Exhibit 10.2
 
 
 
 
AMENDED AND RESTATED CREDIT AGREEMENT
 
 
 
DATED AS OF DECEMBER 22, 2011
 
 
 
AMONG
 
 
 
QUICKSILVER RESOURCES INC.,
as PARENT,
 
QUICKSILVER RESOURCES CANADA INC.,
as BORROWER,
 
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH,
as ADMINISTRATIVE AGENT,
 
JPMORGAN CHASE BANK, N.A.,
as GLOBAL 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 I Definitions and Accounting Matters
1      
Section 1.01
Terms Defined Above
1
 
Section 1.02
Certain Defined Terms
2
 
Section 1.03
Types of Loans and Borrowings
41
 
Section 1.04
Terms Generally; Rules of Construction
41
 
Section 1.05
Accounting Terms and Determinations; GAAP
41
 
Section 1.06
Letter of Credit Amounts
42
 
Section 1.07
Dollar Denominated Baskets
42
   
ARTICLE II The Credits
42      
Section 2.01
Commitments
42
 
Section 2.02
Loans and Borrowings
42
 
Section 2.03
Requests for Borrowings
43
 
Section 2.04
Interest Elections
44
 
Section 2.05
Funding of Borrowings
46
 
Section 2.06
Termination and Reduction of Aggregate Maximum Credit Amounts
47
 
Section 2.07
Borrowing Base
47
 
Section 2.08
Letters of Credit
51
 
Section 2.09
Increase in the Maximum Credit Amounts
56
 
Section 2.10
Defaulting Lenders
58
 
Section 2.11
Currency Conversion and Currency Indemnity
60
   
ARTICLE III Payment of Principal and Interest; Prepayments; Fees
61      
Section 3.01
Repayment of Loans
61
 
Section 3.02
Interest.
61
 
Section 3.03
Alternate Rate of Interest
63
 
Section 3.04
Prepayments
63
 
Section 3.05
Fees
66
   
ARTICLE IV Payments; Pro Rata Treatment; Sharing of Set-Offs
67      
Section 4.01
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
67
 
Section 4.02
Presumption of Payment by the Borrower
68
 
Section 4.03
Certain Deductions by the Administrative Agent
68
 
Section 4.04
Disposition of Proceeds
68
   
ARTICLE V Increased Costs; Break Funding Payments; Payments; Taxes; Illegality
69    

 
 
 
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Section 5.01
Increased Costs
69
 
Section 5.02
Break Funding Payments
70
 
Section 5.03
Taxes
71
 
Section 5.04
Mitigation Obligations; Replacement of Lenders
72
 
Section 5.05
Illegality
73
   
ARTICLE VI Conditions Precedent
74      
Section 6.01
Effective Date
74
 
Section 6.02
Each Credit Event
76
   
ARTICLE VII Representations and Warranties
77      
Section 7.01
Organization; Powers
77
 
Section 7.02
Authority; Enforceability
77
 
Section 7.03
Approvals; No Conflicts
77
 
Section 7.04
Financial Condition; No Material Adverse Effect
78
 
Section 7.05
Litigation
78
 
Section 7.06
Environmental Matters
78
 
Section 7.07
Compliance with the Laws and Agreements
79
 
Section 7.08
Investment Company Act
79
 
Section 7.09
Taxes
79
 
Section 7.10
Disclosure; No Material Misstatements
79
 
Section 7.11
Subsidiaries
80
 
Section 7.12
Insurance
80
 
Section 7.13
Location of Business and Offices
80
 
Section 7.14
Properties; Title, Etc
80
 
Section 7.15
Federal Reserve Regulations
81
 
Section 7.16
Compliance with Benefit Plans; ERISA
82
 
Section 7.17
Status As Senior Indebtedness
83
 
Section 7.18
Solvency
83
 
Section 7.19
Priority; Security Matters
83
   
ARTICLE VIII Affirmative Covenants
84      
Section 8.01
Financial Statements; Other Information
84
 
Section 8.02
Notices of Material Events
86
 
Section 8.03
Existence; Conduct of Business
87
 
Section 8.04
Payment of Obligations
87
 
Section 8.05
Operation and Maintenance of Properties
87
 
Section 8.06
Insurance
88
 
Section 8.07
Books and Records; Inspection Rights
88
 
Section 8.08
Compliance with Laws
88
 
Section 8.09
Environmental Matters
88
 
Section 8.10
Further Assurances
89
 
Section 8.11
Reserve Reports
90
 
Section 8.12
Title Information
92

 
 
 
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Section 8.13
Additional Collateral; Additional Guarantors; Release of Certain
Guarantors/Collateral.
93
 
Section 8.14
ERISA and Benefit Plan Compliance
96
 
Section 8.15
Unrestricted Subsidiaries
97
 
Section 8.16
Section 1031 Exchange
97
 
Section 8.17
Use of Proceeds
98
 
Section 8.18
Fiscal Year
98
   
ARTICLE IX Negative Covenants
98      
Section 9.01
Financial Covenants
98
 
Section 9.02
Debt
98
 
Section 9.03
Liens
101
 
Section 9.04
Dividends and Distributions
103
 
Section 9.05
Repayment of Debt; Amendment of Indentures
104
 
Section 9.06
Investments, Loans and Advances
104
 
Section 9.07
Designation and Conversion of Restricted and Unrestricted Subsidiaries
108
 
Section 9.08
Nature of Business; International Operations
108
 
Section 9.09
Mergers, Etc
108
 
Section 9.10
Sale of Properties and Termination of Oil and Gas Swap Agreements
109
 
Section 9.11
Transactions with Affiliates
112
 
Section 9.12
Negative Pledge Agreements; Dividend Restrictions
112
 
Section 9.13
Swap Agreements
112
 
Section 9.14
Ownership of Restricted Subsidiaries
113
 
Section 9.15
Amendments to Organizational Documents
113
   
ARTICLE X Events of Default; Remedies
  113      
Section 10.01
Events of Default
113
 
Section 10.02
Remedies
116
   
ARTICLE XI The Agents
117      
Section 11.01
Appointment; Powers
117
 
Section 11.02
Duties and Obligations of Administrative Agent
117
 
Section 11.03
Action by Administrative Agents
118
 
Section 11.04
Reliance by Administrative Agents
119
 
Section 11.05
Subagents
119
 
Section 11.06
Resignation of Administrative Agents
119
 
Section 11.07
Agents as Lenders
120
 
Section 11.08
No Reliance
120
 
Section 11.09
Administrative Agent May File Proofs of Claim
120
 
Section 11.10
Authority Of Administrative Agent To Release Collateral And Liens
121
 
Section 11.11
The Arrangers, Syndication Agent and Co-Documentation Agents
121
   
ARTICLE XII Miscellaneous
122      
Section 12.01
Notices
122

 
 
 
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Section 12.02
Waivers; Amendments
123
 
Section 12.03
Expenses, Indemnity; Damage Waiver
124
 
Section 12.04
Successors and Assigns
127
 
Section 12.05
Survival; Revival; Reinstatement
130
 
Section 12.06
Counterparts; Integration; Effectiveness
131
 
Section 12.07
Severability
131
 
Section 12.08
Right of Setoff
132
 
Section 12.09
GOVERNING LAW; JURISDICTION
132
 
Section 12.10
Headings
133
 
Section 12.11
Confidentiality
133
 
Section 12.12
Interest Rate Limitation
134
 
Section 12.13
EXCULPATION PROVISIONS
135
 
Section 12.14
Collateral Matters; Swap Agreements
135
 
Section 12.15
No Third Party Beneficiaries
136
 
Section 12.16
USA Patriot Act Notice
136
 
Section 12.17
Anti-Money Laundering Legislation
136
 
Section 12.18
No Fiduciary Duty
137
 
Section 12.19
Amendment and Restatement Mechanics
137
 
Section 12.20
Acknowledgment of Intercreditor Agreement
138
 
Section 12.21
Termination of Existing Pledge Agreement
138

 
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
   
Schedule 1.02
Initial Guarantors
Schedule 3.05
Grandfathered Letters of Credit
Schedule 7.11
Subsidiaries and Partnerships; Unrestricted Subsidiaries
Schedule 7.12
Insurance
Schedule 9.02
Existing Debt
Schedule 9.03
Liens
Schedule 9.06
Investments
Schedule 9.08
Nature of Business

 
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EXECUTION VERSION

THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 22, 2011 (as
amended, modified, supplemented or restated from time to time, this
“Agreement”), is among QUICKSILVER RESOURCES INC., a Delaware corporation (the
“Parent”), 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”); JPMORGAN CHASE BANK,
N.A., as global administrative agent for the Lenders, and when appropriate, for
the Lenders and U.S. Lenders (in such capacity, together with its successors in
such capacity, the “Global Administrative Agent”); THE BANK OF NOVA SCOTIA, as
syndication agent (in such capacity, the “Syndication Agent”); and THE
TORONTO-DOMINION BANK and CANADIAN IMPERIAL BANK OF COMMERCE, as
co-documentation agents (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

WHEREAS, the Parent, JPMorgan Chase Bank, N.A., as administrative agent and the
lenders and the other parties thereto entered into the Credit Agreement dated as
of September 6, 2011 (as amended or supplemented prior to the date hereof, the
“Existing U.S. Credit Agreement”);

WHEREAS, the Borrower, JPMorgan Chase Bank, N.A., Toronto Branch, as
administrative agent, and the lenders and the other parties thereto entered into
the Credit Agreement dated as of September 6, 2011 (as amended or supplemented,
the “Existing Canadian Credit Agreement”);

WHEREAS, the Borrower and the Parent have requested that the Existing U.S.
Credit Agreement and Existing Canadian Credit Agreement each be amended and
restated to, among other items, facilitate the consummation of the Barnett Shale
Transaction (as defined below) and the Midstream Joint Venture (as defined
below) and to create a global borrowing base;

WHEREAS, the Lenders have agreed to amend and restate the Existing Canadian
Credit Agreement as set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree that the Existing
Canadian Credit Agreement is hereby amended and restated in its entirety as
follows:

ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS

Section 1.01   Terms Defined Above. As used in this Agreement, each term
defined above has the meaning indicated above.

 
 
 
 

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Section 1.02   Certain Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:

“Administrative Agents” means the Global Administrative Agent and the
Administrative
Agent.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Affected Loans” has the meaning assigned to 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 Global Administrative Agent, the
Administrative Agent, the Syndication Agent and the Co-Documentation Agents; and
“Agent” means the Global Administrative Agent, 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” has the meaning assigned to such term in Section 2.11(a).

“Agreement” has the meaning assigned to such term in the preamble hereto.

“Allocated Canadian Borrowing Base” means, as of any date, the sum of (a) the
portion of the U.S. Borrowing Base designated by the Parent to support the
availability of Revolving Credit Exposure pursuant to a Borrowing Base
Allocation Notice delivered in accordance with Section 2.07(e)(i) which is in
effect as of such date plus (b) the Nominal Canadian Borrowing Base. On the date
of this Agreement, the initial Allocated Canadian Borrowing Base shall be
US$300,000,000.

“Allocated U.S. Borrowing Base” means, as of any date, the amount equal to (a)
the U.S. Borrowing Base minus (b) the portion of the U.S. Borrowing Base
designated by the Parent to support the availability of Revolving Credit
Exposure pursuant to a Borrowing Base Allocation Notice delivered in accordance
with Section 2.07(e)(i) which is in effect as of such date. As of the date of
this Agreement, the initial Allocated U.S. Borrowing Base shall be
US$775,000,000.

“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 Global Borrowing Base Utilization
Percentage then in effect:

 
 
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Global Borrowing Base Utilization Percentage
Commitment Fee Rate
Canadian Prime Spread
CDOR Spread
U.S. Prime Spread
Eurodollar Spread
Greater than 90%
0.500%
1.50%
2.50%
1.50%
2.50%
Greater than 75% but less than or equal to 90%
0.500%
1.25%
2.25%
1.25%
2.25%
Greater than 50% and less than or equal to 75%
0.500%
1.00%
2.00%
1.00%
2.00%
Greater than 25% and less than or equal to 50%
0.375%
0.75%
1.75%
0.75%
1.75%
Less than or equal to 25%
0.375%
0.50%
1.50%
0.50%
1.50%

 
 
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 or (b) any Affiliate of a Lender,
(c) any U.S. Lender, (d) any Affiliate of a U.S. Lender or (e) 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) with respect to the U.S. Reserve
Report, Schlumberger Data and Consulting Services, (b) with respect to the
Canadian Reserve Report, LaRoche Petroleum Consultants Limited and (c) any other
independent petroleum engineers or other independent petroleum consultant(s)
reasonably acceptable to the Global 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.

“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

 
 
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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 Canadian Credit Party.

“Barnett Holdings” has the meaning assigned to such term in the definition of
“Barnett Shale Transaction”.

“Barnett Shale Transaction” means a series of transactions (more fully described
below) upon the completion of which the MLP Barnett Shale Assets and the
Specified Oil and Gas Swap Agreements will be wholly owned, directly or
indirectly, by MLP. These transactions shall be consummated at the time of the
initial public offering of common units representing limited partnership
interests of MLP and shall include the following transactions (or such similar
or related transactions not material and adverse to the U.S. Lenders, taken as a
whole) entered into prior to, on or after the Effective Date:

(a)   the Parent shall form (A) the following Restricted Subsidiaries: (1)
Quicksilver Partners Operating Ltd., a Cayman Islands exempted company (“MLP
Opco”); (2) QP General Partner LLC, a Delaware limited liability company
(“SpinCo”); and (3) QPP Holdings LLC, a Delaware limited liability company
(“Barnett Holdings”) and (B) the following Unrestricted Subsidiaries:
Quicksilver Resources GP LLC, a Delaware limited liability company (“GP LLC”)
and Quicksilver Production Partners LP, a Delaware limited partnership (“MLP”)
((A) and (B) collectively, the “Newly Formed Barnett Subsidiaries”);

(b)    the Parent shall contribute the MLP Barnett Shale Assets to MLP Opco;

(c)    through a series of contributions involving SpinCo, Barnett Holdings and
GP LLC, the Parent shall contribute (a) 100% of the equity interest of MLP Opco;
(b) through the novation (or termination and replacement) described in clause
(iv) below, the Specified Oil and Gas Swap Agreements; and (c) cash in an amount
equal to 0.1% of MLP’s equity interest following the MLP IPO to MLP in exchange
for the Contribution Consideration and a general partnership interest in MLP;

(d)   at the time of or concurrently with the contribution of the Equity
Interests in MLP Opco to MLP, (a) the Specified Oil and Gas Swap Agreements
shall be novated by the Parent to MLP (or such Specified Oil and Gas Swap
Agreements may instead be terminated and replaced), (b) all Liens created by the
U.S. Security Instruments in the assets of, and any
 
 
 
4

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Investments by the Parent or its Restricted Subsidiaries in, MLP Opco shall
automatically terminate and all obligations of MLP Opco under the U.S. Guaranty
Agreement or Guaranty Agreement shall automatically be released and (c) MLP Opco
shall automatically become an Unrestricted Subsidiary;

(e)   MLP or one of its wholly owned subsidiaries shall (a) enter into a new
credit facility (the “MLP Credit Agreement”) and (b) offer and sell up to 50% of
its common units representing limited partnership interests through an initial
public offering (the “MLP IPO”);

(f)    the Parent will receive, directly or indirectly, through a series of
distributions, transfers, reimbursements and/or intercompany loans, from MLP,
(a) the net cash proceeds of the MLP IPO and the initial borrowings under the
MLP Credit Agreement on the date of MLP IPO and (b) the MLP interests
(collectively, the “Contribution Consideration”) which shall, in the aggregate,
equal the fair market value of the MLP Barnett Shale Assets and the Specified
Oil and Gas Swap Agreements;

(g)   MLP and GP LLC will enter into an omnibus agreement with the Parent and
certain of its Affiliates, pursuant to which, among other things, the Parent or
such Affiliates will provide MLP and GP LLC with general, administrative and
operational services; and

(h)   MLP and the Parent will enter into a tax sharing agreement pursuant to
which MLP will pay the Parent (or its Affiliates) MLP’s share of state and local
income and other taxes for which MLP’s results are included in a combined or
consolidated tax return filed by the Parent or its Affiliates.

“BBEP” means BreitBurn Energy Partners L.P., a Delaware limited partnership.

“BBEP Common Units” means Common Units of BBEP, and shall include any securities
into or for which such Common Units are reclassified, converted or exchanged in
connection with (a) a consolidation, merger, reorganization or other business
combination transaction to which BBEP is a party and in which BBEP is the
continuing or surviving Person or (b) a transfer of all or substantially all of
the assets of BBEP.

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America or any successor Governmental Authority.

“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 Allocation Notice” has the meaning assigned to such term in
Section 2.07(e)(i).

“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;
 
 
 
5

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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 Canadian Credit Party that is not a Canadian Pension Plan
and which is primarily for the benefit of the employees or former employees of
any Canadian Credit Party employed in Canada who participate or are eligible to
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 Borrowing Base Deficiency” occurs at any time the Revolving Credit
Exposure exceeds the Allocated Canadian Borrowing Base in effect at such time.

“Canadian Credit Parties” means the Borrower, its Restricted Subsidiaries and
each Canadian Guarantor.

“Canadian Dollars” or “C$” refers to the lawful money of Canada.

“Canadian Guarantor” means each Guarantor which is formed under the laws of
Canada or any province or territory thereof.

“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 Canadian Credit Party is located, as the Administrative Agent may
reasonably request, covering the Canadian Credit Parties.

“Canadian Pension Plan” means any pension plan to which any Canadian 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 Canadian 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 Canadian 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
 
 
 
6

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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 Permitted Additional Debt” means any Permitted Additional Debt other
than U.S. Permitted Additional Debt.

“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.

“Canadian Reserve Report Affected Property” has the meaning assigned to such
term in Section 8.12(a).

“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.

“Cash Interest Expense” means, with respect to the Parent and the Consolidated
Restricted Subsidiaries on a consolidated basis for any period, Interest Expense
for such period, less the sum of (a) pay-in-kind Interest Expense or other
non-cash Interest Expense (including as a result of the effects of purchase
accounting), (b) to the extent included in Interest Expense, the amortization of
any financing fees paid by, or on behalf of, the Parent or any Consolidated
Restricted Subsidiary, including such fees paid in connection with the
Transactions, (c) the amortization of debt discounts, if any, or fees and
deferred gains or losses with respect to Swap Agreements in respect of interest
rates, (d) interest income of the Parent and the Consolidated Restricted
Subsidiaries actually received in cash for such period, (e) any charges related
to any premium or penalty paid, 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) to the extent included in
Interest Expense, any interest paid on property and income tax payments,
litigation settlements or any other obligation that does not constitute Debt and
(g) interest expense capitalized during such period; provided that (i) Cash
Interest Expense shall exclude any one-time financing fees paid in connection
with the Transactions or any amendment of this Agreement or the U.S. Credit
Agreement and (ii) that if any such Person shall have Redeemed any Existing Debt
or Permitted Additional Debt during such period, Cash Interest

 
 
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Expense shall be subject to pro forma adjustments for such Redemption as if such
Redemption had occurred on the first day of such period in a manner satisfactory
to the Global Administrative Agent.

“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 the Parent or any of its
Restricted Subsidiaries.

“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, after the Effective Date, the occurrence of any of
the following: (a) 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 the Parent (or its successor
by merger, consolidation or purchase of all or substantially all of its assets)
(for the purposes of this clause, such person or group shall be deemed to
beneficially own any Equity Interest of the Parent held by a parent entity of
the 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); (b) a majority of the members of the board of
directors of the Parent are not Continuing Directors; (c) 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 Parent and its Restricted Subsidiaries taken
as a whole to any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act); (d) the adoption by the stockholders of the Parent of a plan
or
 
 
 
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proposal for the liquidation or dissolution of the Parent; (e) a “Change in
Control” or similar event occurs under and as defined in any indenture or
similar governing document in respect of Existing Debt or Permitted Additional
Debt but only to the extent, in the case of this clause (e), the occurrence of
any such event gives rise to an obligation of the Parent or any other Restricted
Subsidiary to redeem, repay or repurchase, or otherwise offer to redeem, repay
or repurchase, all or any portion of such Existing Debt or Permitted Additional
Debt, which redemption, repayment or repurchase is not otherwise permitted by
the terms of this Agreement; or (f) the Parent shall cease to own, directly or
indirectly, all of the issued and outstanding Equity Interests in the Borrower.

“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 Banking
Supervision or the United States, 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 the United States,
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.

“Combined Aggregate Maximum Credit Amount” means the sum of (a) the Aggregate
Maximum Credit Amounts and (b) the U.S. Aggregate Maximum Credit Amounts.

“Combined Credit Exposure” means, at the time of determination, the sum of (a)
the Dollar Equivalent of the aggregate Revolving Credit Exposure of the Lenders
hereunder, and (b) the U.S. Revolving Credit Exposure.

“Combined Commitments” means the aggregate of (a) the Commitments of the Lenders
hereunder and (b) the U.S. Commitments. The initial aggregate principal amount
of the Combined Commitments is U.S. US$1,075,000,000.

“Combined Defaulting Lender” means a Combined Lender that is a Defaulting Lender
or a U.S. Defaulting Lender.

“Combined Lenders” means the Lenders hereunder and the U.S. Lenders.

 
 
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“Combined Loan Documents” means the Loan Documents and the U.S. Loan Documents.

“Combined Loans” means the loans made by the Combined Lenders to the Borrower
and the Parent pursuant to the Combined Loan Documents.

“Combined Obligations” means the aggregate of the Secured Indebtedness and the
U.S. Secured Indebtedness.

“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 Allocated Canadian Borrowing Base.

“Commitment Fee Rate” has the meaning assigned to such term in the definition of
“Applicable Margin”.

“Consolidated Net Income” means with respect to the Parent and the Consolidated
Restricted Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Parent and its 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 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 Parent or to a
Consolidated Restricted Subsidiary was converted into cash by the 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;

(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
 
 
 
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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, interest expense capitalized in such period,
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 of the
Parent that are Consolidated Subsidiaries.

“Consolidated Subsidiaries” means each Subsidiary of the 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 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 Parent 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.

“Contribution Consideration” has the meaning assigned to such term in the
definition of “Barnett Shale Transaction”.

“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 the Parent and its 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 in respect of drawn letters of credit,
bankers’ acceptances, surety or other bonds and similar instruments that have
not previously been reimbursed;

(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
therefor 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 United States and Canadian 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 and
obligations to deliver goods manufactured by such Person in consideration of
deposits, progress payments or other advance payments 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
 
 
 
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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.

“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 unless such
Lender notifies the Global Administrative Agent and the Borrower in writing that
such failure is the result of such Lender’s determination that one or more
conditions precedent to funding (each of which conditions precedent, together
with any applicable default, shall be specifically identified in such writing),
which has not been waived by the Required Lenders, has not been satisfied, (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 (unless such writing relates to such Lenders’ obligation to
fund a Loan hereunder and states that such position is based on such Lender’s
determination that a condition precedent to funding (which condition precedent,
together with any applicable default, shall be specifically identified in such
writing or public statement), which has not been waived by the Required Lenders,
cannot be satisfied), (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
 
 
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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.

“Discretionary Borrowing Base Allocation Notice” has the meaning assigned to
such term in Section 2.07(e)(ii).

“Discretionary Borrowing Base Reallocation” has the meaning assigned to such
term in Section 2.07(e)(ii).

“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.

“Dollar Equivalent” means, at any date, with respect to any amount denominated
in

(a)   Canadian Dollars, the equivalent amount thereof in Dollars as determined
by the Global Administrative Agent or the Issuing Bank, as the case may be, at
such time on the basis of the amount of Dollars into which such amount of
Canadian Dollars may be converted at the rate of exchange for determining the
amount of Dollars that may be purchased with such amount of Canadian Dollars as
appearing on the Reuters World Currency Page at approximately 12:00 noon, New
York time for the most recent Revaluation Date or, if such rate does not appear
on any Reuters World Currency Page for such most recent Revaluation Date, The
Bank of Canada mid-point spot rate of exchange for such date in Toronto at
approximately 12:00 noon, Toronto time as of such most recent Revaluation Date,
and

(b)   any other foreign currency, the equivalent amount thereof in Dollars as
determined by the Global Administrative Agent, as the case may be, at such time
on the basis of the amount of Dollars into which such amount of foreign currency
may be converted at the rate of exchange for determining the amount of Dollars
that may be purchased with such amount of such foreign currency as appearing on
the Reuters World Currency Page at approximately 12:00 noon, New York time for
the most recent Revaluation Date or, if such rate does not appear on any Reuters
World Currency Page for such most recent Revaluation Date, such rate of exchange
shall be determined by reference to such other publicly available service for
displaying exchange rates as may be reasonably selected by the Global
Administrative Agent by referencing such rate of exchange appearing on such
service at approximately 12:00 noon, New York time as of such most recent
Revaluation Date;
 
 
 
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provided that, in each case, if any such rates of exchange cannot be determined
pursuant to clauses (a) and (b) above, the Dollar Equivalent of such amount
shall be determined by the Global Administrative Agent using any reasonable
method it deems appropriate to determine such rate of exchange, after
consultation with the Borrower.

“Dollars” or “$” or “US$” 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.

“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 and
accretion; 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, plus (ii) an amount
equal to twenty-five percent (25%) of the Net Proceeds received by the Parent
during such period from sales of BBEP Common Units owned by the Parent on or
prior to the Effective Date, and minus (iii) 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 Global
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 to 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 the Parent
or any Restricted Subsidiary involving (a) a Hazardous Discharge from or onto
any real property owned, leased or operated at any time by the Parent or any
Restricted Subsidiary, or (b) a Hazardous Discharge caused, in whole or in part,
by the Parent or any Restricted Subsidiary or by any Person acting on behalf of
or at the instruction of the Parent or any Restricted Subsidiary, or (c) any
violation of any Environmental Law by the Parent or any Restricted Subsidiary.

“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 the Parent or any Restricted Subsidiary
is conducting or at any time has conducted business, or

 
 
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where any Oil and Gas Property of the Parent or any Restricted Subsidiary is
located, including without limitation, (a) with respect to the Parent or any
U.S. Subsidiary or any Oil and Gas Property of the Parent or any U.S. Subsidiary
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 and (b)
with respect to any Domestic Subsidiary conducting business, or any Oil and Gas
Property of any Domestic Subsidiary 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. With
respect to the Parent or any U.S. Subsidiary or any Oil and Gas Property of the
Parent or any U.S. Subsidiary 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; provided, however, that to the extent the applicable Environmental Laws of
the state or local jurisdiction in which any Oil and Gas Property of the Parent
or any Subsidiary 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. With respect to any Domestic Subsidiary conducting business, or
any Oil and Gas Property of any Domestic Subsidiary 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 Domestic Subsidiary
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 province, territory 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 the Parent or any Restricted Subsidiary 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 (including, without limitation, the Existing
Convertible Debentures) shall not constitute “Equity Interests” for purposes
hereof.
 
 
 
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“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 the Parent or any Restricted Subsidiary 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 the Parent or any Restricted Subsidiary 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 the Parent or any Restricted Subsidiary 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 the Parent or any Restricted Subsidiary 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 the Parent or any Restricted Subsidiary, (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 the
Parent or any Restricted Subsidiary 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.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the LIBO Rate.

“Event of Default” has the meaning assigned to such term in Section 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
 
 
 
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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 the Parent or any Restricted Subsidiary 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 the Parent or any
Restricted Subsidiary 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 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 the
Parent or any Restricted Subsidiary 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
 
 
 
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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 applicable precautionary
filings regarding operating leases entered into by the Parent or any Restricted
Subsidiary 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.

“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 (Canada), with
any Canadian 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 Canadian Guarantor is located.

“Existing Canadian Credit Agreement” has the meaning assigned to such term in
the recitals to this Agreement.

“Existing Convertible Debentures” means, collectively, each of Parent’s 1.875%
Convertible Subordinated Debentures due 2024, as amended, restated, renewed,
extended, supplemented, increased, replaced, refinanced or otherwise modified
from time to time to the extent permitted under Section 9.05(b).

“Existing Debt” means the Existing Convertible Debentures, Existing Subordinate
Notes, Existing 2015 Senior Notes, Existing 2016 Senior Notes and Existing 2019
Senior Notes.

 
 
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“Existing Midstream Assets” means all tangible and intangible property owned by
the Borrower or any other Domestic Subsidiary 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,
including, without limitation, 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 and processing agreement signed or to be
signed by and between the Borrower and an Unrestricted Subsidiary or the
partnership referred to in the definition of Midstream Joint Venture in respect
of the gathering and other handling of the Borrower’s Hydrocarbons production in
the said Maxhamish Pipeline and the processing of such Hydrocarbons,
respectively. For purposes of clarity, “Existing Midstream Assets” shall not
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 Domestic Subsidiary with the
partnership referred to in the definition of Midstream Joint Venture.

“Existing QRCI Pledge Agreement” has the meaning assigned to such term in
Section 12.21.

“Existing Subordinate Notes” means, collectively, each of the Parent’s 7⅛%
Senior Subordinated Notes due 2016, as amended, restated, renewed, extended,
supplemented, increased, replaced, refinanced or otherwise modified from time to
time to the extent permitted under Section 9.05(b).

“Existing U.S. Credit Agreement” has the meaning assigned to such term in the
recitals to this Agreement.

“Existing 2015 Senior Notes” means, collectively, each of the Parent’s 8¼%
Senior Notes due 2015, as amended, restated, renewed, extended, supplemented,
replaced, refinanced or otherwise modified from time to time to the extent
permitted under Section 9.05(b).

“Existing 2016 Senior Notes” means, collectively, each of the Parent’s 11¾ %
Senior Notes due 2016, as amended, restated, renewed, extended, supplemented,
replaced, refinanced or otherwise modified from time to time to the extent
permitted under Section 9.05(b).

“Existing 2019 Senior Notes” means, collectively, each of the Parent’s 9⅛%
Senior Notes due 2019, as amended, restated, renewed, extended, supplemented,
replaced, refinanced or otherwise modified from time to time to the extent
permitted under Section 9.05(b).

 
 
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“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.

“Financial Statements” means the financial statement or statements of the Parent
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.

“Foreign Plan” means any employee benefit plan, program, policy, arrangement or
agreement contributed to by the Parent or any Restricted Subsidiary with respect
to employees employed outside Canada and the United States.

“Foreign Subsidiary” means any Restricted Subsidiary that is not a U.S.
Subsidiary.

“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.

“Global Administrative Agent” has the meaning assigned to such term in the
preamble of this Agreement.

“Global 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 8.12(c), Section 9.02(n), or Section 9.10.

“Global Borrowing Base Deficiency” occurs if at any time the Combined Credit
Exposures exceeds the Global Borrowing Base then in effect at such time.

“Global Borrowing Base Utilization Percentage” means, as of any day, the
fraction expressed as a percentage, the numerator of which is the Combined
Credit Exposures on such day, and the denominator of which is the Global
Borrowing Base in effect on such day.

“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 the Parent or any
Restricted Subsidiary, any of their Properties, any Agent, any Issuing Bank or
any Lender.
 
 
 
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“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.

“GP LLC” has the meaning assigned to such term in the definition of “Barnett
Shale Transaction”.

“Grandfathered Letters of Credit” means the letters of credit issued by JPMorgan
under the Existing Canadian Credit Agreement outstanding on the Effective Date
or which constituted “Grandfathered Letters of Credit” under the Existing
Canadian Credit Agreement 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, any other Person that
must guarantee the Combined Obligations in order for the Borrower to comply with
Section 8.13 and any other Person that executes the Guaranty Agreement or the
U.S. Guaranty Agreement guaranteeing the payment of the Combined Obligations.

“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 from or onto any real property owned, leased
or operated at any time by the Parent or any Subsidiary 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,
 
 
 
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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 Reports used in the most recent
determination of the Global 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 assigned to such term in Section 2.09.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Intercreditor Agreement” means the Intercreditor Agreement dated as of the date
hereof among the Administrative Agents on behalf of the Lenders, the U.S.
Lenders and the other secured parties.

“Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.04.

“Interest Expense” means, with respect to the Parent and its Consolidated
Restricted Subsidiaries for any period, (determined without duplication) the
gross interest expense of the Parent and its Consolidated Restricted
Subsidiaries for such period on a consolidated basis, including (i) the
amortization of debt discounts, (ii) the amortization of all fees (including
fees and deferred gains or losses with respect to Swap Agreements in respect of
interest rates) payable in connection with the incurrence of Debt to the extent
included in interest expense, (iii) the portion of any payments or accruals with
respect to Capital Leases allocable to interest expense, (iv) the portion of any
payments or accruals with respect to obligations of the type
 
 
 
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described in clause (e) of the definition of “Debt” in this Agreement allocable
to interest expense whether or not the same constitutes interest expense under
GAAP, and (v) interest expense capitalized in such period. For purposes of the
foregoing, gross interest expense shall be determined after giving effect to any
net payments made or received and costs incurred by the Parent and its
Consolidated Restricted Subsidiaries with respect to Swap Agreements in respect
of interest rates.

“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.

“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 to 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).

“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.

“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

 
 
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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.

“Joinder Agreement” has the meaning assigned to such term 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.

“Joint Lead Arrangers” has the meaning assigned to such term in the preamble of
this Agreement.

“JPMorgan” means JPMorgan Chase Bank, N.A., Toronto Branch, in its individual
capacity.

“Judgment Currency” has the meaning assigned to such term in Section 2.11(b).

“LC Commitment” means (a) from the date hereof until June 1, 2012,
US$100,000,000,
(b) from June 1, 2012 until September 1, 2012, US$125,000,000, (c) from
September 1, 2012 until June 1, 2013, US$165,000,000 and (d) thereafter,
US$205,000,000.

“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. For purposes of computing the undrawn and unexpired stated amount
of any Letter of Credit, the amount of such Letter of Credit shall be determined
in accordance with Section 1.06.

“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
 
 
 
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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, 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 Parent or
any Restricted Subsidiary 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 Combined Credit Exposure is
outstanding, Combined Lenders having more than 50% of the Combined Commitments;
and at any time while any Combined Credit Exposure is outstanding, Combined
Lenders holding more than 50% of the outstanding aggregate principal amount of
the Combined Credit Exposure (without regard to any sale of participations);
provided that any portion of the Combined Credit Exposure of the Combined
Defaulting Lenders (if any) shall be excluded from the determination of the
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 US$25,000,000.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, Property or financial condition of the Parent and its Restricted
Subsidiaries 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 U.S. Loan Documents or Loan Documents or the
ability of the Parent and its Restricted Subsidiaries to perform any of their
respective obligations under any U.S. Loan Document or Loan Document to which it
is a party
 
 
 
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or (c) the rights and remedies of or benefits available to either applicable
Administrative Agent, any other Agent, any Issuing Bank or any U.S. Lender under
any U.S. Loan Document or any Lender under any Loan Document.

“Material Debt” means Debt (other than the Loans and Letters of Credit and U.S.
Loans and U.S. Letters of Credit) or obligations in respect of one or more Swap
Agreements, of any one or more of the Parent and its Restricted Subsidiaries in
an aggregate principal amount exceeding US$45,000,000. For purposes of
determining Material Debt, the “principal amount” of the obligations of the
Parent or any Restricted Subsidiary 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 the Parent or such Restricted Subsidiary 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 US$25,000,000.

“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 Canadian Credit Parties or whose EBITDAX represents 7.5% or
more of the EBITDAX of the Canadian Credit Parties. For purposes of this
definition, the total EBITDAX of the Canadian 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 earliest of (i) September 6, 2016 (the “Scheduled
Maturity Date”), (ii) ninety (90) days prior to the maturity of the Existing
2015 Senior Notes to the extent the Existing 2015 Senior Notes are not
repurchased, redeemed or refinanced to have a termination date of at least
ninety (90) days after the Scheduled Maturity Date, (iii) ninety (90) days prior
to the maturity of the Existing Subordinate Notes to the extent the Existing
Subordinate Notes are not repurchased, redeemed or refinanced to have a
termination date at least ninety (90) days after the Scheduled Maturity Date or
(iv) ninety (90) days prior to the maturity of the Existing 2016 Senior Notes to
the extent the Existing 2016 Senior Notes are not repurchased, redeemed or
refinanced to have a termination date at least ninety (90) days after the
Scheduled Maturity 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) 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, taken
as a whole, than) those disclosed by the Parent to the Global Administrative
Agent prior to the Effective Date that will involve the following transactions
(or such similar or related transactions not material and
 
 
 
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adverse to the Combined Lenders, taken as a whole): (a) the Investment, directly
or indirectly, by the Borrower in a partnership by the exchange of the Existing
Midstream Assets for an interest in the partnership and cash (which partnership
interest will be held directly by the Borrower or, following a transaction
between the Borrower and an Unrestricted Subsidiary wherein the Borrower will
receive Equity Interests in such Unrestricted Subsidiary in exchange for cash
and the partnership interests the Borrower holds, through an Unrestricted
Subsidiary), (b) 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 one or more 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, (c) the entering into of
certain operating agreements and services agreements with respect to the
operations of such partnership and (d) the purchase by the Borrower of certain
compression assets currently used or under construction on the Maxhamish
Pipeline upon completion of the related processing facility for a purchase price
of US$33,000,000 plus any applicable transfer taxes.

“Minimum Allocated U.S. Borrowing Base” has the meaning assigned to such term in
Section 2.07(e)(i).

“Minimum Liquidity” means, as of any date of determination, the sum of (a) the
aggregate unused amount of the Commitments and U.S. Commitments as of such date
(but only to the extent that the Parent or the Borrower, as applicable, is
permitted to borrow such amounts under the terms of this Agreement and the U.S.
Credit Agreement, as applicable, 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 Parent’s balance sheet as of such date.

“MLP” has the meaning assigned to such term in the definition of “Barnett Shale
Transaction”.

“MLP Barnett Shale Assets” means a portion of those assets owned by the Parent
located in the Barnett Shale in the Fort Worth Basin of North Texas consisting
of, but not limited to, producing wells, undeveloped locations (including proved
and unproved reserves) and related well equipment leases and surface rights as
disclosed by the Parent to the Global Administrative Agent prior to the
Effective Date (or such other associated assets not material and adverse to the
Combined Lenders, taken as a whole).

“MLP Credit Agreement” has the meaning assigned to such term in the definition
of “Barnett Shale Transaction”.

“MLP IPO” has the meaning assigned to such term in the definition of “Barnett
Shale Transaction”.

“MLP Opco” has the meaning assigned to such term in the definition of “Barnett
Shale Transaction”.

“Montreal” means Montreal, Quebec, Canada.
 
 
 
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“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 Parent, 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 Proceeds ” means the aggregate cash proceeds received by the Parent or any
Restricted Subsidiary in respect of any sale of BBEP Common Units, net of (a)
the costs relating to such sale, (b) the net tax effect, if any, as a result
thereof (after taking into account any available tax credits or deductions and
any tax sharing arrangements) and (c) Debt (other than the Secured Indebtedness)
which is secured by a Lien upon any of the BBEP Common Units subject to such
sale and which must be repaid as a result of such sale.

“New Borrowing Base Notice” has the meaning assigned to such term in Section
2.07(d).

“New York” means New York, New York.

“Newly Formed Barnett Subsidiaries” has the meaning assigned to such term in the
definition of “Barnett Shale Transaction”.

“Nominal Canadian Borrowing Base” means, as of any date, the amount equal to (a)
the Global Borrowing Base minus (b) the U.S. Borrowing Base.

“Non-Recourse Debt” means any Debt of any Subsidiary which does not own any Oil
and Gas Properties included in the Global Borrowing Base in which the Parent or
any Restricted Subsidiary 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) neither the Parent nor any Restricted Subsidiary 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 the Parent or
any Restricted Subsidiary, 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
 
 
 
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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, 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,
commodity accounts or securities accounts.

“Oil and Gas Swap Agreement” means a Swap Agreement pursuant to which any Person
hedges the price (including basis or transportation cost differentials) to be
received by it for future production of Hydrocarbons.
 
 
 
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“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 such corporation’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” has the meaning assigned to such term 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” has the meaning assigned to such term in the preamble.

“Participant” has the meaning assigned to such term in Section 12.04(c)(i).

“Participant Register” has the meaning assigned to such term 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 the Parent or any Restricted Subsidiary 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) the Parent or any Restricted Subsidiary of the
Parent, (b) a trustee or other fiduciary holding securities under any employee
benefit plan (or related trust) sponsored or maintained by the Parent or any
Restricted Subsidiary of the Parent, (c) 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

 
 
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respective successors, assigns or designees which, in each case, are Controlled
Affiliates of any Person referred to in the foregoing clause (c).

“Permitted Investments” means the Investments permitted by Section 9.06.

“Permitted Liens” means with respect to (a) any Oil and Gas Property of the
Parent or any Restricted Subsidiary of the types described in clauses (a), (b),
(c), (e) and (f) of the definition of “Oil and Gas Properties” evaluated in the
Reserve Reports used in the most recent determination of the Global Borrowing
Base, the Liens permitted under clauses (a), (b), (c), (g), (h) and (j) of
Section 9.03, (b) any Equity Interests issued 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 the Parent,
any Restricted Subsidiary 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 the Parent, any Restricted Subsidiary or an ERISA Affiliate.

“Pledge Agreement” means any Pledge Agreement required to be entered into
hereunder among the Credit Parties (to the extent that any of the foregoing own
Equity Interests in the Restricted Subsidiaries of the Parent (other than Equity
Interests of the Borrower or any U.S. Restricted Subsidiary (each of whose
Equity Interests are or will be pledged pursuant to the U.S. Pledge Agreement))
and the Administrative Agent in substantially the form of Exhibit G (or
otherwise in form and substance acceptable to the Administrative Agent) granting
Liens and a security interest on such Equity Interests issued by such 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.

“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 Notice” has the meaning assigned to such term in
Section 2.07(c)(ii).

“Proposed Global Borrowing Base” has the meaning assigned to such term in
Section 2.07(c)(i).
 
 
 
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“Proposed U.S. Borrowing Base” has the meaning assigned to such term in Section
2.07(c)(i).

“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.

“Reclassification” means the owner of an Oil and Gas Property evaluated in the
Reserve Reports used in the most recent determination of the Global 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 Reports, 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 Global 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 Global 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 respect to any of the foregoing) of such
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 to 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.
 
 
 
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“Required Lenders” means, at any time while no Combined Credit Exposure is
outstanding, Combined Lenders having at least 66-2/3% of the Combined
Commitments; and at any time while any Combined Credit Exposure is outstanding,
Combined Lenders holding at least 66-2/3% of the outstanding aggregate principal
amount of the Combined Credit Exposure (without regard to any sale of
participations); provided that any portion of the Combined Credit Exposure of
the Combined Defaulting Lenders (if any) shall be excluded from the
determination of the Required Lenders.

“Required U.S. Lenders” means the “Required Lenders” under the U.S. Credit
Agreement.

“Reserve Report” means a report or reports, in form and substance reasonably
satisfactory to the Global 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 Borrower and the other Domestic Subsidiaries or the Parent and
the U.S. Subsidiaries, as applicable, 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. A Reserve Report may either be a Canadian Reserve Report
or a U.S. Reserve Report or both as the context requires.

“Responsible Officer” means, as to any Person, the Chief Executive Officer, the
President, any Financial Officer or any Vice President of such Person or of the
controlling shareholder of such Person (a “Specified Responsible Officer”) or
any (a) other officer of such Person or of the controlling shareholder of such
Person specified as such to the Global Administrative Agent in writing by a
Specified Responsible Officer, or (b) other employee of such Person or of a
controlling shareholder of such Person specified as such to the Global
Administrative Agent in writing by the chief financial officer and by one other
Financial Officer of such Person; 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 Parent.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in the Parent
or any Restricted Subsidiary, 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 the Parent or any Restricted Subsidiary or any
option, warrant or other right to acquire any such Equity Interests in the
Parent or any Restricted Subsidiary; 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 Parent that is not an
Unrestricted Subsidiary.

“Revaluation Date” means

(a)   with respect to any Letter of Credit denominated in a currency other than
Dollars, each of the following: (i) the last day of each calendar month (or, if
such day is not a Business Day, the next succeeding Business Day), (ii) such
days as the Administrative Agent may designate, (iii) the Business Day preceding
the date of any Borrowing or the issuance, amendment, extension or renewal of
any Letter of Credit, (iv) the day on which any payment by the L/C Issuer or any
reimbursement payment made in respect of any Letter of Credit denominated in a
currency other than Dollars is to occur, (v) any day on which any LC Exposure is
cash collateralized pursuant to Section 2.08(j), (vi) any date of the payment of
any fees hereunder which depend on the amount of LC Exposure and (vii) any day
on which the Commitments hereunder are decreased;

(b)   with respect to calculations made pursuant to Section 1.07, any date on
which the Parent or any Restricted Subsidiary undertakes (or would propose to
undertake) an action that changes the amount that counts towards a threshold or
basket amount; and

(c)    otherwise, the current date.

“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 to 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
the Parent or any Restricted

 
 
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Subsidiary 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 (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 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 Canadian Credit Party that (i) constituted a “Secured Swap Provider”
under the Existing Canadian Credit Agreement or (ii) 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, whether or
not such Person at any time ceases to be a Lender or an Affiliate of a Lender,
as the case may be, or (b) any assignee of any Person described in clause (a)
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,
debentures, mortgages, deeds of trust and other agreements, instruments or
certificates described or referred to in Exhibit E-1 (it being understood that
Exhibit E-1 shall include any applicable U.S. Security Instruments as of the
date hereof), 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.

“Specified Oil and Gas Swap Agreements” means certain of the Parent’s Oil and
Gas Swap Agreements identified in writing to the Global Administrative Agent
prior to the MLP IPO.

 
 
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“Specified Responsible Officer” has the meaning assigned to such term in the
definition of “Responsible Officer”.

“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 one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower 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.

“Super-majority Lenders” means, at any time while no Combined Credit Exposure is
outstanding, Combined Lenders having at least 95% of the Combined Commitments;
and at any time while any Combined Credit Exposure is outstanding, Combined
Lenders holding at least 95% of the outstanding aggregate principal amount of
the Combined Credit Exposure (without regard to any sale of participations);
provided that any portion of the Combined Credit Exposure of the Combined
Defaulting Lenders (if any) shall be excluded from the determination of the
Super-majority Lenders.

“Super-majority U.S. Lenders” has the meaning assigned to such term in the U.S.
Credit Agreement.

“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
the Parent and its Restricted Subsidiary 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 appropriate Canadian Credit
Party in form and substance reasonably satisfactory to the Administrative
Agent), and re-transferred each morning to the applicable Canadian Credit
Party’s 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.

“Transactions” means, with respect to (a) the Parent , the execution, delivery
and performance by the Parent of the U.S. Credit Agreement and each other U.S.
Loan Document to which it is a party, the borrowing of U.S. Loans, the use of
the proceeds thereof and the issuance of the U.S. Letters of Credit thereunder,
and the grant of Liens by the Parent on Mortgaged Properties and other
Properties pursuant to the U.S. Security Instruments, (b) the Borrower, the
execution, delivery and performance by the Borrower of the 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 (c) each Guarantor, the execution,
delivery and performance by such Guarantor of each Loan Document and U.S. Loan
Document to which it is a party, the guaranteeing of the applicable Combined
Obligations and the other obligations under the Guaranty Agreement or U.S.
Guaranty Agreement by such Guarantor and such Guarantor’s grant of the security
interests and provision of collateral pursuant to the Security Instruments and
U.S. Security Instruments, and the grant of Liens by such Guarantor on Mortgaged
Properties and other Properties pursuant to the Security Instruments and U.S.
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 Parent designated as such
on Schedule 7.10 or which the Parent has designated in writing to the
Administrative Agent to be an Unrestricted Subsidiary pursuant to Section 9.07,
in each case, other than the Borrower.

“U.S. Aggregate Maximum Credit Amounts” means the “Aggregate Maximum Credit
Amounts” under the U.S. Credit Agreement.

“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

 
 
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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 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. Borrowing Base” has the meaning assigned to such term in the U.S. Credit
Agreement.

“U.S. Borrowing Base Deficiency” has the meaning assigned to such term in the
U.S. Credit Agreement.

“U.S. Borrowings” means “Borrowings” under the U.S. Credit Agreement.

“U.S. Commitments” means the “Commitments” of the U.S. Lenders under the U.S.
Credit Agreement.

“U.S. Credit Agreement” means the Amended and Restated Credit Agreement dated as
of even date herewith among the Parent, as borrower, the Global Administrative
Agent, and others.

“U.S. Defaulting Lender” means a “Defaulting Lender” under the U.S. Credit
Agreement.

“U.S. Guarantor” means (x) any Guarantor organized under the laws of the U.S.
(or any state thereof) and (y) prior to the release contemplated by Section
8.13, MLP Opco.

“U.S. Guaranty Agreement” means the “Guaranty Agreement” under the U.S. Credit
Agreement.

“U.S. LC Exposure” means the “LC Exposure” under the U.S. Credit Agreement.

“U.S. Lenders means the “Lenders” under the U.S. Credit Agreement.

“U.S. Letters of Credit” means the “Letters of Credit” under the U.S. Credit
Agreement.

“U.S. Loan Document” means any “Loan Document” under the U.S. Credit Agreement.

“U.S. Loans” means the “Loans” under the U.S. Credit Agreement.

“U.S. Majority Lenders” means the “Majority Lenders” under the U.S. Credit
Agreement.

 
 
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“U.S. Material Restricted Subsidiary” means any “Material Restricted Subsidiary”
under the U.S. Credit Agreement.

“U.S. Notes” means the “Notes” under the U.S. Credit Agreement.

“U.S. Permitted Additional Debt” means the “Permitted Additional Debt” under the
U.S. Credit Agreement.

“U.S. Pledge Agreement” means the “Pledge Agreement” under the U.S. Credit
Agreement.

“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.

“U.S. Required Lenders” means the “Required Lenders” under the U.S. Credit
Agreement.

“U.S. Reserve Report” means a Reserve Report for the Oil and Gas Properties
located in the United States or on the Outer Continental Shelf adjacent to the
United States.

“U.S. Revolving Credit Exposure” means the “Revolving Credit Exposure” under the
U.S. Credit Agreement.

“U.S. Secured Indebtedness” means the “Secured Indebtedness” under the U.S.
Credit Agreement.

“U.S. Secured Parties” means the “Secured Parties” under the U.S. Credit
Agreement.

“U.S. Security Instruments” means the “Security Instruments” under the U.S.
Credit Agreement.

“U.S. Subsidiaries” means, collectively, each Restricted Subsidiaries of the
Parent formed under the laws of the United States or any State or territory
thereof.

“U.S. Sweep Accounts” means the “Sweep Accounts” under the U.S. Credit
Agreement.
 
 
 
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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.

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

 
 
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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.

Section 1.06   Letter of Credit Amounts. For purposes of calculation of the LC
Exposure and utilization of the LC Commitment, the amount of a Letter of Credit
issued in Canadian Dollars at any time shall be deemed to be the Dollar
Equivalent of the stated amount of such Letter of Credit in effect or proposed
to be issued at such time.

Section 1.07   Dollar Denominated Baskets. For purposes of determining
compliance under ARTICLE 9 (excluding Section 9.01) and such other sections of
the Loan Documents as the Borrower and Global Administrative Agent may agree
where compliance with a covenant or provision depends on any threshold or basket
amount operating to provide relief for the Parent and its Restricted
Subsidiaries from such covenant or provision, the applicable amount of any
currency (other than Dollars) shall be the Dollar Equivalent of such currency as
determined as of the most recent Revaluation Date. For the avoidance of doubt,
the Dollar Equivalent of any transaction determined for purposes of covenant
compliance (e.g., the principal amount of Indebtedness incurred, the amount of
an Investment, the value of an asset) shall be determined on the date such
covenant compliance is determined and shall not be thereafter revalued.

ARTICLE II
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
 
 
 
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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.

(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 US$100,000 and not less than US$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 US$1,000,000 and not less than US$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
 
 
 
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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);

(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

 
 
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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);

(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
 
 
 
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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.

(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.

 
 
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(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 US$1,000,000 and not less than US$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

Section 2.07   Borrowing Base. Initial Borrowing Base. (a)   For the period from
and including the Effective Date to but excluding the first Redetermination Date
occurring after the Effective Date, the amount of the Global Borrowing Base
shall be US$1,075,000,000 and the amount of the U.S. Borrowing Base shall be
US$850,000,000. Until reallocated in accordance with the Section 2.07 or 3.04 or
otherwise required to be reduced hereunder, the Allocated U.S. Borrowing Base
shall be US$775,000,000 and the Allocated Canadian Borrowing Base shall be
US$300,000,000. Notwithstanding the foregoing, the Global Borrowing Base and
U.S. Borrowing Base may be subject to further adjustments from time to time,
whether before or after such Redetermination Date, pursuant to Section 8.12(c),
Section 9.02(n) or Section 9.10.

(b)    Scheduled and Interim Redeterminations. Subject to Section 2.07(d), the
Global Borrowing Base and the U.S. Borrowing Base shall be redetermined
semi-annually (a “Scheduled Redetermination”) on or about the date that is 45
days following the Parent’s delivery of the U.S. Reserve Report and Canadian
Reserve Report in accordance with Section
 
 
 
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8.11(a). In addition, (i) the Parent may, by notifying the Global Administrative
Agent thereof, and (ii) the Global Administrative Agent may, or shall at the
direction of the Required Lenders or U.S. Required Lenders, by notifying the
Parent thereof, each elect to cause the Global Borrowing Base or U.S. 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 Global Administrative Agent of (A) the U.S.
Reserve Report, the Canadian Reserve Report and the certificate required to be
delivered by the Parent to the Global 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 Reports, such
certificate and such other reports, data and supplemental information being the
“Engineering Reports”), the Global Administrative Agent shall evaluate the
information contained in the Engineering Reports and shall propose a new Global
Borrowing Base and a new U.S. Borrowing Base (the “Proposed Global Borrowing
Base” and the “Proposed U.S. Borrowing Base”, respectively) based upon such
information and such other information that is deemed appropriate by the Global
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 and the
existence of any other Debt, the Parent’s and its Restricted Subsidiaries’ 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 Global Borrowing Base exceed the Combined Aggregate Maximum
Credit Amounts or the Proposed U.S. Borrowing Base exceed the U.S. Aggregate
Maximum Credit Amounts.

(ii)   The Global Administrative Agent shall notify the Parent, the Borrower and
the Lenders of the Proposed Global Borrowing Base and the Proposed U.S.
Borrowing Base (the “Proposed Borrowing Base Notice”):

(A)   in the case of a Scheduled Redetermination (1) if the
Global Administrative Agent shall have received the Engineering Reports required
to be delivered by the Parent 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 Global Administrative Agent shall not have received the Engineering Reports
required to be delivered by the Parent pursuant to Section 8.11(a) in a timely
and complete manner, then promptly after the Global Administrative Agent has
received complete Engineering Reports from the Parent and has had a reasonable
opportunity to determine the Proposed Global Borrowing Base in accordance with
Section 2.07(c)(i); and
 
 
 
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(B)   in the case of an Interim Redetermination, promptly, and in any event,
within 30 days after the Global Administrative Agent has received the required
Engineering Reports (or as promptly thereafter as may be reasonably
practicable).

(iii)   Any Proposed Global Borrowing Base that would increase the
Global Borrowing Base then in effect must be approved or deemed to have been
approved by the Super-majority Lenders as provided in this Section 2.07(c)(iii);
and any Proposed Global Borrowing Base that would decrease or maintain the
Global 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). Any
Proposed U.S. Borrowing Base that would increase the U.S. Borrowing Base then in
effect must be approved or deemed to have been approved by the Super-majority
U.S. Lenders as provided in this Section 2.07(c)(iii); and any Proposed U.S.
Borrowing Base that would decrease or maintain the U.S. Borrowing Base then in
effect must be approved or be deemed to have been approved by the Required U.S.
Lenders as provided in this Section 2.07(c)(iii). Upon receipt of the Proposed
Borrowing Base Notice, each Lender and U.S. Lender shall have 15 days to agree
with the Proposed Global Borrowing Base and/or the Proposed U.S. Borrowing Base
or disagree with the Proposed Global Borrowing Base and/or the Proposed U.S.
Borrowing Base by proposing an alternate Global Borrowing Base and/or U.S.
Borrowing Base. If, at the end of such 15 days, any Lender or U.S. Lender has
not communicated its approval or disapproval in writing to the Global
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Global Borrowing Base and, if applicable, the U.S. Borrowing Base. If,
at the end of such 15-day period: (1) the Super-majority Lenders, in the case of
a Proposed Global Borrowing Base that would increase the Global Borrowing Base
then in effect, (2) the Super-majority U.S. Lenders, in the case of a Proposed
U.S. Borrowing Base that would increase the U.S. Borrowing Base then in effect,
(3) the Required Lenders, in the case of a Proposed Global Borrowing Base that
would decrease or maintain the Global Borrowing Base or (4) the Required U.S.
Lenders, in the case of a Proposed U.S. Borrowing Base that would decrease or
maintain the U.S. Borrowing Base then in effect, have approved or deemed to have
approved, as aforesaid, then the Proposed Global Borrowing Base shall become the
new Global Borrowing Base effective on the date specified in Section 2.07(d)
and/or the Proposed U.S. Borrowing Base shall become the new U.S. 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, the Required U.S. Lenders, the
Super-majority Lenders or the Super-majority U.S. Lenders have not approved or
deemed to have approved, as aforesaid, then the Global Administrative Agent
shall poll the Lenders and the U.S. Lenders to ascertain the highest (x) Global
Borrowing Base then acceptable to a number of Lenders and U.S. Lenders
sufficient to constitute the Required Lenders or the Super-majority Lenders, as
applicable, and such amount shall become the new Global Borrowing Base,
effective on the date specified in Section 2.07(d) and/or (y) U.S. Borrowing
Base then acceptable to a number of Lenders sufficient to constitute the
Required U.S. Lenders or the Super-majority U.S. Lenders, as applicable, and
such amount shall become the new U.S. Borrowing Base, effective on the date
specified in Section 2.07(d). The consent of the Parent, in its sole discretion,
shall be required for any increase in the Global Borrowing Base or the U.S.
Borrowing Base.
 
 
 
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(d)   Effectiveness of a Redetermined Borrowing Base. After a redetermined
Global Borrowing Base or U.S. Borrowing Base is approved or is deemed to have
been approved by the Required Lenders, the Required U.S. Lenders, the
Super-majority Lenders or the Super-majority U.S. Lenders, as applicable,
pursuant to Section 2.07(c)(iii) (and, in the case of an increase, the Parent),
the Global Administrative Agent shall notify the Parent, the Borrower, the
Lenders and the U.S. Lenders of the amount of the redetermined Global Borrowing
Base and the U.S. Borrowing Base (the “New Borrowing Base Notice”), and such
amounts shall become the new Global Borrowing Base and U.S. Borrowing Base,
effective and applicable to the Parent, the Borrower, the Agents, each Issuing
Bank and the Lenders:

(i)       in the case of a Scheduled Redetermination, (A) if the Global
Administrative Agent shall have received the Engineering Reports required to be
delivered by the Parent 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 Global Administrative Agent shall not have received the Engineering Reports
required to be delivered by the Parent 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 amounts shall then become the Global Borrowing Base and the U.S. Borrowing
Base, as applicable, until the next Scheduled Redetermination Date, the next
Interim Redetermination Date or the next adjustment to the Global Borrowing Base
and/or the U.S. Borrowing Base under Section 8.12(c), 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 Parent.

(e)   Allocation of the U.S. Borrowing Base. For so long as any of the
Combined Commitments are in effect and/or any Combined Obligations are
outstanding, a portion of the U.S. Borrowing Base may be allocated to support
the availability of Revolving Credit Exposure in accordance with this Section
2.07(e).

(i)   Within ten (10) Business Days of receipt of a New Borrowing Base Notice,
the Parent shall specify the amount of U.S. Borrowing Base to be allocated to
support the availability of Revolving Credit Exposure by providing a written
notice to the Global Administrative Agent and the Administrative Agent of such
allocation (each such notice herein a “Borrowing Base Allocation Notice”);
provided that at no time shall (x) the Allocated U.S. Borrowing Base be an
amount less than US$50,000,000 (such minimum amount in respect of the Allocated
U.S. Borrowing Base then in effect, the “Minimum Allocated U.S. Borrowing Base”)
or (y) the Allocated Canadian Borrowing Base (after giving effect to such
allocation) exceed the Aggregate Maximum Credit Amounts. In the event that the
Parent fails to provide the Global Administrative Agent with a Borrowing Base
Allocation Notice required to be delivered upon receipt of a New Borrowing Base
Notice within such ten (10) Business Day period, the U.S. Borrowing Base will be
allocated in the same amount as existed prior to such redetermination.

 
 
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Promptly upon the allocation of the U.S. Borrowing Base, the Global
Administrative Agent shall provide a written notice to the Combined Lenders. Any
designation of the Allocated U.S. Borrowing Base or the Allocated Canadian
Borrowing Base effected pursuant to this Section 2.07(e)(i) in connection with a
determination or redetermination of the Global Borrowing Base or U.S. Borrowing
Base, shall be effective as of the date of the New Borrowing Base Notice.

(ii)   So long as no Default or Event of Default shall have occurred and
be continuing, from time to time but in no event more than (A) four (4) times
per fiscal year and (B) once every thirty (30) days, upon at least five (5)
Business Days prior written notice to the Global Administrative Agent (the
“Discretionary Borrowing Base Allocation Notice”), the Parent may reallocate the
U.S. Borrowing Base between the Allocated U.S. Borrowing Base and the Allocated
Canadian Borrowing Base (a “Discretionary Borrowing Base Reallocation”).
Promptly upon the allocation of the U.S. Borrowing Base between the Allocated
U.S. Borrowing Base and the Allocated Canadian Borrowing Base in accordance with
the procedures set forth in this clause (ii), the Global Administrative Agent
shall provide a written notice thereof to the Combined Lenders. Any
Discretionary Borrowing Base Reallocation shall (1) be effective five (5)
Business Days following the date the Global Administrative Agent receives the
Discretionary Borrowing Base Allocation Notice or the date indicated for such
effectiveness in the Discretionary Borrowing Base Allocation Notice, whichever
is later and (2) be subject to (x) the Minimum Allocated U.S. Borrowing Base and
(y) the Allocated Canadian Borrowing Base (after giving effect to such
allocation) not exceeding the Aggregate Maximum Credit Amounts.

Section 2.08    Letters of Credit.

(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, amended, renewed or extended if, after such issuance or at the
time of any such amendment, renewal or extension, (i) the LC Exposure would
exceed the LC Commitment and (ii) the total Revolving Credit Exposure would
exceed the total Commitments of all Lenders. 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:

 
 
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(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 terms of the proviso in Section 2.08(a) shall be
satisfied. 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).

(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

 
 
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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.

(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
 
 
 
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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).
 
 
 
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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 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), (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) or (iii) the Borrower receives notice
from the Administrative Agent that the LC Exposure exceeds 105% of the LC
Commitment, then the Borrower shall deposit, as of the date of such notice or
required payment or, in the case of clause (z) below, within three Business Days
of the Borrower’s receipt of notice from the Administrative Agent, 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, (x) in the case of an Event of Default, the LC Exposure, (y) in the case of
a payment required by Section 3.04(c), the amount of such excess as provided in
Section 3.04(c), or (z) in the case of the LC Exposure exceeding the LC
Commitment due to fluctuations in the exchange rate between the Dollar and the
Canadian Dollar, the excess of the LC Exposure over the LC Commitment, in each
case, 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
 
 
 
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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
the Parent or of its Subsidiary 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 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) or clause (z) of this Section 2.08(j), 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. If
the Borrower was (1) required to provide an amount of cash collateral hereunder
as a result of the LC Exposure exceeding the LC Commitment due to fluctuations
in the exchange rate between the Dollar and the Canadian Dollar, (2) the LC
Exposure no longer exceeds the LC Commitment and (3) and the Borrower is not
otherwise required to post cash collateral in respect of the Letters of Credit
hereunder which has not been posted, then the amount of such excess shall be
returned to the Borrower within three Business Days upon request of the
Borrower.
 
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

 
 
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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 US$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 US$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 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.
 
 
 
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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 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
 
 
 
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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 deemed paid to and redirected by
such Defaulting Lender, and each Lender irrevocably consents to the foregoing.

 
 
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(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 the Parent 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,
 
 
 
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and (ii) the amount of the Agreed Currency which the relevant Lender or Agent,
as applicable, is able to purchase on the Business Day next following such
receipt with the proceeds of such payment or payments in accordance with its
normal procedures and after deducting any premiums and costs of exchange is less
than the amount of the Agreed Currency due in respect of such liability
immediately prior to such judgment or order, then 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. Subject to Section 1.06 and Section 1.07, any
amount of money to be used in determining compliance with this Agreement may be
denominated in either US$ or C$ and, in accordance with such determination, may
be converted from US$ to C$ or vice-versa, as applicable, at the then-current
rate of exchange on the date thereof as determined according to the definition
of Dollar Equivalent or the principles thereof with respect to a conversion from
C$ to US$, as applicable, subject to any premiums and costs of exchange in
respect of any indemnification obligations hereunder.

ARTICLE III
PAYMENT 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.
 
 
 
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(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 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.
 
 
 
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(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:

(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

 
 
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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. Subject to Section 3.04(d) below, the Parent shall
be required to prepay the U.S. Borrowings and the Borrower shall be required to
prepay Borrowings hereunder in accordance with the following, to the extent the
Parent does not otherwise make such prepayment in accordance with the U.S.
Credit Agreement:

(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).

(ii)    Upon any redetermination of or adjustment to the amount of the Global
Borrowing Base in accordance with Section 2.07, Section 8.12(c) or Section 9.10
(solely as a result of a Casualty Event), if the total Combined Credit Exposures
exceeds the redetermined or adjusted Global Borrowing Base or the Revolving
Credit Exposures exceeds the redetermined or adjusted Allocated Canadian
Borrowing Base, then the Parent and the Borrower shall, at their option, either
(A) make (or cause to be made) a single payment of principal in an amount equal
to such Global Borrowing Base Deficiency or Canadian Borrowing Base Deficiency,
as applicable, and, if any Global Borrowing Base Deficiency or Canadian
Borrowing Base Deficiency remains after prepaying all of the Borrowings and U.S.
Borrowings as a result of an LC Exposure, pay to the Global 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 Global Borrowing Base
Deficiency (or if a Canadian Borrowing Base Deficiency exists, but not a Global
Borrowing Base Deficiency, one-sixth (1/6th) of the amount of such Canadian
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 the Parent or
any of its Restricted Subsidiaries which are or shall become a Guarantor
contemporaneously with such submission pursuant to Section 8.13 for
consideration in connection with the determination of the Global Borrowing Base
which the Global Administrative Agent and the Required Lenders deem
satisfactory, in their sole discretion, to eliminate such Global Borrowing Base
Deficiency and/or Canadian Borrowing Base Deficiency, (D) within fifteen (15)
days following the Deficiency Notification Date, in the case of a Canadian
Borrowing Base Deficiency, reallocate the

 
 
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U.S. Borrowing Base under Section 2.07(e) to the Allocated Canadian Borrowing
Base in amount not less than such Canadian Borrowing Base Deficiency or (E)
within fifteen (15), thirty (30) or forty-five (45) days following the
Deficiency Notification Date, as applicable, eliminate such Global Borrowing
Base Deficiency and/or Canadian Borrowing Base Deficiency through a combination
of a payment, submission of additional Oil and Gas Properties and/or
reallocation of the U.S. Borrowing Base as set forth in clauses (A), (C) or (D)
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 Parent and/or the Borrower
shall provide written notice to the Global Administrative Agent setting forth
their election pursuant to the immediately preceding sentence.

(iii)   Upon any adjustments to the Global Borrowing Base and/or the U.S.
Borrowing Base pursuant to Section 9.02(n) or Section 9.10 (other than
adjustments resulting directly from Casualty Events), if the total Combined
Credit Exposures exceeds the Global Borrowing Base or the Revolving Credit
Exposures exceeds the Allocated Canadian Borrowing Base as adjusted, then the
Parent and/or the Borrower shall (A) prepay the Borrowings in an aggregate
principal amount equal to such Global Borrowing Base Deficiency or Canadian
Borrowing Base Deficiency, as applicable, and (B) if any excess remains after
prepaying all of the Borrowings and U.S. Borrowings as a result of an LC
Exposure, pay to the Global 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 Parent and 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 Global Borrowing Base and/or the
U.S. Borrowing Base under Section 9.02(n) or (y) prior to or contemporaneously
with such adjustment to the Global Borrowing Base and/or the U.S. Borrowing Base
under Section 9.10 (other than 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 Commitments 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.

 
 
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(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 3.4  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 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
 
 
 
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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 IV
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 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.

 
 
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(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 Guarantors unto and in favor of the Global
Administrative Agent or Administrative Agent for the benefit of the Secured
Parties of all of the Borrower’s or each Guarantor’s interest in and to
production and all proceeds attributable thereto which may be
 
 
 
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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 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 V
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

 
 
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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.

(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.
 
 
 
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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 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
 
 
 
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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 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
5.3 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
 
 
 
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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 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
 
 
 
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(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 VI
CONDITIONS PRECEDENT

Section 6.01   Effective Date. The obligations of the Lenders to amend and
restate the Existing Canadian Credit Agreement 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 Global 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 legal counsel to the Global Administrative
Agent and the Administrative Agent).

(b)  The Global 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) (A) the officers of the Borrower or such
Guarantor who are authorized to sign the Loan Documents to which the Borrower or
such Guarantor is a party and specimen signatures of such authorized officers or
(B) that no change has occurred in the incumbency of the officers of the
Borrower or such Guarantor who are authorized to sign the Loan Documents to
which the Borrower or such Guarantor is a party since September 6, 2011 and
(iii) (A) the articles or certificate of incorporation and bylaws (or comparable
organizational documents) of the Borrower and such Guarantor or (B) that there
has been no amendment or other change to the articles or certificate of
incorporation and bylaws (or comparable organizational documents) of the
Borrower and such Guarantor since September 6, 2011. The Global Administrative
Agent and the Lenders may conclusively rely on such certificate until the Global
Administrative Agent receives notice in writing from the Borrower to the
contrary.

(c)  The Global Administrative Agent shall have received from each party hereto
counterparts (in such number as may be requested by the Global Administrative
Agent) of this Agreement signed on behalf of such party.

(d)  The Global Administrative Agent shall have received from each party thereto
duly executed counterparts (in such number as may be requested by the Global
Administrative Agent) of the Security Instruments or amendments to existing
Security Instruments, in each case, as described on Exhibit E-1.
 
 
 
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(e)  The Global Administrative Agent shall have received a copy of the executed
U.S. Credit Agreement and any other U.S. Loan Documents which it reasonably
requests.

(f)  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.

(g)  The Administrative Agent shall have received an opinion of (i) Davis Polk &
Wardwell LLP, special counsel to the Parent 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.

(h)  The Administrative Agent shall have received a certificate of insurance
coverage of the Canadian Credit Parties evidencing that the Canadian Credit
Parties are carrying insurance in accordance with Section 7.11.

(i)   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.
 
(j)   At the time of and immediately after giving effect to the amendment and
restatement of the Existing Canadian Credit Agreement, no Default shall have
occurred and be continuing.

(k)  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 the amendment and
restatement of the Existing Canadian Credit Agreement, 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 amendment and
restatement of the Existing Canadian Credit Agreement, 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.

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
 
 
 
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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 December
31, 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:

(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).

 
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES

The Parent represents and warrants to the Lenders that:

Section 7.01   Organization; Powers. Each of the Parent and its Restricted
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, 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 the
Parent’s and each Restricted Subsidiary’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 and each U.S. Loan
Document to which the Parent and each Restricted Subsidiary is a party has been
duly executed and delivered by the Parent and such Restricted Subsidiary and
constitutes a legal, valid and binding obligation of the Parent and such
Restricted Subsidiary, as 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 any U.S. 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 or the U.S. Security
Instruments as required by this Agreement or the U.S. Credit 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 the Parent or any Restricted Subsidiary or (ii) any applicable Governmental
Requirement or any order of any Governmental Authority applicable to or binding
upon the Parent or any Restricted Subsidiary (including, without limitation,
FCPA and OFAC, if applicable), 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 the U.S. Credit Agreement or
any indenture, agreement or other instrument pursuant to which any Material Debt
is outstanding, in each case, binding upon the Parent or any Restricted
Subsidiary or their Properties, or give rise to

 
 
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a right thereunder to require any payment to be made by the Parent or any
Restricted Subsidiary, 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 the Parent or any Restricted Subsidiary (other than the Liens
created or permitted by the Loan Documents and the U.S. Loan Documents).

Section 7.04   Financial Condition; No Material Adverse Effect. (a) The
financial statements the Parent has furnished to the Global Administrative Agent
pursuant to Section 6.01(l) of the Existing U.S. Credit Agreement present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Parent 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 the Parent’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 Parent, threatened against
or affecting the Parent or any Restricted Subsidiary that (a) would reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect or (b) involve any Loan Document, any U.S. Loan Document or the
Transactions.

Section 7.06   Environmental Matters. Except as disclosed in the Parent’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 the Parent or any Restricted Subsidiary
nor the operations conducted by the Parent or any Restricted Subsidiary thereon,
and, to the knowledge of the Parent, no operations of any prior owner, lessee,
or 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 the Parent, 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 the Parent nor any Restricted Subsidiary nor any Oil and Gas
Property of the Parent or any Restricted Subsidiary nor the operations currently
conducted thereon or, to the knowledge of the Parent, 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 Parent’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 Parent and each Restricted Subsidiary, 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 the Parent and each
 
 
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Restricted Subsidiary are 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 Parent or any Restricted Subsidiary by the Parent or any
Restricted Subsidiary in the past have been transported, treated and disposed of
in accordance with Environmental Laws and, to the knowledge of the Parent, do
not pose an imminent and substantial endangerment to public health or welfare or
the environment, and, to the knowledge of the Parent, 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 Parent’s knowledge, there has been no Hazardous Discharge on or to
any Oil and Gas Property of the Parent or any Restricted Subsidiary, 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 Parent’s knowledge, neither the Parent nor any Restricted Subsidiary
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 Parent and
its Restricted Subsidiaries is in compliance with all Governmental Requirements
applicable to it or its Oil and Gas Properties (including, without limitation,
FCPA and OFAC, if applicable) 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   Investment Company Act. Neither the Parent nor any
Restricted Subsidiary is required to register as an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

Section 7.09   Taxes. Each of the Parent and its Restricted Subsidiaries 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 Parent or such Restricted Subsidiary, as
applicable, 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.

Section 7.10   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 the Parent or any
Restricted Subsidiary to the Global Administrative
 
 
 
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Agent or any Lender or any of their Affiliates in connection with the
negotiation of this Agreement or any other Loan Document or the U.S. Credit
Agreement or any other U.S. Loan Document or delivered hereunder or under any
other Loan Document or the U.S. Credit Agreement or any other U.S. Loan Document
(as modified or supplemented by other information so furnished), when furnished
(and, with respect to any such information delivered to the Global
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 Parent or its Subsidiaries); provided that, with
respect to projected financial information, prospect information, geological and
geophysical data and engineering projections, the Parent 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 Parent and its
Restricted Subsidiaries and (b) projections concerning volumes attributable to
the Oil and Gas Properties of the Parent and its Restricted Subsidiaries and
production and cost estimates contained in each Reserve Report are necessarily
based upon professional opinions, estimates and projections and that the Parent
and the Restricted Subsidiaries do not warrant that such opinions, estimates and
projections will ultimately prove to have been accurate.

Section 7.11   Subsidiaries. Schedule 7.11 lists the name, jurisdiction of
organization and organizational identification number of each Subsidiary of the
Parent as of the Effective Date and identifies each such Subsidiary as either a
Restricted or Unrestricted Subsidiary.

Section 7.12   Insurance. All insurance reasonably necessary in the Parent’s and
its Restricted Subsidiaries’ ordinary course of business is in effect and all
premiums due on such insurance have been paid. Schedule 7.12 sets forth a list
of all such insurance policies maintained by the Parent and its Restricted
Subsidiaries as of the Effective Date.

Section 7.13   Location of Business and Offices. As of the Effective Date, the
Parent’s jurisdiction of organization is Delaware; the name of the Parent as
listed in the public records of its jurisdiction of organization is Quicksilver
Resources Inc.; and the organizational identification number of the Parent in
its jurisdiction of organization is 75-2756163. 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 7.11.

Section 7.14   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:
 
 
 
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(a)  Each of the Parent and its Restricted Subsidiaries has good and defensible
title to the material Oil and Gas Properties evaluated in the Reserve Reports
used in the most recent determination of the Global Borrowing Base and good
title to all its personal Properties that are necessary to permit the Parent and
its Restricted Subsidiaries 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
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 Parent or the Restricted Subsidiary specified as the
owner owns the net interests in production attributable to the Hydrocarbon
Interests as reflected in the most recently delivered Reserve Reports. The
ownership of such Oil and Gas Properties shall not obligate the Parent or such
Restricted Subsidiary 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 Reports that is not offset by a
corresponding proportionate increase in the Parent’s or such Restricted
Subsidiary’s net revenue interest in such Oil and Gas Property; provided that
the Parent or any applicable Restricted Subsidiary shall have the right or
obligation to bear costs disproportionate to the Parent’s or such Restricted
Subsidiary’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 Parent and its Restricted Subsidiaries 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 Parent
and its Restricted Subsidiaries, including, without limitation, all easements
and rights of way, include all rights and Properties necessary to permit the
Parent and its Restricted Subsidiaries to conduct their business in the same
manner as its business has been conducted prior to the date hereof.

(d)  The Parent and each Restricted Subsidiary 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 the Parent and such Restricted
Subsidiary 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 7.15   Federal Reserve Regulations. The Parent and its Restricted
Subsidiaries are not engaged principally, or as one of its or their important
activities, in the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying margin stock (within
the meaning of Regulation T, U or X of the Board). No part of the proceeds of
any Loan or Letter of Credit will be used for any purpose which violates the
provisions of Regulations T, U or X of the Board.
 
 
 
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Section 7.16    Compliance with Benefit Plans; ERISA.

(a)  As of the date hereof, neither the Parent nor any Subsidiary nor any ERISA
Affiliate of the Parent 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 the Parent or any Restricted Subsidiary or any ERISA Affiliate of the Parent
or any Restricted Subsidiary 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 the Parent nor any Restricted Subsidiary nor any ERISA Affiliate of the
Parent or any Restricted Subsidiary 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 Parent nor any Restricted Subsidiary nor any ERISA
Affiliate of the Parent or any Restricted Subsidiary maintains a multiple
employer welfare benefit arrangement within the meaning of Section 3(40)(A) of
ERISA

(b)  Except as could not reasonably be expected to have a Material Adverse
Effect, (i) 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; (ii) all obligations of the
Canadian 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; (iii) no promises of benefit improvements under
the Canadian Pension Plans, if any, or the Canadian Benefit Plans have been
made; (iv) 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;
(v) no Canadian Credit Party has made any improper withdrawals prohibited by
applicable law, or applications of, the assets of any of the Canadian Pension
Plans; (vi) no Canadian Pension Plan Termination Event has occurred; (vii) no
Canadian 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; (viii) all contributions or premiums
required to be made by any

 
 
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Canadian 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 (ix) 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 Canadian
Credit Party contributes or has made contributions on behalf of its employees to
a multi-employer pension 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 7.16(b),
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.

Section 7.17   Status As Senior Indebtedness. The Guarantees by the U.S.
Guarantors of the Loans and other Secured Indebtedness hereunder are “Bank
Indebtedness,” “Senior Indebtedness” and “Designated Senior Indebtedness” under
both the Existing Subordinate Notes and the Existing Convertible Debentures, and
this Agreement is a “Senior Secured Credit Agreement” under the Existing
Subordinate Notes and one of the “Combined Credit Agreements” under the Existing
Convertible Debentures.

Section 7.18   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 Parent and the Guarantors, taken as a
whole, will exceed the aggregate Debt of the Parent and the Guarantors on a
consolidated basis, as the Debt becomes absolute and matures, (b) each of the
Parent and the Guarantors 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 Parent and the Guarantors 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
Parent and the Guarantors will not have unreasonably small capital for the
conduct of its business.

Section 7.19    Priority; Security Matters.

(a)  The U.S. Secured Indebtedness is and shall be at all times secured by
valid, perfected first priority Liens in favor of the Global Administrative
Agent, covering and encumbering the Mortgaged Properties and other Properties
pledged pursuant to the U.S. Security Instruments, to the extent perfection has
occurred or will occur, by the recording of a mortgage, the filing of a 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 Global Administrative Agent may be subject to Permitted Liens.

(b)  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
 
 
 
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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.

ARTICLE VIII
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 Parent covenants and agrees with the Lenders that:

Section 8.01   Financial Statements; Other Information. The Parent will furnish
to the Global Administrative Agent:

(a)  Annual Financial Statements. 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 the Parent 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), (i) its
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 Parent and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied and (ii) its unaudited balance sheet, income statement and related
statement of cash flows as of the end of and for the fiscal year most recently
ended which provides consolidating statements, including statements
demonstrating eliminating entries, if any, with respect to any Consolidated
Subsidiaries that are Unrestricted Subsidiaries, in substantially the form set
forth in its Annual Report on Form 10-K for the period ending December 31, 2010.

(b)  Quarterly Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 10 days after the Parent
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), (i) its 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 the
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
 
 
 
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of footnotes and (ii) its unaudited balance sheet, income statement and related
statement of cash flows as of the end of and for the fiscal quarter most
recently ended which provides consolidating statements, including statements
demonstrating eliminating entries, if any, with respect to any Consolidated
Subsidiaries that are Unrestricted Subsidiaries, in substantially the form set
forth in its Annual Report on Form 10-Q for the period ending September 30,
2011.

(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 of the Parent 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 Global Administrative Agent, and, if requested by the Global
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 dollar value in excess of US$45,000,000
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 dollar value in excess of US$45,000,000.

(f)   Notice of Incurrence of Debt Resulting in Global Borrowing Base Reduction.
Written notice of the incurrence by the Parent or any Restricted Subsidiary of
any Debt pursuant to Section 9.02(n) which results in an automatic reduction in
the Global Borrowing Base and/or the U.S. 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.

(g)       Information Regarding Borrower and Guarantors.

(i)  In the case of the Parent and the U.S. Guarantors, prompt written notice
(and in any event within thirty (30) days following any such change) of any
change (A) in the Parent’s or any U.S. Guarantor’s corporate name, (B) in the
Parent’s or any U.S. Guarantor’s identity or corporate structure or in the
jurisdiction in which such Person is incorporated or formed or (C) in the
Parent’s or any U.S. Guarantor’s jurisdiction of organization or such Person’s
organizational identification number in such jurisdiction of organization

(ii)  In the case of the Borrower and the Canadian Guarantors, (A) prompt
written notice (and in any event within ten (10) days following any such change)
of any change (1) in the Borrower or any Canadian Guarantor’s corporate name or
(2) in the address of the Borrower’s or any Canadian Guarantor’s chief executive
office and (B) prompt written notice (with a copy to the U.S. Administrative
Agent) (and in any event

 
 
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within (30) days following any such change) of any change (1) in the Borrower or
any Canadian Guarantor’s identity or corporate structure or in the jurisdiction
in which such Person is incorporated or formed or (2) in the Borrower’s or any
Canadian Guarantor’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 the Parent or any Restricted Subsidiary (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 Global
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 Parent posts such documents, or provides a link
thereto on the Parent’s website on the Internet at www.qrinc.com or (B) such
documents are publically available on the SEC’s EDGAR website or (ii) on which
such documents are delivered to the Global Administrative Agent, including in
electronic form. Once received by the Global Administrative Agent, the Global
Administrative Agent shall post such documents on the Parent’s behalf on an
Internet or intranet website, if any, to which each Lender and the Global
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Global Administrative Agent); provided that the Parent
shall deliver such documents in a form acceptable to the Global Administrative
Agent. Except for such compliance certificates, the Global 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 Parent 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. Any notices, certificates, statements or other
documents required to be delivered or provided, and, to the extent necessary,
executed by the Parent under the U.S. Credit Agreement shall be deemed to have
been so delivered under this Agreement on the date on which the Parent delivers
such notices, certificates statements or other documents under the U.S. Credit
Agreement.

Section 8.02   Notices of Material Events. Promptly following a Responsible
Officer becoming aware of the occurrence thereof, the Parent will furnish to the
Global 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 Parent 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

 
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(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.

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 Parent will, and will cause
each Restricted Subsidiary 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 Parent will, and will cause each
Restricted Subsidiary to, pay its obligations, including Tax liabilities and
remittance liabilities of the Parent and all of its Restricted Subsidiaries,
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) the Parent or such Restricted Subsidiary 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 the Parent or any Restricted Subsidiary that was evaluated in the
Reserve Reports used in the most recent determination of the Global Borrowing
Base.

Section 8.05   Operation and Maintenance of Properties. The Parent will and will
cause each Restricted Subsidiary 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 Reports used in the most recent determination of the
Global Borrowing Base, provided that, in the case of delay rentals, the Parent
and/or the applicable Restricted Subsidiary shall only be required to pay and
discharge, or make reasonable efforts to pay and discharge, delay rentals as and
to the extent the Parent or such Restricted Subsidiary determines in good faith
that payment and discharge thereof is in the Parent’s or such Restricted
Subsidiary’s, as applicable, best interest, (b) perform, or make reasonable and
customary efforts to cause to be performed, the obligations of the Parent or any
such Restricted Subsidiary 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 Reports used in the
most recent determination of the Global Borrowing Base, (c) do all other things
necessary to keep unimpaired, except for Liens permitted by the Loan Documents,
its
 
 
 
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rights with respect to its material Oil and Gas Properties evaluated in the
Reserve Reports used in the most recent determination of the Global 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 Parent is not the operator of any Property, the Parent 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 Parent will, and will cause each Restricted
Subsidiary 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 or the
U.S. Loans, as applicable, shall be endorsed in favor of the applicable
Administrative Agent as its interests in the collateral may appear and such
policies shall name the applicable Administrative Agent and the Lenders or the
U.S. Lenders, as applicable, as “additional insureds” and provide that the
insurer will endeavor to give at least 30 days prior notice of any cancellation
to the applicable Administrative Agent.

Section 8.07   Books and Records; Inspection Rights. The Parent will, and will
cause each Restricted Subsidiary 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 Parent will, and will cause each
Restricted Subsidiary to, permit any representatives designated by the Global
Administrative Agent or any Lender (coordinated through and together with the
Global 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 Parent’s or
such Restricted Subsidiary’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 Parent or such Restricted Subsidiary) 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 Parent shall bear such cost.

Section 8.08   Compliance with Laws . The Parent will, and will cause each
Restricted Subsidiary 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 Parent shall, and shall cause each Restricted Subsidiary 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
 
 
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Parent shall, and shall cause each Restricted Subsidiary 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 Restricted Subsidiary, 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 Parent or a Restricted Subsidiary is not the operator of
any Property, none of the Parent and its Restricted Subsidiaries 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 Parent and its Restricted
Subsidiaries. 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 Parent 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 Parent shall, and shall cause its
Restricted Subsidiaries to, use commercially reasonable efforts to cause the
operator to comply with this Section 8.09.

(c)  To the extent reasonably requested by the Global Administrative Agent, the
Parent will, and will cause each Restricted Subsidiary to, provide environmental
assessment, audit or test reports of any Oil and Gas Properties of the Parent or
any Restricted Subsidiary, provided an Event of Default then exists or the
Global 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 Parent or any Restricted Subsidiary
of any Oil and Gas Property for consideration of at least US$25,000,000, other
than an acquisition of additional interests in Oil and Gas Properties in which
Parent or any Subsidiary previously held an interest, to the extent Borrower or
such Restricted Subsidiary obtains or is provided with the same, the Parent
shall, promptly following Borrower’s or such Restricted Subsidiary’s obtaining
or being provided with the same, deliver to the Global Administrative Agent such
final and non-privileged material environmental reports of such Oil and Gas
Properties as are reasonably requested by the Global Administrative Agent.

Section 8.10   Further Assurances. (a) The Parent at its sole expense will, and
will cause each Restricted Subsidiary to, promptly execute and deliver to the
applicable Administrative Agent all such other documents, agreements and
instruments reasonably requested by the applicable Administrative Agent to
comply with, cure any defects or accomplish the conditions precedent, covenants
and agreements of the Parent or any Restricted Subsidiary, as the case may be,
in the Loan Documents and U.S. Loan Documents, including the Notes and U.S.
Notes, or to further evidence and more fully describe the collateral intended as
security for the Secured Indebtedness or the U.S. Secured Indebtedness, as
applicable, or to correct any omissions in this Agreement, the U.S. Credit
Agreement, the Security Instruments or the U.S. Security Instruments, or to
state more fully the obligations secured therein, or to perfect, protect or
preserve any Liens created pursuant to this Agreement, the U.S. Credit Agreement
or any of the
 
 
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Security Instruments or U.S. 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 applicable
Administrative Agent, in connection therewith.

(b)   The Parent hereby authorizes the applicable 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 Parent, the Borrower or
any other Guarantor where permitted by law. A carbon, photographic or other
reproduction of the Security Instruments or the U.S. Security Instruments, as
applicable, 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 Parent
shall (or, in connection with the Canadian Reserve Report, shall cause the
Borrower to) (a) furnish to the Global Administrative Agent the Reserve Reports
prepared by one or more Approved Petroleum Engineers (the “Prepared Reserve
Reports”) as of January 1st of such year. On or before October 1st of each year,
commencing October 1, 2012, the Parent shall (or, in connection with the
Canadian Reserve Report, shall cause the Borrower to) furnish to the Global
Administrative Agent, the Lenders and the U.S. Lenders the Reserve Reports as of
July 1st of such year prepared by or under the supervision of the chief engineer
of the Parent in accordance with the procedures used in the most recent Prepared
Reserve Reports. 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 Parent and its Restricted
Subsidiaries 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 Global
Administrative Agent or the Parent pursuant to Section 2.07(b), the Parent shall
(or, in the connection with the Canadian Reserve Report, shall cause the
Borrower to), upon the request of the Global Administrative Agent, furnish to
the Global Administrative Agent, the Lenders and the U.S. Lenders the Reserve
Reports (i) prepared by or under the supervision of the chief engineer of the
Parent and in accordance with the procedures used in the immediately preceding
Prepared Reserve Reports delivered pursuant to Section 8.11(a), and (ii) which
shall have an “as of” date as required by the Global Administrative Agent, no
later than a date mutually agreed to by the Parent or the Borrower, as
applicable, and the Global Administrative Agent. If the Global Administrative
Agent does not request updated Reserve Reports pursuant to the immediately
preceding sentence, the Global Administrative Agent, the Lenders and the U.S.
Lenders may base such Interim Redetermination on the Reserve Reports most
recently delivered by the Parent or the Borrower, as applicable, hereunder.

(c)   With the delivery of each Reserve Report, the Parent shall (or, in
connection with the Canadian Reserve Report, shall cause the Borrower to)
provide to the Global Administrative Agent, the Lenders and the U.S. Lenders a
certificate from a Responsible Officer of the Parent or the Borrower, as
applicable, certifying that in all material respects: (i) the information
contained
 
 
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in the Reserve Reports and any other information delivered in connection
therewith are true and correct, (ii) subject to Immaterial Title Deficiencies,
(x) the Parent or a U.S. Guarantor owns good and defensible title to the Oil and
Gas Properties located in the United States evaluated in the applicable U.S.
Reserve Report and such Properties are free of all Liens except for Permitted
Liens and Liens securing the U.S. Secured Indebtedness and (y) the Borrower or a
Canadian Guarantor owns good and defensible title to the Oil and Gas Properties
located in Canada evaluated in the applicable Canadian 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 (x) with respect
to its Oil and Gas Properties located in the United States evaluated in the
applicable U.S. Reserve Report which would require the Parent or any U.S.
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 and (y) with respect to its Oil and Gas Properties located in
Canada evaluated in the applicable Canadian Reserve Report which would require
the Borrower or any Canadian 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 Reports 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 Parent and each Restricted Subsidiary
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 Canadian 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 or security interest is created by a debenture or
other Security Instrument and is of record (as necessary) as contemplated under
Section 6.01(f)(i) of the Existing Canadian Credit Agreement or (y) located in
any other province in Canada, the United States or any other country or
jurisdiction reasonably acceptable to the Global Administrative Agent; provided
that with respect to Oil and Gas Properties set forth in this clause (y), (i)
the Global 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 and (ii) the Global Administrative Agent shall have received title
information as the Global Administrative Agent may reasonably require
satisfactory to the Global 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 Global 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 Global Administrative Agent.

 
 
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Section 8.12   Title Information. (a) On or before the date that is 45 days
following the delivery to the Global Administrative Agent, the Lenders and the
U.S. Lenders of each Reserve Report required by Section 8.11(a), the Parent will
(or, in connection with the Canadian Reserve Report dealing with the property
described in Section 8.11(d)(y) (the “Canadian Reserve Report Affected
Property”), will cause the Borrower to) deliver title information in form and
substance reasonably acceptable to the Global Administrative Agent covering
enough of the Oil and Gas Properties evaluated by the U.S. Reserve Report and
the Canadian Reserve Report dealing with Canadian Reserve Report Affected
Property that were not included in such immediately preceding Reserve Report, so
that the Global Administrative Agent shall have received together with title
information previously delivered to the Global Administrative Agent,
satisfactory title information on at least 75% of the total value of the Proved
Hydrocarbon Interests evaluated by such Reserve Report.

(b)  If the Parent has provided (or, in connection with the Canadian Reserve
Report Affected Property, has caused the Borrower to provide) title information
for additional Oil and Gas Properties under Section 8.12(a), the Parent shall
(or, in connection with the Canadian Reserve Report Affected Property, shall
cause the Borrower to), within 60 days of notice from the Global Administrative
Agent that title defects or exceptions exist with respect to such additional
Properties (or such longer period as the applicable Administrative Agent may
agree in its discretion), either (i) cure any such title defects or exceptions
raised by such information (including defects or exceptions as to priority)
which are not permitted by Section 9.03, (ii) substitute acceptable Oil and Gas
Properties with no title defects or exceptions except for Permitted Liens having
an equivalent value or (iii) deliver title information in form and substance
acceptable to the Global Administrative Agent so that the Global Administrative
Agent shall have received, together with title information previously delivered
to the Global Administrative Agent, satisfactory title information on at least
75% of the value of the Proved Hydrocarbon Interests evaluated by the applicable
Reserve Report. For purposes of this Section 8.12(b), the Global Administrative
Agent must deliver any notice of title defects or exceptions with respect to any
Oil and Gas Properties within 60 days following the Global Administrative
Agent’s receipt of title information for such Oil and Gas Properties.

(c)   If the Parent is unable to (or, in connection with the Canadian Reserve
Report Affected Property, is unable to cause the Borrower to) cure any title
defect requested by the Global Administrative Agent, the Lenders or the U.S.
Lenders to be cured within the 60-day period (or such longer period as the
applicable Administrative Agent may agree in its discretion) or the Parent does
not (or, in connection with the Canadian Reserve Report Affected Property, does
not cause the Borrower to) comply with the requirements to provide acceptable
title information covering 75% of the value of the Proved Hydrocarbon Interests
evaluated in each most recent Reserve Report, such default shall not be a
Default, but instead the Global Administrative Agent, at the direction of (x)
the Required U.S. Lenders, with respect to the most recent U.S. Reserve Report,
and (y) the Required Lenders, with respect to the Canadian Reserve Report
Affected Property in the most recent Canadian Reserve Report, shall have the
right to exercise the following remedy in their sole discretion from time to
time, and any failure to so exercise this remedy at any time shall not be a
waiver as to future exercise of the remedy by the Global Administrative Agent,
the Lenders or the U.S. Lenders. To the extent that the Global Administrative
Agent is not reasonably satisfied with title to any Oil and Gas Property
included in such Reserve Report after the 60-day period (or such longer period
as the applicable
 
 
 
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Administrative Agent may agree in its discretion) has elapsed, such unacceptable
Oil and Gas Property shall not count towards the 75% requirement, and the Global
Administrative Agent may send a notice to the Parent and the Lenders and the
U.S. Lenders that the then outstanding Global Borrowing Base (and to the extent
such Oil and Gas Property is included in the most recent U.S. Reserve Report,
U.S. Borrowing Base) shall be reduced by an amount as determined by the Required
Lenders to cause the Parent and/or the Borrower to be in compliance with the
requirement to provide acceptable title information on 75% of the value of the
Proved Hydrocarbon Interests. This new Global Borrowing Base (and to the extent
such Oil and Gas Property is included in the most recent U.S. Reserve Report,
U.S. Borrowing Base) shall become effective immediately after receipt of such
notice by the Parent.

Section 8.13   Additional Collateral; Additional Guarantors; Release of
Certain Guarantors/Collateral. (a) In connection with each redetermination of
the Global Borrowing Base, the Parent shall (or, in connection with the Canadian
Reserve Report, shall cause the Borrower to) review each most recently completed
Reserve Report and the list of current Mortgaged Properties to ascertain whether
the Mortgaged Properties:

(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 are subject to a
floating charge or a security interest created by a debenture or other Security
Instrument, which is of record (as necessary) and that creates a first priority,
perfected Lien taken by way of a floating charge or a security interest (subject
only to Permitted Liens) on all of the total value of the Proved Hydrocarbons
Interests of the Borrower and the Guarantors (subject to de minimus exceptions),
or

(y) located in any other province in Canada, the United States or any other
country or jurisdiction reasonably acceptable to the Global Administrative Agent
are subject to fixed charges, collateral agreements or other Security
Instruments, which create first priority, perfected Liens (subject only to
Permitted Liens) on at least 80% of the total value of the Proved Hydrocarbon
Interests evaluated in such Reserve Report, after giving effect to exploration
and production activities, acquisitions, dispositions and production, that are
found in such locations.

In the event that the Mortgaged Properties do not satisfy clause (x) and (y)
above, then the Parent shall, and shall cause its Restricted Subsidiaries to,
grant, within 30 days of the delivery of the certificate required under Section
8.11(c) (or such longer period as the applicable Administrative Agent may agree
in its discretion), to the Canadian Administrative Agent as security for the
Secured Indebtedness or to the Global Administrative Agent as security for the
Combined Obligations, as applicable, a first-priority Lien interest (taken by
way of a floating charge over real property or otherwise) ( provided that
Permitted Liens may exist) on additional Oil and Gas Properties evaluated in
such Reserve Report containing Proved Hydrocarbon Interests not already subject
to a Lien of the Security Instruments or the U.S. Security Instruments, as
applicable, such that after giving effect thereto, each of clause (x) and (y)
will be satisfied. All such Liens will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments or other U.S. Security
Interests, as applicable, all in form and substance reasonably satisfactory to
the
 
 
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applicable Administrative Agent and in sufficient executed (and acknowledged
where necessary or appropriate) counterparts for recording purposes.
Notwithstanding anything to the contrary contained in this Agreement, if any
Restricted Subsidiary places a Lien on its Oil and Gas Properties to secure the
Secured Indebtedness or the U.S. Secured Indebtedness, as applicable, and such
Restricted Subsidiary is not a Guarantor, then it shall become a Guarantor and
comply with Section 8.13(c).

(b)

(i)  If the Parent or any U.S. Subsidiary becomes the owner of a Restricted
Subsidiary, then the Parent shall, or shall cause such U.S. Subsidiary 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 Global Administrative Agent may
agree in its discretion), (A) pledge (x) 100% of the Equity Interests of such
new Restricted Subsidiary if such Subsidiary is a U.S. Subsidiary or (y) 65% of
the total combined voting power of all classes of Equity Interests (and the
remaining 35% under a Pledge Agreement to secure the Secured Indebtedness
hereunder if requested by the Administrative Agent in the case of Domestic
Subsidiaries) and 100% of all non-voting Equity Interests of such new Restricted
Subsidiary, if such new Restricted Subsidiary is a Foreign Subsidiary
(including, without limitation, delivery of original stock certificates
evidencing the Equity Interests of such new Restricted Subsidiary, together with
appropriate undated stock powers for each certificate duly executed in blank by
the registered owner thereof) and (B) execute and deliver such other additional
closing documents, certificates and legal opinions as shall reasonably be
requested by the Global Administrative Agent.

(ii)  If any Domestic Subsidiary becomes the owner of a Restricted Subsidiary,
then the Parent shall (or shall cause the Borrower to) cause such Domestic
Subsidiary 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), (A) pledge 100% of the Equity Interests of such
new Restricted Subsidiary (including, without limitation, delivery of original
stock certificates evidencing the Equity Interests of such new Restricted
Subsidiary, together with appropriate undated stock powers for each certificate
duly executed in blank by the registered owner thereof) and (B) execute and
deliver such other additional closing documents, certificates and legal opinions
as shall reasonably be requested by the Administrative Agent.

(c)   The Parent shall cause the following Persons to guarantee the
Secured Indebtedness pursuant to the Guaranty Agreement:

(i)   each U.S. Guarantor;

(ii)   any Person required to guarantee the Secured Indebtedness in order for
the Parent to be in compliance with Section 9.05(b);

(iii)       any Person that guarantees any Canadian Permitted Additional Debt;

 
 
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(iv)  any Restricted Subsidiary that places a Lien as required by the last
sentence of Section 8.13(a) on its Oil and Gas Properties to secure the Secured
Indebtedness; and

(v)   one or more additional Domestic Subsidiaries to the extent necessary to
cause (1) the total assets of the Domestic Subsidiaries that are not Canadian
Guarantors to be less than 15% of the combined assets of the Borrower and its
Domestic Subsidiaries and (2) the combined EBITDAX of such Domestic Subsidiaries
to be less than 15% of the combined EBITDAX of the Borrower and its Domestic
Subsidiaries.

(d)  In connection with any guaranty required by Section 8.13(c), the Parent
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 applicable
Administrative Agent may agree in its discretion) after the event requiring such
guaranty, execute and deliver (i) a supplement to the Guaranty Agreement or the
U.S. Guaranty Agreement, as applicable, and (ii) such other additional closing
documents, certificates and legal opinions as shall reasonably be requested by
the applicable Administrative Agent. If at any time any Person is not otherwise
required to guarantee the Secured Indebtedness or the U.S. Secured Indebtedness,
as applicable, hereunder (whether pursuant to the other provisions of this
Section8.13 or otherwise) or under any other Loan Document or any other U.S.
Loan Document, as applicable, then upon receipt by the applicable Administrative
Agent of evidence satisfactory to it that such Person has been fully and finally
released from its guarantee obligations in respect of the Existing Debt or, if
applicable, any Permitted Additional Debt, as the case may be, such Person shall
be released from its guarantee obligations with respect to the Secured
Indebtedness or the U.S. Secured Indebtedness as applicable, and the applicable
Administrative Agent shall, at the sole cost and expense of the Parent or the
Borrower, as applicable, execute such further documents and do all such further
acts so as to reasonably evidence such release. The Liens created by the
Security Instruments in any asset of the Parent or any Restricted Subsidiary
that is sold, assigned, farmed-out, conveyed or otherwise transferred in a
manner permitted hereby shall automatically be released, and, without limiting
the foregoing, (x) at the time of the contribution of the Equity Interests in
MLP Opco to MLP as contemplated by the Barnett Shale Transaction, all Liens
created by the Security Instruments in the assets of (including, without
limitation, the MLP Barnett Shale Assets), and any Investments by the Parent or
its Restricted Subsidiaries in, MLP Opco shall automatically terminate and all
obligations of MLP Opco under the Guaranty Agreement shall automatically be
released and (y) at the time of the contribution of the Existing Midstream
Assets to a partnership in exchange for a partnership interest therein in
connection with the Midstream Joint Venture all Liens created by the Security
Instruments in the Existing Midstream Assets shall automatically be released.
The Administrative Agent shall, at the cost of the Borrower, promptly following
its reasonable request, execute a “no-interest letter” addressed to the Borrower
and any other relevant parties in connection with its release of all Liens
created by the Security Instruments in the Existing Midstream Assets or any
other assets in accordance with the terms hereof.

(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 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
 
 
 
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applicable Domestic Subsidiary's property as the Administrative Agent, in its
sole discretion, determines as security for all then present and future Secured
Indebtedness of the Canadian Credit Parties to the Secured Parties. In this
connection, the Borrower will, and will cause each other Domestic Subsidiary 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
Domestic Subsidiary to grant, in favor of the Administrative 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 Domestic
Subsidiary 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 Parent will promptly
furnish to the Global 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 Borrower, its Restricted Subsidiaries, 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 Parent, any of its Restricted Subsidiaries 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 Parent will, and will cause each Restricted Subsidiary
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 US$50,000,000, all of
 
 
 
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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 Canadian Credit Party to
terminate, any Canadian Pension Plan in a manner, or take 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 Canadian
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, any Canadian 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 Canadian 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 Parent:

(a)  will cause the management, business and affairs of each of the 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 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 Parent and its Restricted Subsidiaries;

(b)  other than as contemplated by the Barnett Shale Transaction and the
Midstream Joint Venture, 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)  other than as contemplated by the Barnett Shale Transaction and the
Midstream Joint Venture, will not permit any Unrestricted Subsidiary to hold any
Equity Interest in, or any Debt of, the Parent or any Restricted Subsidiary.

Section 8.16   Section 1031 Exchange. If the Parent 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 Parent, the Parent 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 Parent, (b) payment in full in cash of the note
given by the Section 1031 Counterparty to the Parent 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 Parent.

 
 
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Section 8.17   Use of Proceeds. The Parent will use (and will cause the Borrower
to use) the proceeds of the Loans and the U.S. Loans and will use Letters of
Credit and U.S. 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 and U.S. LC Exposure under all U.S. Letters of Credit used as credit
support for the Parent’s or Restricted Subsidiary’s obligations under any Swap
Agreement shall not exceed an amount equal to (a) US$20,000,000 minus (b) the
amount of cash or treasury securities subject to Liens permitted by Section
9.03(l).

Section 8.18    Fiscal Year. The Parent's fiscal year shall end on December 31.

ARTICLE IX
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 Parent covenants and agrees with the Lenders that:

Section 9.01   Financial Covenants. (a) Interest Coverage Ratio. The Parent will
not, as of the last day of any fiscal quarter, permit its ratio of (i) EBITDAX
for the period of four fiscal quarters then ending (ii) to Cash Interest Expense
for such period, commencing with the four fiscal quarter period ending December
31, 2011, to be less than 2.5 to 1.0.

(b)   Current Ratio. The 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 Parent
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 Parent will not, and will not permit any Restricted
Subsidiary to, incur, create, assume or suffer to exist any Debt, except:

(a)  the Notes or other Secured Indebtedness and the U.S. Notes or other U.S.
Secured Indebtedness;

(b)  the Guarantee by the Parent or any Restricted Subsidiary of any Debt of any
Restricted Subsidiary 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 Parent or any
Restricted

 
 
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Subsidiary, as applicable, in such Restricted Subsidiary at the time such
Guarantee is executed;

(c)  Debt of the Parent or any Restricted Subsidiary to the Parent or any other
Restricted Subsidiary;

(d)  Debt outstanding on the date hereof and set forth on Schedule 9.02,
including without limitation the Existing 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 the Parent
or a Restricted Subsidiary, 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
US$45,000,000 in the aggregate at any one time outstanding;

(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 the Parent
or any Restricted Subsidiary;

(h)  Non-Recourse Debt in an aggregate amount outstanding at any time not to
exceed US$15,000,000;

(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(i);
provided that all Debt incurred under this clause (j), together with all Debt
incurred pursuant to clause (e) above, does not exceed US$45,000,000 in the
aggregate at any one time outstanding;

(k)       other Debt not to exceed US$65,000,000 in the aggregate at any one
time outstanding;

(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 7.09;

(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
 
 
 
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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 or
the U.S. Loans, and (vii) at the time any such Debt is incurred, the Global
Borrowing Base then in effect (and to the extent the issuer or guarantor of such
Debt is the Parent or a U.S. Guarantor, U.S. Borrowing Base) 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 US$1,000,000 and (B) if requested by the Parent, an amount (which may be
zero) approved by the Required Lenders and, if applicable, the Required U.S.
Lenders, and the Global Borrowing Base (and, if applicable, U.S. Borrowing Base)
as so reduced shall become the new Global Borrowing Base (and, if applicable,
U.S. Borrowing Base) immediately upon the date of such issuance or assumption,
effective and applicable to the Parent and the Borrower, the Global
Administrative Agent, each Issuing Bank and the Lenders on 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; 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; and

(r)  Debt consisting of deferred put premiums on Swap Agreements entered into
the Parent or any Restricted Subsidiary with Approved Counterparties;

(s)  Debt incurred by the Parent or any Restricted Subsidiary 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 Parent or such other Restricted Subsidiary; and

(t)  Debt incurred by the Parent or any Restricted Subsidiary as contemplated by
the Barnett Shale Transaction, including, without limitation, in the form of
Guarantees of the obligations of MLP Opco in an aggregate amount not to exceed
US$4,000,000 at any time outstanding.

 
 
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For the avoidance of doubt, to the extent any Debt could be attributable to more
than one subsection of this Section 9.02, the Parent or any Restricted
Subsidiary 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) the Parent or any Restricted Subsidiary 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 Parent will not, and will not permit any Restricted
Subsidiary 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 or the U.S. Security
Instruments, as applicable.

(b)    Excepted Liens.

(c)   Lease burdens payable to third parties which are deducted in the
calculation of discounted present value in the Reserve Reports 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 the
Parent’s or a Restricted Subsidiary’s acquisition of the property burdened
thereby.

(d)   Liens securing Non-Recourse Debt permitted by Section 9.02(h).

(e)    [Reserved].

(f)    Pledges or deposits in the ordinary course of business securing
liabilities to insurance carriers under insurance or self-insurance
arrangements.

(g)  Any Lien existing on any Oil and Gas Property or asset prior to the
acquisition thereof by the Parent or any Restricted Subsidiary 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 the Parent or any Restricted Subsidiary
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 (i) below, shall at no time exceed US$45,000,000 in
the aggregate).

(h)    Liens in existence on the date hereof listed on Schedule 9.03.

 
 
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(i)    Liens on fixed or capital assets acquired, constructed or improved by the
Parent or any of its Restricted Subsidiaries; 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 the
Parent or any of such Restricted Subsidiaries, and (v) the Debt secured by such
Liens, together with the obligations and extensions, renewals and replacements
of such obligations described in clause (g) above, shall at no time exceed
US$45,000,000 in the aggregate.

(j)   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.

(k)       Liens on real property and improvements thereon (other than on Oil and
Gas Properties).

(l)   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) US$20,000,000 minus (ii) the aggregate amount of (x) LC Exposure under all
Letters of Credit and (y) U.S. LC Exposure under all U.S. Letters of Credit used
as credit support for the Parent’s or any Restricted Subsidiary’s obligations
under any Swap Agreement.

(m)      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 Parent or any Restricted Subsidiary 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 Parent and all Restricted
Subsidiaries) plus (ii) the amount of cash that is subject to Liens permitted by
Section 9.03(l) at such time plus (iii) the aggregate amount of (x) LC Exposure
under all Letters of Credit and (y) U.S. LC Exposure under U.S. Letters of
Credit used to post collateral or margin to secure the Parent’s or any
Restricted Subsidiary’s obligations under any Swap Agreement, does not exceed
US$65,000,000 in the aggregate at any one time;

Notwithstanding the foregoing, (i) no Liens may at any time attach to (A) any
Oil and Gas Properties of the Parent or its Restricted Subsidiaries of the types
described in clauses (a), (b), (c), (e) and (f) of the definition of Oil and Gas
Properties evaluated in the Reserve Reports used in the most recent
determination of the Global Borrowing Base, or (B) any Equity Interests issued
by any Restricted Subsidiary to the Parent or any other Restricted Subsidiary
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 the Parent or any Restricted
Subsidiary secure any obligation of the Parent or any Restricted Subsidiary
under any Swap Agreement other than Liens created pursuant to the Security
Instruments or the U.S. Security Instruments, as applicable, and Liens permitted
under Section 9.03(l). For the avoidance of doubt, to the extent any Lien could
be attributable to more than one subsection of this Section 9.03 ,the Parent or
any Restricted Subsidiary 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
 
 
 
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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 Parent will not, and will not
permit any of its Restricted Subsidiaries 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 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)  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
either the Parent, the Borrower or a Guarantor;

(c)  the 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 Parent or its Restricted
Subsidiaries or any of its Affiliates;

(d)  to the extent not permitted by clauses  (a) to (c) above, the Parent may
make (i) Restricted Payments up to an aggregate amount of US$20,000,000 and (ii)
additional Restricted Payments up to an aggregate amount of US$55,000,000 not
including Restricted Payments made under the foregoing clause (i)) or dividends,
distributions or transfers of Equity Interests or other assets or Debt of an
Unrestricted Subsidiary if, in the case of Restricted Payments or such
dividends, distributions or transfers in respect of an Unrestricted Subsidiary,
in each case, made under this clause (ii), (A) no Default has occurred and is
continuing at the time such Restricted Payment or such dividend, transfer or
distribution is made or would result from the making of such Restricted Payment
or such dividend, transfer or distribution, (B) the Minimum Liquidity after
giving effect to such Restricted Payment or such dividend, transfer or
distribution is not less than the greater of (x) 25% of the Global Borrowing
Base then in effect and (y) US$250,000,000, and (C) after giving effect to such
Restricted Payment or such dividend, transfer or distribution, the Borrower is
in pro forma compliance with Section 9.01;

(e)  the Parent may purchase or otherwise acquire Equity Interests in any
Subsidiary using additional shares of its Equity Interests; and

(f)  the Parent may redeem the share purchase rights issued pursuant to that
certain Rights Agreement, dated as of March 11, 2003, between the Parent and
Mellon Investor Services LLC, as Rights Agent, in accordance with the terms of
such Rights Agreement.

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 Parent or any
Restricted Subsidiary 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

 
 
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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 Parent will not,
and will not permit any Restricted Subsidiary to:

(a)  call, make or offer to make any optional or voluntary Redemption (whether
in whole or in part) of any Existing Debt or Permitted Additional Debt,
provided, however, that the Parent and its Restricted Subsidiaries may (i)
Redeem Existing Debt (other than the Existing Subordinated Notes and Existing
Convertible Debentures) or Permitted Additional Debt up to an aggregate amount
of US$20,000,000, (ii) Redeem the Existing Subordinated Notes and Existing
Convertible Debentures if, in the case of Redemptions made under this clause
(ii), (A) no Default or Global Borrowing Base Deficiency has occurred and is
continuing at the time such Redemption is made or would result from the making
of such Redemption, and (B) the Minimum Liquidity after giving effect to such
Redemption is not less than the greater of (1) 15% of the Global Borrowing Base
then in effect and (2) US$150,000,000, (iii) Redeem additional Existing Debt or
Permitted Additional Debt if, in the case of Redemptions made under this clause
(iii), (x) no Default has occurred and is continuing at the time such Redemption
is made or would result from the making of such Redemption, (y) the Minimum
Liquidity after giving effect to such Redemption is not less than the greater of
(1) 25% of the Global Borrowing Base then in effect and (2) US$250,000,000 and
(z) after giving effect to such Redemption, the Parent is in pro forma
compliance with Section 9.01, and (iv) Redeem Existing Debt or Permitted
Additional Debt in connection with any refinancing thereof permitted pursuant to
Section 9.02(o);

(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
Existing Debt or 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 Global
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 (x) in the case of Existing Debt or U.S.
Permitted Additional Debt, the U.S. Secured Indebtedness pursuant to the U.S.
Guaranty Agreement and (y) in the case of Canadian Permitted Additional Debt,
the Secured Indebtedness pursuant to the Guaranty Agreement, and, in either
case, each of the Parent, the Borrower and such guarantor or surety otherwise
complies with Section 8.13(c); or

(c)  if the Parent or any Restricted Subsidiary issues any Debt that is
subordinated in right of payment to the Secured Indebtedness or the U.S. Secured
Indebtedness, as applicable, designate any other Debt (other than the Secured
Indebtedness, the U.S. Secured Indebtedness, the Existing Debt, 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 Parent will not, and will
not permit any Restricted Subsidiary to, make or permit to remain outstanding
any Investments in or to any Person, except that the foregoing restriction shall
not apply to:

 
 
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(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 US$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 or U.S. 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
US$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 Parent in or to any Restricted Subsidiary,
(ii) made by any Restricted Subsidiary in or to the Parent or any other
Restricted Subsidiary, and (iii) made by the Parent or any Restricted Subsidiary
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 US$45,000,000; provided that a
conversion or exchange of Debt of an Unrestricted Subsidiary held by the Parent
or a Restricted Subsidiary 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.

(l)   Guarantee obligations permitted by Section 9.02.

(m)      All Investments constituting Debt permitted by Section 9.02.
 
 
 
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(n)  All Investments arising from transactions by the Parent or any Restricted
Subsidiary 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 the Parent or any Restricted
Subsidiary 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 the Parent or any Restricted Subsidiary 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 US$65,000,000 in the aggregate
(measured on a cost basis).

(p)  All Investments by the Parent or any Restricted Subsidiary in Persons in
which the Parent or such Restricted Subsidiary, as applicable, 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 the North America and any other country
or jurisdictions reasonably acceptable to the Global 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 Parent and its Restricted Subsidiaries do not make more than
US$45,000,000 in the aggregate of any such Investments during any fiscal year
and (y) the total amount of any such Investments at any one time does not exceed
US$125,000,000 in the aggregate.

(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)    [Reserved].

(s)  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 US$5,000,000 at any one time outstanding.

(t)    Indemnities permitted under this Agreement and the U.S. Credit Agreement.

(u)  Investments consisting of Swap Agreements entered into for non-speculative
purposes, subject to compliance with Section 9.03 and Section 9.13.
 
 
 
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(v)   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 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
Global 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 Global Administrative Agent in
its reasonable discretion and (v) the Global Administrative Agent shall have
received an opinion from Borrower’s counsel in form and substance satisfactory
to the Global Administrative Agent.

(w)  Guarantees by the Parent or any Restricted Subsidiary of operating leases
or of other obligations that do not constitute Debt, in each case entered into
by the Parent or any Restricted Subsidiary in the ordinary course of business.

(x)   Investments of any Person that becomes a Restricted Subsidiary of the
Parent 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.

(y)  Any Investment by the Parent or one or more of its 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, the Parent or a
Restricted Subsidiary.

(z)   Any Investment constituting non-cash consideration received in any asset
sale permitted by Section 9.10.

(aa)     Investments resulting from the delivery of credit support provided by,
or on behalf of, the Parent or any Restricted Subsidiary to counterparties
pursuant to any Swap Agreement, in each case to the extent permitted by Section
8.17 and Section 9.03.

(bb)     Investments made as contemplated by the Midstream Joint Venture.

(cc)     Investments in any aboriginal or other tribe in any territory or
province of Canada in an amount not to exceed US$5,000,000 in the aggregate at
any one time outstanding.

(dd)     Investments made as contemplated by the Barnett Shale Transaction.

For the avoidance of doubt, to the extent any Investment could be attributable
to more than one subsection of this Section 9.06, the Parent or any Restricted
Subsidiary 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
 
 
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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 7.11 as of the
Effective Date or thereafter, assuming compliance with Section 9.07(b), any
Person that becomes a Subsidiary of the Parent or any of its Restricted
Subsidiaries shall be classified as a Restricted Subsidiary.

(b)  The Parent may designate by written notification thereof to the Global
Administrative Agent, any Restricted Subsidiary, including a newly formed or
newly acquired Subsidiary, as an Unrestricted Subsidiary if (1) prior, and after
giving effect, to such designation, neither a Default nor a Global Borrowing
Base Deficiency would exist and (2) 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 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). The
Parent hereby notifies the Global Administrative Agent and the Lenders that upon
the contribution of the Equity Interests of MLP Opco to MLP, MLP Opco shall
become an Unrestricted Subsidiary.

(c)  The 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 Parent and its Restricted Subsidiaries 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 Parent complies with the requirements of
Section 8.13 and Section 8.15.

Section 9.08   Nature of Business; International Operations. The Parent will
not, and will not permit any Restricted Subsidiary 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 Parent and its
Restricted Subsidiaries 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 Parent and its Restricted Subsidiaries 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
any other country or jurisdiction reasonably acceptable to the Global
Administrative Agent.

Section 9.09   Mergers, Etc. The Parent will not, and will not permit any
Restricted Subsidiary 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 Parent (provided that the Parent shall be the continuing or surviving
corporation), (B)
 
 
 
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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 or U.S. Guaranty Agreement, as applicable, 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
Parent and its Restricted Subsidiaries 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 Global Borrowing
Base Deficiency would exist and (3) the Parent 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 or U.S. Guaranty Agreement, as applicable, as a
Guarantor;

(b)  the Parent or any Restricted Subsidiary 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
continuing and no Global Borrowing Base Deficiency would result therefrom and,
the Parent or such Restricted Subsidiary, as the case may be, 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 Parent, the Borrower or any Guarantor from any of its obligations under this
Agreement, the U.S. Credit Agreement or any other Loan Document or U.S. 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 or such sale is
in connection with the Barnett Shale Transaction; 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 Parent and its Restricted Subsidiaries taken as a whole (as
reasonably determined by a Responsible Officer of the Parent), (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 Global Borrowing Base
Deficiency would result therefrom.

Section 9.10   Sale of Properties and Termination of Oil and Gas Swap
Agreements. The Parent will not, and will not permit any Restricted Subsidiary
to, sell, assign, farm-out, convey or otherwise transfer (including by way of a
Reclassification) any Oil and Gas Property evaluated in the Reserve Reports used
in the most recent determination of the Global 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

 
 
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Oil and Gas Properties not containing Proved Hydrocarbon Interests which were
not evaluated in the Reserve Reports used in the most recent determination of
the Global 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 Parent or such
Restricted Subsidiary 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
(excluding the MLP Barnett Shale Assets) or any Restricted Subsidiary owning
such Oil and Gas Property or the termination, unwinding, cancelation or other
disposition of Oil and Gas Swap Agreements (excluding the MLP Barnett Shale
Assets); 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
Parent);

(ii)  no Event of Default or Global 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 Parent, directly,
or indirectly, from the termination, 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 Global Borrowing Base in
effect during such period, then the Global Borrowing Base (and to the extent
such Oil and Gas Properties were included in the most recent U.S. Reserve
Report, U.S. 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 Global Administrative Agent attributed to such Oil and
Gas Swap Agreements and Oil and Gas Properties in connection with the most
recent determination of the Global Borrowing Base exceeds (y) five percent (5%)
of the Global Borrowing Base in effect immediately prior to such
redetermination, and the Global Borrowing Base (and, if applicable, U.S.
Borrowing Base) as so reduced shall become the new Global Borrowing Base (and,
if applicable, U.S. Borrowing Base) immediately upon the date of such
termination, unwind, cancellation, sale or disposition (including Casualty
Events and Reclassifications), effective and applicable to the Parent, the
Global Administrative Agent, each Issuing Bank and the Lenders on such date
until the next redetermination or modification thereof hereunder;

 
 
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(iv)  if such termination, unwind, cancellation, sale or disposition (including
Reclassifications, but excluding Casualty Events) would result in an automatic
redetermination of the Global Borrowing Base pursuant to this Section 9.10, the
Borrower or the Parent, as applicable, shall have delivered reasonable prior
written notice thereof to the Global Administrative Agent;

(v)  if a Global 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
Global Borrowing Base or U.S. Borrowing Base pursuant to this Section 9.10, (x)
the Parent (in the case of a redetermination of U.S. Borrowing Base) prepays the
U.S. Borrowings and/or (y) the Parent and the Borrower (in the case of a
redetermination of the Global Borrowing Base) prepay Borrowings or U.S.
Borrowings, as applicable, 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 Global Borrowing Base and/or U.S.
Borrowing Base; and

(vi)  if a Global Borrowing Base Deficiency would directly result from a
Casualty Event as a result of an automatic redetermination of the Global
Borrowing Base or the U.S. 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 Reports used in the most recent determination of the Global
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 the Parent or any Restricted
Subsidiary to receive the cash flow from such Oil and Gas Properties and which
sale is on terms reasonably acceptable to the Global Administrative Agent;

(f)  transfers and other dispositions among the Parent and its Restricted
Subsidiaries subject to compliance with Section 8.13;

(g)      transfers permitted by Section 9.09;

(h)  transfer or assignment of the Existing Midstream Assets as contemplated by
the Midstream Joint Venture; and

(i)   transfers and other dispositions of Oil and Gas Properties and Oil and Gas
Swap Agreements as contemplated by the Barnett Shale Transaction; provided that,
 
 
 
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notwithstanding the foregoing, if the contribution of the Equity Interests of
MLP Opco to MLP is consummated prior to delivery by the Global Administrative
Agent of the Proposed Borrowing Base Notice relating to the Scheduled
Redetermination of the Global Borrowing Base and U.S. Borrowing Base in May
2012, then each of the Global Borrowing Base and U.S. Borrowing Base will be
reduced by US$200,000,000; provided further that if the cash proceeds of the
Barnett Shale Transaction are not applied by the Parent within 45 days of the
consummation thereof to repay, repurchase (including. without limitation,
through a tender offer) or retire at least US$300,000,000 of principal amount of
Existing Debt of the Parent, the Global Borrowing Base and U.S. Borrowing Base
will each be reduced by an additional US$75,000,000.

Section 9.11   Transactions with Affiliates. The Parent will not, and will not
permit any Restricted Subsidiary 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; provided
that any transaction with any Affiliate as contemplated by the Midstream Joint
Venture (including the ongoing transactions contemplated thereunder) and the
Barnett Shale Transaction (including the ongoing transactions contemplated
thereunder) shall be permitted.

Section 9.12   Negative Pledge Agreements; Dividend Restrictions. The Parent
will not, and will not permit any Restricted Subsidiary 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 Agents, the Secured
Parties and the U.S. Secured Parties or restricts any Restricted Subsidiary from
paying dividends or making distributions to the Parent 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 Parent will not, nor will the Parent permit
any Restricted Subsidiary 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 Parent and/or any Restricted Subsidiary is a party as
of the date such Oil and Gas Swap Agreements are entered

 
 
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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 Parent’s and its Restricted Subsidiaries’
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
Parent’s and its Restricted Subsidiaries’ 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 Parent’s and its Restricted Subsidiaries’
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
Parent’s and its Restricted Subsidiaries’ 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 Parent has the authority to market and sell, during the applicable
measurement period; provided that the Parent will not, nor will the Parent
permit any Restricted Subsidiary to, permit its production from Proved Producing
Hydrocarbon Interests (whether or not included or reflected in the most recent
Reserve Reports delivered to the Global 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 Parent will not, nor will the Parent permit any Restricted Subsidiary
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 Restricted Subsidiaries. Except as otherwise
permitted hereunder, the Parent shall not own, directly or indirectly, less than
100% of the issued and outstanding Equity Interests of each Restricted
Subsidiary.

Section 9.15   Amendments to Organizational Documents. The Parent shall not,
and shall not permit any Restricted Subsidiary 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 X
EVENTS OF DEFAULT; REMEDIES

Section 10.01   Events of Default. One or more of the following events shall
constitute an “Event of Default”:
 
 
 
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(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 the
Parent, the Borrower or any other Restricted Subsidiary 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)  the Parent or any Restricted Subsidiary 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 the Parent or any Restricted Subsidiary
only), Section 8.13 or Article 9.

(e)  the Parent, the Borrower, or any other Restricted Subsidiary 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 Parent (which notice will be given
at the request of any Lender) and (ii) a Responsible Officer of the Parent, the
Borrower, or any other Restricted Subsidiary otherwise becoming aware of such
failure; provided that, for the avoidance of doubt, if the Parent 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 Parent, the Borrower or any other Restricted Subsidiary shall fail to
make any payment of principal in respect of any Material Debt or the U.S. Credit
Agreement, 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.
 
 
 
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(g)  any event or condition occurs that results in any Material Debt or the U.S.
Credit Agreement 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 debt under the U.S. Credit Agreement or any trustee or
agent on its or their behalf to cause any Material Debt or any debt under the
U.S. Credit Agreement, in each case, to become due, or to require the Redemption
thereof, prior to its scheduled maturity or require the Parent or any Restricted
Subsidiary to make an offer in respect thereof; provided that this clause (g)
shall not apply (x) to secured Debt that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such Debt or (y)
to the obligations of any Credit Party 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 the Parent or any Restricted Subsidiary 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 the Parent or any Restricted
Subsidiary 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)   the Parent or any Restricted Subsidiary 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 the Parent or any Restricted Subsidiary 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.

(j)   the Parent or any Restricted Subsidiary 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 US$45,000,000 shall be rendered against the Parent
or any Restricted Subsidiary or any combination thereof and the same shall
remain
 
 
 
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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 the Parent or any Restricted Subsidiary 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) or upon the termination of the commitments under the U.S.
Credit Agreement and the acceleration of the U.S. Notes and U.S. Loans following
the occurrence of an event of default thereunder, 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.

 
 
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(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:

(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 XI
THE AGENTS

Section 11.01   Appointment; Powers. Each of the Lenders and each Issuing Bank
hereby irrevocably appoints each of the Administrative Agents as its agent and
authorizes the Global Administrative Agent and the Administrative Agent to take
such actions on its behalf and to exercise such powers as are delegated to it 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. No
Administrative Agent shall have any duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the
foregoing, (a) the Administrative Agents 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 Agents 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
Agents 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 Agents shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower, the Parent or any of their respective
 
 
 
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Subsidiaries that is communicated to or obtained by the bank serving as a Global
Administrative Agent or Administrative Agent or any of its Affiliates in any
capacity. No Administrative Agents shall be deemed to have knowledge of any
Default unless and until written notice thereof is given to it 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 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 it or those conditions precedent
expressly required to be to its satisfaction, (vi) the existence, value,
perfection or priority of any collateral security or the financial or other
condition of the Borrower, the 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
Global Administrative Agent or Administrative Agent, as applicable, shall have
received written notice from such Lender prior to the proposed closing date
specifying its objection thereto.

Section 11.03   Action by Administrative Agents. The Administrative Agents 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 it is required to exercise in writing as
directed by the Majority Lenders, the Required Lenders, Super-majority 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 Agents 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,
Super-majority 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 Agents shall be binding on all of
the Lenders. If a Default has occurred and is continuing, then the
Administrative Agents 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 Agents shall have received such directions, the
Administrative Agents 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 a
Global Administrative Agent or an Administrative Agent be required to take any
action which exposes it to personal liability or
 
 
 
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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 Agents 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
no Agent shall be liable for any action taken or not taken by it in its capacity
as an 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 Agents. The Administrative Agents
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by
the proper Person. The Administrative Agents also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower, the Lenders and each Issuing Bank hereby waives the right to dispute
the Administrative Agents’ record of such statement, except in the case of gross
negligence or willful misconduct by the Administrative Agents. The
Administrative Agents 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 Agents
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 Agents.

Section 11.05   Subagents. The Administrative Agents 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 Agents. The Administrative Agents 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 Agents 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 Agents.

Section 11.06   Resignation of Administrative Agents. Subject to the appointment
and acceptance of a successor Global Administrative Agent or Administrative
Agent as provided in this Section 11.06, the Global Administrative Agent or
Administrative Agent, as applicable 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
 
 
 
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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, the 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 Agents, 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 Global
Administrative Agent, 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 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, the 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, the Parent or
their respective Subsidiaries. Except for notices, reports and other documents
and information expressly required to be furnished to the Lenders by the Global
Administrative Agent or 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
Simpson, Thacher & Bartlett L.L.P. and Blake, Cassels & Graydon LLP are acting
in this transaction as special counsel to the Global Administrative Agent and
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, the Parent or any of their respective
Subsidiaries, the Global 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:
 
 
 
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(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
Global Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agents and their respective agents and counsel and all other
amounts due the Lenders and the Agents 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 Global 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 Agents and their respective agents and counsel, and any other
amounts due the Agents under Section 12.03.

Nothing contained herein shall be deemed to authorize the Administrative Agents
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
Agents 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 or by agreeing to be bound by
the Intercreditor Agreement authorizes the Global Administrative Agent and 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 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 or by agreeing to be bound by the
Intercreditor Agreement authorizes the Global Administrative Agent and 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.

 
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ARTICLE XII
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 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.
 
 
 
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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 Maximum Credit Amount of any Lender without the written
consent of such Lender;

(ii)  increase the Global Borrowing Base without the written consent of the
Super-majority Lenders, decrease or maintain the Global 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;

(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, in each case, without the written
consent
 
 
 
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of each Lender adversely affected thereby, or change Section 10.02(c) without
the written consent of each Person entitled to distribution who is adversely
affected thereby;

(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”, “Super-majority 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 7.11 (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.
Notwithstanding the foregoing, no amendment or modification to (x) ARTICLE 7,
ARTICLE 8, ARTICLE 9 or ARTICLE 10 to this Agreement or (y) any terms defined in
this Agreement to the extent that the amendment or modification of such terms
would affect the operation of such ARTICLES shall be effective without the
corresponding amendment or modification to ARTICLE 7, ARTICLE 8, ARTICLE 9 or
ARTICLE 10 to the U.S. Credit Agreement or the corresponding terms defined in
the U.S. Credit Agreement.
 
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
 
 
 
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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
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
 
 
 
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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 CREDIT PARTIES, (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 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.
 
 
 
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(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)   (i)        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 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

 
 
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delivered to the Administrative Agent) shall not be less than US$2,500,000 and
the amount of the Commitment or Loans of the assigning Lender after such
assignment shall not be less than US$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 US$5,000,000 and the amount of the
unused Commitment and Loans of the assigning Lender after such assignment shall
not be less than US$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 US$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.

(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).
 
 
 
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(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. 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.
 
 
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(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 or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding
 
 
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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

 
 
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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 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
the Parent or any Restricted Subsidiary against any of and all the obligations
of the Parent or any Restricted Subsidiary 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
 
 
 
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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 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 or any credit insurance provider (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
 
 
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basis from a source other than the Borrower. For the purposes of this Section
12.11, “Information” means all information received from the Parent or any
Restricted Subsidiary relating to the Parent or any Restricted Subsidiary 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 the Parent or any Restricted Subsidiary; provided that,
in the case of information received from the Parent or any Restricted Subsidiary
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 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
 
 
 
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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 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
 
 
 
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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 the
Parent or any Restricted Subsidiary, its directors, authorized signing officers,
direct or indirect shareholders or other Persons in control of the Parent or any
Restricted Subsidiary, as applicable, 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 the Parent or
any Restricted Subsidiary or any authorized signatories of the Parent or any
Restricted Subsidiary, as applicable, for the purposes of applicable AML
Legislation, then the Administrative Agent:

(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
 
 
 
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(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 the Parent or any Restricted Subsidiary
or any authorized signatories of the Parent or any Restricted Subsidiary, as
applicable, on behalf of any Lender, or to confirm the completeness or accuracy
of any information it obtains from the Parent or any Restricted Subsidiary, as
applicable, 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 Parent or any
Restricted Subsidiary, 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.

Section 12.19   Amendment and Restatement Mechanics.

(a)  On the Effective Date, subject to their reallocation among the Lenders in
accordance with Annex I, all loans, participations and other indebtedness,
obligations and liabilities outstanding under the Existing Canadian Credit
Agreement on such date shall continue to constitute Loans, participations, and
other indebtedness, obligations and liabilities under this Agreement, and all
Existing Letters of Credit will automatically, without any further action on the
part of any Person, be deemed to be Letters of Credit hereunder.

(b)  It is the intent of the parties hereto that this Agreement amends and
restates in its entirety the Existing Canadian Credit Agreement and re-evidences
the obligations of the Borrower outstanding thereunder. The commitments of the
“Lenders” under the Existing Canadian Credit Agreement are reallocated among the
Lenders under this Agreement as set forth
 
 
 
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on Annex I and any “Lender” under the Existing Canadian Credit Agreement who is
not a Lender hereunder is released of its commitment under the Existing Canadian
Credit Agreement. Each party hereby waives any requirements for notice and
consent required to give effect to such reallocations. This Agreement does not
constitute a novation of the obligations and liabilities under the Existing
Canadian Credit Agreement or evidence repayment of any such obligations and
liabilities.

Section 12.20   Acknowledgment of Intercreditor Agreement. The Lenders
acknowledge that amounts payable by the Borrower and the Guarantors under this
Agreement and the Combined Loan Documents are subject to the sharing and other
provisions in the Intercreditor Agreement.

Section 12.21   Termination of Existing Pledge Agreement. Upon the execution of
the U.S. Pledge Agreement, (a) the Administrative Agent, the Lenders and the
Parent agree that that certain Pledge Agreement, dated as of September 6, 2011,
between the Parent, as pledgor of the Equity Interests of the Borrower
thereunder, and the Administrative Agent, as pledge (the “Existing QRCI Pledge
Agreement”), shall terminate and any Liens granted by the Parent in such Equity
Interests or any other item of collateral under the Existing QRCI Pledge
Agreement shall be released, except to the extent that the Global Administrative
Agent shall have any right, title or interest in such collateral under the U.S.
Pledge Agreement, in which case such right, title or interest shall be deemed
transferred to the Global Administrative Agent under U.S. Pledge Agreement. At
the cost of the Parent, the Administrative Agent shall promptly execute any
reasonably requested release documentation and promptly return to the Parent any
stock certificates, instruments and other property pledged under the Existing
QRCI Pledge Agreement which is not pledged under the U.S. Pledge Agreement.

[SIGNATURES BEGIN NEXT PAGE]

 

 
138

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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
 

 
 

 
QUICKSILVER RESOURCES INC., a Delaware corporation
                        By: /s/ Philip W. Cook      
Philip W. Cook,
     
Senior Vice President – Chief Financial Officer
 

 
 

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

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JPMORGAN CHASE BANK, N.A., as Global
Administrative Agent
                        By: /s/ Michael Kamauf       Name: Michael Kamauf      
Title: Authorized Officer  

 
 

 
JPMORGAN CHASE BANK, N.A., TORONTO
BRANCH, as a Lender, Issuing Bank, and as
Administrative Agent
                        By: /s/ Michael N. Tam       Name: Michael N. Tam,      
Title: 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/ Mark Sparrow       Name: Mark Sparrow      
Title: 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       Name: Debbi L. Brito      
Title: Authirized 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       Name: Randy Geislinger  
    Title: Executive Director  

                      By: /s/ Chris Perks       Name: Chris Perks       Title:
Manager 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/ Medina Sales de Andrade       Name: Medina Sales
de Andrade       Title: 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       Name: Ryan K. Michael    
  Title: 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       Name: David Foltz       Title:
Managing Director  

                      By: /s/ Jack Shuai       Name: Jack Shuai       Title:
Vice President
Corporate and
Investment Banking
 

 

 

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

 
 

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CITIBANK, N.A., CANADIAN BRANCH, as a Lender
                        By: /s/ Gordon Dekuyper       Name: Gordon Dekuyper    
  Title: Authorized Signer  

 

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

 
 

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COMERICA BANK, CANADA BRANCH, as a Lender
                        By: /s/ Susan Starkey       Name: Susan Starkey      
Title: Sr. Manager, Operations  

 
 

 

[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       Name: Tom Byargeon      
Title: Managing Director  

                      By: /s/ Michael Willis       Name: Michael Willis      
Title: Managing 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       Name: Alain Daoust      
Title: Director  

                      By: /s/ Paul White       Name: Paul White       Title:
VP Canadian Operations
Credit-Suisse Canada
 

 

 

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

 
 

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DEUTSCHE BANK AG CANADA BRANCH, as a Lender
                        By: /s/ David Gynn       Name: David Gynn       Title:
Chief Financial Officer  

                      By: /s/ Marcellus Leung       Name: Marcellus Leung      
Title: 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: /s/ Brad C. Crilly       Name: Brad C. Crilly      
Title: Managing Director  

 
 
 

 

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

 
 
 

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UBS AG, CANADA BRANCH, as a Lender
                        By: /s/ Irja R. Otsa       Name: Irja R. Otsa      
Title: Associate Director  

                      By: /s/ Mary E. Evans       Name: Mary E. Evans      
Title: 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/ Janet Heinila       Name: Janet Heinila      
Title: Vice President  

 
 
 

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

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