) the effect
thereof would be to add any guarantor or surety, unless such guarantor or surety
also guarantees the Secured Indebtedness pursuant to the Guaranty Agreement and
each of the Borrower and such guarantor or surety otherwise complies with
Section 8.13(c); or

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     (c)     if the Borrower or any other Credit Party issues any Debt that is
subordinated in right of payment to the Secured Indebtedness, designate any
other Debt (other than the Secured Indebtedness, and any Permitted Additional
Debt) as “designated senior indebtedness” or “designated guarantor senior
indebtedness” or give any such other Debt any other similar designation for the
purposes of any instrument under which that subordinated Debt is issued.  
     Section 9.06   Investments, Loans and Advances.  The Borrower will not, and
will not permit any other Credit Party to, make or permit to remain outstanding
any Investments in or to any Person, except that the foregoing restriction shall
not apply to:
     (a)     Investments made prior to the Effective Date and reflected in the
Financial Statements or which are disclosed to the Lenders in Schedule 9.06.  
     (b)     Readily marketable direct obligations of the United States or
Canada or any agency thereof, or obligations guaranteed by the United States or
Canada or any agency thereof (or investments in mutual funds or similar funds
which invest solely in such obligations).  
     (c)     Investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state, province,
commonwealth or territory of the United States or Canada, or by any political
subdivision or taxing authority thereof, and rated at least “A” by S&P or “A” by
Moody’s.  
     (d)     Repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (b) above entered into
with a bank described in clause (e)     below.  
     (e)     Time deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender or any
other bank or trust company operating in the United States or Canada that has
capital, surplus and undivided profits aggregating at least C$100,000,000 (as of
the date of such bank or trust company’s most recent reports).  
     (f)     All Investments held in the form of cash or cash equivalents.  
     (g)     All Investments in Sweep Accounts.  
     (h)     Commercial paper of a Canadian or U.S.  issuer if at the time of
purchase such commercial paper is rated in one of the two highest ratings
categories of S&P or Moody’s.  
     (i)     Money market mutual or similar funds having assets in excess of
C$100,000,000, at least 95% of the assets of which are comprised of assets
specified in clauses (b), (e), (f), (g), and (h) above.  
     (j)     Investments (i) made by the Borrower or New Parent in or to any
other Credit Party, (ii) made by any Credit Party in or to the Borrower or any
other Credit Party, and (iii) made by any Credit Party in or to Unrestricted
Subsidiaries; provided that, with respect to any Investment described in clause
(iii), the aggregate amount at any one time of all such Investments (valued at
cost as of the date of such Investment) made after the Effective Date shall not
exceed the greater of (x) C$10,000,000 and (y) 5% of the Borrowing Base then in
effect; provided that a conversion or exchange of Debt of an Unrestricted
Subsidiary held by a Credit Party to or for equity of such Unrestricted
Subsidiary shall not be considered an incremental Investment for purposes of
this clause (j).  
     (k)     Extensions of customer or trade credit in the ordinary course of
business.  

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     (l)     Guarantee obligations permitted by Section 9.02.  
     (m)     All Investments constituting Debt permitted by Section 9.02.  
     (n)     All Investments arising from transactions by any Credit Party in
the ordinary course of business, including endorsements of negotiable
instruments, earnest money deposits and deposits to secure obligations that do
not constitute Debt or obligations under Swap Agreements, debt obligations and
other Investments received by any Credit Party in connection with the bankruptcy
or reorganization of customers and in settlement of delinquent obligations of,
and other disputes with, customers.  
     (o)     Any Investments by any Credit Party in any Persons including,
without limitation, Unrestricted Subsidiaries; provided that, the aggregate
amount of all such Investments made pursuant to this clause (o) outstanding at
any one time shall not exceed in the aggregate (measured on a cost basis) the
greater of (x) C$15,000,000 and (y) 7% of the Borrowing Base then in effect.  
     (p)     All Investments by any Credit Party in Persons in which such Credit
Party owns an Equity Interest (i) that own, lease, hold and/or are party to
(A) any Oil and Gas Properties, (B) any processing, gathering or treating
systems, (C) any farm-out, farm-in, joint operating, joint venture or area of
mutual interest agreements, (D) any pipelines or other mid-stream activities, in
each case located within or related to the geographic boundaries of North
America and any other country or jurisdiction reasonably acceptable to the
Administrative Agent and/or (E) any facility or activity related to compressed
or liquefied natural gas or (ii) the purpose of which is to act as a direct or
indirect holding company for any Person that satisfies one or more provisions of
subclause (i) of this clause (p), provided, as to Investments made under this
clause (p) (measured on a cost basis), (x) the Credit Parties do not make in the
aggregate more than the greater of (1) C$10,000,000 and (2) 5% of the Borrowing
Base then in effect of any such Investments during any fiscal year and (y) the
total amount of any such Investments at any one time does not exceed in the
aggregate the greater of (x) C$25,000,000 and (y) 10% of the Borrowing Base then
in effect.  
     (q)     Entry into operating agreements, working interests, royalty
interests, mineral leases, processing, gathering and treating agreements,
farm-in and farm-out agreements, development agreements, contracts for the sale,
transportation or exchange of oil, natural gas or CO2, unitization agreements,
pooling arrangements, service contracts, area of mutual interest agreements,
production sharing agreements, pipeline agreements or other similar or customary
agreements, transactions, properties, interests or arrangements, and Investments
and expenditures in connection therewith or pursuant thereto, in each case made
in the ordinary course of any businesses permitted under this Agreement.  
     (r)     Loans and advances to directors, officers and employees in the
ordinary course of business consistent with prior practice, not to exceed an
aggregate amount of C$2,000,000 at any one time outstanding.  
     (s)     Indemnities permitted under this Agreement.  
     (t)     Investments consisting of Swap Agreements entered into for
non-speculative purposes, subject to compliance with Section 9.03 and
Section 9.13.  
     (u)     So long as no Default exists or results therefrom, loans to the
Section 1031 Counterparty participating in a Section 1031 Exchange provided that
(i) the amount of any such loan does not exceed the sum of (A) purchase price to
be paid by the recipient of such loan for the purchase price of the assets

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subject to the related Section 1031 Exchange, and (B) estimated capital
expenditures and operating expenses to be incurred with respect to such assets
during the 180 day period during which such Section 1031 Exchange is to be
completed, (ii) such loan is secured by a first priority security interest in
the assets to be acquired by such recipient pursuant to the Section 1031
Exchange, (iii) the Administrative Agent has a perfected first priority security
interest in such loan and any note or other document evidencing or securing such
loan, (iv) the documentation relating to such Section 1031 Exchange and the
related Section 1031 Counterparty are satisfactory to the Administrative Agent
in its reasonable discretion and (v) the Administrative Agent shall have
received an opinion from Borrower’s counsel in form and substance satisfactory
to the Administrative Agent.  
     (v)     Guarantees by any Credit Party of operating leases or of other
obligations that do not constitute Debt, in each case entered into by any Credit
Party in the ordinary course of business.  
     (w)     Investments of any Person that becomes a Restricted Subsidiary
after the Effective Date to the extent that such Investments were not made in
contemplation of or in connection with such acquisition, merger, consolidation
or amalgamation and were in existence on the date of such acquisition, merger or
consolidation.  
     (x)     Any Investment by the Borrower, New Parent or one or more of their
respective Restricted Subsidiaries in a Person, if as a result of such
Investment such Person becomes a Restricted Subsidiary or such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, a Credit Party.  
     (y)     Any Investment constituting non-cash consideration received in any
asset sale permitted by Section 9.10.  
     (z)     Investments in Unrestricted Subsidiaries in the form of Equity
Interests issued by such Unrestricted Subsidiaries as consideration for the
contribution, assignment or transfer of up to $50,000 and the Existing Midstream
Assets to such Unrestricted Subsidiaries in connection with the consummation of
the Midstream Joint Venture; provided that the consideration received directly
or indirectly by the Borrower is fair from a financial point of view.  
     (aa)     Investments in any aboriginal or other tribe in any territory or
province of Canada in an amount not to exceed $5,000,000 in the aggregate at any
one time outstanding.  
     (bb)     Investments resulting from the delivery of credit support provided
by, or on behalf of, the Borrower or any Credit Party to counterparties pursuant
to any Swap Agreement, in each case to the extent permitted by Section 8.17 and
Section 9.03.  
     For the avoidance of doubt, to the extent any Investment could be
attributable to more than one subsection of this Section 9.06, the Credit
Parties may categorize all or any portion of such Investment to any one or more
subsections of this Section 9.06 as it elects and unless as otherwise expressly
provided, in no event shall the same portion of any Investment be deemed to
utilize or be attributable to more than one subsection of this
Section 9.06.  For purposes of Section 9.06(j), (o) and (p), the aggregate
Investments thereunder shall be determined net of the cost of any such
Investment (x) that is subsequently sold, redeemed or repaid or (y) in an
Unrestricted Subsidiary that is subsequently designated as a Restricted
Subsidiary.  
     Section 9.07   Designation and Conversion of Restricted and Unrestricted
Subsidiaries.  (a) Unless designated as an Unrestricted Subsidiary on
Schedule 7.10 as of the Effective Date or thereafter,

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assuming compliance with Section 9.07(b), any Person that becomes a Domestic
Subsidiary shall be classified as a Restricted Subsidiary.  
     (b)     The Borrower (or, from and after the New Parent Joinder, New
Parent) may designate by written notification thereof to the Administrative
Agent, any Restricted Subsidiary, including a newly formed or newly acquired
Subsidiary, as an Unrestricted Subsidiary if (i) prior, and after giving effect,
to such designation, neither a Default nor a Borrowing Base Deficiency would
exist and (ii) such designation is deemed to be an Investment in an Unrestricted
Subsidiary in an amount equal to the fair market value as of the date of such
designation of the Borrower’s (or, from and after the New Parent Joinder, New
Parent’s) direct and indirect ownership interest in such Subsidiary and such
Investment would be permitted to be made at the time of such designation under
Section 9.06(j), (p) or (q).  
     (c)     The Borrower (or, from and after the New Parent Joinder, New
Parent) may designate any Unrestricted Subsidiary to be a Restricted Subsidiary
if after giving effect to such designation, (i) the representations and
warranties of the Credit Parties contained in each of the Loan Documents are
true and correct on and as of such date as if made on and as of the date of such
redesignation (or, if stated to have been made expressly as of an earlier date,
were true and correct as of such date), (ii) no Default would exist and
(iii) the Borrower (or, from and after the New Parent Joinder, New Parent)
complies with the requirements of Section 8.13 and Section 8.15.  
     Section 9.08   Nature of Business; International Operations.  The Borrower
will not, and will not permit any other Credit Party to, engage in any business
or activity other than businesses or activities typical of an integrated energy
company or businesses or activities reasonably related thereto.  Notwithstanding
the foregoing, this Section 9.08 shall not prohibit the Credit Parties from
holding and developing the Properties or engaging in any business or activity
described on Schedule 9.08.  From and after the date hereof, the Credit Parties
will not acquire or make any other expenditure (whether such expenditure is
capital, operating or otherwise) in or related to, any Oil and Gas Properties
not located in North America or in another country or jurisdiction reasonably
acceptable to the Administrative Agent.  
     Section 9.09   Mergers, Etc.  The Borrower will not, and will not permit
any other Credit Party to, merge into or with or consolidate with any other
Person, or sell, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its Property to any other
Person (whether now owned or hereafter acquired) any such transaction, a
“consolidation”), or liquidate or dissolve; provided that
     (a)     any Restricted Subsidiary may (i) participate in a consolidation
with (A) the Borrower (provided that the Borrower shall be the continuing or
surviving corporation), (B) any other Restricted Subsidiary (provided that if a
Guarantor is a party to such transaction, the survivor is a Guarantor or becomes
a party to the Guaranty Agreement as a Guarantor) or (C) any other Subsidiary
(provided that either (x) a Restricted Subsidiary shall be the continuing or
surviving Person or (y) if an Unrestricted Subsidiary is the continuing or
surviving Person, (1) the representations and warranties of the Credit Parties
contained in each of the Loan Documents are true and correct on and as of such
date as if made on and as of the date of such consolidation (or, if stated to
have been made expressly as of an earlier date, were true and correct as of such
date), (2) no Default or Borrowing Base Deficiency would exist and (3) the
Borrower is in compliance with the requirements of Section 8.13 and
Section 8.15) or (ii) transfer all or substantially all of its assets to a
Guarantor or a Person that becomes a party to the Guaranty Agreement as a
Guarantor;
     (b)     Any Credit Party may participate in a consolidation (other than as
described in clause (a) above) if, at the time thereof and immediately after
giving effect thereto, no Default shall occur and be

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continuing and no Borrowing Base Deficiency would result therefrom and, such
Credit Party is the surviving entity or the recipient of any such sale, lease or
other disposition of Property, provided that no such consolidation shall have
the effect of releasing the Borrower or any Guarantor from any of its
obligations under this Agreement or any other Loan Document;
     (c)     any sale of all or substantially all of the assets of any
Restricted Subsidiary provided that such sale is permitted by Section 9.10; and
     (d)     any Restricted Subsidiary may liquidate or dissolve if (i) the
continued existence and operation of such Restricted Subsidiary is no longer in
the best interests of the Credit Parties taken as a whole (as reasonably
determined by a Responsible Officer of the Borrower), (ii) such liquidation and
dissolution is not disadvantageous in any material respect to the Lenders, and
(iii) at the time thereof and immediately after giving effect thereto, no
Default shall occur and be continuing and no Borrowing Base Deficiency would
result therefrom.  
     Section 9.10   Sale of Properties and Termination of Oil and Gas Swap
Agreements.  The Borrower will not, and will not permit any other Credit Party
to, sell, assign, farm-out, convey or otherwise transfer (including by way of a
Reclassification) any Oil and Gas Property evaluated in the Reserve Report used
in the most recent determination of the Borrowing Base or any interest therein
or any Restricted Subsidiary owning any such Oil and Gas Property or terminate,
unwind, cancel or otherwise dispose of any Oil and Gas Swap Agreement except
for:
     (a)     the sale of Hydrocarbons in the ordinary course of business;
     (b)     farmouts of undeveloped acreage and assignments in connection with
such farmouts or the abandonment, farm-out, exchange, lease, sublease or other
disposition of Oil and Gas Properties not containing Proved Hydrocarbon
Interests which were not evaluated in the Reserve Report used in the most recent
determination of the Borrowing Base in the ordinary cause of business;
     (c)     the sale or transfer of equipment or other assets that are no
longer necessary or useful or are obsolete for the business of the Credit
Parties or are replaced by equipment or other assets usable in the ordinary
course of business, of at least comparable value;
     (d)     the sale or other disposition (including Casualty Events and
Reclassifications) of such Oil and Gas Property or any interest therein or any
Restricted Subsidiary owning such Oil and Gas Property or the termination,
unwinding, cancelation or other disposition of Oil and Gas Swap Agreements;
provided that:
     (i)     except in the case of a Reclassification, the consideration
received in respect of such sale or other disposition shall be equal to or
greater than the fair market value of the Oil and Gas Property (other than in
the case of a Casualty Event), interest therein or Restricted Subsidiary subject
of such sale or other disposition (as reasonably determined by any Responsible
Officer of the Borrower);
     (ii)     no Event of Default or Borrowing Base Deficiency exists or results
from such termination, unwind, cancellation, sale or disposition (including any
Casualty Event or Reclassification);
     (iii)     if during any period between two successive Redetermination Dates
the aggregate amount of (A) the net cash proceeds received by the Borrower from
the termination,

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unwind, cancelation or other disposition of such Oil and Gas Swap Agreements
plus (B) the Recognized Value of such Oil and Gas Properties sold or disposed of
(including by way of Casualty Events and Reclassifications) exceeds five percent
(5%) of the Borrowing Base in effect during such period, then the Borrowing Base
shall be automatically reduced, effective immediately upon such termination,
unwind, cancellation, sale or disposition (including any Casualty Event or
Reclassification) by the amount that (x) aggregate value that the Administrative
Agent attributed to such Oil and Gas Swap Agreements and Oil and Gas Properties
in connection with the most recent determination of the Borrowing Base exceeds
(y) five percent (5%) of the Borrowing Base in effect immediately prior to such
redetermination, and the Borrowing Base as so reduced shall become the new
Borrowing Base immediately upon the date of such termination, unwind,
cancellation, sale or disposition (including Casualty Events and
Reclassifications), effective and applicable to the Borrower, the Agents, each
Issuing Bank and the Lenders on such date until the next redetermination or
modification thereof hereunder;
     (iv)     if such termination, unwind, cancellation, sale or disposition
(including Reclassifications, but excluding Casualty Events) would result in an
automatic redetermination of the Borrowing Base pursuant to this Section 9.10,
the Borrower shall have delivered reasonable prior written notice thereof to the
Administrative Agent;
     (v)     if a Borrowing Base Deficiency would result from such termination,
unwind, cancellation, sale or disposition (including Reclassifications but
excluding Casualty Events) as a result of an automatic redetermination of the
Borrowing Base pursuant to this Section 9.10, the Borrower prepays Borrowings,
prior to or contemporaneously with the consummation of such termination, unwind,
cancellation, sale or disposition (including Reclassifications but excluding
Casualty Events), to the extent that such prepayment would have been required
under Section 3.04(c)(iii) (without giving effect to any 30-day period for
payment contained therein) after giving effect to such automatic redetermination
of the Borrowing Base; and
     (vi)     if a Borrowing Base Deficiency would directly result from a
Casualty Event as a result of an automatic redetermination of the Borrowing Base
pursuant to this Section 9.10, Section 3.04(c)(ii) shall apply.  
For purposes of this clause (d), such five percent (5%) shall be determined
without giving effect to any asset swaps of Oil and Gas Properties evaluated in
the Reserve Report used in the most recent determination of the Borrowing Base
for other Oil and Gas Properties of equal or greater Recognized Value;
     (e)     the sale of Oil and Gas Properties in connection with tax credit
transactions complying with §29 of the Code or any other analogous provision of
the Code or of Canadian tax law whether now existing or hereafter enacted, which
sale does not result in a reduction in the right of any Credit Party to receive
the cash flow from such Oil and Gas Properties and which sale is on terms
reasonably acceptable to the Administrative Agent;
     (f)     transfers and other dispositions among the Borrower and the other
Credit Parties subject to compliance with Section 8.13;
     (g)     transfers permitted by Section 9.09; and
     (h)     transfer or assignment of the Existing Midstream Assets by the
Borrower to an Unrestricted Subsidiary in connection with the consummation of
the Midstream Joint Venture.  

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     Section 9.11   Transactions with Affiliates.  The Borrower will not, and
will not permit any other Credit Party to, enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any service, with any Affiliate (other than the Guarantors),
unless such transactions are not otherwise prohibited under this Agreement and
are upon fair and reasonable terms no less favorable to it than it would obtain
in a comparable arm’s length transaction with a Person not an Affiliate and
provided that the Midstream Joint Venture (including the ongoing transactions
contemplated thereunder) and the IPO Tax Payments shall be permitted.  
     Section 9.12   Negative Pledge Agreements; Dividend Restrictions.  The
Borrower will not, and will not permit any other Credit Party to, create, incur,
assume or suffer to exist any contract, agreement or understanding which in any
way prohibits or restricts the granting, conveying, creation or imposition of
any Lien on any of its Oil and Gas Property or its Equity Interests in
Restricted Subsidiaries in favor of the Administrative Agent and the Secured
Parties or restricts any Restricted Subsidiary from paying dividends or making
distributions to the Borrower or any Guarantor, or which requires the consent of
or notice to other Persons in connection therewith; provided, however, that the
preceding restrictions will not apply to encumbrances or restrictions arising
under or by reason of (a) this Agreement or the Security Instruments, (b) Debt
permitted by Section 9.02 secured by Liens permitted by Section 9.03 (subject to
the penultimate sentence thereof and only to the extent related to the Property
on which such Liens were created), or any contract, agreement or understanding
creating Liens permitted by Section 9.03 (subject to the penultimate sentence
thereof and only to the extent related to the Property on which such Liens were
created), (c) any leases or licenses or similar contracts as they affect any Oil
and Gas Property or Lien subject to a lease or license, (d) any restriction with
respect to a Restricted Subsidiary imposed pursuant to an agreement entered into
for the direct or indirect sale or disposition of all or substantially all the
equity or Oil and Gas Property of such Restricted Subsidiary (or the Oil and Gas
Property that is subject to such restriction) pending the closing of such sale
or disposition, or (e) customary provisions with respect to the distribution of
Oil and Gas Property in joint venture agreements.  
     Section 9.13   Swap Agreements.  The Borrower will not, nor will the
Borrower permit any other Credit Party to, enter into any new Oil and Gas Swap
Agreements which would cause the volume of Hydrocarbons with respect to which a
settlement payment is calculated under all Oil and Gas Swap Agreements
(including such new transactions) to which the Borrower and/or any other Credit
Party is a party as of the date such Oil and Gas Swap Agreements are entered
into to exceed (a) (i) for the calendar year in which such new Oil and Gas Swap
Agreements are entered into (the “Initial Measurement Period”), eighty-five
percent (85%) of the aggregate of the Credit Parties’ anticipated production
from Proved Hydrocarbon Interests for each of oil and gas (including natural gas
liquids), calculated separately, (ii) for the calendar year immediately
following the end of the Initial Measurement Period (the “Second Measurement
Period”), eighty percent (80%) of the aggregate of the Credit Parties’
anticipated production from Proved Hydrocarbon Interests for each of oil and gas
(including natural gas liquids), calculated separately, (iii) for the calendar
year immediately following the end of the Second Measurement Period (the “Third
Measurement Period”), seventy-five percent (75%) of the aggregate of the Credit
Parties’ anticipated production from Proved Hydrocarbon Interests for each of
oil and gas (including natural gas liquids), calculated separately and (iv) for
the calendar year immediately following the end of the Third Measurement Period
and for each calendar year thereafter, one hundred percent (100%) of the
aggregate of the Credit Parties’ anticipated production from Proved Producing
Hydrocarbon Interests for each of oil and gas (including natural gas liquids),
calculated separately, plus, in each case, (b) an amount not to exceed one
hundred percent (100%) of associated royalty owners’ oil, gas and/or natural gas
liquids produced from the same wells, and which oil, gas and/or natural gas
liquids the Borrower has the authority to market and sell, during the applicable
measurement period; provided that the Borrower will not, nor will the Borrower
permit any other Credit Party to, permit its production from Proved Producing
Hydrocarbon Interests (whether or not included or reflected in the most recent
Reserve Report delivered

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to the Administrative Agent and the Lenders pursuant to Section 8.11) during the
then current month to be less than the aggregate amount of production from
Proved Producing Hydrocarbon Interests which are subject to Oil and Gas Swap
Agreements during such month; provided further that the Borrower will not, nor
will the Borrower permit any other Credit Party to, (x) enter into any Oil and
Gas Swap Agreements except in the ordinary course of business (and not for
speculative purposes), (y) enter into any Swap Agreement for speculative
purposes or with a counterparty that is not an Approved Counterparty or
(z) terminate, unwind, cancel or otherwise dispose of any Oil and Gas Swap
Agreement except to the extent permitted by Section 9.10.  For purposes of this
Section 9.13, no basis swap agreement, put option, or options to purchase put
options shall constitute a Swap Agreement.  
     Section 9.14   Ownership of the Borrower and Restricted
Subsidiaries.  Except as otherwise permitted hereunder, (a) the Borrower shall
not own, directly or indirectly, less than 100% of the issued and outstanding
Equity Interests of each Restricted Subsidiary and (b) no Unrestricted
Subsidiary shall at any time own any direct or indirect Equity Interests in the
Borrower.  
     Section 9.15   Amendments to Organizational Documents.  The Borrower shall
not, and shall not permit any other Credit Party to, amend, supplement or
otherwise modify (or permit to be amended, supplemented or modified) its
Organization Documents in any manner that would be reasonably expected to result
in a Material Adverse Effect.  
ARTICLE 10
Events of Default; Remedies
     Section 10.01   Events of Default.  One or more of the following events
shall constitute an “Event of Default”:
     (a)     the Borrower shall fail to pay any principal of any Loan, or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof, by acceleration or otherwise.  
     (b)     the Borrower shall fail to pay any interest on any Loan, or any fee
or any other amount (other than an amount referred to in Section 10.01(a))
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of five days.  
     (c)     any representation or warranty made or deemed made by or on behalf
of QRI (solely with respect to the QRI Pledge Agreement and solely prior to the
New Parent Joinder) or any Credit Party in or in connection with any Loan
Document or any amendment or modification of any Loan Document or waiver under
such Loan Document, or in any report, certificate, financial statement or other
document furnished pursuant to the provisions hereof or any Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made (or, to the extent
that any such representation and warranty is qualified by materiality, any such
representation and warranty (as so qualified) shall proved to have been
incorrect in any respect when made or deemed made).  
     (d)     any Credit Party shall fail to observe or perform any covenant,
condition or agreement contained in Section 8.01(g), Section 8.02, Section 8.03
(as to the existence of such Credit Party only), Section 8.13, Section 8.19, or
Article 9.  

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     (e)     QRI (solely with respect to the QRI Pledge Agreement and solely
prior to the New Parent Joinder), the Borrower, or any other Credit Party shall
fail to observe or perform any covenant, condition or agreement contained in
this Agreement (other than those specified in Section 10.01(a), Section 10.01(b)
or Section 10.01(d)) or any other Loan Document, and such failure shall continue
unremedied for a period of 30 days after the earlier to occur of (i) notice
thereof from the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender) and (ii) a Responsible Officer of QRI
(solely with respect to the QRI Pledge Agreement and solely prior to the New
Parent Joinder), the Borrower, or such other Credit Party otherwise becoming
aware of such failure; provided that, for the avoidance of doubt, if the
Borrower fails to deliver any financial statements, certificates or other
information within the time period required by Sections 8.01, 8.02, 8.11 or 8.13
and subsequently delivers such financial statements, certificates or other
information as required by such Sections prior to acceleration or the exercise
of any remedy by the Lenders, then such Event of Default shall be deemed to have
been cured and/or waived without any further action by the Administrative Agent
or Lenders.  
     (f)     the Borrower or any other Credit Party shall fail to make any
payment of principal in respect of any Material Debt, when and as the same shall
become due and payable, beyond any applicable grace period provided with respect
thereto and which failure shall continue uncured or unremedied.  
     (g)     any event or condition occurs that results in any Material Debt
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, but after the expiration of any applicable grace
period provided with respect thereto) the holder or holders of any Material Debt
or any trustee or agent on its or their behalf to cause any Material Debt to
become due, or to require the Redemption thereof, prior to its scheduled
maturity or require any Credit Party to make an offer in respect thereof;
provided that this clause (g) shall not apply to secured Debt that becomes due
as a result of the voluntary sale or transfer of the property or assets securing
such Debt or to the obligations of the Borrower, any Credit Party or any
Guarantor in respect of any Swap Agreement unless such Person is the defaulting
party under such Swap Agreement and as a result thereof such Swap Agreement has
been terminated.  
     (h)     an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of any Credit Party or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, including, without limitation, under
the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement
Act (Canada) or the Winding-up and Restructuring Act (Canada), or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Credit Party or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue undismissed
for 60 consecutive days or an order or decree approving or ordering any of the
foregoing shall be entered.  
     (i)     any Credit Party shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, including, without limitation, under the Bankruptcy
and Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada) or
the Winding-up and Restructuring Act (Canada), (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any proceeding or
petition described in Section 10.01(h), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Credit Party or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the benefit
of creditors or (vi) take any action for the purpose of effecting any of the
foregoing.  

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     (j)     any Credit Party shall admit in writing its inability or fail
generally to pay its debts as they become due.  
     (k)     one or more final, non-appealable judgments for the payment of
money in an aggregate amount in excess of C$25,000,000 shall be rendered against
any Credit Party or any combination thereof and the same shall remain
undischarged for a period of 60 consecutive days during which execution shall
not be effectively stayed, bonded or satisfied.  
     (l)     any of the Loan Documents after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in full
force and effect and valid, binding and enforceable in accordance with their
terms against the Borrower or a Guarantor party thereto or shall be repudiated
by any of them in writing, or any of the Security Instruments cease to create a
valid and perfected Lien of the priority required thereby on any of the
collateral purported to be covered thereby, except to the extent permitted by
the terms of this Agreement, or any Credit Party or any of their Affiliates
shall so state in writing.  
     (m)     an ERISA Event or Canadian Pension Plan Termination Event shall
have occurred that, in the opinion of the Majority Lenders, when taken together
with all other ERISA Events or Canadian Pension Plan Termination Events that
have occurred, would reasonably be expected to result in a Material Adverse
Effect.  
     (n)     a Change in Control shall occur.  
     Section 10.02   Remedies.  (a) In the case of an Event of Default other
than one described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), at
any time thereafter during the continuance of such Event of Default, the
Administrative Agent may, and at the request of the Majority Lenders, shall, by
notice to the Borrower, take either or both of the following actions, at the
same or different times: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Notes and the
Loans then outstanding to be due and payable in whole (or in part, in which case
any principal not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and all fees and
other obligations of the Borrower and the Guarantors accrued hereunder and under
the Notes and the other Loan Documents (including, without limitation, the
payment of cash collateral to secure the LC Exposure as provided in
Section 2.08(j)), shall become due and payable immediately, without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or other
notice of any kind, all of which are hereby waived by the Borrower and each
Guarantor; and in case of an Event of Default described in Section 10.01(h),
Section 10.01(i) or Section 10.01(j), the Commitments shall automatically
terminate and the Notes and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and the other obligations of
the Borrower and the Guarantors accrued hereunder and under the Notes and the
other Loan Documents (including, without limitation, the payment of cash
collateral to secure the LC Exposure as provided in Section 2.08(j)), shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower and
each Guarantor.  
     (b)     In the case of the occurrence of an Event of Default, the
Administrative Agent and the Lenders will have all other rights and remedies
available at law and equity.  
     (c)     All proceeds realized from the liquidation or other disposition of
collateral or otherwise received after maturity of the Notes, whether by
acceleration or otherwise, shall be applied:

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     (i)     first, pro rata to payment or reimbursement of that portion of the
Secured Indebtedness constituting fees, expenses and indemnities payable to the
Administrative Agent, Arrangers and other Agents, each in their capacity as
such;
     (ii)     second, pro rata to payment or reimbursement of that portion of
the Secured Indebtedness constituting fees, expenses and indemnities payable to
the Lender;
     (iii)     third, pro rata to payment of accrued interest on the Loans;
     (iv)     fourth, pro rata to payment of principal outstanding on the Loans
and Secured Indebtedness referred to in clause (b) of the definition of Secured
Indebtedness owing to a Secured Party;
     (v)     fifth, pro rata to any other Secured Indebtedness;
     (vi)     sixth, to serve as cash collateral to be held by the
Administrative Agent to secure the LC Exposure; and
     (vii)     seventh, any excess, after all of the Secured Indebtedness shall
have been indefeasibly paid in full in cash or cash collateralized, shall be
paid to the Borrower or as otherwise required by any Governmental Requirement.  
ARTICLE 11
The Agents
     Section 11.01   Appointment; Powers.  Each of the Lenders and each Issuing
Bank hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof and the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto.  
     Section 11.02   Duties and Obligations of Administrative Agent.  The
Administrative Agent 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 Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing (the use of the term “agent” herein and in the other Loan
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law; rather, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties), (b) the Administrative
Agent shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower, New Parent or any of their respective Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity.  The Administrative Agent shall be
deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by the Borrower or a Lender, and
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 this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or under any other Loan Document or
in connection herewith or therewith, (iii) the performance or observance of any
of the

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covenants, agreements or other terms or conditions set forth herein or in any
other Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, (v) the satisfaction of any condition set forth in
Article 6 or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent or those conditions
precedent expressly required to be to the Administrative Agent’s satisfaction,
(vi) the existence, value, perfection or priority of any collateral security or
the financial or other condition of the Borrower, New Parent and their
respective Subsidiaries or any other obligor or guarantor, or (vii) any failure
by the Borrower or any other Person (other than itself) to perform any of its
obligations hereunder or under any other Loan Document or the performance or
observance of any covenants, agreements or other terms or conditions set forth
herein or therein.  For purposes of determining compliance with the conditions
specified in Article 6, each Lender shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
written notice from such Lender prior to the proposed closing date specifying
its objection thereto.  
     Section 11.03   Action by Administrative Agent.  The Administrative Agent
shall have no duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise in writing as directed by the Majority Lenders, the
Required Lenders or the Lenders, as applicable (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 12.02) and in all cases the Administrative Agent shall be
fully justified in failing or refusing to act hereunder or under any other Loan
Documents unless it shall (a) receive written instructions from the Majority
Lenders, the Required Lenders or the Lenders, as applicable, (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02) specifying the action to be taken
and (b) be indemnified to its satisfaction by the Lenders against any and all
liability and expenses which may be incurred by it by reason of taking or
continuing to take any such action.  The instructions as aforesaid and any
action taken or failure to act pursuant thereto by the Administrative Agent
shall be binding on all of the Lenders.  If a Default has occurred and is
continuing, then the Administrative Agent shall take such action with respect to
such Default as shall be directed by the requisite Lenders in the written
instructions (with indemnities) described in this Section 11.03, provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders.  In no event, however,
shall the Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement, the Loan Documents or applicable law.  If a Default has occurred and
is continuing, neither the Syndication Agent nor the Co-Documentation Agents
shall have any obligation to perform any act in respect thereof.  The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Majority Lenders or the Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02), and otherwise the Administrative
Agent shall not be liable for any action taken or not taken by it in its
capacity as the Administrative Agent hereunder or under any other Loan Document
or under any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith INCLUDING ITS OWN ORDINARY
NEGLIGENCE, except for its own gross negligence or willful misconduct.  
     Section 11.04   Reliance by Administrative Agent.  The Administrative Agent
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

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sent by the proper Person.  The Administrative Agent 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 and each of
the Borrower, the Lenders and each Issuing Bank hereby waives the right to
dispute the Administrative Agent’s record of such statement, except in the case
of gross negligence or willful misconduct by the Administrative Agent.  The
Administrative Agent may consult with legal counsel (who may be counsel for the
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.  The Administrative Agent
may deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Administrative Agent.  
     Section 11.05   Subagents.  The Administrative 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 the Administrative Agent.  The Administrative 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 Sections of this Article 11 shall apply to any such
sub-agent and to the Related Parties of the Administrative 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 Administrative Agent.  
     Section 11.06   Resignation of Administrative Agent.  Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this Section 11.06, the Administrative Agent may resign at any time by notifying
the Lenders, each Issuing Bank and the Borrower.  Upon any such resignation, the
Majority Lenders shall have the right, in consultation with the Borrower, to
appoint a successor.  If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within thirty
(30) days after the retiring Agent gives notice of its resignation, then the
retiring Agent may, on behalf of the Lenders and each Issuing Bank, appoint a
successor Agent which shall be a bank with an office in Canada or the United
States, or an Affiliate of any such bank.  Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder.  The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor.  After the Agent’s resignation
hereunder, the provisions of this Article 11 and Section 12.03 shall continue in
effect for the benefit of such retiring 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 Agent.  
     Section 11.07   Agents as Lenders.  Each 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 the Borrower, New Parent or any Subsidiary or other
Affiliate thereof as if it were not an Agent hereunder.  
     Section 11.08   No Reliance.  Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other
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 each other Loan Document to which it is a party.  Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other 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

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this Agreement, any other Loan Document, any related agreement or any document
furnished hereunder or thereunder.  The Agents shall not be required to keep
themselves informed as to the performance or observance by the Borrower, New
Parent or any of their respective Subsidiaries of this Agreement, the Loan
Documents or any other document referred to or provided for herein or to inspect
the Properties or books of the Borrower, New Parent or their respective
Subsidiaries.  Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, no Agent or Arranger shall have any duty or responsibility to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower (or any of its Affiliates) which
may come into the possession of such Agent or any of its Affiliates.  In this
regard, each Lender acknowledges that Vinson & Elkins L.L.P.  and Blake, Cassels
& Graydon LLP are acting in this transaction as special counsel to the
Administrative Agent only, except to the extent otherwise expressly stated in
any legal opinion or any Loan Document.  Each other party hereto will consult
with its own legal counsel to the extent that it deems necessary in connection
with the Loan Documents and the matters contemplated therein.  
     Section 11.09   Administrative Agent May File Proofs of Claim.  In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Borrower, New Parent or any of their respective
Subsidiaries, the Administrative Agent (irrespective of whether the principal of
any Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made
any demand on the Borrower) shall be entitled and empowered, by intervention in
such proceeding or otherwise:
     (a)     to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Secured
Indebtedness that are owing and unpaid and to file such other documents as may
be necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent under Section 12.03) allowed in such judicial
proceeding; and
     (b)     to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.  
     Nothing contained herein shall be deemed to authorize the Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender any
plan of reorganization, arrangement, adjustment or composition affecting the
Secured Indebtedness or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.  
     Section 11.10   Authority Of Administrative Agent To Release Collateral And
Liens.  Each Lender and each Issuing Bank hereby authorizes the Administrative
Agent to release or subordinate any Oil and Gas Property (other than, in the
case of any such subordination, any Oil and Gas Property of the type described
in clauses (a), (b), (c), (e) and (f) of the definition thereof evaluated in the
Reserve Report

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used in the most recent determination of the Borrowing Base) or other collateral
that is permitted to be sold, Reclassified or released or be subject to a Lien
pursuant to the terms of the Loan Documents.  Each Lender and each Issuing Bank
hereby authorizes the Administrative Agent to execute and deliver to the
Borrower, at the Borrower’s sole cost and expense, any and all releases of
Liens, termination statements, assignments or other documents reasonably
requested by the Borrower in connection with any sale, Reclassification or other
disposition of Oil or Gas Property to the extent such sale, Reclassification or
other disposition is permitted by the terms of Section 9.10 or is otherwise
authorized by the terms of the Loan Documents.  
     Section 11.11   The Arrangers, Syndication Agent and Co-Documentation
Agents.  The Arrangers, the Syndication Agent and the Co-Documentation Agents
shall have no duties, responsibilities or liabilities under this Agreement and
the other Loan Documents other than their duties, responsibilities and
liabilities in their capacity as Lenders hereunder.  
ARTICLE 12
Miscellaneous
     Section 12.01   Notices.  (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
Section 12.01(b)), all notices and other communications provided for 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:
     (i)     if to the Borrower, to it at One Palliser Square, Suite 2000,
125-9th Avenue, SE, Calgary, Alberta T2G OP8, Canada, Attention of Vice
President — Finance (Telecopy No.  (403) 262-6115), with a copy to Quicksilver
Resources Inc., 801 Cherry St, Suite 3700, Unit 19, Fort Worth, Texas 76102,
Attention: Vice President — Treasurer (Telecopy No.  (817) 665-5016), with a
copy to General Counsel (Telecopy No.  (817) 668-5012);
     (ii)     if to the Administrative Agent or to JPMorgan as Issuing Bank, to
it at 10 South Dearborn, Chicago, Illinois 60603-2003, Attention of Kevin Berry
(Telecopy No.  (312) 385-7101), and for all other correspondence other than
borrowings, continuation, conversion and Letter of Credit requests 2200 Ross
Avenue, 3rd Floor, Mail Code TX1-2911, Dallas, Texas 75201, Attention: Kimberly
A.  Bourgeois (Telecopy No.  (214) 965-3280); and
     (iii)     if to any other Lender, in its capacity as such, or any other
Lender in its capacity as an Issuing Bank, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.  
     (b)     Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article 2, Article 3, Article 4 and Article 5
unless set forth herein or otherwise agreed by the Administrative Agent and the
applicable Lender.  The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications and any such approval of procedures in respect of electronic
communications by any Lender or the Administrative Agent may be revoked at any
time by any such Lender or by the Administrative Agent.  In connection with any
such revocation, if such Lender or the Administrative Agent elects not to
receive electronic communications (including those by electronic mail), then
such electronic communications (including

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electronic mail) shall not be a valid method of delivering notices hereunder to
such Person notwithstanding any provision hereof to the contrary.  
     (c)     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 if received by the recipient during its normal
business hours.  
     Section 12.02   Waivers; Amendments.  (a) No failure on the part of any
party hereto to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege, or any abandonment or
discontinuance of steps to enforce such right, power or privilege, under any of
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any of the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.  The rights and remedies of the Administrative
Agent, any other Agent, each Issuing Bank 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 this
Agreement or any other Loan Document or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
Section 12.02(b), 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 Administrative Agent, any other 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 provision hereof nor any Security
Instrument nor any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Majority Lenders or by the Borrower and the Administrative Agent with
the consent of the Majority Lenders; provided that no such agreement shall
     (i)     increase the Commitment or the Maximum Credit Amount of any Lender
without the written consent of such Lender;
     (ii)     increase the Borrowing Base without the written consent of all of
the Lenders, decrease or maintain the Borrowing Base without the consent of
Required Lenders or modify Section 2.07 or 2.09 without the written consent of
all of the Lenders (other than any Defaulting Lender); provided that a Scheduled
Redetermination may be postponed by the Required Lenders;
     (iii)     reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder, or
reduce any other Secured Indebtedness hereunder or under any other Loan
Document, without the written consent of each Lender affected thereby;
     (iv)     postpone the scheduled date of payment or prepayment of the
principal amount of any Loan or LC Disbursement (which, for the avoidance of
doubt, shall not include any mandatory prepayment pursuant to Section 3.04(c)),
or any interest thereon, or any fees payable hereunder, or any other Secured
Indebtedness hereunder or under any other Loan Document, or reduce the amount
of, waive or excuse any such payment, or postpone or extend the Termination Date
without the written consent of each Lender affected thereby;

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     (v)     change Section 4.01(b) or Section 4.01(c) in a manner that would
alter the pro rata sharing of payments required thereby, or change
Section 10.02(c), in each case, without the written consent of each Lender;
     (vi)     waive or amend Section 3.04(c), Section 6.01, or Section 12.14,
without the written consent of each Lender (other than any Defaulting Lender);
     (vii)     release any Guarantor (except as set forth in the Guaranty
Agreement, Section 8.13(d), Section 9.10(d) or Section 12.16) or release all or
substantially all of the collateral (other than as provided in Section 11.10),
without the written consent of each Lender (other than any Defaulting Lender);
     (viii)     change any of the provisions of this Section 12.02(b) or any
other provision hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or under any other Loan Documents
or make any determination or grant any consent hereunder or any other Loan
Documents, in each case to the extent that such provision specifies that all
Lenders (including Defaulting Lenders) must make any determination or grant any
consent hereunder or under any other Loan Documents, without the written consent
of each Lender; or
     (ix)     change the definitions of “Required Lenders” or “Majority Lenders”
or any other provisions hereof specifying the number or percentage of Lenders
required to waive, amend or modify any rights hereunder or under any other Loan
Documents or make any determination or grant any consent hereunder or any other
Loan Documents to the extent that such provision does not require the approval
or consent of a Defaulting Lender, in each case without the written consent of
each Lender (other than any Defaulting Lender);
     provided, further, that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, any other Agent, or any
Issuing Bank hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent, such other Agent, or such Issuing
Bank, as the case may be.  Notwithstanding the foregoing, any supplement to
Schedule 7.10 (Subsidiaries) shall be effective, after compliance with the
requirements of Section 12.17, simply by delivering to the Administrative Agent
a supplemental schedule clearly marked as such and, upon receipt, the
Administrative Agent will promptly deliver a copy thereof to the Lenders.  
     Section 12.03   Expenses, Indemnity; Damage Waiver.  (a) The Borrower shall
pay (i) all reasonable and substantiated out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including, without limitation, the
reasonable and substantiated fees, charges and disbursements of one (1) outside
U.S.  counsel, one (1) outside Canadian counsel (on a solicitor and his own
client full indemnity basis), applicable local counsel and other outside
consultants for the Administrative Agent, the reasonable travel, photocopy,
mailing, courier, telephone and other similar expenses, and the cost of
environmental audits and surveys and appraisals, in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the
execution hereof and including advice of counsel to the Administrative Agent as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable and substantiated
out-of-pocket costs, expenses, Taxes, assessments and other charges incurred by
any Agent or any Lender in connection with any filing, registration, recording
or perfection of any security interest contemplated by this Agreement or any
Security Instrument or any other document

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referred to therein, (iii) all reasonable and substantiated out-of-pocket
expenses incurred by each Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit issued by such Issuing
Bank or any demand for payment thereunder, (iv) all out-of-pocket expenses
incurred by any Agent, any Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for any Agent, any Issuing Bank or any
Lender (on a solicitor and his own client full indemnity basis), in connection
with the enforcement or protection of its rights in connection with this
Agreement or any other Loan Document, including its rights under this
Section 12.03, or in connection with the Loans made or Letters of Credit issued
hereunder, including, without limitation, all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.  
     (b)     THE BORROWER SHALL INDEMNIFY EACH AGENT, EACH ARRANGER, EACH
ISSUING BANK AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING
PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND DEFEND AND
HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
PENALTIES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND
DISBURSEMENTS OF ANY COUNSEL (ON A SOLICITOR AND HIS OWN CLIENT FULL INDEMNITY
BASIS) FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE EXECUTION OR
DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO
OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF ANY CREDIT PARTY TO
COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH
ANY GOVERNMENTAL REQUIREMENT, (iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY
BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN
ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS
DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE
OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (a) ANY REFUSAL BY ANY
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, OR (b) THE PAYMENT OF A DRAWING UNDER ANY
LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER
IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH,
(v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS
OF THE BORROWER, NEW PARENT AND THEIR RESPECTIVE SUBSIDIARIES, (vii) ANY
ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED
PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO
ANY CREDIT PARTY OR ANY OF THEIR PROPERTIES OR OPERATIONS, INCLUDING, THE
PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT,
DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF HAZARDOUS MATERIALS ON OR AT
ANY OF THEIR PROPERTIES, (ix) ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO
THE CREDIT PARTIES, OR (x) 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, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY

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KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE
ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES (X) 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, (Y) RELATE TO CLAIMS
BETWEEN OR AMONG ANY OF THE LENDERS, THE ADMINISTRATIVE AGENT, THE ARRANGERS OR
ANY OF THEIR AFFILIATES, SHAREHOLDERS, PARTNERS OR MEMBERS OR (Z) ARE IN RESPECT
OF ANY PROPERTY FOR ANY OCCURRENCE ARISING FROM THE ACTS OR OMISSIONS OF THE
ADMINISTRATIVE AGENT OR ANY LENDER DURING THE PERIOD AFTER WHICH SUCH PERSON,
ITS SUCCESSORS OR ASSIGNS HAVE OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY
FORECLOSURE OR DEED IN LIEU OF FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR
OTHERWISE).  
     (c)     To the extent that the Borrower fails to pay any amount required to
be paid by it to any Agent, any Arranger, or any Issuing Bank under
Section 12.03(a) or (b), each Lender severally agrees to pay to such Agent, such
Arranger, 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 such Agent,
such Arranger, or such Issuing Bank in its capacity as such.  
     (d)     To the extent permitted by applicable law, the 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, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.  
     (e)     All amounts due under this Section 12.03 shall be payable not later
than 30 days after written demand therefor.  
     Section 12.04   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 any Issuing Bank that issues any Letter of Credit), except that
(i) the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section 12.04.  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 any Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in Section 12.04(c))
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, each Issuing Bank, and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.  
     (b)     Subject to the conditions set forth in Section 12.04(b)(ii), 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

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portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:
     (A)     the Borrower, provided that no consent of the Borrower shall be
required if such assignment is to a Lender, an Affiliate of a Lender, an
Approved Fund or, if an Event of Default has occurred and is continuing, is to
any other assignee; and
     (B)     the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment to an assignee that is
a Lender, Affiliate of a Lender or an Approved Fund of a Lender immediately
prior to giving effect to such assignment.  
     (ii)     Assignments shall be subject to the following additional
conditions:
     (A)     except for an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans, (1) in the case of an assignment to a
Lender or an Affiliate of a Lender, the amount of the unused Commitment and
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 Administrative Agent) shall not be less than C$2,500,000 and
the amount of the Commitment or Loans of the assigning Lender after such
assignment shall not be less than C$2,500,000 unless each of the Borrower and
the Administrative Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default has occurred and is continuing
and (2) in the case of an assignment to an assignee other than a Lender or an
Affiliate of a Lender, 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
Administrative Agent) shall not be less than C$5,000,000 and the amount of the
unused Commitment and Loans of the assigning Lender after such assignment shall
not be less than C$5,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, provided that no such consent of the Borrower shall be
required if an Event of Default has occurred and is continuing;
     (B)     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;
     (C)     the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of C$3,500;
     (D)     the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire;
     (E)     in no event may any Lender assign all or a portion of its rights
and obligations under this Agreement to the Borrower or any Affiliate of the
Borrower or to any other Person that does not deal at arm’s length, within the
meaning of the Income Tax Act (Canada), with the Borrower; and
     (F)     the assignee must not be a Defaulting Lender.  

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     (iii)     Subject to Section 12.04(b)(iv) and the acceptance and recording
thereof, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto 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, 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 5.01,
Section 5.02, Section 5.03 and Section 12.03).  Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 12.04 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
Section 12.04(c).  
     (iv)     The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices 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 Maximum Credit Amount 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 absent manifest error, and the Borrower, the Administrative Agent,
each Issuing Bank 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, notwithstanding notice to the contrary.  The
Register shall be available for inspection by the Borrower, any Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.  In connection with any changes to the Register, if necessary, the
Administrative Agent will reflect the revisions on Annex I and forward a copy of
such revised Annex I to the Borrower, each Issuing Bank and each Lender.  
     (v)     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 Section 12.04(b)
and any written consent to such assignment required by Section 12.04(b), the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register.  No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this Section 12.04(b).  
     (c) (i)     Any Lender may, without the consent of the Borrower, the
Administrative Agent, or any Issuing Bank, sell participations to one or more
banks or other entities (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 (A) no such Participant
shall be a Person with whom the Borrower does not deal at arm’s length, within
the meaning of the Income Tax Act (Canada), (B) such Lender’s obligations under
this Agreement shall remain unchanged, (C) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (D) the Borrower, the Administrative Agent, each Issuing Bank 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 this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; 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 proviso to Section 12.02 that
affects such Participant.  In addition such agreement must provide that the
Participant be bound by the provisions of Section 12.03.  

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Subject to Section 12.04(c)(ii), the Borrower agrees that each Participant shall
be entitled to the benefits of Section 5.01, Section 5.02 and Section 5.03 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 12.04(b), provided that such Participant’s
entitlements shall be no greater than the entitlements of the Lender which sold
such participation.  To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 12.08 as though it were a Lender,
provided such Participant agrees to be subject to Section 4.01(c) as though it
were a Lender.  
     (ii)     A Participant shall not be entitled to receive any greater payment
under Section 5.01 or Section 5.03 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower’s prior written consent.  
     (iii)     Each Lender that sells a participation shall, acting solely for
this purpose as a non-fiduciary agent of the Borrower, maintain a register on
which it enters the name and address of each participant and the principal
amounts (and related interest amounts) of each participant’s interest in the
Loans or other obligations under this Agreement (the “Participant
Register”).  The entries in the Participant Register shall be conclusive, absent
manifest error, and such Lender shall treat each person whose name is recorded
in the Participant Register as the owner of such participation for all purposes
of this Agreement notwithstanding any notice to the contrary.  No Lender shall
have any obligation to disclose all or any portion of the Participant Register
to the Borrower or any other Person (including the identity of any participant
or any information relating to a participant’s interest in any obligations under
any Loan Document) except to the extent that such disclosure is necessary to
establish that such commitment, loan, letter of credit or other obligation is in
registered form under Section 5f.103-1(c) of the United States Treasury
Regulations (or the Canadian equivalent).  For the avoidance of doubt, the
Administrative Agent (in its capacity as Administrative Agent) shall have no
responsibility for maintaining a Participant Register.  
     (d)     Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including, without limitation, any pledge or assignment to secure
obligations to a Federal Reserve Bank (or the Canadian equivalent) or central
bank, and this Section 12.04(d) shall not apply to any such pledge or assignment
of a security interest; 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.  
     (e)     Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would require the Borrower and the Guarantors to file a registration
statement with the SEC (or the Canadian equivalent) or to qualify the Loans
under the “Blue Sky” laws of any state or province.  
     Section 12.05   Survival; Revival; Reinstatement.  (a) All covenants,
agreements, representations and warranties made by the Borrower herein 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 this Agreement 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 the Administrative Agent, any other
Agent, any Issuing Bank or any Lender may have had notice or knowledge of any
Default or any 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

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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 5.01, Section 5.02,
Section 5.03 and Section 12.03 and Article 11 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, any other
Loan Document or any provision hereof or thereof.  
     (b)     To the extent that any payments on the Secured Indebtedness or
proceeds of any collateral are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver or other Person under any bankruptcy law, common
law or equitable cause, then to such extent, the Secured Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Administrative Agent’s and the Lenders’ Liens, security
interests, rights, powers and remedies under this Agreement and each Loan
Document shall continue in full force and effect.  In such event, each Loan
Document shall be automatically reinstated and the Borrower shall take such
action as may be reasonably requested by the Administrative Agent and the
Lenders to effect such reinstatement.  
     Section 12.06   Counterparts; Integration; Effectiveness.  (a) 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.  
     (b)     This Agreement, the other Loan Documents and any separate letter
agreements with respect to fees payable to the Agents and other matters
constitute the entire contract among the parties relating to the subject matter
hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and
thereof.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.  
     (c)     Except as provided in Section 6.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the 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 or electronic mail
shall be effective as delivery of a manually executed counterpart of this
Agreement.  
     Section 12.07   Severability.  Any provision of this Agreement or any other
Loan Document 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 or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.  If it becomes illegal for any Lender to
hold or benefit from a Lien over real property pursuant to any law, such Lender
shall notify the Administrative Agent and disclaim any benefit of such security
interest to the extent of such illegality, but such illegality shall not
invalidate or render unenforceable such Lien for the benefit of each of the
other Lenders.  
     Section 12.08   Right of Setoff.  If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest

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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 (of whatsoever kind, including, without limitation, obligations
under Swap Agreements) at any time owing by such Lender or Affiliate to or for
the credit or the account of any Credit Party against any of and all the
obligations of any Credit Party owed to such Lender now or hereafter existing
under this Agreement or any other Loan Document, irrespective of whether or not
such Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations may be unmatured.  The rights of each
Lender under this Section 12.08 are in addition to other rights and remedies
(including other rights of setoff) which such Lender or its Affiliates may
have.  
     Section 12.09   GOVERNING LAW; JURISDICTION.  (a) THIS AGREEMENT, THE NOTES
AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT, TORT OR OTHERWISE) THAT
MAY BE BASED UPON, ARISE OUT OF OR RELATE IN ANY WAY TO THIS AGREEMENT OR THE
NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE PROVINCE OF ALBERTA AND OF THE FEDERAL LAWS OF CANADA APPLICABLE
THEREIN.  
     (b)     ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS
SHALL BE BROUGHT IN THE COURTS OF THE PROVINCE OF ALBERTA, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE
EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS.  THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER ANOTHER PARTY IN
ANY COURT OTHERWISE HAVING JURISDICTION.  
     (c)     EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED
PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO
BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.  
     (d)     EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL

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FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 12.09.  
     Section 12.10   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 12.11   Confidentiality.  Each of the Administrative Agent, each
Issuing Bank 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 or any other
Loan Document, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document 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 12.11, 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 (provided that such Person agrees in writing to
be bound by the provisions of this Section 12.11) or (ii) any actual or
prospective counterparty (or its advisors) to any securitization or Swap
Agreement relating to the Borrower and its obligations (provided that such
Person agrees in writing to be bound by the provisions of this Section 12.11),
(g) with the consent of the Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section 12.11 or (ii) becomes available to the Administrative Agent, any Issuing
Bank or any Lender on a nonconfidential basis from a source other than the
Borrower.  For the purposes of this Section 12.11, “Information” means all
information received from any Credit Party relating to any Credit Party and
their businesses, other than any such information that is available to the
Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by a Credit Party; provided that, in the case of information
received from any Credit Party after the date hereof, 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 12.11
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.  
     Section 12.12   Interest Rate Limitation.  It is the intention of the
parties hereto that each Lender shall conform strictly to usury laws applicable
to it.  Accordingly, if the transactions contemplated hereby would be usurious
as to any Lender under laws applicable to it (including the laws of Canada, the
United States of America and the State of Texas or any other jurisdiction whose
laws may be mandatorily applicable to such Lender notwithstanding the other
provisions of this Agreement), then, in that event, notwithstanding anything to
the contrary in any of the Loan Documents or any agreement entered into in
connection with or as security for the Notes, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under law applicable
to any Lender that is contracted for, taken, reserved, charged or received by
such Lender under any of the Loan Documents or agreements or otherwise in
connection with the Loans shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled automatically
and if theretofore paid shall be credited by

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such Lender on the principal amount of the Secured Indebtedness (or, to the
extent that the principal amount of the Secured Indebtedness shall have been or
would thereby be paid in full, refunded by such Lender to the Borrower); and
(ii) in the event that the maturity of the Loans is accelerated by reason of an
election of the holder thereof resulting from any Event of Default under this
Agreement or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest under law applicable to any
Lender may never include more than the maximum amount allowed by such applicable
law, and excess interest, if any, provided for in this Agreement or otherwise
shall be canceled automatically by such Lender as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by such
Lender on the principal amount of the Secured Indebtedness (or, to the extent
that the principal amount of the Secured Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower).  All sums
paid or agreed to be paid to any Lender for the use, forbearance or detention of
sums due hereunder shall, to the extent permitted by law applicable to such
Lender, be amortized, prorated, allocated and spread throughout the actual full
term of the Loans until payment in full so that the rate or amount of interest
on account of any Loans hereunder does not exceed the maximum amount allowed by
such applicable law.  If at any time and from time to time (A) the amount of
interest payable to any Lender on any date shall be computed at the Highest
Lawful Rate applicable to such Lender pursuant to this Section 12.12 and (B) in
respect of any subsequent interest computation period the amount of interest
otherwise payable to such Lender would be less than the amount of interest
payable to such Lender computed at the Highest Lawful Rate applicable to such
Lender, then the amount of interest payable to such Lender in respect of such
subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.12.  To the extent that Chapter 303 of
the Texas Finance Code is relevant for the purpose of determining the Highest
Lawful Rate applicable to a Lender, such Lender elects to determine the
applicable rate ceiling under such Chapter by the weekly ceiling from time to
time in effect.  Chapter 346 of the Texas Finance Code does not apply to the
Borrower’s obligations hereunder.  
     Notwithstanding any provision herein to the contrary, in no event will the
aggregate “interest” (as defined in section 347 of the Criminal Code (Canada))
payable under this Agreement exceed the maximum effective annual rate of
interest on the “credit advanced” (as defined in that section) permitted under
that section and, if any payment, collection or demand pursuant to this
Agreement in respect of “interest” (as defined in that section) is determined to
be contrary to the provisions of that section, such payment, collection or
demand will be deemed to have been made by mutual mistake of the Borrower, any
Guarantor, the Lenders, any Issuing Bank and any Agent, as the case may be, and
the amount of such excess payment or collection will be refunded to the Borrower
or such Guarantor, as the case may be.  For purposes of this Agreement, the
effective annual rate of interest will be determined in accordance with
generally accepted actuarial practices and principles over the term of the Loans
on the basis of annual compounding of the lawfully permitted rate of interest
and, in the event of dispute, a certificate of a Fellow of the Canadian
Institute of Actuaries appointed by the Administrative Agent will be prima facie
evidence, for the purposes of such determination.  
     Section 12.13   EXCULPATION PROVISIONS.  EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS

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AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT
IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY.  EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE
VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE
OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”
     Section 12.14   Collateral Matters; Swap Agreements.  The benefit of the
Security Instruments and of the provisions of this Agreement relating to any
collateral securing the Secured Indebtedness shall also extend to and be
available to the Secured Swap Providers (on a pro rata basis in respect of any
such obligations of any Credit Party to them) with respect to any Swap
Agreement, but excluding any additional transactions or confirmations entered
into (a) after such Secured Swap Provider ceases to be a Lender or an Affiliate
of a Lender or (b) after assignment by a Secured Swap Provider to a Person that
is not a Lender or an Affiliate of a Lender at the time of such assignment.  No
Lender or any Affiliate of a Lender shall have any voting rights under any Loan
Document as a result of the existence of obligations owed to it under any such
Swap Agreements.  
     Section 12.15   No Third Party Beneficiaries.  This Agreement, the other
Loan Documents, and the agreement of the Lenders to make Loans and the Issuing
Banks to issue, amend, renew or extend Letters of Credit hereunder are solely
for the benefit of the Borrower, and no other Person (including, without
limitation, any Subsidiary of the Borrower, any obligor, contractor,
subcontractor, supplier or materialsman) shall have any rights, claims, remedies
or privileges hereunder or under any other Loan Document against the
Administrative Agent, any other Agent, any Issuing Bank, or any Lender for any
reason whatsoever.  There are no third party beneficiaries.  
     Section 12.16   USA Patriot Act Notice.  Each Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of
Pub.  L.  107-56 (signed into law October 26, 2001)) (the “Act”), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the
Act.  
     Section 12.17   Anti-Money Laundering Legislation.  (a) The Borrower
acknowledges that, pursuant to the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act (Canada) and other applicable anti-money laundering,
anti-terrorist financing, government sanction and “know your client” Laws,
whether within Canada or elsewhere (collectively, including any guidelines or
orders thereunder, “AML Legislation”), the Lenders and the Administrative Agent
may be required to obtain, verify and record information regarding each Credit
Party, its directors, authorized signing officers, direct or indirect
shareholders or other Persons in control of the applicable Credit Party, and the
transactions contemplated hereby.  Borrower shall promptly provide all such
information, including supporting documentation and other evidence, as may be
reasonably requested by any Lender or the Administrative Agent, or any
prospective assign or participant of a Lender or the Administrative Agent, in
order to comply with any applicable AML Legislation, whether now or hereafter in
existence.  
(b)     If the Administrative Agent has ascertained the identity of any Credit
Party or any authorized signatories of the applicable Credit Party for the
purposes of applicable AML Legislation, then the Administrative Agent:

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     (i)     shall be deemed to have done so as an agent for each Lender, and
this Agreement shall constitute a “written agreement” in such regard between
each Lender and the Administrative Agent within the meaning of applicable AML
Legislation; and
     (ii)     shall provide to each Lender copies of all information obtained in
such regard without any representation or warranty as to its accuracy or
completeness.  
Notwithstanding the preceding sentence and except as may otherwise be agreed in
writing, each of the Lenders agrees that the Administrative Agent has no
obligation to ascertain the identity of any Credit Party or any authorized
signatories of the applicable Credit Party on behalf of any Lender, or to
confirm the completeness or accuracy of any information it obtains from the
applicable Credit Party or any such authorized signatory in doing so.  
     Section 12.18   No Fiduciary Duty.  Each Agent, Lender and their respective
Affiliates (collectively, solely for purposes of this paragraph, the “Banks”),
may have economic interests that conflict with those of the Borrower and the
other Credit Parties, their stockholders and/or their Affiliates (collectively,
solely for purposes of this paragraph, the “Obligors”).  The Borrower agrees
that nothing in the Agreement or the Loan Documents or otherwise will be deemed
to create an advisory, fiduciary or agency relationship or fiduciary or other
implied duty between any Bank, on the one hand, and any Obligor, on the
other.  The Borrower acknowledges and agrees that (a) the transactions
contemplated by the Loan Documents (including the exercise of rights and
remedies hereunder and thereunder) are arm’s-length commercial transactions
between the Banks, on the one hand, and the Obligors, on the other, and (ii) in
connection therewith and with the process leading thereto, (x) no Bank has
assumed an advisory or fiduciary responsibility in favor of any Obligor with
respect to the transactions contemplated hereby (or the exercise of rights or
remedies with respect thereto) or the process leading thereto (irrespective of
whether any Bank has advised, is currently advising or will advise any Obligor
on other matters) or any other obligation to any Obligor except the obligations
expressly set forth in the Loan Documents and (y) each Bank is acting solely as
principal and not as the agent or fiduciary of any Obligor, its management,
stockholders, creditors or any other Person.  The Borrower acknowledges and
agrees that it has consulted its own legal and financial advisors to the extent
it deemed appropriate and that it is responsible for making its own independent
judgment with respect to such transactions and the process leading thereto.  The
Borrower agrees that it will not claim that any Bank has rendered advisory
services of any nature or respect, or owes a fiduciary or similar duty to any
Obligor, in connection with such transaction or the process leading thereto.  
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     The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.  

            QUICKSILVER RESOURCES CANADA INC.,
an Alberta, Canada corporation       By:    /s/ Vanessa Gomez LaGatta        
Vanessa Gomez LaGatta,        Vice President - Treasurer     

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            THE BANK OF NOVA SCOTIA, as a
Lender and as Syndication Agent         By:   /s/ John Frazell         John
Frazell,        Director     

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            THE TORONTO-DOMINION BANK,
as a Lender and as Co-Documentation Agent       By:    /s/ Debbi L.  Brito      
  Debbi L.  Brito,        Authorized Signatory     

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            CANADIAN IMPERIAL BANK OF COMMERCE,
as a Lender and as Co-Documentation Agent       By:   /s/ Randy Geislinger      
  Randy Geislinger,        Executive Director   

              By:   /s/ Chris Perks         Chris Perks,        Managing
Director   

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            BANK OF AMERICA, N.A.  (by its Canada Branch),
as a Lender       By:   /s/ Clara McGibbon         Clara McGibbon,       
Assistant Vice President     

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            BRANCH BANKING & TRUST COMPANY, as a
Lender       By:   /s/ Ryan K.  Michael         Ryan K.  Michael,        Senior
Vice President     

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            BNP PARIBAS (CANADA), as a
Lender       By:   /s/ David Foltz         David Foltz,        Managing
Director   

              By:   /s/ Cory Wallin         Cory Wallin,        Director   

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            CITIBANK, N.A., CANADIAN BRANCH, as a
Lender       By:   /s/ Niyousha Zarinpour         Niyousha Zarinpour,       
Authorized Signatory     

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            COMERICA BANK, CANADA BRANCH, as a
Lender       By:   /s/ Omer Ahmed         Omer Ahmed,        Portfolio Manager 
   

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK, as a
Lender       By:   /s/ Tom Byargeon         Tom Byargeon,        Managing
Director   

              By:   /s/ Sharada Manne         Sharada Manne,        Director   

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            CREDIT SUISSE AG, TORONTO BRANCH, as a
Lender
      By:   /s/ Alain Daoust         Alain Daoust,        Director   

              By:   /s/ Jane Brean         Jane Brean,        Director   

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            DEUTSCHE BANK AG CANADA BRANCH, as a
Lender       By:   /s/ Rod O'Hara         Rod O'Hara        Director   

              By:   /s/ Marcellus Leung         Marcellus Leung,       
Assistant Vice President   

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            THE ROYAL BANK OF SCOTLAND N.V.,
(CANADA) BRANCH, as a Lender       By:   /a/ Brad Crilly         Brad Crilly,   
    Managing Director     

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            UBS AG, CANADA BRANCH, as a Lender       By:   /s/ Mary E.  Evans  
      Mary E.  Evans,        Associate Director   

              By:   /s/ Irja R.  Otsa         Irja R.  Otsa,        Associate
Director   

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]

 

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            WELLS FARGO FINANCIAL CORPORATION
CANADA, as a Lender       By:   /s/ Catherine Stacy         Catherine Stacy,   
    Vice President     

[Signature Page to Credit Agreement – Quicksilver Resources Canada Inc.]