ASSIGNMENT,
      WAIVER AND THIRD AMENDMENT
      TO CREDIT AGREEMENT

     

    AMONG

     

    TANDEM
      ENERGY CORPORATION

     

    PER
      ACQUISITION CORP.

    


     

    AND

    


     

    GUARANTY
      BANK, FSB

     

    Effective
      as of October 26, 2007

     

    __________________________________

     

    LETTER
      OF CREDIT FACILITY OF UP TO $2,825,000

    ___________________________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    TABLE
      OF CONTENTS

    

      
        	 	 	
                PAGE

              
	 	 	 
	
                ARTICLE
                  I.

              	
                DEFINITIONS

              	
                1

              
	
                1.01

              	
                Terms
                  Defined Above

              	
                1

              
	
                1.02

              	
                Terms
                  Defined in Agreement

              	
                1

              
	
                1.03

              	
                References

              	
                1

              
	
                1.04

              	
                Articles
                  and Sections

              	
                2

              
	
                1.05

              	
                Number
                  and Gender

              	
                2

              
	 	 	
                 

              
	
                ARTICLE
                  II.

              	
                ASSIGNMENT

              	
                2

              
	
                2.01

              	
                Assignment

              	
                2

              
	
                2.02

              	
                Assumption

              	
                2

              
	
                2.03

              	
                Consent

              	
                2

              
	
                 

              	 	
                 

              
	
                ARTICLE
                  III.

              	
                WAIVER

              	
                2

              
	
                3.01

              	
                Waiver

              	
                2

              
	
                3.02

              	
                Limitation
                  on Waivers

              	
                2

              
	
                 

              	 	
                 

              
	
                ARTICLE
                  IV.

              	
                AMENDMENTS

              	
                3

              
	
                4.01

              	
                References
                  to Borrower

              	
                3

              
	
                4.02

              	
                Amendment
                  of Section 2.8(a)

              	
                3

              
	
                4.03

              	
                Amendment
                  of Exhibit I

              	
                3

              
	
                 

              	 	
                 

              
	
                ARTICLE
                  V.

              	
                CONDITIONS

              	
                3

              
	
                5.01

              	
                Receipt
                  of Documents

              	
                3

              
	
                5.02

              	
                Accuracy
                  of Representations and Warranties

              	
                3

              
	
                5.03

              	
                Matters
                  Satisfactory to Lender

              	
                3

              
	
                 

              	 	
                 

              
	
                ARTICLE
                  VI.

              	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                4

              
	
                 

              	 	
                 

              
	
                ARTICLE
                  VII.

              	
                RATIFICATION

              	
                4

              
	
                 

              	 	
                 

              
	
                ARTICLE
                  VIII.

              	
                MISCELLANEOUS

              	
                4

              
	
                8.01

              	
                Scope
                  of Amendment

              	
                4

              
	
                8.02

              	
                Agreement
                  as Amended

              	
                4

              
	
                8.03

              	
                Parties
                  in Interest

              	
                4

              
	
                8.04

              	
                Rights
                  of Third Parties

              	
                4

              
	
                8.05

              	
                ENTIRE
                  AGREEMENT

              	
                4

              
	
                8.06

              	
                GOVERNING
                  LAW

              	
                5

              
	
                8.07

              	
                JURISDICTION
                  AND VENUE

              	
                5

              


      

       

    

    EXHIBIT
      I
      - FORM
      OF
      PROMISSORY NOTE

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    


    ASSIGNMENT,
      WAIVER AND THIRD AMENDMENT
      TO CREDIT AGREEMENT

     

    This
      ASSIGNMENT,
      WAIVER
      AND THIRD AMENDMENT TO CREDIT AGREEMENT
      (this
“Third
      Amendment”)
      is
      made and entered into effective as of October 26, 2007, among TANDEM
      ENERGY CORPORATION,
      a
      Colorado corporation (“Tandem”),
      PER
      ACQUISITION CORP.,
      a
      Delaware corporation (“PER”)
      and
GUARANTY
      BANK, FSB,
      a
      federal savings bank (the “Lender”).

     

    WITNESSETH

     

    WHEREAS,
      the Lender and Tandem did execute and exchange counterparts of that certain
      Credit Agreement dated June 8, 2005, as amended by First Amendment to
      Credit Agreement dated effective October 21, 2005, and as further amended by
      Waiver and Second Amendment to Credit Agreement dated February 15, 2006 (as
      so
      amended, the “Agreement”),
      to
      which reference is here made for all purposes;

     

    WHEREAS,
      TEC has assigned all of the Mortgaged Property to PER, subject to the liens
      and
      security interests of the Security Instruments, and PER has assumed certain
      liabilities of Tandem, including, without limitation, the Obligations and all
      obligations of Tandem under the ISDA Master Agreement between Tandem and BP
      Corporation North America Inc., (“BP”)
      which
      is the subject of the Intercreditor Agreement dated August 28, 2006 by and
      among the Lender, BP and Tandem (the “Intercreditor
      Agreement”);
      

     

    WHEREAS,
      Tandem is desirous of assigning to PER all rights of Tandem under the Agreement
      and the other Loan Documents and PER is desirous of confirming its assumption
      of
      all obligations of Tandem under the Agreement and the other Loan
      Documents;

     

    WHEREAS,
      PER and the Lender are desirous of amending the Agreement in the particulars
      hereinafter set forth;

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements of the
      parties to the Agreement, as set forth therein, and the mutual covenants and
      agreements of the parties hereto, as set forth in this Third Amendment, the
      parties hereto agree as follows:

     

    ARTICLE
      I.

    DEFINITIONS

     

    1.01    Terms
      Defined Above.
      As used
      herein, each of the terms “Agreement,”
      “BP,”
      “Intercreditor
      Agreement,”
      “Lender,”
      “PER,”
      “Tandem,”
and
      “Third
      Amendment”
shall
      have the meaning assigned to such term hereinabove.

     

    1.02    Terms
      Defined in Agreement.
      As used
      herein, each term defined in the Agreement shall have the meaning assigned
      thereto in the Agreement, unless expressly provided herein to the
      contrary.

     

    1.03    References.
      References in this Third Amendment to Article or Section numbers shall be to
      Articles and Sections of this Third Amendment, unless expressly stated herein
      to
      the contrary. References in this Third Amendment to “hereby,” “herein,”
hereinafter,” hereinabove,” “hereinbelow,” “hereof,” and “hereunder” shall be to
      this Third Amendment in its entirety and not only to the particular Article
      or
      Section in which such reference appears.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.04    Articles
      and Sections.
      This
      Third Amendment, for convenience only, has been divided into Articles and
      Sections and it is understood that the rights, powers, privileges, duties,
      and
      other legal relations of the parties hereto shall be determined from this Third
      Amendment as an entirety and without regard to such division into Articles
      and
      Sections and without regard to headings prefixed to such Articles and
      Sections.

     

    1.05    Number
      and Gender.
      Whenever the context requires, reference herein made to the single number shall
      be understood to include the plural and likewise the plural shall be understood
      to include the singular. Words denoting sex shall be construed to include the
      masculine, feminine, and neuter, when such construction is appropriate, and
      specific enumeration shall not exclude the general, but shall be construed
      as
      cumulative. Definitions of terms defined in the singular and plural shall be
      equally applicable to the plural or singular, as the case may be.

     

    ARTICLE
      II.

    ASSIGNMENT

     

    2.01    Assignment.
      Tandem
      hereby transfers and assigns to PER all rights and benefits of Tandem under
      the
      Agreement and the other Loan Documents.

     

    2.02    Assumption.
      PER
      hereby assumes all obligations and duties of Tandem under the Agreement and
      the
      other Loan Documents, including, without limitation, the obligations and duties
      of Tandem in respect of the Letters of Credit outstanding as of the effective
      date of this Third Amendment.

     

    2.03    Consent.
      The
      Lender hereby consents to the transfer and assignment pursuant to
      Section 2.1 and the assumption pursuant to Section 2.2.

     

    ARTICLE
      III.

    WAIVER

     

    3.01    Waiver.
      The
      Lender hereby waives any Default or Event of Default arising under the Agreement
      or any other Loan Document solely as a result of violations of Section 6.4
      through October 26, 2007.

     

    3.02    Limitation
      on Waivers.
      The
      scope of the waiver set forth in Section 2.01 is expressly limited to its terms
      and does not extend to any other or future breaches, Defaults, violations or
      Events of Default under the Agreement or any other Loan Document.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV.

    AMENDMENTS

     

    The
      PER
      the Lender hereby amend the Agreement in the following particulars:

     

    4.01    References
      to Borrower. All references to “the Borrower” in the Agreement shall mean
      PER.

     

    4.02    Amendment
      of Section 2.8(a). Section 2.8(a) of the Agreement is hereby amended to read
      as
      follows:

     

    “2.8    Borrowing
      Base Determinations. (a) The Borrowing Base as of the effective date of this
      Third Amendment is acknowledged by the Borrower and the Lender to be $5,000,000
      or the amount of the outstanding Letters of Credit as of the effective date
      of
      this Third Amendment as reduced as any of such Letters of Credit expires or
      is
      cancelled, whichever is less.”

     

    4.03    Amendment
      of Exhibit I. Exhibit I, i.e. the “Form of Promissory Note” shall be amended
      to be as set forth on Exhibit I-A attached to this Third Amendment.

     

    ARTICLE
      V.

    CONDITIONS

     

    The
      obligation of the Lender to amend the Agreement as provided herein is subject
      to
      the fulfillment of the following conditions precedent:

     

    5.01    Receipt
      of Documents.
      The
      Lender shall have received, reviewed, and approved the following documents
      and
      other items, appropriately executed when necessary and in form and substance
      satisfactory to the Lender:

     

    
      	 	
              (a)

            	
              multiple
                counterparts of this Third Amendment as requested by the Lender;
                

            


    

     

    
      	 	
              (b)

            	
              the
                Note;

            


    

     

    
      	 	
              (c)

            	
              payment
                of the legal fees of Jackson Walker L.L.P. in the amount of $44,213.41;
                

            


    

     

    
      	 	
              (d)

            	
              payment
                to the Lender the amount of $20,588,702.80 for principal, interest
                through
                October 26, 2006, and LIBO breakage fees;
                and

            


    

     

    
      	 	
              (e)

            	
              such
                other agreements, documents, items, instruments, opinions, certificates,
                waivers, consents, and evidence as the Lender may reasonably
                request.

            


    

     

    5.02    Accuracy
      of Representations and Warranties.
      The
      representations and warranties contained in Article IV of the Agreement and
      this
      Third Amendment shall be true and correct.

     

    5.03    Matters
      Satisfactory to Lender.
      All
      matters incident to the consummation of the transactions contemplated hereby
      shall be satisfactory to the Lender.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VI.

    REPRESENTATIONS
      AND WARRANTIES

     

    The
      Borrower hereby expressly re-makes, in favor of the Lender, all of the
      representations and warranties set forth in Article IV of the Agreement, and
      represents and warrants that all such representations and warranties remain
      true
      and unbreached.

     

    ARTICLE
      VII.

    RATIFICATION

     

    PER
      and
      the Lender do hereby adopt, ratify and confirm the Agreement and the other
      Loan
      Documents, in all things in accordance with the terms and provisions thereof,
      as
      amended by this Third Amendment also hereby adopts, ratifies, and confirms
      the
      Intercreditor Agreement among in accordance with the terms and provisions
      thereof.

     

    ARTICLE
      VIII.

    MISCELLANEOUS

     

    8.01    Scope
      of Amendment.
      The
      scope of this Third Amendment is expressly limited to the matters addressed
      herein and this Third Amendment shall not operate as a waiver of any past,
      present, or future breach, Default, or Event of Default under the Agreement.
      except to the extent, if any, that any such breach, Default, or Event of Default
      is remedied by the effect of this Third Amendment.

     

    8.02    Agreement
      as Amended.
      All
      references to the Agreement in any document heretofore or hereafter executed
      in
      connection with the transactions contemplated in the Agreement shall be deemed
      to refer to the Agreement as amended by this Third Amendment.

     

    8.03    Parties
      in Interest.
      All
      provisions of this Third Amendment shall be binding upon and shall inure to
      the
      benefit of the parties hereto and their respective successors and
      assigns.

     

    8.04    Rights
      of Third Parties.
      All
      provisions herein are imposed solely and exclusively for the benefit of the
      parties hereto, and no other Person shall have standing to require satisfaction
      of such provisions in accordance with their terms and any or all of such
      provisions may be freely waived in whole or in part by the Lender at any time
      if
      in its sole discretion it deems it advisable to do so.

     

    8.05    ENTIRE
      AGREEMENT.
      THIS
      THIRD AMENDMENT CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH
      RESPECT TO THE SUBJECT HEREOF AND SUPERSEDES ANY PRIOR AGREEMENT, WHETHER
      WRITTEN OR ORAL, AMONG SUCH PARTIES REGARDING THE SUBJECT HEREOF. FURTHERMORE
      IN
      THIS REGARD, THIS THIRD AMENDMENT, THE AGREEMENT, THE NOTE, THE SECURITY
      INSTRUMENTS, AND THE OTHER WRITTEN DOCUMENTS REFERRED TO IN THE AGREEMENT OR
      EXECUTED IN CONNECTION WITH OR AS SECURITY FOR THE NOTE REPRESENT, COLLECTIVELY,
      THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY
      EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
      PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
      PARTIES.

     

    8.06    GOVERNING
      LAW.
      THIS
      THIRD AMENDMENT, THE AGREEMENT AND THE NOTE SHALL BE DEEMED TO BE CONTRACTS
      MADE
      UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
      THE
      STATE OF TEXAS. THE PARTIES ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT AND THE
      NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY BEAR A NORMAL, REASONABLE, AND
      SUBSTANTIAL RELATIONSHIP TO THE STATE OF TEXAS.

     

    8.07    JURISDICTION
      AND VENUE.
      ALL
      ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN
      CONNECTION WITH, OUT OF, RELATED TO, OR FROM THIS THIRD AMENDMENT, THE AGREEMENT
      OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED IN COURTS HAVING SITUS IN HARRIS
      COUNTY, TEXAS. EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE JURISDICTION
      OF
      ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN HARRIS COUNTY, TEXAS, AND HEREBY
      WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE
      OF
      ANY LITIGATION BROUGHT AGAINST IT BY ANY OTHER PARTY HERETO IN ACCORDANCE WITH
      THIS SECTION.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF, this Assignment, Waiver and Third Amendment to Credit Agreement
      is executed effective the date first hereinabove written.

     

    
      	 	 	 
	 	TANDEM
              ENERGY CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/
              Michael G. Cunningham
	 	
              
Name:
Michael
              G. Cunningham
	 	Title:
              Senior
              Vice President


    

     

    
      	 	 	 
	 	PER
              ACQUISITION CORP.
	 
 	 
 	 
 
	 	By:  	/s/
              Barry Kostiner
	 	
              
Barry
              Kostiner
	 	Vice
              President


    

     

    
      	 	 	 
	 	GUARANTY
              BANK, FSB
	 
 	 
 	 
 
	 	By:  	/s/
              Christopher S. Parada
	 	
              
Christopher
              S. Parada
	 	Senior
              Vice President,


    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      I

     

    FORM
      OF NOTE

     

    PROMISSORY
      NOTE

     

    
      	
              $5,000,000

            	
              Houston,
                Texas

            	
              October
                26, 2007

            


    

    


     

    FOR
      VALUE
      RECEIVED and WITHOUT GRACE, the undersigned (“Maker”)
      promises to pay to the order of GUARANTY
      BANK, FSB (“Payee”),
      at
      its banking quarters in Houston, Harris County, Texas, the sum of FIVE
      MILLION DOLLARS ($5,000,000), or so much thereof as may be advanced against
      this
      Note pursuant to the Credit Agreement dated June 8, 2005, as amended,
      originally by and between Tandem Energy Corporation and Payee (as amended,
      restated or supplemented from time to time, the “Credit
      Agreement”),
      together with interest at the rates and calculated as provided in the Credit
      Agreement.

     

    Reference
      is hereby made to the Credit Agreement for matters governed thereby, including,
      without limitation, certain events which will entitle the holder hereof to
      accelerate the maturity of all amounts due hereunder. Capitalized terms used
      but
      not defined in this Note shall have the meanings assigned to such terms in
      the
      Credit Agreement.

     

    This
      Note
      is issued pursuant to, is the “Note” under, and is payable as provided in the
      Credit Agreement. Subject to compliance with applicable provisions of the Credit
      Agreement, Maker may at any time pay the full amount or any part of this Note
      without the payment of any premium or fee, but such payment shall not, until
      this Note is fully paid and satisfied, excuse the payment as it becomes due
      of
      any payment on this Note provided for in the Credit Agreement.

     

    Without
      being limited thereto or thereby, this Note is secured by the Security
      Instruments.

     

    THIS
      NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF TEXAS WITHOUT
      GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF
      LAW.

     

    
      	 	 	 
	 	PER
              ACQUISITION CORP.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Barry
              Kostiner
	 	President


    

     

    
      
        
        

      

      
        I-i