[U.S.
      CREDIT AGREEMENT]

     

    
      
        

      

       

    

    CREDIT
      AGREEMENT

    


    dated
      as of July 28, 2006

    


    among

    


    STORM
      CAT ENERGY (USA) CORPORATION,

    


    STORM
      CAT ENERGY CORPORATION,

    


    THE
      LENDERS PARTY HERETO,

    


    and

    


    JPMORGAN
      CHASE BANK, N.A.,

    


    as
      Global Administrative Agent

    
 

     

      
        

      

    

    


    J.P.
      MORGAN SECURITIES INC.,

    


    as
      Sole Book Manager and Lead Arranger


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               ARTICLE
                I 

              DEFINITIONS

            
	
              Section
                1.1

            	 	
              Defined
                Terms

            	 	
              1

            
	
              Section
                1.2

            	 	
              Classification
                of Loans and Borrowings

            	 	
              24

            
	
              Section
                1.3

            	 	
              Terms
                Generally

            	 	
              24

            
	
              Section
                1.4

            	 	
              Accounting
                Terms; GAAP

            	 	
              24

            
	
              Section
                1.5

            	 	
              Designation
                and Conversion of Restricted and Unrestricted
                Subsidiaries.

            	 	
              25

            
	 
	
               ARTICLE
                II 

              THE
                CREDITS

            
	
              Section
                2.1

            	 	
              Commitments

            	 	
              26

            
	
              Section
                2.2

            	 	
              Loans
                and Borrowings

            	 	
              26

            
	
              Section
                2.3

            	 	
              Requests
                for Borrowings

            	 	
              27

            
	
              Section
                2.4

            	 	
              Letters
                of Credit

            	 	
              27

            
	
              Section
                2.5

            	 	
              Funding
                of Borrowings

            	 	
              31

            
	
              Section
                2.6

            	 	
              Interest
                Elections

            	 	
              32

            
	
              Section
                2.7

            	 	
              Global
                Borrowing Base

            	 	
              33

            
	
              Section
                2.8

            	 	
              Termination
                and Reduction of Commitments

            	 	
              38

            
	
              Section
                2.9

            	 	
              Repayment
                of Loans; Evidence of Debt

            	 	
              38

            
	
              Section
                2.10

            	 	
              Prepayment
                of Loans

            	 	
              38

            
	
              Section
                2.11

            	 	
              Fees

            	 	
              39

            
	
              Section
                2.12

            	 	
              Interest

            	 	
              41

            
	
              Section
                2.13

            	 	
              Alternate
                Rate of Interest

            	 	
              42

            
	
              Section
                2.14

            	 	
              Illegality

            	 	
              43

            
	
              Section
                2.15

            	 	
              Increased
                Costs

            	 	
              44

            
	
              Section
                2.16

            	 	
              Break
                Funding Payments

            	 	
              45

            
	
              Section
                2.17

            	 	
              Taxes

            	 	
              46

            
	
              Section
                2.18

            	 	
              Payments
                Generally; Pro Rata Treatment; Sharing of Set-offs

            	 	
              48

            
	
              Section
                2.19

            	 	
              Mitigation
                Obligations; Replacement of Lenders

            	 	
              49

            
	 
	
               ARTICLE
                III 

              REPRESENTATIONS
                AND WARRANTIES

            
	
              Section
                3.1

            	 	
              Organization;
                Powers

            	 	
              50

            
	
              Section
                3.2

            	 	
              Authorization;
                Enforceability

            	 	
              50

            
	
              Section
                3.3

            	 	
              Approvals;
                No Conflicts

            	 	
              51

            
	
              Section
                3.4

            	 	
              Financial
                Condition; No Material Adverse Change

            	 	
              51

            
	
              Section
                3.5

            	 	
              Properties

            	 	
              51

            
	
              Section
                3.6

            	 	
              Litigation

            	 	
              52

            
	
              Section
                3.7

            	 	
              Compliance
                with Laws and Agreements

            	 	
              52

            
	
              Section
                3.8

            	 	
              Investment
                Company Status

            	 	
              52

            
	
              Section
                3.9

            	 	
              Taxes

            	 	
              52

            
	
              Section
                3.10

            	 	
              ERISA

            	 	
              52

            
	
              Section
                3.11

            	 	
              Disclosure

            	 	
              53

            
	
              Section
                3.12

            	 	
              Subsidiaries

            	 	
              53

            
	
              Section
                3.13

            	 	
              Insurance

            	 	
              53

            
	
              Section
                3.14

            	 	
              Labor
                Matters

            	 	
              53

            
	
              Section
                3.15

            	 	
              Priority;
                Security Matters

            	 	
              53

            


    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                3.16

            	 	
              Environmental
                Matters

            	 	
              54

            
	
              Section
                3.17

            	 	
              Solvency

            	 	
              55

            
	
              Section
                3.18

            	 	
              Use
                of Credit

            	 	
              55

            
	
              Section
                3.19

            	 	
              Claims
                and Liabilities

            	 	
              55

            
	 
	
               ARTICLE
                IV 

              CONDITIONS

            
	
              Section
                4.1

            	 	
              Effectiveness

            	 	
              55

            
	
              Section
                4.2

            	 	
              Initial
                Loan

            	 	
              56

            
	
              Section
                4.3

            	 	
              Each
                Credit Event

            	 	
              59

            
	 
	
               ARTICLE
                V 

              AFFIRMATIVE
                COVENANTS

            
	
              Section
                5.1

            	 	
              Financial
                Reporting; Notices and Other Information

            	 	
              60

            
	
              Section
                5.2

            	 	
              Notice
                of Material Events

            	 	
              62

            
	
              Section
                5.3

            	 	
              Information
                Regarding Collateral

            	 	
              63

            
	
              Section
                5.4

            	 	
              Existence;
                Conduct of Business

            	 	
              63

            
	
              Section
                5.5

            	 	
              Payment
                of Obligations

            	 	
              63

            
	
              Section
                5.6

            	 	
              Maintenance
                of Properties

            	 	
              63

            
	
              Section
                5.7

            	 	
              Insurance

            	 	
              64

            
	
              Section
                5.8

            	 	
              Casualty
                and Condemnation

            	 	
              64

            
	
              Section
                5.9

            	 	
              Books
                and Records; Inspection Rights

            	 	
              64

            
	
              Section
                5.10

            	 	
              Compliance
                with Laws

            	 	
              64

            
	
              Section
                5.11

            	 	
              Use
                of Proceeds and Letters of Credit

            	 	
              63

            
	
              Section
                5.12

            	 	
              Additional
                Subsidiaries

            	 	
              65

            
	
              Section
                5.13

            	 	
              Unrestricted
                Subsidiaries

            	 	
              65

            
	
              Section
                5.14

            	 	
              Environmental
                Matters

            	 	
              65

            
	
              Section
                5.15

            	 	
              Further
                Assurances; Title Data.

            	 	
              65

            
	 
	
               ARTICLE
                VI 

              FINANCIAL
                COVENANTS

            
	
              Section
                6.1

            	 	
              Ratio
                of Total Funded Debt to EBITDA

            	 	
              68

            
	
              Section
                6.2

            	 	
              Ratio
                of Current Assets to Current Liabilities

            	 	
              68

            
	 
	
               ARTICLE
                VII 

              NEGATIVE
                COVENANTS

            
	
              Section
                7.1

            	 	
              Indebtedness;
                Certain Equity Securities

            	 	
              68

            
	
              Section
                7.2

            	 	
              Liens

            	 	
              69

            
	
              Section
                7.3

            	 	
              Fundamental
                Changes

            	 	
              70

            
	
              Section
                7.4

            	 	
              Investments,
                Loans, Advances, Guarantees and Acquisitions

            	 	
              71

            
	
              Section
                7.5

            	 	
              Asset
                Sales

            	 	
              72

            
	
              Section
                7.6

            	 	
              Sale
                and Leaseback Transactions

            	 	
              72

            
	
              Section
                7.7

            	 	
              Hedging
                Agreements

            	 	
              72

            
	
              Section
                7.8

            	 	
              Restricted
                Payments; Certain Payments of Indebtedness

            	 	
              73

            
	
              Section
                7.9

            	 	
              Transactions
                with Affiliates

            	 	
              73

            
	
              Section
                7.10

            	 	
              Restrictive
                Agreements

            	 	
              73

            
	
              Section
                7.11

            	 	
              No
                Action to Affect Security Documents

            	 	
              74

            


    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    
      	
               ARTICLE
                VIII 

              EVENTS
                OF DEFAULT

            
	
              Section
                8.1

            	 	
              Listing
                of Events of Default

            	 	
              74

            
	
              Section
                8.2

            	 	
              Action
                if Bankruptcy

            	 	
              76

            
	
              Section
                8.3

            	 	
              Action
                if Other Event of Default

            	 	
              76

            
	 
	
               ARTICLE
                IX 

              AGENTS

            
	 
	
               ARTICLE
                X 

              MISCELLANEOUS

            
	
              Section
                10.1

            	 	
              Notices

            	 	
              79

            
	
              Section
                10.2

            	 	
              Waivers;
                Amendments

            	 	
              81

            
	
              Section
                10.3

            	 	
              Expenses;
                Indemnity; Damage Waiver

            	 	
              82

            
	
              Section
                10.4

            	 	
              Successors
                and Assigns

            	 	
              84

            
	
              Section
                10.5

            	 	
              Survival

            	 	
              86

            
	
              Section
                10.6

            	 	
              Counterparts;
                Effectiveness

            	 	
              87

            
	
              Section
                10.7

            	 	
              Severability

            	 	
              87

            
	
              Section
                10.8

            	 	
              Right
                of Setoff

            	 	
              87

            
	
              Section
                10.9

            	 	
              GOVERNING
                LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

            	 	
              87

            
	
              Section
                10.10

            	 	
              WAIVER
                OF JURY TRIAL

            	 	
              88

            
	
              Section
                10.11

            	 	
              Headings

            	 	
              89

            
	
              Section
                10.12

            	 	
              Confidentiality

            	 	
              89

            
	
              Section
                10.13

            	 	
              Interest
                Rate Limitation

            	 	
              89

            
	
              Section
                10.14

            	 	
              Collateral
                Matters; Hedging Agreements

            	 	
              91

            
	
              Section
                10.15

            	 	
              Arranger;
                Other Agents

            	 	
              91

            
	
              Section
                10.16

            	 	
              Intercreditor
                Agreement; Loan Documents

            	 	
              91

            
	
              Section
                10.17

            	 	
              USA
                PATRIOT Act Notice

            	 	
              91

            
	
              Section
                10.18

            	 	
              NO
                ORAL AGREEMENTS

            	 	
              92

            


    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    


    DEFINED
      TERMS

    


    
      	 	 	
              Page
                No.

            
	
              ABR

            	 	
              1

            
	
              Act

            	 	
              91

            
	
              Adjusted
                LIBO Rate

            	 	
              1

            
	
              Administrative
                Questionnaire

            	 	
              1

            
	
              Affiliate

            	 	
              1

            
	
              Agents

            	 	
              1

            
	
              Agreement

            	 	
              1

            
	
              Allocated
                Canadian Borrowing Base

            	 	
              35

            
	
              Allocated
                U.S. Borrowing Base

            	 	
              35

            
	
              Alternate
                Base Rate

            	 	
              2

            
	
              Annualized
                EBITDA

            	 	
              2

            
	
              Applicable
                Lending Office

            	 	
              2

            
	
              Applicable
                Percentage

            	 	
              2

            
	
              Applicable
                Rate

            	 	
              2

            
	
              Approved
                Counterparty

            	 	
              3

            
	
              Approved
                Country

            	 	
              3

            
	
              Approved
                Engineer

            	 	
              3

            
	
              Arranger

            	 	
              3

            
	
              Assignment
                and Assumption

            	 	
              3

            
	
              Authorized
                Officer

            	 	
              3

            
	
              Availability
                Period

            	 	
              3

            
	
              Board

            	 	
              3

            
	
              Borrower

            	 	
              1

            
	
              Borrowing

            	 	
              4

            
	
              Borrowing
                Base Properties

            	 	
              4

            
	
              Borrowing
                Request

            	 	
              4

            
	
              Business
                Day

            	 	
              4

            
	
              C$

            	 	
              4

            
	
              Canadian
                Administrative Agent

            	 	
              4

            
	
              Canadian
                Borrower

            	 	
              4

            
	
              Canadian
                Credit Agreement

            	 	
              4

            
	
              Canadian
                Dollars

            	 	
              4

            
	
              Canadian
                Lenders

            	 	
              4

            
	
              Canadian
                Loan Documents

            	 	
              4

            
	
              Canadian
                Obligations

            	 	
              5

            
	
              Canadian
                Security Documents

            	 	
              5

            
	
              Capital
                Lease Obligations

            	 	
              5

            
	
              Casualty
                Event

            	 	
              5

            
	
              CERCLA

            	 	
              5

            
	
              CERCLIS

            	 	
              5

            
	
              Change
                in Control

            	 	
              5

            
	
              Change
                in Law

            	 	
              5

            
	
              Code

            	 	
              5

            


    

     

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

     

    
      	
              Collateral

            	 	
              6

            
	
              Combined
                Applicable Percentage

            	 	
              6

            
	
              Combined
                Commitments

            	 	
              6

            
	
              Combined
                Credit Agreements

            	 	
              6

            
	
              Combined
                Credit Exposure

            	 	
              6

            
	
              Combined
                LC Exposure

            	 	
              6

            
	
              Combined
                Lenders

            	 	
              6

            
	
              Combined
                Loan Documents

            	 	
              7

            
	
              Combined
                Loans

            	 	
              7

            
	
              Combined
                Obligations

            	 	
              7

            
	
              Commission

            	 	
              7

            
	
              Commitment

            	 	
              7

            
	
              Commitment
                Fee

            	 	
              7

            
	
              Control

            	 	
              7

            
	
              Controlled

            	 	
              7

            
	
              Controlling

            	 	
              7

            
	
              Credit
                Exposure

            	 	
              7

            
	
              Current
                Assets

            	 	
              7

            
	
              Current
                Liabilities

            	 	
              7

            
	
              Default

            	 	
              8

            
	
              Deficiency
                Notification Date

            	 	
              37

            
	
              Disclosed
                Matters

            	 	
              52

            
	
              dollars

            	 	
              8

            
	
              EBITDA

            	 	
              8

            
	
              Election
                Notice

            	 	
              39

            
	
              Environmental
                Laws

            	 	
              8

            
	
              Environmental
                Liability

            	 	
              8

            
	
              Equity
                Interests

            	 	
              8

            
	
              Equivalent
                Amount

            	 	
              8

            
	
              ERISA

            	 	
              9

            
	
              ERISA
                Affiliate

            	 	
              9

            
	
              ERISA
                Event

            	 	
              9

            
	
              Eurodollar

            	 	
              9

            
	
              Eurodollar
                Borrowing

            	 	
              24

            
	
              Eurodollar
                Loan

            	 	
              24

            
	
              Event
                of Default

            	 	
              74

            
	
              Exchange
                Act

            	 	
              9

            
	
              Excluded
                Taxes

            	 	
              9

            
	
              Facility
                Guaranty

            	 	
              10

            
	
              Federal
                Funds Effective Rate

            	 	
              10

            
	
              Fee
                Letter

            	 	
              10

            
	
              Financing
                Transactions

            	 	
              10

            
	
              Foreign
                Lender

            	 	
              10

            
	
              Foreign
                Subsidiary

            	 	
              10

            
	
              GAAP

            	 	
              10

            
	
              Global
                Administrative Agent

            	 	
              10

            


    

     

    
      
        
        

      

      
        v

        
          

        

      

      
        
        

      

    

     

    
      	
              Global
                Borrowing Base

            	 	
              11

            
	
              Global
                Borrowing Base Allocation Notice

            	 	
              35

            
	
              Global
                Borrowing Base Deficiency

            	 	
              11

            
	
              Global
                Borrowing Base Designation Notice

            	 	
              34

            
	
              Global
                Borrowing Base Utilization Percentage

            	 	
              11

            
	
              Global
                Effective Date

            	 	
              11

            
	
              Global
                Effectiveness Notice

            	 	
              11

            
	
              Governmental
                Approval

            	 	
              11

            
	
              Governmental
                Authority

            	 	
              11

            
	
              Governmental
                Rule

            	 	
              11

            
	
              Guarantee

            	 	
              11

            
	
              Guarantor

            	 	
              12

            
	
              Hazardous
                Material

            	 	
              12

            
	
              Hedging
                Agreement

            	 	
              12

            
	
              Hedging
                Obligations

            	 	
              12

            
	
              Highest
                Lawful Rate

            	 	
              90

            
	
              Hydrocarbon
                Interests

            	 	
              12

            
	
              Hydrocarbons

            	 	
              12

            
	
              Indebtedness

            	 	
              12

            
	
              Indemnified
                Taxes

            	 	
              13

            
	
              Indemnitee

            	 	
              83

            
	
              Independent
                Reserve Report

            	 	
              61

            
	
              Information

            	 	
              89

            
	
              Initial
                Reserve Report

            	 	
              13

            
	
              Intercreditor
                Agreement

            	 	
              13

            
	
              Interest
                Election Request

            	 	
              13

            
	
              Interest
                Payment Date

            	 	
              13

            
	
              Interest
                Period

            	 	
              14

            
	
              Internal
                Reserve Report

            	 	
              61

            
	
              Investment

            	 	
              14

            
	
              Issuing
                Bank

            	 	
              14

            
	
              LC
                Disbursement

            	 	
              14

            
	
              LC
                Exposure

            	 	
              14

            
	
              Lender
                Affiliate

            	 	
              15

            
	
              Lenders

            	 	
              15

            
	
              Letter
                of Credit

            	 	
              15

            
	
              LIBO
                Rate

            	 	
              15

            
	
              Lien

            	 	
              15

            
	
              Loan
                Document

            	 	
              15

            
	
              Loan
                Parties

            	 	
              16

            
	
              Loan
                Value

            	 	
              16

            
	
              Loans

            	 	
              16

            
	
              Margin
                Stock

            	 	
              16

            
	
              Material
                Adverse Effect

            	 	
              16

            
	
              Maturity
                Date

            	 	
              16

            
	
              Moody’s

            	 	
              16

            


    

     

    
      
        
        

      

      
        vi

        
          

        

      

      
        
        

      

    

     

    
      	
              Mortgage

            	 	
              16

            
	
              Mortgaged
                Property

            	 	
              16

            
	
              Multiemployer
                Plan

            	 	
              17

            
	
              Net
                Proceeds

            	 	
              17

            
	
              New
                York City

            	 	
              17

            
	
              Non-Recourse
                Debt

            	 	
              17

            
	
              Note

            	 	
              17

            
	
              Obligations

            	 	
              17

            
	
              Oil
                and Gas Properties

            	 	
              17

            
	
              Organic
                Documents

            	 	
              18

            
	
              Other
                Taxes

            	 	
              18

            
	
              Parent

            	 	
              1,
                18

            
	
              Participant

            	 	
              86

            
	
              PBGC

            	 	
              18

            
	
              Pension
                Plan

            	 	
              18

            
	
              Permitted
                Encumbrances

            	 	
              19

            
	
              Permitted
                Investments

            	 	
              19

            
	
              Person

            	 	
              20

            
	
              Plan

            	 	
              20

            
	
              Pledge
                Agreement

            	 	
              20

            
	
              Preferred
                Equity Interest

            	 	
              20

            
	
              Present
                Value

            	 	
              20

            
	
              Prime
                Rate

            	 	
              20

            
	
              Proceeds

            	 	
              21

            
	
              Production
                Payment

            	 	
              21

            
	
              Property

            	 	
              21

            
	
              Proven
                Reserves

            	 	
              21

            
	
              Register

            	 	
              85

            
	
              Regulation
                U

            	 	
              21

            
	
              Related
                Parties

            	 	
              21

            
	
              Release

            	 	
              21

            
	
              Remedial
                Action

            	 	
              21

            
	
              Required
                Lenders

            	 	
              22

            
	
              Reserve
                Report

            	 	
              22

            
	
              Resource
                Conservation and Recovery Act

            	 	
              22

            
	
              Restricted
                Payment

            	 	
              22

            
	
              Restricted
                Subsidiary

            	 	
              22

            
	
              S&P

            	 	
              22

            
	
              Security
                Documents

            	 	
              22

            
	
              Solvent

            	 	
              22

            
	
              Statutory
                Reserve Rate

            	 	
              23

            
	
              subsidiary

            	 	
              23

            
	
              Subsidiary

            	 	
              23

            
	
              Taxes

            	 	
              23

            
	
              Total
                Funded Debt

            	 	
              23

            
	
              Type

            	 	
              23

            


    

     

    
      
        
        

      

      
        vii

        
          

        

      

      
        
        

      

    

     

    
      	
              U.S.

            	 	
              24

            
	
              U.S.
                Borrowing Base

            	 	
              24

            
	
              U.S.
                Borrowing Base Deficiency

            	 	
              24

            
	
              U.S.
                Dollars

            	 	
              8

            
	
              U.S.
                Required Lenders

            	 	
              24

            
	
              U.S.$

            	 	
              8

            
	
              UCC
                Searches

            	 	
              23

            
	
              United
                States

            	 	
              24

            
	
              Unrestricted
                Subsidiary

            	 	
              24

            
	
              Unutilized
                Commitment

            	 	
              24

            
	
              Withdrawal
                Liability

            	 	
              24

            


    


    
      
        
        

      

      
        viii

        
          

        

      

      
        
        

      

    


    EXHIBITS
      AND SCHEDULES

    


    
      	
              EXHIBITS:

            	 	 
	
              Exhibit
                A

            	 	
              Form
                of Compliance Certificate

            
	
              Exhibit
                B

            	 	
              Form
                of Assignment and Assumption

            
	
              Exhibit
                C-1

            	 	
              Form
                of Borrowing Request

            
	
              Exhibit
                C-2

            	 	
              Form
                of Interest Election Request

            
	
              Exhibit
                D

            	 	
              Form
                of Facility Guaranty

            
	
              Exhibit
                E

            	 	
              Form
                of Pledge Agreement

            
	 	 	 
	
              SCHEDULES:

            	 	 
	
              Schedule 2.1

            	 	
              Commitments

            
	
              Schedule 3.4

            	 	
              Contingent
                Liabilities; Long Term Commitments; Unrealized Losses

            
	
              Schedule 3.6

            	 	
              Disclosed
                Matters

            
	
              Schedule 3.9

            	 	
              Taxes

            
	
              Schedule 3.12

            	 	
              Subsidiaries;
                Restricted Subsidiaries

            
	
              Schedule 3.13

            	 	
              Insurance

            
	
              Schedule 3.16

            	 	
              Environmental
                Matters

            
	
              Schedule 7.1(a)(iii)

            	 	
              Existing
                Guarantees of Intercompany Indebtedness

            
	
              Schedule 7.2
                

            	 	
              Existing
                Liens

            
	
              Schedule 7.4

            	 	
              Existing
                Investments

            
	
              Schedule 7.10

            	 	
              Existing
                Restrictions

            


    

     

    
      
        
        

      

      
        ix

        
          

        

      

      
        
        

      

    

    


    CREDIT
      AGREEMENT

    


    THIS
      CREDIT AGREEMENT, dated as of July 28, 2006, is among STORM
      CAT ENERGY (USA) CORPORATION,
      a
      Colorado corporation (the “Borrower”),
      STORM
      CAT ENERGY CORPORATION,
      a
      corporation amalgamated under the laws of British Columbia (“Parent”),
      the
LENDERS
      party
      hereto, and JPMORGAN
      CHASE BANK, N.A.,
      as
      Global Administrative Agent.

    


    WITNESSETH:

    


    WHEREAS,
      Borrower and Parent have requested that the Lenders provide certain loans to
      and
      extensions of credit on behalf of the Borrower; and

    


    WHEREAS,
      the Lenders have agreed to make such loans and extensions of credit subject
      to
      the terms and conditions of this Agreement.

    


    NOW,
      THEREFORE, in consideration of the mutual promises herein contained and for
      other valuable consideration, the receipt and adequacy of which are hereby
      acknowledged, the parties hereto agree as follows:

    


    ARTICLE
      I

    DEFINITIONS

     

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

    


    “ABR”,
      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 Alternate Base Rate.

    


    “Adjusted
      LIBO Rate”
means,
      with respect to any Eurodollar Borrowing for any Interest Period, an interest
      rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal
      to
      (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory
      Reserve Rate.

    


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

    


    “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
      each of the Global Administrative Agent and any other agent appointed hereunder
      from time to time.

    


    “Agreement”
means
      this Credit Agreement, as it may be amended, supplemented, restated or otherwise
      modified and in effect from time to time.


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    


    “Allocated
      Canadian Borrowing Base”
means
      from time to time the “Allocated Canadian Borrowing Base” as determined in
      accordance with Section
      2.7(d)(ii).

    


    “Allocated
      U.S. Borrowing Base”
means
      from time to time the “Allocated U.S. Borrowing Base” as determined in
      accordance with Section
      2.7(d)(i).

    


    “Alternate
      Base Rate”
means,
      for any day, a rate per annum equal to the greater of (a) the Prime Rate in
      effect on such day, and (b) the Federal Funds Effective Rate in effect on such
      day plus1⁄2
of
      1%.
      Any change in the Alternate Base Rate due to a change in the Prime Rate or
      the
      Federal Funds Effective Rate shall be effective from and including the effective
      date of such change in the Prime Rate or the Federal Funds Effective Rate,
      respectively. If for any reason the Global Administrative Agent shall have
      determined (which determination shall be conclusive and binding, absent manifest
      error) that it is unable to ascertain the Federal Funds Effective Rate for
      any
      reason, including, without limitation, the inability or failure of the Global
      Administrative Agent to obtain sufficient bids or publications in accordance
      with the terms hereof, the Alternate Base Rate shall be the Prime Rate until
      the
      circumstances giving rise to such inability no longer exist.

    


    “Annualized
      EBITDA”
means,
      for purposes of calculating the financial ratio set forth in Section
      6.1
      for any
      fiscal quarter, Parent’s actual EBITDA for such fiscal quarter ending on the
      calculation date multiplied by 4.

    


    “Applicable
      Lending Office”
means,
      for each Lender and for each Type of Loan, such office of such Lender (or of
      an
      Affiliate of such Lender) as such Lender may from time to time specify in
      writing to the Global Administrative Agent and Borrower as the office by which
      its Loans of such Type are to be made and/or issued and maintained.

    


    “Applicable
      Percentage”
means,
      with respect to any Lender, the percentage of the total Commitments represented
      by such Lender’s Commitment. If the Commitments have terminated or expired, the
      Applicable Percentages shall be determined based upon the Commitments most
      recently set forth in the Register, giving effect to any assignments made in
      accordance with Section
      10.4
      or any
      decreases in Commitments made in accordance with this Agreement.

    


    “Applicable
      Rate”
means,
      for any day and with respect to any Eurodollar Loans, any ABR Loans or any
      Commitment Fees payable hereunder, as the case may be, the applicable rate
      per
      annum set forth below in the Global Borrowing Base Utilization Grid with respect
      to “Eurodollar Loans,” “ABR Loans” or “Commitment Fees,” as the case may be,
      based on the Global Borrowing Base Utilization Percentage then in effect on
      such
      date:


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Global
      Borrowing Base Utilization Grid

    


    
      	
              Global
                Borrowing Base Utilization Percentage:

            	 	 	
              <50

            	
              %

            	 	
              ≥50%
                <75

            	
              %

            	 	
              ≥75%
                <90

            	
              %

            	 	
              ≥90

            	
              %

            
	
              Eurodollar
                Loans:

            	 	 	
              1.250

            	
              %

            	 	
              1.500

            	
              %

            	 	
              1.750

            	
              %

            	 	
              2.000

            	
              %

            
	
              ABR
                Loans:

            	 	 	
              0

            	
              %

            	 	
              0

            	
              %

            	 	
              0.250

            	
              %

            	 	
              0.500

            	
              %

            
	
              Commitment
                Fees:

            	 	 	
              0.300

            	
              %

            	 	
              0.375

            	
              %

            	 	
              0.375

            	
              %

            	 	
              0.500

            	
              %

            


    

    


    Each
      change in the Applicable Rate shall apply during the period commencing on the
      effective date of such change and ending on the date immediately preceding
      the
      effective date of the next such change.

    


    “Approved
      Counterparty”
means
      (a) any Lender or any Affiliate of any Lender, or (b) any other Person
      whose long term senior unsecured debt rating at the time of entry into the
      applicable Hedging Agreement is A-/A3 by S&P or Moody’s (or their
      equivalent) or higher.

    


    “Approved
      Country”
means
      the United States or Canada.

    


    “Approved
      Engineer”
means
      Netherland, Sewell & Associates, Inc., or such other firm of independent
      petroleum engineers expert in the matters required to be performed in connection
      with the preparation and delivery of an Independent Reserve Report and
      reasonably satisfactory to the Global Administrative Agent.

    


    “Arranger”
means
      J.P. Morgan Securities Inc.

    


    “Assignment
      and Assumption”
means
      an assignment and assumption entered into by a Lender and an assignee (with
      the
      consent of any party whose consent is required by Section
      10.4),
      and
      accepted by the Global Administrative Agent, in substantially the form of
Exhibit
      B
      or any
      other form approved by the Global Administrative Agent.

    


    “Authorized
      Officer”
means
      the Chief Executive Officer, the President or the Chief Financial Officer of
      Parent or Borrower or any other officer of Parent or Borrower specified as
      such
      to the Global Administrative Agent in writing by any of the aforementioned
      officers of Parent or Borrower.

    


    “Availability
      Period”
means
      the period from and including the Global Effective Date to but excluding the
      earlier of the Maturity Date and the date of termination of the
      Commitments.

    


    “Board”
means
      the Board of Governors of the Federal Reserve System of the United States of
      America.

    


    “Borrower”
is
      defined in the preamble.


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    “Borrowing”
means
      Loans of the same Type, made, converted or continued on the same date and,
      in
      the case of Eurodollar Loans, as to which a single Interest Period is in
      effect.

    


    “Borrowing
      Base Properties”
means
      the Mortgaged Properties and those other Oil and Gas Properties owned by
      Borrower, Parent or its Restricted Subsidiaries that are given value in the
      determination of the then current Global Borrowing Base.

    


    “Borrowing
      Request”
means
      a
      request by Borrower for a Borrowing in accordance with Section
      2.3,
      in
      substantially the form of Exhibit
      C-1
      or any
      other form approved by the Global Administrative Agent.

    


    “Business
      Day”
means
      any day that is not a Saturday, Sunday or other day on which commercial banks
      in
      Dallas, Texas and New York City are authorized or required by law to remain
      closed.

    


    “Canadian
      Administrative Agent”
means
      JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as Canadian
      administrative agent for the lenders party to the Canadian Credit Agreement,
      and
      any successor thereto.

    


    “Canadian
      Borrower”
means
      Parent, as the “Borrower” under the Canadian Credit Agreement.

    


    “Canadian
      Credit Agreement”
means
      that certain Credit Agreement of even date herewith among the Canadian Borrower,
      the Canadian Lenders, the Global Administrative Agent and the Canadian
      Administrative Agent, as it may be amended, supplemented, restated or otherwise
      modified and in effect from time to time. 

    


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

    


    “Canadian
      Lenders”
means
      the financial institutions from time to time party to the Canadian Credit
      Agreement and their respective successors and permitted assigns.

    


    “Canadian
      Loan Documents”
means
      the Canadian Credit Agreement, each Canadian Security Document, each Hedging
      Agreement between the Canadian Borrower or any of its Restricted Subsidiaries
      and any Canadian Lender or any Affiliate of a Canadian Lender, any Borrowing
      Request under the Canadian Credit Agreement, any Interest Election Request
      under
      the Canadian Credit Agreement, any election notice and any agreement with
      respect to fees, together with all exhibits, schedules and attachments thereto,
      and all other agreements, documents, certificates, financing statements and
      instruments from time to time executed and delivered by a Loan Party (as defined
      in the Canadian Credit Agreement) pursuant to or in connection with any of
      the
      foregoing.

    


    “Canadian
      Obligations”
means,
      at any time, the Equivalent Amount in U.S. Dollars of the sum of (a) the
      aggregate “Credit Exposure” of the Canadian Lenders under the Canadian Loan
      Documents plus
      (b) all
      accrued and unpaid interest and fees owing to the Canadian Lenders under the
      Canadian Loan Documents plus
      (c) all
      other obligations (monetary or otherwise) of Canadian Borrower or any of its
      Restricted Subsidiaries to any Canadian Lender or any of the “Agents” under the
      Canadian Credit Agreement, whether or not contingent, arising under or in
      connection with any of the Canadian Loan Documents.

    
 

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Canadian
      Security Documents”
means
      the “Security Documents,” as defined in the Canadian Credit
      Agreement.

    


    “Capital
      Lease Obligations”
means,
      for any Person, all obligations of such Person to pay rent or other amounts
      under a lease of (or other agreement conveying the right to use) Property to
      the
      extent such obligations are required to be classified and accounted for as
      a
      capital lease on a balance sheet of such Person under GAAP, and, for purposes
      of
      this Agreement, the amount of such obligations shall be the capitalized amount
      thereof, determined in accordance with GAAP.

    


    “Casualty
      Event”
means
      any loss, casualty or other insured damage to, or any taking under power of
      eminent domain or by condemnation or similar proceeding of, any Collateral
      having a fair market value in excess of U.S. $500,000 (or its equivalent in
      other currencies).

    


    “CERCLA”
means
      the Comprehensive Environmental Response, Compensation and Liability Act of
      1980, 42 U.S.C. § 9601, et.
      seq.,
      as
      amended from time to time.

    


    “CERCLIS”
means
      the Comprehensive Environmental Response and Liability Information System as
      provided for by 40 C.F.R. § 300.5, as amended from time to time.

    


    “Change
      in Control”
means
      (a) the failure of Parent to own, directly or indirectly, 100% of the
      Equity Interests of Borrower or any other Loan Party, or (b) a “Change in
      Control” under the Canadian Credit Agreement.

    


    “Change
      in Law”
means
      (a) the adoption of any law, rule or regulation after the date of this
      Agreement, (b) any change in any law, rule or regulation or in the
      interpretation or application thereof by any Governmental Authority after the
      date of this Agreement or (c) compliance by any Lender or any Issuing Bank
      (or,
      for purposes of Section
      2.15(b),
      by any
      Applicable Lending Office of such Lender or any Issuing Bank or by such Lender’s
      or any Issuing Bank’s holding company, if any) with any request, guideline or
      directive (whether or not having the force of law) of any Governmental Authority
      made or issued after the date of this Agreement.

    


    “Code”
means
      the Internal Revenue Code of 1986, as amended from time to time.

    


    “Collateral”
means
      any and all “Mortgaged Property” and “Collateral,” as defined in all Security
      Documents.

    


    “Combined
      Applicable Percentage”
means,
      with respect to any Combined Lender, the percentage of the total Combined
      Commitments represented by such Combined Lender’s Commitment (or, in the case of
      Canadian Lenders, the “Commitment” of such Canadian Lender as defined in the
      Canadian Credit Agreement) with amounts outstanding in Canadian Dollars being
      converted into an Equivalent Amount (calculated by the Global Administrative
      Agent) of U.S. Dollars solely for this purpose. If the Combined Commitments
      have
      terminated or expired, the Combined Applicable Percentages shall be determined
      based upon the Combined Commitments most recently in effect, after giving effect
      to any assignments made in accordance with the Combined Credit
      Agreements.

    
 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “Combined
      Commitments”
means,
      with respect to each Combined Lender, the commitment of such Combined Lender
      to
      make Loans (or in the case of Canadian Lenders, “Loans” (as defined in the
      Canadian Credit Agreement)), expressed as an amount representing the maximum
      aggregate amount of such Combined Lender’s Credit Exposure (or in the case of
      Canadian Lenders, “Credit Exposure” (as defined in the Canadian Credit
      Agreement)) under the Combined Credit Agreements (with amounts outstanding
      in
      Canadian Dollars being converted into an Equivalent Amount (calculated by the
      Global Administrative Agent) of U.S. Dollars solely for this purpose), as such
      commitment may be reduced or terminated from time to time pursuant to the
      Combined Loan Documents. The amount of each Combined Lender’s Commitment is set
      forth on Schedule 2.1
      to the
      applicable Combined Credit Agreement, or in an Assignment and Assumption (as
      defined in this Agreement and the Canadian Credit Agreement) pursuant to which
      such Combined Lender shall have assumed its Combined Commitment, as applicable,
      subject to reduction and termination from time to time pursuant to this
      Agreement and the Canadian Credit Agreement. The initial aggregate amount of
      the
      Combined Lenders’ Combined Commitments is U.S.$250,000,000.

    


    “Combined
      Credit Agreements”
means
      this Agreement and the Canadian Credit Agreement.

    


    “Combined
      Credit Exposure”
means
      at any time the sum of (a) the aggregate Credit Exposure of all Lenders
      hereunder and (b) the Equivalent Amount in U.S. Dollars of the aggregate “Credit
      Exposure” (as defined in the Canadian Credit Agreement) of all Canadian
      Lenders.

    


    “Combined
      LC Exposure”
means,
      at any time, the sum of the LC Exposure under this Agreement and the Equivalent
      Amount in U.S. Dollars of the “LC Exposure” (as defined in the Canadian Credit
      Agreement) under the Canadian Credit Agreement. The Combined LC Exposure of
      any
      Combined Lender at any time shall be its Combined Applicable Percentage of
      the
      total Combined LC Exposure at such time.

    


    “Combined
      Lenders”
means
      the Lenders hereunder and the Canadian Lenders.

    


    “Combined
      Loan Documents”
means
      the Loan Documents and the Canadian Loan Documents.

    


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

    


    “Combined
      Obligations”
means
      the aggregate of the Obligations and the Canadian Obligations.

    


    “Commission”
means
      the U.S. Securities and Exchange Commission, or any Governmental Authority
      in
      the United States succeeding to any or all of the functions
      thereof.

    
 

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “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 Credit Exposure
      hereunder, as such commitment may be (a) reduced from time to time pursuant
      to
Section
      2.8,
      (b)
      reduced or increased from time to time pursuant to assignments by or to such
      Lender pursuant to Section
      10.4,
      and (c)
      terminated pursuant to Section
      8.2
      or
Section
      8.3.
      The
      initial amount of each Lender’s Commitment is set forth on Schedule 2.1,
      or in
      the Register following any Assignment and Assumption to which such Lender is
      a
      party. The initial aggregate amount of the Commitments of the Lenders is
      U.S.$250,000,000.

    


    “Commitment
      Fee”
is
      defined in Section
      2.11(a).

    


    “Control”
means
      the possession, directly or indirectly, of the power to direct or cause the
      direction of the management or policies of a Person, whether through the ability
      to exercise voting power, by contract or otherwise. “Controlling”
and
      “Controlled”
have
      meanings correlative thereto.

    


    “Credit
      Exposure”
means,
      with respect to any Lender at any time, the sum of the outstanding principal
      amount of such Lender’s Loans and its LC Exposure at such time.

    


    “Current
      Assets”
means,
      with respect to Parent and its Subsidiaries on a consolidated basis, as of
      any
      date of determination, the sum of (a) the current assets of Parent and its
      Subsidiaries on a consolidated basis at such time determined in accordance
      with
      GAAP, plus
      (b) the
      current Unutilized Commitment at such time, minus
      (c)
      current FASB 133 and FASB 143 assets,

    


    “Current
      Liabilities”
means,
      with respect to Parent and its Subsidiaries on a consolidated basis, as of
      any
      date of determination, the sum of the current obligations of Parent and its
      Subsidiaries, excluding amounts “due to or due from” Parent and/or Subsidiaries,
      on a consolidated basis at such time determined in accordance with GAAP,
      excluding therefrom (a) any current liabilities to pay principal due on the
      Loans, and (b) current FASB 133 and FASB 143 liabilities.

    


    “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.

    


    “Deficiency
      Notification Date”
is
      defined in Section
      2.7(f).

    


    “Disclosed
      Matters”
is
      defined in Section
      3.6(a).

    


    “dollars”
or
      “U.S.
      Dollars”
or
      “U.S.$”
refers
      to lawful money of the United States of America.

    


    “EBITDA”
means,
      for any period, the consolidated net income of Parent and its Subsidiaries
      for
      such period (excluding any extraordinary gains and losses from consolidated
      net
      income) before deduction for interest expense, depreciation, depletion expense,
      amortization expense, federal, provincial, territorial and state income taxes
      and other non-cash charges (including, but not limited to, stock option grants,
      warrants, and similar non-cash charges) and expenses incurred by Parent and
      its
      Subsidiaries; provided,
      however,
      that
      any calculation of EBITDA hereunder shall be (a) in all respects acceptable
      to, and approved by, the Global Administrative Agent, and (b) made using an
      EBITDA calculated on a pro forma basis (inclusive of any acquisitions and/or
      divestitures, if any, made during the relevant calculation period and, if any
      such acquisition or divestiture has a value in excess of U.S.$500,000, as if
      such acquisition or divestiture had occurred on the first day of such
      period).


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    “Environmental
      Laws”
means
      all laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
      injunctions, notices or binding agreements issued, promulgated or entered into
      by any Governmental Authority, relating in any way to the environment,
      preservation or reclamation of natural resources, the management, release or
      threatened release of any Hazardous Material or to health and safety matters
      (including without limitation the Environmental Protection Enhancement Act
      (Alberta) and the Canadian Environmental Protection Act).

    


    “Environmental
      Liability”
means
      any liability, contingent or otherwise (including any liability for damages,
      costs of environmental remediation, fines, penalties or indemnities), of Parent
      or any of its Subsidiaries directly or indirectly 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, agreement
      or
      other consensual arrangement pursuant to which liability is assumed or imposed
      with respect to any of the foregoing.

    


    “Equity
      Interests”
means
      shares of the capital stock, partnership interests, membership interest in
      a
      limited liability company, beneficial interests in a trust or other equity
      interests in any Person or any warrants, options or other rights to acquire
      such
      interests.

    


    “Equivalent
      Amount”
means
      as at any date the amount of Canadian Dollars into which an amount of U.S.
      Dollars may be converted, or the amount of U.S. Dollars into which an amount
      of
      Canadian Dollars may be converted, in either case at The Bank of Canada
      mid-point noon spot rate of exchange for such date in Toronto at approximately
      12:00 noon, Toronto time on such date.

    


    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and any
      successor statute of similar import, together with the rules, regulations and
      interpretations thereunder, in each case as in effect from time to
      time.

    


    “ERISA
      Affiliate”
means
      all members of a controlled group of corporations and all members of a
      controlled group of trades or businesses (whether or not incorporated) under
      common control which, together with Parent, are treated as a single employer
      under Section 414 (b) or 414 (c) of the Internal Revenue Code or Section 4001
      of
      ERISA.

    


    “ERISA
      Event”
means
      (a) any “reportable event”, as defined in Section 4043 of ERISA or the
      regulations issued thereunder with respect to a Plan (other than an event for
      which the 30 day notice period is waived); (b) the existence with respect to
      any
      Plan of an “accumulated funding deficiency” (as defined in Section 412 of the
      Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant
      to
      Section 412(d) of the Code or Section 303(d) of ERISA of an application for
      a
      waiver of the minimum funding standard with respect to any Plan; (d) the
      incurrence by Parent or any ERISA Affiliate of any liability under Title IV
      of
      ERISA with respect to the termination of any Plan; (e) the receipt by Parent
      or
      any ERISA Affiliate from the PBGC or a plan administrator of any notice relating
      to an intention to terminate any Plan or Plans or to appoint a trustee to
      administer any Plan; (f) the incurrence by Parent or any ERISA Affiliate of
      any
      Withdrawal Liability; or (g) the receipt by Parent or any ERISA Affiliate of
      any
      notice concerning the determination that a Multiemployer Plan is, or is expected
      to be, insolvent or in reorganization, within the meaning of Title IV of
      ERISA.


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    “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 Adjusted LIBO Rate.

    


    “Event
      of Default”
has
      the
      meaning assigned to such term in Section
      8.1.

    


    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended. 

    


    “Excluded
      Taxes”
means,
      with respect to any Agent, any Lender, any Issuing Bank or any other recipient
      of any payment to be made by or on account of any obligation of Borrower
      hereunder, (a) income or franchise taxes imposed on (or measured by) its net
      income by the United States of America, or by the jurisdiction under the laws
      of
      which such recipient is organized or in which its principal office is located
      or, in the case of any Lender, in which its Applicable Lending Office is
      located, (b) any branch profits taxes imposed by the United States of America
      or
      any similar tax imposed by any other jurisdiction in which Borrower is located
      and (c) in the case of a Foreign Lender (other than an assignee pursuant to
      a
      request by Borrower under Section
      2.19(b)),
      any
      withholding tax that is imposed on amounts payable to such Foreign Lender at
      the
      time such Foreign Lender becomes a party to this Agreement (or designates a
      new
      Applicable Lending Office) or is attributable to such Foreign Lender’s failure
      to comply with Section
      2.17(e),
      except
      to the extent that such Foreign Lender (or its assignor, if any) was entitled,
      at the time of designation of a new Applicable Lending Office (or assignment),
      to receive additional amounts from Borrower with respect to such withholding
      tax
      pursuant to Section
      2.19(a).

    


    “Facility
      Guaranty”
means
      a
      guaranty dated as of the Global Effective Date or otherwise delivered pursuant
      to the Loan Documents, made by each Loan Party (other than Parent, Borrower
      and
      any Foreign Subsidiary) in favor of the Global Administrative Agent,
      substantially in the form of Exhibit
      D,
      as
      amended, supplemented, restated or otherwise modified from time to time in
      accordance with the terms of this Agreement and the other Loan Documents. The
      term “Facility Guaranties” shall include each and every Facility Guaranty
      executed and delivered by a Loan Party (other than Parent, Borrower and any
      Foreign Subsidiary) hereunder.

    


    “Federal
      Funds Effective Rate”
means,
      for any day, the weighted average (rounded upwards, if necessary, to the next
      1/100 of 1%) of the rates on overnight Federal funds transactions with members
      of the Federal Reserve System arranged by Federal funds brokers, as published
      on
      the next succeeding Business Day by the Federal Reserve Bank of New York, or,
      if
      such rate is not so published for any day that is a Business Day, the average
      (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations
      for
      such day for such transactions received by the Global Administrative Agent
      from
      three Federal funds brokers of recognized standing selected by it.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    “Fee
      Letter”
means
      that certain Fee Letter dated as of the date hereof, by and between Parent
      and
      JPMorgan Chase Bank, N.A., as such letter may be amended, supplemented, restated
      or otherwise modified from time to time in accordance with the Loan
      Documents.

    


    “Financing
      Transactions”
means
      the execution, delivery and performance by each Loan Party of the Loan Documents
      to which it is to be a party, the borrowing of Loans, the use of the proceeds
      thereof and the issuance of Letters of Credit hereunder.

    


    “Foreign
      Lender”
means
      any Lender that is organized under the laws of a jurisdiction other than the
      United States of America or any State thereof, or the District of
      Columbia.

    


    “Foreign
      Subsidiary”
means
      any Subsidiary that is organized under the laws of a jurisdiction other than
      the
      United States of America or any State thereof or the District of
      Columbia.

    


    “GAAP”
means
      generally accepted accounting principles in the United States of
      America.

    


    “Global
      Administrative Agent”
means
      JPMorgan Chase Bank, N.A., in its capacity as global administrative agent for
      the Combined Lenders, and its successors.

    


    “Global
      Borrowing Base”
means
      the “Global Borrowing Base” as determined from time to time pursuant to
Section
      2.7.

    


    “Global
      Borrowing Base Allocation Notice”
is
      defined in Section
      2.7(d)(iii).

    


    “Global
      Borrowing Base Deficiency”
means,
      at the time of determination, the amount by which (a) the Combined Credit
      Exposure of all Combined Lenders exceeds (b) the then current Global Borrowing
      Base.

    


    “Global
      Borrowing Base Designation Notice”
is
      defined in Section
      2.7(b).

    


    “Global
      Borrowing Base Utilization Percentage”
means,
      at any time of determination, an amount (expressed as a percentage) equal to
      the
      quotient of (a) the Combined Credit Exposure divided
      by
      (b) the Global Borrowing Base.

    


    “Global
      Effective Date”
means
      the date on which the conditions specified in Section 4.2
      of each
      Combined Credit Agreement are satisfied (or waived in accordance with
Section 10.2
      of each
      Combined Credit Agreement).

    


    “Global
      Effectiveness Notice”
means
      a
      notice and certificate of Borrower and Parent properly executed by an Authorized
      Officer of Borrower and Parent addressed to the Combined Lenders and delivered
      to the Global Administrative Agent whereby Borrower and Parent certify
      satisfaction and/or waiver of all the conditions precedent to the effectiveness
      under Section 4.2
      of each
      Combined Credit Agreement.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    “Governmental
      Approval”
means
      (a) any authorization, consent, approval, license, ruling, permit, tariff,
      rate,
      certification, waiver, exemption, filing, variance, claim, order, judgment
      or
      decree of, or with, (b) any required notice to, (c) any declaration of or with,
      or (d) any registration by or with, any Governmental Authority.

    


    “Governmental
      Authority”
means
      the government of the United States of America, Canada, any other nation or
      any
      political subdivision thereof, whether state, provincial, territorial 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 or pertaining to
      government.

    


    “Governmental
      Rule”
means
      any statute, law, regulation, ordinance, rule, judgment, order, decree, permit,
      concession, grant, franchise, license, agreement, directive, requirement of,
      or
      other governmental restriction or any similar binding form of decision of or
      determination by, or any binding interpretation or administration of any of
      the
      foregoing by, any Governmental Authority, whether now or hereafter in
      effect.

    


    “Guarantee”
means
      a
      guarantee, an endorsement, a contingent agreement to purchase or to furnish
      funds for the payment or maintenance of, or otherwise to be or become
      contingently liable under or with respect to, the Indebtedness, net worth,
      working capital or earnings of any Person or any production or revenues
      generated by (or any capital or other expenditures incurred in connection with
      the acquisition and exploitation of, exploration for, development of or
      production from) any Hydrocarbons, or a guarantee of the payment of dividends
      or
      other distributions upon the Equity Interests of any Person, including, without
      limitation, causing a bank, surety company or other financial institution or
      similar entity to issue a letter of credit, surety bond or other similar
      instrument for the benefit of another Person, but excluding any such
      endorsements, contingent agreement or contingent liability for collection or
      deposit in the ordinary course of business. The terms “Guarantee”
and
      “Guaranteed”
used
      as
      a verb shall have a correlative meaning.

    


    “Guarantor”
means,
      collectively, (a) each Loan Party (other than Parent, Borrower and any Foreign
      Subsidiary) that executes and delivers a Facility Guaranty, including each
      Loan
      Party that is required to execute a Facility Guaranty pursuant to Section
      5.12.

    


    “Hazardous
      Material”
means
      all explosive or radioactive substances or wastes and all hazardous or toxic
      substances, wastes or other pollutants, asbestos or asbestos containing
      materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
      and all other substances or wastes of any nature regulated pursuant to any
      Environmental Law, and any petroleum, petroleum products or petroleum
      distillates and associated oil or natural gas exploration, production and
      development wastes that are not exempted or excluded from being defined as
      “hazardous substances”, “hazardous materials”, “hazardous wastes” and “toxic
      substances” under such Environmental Laws.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    “Hedging
      Agreement”
means
      any interest rate protection agreement, foreign currency exchange agreement,
      commodity price protection agreement or other interest or currency exchange
      rate
      or commodity price hedging arrangement among Borrower, Parent or its Restricted
      Subsidiaries and any Person.

    


    “Hedging
      Obligations”
means,
      with respect to any Person, all liabilities (including but not limited to
      obligations and liabilities of such Person arising in connection with or as
      a
      result of early or premature termination of a Hedging Agreement, whether or
      not
      occurring as a result of a default thereunder) of such Person under a Hedging
      Agreement.

    


    “Highest
      Lawful Rate”
is
      defined in Section
      10.13(b).

    


    “Hydrocarbon
      Interests”
means
      all rights, titles and interests in and to oil and gas leases, oil, gas and
      mineral leases, other Hydrocarbon leases, mineral interests; mineral servitudes,
      overriding royalty interests, royalty interests, net profits interests,
      production payment interests, and other similar interests.

    


    “Hydrocarbons”
means,
      collectively, oil, gas, casinghead gas, drip gasoline, natural gasoline,
      condensate, distillate and all other liquid or gaseous hydrocarbons and related
      minerals and all products therefrom, in each case whether in a natural or a
      processed state.

    


    “Indebtedness”
of
      any
      Person means, without duplication, (a) all obligations of such Person for
      borrowed money, (b) all obligations of such Person evidenced by bonds,
      debentures, notes or similar instruments, (c) all obligations of such Person
      under conditional sale or other title retention agreements relating to Property
      acquired by such Person, (d) all obligations of such Person in respect of the
      deferred purchase price of Property or services (excluding earn-outs and current
      accounts payable incurred in the ordinary course of business), (e) all
      Indebtedness of others secured by (or for which the holder of such Indebtedness
      has an existing right, contingent or otherwise, to be secured by) any Lien
      on
      property owned or acquired by such Person, whether or not the Indebtedness
      secured thereby has been assumed, (f) all Guarantees by such Person of
      Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h)
      all obligations, contingent or otherwise, of such Person as an account party
      in
      respect of letters of credit and letters of guaranty, (i) all obligations
      of such Person with respect to any arrangement, directly or indirectly, whereby
      such Person or its Subsidiaries shall sell or transfer any material asset,
      and
      whereby such Person or any of its Subsidiaries shall then or immediately
      thereafter rent or lease as lessee such asset or any part thereof, (j) all
      recourse and support obligations of such Person or any of its Subsidiaries
      with
      respect to the sale or discount of any of its accounts receivable, and
      (k) all obligations of such Person with respect to Production Payments sold
      by such Person or any prepayments for oil and gas production or other similar
      agreements. The Indebtedness of any Person shall include, without duplication,
      the Indebtedness of any other Person (including any partnership in which such
      Person is a general partner) to the extent such Person is liable therefor as
      a
      result of such Person’s ownership interest in or other relationship with such
      entity, except to the extent the terms of such Indebtedness provide that such
      Person is not liable therefor.

    


    “Indemnified
      Taxes”
means
      Taxes other than Excluded Taxes.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    “Indemnitee”
is
      defined in Section
      10.3(b).

    


    “Independent
      Reserve Report”
is
      defined in Section
      5.1(e).

    


    “Information”
is
      defined in Section
      10.12.

    


    “Initial
      Reserve Report”
means
      the Independent Reserve Report delivered to the Global Administrative Agent
      dated effective as of June 30, 2006, with respect to the Oil and Gas Properties
      of Borrower, a true and correct copy of which has been delivered to the Global
      Administrative Agent and the Lenders.

    


    “Intercreditor
      Agreement”
means
      that certain Intercreditor Agreement dated as of even date herewith, by and
      among the Global Administrative Agent, the Canadian Administrative Agent and
      the
      Combined Lenders, as amended, supplemented, restated or otherwise modified
      from
      time to time in accordance with the Loan Documents.

    


    “Interest
      Election Request”
means
      a
      request by Borrower to convert or continue a Borrowing in accordance with
Section
      2.6,
      in
      substantially the form of Exhibit
      C-2
      or any
      other form approved by the Global Administrative Agent.

    


    “Interest
      Payment Date”
means
      (a) with respect to any ABR Loan, the last day of each March, June, September
      and December, and (b) with respect to any Eurodollar Loan, the last day of
      the
      Interest Period applicable to the Borrowing of which such Loan is a part and,
      in
      the case of a Eurodollar Borrowing with an Interest Period of more than three
      (3) months’ duration, each day prior to the last day of such Interest Period
      that occurs at intervals of three (3) months’ duration after the first day of
      such Interest Period.

    


    “Interest
      Period”
means
      with respect to any Eurodollar Borrowing, the period commencing on the date
      of
      such Borrowing and ending on the numerically corresponding day, in the calendar
      month that is one, two or three months (or, with the consent of each Lender,
      six
      months) thereafter, as Borrower may elect; provided,
      that
      (a) if any Interest Period would end on a day other than a Business Day, such
      Interest Period shall be extended to the next succeeding Business Day unless
      such next succeeding Business Day would fall in the next calendar month, in
      which case such Interest Period shall end on the next preceding Business Day,
      (b) any Interest Period pertaining to a Eurodollar Borrowing that commences
      on
      the last Business Day of a calendar month (or on a day for which there is no
      numerically corresponding day in the last calendar month of such Interest
      Period) shall end on the last Business Day of the last calendar month of such
      Interest Period, and (c) no Interest Period may end later than the last day
      of
      the Availability 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.

    


    “Internal
      Reserve Report”
is
      defined in Section
      5.1(e).

    


    “Investment”
means,
      for any Person: (a) the acquisition (whether for cash, Property, services or
      securities or otherwise) of Equity Interests of any other Person (including,
      without limitation, any “short sale” or any sale of any securities at a time
      when such securities are not owned by the Person entering into such short sale),
      (b) the making of any deposit with, or advance, loan or other extension of
      credit to, any other Person (including the purchase of Property from another
      Person subject to an understanding or agreement, contingent or otherwise, to
      resell such Property to such Person, but excluding any such advance, loan or
      extension of credit having a term not exceeding 180 days representing the
      purchase price of inventory or supplies sold by such Person in the ordinary
      course of business) or (c) the entering into of any Guarantee of Indebtedness
      or
      other liability of any other Person and (without duplication) any amount
      committed to be advanced, lent or extended to such Person. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    “Issuing
      Bank”
means
      JPMorgan Chase Bank, N.A. and each Lender that agrees to act as an issuer of
      Letters of Credit hereunder at the request of the Global Administrative Agent,
      in each case, in its capacity as the issuer of Letters of Credit hereunder.
      Any
      Issuing Bank may, in its discretion, arrange for one or more Letters of Credit
      to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing
      Bank” shall include any such Affiliate with respect to Letters of Credit issued
      by such Affiliate.

    


    “LC
      Disbursement”
means
      a
      payment made by any Issuing Bank pursuant to a Letter of Credit.

    


    “LC
      Exposure”
means,
      at any time, the sum of (a) the aggregate undrawn amount of all outstanding
      Letters of Credit at such time plus
      (b) the
      aggregate amount of all LC Disbursements that have not yet been reimbursed
      by or
      on behalf of Borrower at such time. The LC Exposure of any Lender at any time
      shall be its Applicable Percentage of the total LC Exposure at such
      time.

    


    “Lender
      Affiliate”
means,
      with respect to any Lender, (a) an Affiliate of such Lender or (b) any entity
      (whether a corporation, partnership, trust or otherwise) that is engaged in
      making, purchasing, holding or otherwise investing in bank loans and similar
      extensions of credit in the ordinary course of its business and is administered
      or managed by such Lender or an Affiliate of such Lender, and with respect
      to
      any Lender that is a fund which invests in bank loans and similar extensions
      of
      credit, any other fund that invests in bank loans and similar extensions of
      credit and is managed by the same investment advisor as such Lender or by an
      Affiliate of such investment advisor.

    


    “Lenders”
means
      the Persons listed on Schedule 2.1
      and any
      other Person that shall have become a party hereto pursuant to an Assignment
      and
      Assumption, other than any such Person that ceases to be a party hereto pursuant
      to an Assignment and Assumption.

    


    “Letter
      of Credit”
means
      any letter of credit issued pursuant to this Agreement.

    


    “LIBO
      Rate”
means,
      with respect to any Eurodollar Borrowing for any Interest Period, the rate
      appearing on Page 3750 of the Telerate Service (or on any successor or
      substitute page of such Service, or any successor to or substitute for such
      Service, providing the British Bankers Association Interest Settlement Rate
      for
      such Service, as determined by the Global Administrative Agent from time to
      time
      for purposes of providing quotations of interest rates applicable to dollar
      deposits in the London interbank market) at approximately 11:00 a.m., London
      time, two Business Days prior to the commencement of such Interest Period,
      as
      the rate for dollar deposits with a maturity equal to such Interest Period.
      In
      the event that such rate is not available at such time for any reason, then
      the
“LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period
      shall be the rate at which dollar deposits of U.S.$5,000,000 and for a maturity
      equal to such Interest Period are offered by the principal London office of
      the
      Global Administrative Agent in immediately available funds in the London
      interbank market at approximately 11:00 a.m., London time, two Business Days
      prior to the commencement of such Interest Period.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    “Lien”
means,
      with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
      hypothecation, encumbrance, charge, collateral assignment or security interest
      in, on or of such asset, including, without limitation, encumbrances created
      by
      the posting of a Letter of Credit, and (b) the interest of a vendor or a lessor
      under any conditional sale agreement, capital lease or title retention agreement
      (or any financing lease having substantially the same economic effect as any
      of
      the foregoing) relating to such asset to secure Indebtedness.

    


    “Loan
      Document”
means
      (a) this Agreement, the Notes, the Security Documents, the Fee Letter, the
      Intercreditor Agreement, the Facility Guaranties, the Hedging Agreements between
      Borrower, Parent or any of its Restricted Subsidiaries and any Lender or any
      Affiliate of a Lender, any Borrowing Request, any Interest Election Request,
      any
      election notice, any agreement with respect to fees described in Section
      2.11,
      and (b)
      each other agreement, document or instrument delivered by Parent, Borrower
      or
      any other Loan Party in connection with this Agreement, as amended,
      supplemented, restated or otherwise modified from time to time. For avoidance
      of
      doubt, the term “Loan Document” shall not include the Canadian Loan
      Documents.

    


    “Loan
      Parties”
means
      Parent, Borrower and any other Affiliate or Restricted Subsidiary of Parent
      that
      executes a Loan Document, for so long as such Loan Document is in
      effect.

    


    “Loan
      Value”
means,
      with respect to the Borrowing Base Properties, the value which the Global
      Administrative Agent, in its sole discretion, attributes to the Borrowing Base
      Properties (or a particular Borrowing Base Property) in its calculation of
      the
      Global Borrowing Base and the U.S. Borrowing Base.

    


    “Loans”
means
      the loans made by the Lenders to Borrower pursuant to this
      Agreement.

    


    “Margin
      Stock”
means
      “margin stock” within the meaning of Regulation U.

    


    “Material
      Adverse Effect”
means
      a
      material adverse effect on (a) the business, Property, operations or condition,
      financial or otherwise, of the Loan Parties taken as a whole, (b) the ability
      of
      the Loan Parties (as defined herein and in the Canadian Credit Agreement) to
      perform any of their respective obligations under the Combined Loan Documents
      or
      (c) the rights of or benefits available to the Combined Lenders under any of
      the
      Combined Loan Documents, as the case may be.

    


    “Maturity
      Date”
means
      July 28, 2010.

    


    “Moody’s”
means
      Moody’s Investors Service, Inc.


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    “Mortgage”
means
      any Mortgage, Line of Credit Mortgage, Deed of Trust, Assignment, Security
      Agreement, Financing Statement and Fixture Filing (a) dated as of the Global
      Effective Date or (b) otherwise delivered pursuant to the Loan Documents, in
      form and substance satisfactory to the Global Administrative Agent, executed
      and
      delivered by Borrower or any other Loan Party (other than Foreign Subsidiaries),
      as the case may be, as amended, supplemented, restated or otherwise modified
      from time to time in accordance with the terms of this Agreement and the other
      Loan Documents. The term “Mortgage” shall include each mortgage supplement after
      execution and delivery of such mortgage supplement. The term “Mortgages” shall
      include each and every Mortgage executed and delivered by each of Borrower,
      Parent and its Restricted Subsidiaries hereunder.

    


    “Mortgaged
      Property”
means,
      initially, each Oil and Gas Property on which a Lien has been granted pursuant
      to Section
      4.2(b)(vi),
      and
      includes each other Oil and Gas Property with respect to which a Mortgage is
      granted pursuant to Section
      5.12
      or
Section
      5.15.
      The
      term “Mortgaged Property” shall not include an Oil and Gas Property with respect
      to which a Lien has been released and not re-granted pursuant to the provisions
      of Section
      5.15(a).

    


    “Multiemployer
      Plan”
means
      a
      multiemployer plan as defined in Section 4001(a)(3) of ERISA.

    


    “Net
      Proceeds”
means,
      with respect to any event, (a) the cash proceeds received by Borrower, Parent
      and its Restricted Subsidiaries in respect of such event including (i) any
      cash
      received in respect of any non-cash proceeds, but only as and when received,
      (ii) in the case of a casualty, insurance proceeds and (iii) in the case of
      a
      condemnation or similar event, condemnation awards and similar payments, net
      of
      (b) the sum of (i) all reasonable fees and out of pocket expenses paid by
      Borrower, Parent and its Restricted Subsidiaries to third parties (other than
      Affiliates) in connection with such event, (ii) in the case of a sale, transfer
      or other disposition of an asset (including pursuant to a sale and leaseback
      transaction or a casualty or a condemnation or similar proceeding), the amount
      of all payments required to be made by Borrower, Parent and its Restricted
      Subsidiaries as a result of such event to repay Indebtedness (other than Loans)
      secured by such asset or otherwise subject to mandatory prepayment as a result
      of such event, (iii) the amount of all taxes paid (or reasonably estimated
      to be
      payable) by Borrower, Parent and its Restricted Subsidiaries, and (iv) the
      amount of any reserves established by Borrower, Parent and its Restricted
      Subsidiaries to fund contingent liabilities reasonably estimated to be payable,
      in each case during the year that such event occurred or the next succeeding
      year and that are directly attributable to such event (as determined reasonably
      and in good faith by the chief financial officer of Parent).

    


    “New
      York City”
means
      New York, New York.

    


    “Non-Recourse
      Debt”
means
      any Indebtedness of any Unrestricted Subsidiary, in each case in respect of
      which the holder or holders thereof (a) shall have recourse only to, and shall
      have the right to require the obligations of such Unrestricted Subsidiary to
      be
      performed, satisfied, and paid only out of, the assets and Property of such
      Unrestricted Subsidiary and/or one or more of its Subsidiaries and/or any other
      Person (other than Borrower, Parent and/or any Restricted Subsidiary), and
      (b)
      shall have no direct or indirect recourse (including by way of guaranty or
      indemnity) to Borrower, Parent or any Restricted Subsidiary or to any of the
      assets or Property of Borrower, Parent or any Restricted Subsidiary, whether
      for
      principal, interest, fees, expenses or otherwise. 


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    “Note”
means
      any promissory note delivered pursuant to Section
      2.9(e).

    


    “Obligations”
means,
      at any time, the sum of (a) the aggregate Credit Exposure of the Lenders under
      the Loan Documents plus
      (b) all
      accrued and unpaid interest and fees owing to the Lenders under the Loan
      Documents plus
      (c) all
      Hedging Obligations in connection with all Hedging Agreements between Borrower,
      Parent or any of its Restricted Subsidiaries and any Lender or any Affiliate
      of
      a Lender plus
      (d) all
      other obligations (monetary or otherwise) of Borrower, Parent or any Restricted
      Subsidiary to any Lender or any Agent, whether or not contingent, arising under
      or in connection with any of the Loan Documents.

    


    “Oil
      and Gas Properties”
means
      the Hydrocarbon Interests; any Property now or hereafter pooled or unitized
      with
      Hydrocarbon Interests; 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 having jurisdiction) which may affect all
      or
      any portion of the Hydrocarbon Interests; all operating agreements, joint
      venture agreements, contracts and other agreements which relate to any of the
      Hydrocarbon Interests or the production, sale, purchase, exchange or processing
      of Hydrocarbons from or attributable to such Hydrocarbon Interests; all
      Hydrocarbons in and under and which may be produced and saved or attributable
      to
      the Hydrocarbon Interests, the lands covered thereby and all oil in tanks and
      all rents, issues, profits, proceeds, products, revenues and other incomes
      from
      or attributable to the Hydrocarbon Interests; all tenements, profits á prendre,
      hereditaments, appurtenances and any Property in anywise appertaining,
      belonging, affixed or incidental to the Hydrocarbon Interests, Property, 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 or other personal Property which may be on such
      premises for the purpose of drilling a well or for other similar temporary
      uses)
      and including any and all oil wells, gas wells, water wells, injection wells
      or
      other wells, buildings, structures, 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.

    


    “Organic
      Documents”
means,
      relative to any Person, its articles of organization, formation or incorporation
      (or comparable document), its by-laws or operating agreement and all partnership
      agreements, limited liability company or operating agreements and similar
      arrangements applicable to ownership.

    


    “Other
      Taxes”
means
      any and all present or future stamp or documentary taxes or any other excise
      or
      property taxes, charges or similar levies arising from any payment made under
      any Loan Document or from the execution, delivery or enforcement of, or
      otherwise with respect to, any Loan Document.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    “Parent”
is
      defined in the preamble. 

    


    “Participant”
is
      defined in Section
      10.4(e).

    


    “PBGC”
means
      the Pension Benefit Guaranty Corporation referred to and defined in ERISA and
      any successor entity performing similar functions.

    


    “Pension
      Plan”
means
      a
“pension plan,” as such term is defined in Section 3(2) of ERISA, which is
      subject to Title IV of ERISA (other than a multiemployer plan as defined in
      Section 4001(a)(3) of ERISA), and to which Parent or any ERISA Affiliate may
      have liability, including any liability by reason of having been a substantial
      employer within the meaning of 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
      Encumbrances”
      means:

    


    (a) Liens
      imposed by any Governmental Rule for Taxes that are not yet due or are being
      contested in compliance with Section
      5.5;

    


    (b) carriers’,
      warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
      imposed by law or arising in the ordinary course of business and in each case,
      securing obligations that are not overdue by more than 45 days or are being
      contested in compliance with Section
      5.5;

    


    (c) deposits
      to secure the performance of bids, trade contracts, leases, statutory
      obligations, surety and appeal bonds, performance bonds and other obligations
      of
      a like nature, in each case in the ordinary course of business;

    


    (d) pledges
      or deposits under worker’s compensation, unemployment insurance and other social
      security or similar legislation made in the ordinary course of
      business;

    


    (e) judgment
      Liens in respect of judgments that do not constitute an Event of Default under
      Section
      8.1(h);

    


    (f) easements,
      zoning restrictions, rights-of-way and similar encumbrances on real property
      imposed by any Governmental Rule or arising in the ordinary course of business
      that do not secure any Indebtedness and do not materially detract from the
      value
      of the affected property or interfere with the ordinary conduct of business
      of
      Borrower, Parent or any of its Restricted Subsidiaries;

    


    (g) Liens
      permitted by the Canadian Credit Agreement or any of the other Combined Loan
      Documents; and

    


    (h) any
      (i) interest or title of a lessor under any lease of real property entered
      into by Parent, Borrower or any Restricted Subsidiary in the ordinary course
      of
      its business and covering only the assets so leased or liens in favor of a
      lessor created by statute or by the terms of a lease, and (ii) interests or
      rights of a creditor of a landlord pursuant to a subordination or other similar
      agreement entered into in the ordinary course of business covering only the
      property subject to the terms of such lease;

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    provided
      that the
      term “Permitted Encumbrances” shall not include any Lien securing any
      Indebtedness for borrowed money.

    


    “Permitted
      Investments”
      means:

    


    (a) direct
      obligations of, or obligations the principal of and interest on which are
      unconditionally guaranteed by, the United States of America or Canada or any
      province thereof (or by any agency thereof to the extent such obligations are
      backed by the full faith and credit of the United States of America), in each
      case maturing within one (1) year from the date of acquisition
      thereof;

    


    (b) Investments
      in commercial paper (i) rated A-1, P-1, R-1 low or A-1 or better by S&P,
      Moody’s, Dominion Bond Rating Service Limited or Canada Bond Rating Service,
      respectively, maturing not more than 90 days from the date of acquisition
      thereof or (ii) rated A-2 or better (but less than A-1) or P-2 or better (but
      less than P-1) by S&P or Moody’s, respectively, maturing not more than 30
      days from the date of acquisition thereof; and

    


    (c) Investments
      in certificates of deposit, bankers’ acceptances and time deposits maturing
      within one (1) year from the date of acquisition thereof issued or
      guaranteed by or placed with, and money market deposit accounts issued or
      offered by, any domestic office of any commercial bank organized under the
      laws
      of the United States of America or Canada or any State or Province thereof
      which
      has a combined capital and surplus and undivided profits of not less than
      U.S.$500,000,000.

    


    “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 (other than a Multiemployer Plan) subject
      to
      the provisions of Title IV of ERISA or Section 412 of the Code or Section 302
      of
      ERISA, and in respect of which Parent or any ERISA Affiliate is (or, if such
      plan were terminated, would under Section 4069 of ERISA be deemed to be) an
      “employer” as defined in Section 3(5) of ERISA.

    


    “Pledge
      Agreement”
means
      a
      Pledge Agreement, dated as of the Global Effective Date or otherwise delivered
      pursuant to the Loan Documents, in form and substance satisfactory to the Global
      Administrative Agent, as amended, supplemented, restated or otherwise modified
      from time to time in accordance with the Loan Documents. The term “Pledge
      Agreements” shall include each and every Pledge Agreement executed and delivered
      pursuant to the Loan Documents.

    


    “Preferred
      Equity Interest”
means
      any Equity Interest that, by its terms (or the terms of any security into which
      it is convertible or for which it is exchangeable) or upon the happening of
      any
      event or circumstance either (a) matures, (b) is redeemable (whether mandatorily
      or otherwise) at the option of the holder thereof for any consideration other
      than shares of common stock or (c) is convertible or exchangeable for
      Indebtedness or other Preferred Equity Interests, in each case, in whole or
      in
      part, prior to the date which is 91 days after the earlier of (i) the Maturity
      Date or (ii) the date on which the Combined Obligations have been paid in full
      and the Combined Commitments have terminated and all Letters of Credit have
      expired or terminated.


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    “Present
      Value”
means,
      at any time, the calculation of the present value of future cash flows based
      upon the then-effective Reserve Report for Proven Reserves from Oil and Gas
      Properties located within an Approved Country, utilizing the customary discount
      rates and price deck of the Global Administrative Agent.

    


    “Prime
      Rate”
means
      the rate of interest per annum publicly announced from time to time by the
      Global Administrative Agent as its prime rate in effect at its principal office
      in New York City. Without notice to Borrower, Parent or any other Person, the
      Prime Rate shall change automatically from time to time as and in the amount
      by
      which such prime rate shall fluctuate. The Prime Rate is a reference rate and
      does not necessarily represent the lowest or best rate actually charged to
      any
      customer. The Global Administrative Agent may make commercial loans and other
      loans at rates of interest at, above or below the Prime Rate. For purposes
      of
      this Agreement, any change in the Alternate Base Rate due to a change in the
      Prime Rate shall be effective on the date such change in the Prime Rate is
      announced.

    


    “Proceeds”
means,
      with respect to any event, the cash proceeds received in respect of such event
      including any cash received in respect of any non-cash proceeds, but only as
      and
      when received.

    


    “Production
      Payment”
means
      a
      production payment obligation (whether volumetric or dollar denominated) of
      Borrower, Parent or any of its Restricted Subsidiaries which is payable from
      a
      specified share of proceeds received from production from specified Oil and
      Gas
      Properties, together with all undertakings and obligations in connection
      therewith.

    


    “Property”
means
      any interest in any kind of property or asset, whether real, personal or mixed,
      or tangible or intangible.

    


    “Proven
      Reserves”
means
      collectively, “proved oil and gas reserves,” “proved developed producing oil and
      gas reserves,” “proved developed non-producing oil and gas reserves” (consisting
      of proved developed shut-in oil and gas reserves and proved developed behind
      pipe oil and gas reserves), and “proved undeveloped oil and gas reserves,” as
      such terms are defined by the Commission in its standards and
      guidelines.

    


    “Register”
has
      the
      meaning set forth in Section
      10.4(c).

    


    “Regulation
      U”
means
      any of Regulations T, U or X of the Board from time to time in effect and shall
      include any successor or other regulations or official interpretations of the
      Board or any successor Person relating to the extension of credit for the
      purpose of purchasing or carrying Margin Stock and which is applicable to member
      banks of the Federal Reserve System or any successor Person.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    


    “Related
      Parties”
means,
      with respect to any specified Person, such Person’s Affiliates and the
      respective directors, officers, employees, agents and advisors of such Person
      and such Person’s Affiliates.

    


    “Release”
means
      a
“release,” as such term is defined in CERCLA.

    


    “Remedial
      Action”
means
      any action under Environmental Laws required to (a) clean up, remove, treat,
      dispose of, abate, or in any other way address Hazardous Materials in the
      environment, (b) prevent the Release or threat of a Release or minimize the
      further Release of Hazardous Materials, or (c) investigate and determine if
      a
      remedial response is needed and to design such a response and any post-remedial
      investigation, monitoring, operation, and maintenance and care.

    


    “Required
      Lenders”
means,
      at any time, the Combined Lenders having in the aggregate at least 66-2/3%
      of
      the aggregate total Combined Commitments under the Combined Loan Documents,
      or,
      if the Combined Commitments have been terminated, Combined Lenders holding
      at
      least 66-2/3% of the aggregate unpaid principal amount of the outstanding
      Combined Credit Exposure.

    


    “Reserve
      Report”
means
      the Initial Reserve Report and any other Independent Reserve Report or Internal
      Reserve Report delivered pursuant to Section
      2.7
      or
Section
      5.1(e),
      in form
      and substance reasonably satisfactory to the Global Administrative Agent,
      prepared at the sole cost and expense of Borrower (a) by an Approved Engineer
      or
      (b) by Borrower’s internal petroleum engineers, as the case may be, which shall
      evaluate the Proven Reserves attributable to the Oil and Gas Properties owned
      directly by Borrower, Parent and/or its Restricted Subsidiaries, as of the
      immediately preceding December 31 or June 30. Each Reserve Report
      shall set forth volumes, projections of the future rate of production,
      Hydrocarbons prices, escalation rates, discount rate assumptions, and net
      proceeds of production, present value of the net proceeds of production,
      operating expenses and capital expenditures, in each case based upon updated
      economic assumptions reasonably acceptable to the Global Administrative
      Agent.

    


    “Resource
      Conservation and Recovery Act”
means
      the Resource Conservation and Recovery Act, 42 U.S.C. Section 690, et seq.,
      as
      amended from time to time.

    


    “Restricted
      Payment”
means
      any dividend or other distribution (whether in cash, securities or other
      Property, real, personal or mixed) with respect to any Equity Interests in
      Borrower, Parent or Restricted Subsidiary, or any payment (whether in cash,
      securities or other Property, real, personal or mixed), including any sinking
      fund or similar deposit, on account of the purchase, redemption, retirement,
      acquisition, cancellation or termination of any Equity Interests in Borrower,
      Parent or any Restricted Subsidiary or any option, warrant or other right to
      acquire any such Equity Interests in Borrower, Parent or any Restricted
      Subsidiary.

    


    “Restricted
      Subsidiary”
means
      any Subsidiary of Parent that is not an Unrestricted Subsidiary.

    


    “S&P”
means
      Standard & Poor’s and any successor thereto that is a nationally-recognized
      rating agency.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    


    “Security
      Documents”
means
      each Facility Guaranty, each Mortgage, each Pledge Agreement, each Canadian
      Security Document and each other instrument or document executed and delivered
      pursuant to Section
      5.12
      or
Section
      5.15
      or
      pursuant to the Loan Documents to secure any of the Obligations.

    


    “Solvent”
means,
      with respect to any Person at any time, a condition under which (a) the fair
      saleable value of such Person’s assets is, on the date of determination, greater
      than the total amount of such Person’s liabilities (including contingent and
      unliquidated liabilities) at such time; and (b) such Person is able to pay
      all
      of its liabilities as such liabilities mature. For purposes of this definition
      (i) the amount of a Person’s contingent or unliquidated liabilities at any time
      shall be that amount which, in light of all the facts and circumstances then
      existing, represents the amount which can reasonably be expected to become
      an
      actual or matured liability, (ii) the “fair saleable value” of an asset shall be
      the amount which may be realized within a reasonable time either through
      collection or sale of such asset at its regular market value, and (iii) the
      “regular market value” of an asset shall be the amount which a capable and
      diligent business person could obtain for such asset from an interested buyer
      who is willing to purchase such asset under ordinary selling
      conditions.

    


    “Statutory
      Reserve Rate”
means
      a
      fraction (expressed as a decimal), the numerator of which is the number one
      and
      the denominator of which is the number one minus
      the
      aggregate of the applicable maximum reserve percentages (including any basic,
      marginal, special, emergency or supplemental reserves) expressed as a decimal
      established by the Board to which the Global Administrative Agent is subject
      with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
      referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such
      reserve percentages shall include those imposed pursuant to such Regulation
      D.
      Eurodollar Loans shall be deemed to constitute eurocurrency fundings and to
      be
      subject to such reserve requirements without benefit of or credit for proration,
      exemptions or offsets that may be available from time to time to any Lender
      under such Regulation D or any comparable regulation. The Statutory Reserve
      Rate
      shall be adjusted automatically on and as of the effective date of any change
      in
      any reserve percentage.

    


    “subsidiary”
means,
      with respect to any Person (the “parent”) at any date any corporation, limited
      liability company, partnership, association or other entity (a) of which
      securities or other ownership interests representing more than 50% of the equity
      or more than 50% of the ordinary voting power or, in the case of a partnership,
      more than 50% of the general partnership interests are, as of such date, owned,
      controlled or held, or (b) that is, as of such date, otherwise Controlled,
      by
      the parent or one or more subsidiaries of the parent or by the parent and one
      or
      more subsidiaries of the parent.

    


    “Subsidiary”
means
      any subsidiary of Parent.

    


    “Taxes”
means
      any and all present or future taxes, levies, imposts, duties, deductions,
      charges or withholdings imposed by any Governmental Authority.

    


    “Total
      Funded Debt”
means
      all Indebtedness of Parent and its Subsidiaries, without duplication, on a
      consolidated basis described under (i) clauses (a), (b), (g), (h) and (i)
      of the definition thereof, and (ii) clauses (e) and (f) of the definition
      thereof but only with respect to Indebtedness referred to in clauses (a), (b),
      (g), (h) and (i) of the definition thereof.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    “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 Adjusted LIBO Rate or the Alternate Base Rate.

    


    “UCC
      Searches”
means
      central and local current financing statement searches from each state in which
      any Collateral or a Borrowing Base Property is located, and such other
      jurisdictions as the Global Administrative Agent may request, covering each
      Loan
      Party together with copies of all financing statements listed in such
      searches.

    


    “United
      States”
or
      “U.S.”
means
      the United States of America, its fifty states and the District of
      Columbia.

    


    “Unrestricted
      Subsidiary”
means
      any Subsidiary of Parent that is not a Restricted Subsidiary or which Parent
      has
      designated in writing to the Global Administrative Agent to be an Unrestricted
      Subsidiary pursuant to Section
      1.5
      and all
      subsidiaries of such Person. As of the date of this Agreement, the Unrestricted
      Subsidiaries are designated on Schedule 3.12
      as
      such.

    


    “Unutilized
      Commitment”
means,
      at the time of determination, the amount by which (a) the lowest of
      (i) the aggregate amount of the Commitments of all Lenders at such time,
      (ii) the amount of the U.S. Borrowing Base as then in effect at such time,
      and
      (iii) the amount of the Allocated U.S. Borrowing Base as then in effect at
      such time, exceeds (b) the amount of the aggregate Credit Exposure of the
      Lenders at such time.

    


    “U.S.
      Borrowing Base”
means
      the “U.S. Borrowing Base” as determined from time to time pursuant to
Section
      2.7.

    


    “U.S.
      Borrowing Base Deficiency”
means
      the amount by which (a) the aggregate Credit Exposure of the Lenders exceeds
      (b) the lesser of (i) the then current U.S. Borrowing Base and
      (ii) the then current Allocated U.S. Borrowing Base.

    


    “U.S.
      Required Lenders”
means,
      at any time, the Lenders having in the aggregate at least 66-2/3% of the
      aggregate total Commitments under the Loan Documents, or, if the Commitments
      have been terminated, the Lenders holding at least 66-2/3% of the aggregate
      unpaid principal amount of the outstanding Credit Exposure.

    


    “Withdrawal
      Liability”
means
      liability to a Multiemployer Plan as a result of a complete or partial
      withdrawal from such Multiemployer Plan, as such terms are defined in Part
      I of
      Subtitle E of Title IV of ERISA.

     

    Section
      1.2 Classification
      of Loans and Borrowings.
      For
      purposes of this Agreement, Loans and Borrowings may be classified and referred
      to by Type (e.g.,
      a
“Eurodollar
      Loan”
or
      “Eurodollar
      Borrowing”).

     

    Section
      1.3 Terms
      Generally.
      The
      definitions of terms herein shall apply equally to the singular and plural
      forms
      of the terms defined. Whenever the context may require, any pronoun shall
      include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the
      phrase “without limitation”. The word “will” shall be construed to have the same
      meaning and effect as the word “shall”. Unless the context requires otherwise a)
      any definition of or reference to any agreement, instrument or other document
      herein shall be construed as referring to such agreement, instrument or other
      document as from time to time amended, supplemented or otherwise modified
      (subject to any restrictions on such amendments, supplements or modifications
      set forth herein), b) any reference herein to any Person shall be construed
      to
      include such Person’s successors and assigns, provided
      such
      successors and assigns are permitted by the Loan Documents, c) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
      construed to refer to this Agreement in its entirety and not to any particular
      provision hereof, and d) all references herein to Articles, Sections, Exhibits
      and Schedules shall be construed to refer to Articles and Sections of, and
      Exhibits and Schedules to, this Agreement.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    Section
      1.4 Accounting
      Terms; GAAP.
      Except
      as otherwise expressly provided herein, all terms of an accounting or financial
      nature shall be construed in accordance with GAAP, as in effect from time to
      time; provided
      that, if
      Parent notifies the Global Administrative Agent that Parent requests an
      amendment to any provision hereof to eliminate the effect of any change
      occurring after the date of this Agreement in GAAP or in the application thereof
      on the operation of such provision (or if the Global Administrative Agent
      notifies Borrower or Parent that the Required Lenders request an amendment
      to
      any provision hereof for such purpose), regardless of whether any such notice
      is
      given before or after such change in GAAP or in the application thereof, then
      such provision shall be interpreted on the basis of GAAP as in effect and
      applied immediately before such change shall have become effective until such
      notice shall have been withdrawn or such provision amended in accordance
      herewith.

     

    Section
      1.5 Designation
      and Conversion of Restricted and Unrestricted Subsidiaries.

    


    (a) Unless
      designated as an Unrestricted Subsidiary on Schedule 3.12
      as of
      the date of this Agreement or thereafter in writing to the Global Administrative
      Agent, any Person that becomes a Subsidiary of Parent or any of its Restricted
      Subsidiaries (including Borrower) shall be classified as a Restricted
      Subsidiary.

     

    (b) Parent
      may designate any Subsidiary of Parent (other than Borrower) (including a newly
      formed or newly acquired Subsidiary) as an Unrestricted Subsidiary if i) after
      giving effect to such designation, no Default would exist as a result of a
      breach of Section
      5.13
      and ii)
      such designation is deemed to be an Investment in an Unrestricted Subsidiary
      in
      an amount equal to the fair market value of 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
      7.4(h).
      Except
      as provided in this Section
      1.5(b),
      no
      Restricted Subsidiary may be redesignated as an Unrestricted
      Subsidiary.

    


    (c) Parent
      may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if
      after
      giving effect to such designation, iii) the representations and warranties
      of
      Borrower, 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), iv) no Default would
      exist, and v) Borrower and Parent comply with the requirements of Section
      5.12
      and
Section
      5.15.
      Any
      such designation shall be treated as a cash dividend in an amount equal to
      the
      fair market value of Parent’s direct and indirect ownership interest in such
      Subsidiary for purposes of the limitation on Investments under Section
      7.4(h).

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    


    (d) If,
      during any period, a Subsidiary is redesignated as either “Restricted” or
“Unrestricted,” then for purposes of the calculation of EBITDA for such period,
      such Subsidiary shall be deemed to have been redesignated as of the first day
      of
      the relevant period. 

    


    ARTICLE
      II

    THE
      CREDITS

     

    Section
      2.1 Commitments.
      Subject
      to the terms and conditions set forth herein, each Lender agrees to make Loans
      in U.S. Dollars to Borrower from time to time during the Availability Period
      in
      an aggregate principal amount that will not result in e) the Credit Exposure
      of
      any Lender exceeding the lowest of (1) the Commitment of such Lender,
      (2) such Lender’s Applicable Percentage of the U.S. Borrowing Base then in
      effect, or (3) such Lender’s Applicable Percentage of the Allocated U.S.
      Borrowing Base then in effect, or f) the aggregate amount of the Credit Exposure
      of all Lenders exceeding the lowest of (1) the aggregate Commitments of all
      of
      the Lenders, (2) the U.S. Borrowing Base then in effect, or (3) the
      Allocated U.S. Borrowing Base then in effect. Within the foregoing limits and
      subject to the terms and conditions set forth herein, Borrower may borrow,
      prepay and reborrow Loans.

     

    Section
      2.2 Loans
      and Borrowings.

    


    (a) Each
      Loan
      shall be made as part of a Borrowing consisting of Loans made by the Lenders
      ratably in accordance with their respective Applicable Percentages. The failure
      of any Lender to make any Loan required to be made by it shall not relieve
      any
      other Lender of its obligations hereunder; provided
      that the
      Commitments of the Lenders are several and no Lender shall be responsible for
      any other Lender’s failure to make Loans as required.

    


    (b) Subject
      to Section
      2.13
      and
Section
      2.14,
      each
      Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as
      Borrower may request in accordance herewith. Each Lender at its option may
      make
      any Eurodollar Loan by causing any domestic or foreign branch or Affiliate
      of
      such Lender to make such Loan; provided
      that any
      exercise of such option shall not affect the obligation of Borrower to repay
      such Loan in accordance with the terms of this Agreement.

     

    (c) At
      the
      commencement of each Interest Period for any Eurodollar Borrowing, such
      Borrowing shall be in an aggregate amount that is an integral multiple of
      U.S.$500,000 and not less than U.S.$1,000,000 (including any continuation or
      conversion of existing Loans made in connection therewith). At the time that
      each ABR Borrowing is made, such Borrowing shall be in an aggregate amount
      that
      is an integral multiple of U.S.$500,000 and not less than U.S. $1,000,000
      (including any continuation or conversion of existing Loans made in connection
      therewith); provided
      that an
      ABR Borrowing may be in an aggregate amount that is equal to the entire
      Unutilized Commitment, if less. Borrowings of more than one Type may be
      outstanding at the same time; provided
      that
      there shall not at any time be more than a total of five (5) Eurodollar
      Borrowings outstanding.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (d) Notwithstanding
      any other provision of this Agreement, Borrower shall not be entitled to
      request, or to elect to convert or continue, any Eurodollar Borrowing if the
      Interest Period requested with respect thereto would end after the Maturity
      Date.

     

    Section
      2.3 Requests
      for Borrowings.
      To
      request a Borrowing, Borrower shall notify the Global Administrative Agent
      of
      such request by telephone g) in the case of a Eurodollar Borrowing, not later
      than 12:00 noon, Dallas, Texas time, three Business Days before the date of
      the
      proposed Borrowing or h) in the case of an ABR Borrowing, not later than 10:00
      a.m., Dallas, Texas time, on the date of the proposed Borrowing. Each such
      telephonic Borrowing Request shall be irrevocable and shall be confirmed
      promptly by hand delivery or telecopy (or other electronic transmission approved
      by the Global Administrative Agent) to the Global Administrative Agent of a
      written Borrowing Request executed by an Authorized Officer of Borrower,
      substantially in the form of Exhibit
      C-1
      or
      otherwise in a form approved by the Global Administrative Agent. Each such
      telephonic and written Borrowing Request shall specify the following information
      in compliance with Section
      2.2:

    


    (i) the
      aggregate amount of the requested Borrowing;

    


    (ii) the
      date
      of such Borrowing, which shall be a Business Day;

    


    (iii) whether
      such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
      and

    


    (iv) in
      the
      case of a Eurodollar Borrowing, the initial Interest Period to be applicable
      thereto, which shall be a period contemplated by the definition of the term
      “Interest Period”.

    


    If
      no
      election as to the Type of Borrowing is specified, then the requested Borrowing
      shall be an ABR Borrowing. If no Interest Period is specified with respect
      to
      any requested Eurodollar Borrowing, then Borrower shall be deemed to have
      selected an Interest Period of one month’s duration. Promptly following receipt
      of a Borrowing Request in accordance with this Section, the Global
      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
      2.4 Letters
      of Credit.

    


    (a) General.
      Subject
      to the terms and conditions set forth herein, Borrower may request the issuance
      of Letters of Credit for its own account or the account of any Restricted
      Subsidiary, in a form reasonably acceptable to the Global Administrative Agent
      and the Issuing Bank, at any time and from time to time during the Availability
      Period. In the event of any inconsistency between the terms and conditions
      of
      this Agreement and the terms and conditions of any form of letter of credit
      application or other agreement submitted by Borrower to, or entered into by
      Borrower with, the Issuing Bank relating to any Letter of Credit, the terms
      and
      conditions of this Agreement shall control.


    
      
        
        

      

      
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    (b) Notice
      of Issuance, Amendment, Renewal, Extension; Certain Conditions.
      To
      request the issuance of a Letter of Credit (or the amendment, renewal or
      extension of an outstanding Letter of Credit), Borrower shall hand-deliver
      or
      telecopy (or transmit by electronic communication, if arrangements for doing
      so
      have been approved by the Issuing Bank) to an Issuing Bank and the Global
      Administrative Agent (reasonably in advance of the requested date of issuance,
      amendment, renewal or extension) a notice requesting the issuance of a Letter
      of
      Credit, or identifying the Letter of Credit to be amended, renewed or extended,
      and specifying the date of issuance, amendment, renewal or extension (which
      shall be a Business Day), the date on which such Letter of Credit is to expire
      (which shall comply with paragraph
      (c)
      of this
      Section), the amount of such Letter of Credit, the Loan Party for whose account
      such Letter of Credit shall be issued, the name and address of the beneficiary
      thereof and such other information as shall be necessary to prepare, amend,
      renew or extend such Letter of Credit. If requested by the Issuing Bank,
      Borrower also shall submit a letter of credit application on the Issuing Bank’s
      standard form in connection with any request for a Letter of Credit. A Letter
      of
      Credit shall be issued, amended, renewed or extended only if (and upon issuance,
      amendment, renewal or extension of each Letter of Credit Borrower shall be
      deemed to represent and warrant that), after giving effect to such issuance,
      amendment, renewal or extension (1) the LC Exposure shall not exceed the least
      of (a) the aggregate Commitments hereunder; (b) the Allocated U.S. Borrowing
      Base as then in effect at such time and (c) U.S.$10,000,000; and (2) the
      aggregate Credit Exposure of the Lenders shall not exceed the lesser of (x)
      the
      aggregate Commitments of the Lenders or (y) the Allocated U.S. Borrowing Base
      then in effect. The Global Administrative Agent shall use reasonable efforts
      to
      provide notice to the Lenders on a quarterly basis with respect to the issuance,
      amendment, renewal or extension of Letters of Credit hereunder for such
      quarter.

     

    (c) Expiration
      Date.
      Each
      Letter of Credit shall expire at or prior to the close of business on the
      earlier of (3) 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 (4) five (5) Business Days prior to the Maturity
      Date. 

     

    (d) Participations.
      By the
      issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing
      the amount thereof) and without any further action on the part of the Issuing
      Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each
      Lender hereby acquires from the Issuing Bank, a participation in such Letter
      of
      Credit equal to such Lender’s Applicable Percentage of the aggregate amount
      available to be drawn under such Letter of Credit. In consideration and in
      furtherance of the foregoing, each Lender hereby absolutely and unconditionally
      agrees to pay to the Global Administrative Agent, for the account of the Issuing
      Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such
      Issuing Bank and not reimbursed by Borrower on the date due as provided in
      paragraph (e)
      of this
      Section, or of any reimbursement payment required to be refunded to Borrower
      for
      any reason. Each Lender acknowledges and agrees that its obligation to acquire
      participations pursuant to this paragraph in respect of Letters of Credit is
      absolute and unconditional and shall not be affected by any circumstance
      whatsoever, including any amendment, renewal or extension of any Letter of
      Credit or the occurrence and continuance of a Default or reduction or
      termination of the Commitments, and that each such payment shall be made without
      any offset, abatement, withholding or reduction whatsoever.

     

    
      
        
        

      

      
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    (e) Reimbursement.
      If an
      Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit,
      Borrower shall reimburse such LC Disbursement by paying to the Global
      Administrative Agent an amount equal to such LC Disbursement not later than
      12:00 noon, Dallas, Texas time, on the date that such LC Disbursement is made,
      if Borrower shall have received notice of such LC Disbursement prior to 10:00
      a.m., Dallas, Texas time, on such date; or, if such notice has not been received
      by Borrower prior to such time on such date, then not later than 12:00 noon,
      Dallas, Texas time, on the Business Day immediately following the day that
      Borrower receives such notice; provided
      that,
      unless such LC Disbursement is less than U.S.$500,000, Borrower may, subject
      to
      the conditions to Borrowing set forth herein, request in accordance with
Section
      2.3
      that
      such payment be financed with a Borrowing in an equivalent amount and, to the
      extent so financed, Borrower’s obligation to make such payment shall be
      discharged and replaced by the resulting Borrowing. If Borrower fails to make
      such payment when due (or fails to request an ABR Loan Borrowing as provided
      herein), the Global Administrative Agent shall notify each Lender of the
      applicable LC Disbursement, the payment then due from Borrower in respect
      thereof and such Lender’s Applicable Percentage thereof. Promptly following
      receipt of such notice, each Lender shall pay to the Global Administrative
      Agent
      its Applicable Percentage of the payment then due from Borrower, in the same
      manner as provided in Section
      2.5
      with
      respect to Loans made by such Lender (and Section
      2.5
      shall
      apply, mutatis mutandis, to the payment obligations of the Lenders), and the
      Global Administrative Agent shall promptly pay to the Issuing Bank the amounts
      so received by it from the Lenders. Promptly following receipt by the Global
      Administrative Agent of any payment from Borrower pursuant to this paragraph
      (or
      promptly following the Global Administrative Agent’s receipt from the Lenders of
      proceeds from a requested Borrowing), the Global Administrative Agent shall
      distribute such payment to the Issuing Bank or, to the extent that Lenders
      have
      made payments pursuant to this paragraph to reimburse the Issuing Bank, then
      to
      such Lenders and the Issuing Bank as their interests may appear. Any payment
      made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for
      any LC Disbursement (other than the funding of ABR Loans as contemplated above)
      shall not constitute a Loan and shall not relieve Borrower of its obligation
      to
      reimburse such LC Disbursement.

    


    (f) Obligations
      Absolute.
      Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e)
      of this
      Section shall be absolute, unconditional and irrevocable, and shall be performed
      strictly in accordance with the terms of this Agreement under any and all
      circumstances whatsoever and irrespective of (5) any lack of validity or
      enforceability of any Letter of Credit or this Agreement or any other Loan
      Document, or any term or provision herein or therein, (6) any draft or other
      document presented under a Letter of Credit proving to be forged, fraudulent
      or
      invalid in any respect or any statement therein proving to be untrue or
      inaccurate in any respect, (7) payment by an Issuing Bank under a Letter of
      Credit against presentation of a draft or other document that does not comply
      with the terms of such Letter of Credit, or (8) any other event or circumstance
      whatsoever, whether or not similar to any of the foregoing, that might, but
      for
      the provisions of this Section, constitute a legal or equitable discharge of,
      or
      provide a right of setoff against, Borrower’s obligations hereunder. Neither the
      Agents, the Lenders or any Issuing Bank nor any of their Related Parties shall
      have any liability or responsibility by reason of or in connection with the
      issuance or transfer of any Letter of Credit or any payment or failure to make
      any payment thereunder (irrespective of any of the circumstances referred to
      in
      the preceding sentence), or any error, omission, interruption, loss or delay
      in
      transmission or delivery of any draft, notice or other communication under
      or
      relating to any Letter of Credit (including any document required to make a
      drawing thereunder), any error in interpretation of technical terms or any
      consequence arising from causes beyond the control of such Issuing Bank;
provided
      that the
      foregoing shall not be construed to excuse such Issuing Bank from liability
      to
      Borrower to the extent of any direct or actual damages (as opposed to special,
      indirect, consequential or punitive damages, claims in respect of which are
      hereby waived by Borrower to the extent permitted by applicable law) suffered
      by
      Borrower that are caused by such Issuing Bank’s failure to exercise care when
      determining whether drafts and other documents presented under a Letter of
      Credit comply with the terms thereof. The parties hereto expressly agree that,
      in the absence of gross negligence or willful misconduct on the part of the
      Issuing Bank (as finally determined by a court of competent jurisdiction),
      the
      Issuing Bank shall be deemed to have exercised care in each such determination.
      In furtherance of the foregoing and without limiting the generality thereof,
      the
      parties agree that, with respect to documents presented which appear on their
      face to be in substantial compliance with the terms of a Letter of Credit,
      the
      Issuing Bank may, in its sole discretion, either accept and make payment upon
      such documents without responsibility for further investigation, regardless
      of
      any notice or information to the contrary, or refuse to accept and make payment
      upon such documents if such documents are not in strict compliance with the
      terms of such Letter of Credit.

     

    
      
        
        

      

      
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    (g) Disbursement
      Procedures.
      An
      Issuing Bank shall, promptly following its receipt thereof, examine all
      documents purporting to represent a demand for payment under a Letter of Credit.
      Such Issuing Bank shall promptly notify the Global Administrative Agent and
      Borrower by telephone (confirmed by telecopy) of such demand for payment and
      whether such Issuing Bank has made or will make an LC Disbursement thereunder;
      provided
      that any
      failure to give or delay in giving such notice shall not relieve Borrower of
      its
      obligation to reimburse such Issuing Bank and the Lenders with respect to any
      such LC Disbursement.

    


    (h) Interim
      Interest.
      If an
      Issuing Bank shall make any LC Disbursement, then, unless Borrower shall
      reimburse such LC Disbursement in full on the date such LC Disbursement is
      made,
      the unpaid amount thereof shall bear interest, for each day from and including
      the date such LC Disbursement is made to but excluding the date that Borrower
      reimburses such LC Disbursement, at the rate per annum set forth in Section
      2.12(c).
      Interest accrued pursuant to this paragraph shall be for the account of the
      Issuing Bank, except that interest accrued on and after the date of payment
      by
      any Lender pursuant to paragraph (e)
      of this
      Section to reimburse the Issuing Bank shall be for the account of such Lender
      to
      the extent of such payment.

     

    (i) Cash
      Collateralization.
      If any
      Event of Default shall occur and be continuing, on the Business Day that
      Borrower receives notice from the Global Administrative Agent or the Required
      Lenders (or, if the maturity of the Loans has been accelerated, Lenders with
      LC
      Exposure representing 66-2/3% or more of the total LC Exposure) demanding the
      deposit of cash collateral pursuant to this paragraph, Borrower shall deposit
      in
      an account with the Global Administrative Agent, in the name of the Global
      Administrative Agent and for the benefit of the Lenders, an amount in cash
      equal
      to the LC Exposure as of such date plus
      any
      accrued and unpaid interest thereon; provided
      that the
      obligation to deposit such cash collateral shall become effective immediately,
      and such deposit shall become immediately due and payable, without demand or
      other notice of any kind, upon the occurrence of any Event of Default with
      respect to Borrower described in Section
      8.1(g).
      Borrower also shall deposit cash collateral pursuant to this paragraph as and
      to
      the extent required by Section
      2.10,
      and any
      such cash collateral so deposited and held by the Global Administrative Agent
      hereunder shall constitute part of the Global Borrowing Base for purposes of
      determining compliance with Section
      2.10.
      Each
      such deposit shall be held by the Global Administrative Agent as collateral
      for
      the payment and performance of the obligations of Borrower under this Agreement.
      The Global 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 Global Administrative Agent and
      at
      Borrower’s risk and expense, such deposits shall not bear interest. Interest or
      profits, if any, on such investments shall accumulate in such account. Moneys
      in
      such account shall be applied by the Global Administrative Agent to reimburse
      the Issuing Bank for LC Disbursements for which it has not been reimbursed
      and,
      to the extent not so applied, shall be held for the satisfaction of the
      reimbursement obligations of Borrower for the LC Exposure at such time or,
      if
      the maturity of the Loans has been accelerated (but subject to the consent
      of
      Lenders with LC Exposure representing 66-2/3% or more of the total LC Exposure),
      be applied to satisfy other obligations of Borrower under this Agreement. If
      Borrower is required to provide an amount of cash collateral hereunder as a
      result of the occurrence of an Event of Default, such amount (to the extent
      not
      applied as aforesaid) shall be returned to Borrower within three (3) Business
      Days after all Events of Default have been cured or waived. If Borrower is
      required to provide an amount of cash collateral hereunder pursuant to
Section
      2.10,
      such
      amount (to the extent not applied as aforesaid) shall be returned to Borrower
      as
      and to the extent that, after giving effect to such return, Borrower would
      remain in compliance with Section
      2.10
      and no
      Default shall have occurred and be continuing.

     

    
      
        
        

      

      
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    Section
      2.5 Funding
      of Borrowings.

     

    (a) Each
      Lender shall make each Loan to be made by it hereunder on the proposed date
      thereof by wire transfer of immediately available funds by 1:00 p.m., Dallas,
      Texas time, to the account of the Global Administrative Agent most recently
      designated by it for such purpose by notice to the Lenders. The Global
      Administrative Agent will make such Loans available to Borrower by promptly
      crediting the amounts so received, in like funds, to an account of Borrower
      maintained with the Global Administrative Agent in Dallas, Texas; provided
      that ABR
      Loans made to finance the reimbursement of an LC Disbursement as provided in
      Section
      2.4(e)
      shall be
      remitted by the Global Administrative Agent to the applicable Issuing
      Bank.

     

    (b) Unless
      the Global Administrative Agent shall have received notice from a Lender prior
      to the proposed date of any Borrowing that such Lender will not make available
      to the Global Administrative Agent such Lender’s share of such Borrowing, the
      Global Administrative Agent may assume that such Lender has made such share
      available on such date in accordance with paragraph (a)
      of this
      Section and may, in reliance upon such assumption, make available to Borrower
      a
      corresponding amount. In such event, if a Lender has not in fact made its share
      of the applicable Borrowing available to the Global Administrative Agent, then
      the applicable Lender and Borrower severally agree to pay to the Global
      Administrative Agent forthwith on demand such corresponding amount with interest
      thereon, for each day from and including the date such amount is made available
      to Borrower to but excluding the date of payment to the Global Administrative
      Agent, at (9) in the case of such Lender, the greater of (a) the Federal Funds
      Effective Rate or (b) a rate determined by the Global Administrative Agent
      in
      accordance with banking industry rules on interbank compensation or (10) in
      the
      case of Borrower, the interest rate applicable to Loans made in such Borrowing.
      If such Lender pays such amount to the Global Administrative Agent, then such
      amount shall constitute such Lender’s Loan included in such
      Borrowing.

     

    
      
        
        

      

      
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    Section
      2.6 Interest
      Elections.

    


    (a) Borrower
      may elect to convert a Borrowing to a different Type or to continue such
      Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
      therefor, all as provided in this Section. Borrower may, subject to the
      requirements of Section
      2.2(c),
      elect
      different options with respect to different portions of the affected Borrowing,
      in which case each such portion shall be allocated ratably among the Lenders
      holding the Loans comprising such Borrowing, and the Loans comprising each
      such
      portion shall be considered a separate Borrowing.

    


    (b) To
      make
      an election pursuant to this Section, Borrower shall notify the Global
      Administrative Agent of such election by telephone by the time that a Borrowing
      Request would be required under Section
      2.3
      if
      Borrower were requesting a Borrowing of the Type resulting from such election
      to
      be made on the effective date of such election. Each such telephonic Interest
      Election Request shall be irrevocable and shall be confirmed promptly by hand
      delivery or telecopy to the Global Administrative Agent of a written Interest
      Election Request executed by an Authorized Officer of Borrower, substantially
      in
      the form of Exhibit
      C-2
      or
      otherwise in a form approved by the Global Administrative Agent.

    


    (c) Each
      telephonic and written Interest Election Request shall specify the following
      information in compliance with Section
      2.2:

    


    (i) the
      Borrowing to which such Interest Election Request applies and, if different
      options are being elected with respect to different portions thereof, the
      portions thereof to be allocated to each resulting Borrowing (in which case
      the
      information to be specified pursuant to clauses (iii) and (iv) (iii) and
      (iv) below shall be specified for each resulting Borrowing);

     

    (ii) the
      effective date of the election made pursuant to such Interest Election Request,
      which shall be a Business Day;

     

    (iii) whether
      the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
      and

     

    (iv) if
      the
      resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
      applicable thereto after giving effect to such election, which shall be a period
      contemplated by the definition of the term “Interest Period”.

    


    If
      any
      such Interest Election Request requests a Eurodollar Borrowing but does not
      specify an Interest Period, then Borrower shall be deemed to have selected
      an
      Interest Period of one month’s duration.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    (d) Promptly
      following receipt of an Interest Election Request, the Global Administrative
      Agent shall advise each Lender of the details thereof and of such Lender’s
      portion of each resulting Borrowing.

    


    (e) If
      Borrower fails to deliver a timely Interest Election Request with respect to
      a
      Eurodollar Borrowing prior to the end of the Interest Period applicable thereto,
      then, unless such Borrowing is repaid as provided herein, at the end of such
      Interest Period such Borrowing shall be converted to an ABR Borrowing.
      Notwithstanding any contrary provision hereof, if an Event of Default has
      occurred and is continuing and the Global Administrative Agent, at the request
      of the Required Lenders, so notifies Borrower, then, so long as such Event
      of
      Default is continuing, (11) no outstanding Borrowing may be converted to or
      continued as a Eurodollar Borrowing and (12) unless the Indebtedness has been
      accelerated pursuant to Section
      8.3,
      each
      Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
      Interest Period applicable thereto.

     

    Section
      2.7 Global
      Borrowing Base.

    


    (a) Initial
      Global Borrowing Base and U.S. Borrowing Base.
      During
      the period from the date hereof to the date of the first redetermination of
      the
      Global Borrowing Base and U.S. Borrowing Base pursuant to the provisions of
      this
      Section, ii) the initial amount of the Global Borrowing Base has been
      determined by the Global Administrative Agent and acknowledged by Borrower
      and
      the Canadian Borrower and agreed to by the Combined Lenders to be
      U.S.$10,000,000, and iii) the initial amount of the U.S. Borrowing Base has
      been determined by the Global Administrative Agent and acknowledged by Borrower
      and agreed to by the Combined Lenders to be U.S. $11,000,000.

     

    (b) Annual
      Scheduled Determinations of the Global Borrowing Base and U.S. Borrowing
      Base.
      Promptly after January 1 of each calendar year (commencing January 1, 2007),
      and
      in any event prior to March 1st of each calendar year (commencing March 1,
      2007), Borrower shall furnish to the Global Administrative Agent and the
      Combined Lenders a Reserve Report in form and substance reasonably satisfactory
      to the Global Administrative Agent, prepared by an Approved Engineer, which
      Reserve Report shall evaluate as of December 31st of the immediately
      preceding calendar year iv) the Proven Reserves attributable to the Oil and
      Gas Properties which Borrower wishes to include in the Global Borrowing Base,
      and a projection of the rate of production and net operating income with respect
      thereto, as of such date, and v) the Proven Reserves attributable to the
      Oil and Gas Properties of Borrower and the U.S. Loan Parties which Borrower
      wishes to include in the U.S. Borrowing Base, and a projection of the rate
      of
      production and net operating income with respect thereto, as of such date,
      in
      each case, together with additional data concerning pricing, hedging, operating
      costs and quantities of production, and other information and engineering and
      geological data as the Global Administrative Agent or any Combined Lender may
      reasonably request. Within 15 days after receipt of such report and information,
      the Global Administrative Agent shall make an initial determination of the
      Global Borrowing Base and the U.S. Borrowing Base, and upon such initial
      determination shall promptly notify the Combined Lenders in writing of the
      Global Administrative Agent’s initial determination of the Global Borrowing Base
      and the U.S. Borrowing Base. The Global Administrative Agent shall make such
      determination in accordance with its customary practices and standards for
      oil
      and gas loans and in the exercise of its sole and reasonable discretion. Within
      15 days following their receipt of the proposed amount for the redetermined
      Global Borrowing Base and U.S. Borrowing Base, (a) all Combined Lenders (in
      the case of a proposed increase of the Global Borrowing Base) and/or all Lenders
      (in the case of a proposed increase of the U.S. Borrowing Base), or
      (b) Required Lenders (in the case of a decrease or reaffirmation of the
      Global Borrowing Base) and/or U.S. Required Lenders (in the case of a decrease
      or reaffirmation of the U.S. Borrowing Base) shall approve or reject the Global
      Administrative Agent’s initial determination of the Global Borrowing Base and
      the U.S. Borrowing Base by written notice to the Global Administrative Agent;
      provided,
      however
      that
      failure by any Combined Lender to reject in writing the Global Administrative
      Agent’s determination of the Global Borrowing Base and the U.S. Borrowing Base
      within such 15-day period shall be deemed an acceptance of such determination
      by
      such Combined Lender. If all of the Combined Lenders (in the case of the Global
      Borrowing Base) or all of the Lenders (in the case of the U.S. Borrowing Base),
      or the Required Lenders or U.S. Required Lenders, as applicable, fail to approve
      any such determination of the Global Borrowing Base or the U.S. Borrowing Base
      made by the Global Administrative Agent hereunder, then the Global
      Administrative Agent shall poll the Combined Lenders, Required Lenders or U.S.
      Required Lenders, as appropriate, and the Global Borrowing Base and the U.S.
      Borrowing Base, as applicable, shall be set at the highest amount on which
      all
      Combined Lenders (in the case of the Global Borrowing Base) or all Lenders
      (in
      the case of the U.S. Borrowing Base) if such number would result in an increase
      in the Global Borrowing Base or the U.S. Borrowing Base, or otherwise, the
      Required Lenders or the U.S. Required Lenders, as applicable, can agree, it
      being understood that a Combined Lender is deemed to have agreed to any and
      all
      amounts that are lower than the amount actually determined by such Combined
      Lender to be the appropriate value of the Global Borrowing Base and the U.S.
      Borrowing Base. Upon approval or deemed approval by the Combined Lenders,
      Lenders, Required Lenders or U.S. Required Lenders, as applicable, of the Global
      Borrowing Base and the U.S. Borrowing Base, the Global Administrative Agent
      upon
      notice thereof shall, by written notice to Borrower, Canadian Borrower and
      the
      Combined Lenders, designate the new Global Borrowing Base available to Borrower
      and the Canadian Borrower, and the new U.S. Borrowing Base available to
      Borrower, in each case as of April 1st of the applicable calendar year (each
      such notice in this Section
      2.7(b)
      or
Section
      2.7(c)
      below,
      herein a “Global
      Borrowing Base Designation Notice”).
      Upon
      receipt of such Global Borrowing Base Designation Notice, Borrower shall
      designate the Allocated U.S. Borrowing Base and the Allocated Canadian Borrowing
      Base to the Global Administrative Agent in accordance with Section
      2.7(d). 

     

    
      
        
        

      

      
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    (c) Semi-Annual
      Scheduled Determination of the Global Borrowing Base and U.S. Borrowing
      Base.
      In
      addition, promptly after June 30 of each calendar year (commencing
      June 30, 2006), and in any event prior to September 1st of each calendar
      year (commending September 1, 2006), Borrower will make available for
      review by the Global Administrative Agent a Reserve Report in form and substance
      reasonably satisfactory to the Global Administrative Agent, prepared by
      Borrower’s internal petroleum engineers, which Reserve Report shall evaluate as
      of June 30 of such calendar year vi) the Proven Reserves attributable
      to the Oil and Gas Properties which Borrower wishes to include in the Global
      Borrowing Base, and a projection of the rate of production and net operating
      income with respect thereto, as of such date, and vii) the Proven Reserves
      attributable to the Oil and Gas Properties of Borrower and the U.S. Loan Parties
      which Borrower wishes to include in the U.S. Borrowing Base, and a projection
      of
      the rate of production and net operating income with respect thereto, as of
      such
      date, in each case, together with additional data concerning pricing, hedging,
      operating costs, and quantities of production, and other information and
      engineering and geological data as the Global Administrative Agent or any
      Combined Lender may reasonably request. The Global Administrative Agent and
      the
      Required Lenders (or all Combined Lenders in the case of a proposed increase
      of
      the Global Borrowing Base), or the Global Administrative Agent and the U.S.
      Required Lenders (or all Lenders in the case of a proposed increase of the
      U.S.
      Borrowing Base), as applicable, shall approve and designate the new Global
      Borrowing Base and the U.S. Borrowing Base, as applicable, in each case as
      of
      October 1st of the applicable calendar year in accordance with the procedures
      and standards described in Section
      2.7(b)
      and
      Borrower shall provide a Global Borrowing Base Allocation Notice to the Global
      Administrative Agent in accordance with Section
      2.7(d).

     

    
      
        
        

      

      
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    (d) Allocation
      of the Global Borrowing Base.
      The
      Global Borrowing Base shall be comprised of the Allocated U.S. Borrowing Base
      and the Allocated Canadian Borrowing Base, and allocations between the Allocated
      U.S. Borrowing Base and Allocated Canadian Borrowing Base shall be made in
      accordance with this Section
      2.7(d).

     

    (i) The
      “Allocated
      U.S. Borrowing Base”
means,
      as of any date, the amount in U.S. Dollars designated or determined as such
      from
      time to time (a) by Borrower pursuant to a Global Borrowing Base Allocation
      Notice delivered in accordance with Section
      2.7(d)(iii)
      or
(iv)
      of this
      Agreement or (b) in accordance with the other provisions of this Agreement.
      On
      the date of this Agreement, the initial Allocated U.S. Borrowing Base shall
      be
      U.S.$11,000,000.

     

    (ii) The
      “Allocated
      Canadian Borrowing Base”
means,
      as of any date, the Equivalent Amount in U.S. Dollars designated as such from
      time to time (c) by Borrower pursuant to a Global Borrowing Base Allocation
      Notice delivered in accordance with Section
      2.7(d)(iii)
      or
(iv)
      of this
      Agreement or (d) in accordance with the other provisions of this Agreement.
      On
      the date of this Agreement, the initial Allocated Canadian Borrowing Base shall
      be U.S.$0.

     

    (iii) Upon
      receipt of the Global Borrowing Base Designation Notice, Borrower shall specify
      within ten (10) days of its receipt thereof the allocation of the Global
      Borrowing Base between the Allocated U.S. Borrowing Base and the Allocated
      Canadian Borrowing Base by providing a written notice to the Global
      Administrative Agent of such allocation (each such notice herein a “Global
      Borrowing Base Allocation Notice”);
      provided
      that
      (2) the sum of the Allocated U.S. Borrowing Base and the Allocated Canadian
      Borrowing Base shall at all times be equal to the Global Borrowing Base, and
      (3) the Allocated U.S. Borrowing Base shall never exceed the U.S. Borrowing
      Base then in effect. In the event that Borrower fails to provide the Global
      Administrative Agent with a Global Borrowing Base Allocation Notice within
      the
      period required by this Section
      2.7(d)(iii),
      the
      Global Borrowing Base will be allocated in same proportion as existed prior
      to
      such redetermination. Promptly upon the allocation of the Global Borrowing
      Base
      between the Allocated U.S. Borrowing Base and the Allocated Canadian Borrowing
      Base in accordance with the procedures set forth above, the Global
      Administrative Agent shall provide a written notice to the Combined Lenders
      and
      Borrower, which written notice shall set forth the Allocated U.S. Borrowing
      Base
      and the Allocated Canadian Borrowing Base to be in effect. Any designation
      of
      the Allocated U.S. Borrowing Base or the Allocated Canadian Borrowing Base
      effected pursuant to this Section
      2.7(d)(iii)
      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 Global Borrowing
      Base Designation Notice.

     

    
      
        
        

      

      
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    (iv) Borrower
      shall have the right to request the Combined Lenders to increase the Allocated
      U.S. Borrowing Base (but in no event to an amount in excess of the U.S.
      Borrowing Base then in effect) and decrease the Allocated Canadian Borrowing
      Base, or to increase the Allocated Canadian Borrowing Base and decrease the
      Allocated U.S. Borrowing Base, by providing a written notice to the Global
      Administrative Agent and the Combined Lenders; provided
      that
      Borrower may change the Allocated U.S. Borrowing Base and/or the Allocated
      Canadian Borrowing Base only one (1) time during any fiscal quarter unless
      necessary to cure any deficiency as contemplated by Section
      2.10(b).
      In
      connection with such increase or decrease, each Combined Lender shall have
      its
      share of the Allocated U.S. Borrowing Base or the Allocated Canadian Borrowing
      Base, as applicable, increased or decreased, as the case may be, by an amount
      in
      proportion to its Applicable Percentage (as defined herein, in the case of
      a
      Lender, and as defined in the Canadian Credit Agreement, in the case of a
      Canadian Lender). The revised Allocated U.S. Borrowing Base and Allocated
      Canadian Borrowing Base shall become effective upon the delivery by the Global
      Administrative Agent to Borrower and the Combined Lenders of written notice
      thereof.

     

    (e) Discretionary
      Determination of the Global Borrowing Base and U.S. Borrowing
      Base.
      Each of
      Borrower and, at the request of the Required Lenders, the Global Administrative
      Agent shall have the right to redetermine the Global Borrowing Base and the
      U.S.
      Borrowing Base at any time and from time to time but not more often than one
      (1)
      time between any scheduled redetermination (annual or semi-annual) of the Global
      Borrowing Base and the U.S. Borrowing Base. If either Borrower or, at the
      request of the Required Lenders, the Global Administrative Agent, shall elect
      to
      make a discretionary redetermination of the Global Borrowing Base and U.S.
      Borrowing Base pursuant to the provisions of this Section
      2.7(e),
      Borrower shall, within 30 days of receipt of a request therefor from the Global
      Administrative Agent, deliver to the Global Administrative Agent an Internal
      Reserve Report or such other updated engineering, production, operating and
      other data as the Global Administrative Agent or any Combined Lender may
      reasonably request. The Global Administrative Agent, the Required Lenders,
      the
      Combined Lenders, the U.S. Required Lenders or all Lenders, as applicable,
      shall
      approve and designate the new Global Borrowing Base and U.S. Borrowing Base
      in
      accordance with the procedures and standards described in Section
      2.7(b)
      and
      Borrower shall provide a Global Borrowing Base Allocation Notice to the Global
      Administrative Agent in accordance with Section
      2.7(d)(iii);
      provided
      that in
      the event that Borrower fails to provide such Global Borrowing Base Allocation
      Notice, the Global Borrowing Base shall be allocated between the Allocated
      U.S.
      Borrowing Base and the Allocated Canadian Borrowing Base in accordance with
      Section
      2.7(d)(iii).

     

    
      
        
        

      

      
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    (f) General
      Provisions With Respect to the Global Borrowing Base and U.S. Borrowing
      Base.
      The
      determination of the Global Borrowing Base and the U.S. Borrowing Base shall
      be
      made by the Global Administrative Agent and the Combined Lenders or the Required
      Lenders, or the Lenders or the U.S. Required Lenders, as applicable, taking
      into
      consideration the estimated value of the Oil and Gas Properties owned by
      Borrower and the other Loan Parties as reflected in the most recent Reserve
      Report delivered hereunder and any other relevant information obtained by or
      delivered to the Global Administrative Agent or any Combined Lender, all in
      accordance with the other provisions of this Section
      2.7
      in
      accordance with their customary practices for oil and gas loans as in effect
      from time to time. It is understood by the parties hereto that the Combined
      Lenders shall have no commitment or obligation whatsoever to increase the Global
      Borrowing Base or U.S. Borrowing Base to any amount in excess of
      U.S.$250,000,000, and nothing herein contained shall be construed to be a
      commitment by the Combined Lenders to so increase the Global Borrowing Base
      or
      U.S. Borrowing Base. The Global Borrowing Base and U.S. Borrowing Base may
      each
      be redetermined pursuant to Section
      2.7(b)
      (annual), Section
      2.7(c)
      (semi-annual) and Section
      2.7(e)
      (discretionary) and may be adjusted from time to time to give effect to
      occurrence of asset dispositions under Section
      2.7(g).
      In
      connection with any redetermination or adjustment pursuant to any of the
      foregoing, if the Global Administrative Agent determines that either a Global
      Borrowing Base Deficiency or a U.S. Borrowing Base Deficiency exists, the Global
      Administrative Agent shall give written notice thereof to Borrower and the
      date
      such notice is received shall be the “Deficiency
      Notification Date”.

     

    (g) Adjustment
      of Global Borrowing Base In Connection With Asset Dispositions.
      In the
      event that Borrower sells, transfers or otherwise disposes in one or more
      transactions any Property pursuant to Section
      7.5(f),
      if the
      aggregate Loan Value of all such Property so sold, transferred or otherwise
      disposed of during the period since the most recent redetermination of the
      Global Borrowing Base shall exceed 5% of the amount of the then current Global
      Borrowing Base, then the Global Borrowing Base shall be reduced by an amount
      equal to the Loan Value assigned to such Property in the most recently prepared
      Reserve Report. The Global Administrative Agent shall provide notice to Borrower
      and the Combined Lenders of the reduction in the Global Borrowing Base resulting
      from such disposition, which reduction shall be effective as of the date of
      such
      notice. Any such reduction in the Global Borrowing Base shall result in a
      corresponding reduction in the U.S. Borrowing Base and the Allocated U.S.
      Borrowing Base (to the extent that the Property so sold, transferred or
      otherwise disposed of is located in the United States) or in the Allocated
      Canadian Borrowing Base (to the extent that the Property so sold, transferred
      or
      otherwise disposed of is located in Canada).

    


    (h) Maximum
      Credit.
      The
      Global Borrowing Base shall represent the maximum amount of credit in the form
      of loans, letters of credit and bankers’ acceptances (subject to the aggregate
      Combined Commitments and subject to the other provisions hereof or of the
      Canadian Credit Agreement) that the Combined Lenders will extend to Borrower
      or
      Canadian Borrower pursuant to the Combined Loan Documents at any one time prior
      to the Maturity Date. The U.S. Borrowing Base shall represent the maximum amount
      of credit in the form of Loans and Letters of Credit (subject to the aggregate
      Commitments and subject to the other provisions thereof) that the Lenders will
      extend to Borrower pursuant to the Loan Documents at any one time prior to
      the
      Maturity Date.

     

    
      
        
        

      

      
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    Section
      2.8 Termination
      and Reduction of Commitments.

    


    (a) Unless
      previously terminated in accordance with this Agreement, the Commitments shall
      terminate on the Maturity Date.

     

    (b) Borrower
      may at any time terminate, or from time to time reduce, the Commitments;
provided
      that (4)
      each reduction of the Commitments shall be in an amount that is an integral
      multiple of U.S.$500,000 and not less than U.S.$1,000,000 and (5) Borrower
      shall
      not terminate or reduce the Commitments if, after giving effect to any
      concurrent prepayment of the Loans in accordance with Section
      2.10,
      the
      aggregate Credit Exposure of the Lenders would exceed the aggregate Commitments
      of the Lenders.

    


    (c) Borrower
      shall notify the Global Administrative Agent of any election to terminate or
      reduce the Commitments under paragraph (b)
      of this
      Section at least two (2) Business Days prior to the effective date of such
      termination or reduction, specifying such election and the effective date
      thereof. Promptly following receipt of any notice, the Global Administrative
      Agent shall advise the Lenders of the contents thereof. Each notice delivered
      by
      Borrower pursuant to this Section shall be irrevocable; provided
      that a
      notice of termination of the Commitments delivered by Borrower may state that
      such notice is conditioned upon the effectiveness of other credit facilities,
      in
      which case such notice may be revoked by Borrower (by notice to the Global
      Administrative Agent on or prior to the specified effective date) if such
      condition is not satisfied. Any termination or reduction of the Commitments
      shall be permanent. Each reduction of the Commitments shall be made ratably
      among each of the Lenders in accordance with each such Lender’s Applicable
      Percentage.

     

    Section
      2.9 Repayment
      of Loans; Evidence of Debt.

    


    (a) Borrower
      hereby unconditionally promises to pay to the Global Administrative Agent for
      the account of each Lender the then unpaid principal amount of each Loan and
      Borrowing of such Lender on the Maturity Date.

     

    (b) Each
      Lender shall maintain in accordance with its usual practice an account or
      accounts evidencing the indebtedness of Borrower to such Lender resulting from
      each Loan made by such Lender, including the amounts of principal and interest
      payable and paid to such Lender from time to time hereunder.

     

    (c) The
      Global Administrative Agent shall maintain accounts in which it shall record
      (6) the amount of each Loan made hereunder, the Type thereof and the
      Interest Period applicable thereto, (7) the amount of any principal or
      interest due and payable or to become due and payable from Borrower to each
      Lender hereunder and (8) the amount of any sum received by the Global
      Administrative Agent hereunder for the account of the Lenders and each Lender’s
      share thereof.
      In the
      event of any inconsistency between the account maintained by any Lender and
      the
      account maintained by the Global Administrative Agent, the account maintained
      by
      the Global Administrative Agent shall control, absent manifest
      error.

    


    (d) The
      entries made in the accounts maintained pursuant to paragraphs (b)
      or
(c)
      of this
      Section shall be prima facie evidence of the existence and amounts of the
      obligations recorded therein; provided
      that the
      failure of any Lender or the Global Administrative Agent to maintain such
      accounts or any error therein shall not in any manner affect the obligation
      of
      Borrower to repay the Loans in accordance with the terms of this
      Agreement.

     

    
      
        
        

      

      
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    (e) Any
      Lender may request that Loans made by it be evidenced by one or more promissory
      notes. In such event, Borrower shall prepare, execute and deliver to such Lender
      promissory notes payable to the order of such Lender (or, if requested by such
      Lender, to such Lender and its registered assigns and in a form approved by
      the
      Global Administrative Agent). Thereafter, the Loans evidenced by such promissory
      notes and interest thereon shall at all times (including after assignment
      pursuant to Section
      10.4)
      be
      represented by one or more promissory notes in such form payable to the order
      of
      the payee named therein (or, if any such promissory note is a registered note,
      to such payee and its registered assigns).

     

    Section
      2.10 Prepayment
      of Loans.

    


    (a) Borrower
      shall have the right at any time and from time to time to prepay any Borrowing
      in whole or in part, subject to the requirements of this Section.

     

    (b) If
      either
      a Global Borrowing Base Deficiency or a U.S. Borrowing Base Deficiency occurs,
      then Borrower shall take the following actions:

     

    (i) in
      the
      case of a Global Borrowing Base Deficiency resulting from a redetermination
      or
      reduction of the Global Borrowing Base, Borrower shall, within ten (10)
      days following the Deficiency Notification Date, provide written notice (the
      “Election
      Notice”)
      to the
      Global Administrative Agent stating the action which Borrower proposes to take
      to remedy such deficiency, and Borrower shall thereafter, at its option, either
      (a) within thirty (30) days following the delivery of the Election Notice,
      prepay Combined Loans in an aggregate principal amount equal to such deficiency,
      together with interest on the principal amount paid accrued to the date of
      such
      prepayment, (b) eliminate such deficiency by making three (3)
      consecutive monthly mandatory prepayments of the Combined Loans, together with
      interest on the principal amount paid accrued to the date of such prepayment,
      each such payment to be in the amount of 1/3rd of the amount of such deficiency,
      commencing on the last day of the month in which the Election Notice is
      delivered, and continuing on the last day of each month thereafter,
      (c) within ninety (90) days following the delivery of the Election
      Notice, submit (and pledge as Collateral) additional Oil and Gas Properties
      owned by Borrower or any other Loan Party for consideration in connection with
      the determination of the Global Borrowing Base which the Global Administrative
      Agent and the Combined Lenders deem sufficient in their sole discretion to
      eliminate such deficiency, or (d) within ninety (90) days following
      the delivery of the Election Notice, eliminate such deficiency through a
      combination of prepayments and submission of additional Oil and Gas Properties
      as set forth in subclauses (A) and (C) above, and, if after prepaying the
      Combined Loans pursuant to subclauses (A), (B) or (D) above, a Global Borrowing
      Base Deficiency remains as a result of any LC Exposure, Borrower shall pay
      to
      the Global Administrative Agent an amount equal to such remaining Global
      Borrowing Base Deficiency to be held as cash collateral as provided in
Section
      2.4(i);

     

    
      
        
        

      

      
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    (ii) in
      the
      case of a U.S. Borrowing Base Deficiency resulting from a redetermination or
      reduction of the Global Borrowing Base, take the action described under
      clause (i) above (except that prepayments shall be made in respect of Loans
      made pursuant to this Agreement);

     

    (iii) in
      the
      case of either a Global Borrowing Base Deficiency or a U.S. Borrowing Base
      Deficiency resulting from an asset disposition pursuant to Section
      2.7(g),
      utilize
      the Net Proceeds of such asset disposition to take the action described under
      clause (i) above (except that prepayments shall first be made in respect of
      Loans made pursuant to this Agreement); provided
      that if
      a prepayment or deposit is required under this clause (iii), then Borrower
      shall be obligated to make such prepayment and/or deposit of cash collateral
      on
      the Business Day immediately following the receipt by Borrower or any other
      Loan
      Party of any Net Proceeds from such asset disposition;

     

    (iv) in
      the
      case of a U.S. Borrowing Base Deficiency resulting from a reallocation of the
      Global Borrowing Base pursuant to Section
      2.7(d),
      prepay
      Loans in an aggregate principal amount equal to such deficiency, together with
      interest on the principal amount paid accrued to the date of such prepayment,
      and if a U.S. Borrowing Base Deficiency remains after prepaying all of the
      Loans
      as a result of any LC Exposure, pay to the Global Administrative Agent an amount
      equal to such remaining U.S. Borrowing Base Deficiency to be held as cash
      collateral as provided in Section
      2.4(i);
      it
      being understood that Borrower shall be obligated to make such prepayment and/or
      deposit of cash collateral on the effective date of such
      reallocation; 

    


    (v) notwithstanding
      anything in this Section
      2.10
      to the
      contrary, in the event that a U.S. Borrowing Base Deficiency exists at a time
      when no Global Borrowing Base Deficiency exists, then, to the extent that such
      action would cure (in whole or in part) such U.S. Borrowing Base Deficiency,
      Borrower may reallocate the Global Borrowing Base between the Allocated U.S.
      Borrowing Base and the Allocated Canadian Borrowing Base by providing the Global
      Administrative Agent with its election to do so (which election will designate
      the relevant reallocations) on the Business Day on which such U.S. Borrowing
      Base Deficiency occurs; provided,
      however,
      that no
      reallocation shall be permitted to the extent such reallocation would cause
      the
      aggregate “Credit Exposure” of the Canadian Lenders under the Canadian Credit
      Agreement to be greater than the lesser of the aggregate “Commitments”
thereunder and the Allocated Canadian Borrowing Base; and

    


    (vi) in
      the
      case of a Global Borrowing Base Deficiency or any U.S. Borrowing Base Deficiency
      not resulting from a reason described in clauses (i), (ii), (iii) or (iv)
      above, Borrower will prepay within thirty (30) days the Loans and “Loans”
under the Canadian Credit Agreement in an aggregate principal amount equal
      to
      such Global Borrowing Base Deficiency or U.S. Borrowing Base Deficiency
      together, in each case, with unpaid interest thereon accrued to the date of
      such
      prepayment and, if after prepaying all such Loans and “Loans” under the Canadian
      Credit Agreement, a Global Borrowing Base Deficiency remains as a result of
      any
      LC Exposure, pay to the Global Administrative Agent an amount equal to such
      remaining Global Borrowing Base Deficiency to be held as cash collateral as
      provided in Section
      2.4(i).

     

    
      
        
        

      

      
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    (c) Notwithstanding
      any other provision of this Section
      2.10,
      if at
      any time the Credit Exposure of any Lender exceeds its Commitment, Borrower
      will
      forthwith prepay the Loans of such Lender in an aggregate principal amount
      equal
      to such excess, together with interest on the principal amount paid accrued
      to
      the date of such prepayment, and if any excess remains after prepaying all
      of
      such Loans as a result of any LC Exposure of such Lender, pay to the Global
      Administrative Agent an amount equal to such remaining excess to be held as
      cash
      collateral for such Lender as provided in Section
      2.4(i).
      Borrower shall make prepayments pursuant to this clause (c)
      prior to
      making prepayments pursuant to clause (b)
      above.

    


    (d) Borrower
      shall notify the Global Administrative Agent by telephone (confirmed by
      telecopy) of any prepayment hereunder (9) in the case of prepayment of a
      Eurodollar Borrowing, not later than 12:00 noon, Dallas, Texas time, two
      Business Days before the date of prepayment or (10) in the case of prepayment
      of
      an ABR Borrowing, not later than 10:00 a.m., Dallas, Texas time, on the date
      of
      prepayment. Each such notice shall be irrevocable and shall specify the
      prepayment date and the principal amount of each Borrowing or portion thereof
      to
      be prepaid (which amount shall be in a minimum principal amount of
      U.S.$1,000,000 (or the aggregate amount of the Obligations hereunder at such
      time, if a lesser amount) and in U.S.$500,000 increments in excess thereof
      (or
      such other lesser amount in excess thereof in the event that prepayment is
      with
      respect to all Obligations hereunder); provided
      that, if
      a notice of prepayment is given in connection with a conditional notice of
      termination of the Commitments as contemplated by Section
      2.8,
      then
      such notice of prepayment may be revoked if such notice of termination is
      revoked in accordance with Section
      2.8.
      Promptly following receipt of any such notice relating to a Borrowing, the
      Global Administrative Agent shall advise the Lenders of the contents thereof.
      Each partial prepayment of any Borrowing shall be in an amount that would be
      permitted in the case of an advance of a Borrowing of the same Type as provided
      in Section
      2.2.
      Each
      prepayment of a Borrowing shall be applied ratably to the Loans included in
      the
      prepaid Borrowing. Prepayments shall be accompanied by accrued interest to
      the
      extent required by Section
      2.12
      and by
      any other amounts then due under this Agreement (including all amounts due
      under
Section
      2.16).

     

    Section
      2.11 Fees.

     

    (a) Borrower
      agrees to pay to the Global Administrative Agent for the account of each Lender
      a commitment fee (the “Commitment
      Fee”),
      which
      shall accrue at the Applicable Rate for Commitment Fees on the daily amount
      equal to the Applicable Percentage of such Lender of the Unutilized Commitment
      during the period from and including the Global Effective Date to but excluding
      the date on which the Commitments terminate. Accrued Commitment Fees shall
      be
      payable in arrears on the last day of March, June, September and December of
      each year and on the date on which the Commitments terminate, commencing on
      the
      first such date to occur after the date of this Agreement; provided
      that any
      Commitment Fees accruing after the date on which the Commitments terminate
      shall
      be payable on demand. All Commitment Fees shall be computed on the basis of
      a
      year of 360 days and shall be payable for the actual number of days elapsed
      (including the first day but excluding the last day).

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    (b) Borrower
      agrees to pay (11) to the Global Administrative Agent for the account of
      each Lender a participation fee with respect to its participations in Letters
      of
      Credit, which shall accrue at the Applicable Rate for Eurodollar Loans on the
      average daily amount of such Lender’s LC Exposure during the period from and
      including the date of this Agreement to but excluding the later of the date
      on
      which the Commitments terminate and the date on which the Lenders cease to
      have
      any LC Exposure, (12) from and after the date one or more Persons (in addition
      to JPMorgan Chase Bank, N.A.) becomes a Lender hereunder, to the Issuing Bank
      a
      fronting fee equal to the greater of (a) U.S.$500 and (b) the rate of 0.125%
      per
      annum on the face amount of each Letter of Credit issued by the Issuing Bank,
      and (13) to the Issuing Bank, such Issuing Bank’s standard fees with
      respect to the administration, issuance, amendment, renewal or extension of
      any
      Letter of Credit or processing of drawings thereunder. Accrued participation
      fees shall be payable in arrears on the last day of each March, June, September
      and December of each year, commencing on the first such date to occur after
      the
      date of this Agreement; provided
      that all
      such fees shall be payable on the date on which the Commitments terminate and
      any such fees accruing after the date on which the Commitments terminate shall
      be payable on demand. Fronting fees with respect to any Letter of Credit shall
      be payable at the time of issuance of such Letter of Credit. Any other fees
      payable to the Issuing Bank pursuant to this paragraph shall be payable within
      ten (10) days after demand. All participation fees and fronting fees shall
      be
      computed on the basis of a year of 360 days and shall be payable for the actual
      number of days elapsed (including the first day but excluding the last
      day).

     

    (c) Borrower
      agrees to pay to the Global Administrative Agent and/or the Arranger, for its
      own account and for the account of each Lender, as applicable, fees, in the
      amounts and at the times separately agreed upon among Parent, Borrower, the
      Global Administrative Agent and the Arranger, including, without limitation,
      the
      amounts agreed upon in the Fee Letter.

    


    (d) All
      fees
      payable hereunder shall be paid on the dates due, in immediately available
      funds, to the Global Administrative Agent (or the Issuing Bank, in the case
      of
      fees payable to it) for distribution, in the case of Commitment Fees and
      participation fees, to the Lenders entitled thereto. Fees paid shall not be
      refundable under any circumstances.

     

    Section
      2.12 Interest.

     

    (a) Subject
      to Section
      10.13,
      the
      Loans comprising each ABR Borrowing shall bear interest at the Alternate Base
      Rate plus
      the
      Applicable Rate for ABR Loans.

     

    (b) Subject
      to Section
      10.13,
      the
      Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted
      LIBO Rate for the Interest Period in effect for such Borrowing plus
      the
      Applicable Rate for Eurodollar Loans.

     

    
      
        
        

      

      
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    (c) Notwithstanding
      the foregoing, but subject to Section
      10.13,
      if any
      principal of or interest on any Loan or any fee or other amount payable by
      Borrower hereunder is not paid when due, whether at stated maturity, upon
      acceleration or otherwise, such overdue amount shall bear interest, after as
      well as before judgment, at a rate per annum equal to (14) in the case of
      overdue principal of any Loan, 2% plus
      the rate
      otherwise applicable to such Loan as provided in the preceding paragraphs of
      this Section or (15) in the case of any other amount, 2% plus
      the rate
      applicable to ABR Loans as provided in paragraph (a)
      of this
      Section.

    


    (d) Subject
      to Section
      10.13,
      accrued
      interest on each Loan shall be payable in arrears on each Interest Payment
      Date
      for such Loan and upon termination of the Commitments; provided
      that
      (16) interest accrued pursuant to paragraph (c)
      of this
      Section shall be payable on demand of the Global Administrative Agent or the
      Required Lenders (through the Global Administrative Agent), (17) in the event
      of
      any repayment or prepayment of any Loan, accrued interest on the principal
      amount repaid or prepaid shall be payable on the date of such repayment or
      prepayment and (18) in the event of any conversion of any Eurodollar Loan prior
      to the end of the current Interest Period therefor, accrued interest on such
      Loan shall be payable on the effective date of such conversion.

    


    (e) Subject
      to Section
      10.13,
      all
      interest hereunder shall be computed on the basis of a year of 360 days, except
      that interest computed by reference to the Alternate Base Rate at times when
      the
      Alternate Base Rate is based on the Prime 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 Alternate Base Rate, Adjusted LIBO
      Rate
      or LIBO Rate shall be determined by the Global Administrative Agent, and such
      determination shall be conclusive absent manifest error.

     

    Section
      2.13 Alternate
      Rate of Interest.
      If
      prior to the commencement of any Interest Period for a Eurodollar
      Borrowing:

     

    (a) the
      Global Administrative Agent determines (which determination shall be conclusive
      absent manifest error) that adequate and reasonable means do not exist for
      ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
      Interest Period;

    


    (b) the
      Global Administrative Agent is advised by the Required Lenders that the Adjusted
      LIBO Rate for such Interest Period will not adequately and fairly reflect the
      cost to such Lenders of making or maintaining their Loans included in such
      Borrowing for such Interest Period; or

     

    (c) the
      Global Administrative Agent determines in good faith (which determination shall
      be conclusive) that by reason of circumstances affecting the interbank dollar
      market generally, deposits in U.S. Dollars in the London interbank dollar market
      are not being offered for the applicable Interest Period and in an amount equal
      to the amount of the Eurodollar Loan requested by Borrower,

    


    then
      the
      Global Administrative Agent shall give prompt notice thereof to Borrower and
      the
      Lenders by telephone or telecopy and, if given by telephone, as promptly as
      practicable thereafter in writing and, until the Global Administrative Agent
      notifies Borrower and the Lenders that the circumstances giving rise to such
      notice no longer exist, (19) any Interest Election Request that requests the
      conversion of any Borrowing to, or continuation of any Borrowing as, a
      Eurodollar Borrowing for the affected Interest Period shall be ineffective,
      and
      (20) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing
      shall be made as a Eurodollar Loan having the shortest Interest Period which
      is
      not unavailable under clauses (a) through (c) of this Section, and if no
      Interest Period is available, as an ABR Borrowing.

     

    
      
        
        

      

      
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    Section
      2.14 Illegality.

     

    (a) Notwithstanding
      any other provision of this Agreement to the contrary, if (21) by reason of
      the
      adoption of any applicable Governmental Rule or any change in any applicable
      Governmental Rule or in the interpretation or administration thereof by any
      Governmental Authority or compliance by any Lender with any request or directive
      (whether or not having the force of law) of any central bank or other
      Governmental Authority or (22) circumstances affecting the London interbank
      dollar market or the position of a Lender therein shall at any time make it
      unlawful or impracticable in the sole discretion of a Lender exercised in good
      faith for such Lender or its Applicable Lending Office to (a) honor its
      obligation to make Eurodollar Loans either generally or for a particular
      Interest Period provided for hereunder, or (b) maintain Eurodollar Loans either
      generally or for a particular Interest Period provided for hereunder, then
      such
      Lender shall promptly notify Borrower thereof through Global Administrative
      Agent and such Lender’s obligation to make or maintain Eurodollar Loans having
      an affected Interest Period hereunder shall be suspended until such time as
      such
      Lender may again make and maintain Eurodollar Loans having an affected Interest
      Period (in which case the provisions of Section
      2.14(b)
      hereof
      shall be applicable). Before giving such notice pursuant to this Section
      2.14,
      such
      Lender will designate a different available Applicable Lending Office for the
      affected Eurodollar Loans of such Lender or take such other action as Borrower
      may request if such designation or action will avoid the need to suspend such
      Lender’s obligation to make Eurodollar Loans hereunder and will not, in the sole
      opinion of such Lender exercised in good faith, be disadvantageous to such
      Lender (provided,
      that
      such Lender shall have no obligation so to designate an Applicable Lending
      Office for Eurodollar Loans located in the United States of
      America).

     

    (b) If
      the
      obligation of any Lender to make or maintain any Eurodollar Loans shall be
      suspended pursuant to Section
      2.14(a)
      hereof,
      all Loans having an affected Interest Period which would otherwise be made
      by
      such Lender as Eurodollar Loans shall be made instead as ABR Loans (and, if
      such
      Lender so requests by notice to Borrower with a copy to the Global
      Administrative Agent, each Eurodollar Loan having an affected Interest Period
      of
      such Lender then outstanding shall be automatically converted into an ABR Loan
      on the last day of the Interest Period for such Eurodollar Loans unless earlier
      conversion is required by applicable law) and, to the extent that Eurodollar
      Loans are so made as (or converted into) ABR Loans, all payments of principal
      which would otherwise be applied to such Eurodollar Loans shall be applied
      instead to such ABR Loans.

     

     

     

    
      
        
        

      

      
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      Section
        2.15 Increased
        Costs.

    

     

    (a) If
      any
      Change in Law shall:

    


    (i) impose,
      modify or deem applicable any reserve, special deposit or similar requirement
      against assets of, deposits with or for the account of, or credit extended
      by,
      any Lender (except any such reserve requirement reflected in the Adjusted LIBO
      Rate) or any Issuing Bank; or

    


    (ii) impose
      on
      any Lender or any Issuing Bank or the London interbank market any other
      condition affecting this Agreement or Eurodollar Loans made by such Lender
      or
      any Letter of Credit or participation therein;

    


    and
      the
      result of any of the foregoing shall be to increase the cost to such Lender
      of
      making or maintaining any Eurodollar Loan (or of maintaining its obligation
      to
      make any such Loan) or to increase the cost to such Lender or such Issuing
      Bank
      of participating in, issuing or maintaining any Letter of Credit or to reduce
      the amount of any sum received or receivable by such Lender or such Issuing
      Bank
      hereunder (whether of principal, interest or otherwise), then Borrower will
      pay
      to such Lender or such Issuing Bank such additional amount or amounts as will
      compensate such Lender or such Issuing Bank, as the case may be, for such
      additional costs incurred or reduction suffered.

     

    (b) If
      any
      Lender or any Issuing Bank determines that any Change in Law regarding capital
      requirements has or would have the effect of reducing the rate of return on
      such
      Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or
      such Issuing Bank’s holding company, if any, as a consequence of this Agreement
      or the Loans made by, or participations in Letters of Credit held by, such
      Lender, or the Letters of Credit issued by such Issuing Bank, to a level below
      that which such Lender or such Issuing Bank or such Lender’s or such Issuing
      Bank’s holding company could have achieved but for such Change in Law (taking
      into consideration such Lender’s or such Issuing Bank’s policies and the
      policies of such Lender’s or such Issuing Bank’s holding company with respect to
      capital adequacy), then Borrower will pay to such Lender or such Issuing Bank,
      as the case may be, such additional amount or amounts as will compensate such
      Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding
      company for any such reduction suffered.

     

    (c) A
      certificate of a Lender or an Issuing Bank setting forth the amount or amounts
      necessary to compensate such Lender or such Issuing Bank or such Lender’s or
      such Issuing Bank’s holding company, as the case may be, as specified in
paragraph (a)
      or
(b)
      of this
      Section shall be delivered to Borrower and shall be conclusive absent manifest
      error. Borrower shall pay such Lender or such Issuing Bank, as the case may
      be,
      the amount shown as due on any such certificate within ten (10) days after
      receipt thereof.

    


    (d) Failure
      or delay on the part of any Lender or any Issuing Bank to demand compensation
      pursuant to this Section shall not constitute a waiver of such Lender’s or such
      Issuing Bank’s right to demand such compensation; provided
      that
      Borrower shall not be required to compensate a Lender or an Issuing Bank
      pursuant to this Section for any increased costs or reductions incurred more
      than 270 days prior to the date that such Lender or such Issuing Bank, as the
      case may be, notifies Borrower of the Change in Law giving rise to such
      increased costs or reductions and of such Lender’s or such Issuing Bank’s
      intention to claim compensation therefor; provided further
      that, if
      the Change in Law giving rise to such increased costs or reductions is
      retroactive, then the 270-day period referred to above shall be extended to
      include the period of retroactive effect thereof.

     

    
      
        
        

      

      
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    Section
      2.16 Break
      Funding Payments.
      In the
      event of i) the payment (including prepayment) of any principal of any
      Eurodollar Loan other than on the last day of an Interest Period applicable
      thereto (including as a result of an Event of Default), j) the conversion of
      any
      Eurodollar Loan other than on the last day of the Interest Period applicable
      thereto, k) the failure to borrow, convert, continue or prepay any Loan on
      the
      date specified in any notice delivered pursuant hereto (regardless of whether
      such notice may be revoked under Section
      2.10(b)
      and is
      revoked in accordance therewith), or l) the assignment of any Eurodollar Loan
      other than on the last day of the Interest Period applicable thereto as a result
      of a request by Borrower pursuant to Section
      2.19
      then, in
      any such event, Borrower shall compensate each Lender for the loss, cost and
      expense attributable to such event. In the case of a Eurodollar Loan, such
      loss,
      cost or expense to any Lender shall be deemed to include an amount determined
      by
      such Lender to be the excess, if any, of (1) the amount of interest which would
      have accrued on the principal amount of such Loan had such event not occurred,
      at the Adjusted 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
      (2) the
      amount of interest which would accrue on such principal amount for such period
      at the interest rate which such Lender would bid were it to bid, at the
      commencement of such period, for dollar deposits of a comparable amount and
      period from other banks in the London interbank market. A certificate of any
      Lender setting forth any amount or amounts that such Lender is entitled to
      receive pursuant to this Section shall be delivered to Borrower and the Global
      Administrative Agent and shall be conclusive absent manifest error. Borrower
      shall pay such Lender the amount shown as due on any such certificate within
      ten
      (10) days after receipt thereof.

     

    Section
      2.17 Taxes.

     

    (a) Any
      and
      all payments by or on account of any obligation of Borrower hereunder or under
      any other Loan Document shall be made free and clear of and without deduction
      for any Indemnified Taxes or Other Taxes; provided
      that if
      Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
      such payments, then (3) the sum payable shall be increased as necessary so
      that
      after making all required deductions (including deductions applicable to
      additional sums payable under this Section), the Global Administrative Agent,
      each Lender or the Issuing Bank (as the case may be) receives an amount equal
      to
      the sum it would have received had no such deductions been made, (4) Borrower
      shall make such deductions and (5) Borrower shall pay the full amount deducted
      to the relevant Governmental Authority in accordance with applicable law;
provided
      that if
      a Lender is in default of its obligations under Section
      2.17(e),
      then
      Borrower shall only be obligated to comply with clauses (ii) and (iii) of
      this Section
      2.17(a)
      with
      respect to payments to be made to such Lender.

    


    (b) In
      addition, Borrower shall pay any Other Taxes to the relevant Governmental
      Authority in accordance with applicable law.

     

    
      
        
        

      

      
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    (c) Borrower
      shall indemnify the Global Administrative Agent, each Lender and each Issuing
      Bank, within ten (10) days after written demand therefor, for the full amount
      of
      any Indemnified Taxes or Other Taxes paid by the Global Administrative Agent,
      such Lender or such Issuing Bank, as the case may be, on or with respect to
      any
      payment by or on account of any obligation of Borrower hereunder or under any
      other Loan Document (including Indemnified Taxes or Other Taxes imposed or
      asserted on or attributable to amounts payable under this Section) and any
      penalties, interest and reasonable expenses arising therefrom or with respect
      thereto, whether or not such Indemnified Taxes or Other Taxes were correctly
      or
      legally imposed or asserted by the relevant Governmental Authority; provided
      that if
      a Lender is in default of its obligations under Section
      2.17(e),
      then
      Borrower shall have no obligations under this Section
      2.17(c)
      with
      respect to any payments or liabilities described herein made or owed by such
      Lender. A certificate as to the amount of such payment or liability delivered
      to
      Borrower by a Lender or an Issuing Bank, or by the Global Administrative Agent
      on its own behalf or on behalf of a Lender or an Issuing Bank, shall be
      conclusive absent manifest error.

    


    (d) As
      soon
      as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower
      to a Governmental Authority, if available, Borrower shall deliver to the Global
      Administrative Agent the original or a certified copy of a receipt issued by
      such Governmental Authority evidencing such payment, a copy of the return
      reporting such payment or other evidence of such payment reasonably satisfactory
      to the Global Administrative Agent.

     

    (e) Each
      Lender that is not organized under the laws of the United States of America
      or a
      state thereof agrees that such Lender will deliver to Borrower and the Global
      Administrative Agent two (2) duly completed copies of United States Internal
      Revenue Service Form W-8 BEN or W-8 ECI (or successor form) certifying in either
      case that such Lender is entitled to receive payments from the Loan Parties
      under the Loan Documents without deduction or withholding of any United States
      federal income taxes. Each Lender which so delivers a Form W-8 BEN or W-8 ECI
      further undertakes to deliver to Borrower and the Global Administrative Agent
      two (2) additional copies of such form (or a successor form) on or before such
      form expires or becomes obsolete or after the occurrence of any event requiring
      a change in the most recent form so delivered by it and such amendments thereto
      or extensions or renewals thereof as may be reasonably requested by Borrower
      or
      the Global Administrative Agent, in each case, certifying that such Lender
      is
      entitled to receive payments from Borrower under the Loan Documents without
      deduction or withholding of any United States federal income taxes, unless
      (6)
      an event (including without limitation any change in treaty, law or regulation)
      has occurred prior to the date on which any such delivery would otherwise be
      required which renders all such forms inapplicable or which would prevent such
      Lender from duly completing and delivering any such form with respect to it
      and
      (7) such Lender advises Borrower and the Global Administrative Agent that it
      is
      not capable of receiving such payments without any deduction or withholding
      of
      United States federal income tax.

    


    (f) If
      Borrower at any time pays an amount under Section
      2.17(a), Section
      2.10(b)
      or
Section
      2.17(c)
      to any
      Lender, the Global Administrative Agent or any Issuing Bank, and such payee
      receives a refund of or credit for any part of any Indemnified Taxes or Other
      Taxes which such payee determines in its sole judgment is made with respect
      to
      such amount paid by Borrower, such Lender, the Global Administrative Agent
      or
      any Issuing Bank, as the case may be, shall pay to such Borrower the amount
      of
      such refund or credit promptly, and in any event within 30 days, following
      the
      receipt of such refund or credit by such payee.

     

    
      
        
        

      

      
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    Section
      2.18 Payments
      Generally; Pro Rata Treatment; Sharing of Set-offs.

    


    (a) Borrower
      shall make each payment required to be made by it hereunder or under any other
      Loan Document (whether of principal, interest, fees or reimbursement of LC
      Disbursements, or of amounts payable under Section
      2.15,
      Section
      2.16
      or
Section
      2.17,
      or
      otherwise) prior to the time expressly required hereunder or under such other
      Loan Document for such payment (or, if no such time is expressly required,
      prior
      to 11:00 a.m., Dallas, Texas time), on the date when due, in immediately
      available funds, without set off or counterclaim. Any amounts received after
      such time on any date may, in the discretion of the Global 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 Global
      Administrative Agent c/o JPMorgan Chase Bank, N.A., 10 South Dearborn,
      Floor 19, Chicago, Illinois  60603-2003, Attention: Susan Dugan,
      Telephone: 312-385-7143, Fax: 312-385-7096, with a copy to JPMorgan Chase Bank,
      N.A., 1717 Main Street, 4th
      Floor,
      Mail Code TX1-2448, Dallas, Texas 75201, Attention: Scott Fowler, Telephone:
      214-290-2162, Fax: 214-290-2332, except payments to be made directly to an
      Issuing Bank as expressly provided herein and payments pursuant Section
      2.15,
      Section
      2.16,
      Section
      2.17(a),
      Section
      2.17(c)
      and
Section
      10.3
      shall be
      made directly to the Persons entitled thereto and payments pursuant to other
      Loan Documents shall be made to the Persons specified therein. The Global
      Administrative Agent shall distribute any such payments received by it for
      the
      account of any other Person to the appropriate recipient promptly following
      receipt thereof. Except as set forth in clause (a) of the definition of
“Interest Period”, if any payment under any Loan Document shall be due on a day
      that is not a Business Day, the date for payment shall be extended to the next
      succeeding Business Day, and, in the case of any payment accruing interest,
      interest thereon shall be payable for the period of such extension. All payments
      under each Loan Document shall be made in U.S. Dollars.

     

    (b) If
      at any
      time insufficient funds are received by and available to the Global
      Administrative Agent to pay fully all amounts of principal, unreimbursed LC
      Disbursements, interest and fees then due hereunder, such funds shall be applied
      (8) 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 (9) second, towards payment of principal
      and unreimbursed LC Disbursements then due hereunder, ratably among the parties
      entitled thereto in accordance with the amounts of principal and unreimbursed
      LC
      Disbursements then due to such parties.

     

    (c) If
      any
      Lender shall, by exercising any right of set off or counterclaim or otherwise,
      obtain payment in respect of any principal of or interest on any of its Loans
      or
      participations in LC Disbursements resulting in such Lender receiving payment
      of
      a greater proportion of the aggregate amount of its Loans and participations
      in
      LC Disbursements and accrued interest thereon than the proportion received
      by
      any other Lender, then the Lender receiving such greater proportion shall
      purchase (for cash at face value) participations in the Loans and participations
      in LC Disbursements of other Lenders to the extent necessary so that the benefit
      of all such payments shall be shared by the Lenders ratably in accordance with
      the aggregate amount of principal of and accrued interest on their respective
      Loans and participations in LC Disbursements; provided
      that
      (10) 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 (11) the provisions of this paragraph shall not be construed
      to
      apply to any payment made by Borrower pursuant to and in accordance with the
      express terms of this Agreement or any payment obtained by a Lender as
      consideration for the assignment of or sale of a participation in any of its
      Loans or participations in LC Disbursements to any assignee or participant,
      other than to Borrower or any Subsidiary or Affiliate thereof (as to which
      the
      provisions of this paragraph shall apply). Borrower consents to the foregoing
      and agrees, to the extent it may effectively do so under applicable law, that
      any Lender acquiring a participation pursuant to the foregoing arrangements
      may
      exercise against Borrower rights of set-off and counterclaim with respect to
      such participation as fully as if such Lender were a direct creditor of Borrower
      in the amount of such participation.

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    (d) Unless
      the Global Administrative Agent shall have received notice from Borrower prior
      to the date on which any payment is due to the Global Administrative Agent
      for
      the account of the Lenders or an Issuing Bank hereunder that Borrower will
      not
      make such payment, the Global Administrative Agent may assume that Borrower
      has
      made such payment on such date in accordance herewith and may, in reliance
      upon
      such assumption, distribute to the Lenders or an Issuing Bank, as the case
      may
      be, the amount due. In such event, if Borrower has not in fact made such
      payment, then each of the Lenders or each of the Issuing Banks, as the case
      may
      be, severally agrees to repay to the Global Administrative Agent forthwith
      on
      demand the amount so distributed to such Lender or such Issuing Bank with
      interest thereon, for each day from and including the date such amount is
      distributed to it to but excluding the date of payment to the Global
      Administrative Agent, at the greater of the Federal Funds Effective Rate and
      a
      rate determined by the Global Administrative Agent in accordance with banking
      industry rules on interbank compensation.

    


    (e) If
      any
      Lender shall fail to make any payment required to be made by it pursuant to
      Section
      2.4(d)(e),
      Section
      2.5(b),
      Section
      2.18(d)
      or
Section
      10.3(c)
      then the
      Global Administrative Agent may, in its discretion (notwithstanding any contrary
      provision hereof), apply any amounts thereafter received by the Global
      Administrative Agent for the account of such Lender to satisfy such Lender’s
      obligations under such Sections until all such unsatisfied obligations are
      fully
      paid.

     

    Section
      2.19 Mitigation
      Obligations; Replacement of Lenders.

     

    (a) If
      any
      Lender requests compensation under Section
      2.15,
      or if
      Borrower is required to pay any additional amount to any Lender or any
      Governmental Authority for the account of any Lender pursuant to Section
      2.17,
      then
      such Lender shall use reasonable efforts to designate a different Applicable
      Lending Office for funding or booking its Loans hereunder or to assign its
      rights and obligations hereunder to another of its offices, branches or
      Affiliates, if, in the judgment of such Lender, such designation or assignment
      (12) would eliminate or reduce amounts payable pursuant to Section
      2.15 or
      Section
      2.17,
      as the
      case may be, in the future and (13) would not subject such Lender to any
      unreimbursed cost or expense and would not otherwise be disadvantageous to
      such
      Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred
      by any Lender in connection with any such designation or
      assignment.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    (b) If
      (14)
      any Lender asserts that events have occurred suspending its obligation to make
      or maintain Eurodollar Loans under Section
      2.14
      when
      substantially all other Lenders have not also done so, (15) any Lender requests
      compensation under Section
      2.15,
      (16)
      Borrower is required to pay any additional amount to any Lender or any
      Governmental Authority for the account of any Lender pursuant to Section
      2.17,
      or (iv)
      any Lender defaults in its obligation to fund Loans hereunder, then Borrower
      may, at its sole expense and effort, upon notice to such Lender and the Global
      Administrative Agent, require such Lender to assign and delegate, without
      recourse (in accordance with and subject to the terms of Section
      10.4),
      all
      its interests, rights and obligations under this Agreement to an assignee that
      shall assume such obligations (which assignee may be another Lender, if a Lender
      accepts such assignment); provided
      that (i)
      Borrower shall have received the prior written consent of the Global
      Administrative Agent, which consent shall not unreasonably be withheld or
      delayed, (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 as of such time, from the assignee (to the extent of such outstanding
      principal and accrued interest and fees) or Borrower (in the case of all other
      amounts), (iii) the assignee and assignor shall have entered into an Assignment
      and Assumption, and (iv) in the case of any such assignment resulting from
      a
      claim for compensation under Section
      2.15
      or
      payments required to be made pursuant to Section
      2.17,
      such
      assignment will result in a reduction in such compensation or
      payments.

    


    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

    


    In
      order
      to induce the Global Administrative Agent, any Issuing Bank and the Lenders
      to
      enter into this Agreement and to make Loans and issue or participate in any
      Letters of Credit hereunder, Borrower and Parent jointly and severally represent
      and warrant to the Global Administrative Agent, any Issuing Bank and the Lenders
      as set forth in this Article.

     

    Section
      3.1 Organization;
      Powers.
      Each of
      Parent, Borrower and the other Loan Parties is duly organized, validly existing
      and in good standing under the laws of the jurisdiction of its organization,
      has
      all requisite power and authority to carry on its business as now conducted
      and,
      except where the failure to do so, individually or in the aggregate, could
      not
      reasonably be expected to result in a Material Adverse Effect, is qualified
      to
      do business in, and is in good standing in, every jurisdiction where such
      qualification is required.

     

    Section
      3.2 Authorization;
      Enforceability.
      The
      execution, delivery and performance by Borrower and Parent of this Agreement
      and
      each other Loan Document executed or to be executed by it, and the execution,
      delivery and performance by each other Loan Party of each Loan Document executed
      or to be executed by it, are within Borrower’s, Parent’s and each such other
      Loan Party’s corporate, limited liability company and/or partnership powers, and
      have been duly authorized by all necessary corporate, limited liability company
      and/or partnership action, and if required, stockholder, member and/or partner
      action. This Agreement and each other Loan Document executed or to be executed
      by it has been duly executed and delivered by Borrower and Parent and
      constitutes, and each other Loan Document executed or to be executed by any
      other Loan Party, when executed and delivered by such other Loan Party, will
      constitute, a legal, valid and binding obligation of Borrower, Parent or such
      other Loan Party (as the case may be), enforceable in accordance with their
      respective terms, subject to applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws affecting creditors’ rights generally and subject to
      general principles of equity, regardless of whether considered in a proceeding
      in equity or at law.

     

    
      
        
        

      

      
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    Section
      3.3 Approvals;
      No Conflicts.
      The
      execution, delivery and performance by Borrower and Parent of this Agreement
      and
      each other Loan Document executed or to be executed by it, and the execution,
      delivery and performance by each other Loan Party of each Loan Document executed
      or to be executed by such other Loan Party, m) do not require any Governmental
      Approval or third party approvals, except such as have been obtained or made
      and
      are in full force and effect and except filings necessary to perfect Liens
      created under the Loan Documents, n) will not violate any applicable
      Governmental Rule or the Organic Documents of Borrower, Parent or any such
      other
      Loan Party or any order of any Governmental Authority, o) will not violate
      or
      result in a default under any indenture, agreement or other instrument binding
      upon Borrower, Parent or any such other Loan Party or its assets, or give rise
      to a right thereunder to require any payment to be made by Borrower, Parent
      or
      any such other Loan Party, and p) will not result in the creation or imposition
      of any Lien on any asset of Borrower, Parent or any such other Loan Party,
      except Liens created under the Loan Documents.

     

    Section
      3.4 Financial
      Condition; No Material Adverse Change.

     

    (a) Parent
      has heretofore furnished to the Lenders and the Global Administrative Agent
      copies of Parent’s consolidated balance sheet and statements of income,
      stockholders equity and cash flows i) as of and for the fiscal year ended
      December 31, 2005, audited by Hein & Associates LLP, independent public
      accountants, and ii) as of and for the fiscal quarters and the portions of
      the
      fiscal year ended March 31, 2006, certified by the chief financial officer
      of
      Parent. Such financial statements present fairly, in all material respects,
      the
      financial position and results of operations and cash flows of Parent and its
      consolidated Subsidiaries as of such dates and for such periods in accordance
      with GAAP consistently applied, subject to year end audit adjustments in the
      case of the statements referred to in clause (ii) above.

     

    (b) Except
      as
      set forth in Schedule 3.4
      or
      reflected in the financial statements referred to in Section
      3.4(a),
      neither
      Borrower, Parent, nor any other Loan Party has any contingent liabilities,
      unusual long-term commitments or unrealized losses.

    


    (c) Since
      December 31, 2005, there has been no material adverse change in the consolidated
      financial condition, operations or business taken as a whole of Parent and
      its
      consolidated Subsidiaries.

     

    Section
      3.5 Properties.

    


    (a) Each
      of
      Borrower, Parent and the other Loan Parties owns its Properties free and clear
      of all Liens (other than Liens permitted by Section
      7.2).


    
      
        
        

      

      
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    (b) After
      giving full effect to all Liens permitted under Section
      7.2,
      Borrower, Parent and the other Loan Parties own the net interests in
      Hydrocarbons produced from the Oil and Gas Properties as reflected in the most
      recent Reserve Report, and neither Borrower, Parent nor any other Loan Party
      is
      obligated to bear costs or expenses in respect of the Oil and Gas Properties
      in
      excess of its working interest percentage as reflected in the most recent
      Reserve Report.

     

    Section
      3.6 Litigation.

     

    (a) Except
      for such actions, suits or proceedings set forth in Schedule 3.6
      hereto
      and any other actions, suits or proceedings from time to time disclosed in
      writing by Borrower, Parent or the other Loan Parties to the Global
      Administrative Agent after the date of this Agreement (collectively, the
“Disclosed
      Matters”),
      there
      are no actions, suits or proceedings by or before any arbitrator or Governmental
      Authority pending against or, to the knowledge of Borrower or Parent, threatened
      against or affecting Borrower, Parent or any other Loan Party or any of their
      respective Properties, businesses, assets or revenues, (1) that could reasonably
      be expected, individually or in the aggregate, to result in a Material Adverse
      Effect or (2) that question the validity or enforceability of any of the Loan
      Documents or seek to enjoin or prevent the Financing Transactions.

    


    (b) Since
      the
      date of this Agreement, there has been no change in the status of the Disclosed
      Matters that, individually or in the aggregate, has resulted in, or materially
      increased the likelihood of, a Material Adverse Effect.

     

    Section
      3.7 Compliance
      with Laws and Agreements.
      Each of
      Borrower, Parent and the other Loan Parties is in compliance with all
      Governmental Rules applicable to such Person or its Property and all indentures,
      agreements and other instruments binding upon it or its Property, except where
      the failure to do so, individually or in the aggregate, could not reasonably
      be
      expected to result in a Material Adverse Effect. No Default has occurred and
      is
      continuing.

     

    Section
      3.8 Investment
      Company Status.
      Neither
      Borrower, Parent nor any of their Subsidiaries is an “investment company” as
      defined in, or subject to regulation under, the Investment Company Act of 1940,
      as amended.

     

    Section
      3.9 Taxes.
      Except
      as set forth in Schedule 3.9,
      each of
      Borrower, Parent, the other Loan Parties and each of their Subsidiaries which
      is
      a member of Parent’s consolidated U.S. federal income tax group has timely filed
      or caused to be filed all Tax returns and reports required to have been filed
      and has paid or caused to be paid all Taxes required to have been paid by it,
      except q) Taxes that are being contested in good faith by appropriate
      proceedings and for which Borrower, Parent or such Subsidiary, as applicable,
      has set aside on its books adequate reserves or r) to the extent that the
      failure to do so could not reasonably be expected to result in a Material
      Adverse Effect.

     

    Section
      3.10 ERISA.
      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, could reasonably be expected to result in a Material Adverse
      Effect. The present value of all accumulated benefit obligations under each
      Plan
      (in each case determined based on the assumptions used for purposes of Statement
      of Financial Accounting Standards No. 87) as of the date of the most recent
      financial statements reflecting such amounts, does not exceed the fair market
      value of the assets of such Plan (as of the date of determination of such
      benefit obligation amount) by an amount which, if it constituted a direct
      liability of Parent or Borrower, could reasonably be expected to have a Material
      Adverse Effect.

     

    
      
        
        

      

      
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    Section
      3.11 Disclosure.
      Borrower and Parent have disclosed to the Lenders and the Global Administrative
      Agent all agreements, court orders, judgments, instruments and corporate or
      other restrictions to which Borrower, Parent or any of their Subsidiaries is
      subject, and all other matters known to any of them relating to any of the
      foregoing, which agreements, court orders, judgments, instruments, restrictions
      and other matters individually or in aggregate could reasonably be expected
      to
      result in a Material Adverse Effect. None of the documents, reports, financial
      statements, certificates or other information furnished by or on behalf of
      Borrower, Parent or any of their Subsidiaries to the Global Administrative
      Agent
      or any Lender in connection with the negotiation of this Agreement or any other
      Loan Document or delivered hereunder or thereunder (as modified or supplemented
      by other information so furnished) contains any material misstatement of fact
      or
      omits to state any material fact necessary to make the statements therein,
      in
      the light of the circumstances under which they were made, not misleading;
      provided
      that,
      with respect to projected financial information, Borrower and Parent represent
      only that such information was prepared in good faith based upon assumptions
      believed to be reasonable at the time.

     

    Section
      3.12 Subsidiaries.
      Schedule 3.12
      sets
      forth the name, the identity or corporate structure, the ownership interest,
      the
      chief executive office, principal places of business, and, if applicable, the
      Federal Taxpayer Identification Number, of each direct or indirect Subsidiary
      of
      Parent as of the Global Effective Date. Schedule 3.12
      also
      sets forth the name of each Restricted Subsidiary and Unrestricted Subsidiary
      of
      Parent as of the Global Effective Date. As of the Global Effective Date, Parent
      does not have any Subsidiaries other than the Subsidiaries identified in
Schedule 3.12.

     

    Section
      3.13 Insurance.
      Schedule 3.13
      sets
      forth a description of all insurance maintained by or on behalf of Borrower,
      Parent and the other Loan Parties as of the date of this Agreement. As of the
      date of this Agreement, all premiums in respect of such insurance then due
      have
      been paid.

     

    Section
      3.14 Labor
      Matters.
      As of
      the Global Effective Date, there are no strikes, lockouts or slowdowns against
      Borrower, Parent or any other Loan Party pending or, to the knowledge of
      Borrower or Parent, threatened. The hours worked by and payments made to
      employees of Borrower, Parent and the other Loan Parties have not been in
      material violation of the Fair Labor Standards Act or any other applicable
      Federal, state, provincial, local, territorial or foreign law dealing with
      such
      matters. All payments due from Borrower, Parent or any other Loan Party, or
      for
      which any claim may be made against Borrower, Parent or any other Loan Party,
      on
      account of wages and employee health and welfare insurance and other benefits,
      have been paid or accrued as a liability on the books of Borrower, Parent or
      any
      other Loan Party.

     

    Section
      3.15 Priority;
      Security Matters.
      The
      Combined Obligations are and shall be at all times secured by Liens in all
      Collateral located in the United States or Canada to the extent perfection
      has
      or will occur by the filing of a UCC financing statement in the state of
      incorporation or formation of each applicable Loan Party, filing a mortgage
      in
      real property records of the county in which such real property or fixtures
      is
      located (or adjacent in the case of properties located on the Outer Continental
      Shelf), filing of an instrument to create a floating charge under the laws
      of
      the Province of British Columbia, or by possession, and, except for Liens
      permitted by Section
      7.2,
      all
      such Liens shall be first priority Liens.

     

    
      
        
        

      

      
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    Section
      3.16 Environmental
      Matters.
      Except
      as set forth in Schedule 3.16
      or,
      after the date of this Agreement, otherwise disclosed in writing by Parent
      or
      Borrower to the Global Administrative Agent:

    


    (a) All
      facilities and Property owned or leased by Borrower, Parent or any of the other
      Loan Parties have been, and continue to be, owned or leased by Borrower, Parent
      or the other Loan Parties in compliance with all applicable Environmental Laws
      except where the failure to comply could not reasonably be expected to have
      a
      Material Adverse Effect;

    


    (b) There
      are
      no pending or, to the knowledge of Borrower or Parent, threatened (1) claims,
      complaints, notices or requests for information received by Borrower, Parent
      or
      any other Loan Party with respect to any alleged violation of any applicable
      Environmental Law, or (2) complaints or notices to Borrower, Parent or any
      of
      the other Loan Parties regarding instances which could give rise to an
      Environmental Liability for Borrower, Parent or any of the other Loan Parties,
      which in either case could reasonably be expected to have a Material Adverse
      Effect;

    


    (c) To
      the
      best of Borrower, Parent and the other Loan Parties’ knowledge after reasonable
      inquiry, there have been no Releases of Hazardous Materials at, on or under
      any
      Property now or previously owned or leased by Borrower, Parent or any other
      Loan
      Party which could give rise to an Environmental Liability which could reasonably
      be expected to have a Material Adverse Effect;

    


    (d) Borrower,
      Parent and the other Loan Parties have been issued and are in material
      compliance with all permits, certificates, approvals, licenses and other
      authorizations required by applicable Environmental Laws except where the
      failure to comply could not reasonably be expected to have a Material Adverse
      Effect;

    


    (e) No
      Property now or previously owned or leased by Borrower, Parent or any of other
      Loan Parties is listed or proposed for listing (with respect to owned Property
      only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or
      on
      any analogous state or any Canadian federal or provincial list of sites
      requiring investigation or clean-up which listing could result in the imposition
      of an Environmental Liability on any of Borrower, Parent or any of the other
      Loan Parties which could reasonably be expected to have a Material Adverse
      Effect;

    


    (f) There
      are
      no underground storage tanks, active or abandoned, including petroleum storage
      tanks, on or under any Property now or previously owned or leased by Borrower,
      Parent or any other Loan Party which have been operated in non-compliance with
      applicable Environmental Laws which could give rise to an Environmental
      Liability which could reasonably be expected to have a Material Adverse
      Effect;


    
      
        
        

      

      
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    (g) None
      of
      Borrower, Parent or any other Loan Party has directly transported or directly
      arranged for the transportation of any Hazardous Material to any site which
      is
      listed or proposed for listing on the National Priorities List pursuant to
      CERCLA, on the CERCLIS or on any analogous state, provincial or territorial
      list
      or which is the subject of federal, state, provincial, territorial or local
      enforcement actions or other investigations which could give rise to an
      Environmental Liability which could reasonably be expected to have a Material
      Adverse Effect; 

    


    (h) There
      are
      no polychlorinated biphenyls or friable asbestos present at any Property now
      or
      previously owned or leased by Borrower, Parent or any other Loan Party which
      ownership or use of could result in the imposition of an Environmental Liability
      which could reasonably be expected to have a Material Adverse Effect;
      and

    


    (i) Borrower
      and Parent have adopted and implemented procedures and guidelines as they have
      determined are reasonably appropriate to continuously ensure compliance with
      applicable Environmental Laws and to identify and evaluate events or conditions
      that would result in any material Environmental Liability. 

     

    Section
      3.17 Solvency.
      Immediately after the consummation of the Financing Transactions to occur on
      the
      Global Effective Date, s) no Loan Party will have unreasonably small capital
      with which to conduct the business in which such Loan Party is engaged as such
      business is now conducted and is proposed to be conducted following the Global
      Effective Date; and t) Borrower, Parent and each other Loan Party, on a
      consolidated basis, will be Solvent.

     

    Section
      3.18 Use
      of
      Credit.
      None of
      Borrower, Parent or any of the other Loan Parties is engaged principally, or
      as
      one of its important activities, in the business of extending credit for the
      purpose, whether immediate, incidental or ultimate, of buying or carrying Margin
      Stock, and no part of the proceeds of any extension of credit hereunder will
      be
      used to buy or carry any Margin Stock.

     

    Section
      3.19 Claims
      and Liabilities.
      None of
      Borrower, Parent or any of the other Loan Parties has accrued any liabilities
      under gas purchase contracts for gas not taken, but for which it is liable
      to
      pay if not made up and which, if not paid, could reasonably be expected to
      have
      a Material Adverse Effect. No claims exist against Borrower, Parent or any
      other
      Loan Party for gas imbalances which claims if adversely determined could
      reasonably be expected to have a Material Adverse Effect. No purchaser of
      product supplied by Borrower, Parent or any other Loan Party has any claim
      against Borrower, Parent or any other Loan Party for product paid for, but
      for
      which delivery was not taken as and when paid for, which claim if adversely
      determined could reasonably be expected to have a Material Adverse
      Effect.

    


    ARTICLE
      IV

    CONDITIONS

     

    Section
      4.1 Effectiveness.
      This
      Agreement shall become effective on the date on which each of the following
      conditions is satisfied (or waived in accordance with Section
      10.2):


    
      
        
        

      

      
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    (a) Certain
      Loan Documents.
      The
      Global Administrative Agent (or its counsel) shall have received from each
      party
      thereto either a counterpart of each of the following documents duly executed
      on
      behalf of such party or written evidence satisfactory to the Global
      Administrative Agent (which may include telecopy transmission of a signed
      signature page of such document) that each such party has duly executed for
      delivery to the Global Administrative Agent a counterpart of each of the
      following documents which documents must be acceptable to the Global
      Administrative Agent in its sole and absolute discretion: this Agreement, the
      Canadian Credit Agreement and the Intercreditor Agreement.

    


    (b) Fees
      and Expenses.
      The
      Global Administrative Agent, the Canadian Administrative Agent, the Arranger
      and
      the Lenders shall have received all fees, including the fees agreed upon in
      the
      Fee Letter, and other amounts due and payable pursuant to this Agreement or
      any
      other Loan Document on or prior to the date hereof, including, to the extent
      invoiced, reimbursement or payment of all out-of-pocket expenses (including
      reasonable fees, charges and disbursements of counsel) required to be reimbursed
      or paid by any Loan Party hereunder or under any other Combined Loan
      Document.

     

    Section
      4.2 Initial
      Loan.
      The
      obligations of u) the Lenders to make Loans or v) any Issuing Bank to issue
      Letters of Credit hereunder shall not become effective until the date on which
      each of the following conditions is satisfied (or waived in accordance with
      Section
      10.2):

    


    (i) Certain
      Loan Documents.
      The
      Global Administrative Agent (or its counsel) shall have received from each
      party
      thereto either a counterpart of each of the following documents duly executed
      on
      behalf of such party or written evidence satisfactory to the Global
      Administrative Agent (which may include telecopy transmission of a signed
      signature page of such document) that each such party has duly executed for
      delivery to the Global Administrative Agent a counterpart of each of the
      following documents: a Facility Guaranty from each of the Loan Parties (other
      than Parent, Borrower or any Foreign Subsidiary), the Fee Letter, the Pledge
      Agreement required by Section
      4.2(b)(v),
      the
      Mortgages executed by Borrower, as required by Section
      4.2(b)(vi),
      and all
      related financing statements and other filings.

    


    (ii) Canadian
      Loan Documents.
      The
      Global Administrative Agent shall have received copies of the executed Canadian
      Loan Documents (other than the Canadian Credit Agreement).

     

    (iii) Opinions
      of Counsel.
      The
      Global Administrative Agent shall have received opinions dated the Global
      Effective Date, addressed to the Global Administrative Agent and all Lenders,
      from (a) Hogan & Hartson L.L.P., counsel to Parent and Borrower, and (b)
      local counsel in the State of Wyoming, in each case in form and substance
      acceptable to the Global Administrative Agent and its counsel.

     

    (iv) Organizational
      Documents.
      The
      Global Administrative Agent shall have received a certificate of an Authorized
      Officer of each Loan Party dated as of the Global Effective Date,
      certifying:

     

    
      
        
        

      

      
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    (A) that
      attached to each such certificate is (i) a true and complete copy of the Organic
      Documents of such Loan Party, as the case may be, as in effect on the Global
      Effective Date, (ii) a true and complete copy of a certificate from the
      Governmental Authority of the state of such entity’s organization certifying
      that such entity is duly organized and validly existing in such state, and
      (iii)
      a true and complete copy of a certificate from the appropriate Governmental
      Authority of each state (without duplication) certifying that such entity is
      duly qualified and in good standing (including with respect to the payment
      of
      franchise taxes, if any) to transact business in such state as a foreign
      corporation or other entity, if the failure to be so qualified or in good
      standing could reasonably be expected to have a Material Adverse
      Effect;

     

    (B) that
      attached to such certificate is a true and complete copy of resolutions duly
      adopted by the board of directors or management committee of such Loan Party,
      as
      applicable, authorizing the execution, delivery and performance of such of
      the
      Loan Documents to which such Loan Party is or is intended to be a party;
      and

    


    (C) as
      to the
      incumbency and specimen signature of each officer of such Loan Party executing
      such of the Loan Documents to which such Loan Party is or is intended to be
      a
      party.

     

    (v) Pledge
      Agreement.
      The
      Global Administrative Agent shall have received counterparts of a Pledge
      Agreement, dated as of the Global Effective Date, duly executed and delivered
      by
      Parent and Borrower, together with the following: 

    


    (A) stock
      certificates representing all the outstanding Equity Interests of Borrower
      and
      each other Loan Party owned by or on behalf of Parent and/or Borrower as of
      the
      Global Effective Date after giving effect to the Financing Transactions (except
      that Equity Interests of a Loan Party that is a Foreign Subsidiary shall be
      limited to 65% of the total combined voting power of all classes of voting
      Equity Interests of such Foreign Subsidiary), and stock powers and instruments
      of transfer, endorsed in blank, with respect to such stock certificates, or,
      if
      any securities pledged pursuant to the Pledge Agreement are uncertificated
      securities, confirmation and evidence satisfactory to the Global Administrative
      Agent that the security interest in such uncertificated securities has been
      transferred to and perfected by the Global Administrative Agent in accordance
      with the Uniform Commercial Code, as in effect in the State of New York;
      and

    


    (B) all
      documents and instruments, including Uniform Commercial Code Financing
      Statements (Form UCC-1), required by law or reasonably requested by the Global
      Administrative Agent to be filed, registered or recorded to create or perfect
      the Liens intended to be created under the Pledge Agreement.

     

    
      
        
        

      

      
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    (vi) Mortgages.
      The
      Global Administrative Agent shall have received (c) counterparts of
      duly-executed Mortgages from Borrower encumbering various Oil and Gas Properties
      which constitute at least 80% of the Present Value of the Oil and Gas Properties
      of Borrower evaluated for purposes of establishing the initial amount of the
      Global Borrowing Base, and (d) executed (as applicable) copies of proper
      Uniform Commercial Code Form UCC-3 termination statements necessary to release
      all Liens and other rights of any Person previously granted by any Person in
      any
      Collateral described in the Mortgages (except Liens permitted pursuant to
Section
      7.2),
      together with such other Uniform Commercial Code Form UCC-3 termination
      statements as the Global Administrative Agent may reasonably
      request.

    


    (vii) UCC
      Searches.
      The
      Global Administrative Agent shall have received (e) the UCC Searches, all dated
      reasonably close to the Global Effective Date, in the discretion of the Global
      Administrative Agent and in form and substance satisfactory to the Global
      Administrative Agent, and (f) evidence reasonably satisfactory to the Global
      Administrative Agent that the Liens indicated by the financing statements (or
      similar documents) in such UCC Searches are permitted by Section
      7.2
      or have
      been released.

    


    (viii) Priority;
      Security Interest.
      The
      Collateral and Borrowing Base Properties shall be free and clear of all Liens,
      except Liens permitted by Section
      7.2.
      All
      filings, notices, recordings and other action necessary to perfect the Liens
      in
      the Collateral shall have been made, given or accomplished or arrangements
      for
      the completion thereof satisfactory to the Global Administrative Agent and
      its
      counsel shall have been made and all filing fees and other expenses related
      to
      such actions either have been paid in full or arrangements have been made for
      their payment in full which are satisfactory to the Global Administrative
      Agent.

    


    (ix) Due
      Diligence Review.
      The
      Global Administrative Agent or its counsel shall have completed (2) a
      satisfactory review of title to not less than 80% of the Present Value of the
      Oil and Gas Properties evaluated for purposes of establishing the initial amount
      of the Global Borrowing Base, and such review shall not have revealed any
      condition or circumstance which would reflect that the representations and
      warranties contained in Section
      3.5
      hereof
      are inaccurate in any respect, and (3) an environmental review of the
      Borrowing Base Properties and such review shall not have revealed any condition
      or circumstance which would reflect that the representations and warranties
      contained in Section
      3.16
      hereof
      are inaccurate in any respect.

    


    (x) Approvals
      and Consents.
      The
      Global Administrative Agent shall have received copies of all Governmental
      Approvals and third party consents and approvals necessary or advisable in
      connection with the Financing Transactions.


    
      
        
        

      

      
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    (xi) Insurance.
      The
      Global Administrative Agent and the Lenders shall have received certificates,
      dated within ten (10) days of the Global Effective Date, from Borrower’s and
      Parent’s insurers certifying (a) compliance with all of the insurance
      required by Section
      5.7
      and by
      the Security Documents and (b) that such insurance is in full force and
      effect.

    


    (xii) Initial
      Reserve Report.
      The
      Global Administrative Agent and the Lenders shall have received and shall be
      satisfied with the contents, results and scope of the Initial Reserve
      Report.

    


    (xiii) Hedging
      Agreements.
      The
      Global Administrative Agent shall have received a list of any Hedging Agreements
      currently in existence with respect to Borrower, Parent or any of the other
      Loan
      Parties.

    


    (xiv) Financial
      Statements.
      The
      Global Administrative Agent shall have received the financial statements
      described in Section
      3.4
      hereof.

    


    (xv) Global
      Effectiveness Notice.
      The
      Global Administrative Agent shall have received the Global Effectiveness
      Notice.

    


    (xvi) Other
      Documents.
      The
      Global Administrative Agent shall have received such other legal opinions,
      information, approvals, instruments and documents as the Global Administrative
      Agent or its counsel may have reasonably requested.

    


    (xvii) Satisfactory
      Legal Form.
      All
      documents executed or submitted pursuant hereto by and on behalf of Borrower,
      Parent or any other Loan Party shall be in form and substance reasonably
      satisfactory to the Global Administrative Agent and its counsel. 

    


    The
      Global Administrative Agent shall notify Borrower, Parent and the Lenders of
      the
      Global Effective Date, and such notice shall be conclusive and binding.
      Notwithstanding the foregoing, the obligations of (c) the Lenders to make Loans
      and (d) any Issuing Bank to issue Letters of Credit hereunder shall not become
      effective unless each of the foregoing conditions is satisfied (or waived
      pursuant to Section
      10.2)
      at or
      prior to 2:00 p.m., Dallas, Texas time, on July 28, 2006 (and, in the event
      such conditions are not so satisfied or waived, the Commitments shall terminate
      at such time).

     

    Section
      4.3 Each
      Credit Event.
      The
      obligation of each Lender to make a Loan on the occasion of any Borrowing,
      and
      of the Issuing Banks to issue, amend, renew or extend any Letter of Credit,
      is
      subject to receipt of the request therefor in accordance herewith and to the
      satisfaction of the following conditions:

     

    (a) Representations
      and Warranties.
      At the
      time of and immediately after giving effect to such Borrowing or the issuance,
      amendment, renewal or extension of such Letter of Credit, as applicable, the
      representations and warranties of each Loan Party set forth in the Loan
      Documents to which it is a party shall be true and correct on and as of such
      date after giving effect to such funding and to the intended use thereof as
      if
      made on and as of such date (or, if stated to have been made expressly as of
      an
      earlier date, were true and correct as of such date).


    
      
        
        

      

      
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    (b) No
      Defaults.
      At the
      time of and immediately after giving effect to such Borrowing or the issuance,
      amendment, renewal or extension of such Letter of Credit, as applicable, no
      Default shall have occurred and be continuing and Parent shall be in compliance
      with the financial covenants set forth in Article
      VI.

     

    (c) No
      Material Adverse Effect.
      At the
      time of and immediately after giving effect to such Borrowing or the issuance,
      amendment, renewal or extension of such Letter of Credit, no event or events
      shall have occurred which individually or in the aggregate could reasonably
      be
      expected to have a Material Adverse Effect.

    


    (d) Borrowing
      Request.
      The
      Global Administrative Agent shall have received a Borrowing Request for any
      Borrowing. Each Borrowing and each issuance, amendment, renewal or extension
      of
      a Letter of Credit shall be deemed to constitute a representation and warranty
      by Borrower and Parent on the date thereof as to the matters specified in
paragraphs (a),
      (b)
      and
(c)
      of this
      Section.

    


    ARTICLE
      V

    AFFIRMATIVE
      COVENANTS

    


    Borrower
      and Parent jointly and severally agree with the Global Administrative Agent,
      any
      Issuing Bank and each Lender that, until the Commitments have expired or been
      terminated and Obligations shall have been paid and performed in full and all
      Letters of Credit shall have expired or terminated and all LC Disbursements
      shall have been reimbursed, Borrower and Parent will perform (or cause the
      performance of) the obligations set forth in this Article.

     

    Section
      5.1 Financial
      Reporting; Notices and Other Information.
      Borrower and Parent will furnish, or will cause to be furnished, to each Lender,
      each Canadian Lender, the Global Administrative Agent and the Canadian
      Administrative Agent the following financial statements, reports, notices and
      information:

     

    (a) As
      soon
      as available, but in any event within 90 days after the end of each fiscal
      year
      of Parent (or not later than one (1) Business Day after such earlier filing
      date as may be required by the Commission), commencing with the fiscal year
      ending December 31, 2006, a copy of Parent’s audited annual report for the
      applicable fiscal year, including therein a consolidated balance sheet and
      related statements of operations, stockholders’ equity and cash flows as of the
      end of and for such fiscal year, setting forth in each case in comparative
      form
      the figures for the previous fiscal year, all reported on by an independent
      public accountant 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 Parent and its consolidated Subsidiaries on a
      consolidated basis in accordance with GAAP consistently applied;

     

    (b) As
      soon
      as available, but in any event within 45 days after the end of each fiscal
      quarter of Parent (or not later than one (1) Business Day after such earlier
      filing date as may be required by the Commission) commencing with the fiscal
      quarter ending June 30, 2006, Parent’s consolidated balance sheet and
      related statements of operations, stockholders’ equity and cash flows as of the
      end of and for the applicable fiscal quarter and the then-elapsed portion of
      the
      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 an Authorized Officer
      of
      Parent as presenting fairly in all material respects the financial condition
      and
      results of operations of Parent and its consolidated Subsidiaries on a
      consolidated basis in accordance with GAAP consistently applied, subject to
      normal year-end audit adjustments;


    
      
        
        

      

      
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    (c) Concurrently
      with any delivery of financial statements under clause (a) or (b) above, a
      compliance certificate, in substantially the form of Exhibit
      A
      or any
      other form approved by the Global Administrative Agent, executed by an
      Authorized Officer of Parent (4) 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, (5) setting forth reasonably
      detailed calculations demonstrating compliance with Article
      VI,
      and (6)
      stating whether any change in GAAP or in the application thereof has occurred
      since the date of the audited financial statements referred to in Section
      3.4
      and, if
      any such change has occurred, specifying the effect of such change on the
      financial statements accompanying such certificate;

    


    (d) Promptly
      after the sending or filing thereof, copies of all material public filings,
      reports and communications from Parent or any of its Subsidiaries, and all
      reports, proxy statements and registration statements which Parent or any of
      its
      Subsidiaries files with the Commission or any national securities
      exchange;

     

    (e) By
      March
      1st of each year, a Reserve Report prepared by an Approved Engineer (the
“Independent
      Reserve Report”),
      and
      by September 1st of each year, a Reserve Report prepared by Borrower, utilizing
      the customary discount rates and price deck of the Global Administrative Agent
      and in form and substance acceptable to the Global Administrative Agent (the
      “Internal
      Reserve Report”); 

    


    (f) Within
      45
      days after the end of each calendar quarter, a certificate specifying any
      material sales, transfer, assignments or other dispositions of Property of
      Borrower, Parent or any other Loan Party governed by subsections (d),
      (e)
      or
(f)
      of
Section
      7.5
      occurring during such calendar quarter, executed on behalf of Parent by an
      Authorized Officer; and

    


    (g) Promptly
      following any request therefor, such other information regarding the operations,
      business affairs and financial condition of Borrower, Parent or any other Loan
      Party, including, without limitation, any requested Internal Reserve Report,
      or
      compliance with the terms of this Agreement, as the Global Administrative Agent
      or any Lender may reasonably request.


    
      
        
        

      

      
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    Section
      5.2 Notice
      of Material Events.

    


    (a) Promptly,
      and in any event within three (3) Business Days of Parent, Borrower or any
      other
      Loan Party becoming aware of the following events, Parent or Borrower will
      furnish to the Global Administrative Agent and each Lender written notice of
      the
      following:

    


    (i) the
      occurrence of any Default; and

    


    (ii) any
      sales, transfer, assignments or other dispositions of Property of Borrower,
      Parent or any other Loan Party governed by subsections (d), (e) or (f) of
Section
      7.5;

    


    (b) Promptly,
      and in any event within five (5) days of Borrower, Parent or any other Loan
      Party becoming aware of the following events, Borrower or Parent will furnish
      to
      the Global Administrative Agent and each Lender written notice of the
      following:

    


    (i) (a)
      the
      filing or commencement of any action, suit or proceeding by or before any
      arbitrator or Governmental Authority against or affecting Borrower, Parent
      or
      any other Loan Party or (b) the occurrence of any adverse development with
      respect to any action, suit or proceeding previously disclosed to the Global
      Administrative Agent or the Lenders pursuant to this Agreement, in each case
      if
      such action, suit, proceeding or development could reasonably be expected to
      result in a Material Adverse Effect;

    


    (ii) the
      occurrence of any ERISA Event that, alone or together with any other ERISA
      Events that have occurred, could reasonably be expected to result in liability
      of Borrower, Parent and the other Loan Parties in an aggregate amount which
      could reasonably be expected to have a Material Adverse Effect;

    


    (iii) any
      and
      all enforcement, cleanup, removal or other governmental or regulatory actions
      instituted, completed or threatened or other environmental claims against
      Borrower, Parent, any other Loan Party, or any of their Properties pursuant
      to
      any applicable Environmental Laws which, if adversely determined, could
      reasonably be expected to have a Material Adverse Effect;

    


    (iv) any
      default under one or more Hedging Agreements which results in an obligation
      of
      Borrower, Parent or any other Loan Party to make one or more payments in an
      aggregate amount in excess of U.S.$250,000; and

    


    (v) any
      other
      development that results in, or could reasonably be expected to result in,
      a
      Material Adverse Effect; and

    


    (c) Each
      notice delivered under this Section shall be accompanied by a statement of
      an
      Authorized Officer of Parent or Borrower setting forth the details of the event
      or development requiring such notice and any action taken or proposed to be
      taken with respect thereto.


    
      
        
        

      

      
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    Section
      5.3 Information
      Regarding Collateral.
      Parent
      or Borrower will furnish to the Global Administrative Agent promptly, and in
      any
      event within ten (10) days upon becoming aware of the following changes, written
      notice of any change w) in Borrower’s, Parent’s or any other Loan Party’s
      corporate or organizational name or in any trade name used to identify Borrower,
      Parent or such other Loan Party in the conduct of its business or in the
      ownership of any of its Properties, x) in the location of Borrower’s, Parent’s
      or any other Loan Party’s chief executive office or its principal place of
      business, y) in Borrower’s, Parent’s or any other Loan Party’s state of
      incorporation or formation, z) in Borrower’s, Parent’s or any other Loan Party’s
      identity or corporate or organizational structure, aa) in Borrower’s, Parent’s
      or any other Loan Party’s organizational identification number or any other such
      similar number identifying Borrower, Parent or such Loan Party, and bb) in
      the
      location of any Collateral located in Canada to any jurisdiction in which any
      registration of, or in respect of, the Debenture (as defined in the Canadian
      Credit Agreement) may not be effective to protect the Lien created thereunder,
      including, without limitation, information regarding the time of such
      relocation, the items being relocated and the intended new locality of such
      items.

     

    Section
      5.4 Existence;
      Conduct of Business.
      Borrower and Parent will, and will cause each other Loan Party to, do or cause
      to be done all things necessary to preserve, renew and keep in full force and
      effect cc) its legal existence and dd) the rights, licenses, permits,
      privileges, franchises, patents, copyrights, trademarks and trade names material
      to the conduct of its business, except where the failure to so preserve, renew
      or keep in full force and effect such rights, licenses, permits, privileges,
      franchises, patents, copyrights, trademarks or trade names could not reasonably
      be expected to result in a Material Adverse Effect.

     

    Section
      5.5 Payment
      of Obligations.
      Borrower and Parent will, and will cause each other Loan Party to, pay its
      obligations, including liabilities for Taxes, before the same shall become
      delinquent or in default, except where ee) the validity or amount thereof is
      being contested in good faith by appropriate proceedings, ff) Borrower, Parent
      or such other Loan Party has set aside on its books adequate reserves with
      respect thereto in accordance with GAAP, gg) such contest effectively suspends
      collection of the contested obligation and the enforcement of any Lien securing
      such obligation, and hh) the failure to make payment pending such contest could
      not reasonably be expected to result in a Material Adverse Effect.

     

    Section
      5.6 Maintenance
      of Properties.
      Borrower and Parent will, and will cause each of the other Loan Parties to,
      keep, preserve, protect and maintain all Properties material to the conduct
      of
      its business in good repair, working order and condition, and make necessary
      and
      proper repairs, renewals and replacements so that their business, and the
      respective businesses of the other Loan Parties, carried on in connection
      therewith may be properly conducted at all times in accordance with standard
      industry practices unless (1) Borrower, Parent or the respective other Loan
      Party determines in good faith that the continued maintenance of any of its
      Properties is no longer economically desirable or (2) the failure to so keep,
      preserve, protect and maintain such Properties or the failure to make such
      repairs, renewals or replacements could not reasonably be expected to result
      in
      a Material Adverse Effect. In particular, Borrower and Parent will, and will
      cause each of the other Loan Parties to, operate or cause to be operated its
      Oil
      and Gas Properties as a reasonable and prudent operator.


    
      
        
        

      

      
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    Section
      5.7 Insurance.
      Borrower and Parent will, and will cause each of the other Loan Parties to,
      maintain, with financially sound and reputable insurance companies insurance
      in
      such amounts and against such risks as are customarily maintained by companies
      of established repute engaged in the same or similar businesses operating in
      the
      same or similar locations. The Global Administrative Agent, on behalf of the
      Lenders, will be named as sole loss payee and additional insured, as
      appropriate, with respect to such insurance. Borrower and Parent will furnish
      to
      the Lenders, upon request of the Global Administrative Agent, information in
      reasonable detail as to the insurance so maintained.

     

    Section
      5.8 Casualty
      and Condemnation.
      Borrower and Parent ii) will furnish to the Global Administrative Agent and
      the
      Lenders written notice promptly, and in any event within three (3) Business
      Days
      of the occurrence, of any Casualty Event to any Collateral or the commencement
      of any action or proceeding for the taking of any material portion of the
      Collateral or any part thereof or interest therein under power of eminent domain
      or by condemnation or similar proceeding and jj) will ensure that the Net
      Proceeds of any such event (whether in the form of insurance proceeds,
      condemnation awards or otherwise) are collected and applied in accordance with
      the applicable provisions of the Combined Loan Documents.

     

    Section
      5.9 Books
      and Records; Inspection Rights.
      Borrower and Parent will, and will cause each of their Subsidiaries to, keep
      proper books of record and account in which full, true and correct entries
      are
      made of all dealings and transactions in relation to its business and
      activities. Borrower and Parent will, and will cause each of the other Loan
      Parties to, permit any representatives or agents designated by the Global
      Administrative Agent or any Lender (including any consultants, accountants,
      lawyers and appraisers), upon reasonable prior notice and at the reasonable
      cost
      and expense of Borrower and Parent, to visit and inspect its Properties,
      including, without limitation, the Oil and Gas Properties, to examine and make
      extracts from its books and records, and to discuss its affairs, finances and
      condition with its officers and independent accountants, all at reasonable
      times
      and without disruption to the conduct of Borrower’s business; provided,
      however,
      so long
      as no Default shall have occurred and be continuing, the Global Administrative
      Agent and Lenders agree to limit such visits to one (1) during each fiscal
      year of Borrower and Parent for which Borrower or Parent shall pay the
      reasonable cost and expense of the Global Administrative Agent or
      Lender.

     

    Section
      5.10 Compliance
      with Laws.
      Borrower and Parent will, and will cause each of their Subsidiaries to, comply
      with all Governmental Rules applicable to it or its property, except where
      the
      failure to do so, individually or in the aggregate, could not reasonably be
      expected to result in a Material Adverse Effect.

     

    Section
      5.11 Use
      of
      Proceeds and Letters of Credit.
      Borrower and Parent will, and will cause each of their Subsidiaries to, use
      the
      proceeds of the Loans kk) to reimburse each Issuing Bank for LC Disbursements
      in
      accordance with Section
      2.4(e),
      or ll)
      for Borrower’s and the other Loan Parties’ general corporate purposes, including
      any acquisitions. No part of the proceeds of any Loan will be used, whether
      directly or indirectly, for any purpose that entails a violation of any of
      the
      regulations of the Board, including Regulation U. Letters of Credit will be
      issued only to support normal and customary oil and gas operations including,
      but not limited to, credit support for insurance or similar items required
      in
      support of Borrower’s operations, undertaken by Borrower or any of the other
      Loan Parties in the ordinary course of its business.


    
      
        
        

      

      
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    Section
      5.12 Additional
      Subsidiaries.
      If any
      additional Subsidiary of Parent is formed or acquired after the Global Effective
      Date, Borrower and Parent will notify the Global Administrative Agent and the
      Lenders thereof and whether such Subsidiary is an Unrestricted Subsidiary or
      a
      Restricted Subsidiary, and if a Restricted Subsidiary, then Borrower and Parent
      will cause such Restricted Subsidiary (unless such Restricted Subsidiary is
      a
      Foreign Subsidiary) to mm) execute a Facility Guaranty within fifteen (15)
      Business Days after such Subsidiary is formed or acquired, i) execute a Mortgage
      (to the extent necessary to comply with Section
      5.15)
      and
      promptly take such actions to create and perfect Liens on such Restricted
      Subsidiary’s assets to secure the Obligations as the Global Administrative Agent
      shall reasonably request, ii) pledge or cause to be pledged all Equity Interests
      in such Restricted Subsidiary pursuant to a Pledge Agreement within
      fifteen (15) Business Days after such Restricted Subsidiary is formed or
      acquired (except that, if such Restricted Subsidiary is a Foreign Subsidiary,
      Equity Interests of such Restricted Subsidiary to be pledged pursuant to such
      Pledge Agreement may be limited to 65% of the total combined voting power of
      all
      classes of voting Equity Interests of such Restricted Subsidiary) and iii)
      cause
      any and all such Persons (except Parent and Borrower) pledging such Equity
      Interests pursuant to a Pledge Agreement to execute a Facility Guaranty but
      only
      if such Person has not heretofore executed a Facility Guaranty. 

     

    Section
      5.13 Unrestricted
      Subsidiaries.
      Borrower and Parent:

    


    (a) will
      cause the management, business and affairs of each of Borrower, Parent and
      the
      other Loan Parties 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 any Property of Borrower, Parent and their
      respective Subsidiaries to be commingled) so that each Unrestricted Subsidiary
      that is a corporation will be treated as a corporate entity separate and
      distinct from Borrower, Parent and the other Loan Parties;

    


    (b) will
      not,
      and will not permit any of the other Loan Parties to, incur, assume, Guarantee
      or be or become liable for any Indebtedness of any of the Unrestricted
      Subsidiaries; and

    


    (c) will
      not
      permit any Unrestricted Subsidiary to hold any Equity Interest in, or any
      Indebtedness of, any Loan Party.

     

    Section
      5.14 Environmental
      Matters.

    


    (a) Borrower
      and Parent will, and will cause each of the other Loan Parties to, comply in
      all
      material respects with all Environmental Laws now or hereafter applicable to
      Borrower, Parent or the other Loan Parties, and shall obtain, at or prior to
      the
      time required by applicable Environmental Laws, all environmental, health and
      safety permits, licenses and other authorizations necessary for its operations
      and maintain such authorizations in full force and effect, except to the extent
      failure to have any such permit, license or authorization could not reasonably
      be expected to have a Material Adverse Effect.

    


    (b) Borrower
      and Parent will, and will cause each of the other Loan Parties to, promptly
      furnish to the Global Administrative Agent all requests for information, notices
      of claim, demand letters, and other notifications, received by Borrower, Parent
      or any other Loan Parties, to the effect that, in connection with its ownership
      or use of their Properties or the conduct of their business, it may be
      potentially responsible with respect to any investigation or clean-up of
      Hazardous Material at any location, except to the extent any such investigation
      or clean-up could not reasonably be expected to have a Material Adverse
      Effect.


    
      
        
        

      

      
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    Section
      5.15 Further
      Assurances; Title Data.

     

    (a) Borrower
      and Parent will, and will cause each other Loan Party to, execute any and all
      further documents, financing statements, agreements and instruments, and take
      all such further actions (including the filing and recording of financing
      statements, fixture filings, mortgages, deeds of trust and other documents),
      which may be required under any applicable law, or which the Global
      Administrative Agent or the Required Lenders may reasonably request, to effect
      the transactions contemplated by the Loan Documents or to grant, preserve,
      protect or perfect the Liens created or intended to be created by the Security
      Documents or the validity or priority of any such Lien, all at the expense
      of
      the Loan Parties. Borrower and Parent also agree to provide to the Global
      Administrative Agent, from time to time upon reasonable request of the Global
      Administrative Agent, information which is in the possession of Borrower, Parent
      or the other Loan Parties or otherwise reasonably obtainable by any of them,
      reasonably satisfactory to the Global Administrative Agent as to the perfection
      and priority of the Liens created or intended to be created by the Security
      Documents. The Security Documents shall remain in effect at all times unless
      otherwise released pursuant to the terms of this Agreement.

    


    (b) Borrower
      and Parent hereby authorize the Global Administrative Agent and the Lenders
      to
      file one or more financing or continuation statements, and amendments thereto,
      relative to all or any part of the Collateral without the signature of Borrower,
      Parent or any other Loan Party where permitted by law. A carbon, photographic
      or
      other reproduction of the Security Documents or any financing statement covering
      the Collateral or any part thereof shall be sufficient as a financing statement
      where permitted by law. The Global Administrative Agent will promptly send
      Borrower any financing or continuation statements it files without the signature
      of Borrower, Parent or any other Loan Party and the Global Administrative Agent
      will promptly send Borrower the filing or recordation information with respect
      thereto.

     

    (c) If
      at any
      time the aggregate Present Value of the Oil and Gas Properties for which the
      Global Administrative Agent shall have received currently effective, duly
      executed Mortgages encumbering such Oil and Gas Properties constitutes
      (1) less than 80% of the aggregate Present Value of all Oil and Gas
      Properties of Borrower, Parent and its Restricted Subsidiaries evaluated for
      purposes of the then effective Global Borrowing Base, (2) less than 80% of
      the
      aggregate Present Value of all Oil and Gas Properties of Borrower, Parent and
      its Restricted Subsidiaries located in the United States and evaluated for
      purposes of the U.S. Borrowing Base then in effect, or (3) less than 80% of
      the
      aggregate Present Value of all Oil and Gas Properties of Borrower, Parent and
      its Restricted Subsidiaries located in Canada and evaluated for purposes of
      the
      Allocated Canadian Borrowing Base then in effect, then Borrower and Parent
      will,
      and/or will cause the Restricted Subsidiaries to, execute and deliver to the
      Global Administrative Agent, Mortgages covering additional Oil and Gas
      Properties of Borrower, Parent and/or its Restricted Subsidiaries not then
      encumbered by Mortgages for the benefit of the Global Administrative Agent,
      such
      that the Global Administrative Agent shall have received currently effective
      duly-executed Mortgages (x) encumbering Oil and Gas Properties of Borrower,
      Parent and its Restricted Subsidiaries constituting 80% or more of the aggregate
      Present Value of all Oil and Gas Properties of Borrower, Parent and its
      Restricted Subsidiaries evaluated for purposes of the then effective Global
      Borrowing Base, (y) encumbering Oil and Gas Properties of Borrower, Parent
      and its Restricted Subsidiaries located in the United States with a Present
      Value constituting not less than 80% of the aggregate Present Value of all
      Oil
      and Gas Properties of Borrower, Parent and its Restricted Subsidiaries located
      in the United States and evaluated for purposes of the U.S. Borrowing Base, and
      (z) at any time Allocated Canadian Borrowing Base is in effect, encumbering
      Oil
      and Gas Properties of Borrower, Parent and its Restricted Subsidiaries located
      in Canada with a Present Value constituting not less than 80% of the aggregate
      Present Value of all Oil and Gas Properties of Borrower, Parent and its
      Restricted Subsidiaries located in Canada and evaluated for purposes of the
      Allocated Canadian Borrowing Base.


    
      
        
        

      

      
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    (d) On
      or
      before the delivery to the Global Administrative Agent and Combined Lenders
      of
      each Reserve Report required by Section
      2.7
      or
Section
      5.1(e)
      hereof,
      and at such other times as the Required Lenders may request, Borrower will
      deliver title information in form and substance reasonably acceptable to the
      Global Administrative Agent and its counsel covering enough of the proved Oil
      and Gas Properties evaluated by such Reserve Report that were not included
      in
      the immediately preceding Reserve Report, so that the Global Administrative
      Agent and its counsel shall have received, together with title information
      previously received, satisfactory title information on at least 80% of the
      total
      value of the proved Oil and Gas Properties evaluated by such Reserve Report.
      Borrower and Parent will, and will cause each other Loan Party to, in all
      material respects maintain good and defensible title (except for Permitted
      Encumbrances) to (4) the Mortgaged Properties, and (5) its and their
      other material Oil and Gas Properties, and to do all things reasonably necessary
      to cure any material title defects which are not Permitted Encumbrances of
      which
      an Authorized Officer of Borrower, Parent or any other Loan Party has knowledge
      or has been provided written notice. 

    


    (e) At
      any
      time Borrower or any of the other Loan Parties is required to execute and
      deliver Mortgages to the Global Administrative Agent pursuant to this
Section
      5.15,
      Borrower shall also deliver to the Global Administrative Agent such customary
      opinions of counsel (including, if so requested, title opinions, and in each
      case addressed to the Global Administrative Agent) and other evidence of title
      as the Global Administrative Agent shall deem reasonably necessary or
      appropriate to verify (6) Borrower’s or such other Loan Party’s title to
      not less than 80% of the total value of the proved Oil and Gas Properties which
      are subject to such Mortgages, and (7) the validity, perfection of the
      Liens and priority (subject only to Permitted Encumbrances) of the Liens created
      by such Mortgages and such other matters regarding such Mortgages and the Loan
      Documents as the Global Administrative Agent shall reasonably
      request.

    


    ARTICLE
      VI

    FINANCIAL
      COVENANTS

    


    Borrower
      and Parent jointly and severally agree with the Global Administrative Agent,
      any
      Issuing Bank, and each Lender that, until the Commitments have expired or been
      terminated and Obligations shall have been paid and performed in full and all
      Letters of Credit shall have expired or terminated and all LC Disbursements
      shall have been reimbursed, Parent will perform the obligations set forth in
      this Article.


    
      
        
        

      

      
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    Section
      6.1 Ratio
      of Total Funded Debt to EBITDA.
      As of
      the end of any fiscal quarter, commencing with the fiscal quarter ending
      December 31, 2006, Parent will not permit its ratio of Total Funded Debt
      outstanding to Annualized EBITDA to be greater than iv) for the fiscal
      quarters ending December 31, 2006 and March 31, 2007, 3.50 to 1.00, and
      v) for the fiscal quarter ending June 30, 2007 and for each fiscal
      quarter thereafter, 3.00 to 1.00.

     

    Section
      6.2 Ratio
      of Current Assets to Current Liabilities.
      As of
      the end of any fiscal quarter, commencing with the fiscal quarter ending
      December 31, 2006, Parent will not permit its ratio of Current Assets to
      Current Liabilities to be less than 1.00 to 1.00.

    


    ARTICLE
      VII

    NEGATIVE
      COVENANTS

    


    Borrower
      and Parent jointly and severally agree with the Global Administrative Agent,
      any
      Issuing Bank, and each Lender that, until the Commitments have expired or been
      terminated and the Obligations shall have been paid and performed in full and
      all Letters of Credit shall have expired or terminated and all LC Disbursements
      shall have been reimbursed, Borrower and Parent will perform the obligations
      set
      forth in this Article.

     

    Section
      7.1 Indebtedness;
      Certain Equity Securities.

     

    (a) Borrower
      and Parent will not, and will not permit any other Loan Party to, create, incur,
      assume or permit to exist any Indebtedness, except:

    


    (i) Indebtedness
      created under the Combined Loan Documents;

     

    (ii) Indebtedness
      of (i) Borrower to any Restricted Subsidiary, (ii) any Restricted Subsidiary
      to
      Borrower and (iii) any Restricted Subsidiary to another Restricted Subsidiary
      that is subordinated to the Combined Obligations in form and substance
      reasonably satisfactory to the Global Administrative Agent;

     

    (iii) Guarantees
      by Borrower and Parent of Indebtedness of any other Loan Party and by any other
      Loan Party of Indebtedness of Borrower and Parent, in each case existing as
      of
      the date hereof and set forth in Schedule 7.1(a)(iii);

     

    (iv) Indebtedness
      of any Person that becomes a Restricted Subsidiary after the Global Effective
      Date; provided
      that (a)
      such Indebtedness exists at the time such Person becomes a Restricted Subsidiary
      and is not created in contemplation of or in connection with such Person
      becoming a Restricted Subsidiary and (b) the aggregate principal amount of
      Indebtedness permitted by this clause (iv) and clause (vii) shall not
      exceed U.S.$1,000,000 at any time outstanding;


    
      
        
        

      

      
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    (v) Indebtedness
      of Borrower and the Restricted Subsidiaries secured by Liens permitted by
Section
      7.2(e)
      up to
      but not exceeding U.S.$500,000 at any one time outstanding;

    


    (vi) Capital
      Lease Obligations of Borrower and the Restricted Subsidiaries secured by Liens
      permitted by Section
      7.2(h)
      hereof
      up to but not exceeding U.S.$500,000 at any one time outstanding;

     

    (vii) contingent
      obligations arising with respect to customary indemnification obligations in
      favor of purchasers in connection with dispositions permitted under Section
      7.5;

    


    (viii) Indebtedness
      in respect of netting services, overdraft protection and otherwise in connection
      with deposit accounts;

    


    (ix) Indebtedness
      incurred in the ordinary course of business in connection with performance,
      surety, appeal or other similar obligations (exclusive of obligations for the
      payment of borrowed money);

    


    (x) other
      Indebtedness of Borrower and the Restricted Subsidiaries in an aggregate
      principal amount not exceeding U.S.$500,000 at any time outstanding;
      and

    


    (xi) any
      extension, renewal or refinancing (but not increase) of any of the foregoing
      on
      terms and conditions (taken as a whole) that are no less favorable to Borrower,
      Parent and the Restricted Subsidiaries than the Indebtedness being extended,
      renewed or refinanced.

    


    (b) Borrower
      and Parent will not, and will not permit any other Loan Party to, issue any
      Preferred Equity Interest.

     

    (c) Borrower
      and Parent will not permit any of the Unrestricted Subsidiaries to create,
      incur
      or suffer to exist any Indebtedness except
      Non-Recourse Debt in an aggregate principal amount not to exceed U.S.500,000
      at
      any time outstanding.

    


    (d) Notwithstanding
      anything contained in this Agreement to the contrary, Borrower and Parent may,
      or may permit any other Loan Party to create, incur, assume or permit to exist
      debt, which debt and any Liens created by such debt is at all times subordinate
      to the Indebtedness and Liens created by the Combined Credit Agreements, in
      such
      amounts and on such terms approved by the Global Administrative Agent and the
      Required Lenders in their sole and absolute discretion.

     

    Section
      7.2 Liens.
      Borrower and Parent will not, and will not permit any other Loan Party to,
      create, incur, assume or permit to exist any Lien on any Property or asset
      now
      owned or hereafter acquired by it, or assign or sell any income or revenues
      (including accounts receivable) or rights in respect of any thereof,
      except:

    


    (a) Liens
      created under the Combined Loan Documents;


    
      
        
        

      

      
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    (b) Permitted
      Encumbrances;

    


    (c) any
      Lien
      on any Property or asset of Borrower or any Restricted Subsidiary existing
      on
      the Global Effective Date and set forth in Schedule 7.2;
      provided
      that (2)
      such Lien shall not apply to any other Property or asset of Borrower or any
      other Loan Party and (3) such Lien shall secure only those obligations which it
      secures on the Global Effective Date;

    


    (d) any
      Lien
      existing on any Property or asset prior to the acquisition thereof by Borrower
      or any Restricted Subsidiary or existing on any Property or asset of any Person
      that becomes a Restricted Subsidiary after the Global Effective Date prior
      to
      the time such Person becomes a Restricted Subsidiary; provided
      that (4)
      such Lien is not created in contemplation of or in connection with such
      acquisition or such Person becoming a Restricted Subsidiary, as the case may
      be,
      (5) such Lien shall not apply to any other Property or assets of Borrower or
      any
      other Loan Party, and (6) 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 the case may be;

     

    (e) any
      Liens
      on assets acquired, constructed or improved by Borrower or any Restricted
      Subsidiary; provided
      that (7)
      such Liens secure Indebtedness permitted by clause (v) of Section
      7.1(a),
      (8)
      such Liens and the Indebtedness secured thereby are incurred prior to or within
      90 days after such acquisition or the completion of such construction or
      improvement, (9) the Indebtedness secured thereby does not exceed 80% of the
      cost of acquiring, constructing or improving such fixed or capital assets,
      and
      (10) such Liens shall not apply to any other Property of Borrower or any of
      the
      other Loan Parties;

    


    (f) any
      Liens
      for farm-in, farm-out, joint operating, area of mutual interest agreements
      or
      similar agreements entered into by Borrower and the other Loan Parties in the
      ordinary course of business and which Borrower or such Loan Party determines
      in
      good faith to be necessary for or advantageous to the economic development
      of
      their Properties;

    


    (g) additional
      Liens upon real and/or personal Property created after the date hereof,
provided
      that the
      aggregate Indebtedness secured thereby and incurred on and after the date hereof
      shall not exceed U.S.$500,000 in the aggregate at any one time
      outstanding;

     

    (h) Liens
      to
      secure Capital Lease Obligations permitted under Section
      7.1(a)(v);
      provided
      that
      such Liens attach only to Property subject of such Capital Lease
      Obligation;
      and

    


    (i) any
      extension, renewal or replacement of the foregoing, provided
      that the
      Liens permitted hereunder shall not be spread to cover any additional
      Indebtedness or Property (other than a substitution of like
      Property).

     

    Section
      7.3 Fundamental
      Changes.

    


    (a) Borrower
      and Parent will not, and will not permit any other Loan Party to, merge into
      or
      consolidate or amalgamate with any other Person, or permit any other Person
      to
      merge into or consolidate or amalgamate with it, or liquidate or dissolve,
      except that, if at the time thereof and immediately after giving effect thereto
      no Default shall have occurred and be continuing (11) any Restricted Subsidiary
      may merge into Borrower in a transaction in which Borrower is the surviving
      entity, (12) any Restricted Subsidiary may merge into any Restricted Subsidiary
      in a transaction in which the surviving entity is a Restricted Subsidiary and
      (if any party to such merger is a Loan Party) is a Loan Party, and (13) Borrower
      or any Restricted Subsidiary may merge or consolidate with any other Person
      if
      in the case of a merger or consolidation of (a) Borrower, Borrower is the
      surviving entity, and (b) in any other case, the surviving entity is a
      wholly-owned Restricted Subsidiary and such Restricted Subsidiary (x) has
      complied with the requirements of Section
      5.12
      and (y)
      shall have assumed and ratified all obligations of any Restricted Subsidiary
      involved in such merger pursuant to documentation in form and substance
      satisfactory to the Global Administrative Agent.


    
      
        
        

      

      
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    (b) Borrower
      and Parent will not, and will not permit any of their Subsidiaries to, engage
      to
      any material extent in any business other than businesses of the type conducted
      by Borrower, Parent and their Subsidiaries on the date of execution of this
      Agreement and businesses reasonably related thereto.

     

    Section
      7.4 Investments,
      Loans, Advances, Guarantees and Acquisitions.
      Borrower and Parent will not, and will not permit any other Loan Party to,
      purchase, hold or acquire (including pursuant to any merger with any Person
      that
      was not a Restricted Subsidiary prior to such merger) any Equity Interests
      in or
      evidences of Indebtedness or other securities (including any option, warrant
      or
      other right to acquire any of the foregoing) of, make or permit to exist any
      loans or advances to, Guarantee any Indebtedness of, or make or permit to exist
      any Investment or any other interest in, any other Person, or purchase or
      otherwise acquire (in one transaction or a series of transactions) any assets
      of
      any other Person constituting a business unit, except:

    


    (a) Permitted
      Investments;

    


    (b) Investments
      existing on the date of this Agreement and set forth on Schedule 7.4;

     

    (c) Investments
      by Borrower and the Restricted Subsidiaries in Equity Interests in Restricted
      Subsidiaries and Indebtedness of Borrower or a Restricted Subsidiary permitted
      by Section
      7.1(a)(ii);

     

    (d) one
      or
      more substantially contemporaneous Investments in Equity Interests of any Person
      owning Oil and Gas Properties which, after giving effect to such Investments,
      will be a Restricted Subsidiary or will be merged into or with a Restricted
      Subsidiary; provided
      that
      (14) as a result of such Investments, such Person becomes a wholly-owned
      Restricted Subsidiary and has complied with the requirements of Section
      5.12,
      and
      (15) no Default would result from such Person becoming a Restricted
      Subsidiary;

    


    (e) Guarantees
      constituting Indebtedness permitted by Section
      7.1;
      provided
      that a
      Restricted Subsidiary shall not Guarantee any other Indebtedness unless such
      Restricted Subsidiary also has Guaranteed the Obligations pursuant to a Facility
      Guaranty delivered pursuant to Article
      IV
      on the
      Global Effective Date or pursuant to Section
      5.12;

    


    (f) Investments
      in Oil and Gas Properties and related assets and technology; 


    
      
        
        

      

      
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    (g) Investments
      in Unrestricted Subsidiaries existing as of the date hereof and set forth on
      Schedule 7.4;
      and

     

    (h) additional
      Investments in an aggregate principal amount not to exceed U.S.$500,000 at
      any
      one time outstanding.

     

    Section
      7.5 Asset
      Sales.
      Borrower and Parent will not, and will not permit any Restricted Subsidiary
      to,
      sell, transfer, lease or otherwise dispose of any Property or asset, including
      any Equity Interest owned by it, nor will Borrower and Parent permit any of
      the
      Restricted Subsidiaries to issue any additional Equity Interest in such
      Restricted Subsidiary, except:

    


    (a) sales
      or
      other dispositions of inventory, used or surplus equipment and Permitted
      Investments in the ordinary course of business;

    


    (b) sales,
      transfers and dispositions of Property to Borrower or a Restricted Subsidiary
      (including the transfer of Oil and Gas Properties into newly created limited
      partnerships or limited liability companies, all of the Equity Interests of
      which are directly or indirectly owned by Borrower and/or the Restricted
      Subsidiaries) or the issuance of any Equity Interest in Borrower or any
      Restricted Subsidiary to Borrower or any Restricted Subsidiary;

    


    (c) any
      Hydrocarbons produced or sold in the ordinary course of business;

     

    (d) the
      sale,
      transfer or other disposition of Equity Interests in Unrestricted
      Subsidiaries;

     

    (e) the
      sale,
      transfer or other disposition in one or more transactions of Property (other
      than Equity Interests in Parent or Restricted Subsidiaries) not constituting
      Borrowing Base Properties; and 

     

    (f) provided
      no Event of Default, Global Borrowing Base Deficiency or U.S. Borrowing Base
      Deficiency then exists, the sale, issuance, transfer or other disposition in
      one
      or more transactions of Property constituting either Equity Interests in Parent
      or Restricted Subsidiaries or any Oil and Gas Properties that are given value
      in
      the calculation of Present Value or the Global Borrowing Base, as applicable;
      provided
      that,
      with respect to the Oil and Gas Properties only, the aggregate Loan Value of
      such Oil and Gas Property so sold, transferred or disposed of during the period
      since the most recent redetermination of the Global Borrowing Base shall not
      exceed 5% of the amount of the then current Global Borrowing Base.

     

    Section
      7.6 Sale
      and Leaseback Transactions.
      Except
      to the extent permitted by Section
      7.1
      and
Section
      7.2,
      Borrower and Parent will not, and will not permit any other Loan Party to,
      enter
      into any arrangement, directly or indirectly, whereby it shall sell or transfer
      any Property, real or personal, used or useful in its business, whether now
      owned or hereinafter acquired, and thereafter rent or lease such Property or
      other Property that it intends to use for substantially the same purpose or
      purposes as the Property sold or transferred.

     

    Section
      7.7 Hedging
      Agreements.
      Borrower and Parent will not, and will not permit any other Loan Party to,
      enter
      into any Hedging Agreements with any Person other than vi) Hedging Agreements
      in
      respect of commodities (1) with an Approved Counterparty and (2) the
      notional volumes for which (when aggregated with other commodity Hedging
      Agreements of Borrower, Parent and the other Loan Parties then in effect other
      than basis differential swaps on volumes already hedged pursuant to other
      Hedging Agreements) do not exceed, as of the date such Hedging Agreement is
      executed, 80% of the reasonably anticipated projected production from proved,
      developed, producing Oil and Gas Properties (as set forth in the most recently
      delivered Reserve Report and approved by the Global Administrative Agent) for
      each month during the period during which such Hedging Agreement is in effect
      for each of crude oil and natural gas, calculated separately, and which Hedging
      Agreements shall not, in any case, have a tenor of greater than three (3)
      years, and vii) Hedging Agreements in respect of interest rates with an Approved
      Counterparty, the notional amounts of which (when aggregated with all other
      Hedging Agreements of Borrower, Parent and the other Loan Parties then in effect
      in respect of interest rates) do not exceed 100% of the then outstanding
      principal amount of Borrower’s Indebtedness for borrowed money, and which
      Hedging Agreements shall not, in any case, have a tenor of greater than
      three (3) years. In no event shall any Hedging Agreement to which Borrower,
      Parent or any other Loan Party is a party contain any requirement, agreement
      or
      covenant for Borrower, Parent or any other Loan Party to post cash or other
      collateral or margin to secure their obligations under such Hedging Agreement
      or
      to cover market exposures. 


    
      
        
        

      

      
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    Section
      7.8 Restricted
      Payments; Certain Payments of Indebtedness.
      Borrower and Parent will not, and will not permit any other Loan Party to,
      declare or make, or agree to pay or make, directly or indirectly, any Restricted
      Payment, or incur any obligation (contingent or otherwise) to do so, except
      that:

    


    (a) any
      Restricted Subsidiary may pay dividends to Borrower or any other Restricted
      Subsidiary; and 

    


    (b) Borrower
      and Parent may make Restricted Payments provided
      that
      such Restricted Payments are in shares of common stock or other Equity Interests
      of Borrower or Parent.

     

    Section
      7.9 Transactions
      with Affiliates.
      Borrower and Parent will not, and will not permit any other Loan Party to,
      sell,
      lease or otherwise transfer any Property or assets to, or purchase, lease or
      otherwise acquire any Property or assets from, or otherwise engage in any other
      transactions with, any of its Affiliates, except nn) transactions in the
      ordinary course of business and that are at prices and on terms and conditions
      not less favorable to Borrower, Parent or such other Loan Party than could
      be
      obtained on an arm’s-length basis from unrelated third parties, oo) transactions
      between or among Borrower, Parent and the other Loan Parties not involving
      any
      other Affiliate, pp) any Restricted Payment permitted by Section
      7.8,
      and
      qq) any Investment permitted by Section
      7.4.

     

    Section
      7.10 Restrictive
      Agreements.
      Borrower and Parent will not, and will not permit any other Loan Party to,
      directly or indirectly, enter into, incur or permit to exist any agreement
      or
      other arrangement that prohibits or restricts rr) the ability of Borrower,
      Parent or any other Loan Party to create, incur or permit to exist any Lien
      in
      favor of the Global Administrative Agent and/or the Canadian Administrative
      Agent for the benefit of the Combined Lenders upon any of its Property, or
      ss)
      the ability of any Restricted Subsidiary to make Restricted Payments to Borrower
      or any other Restricted Subsidiary or to Guarantee Indebtedness of Borrower
      or
      any other Restricted Subsidiary; provided
      that (1)
      the foregoing shall not apply to restrictions and conditions imposed by law
      or
      by any Combined Loan Document, (2) the foregoing shall not apply to restrictions
      and conditions existing on the date of this Agreement identified on Schedule 7.10
      (but
      shall apply to any extension or renewal of, or any amendment or modification
      expanding the scope of, any such restriction or condition), (3) the foregoing
      shall not apply to customary restrictions and conditions contained in agreements
      relating to the sale of a Restricted Subsidiary pending such sale, provided
      such
      restrictions and conditions apply only to the Restricted Subsidiary that is
      to
      be sold and such sale is permitted hereunder, (4) clause (a) of the
      foregoing shall not apply to restrictions or conditions imposed by any agreement
      relating to secured Indebtedness or other obligations permitted by this
      Agreement if such restrictions or conditions apply only to the Property or
      assets securing such Indebtedness or other obligation, and (5) clause (a)
      of the foregoing shall not apply to customary provisions in leases or other
      agreements restricting the assignment thereof.


    
      
        
        

      

      
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    Section
      7.11 No
      Action to Affect Security Documents.
      Except
      for transactions expressly permitted hereby, Borrower and Parent shall not,
      and
      shall not permit any of their Subsidiaries to, do anything to adversely affect
      the priority of the Liens created by the Security Documents given or to be
      given
      in respect of the Obligations.

    


    ARTICLE
      VIII

    EVENTS
      OF DEFAULT

     

    Section
      8.1 Listing
      of Events of Default.
      Each of
      the following events or occurrences described in this Section
      8.1
      shall
      constitute an “Event
      of Default”:

    


    (a) Non-Payment
      of Obligations.
      Any
      Loan Party shall default in the payment or prepayment when due of any principal
      of any Loan or of any reimbursement obligation with respect to any Letter of
      Credit; or Borrower shall default in the payment when due of any interest,
      fee
      or of any other obligation hereunder or under any other Loan Document and such
      default continues for a period of three (3) days.

    


    (b) Breach
      of Warranty.
      Any
      representation or warranty of any Loan Party made or deemed to be made hereunder
      or in any other Loan Document or any other writing or certificate furnished
      by
      or on behalf of any Loan Party to the Global Administrative Agent, or any Lender
      for purposes of or in connection with this Agreement or any such other Loan
      Document is or shall be false or misleading when made.

    


    (c) Non-Performance
      of Covenants and Obligations.
      Any
      Loan Party shall default in the due performance and observance of any of its
      obligations under Section
      5.1,
      Section
      5.2,
      Section
      5.3,
      Section
      5.7,
      Section
      5.11,
      Section
      5.12
      or
Section
      5.15,
      or
      under Article
      VI
      or
Article
      VII.

    


    (d) Non-Performance
      of Other Covenants and Obligations.
      Any
      Loan Party shall default in the due performance and observance of any other
      agreement contained herein or in any other Loan Document, and such default
      shall
      continue unremedied for a period of 30 days after notice thereof shall have
      been
      given to Borrower by the Global Administrative Agent or the Required
      Lenders.


    
      
        
        

      

      
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    (e) Default
      on Other Indebtedness.
      Any
      Loan Party shall default in the payment when due of any principal of or interest
      on any of its other Indebtedness aggregating U.S.$500,000 or more, or in the
      payment when due of U.S.$500,000 or more in the aggregate under one or more
      Hedging Agreements; or any event specified in any note, agreement, indenture
      or
      other document evidencing or relating to any such Indebtedness shall occur
      if
      the effect of such event is to cause, or (with the giving of any notice or
      the
      lapse of time or both) to permit the holder or holders of such Indebtedness
      (or
      a trustee or agent on behalf of such holder or holders) to cause, such
      Indebtedness to become due, or to be prepaid in full (whether by redemption,
      purchase, offer to purchase or otherwise), prior to its stated
      maturity.

    


    (f) Pension
      Plans.
      Any of
      the following events shall occur with respect to any Pension Plan: (6) the
      institution of any steps by Parent, any ERISA Affiliate or any other Person
      to
      terminate a Pension Plan if, as a result of such termination, Parent or any
      ERISA Affiliate could reasonably expect to incur a liability or obligation
      to
      such Pension Plan, which could reasonably be expected to have a Material Adverse
      Effect; or (7) a contribution failure occurs with respect to any Pension Plan
      sufficient to give rise to a Lien under Section 302(f) of ERISA to the extent
      such action could reasonably be expected to have a Material Adverse
      Effect.

     

    (g) Bankruptcy
      and Insolvency.
      Any
      Loan Party shall (8) generally fail to pay, or admit in writing its inability
      or
      unwillingness to generally pay, debts as they become due; (9) apply for, consent
      to, or acquiesce in, the appointment of a trustee, receiver, receiver and
      manager, sequestrator or other custodian for any Loan Party, or any substantial
      part of the property of any thereof, or make a general assignment for the
      benefit of creditors; (10) in the absence of such application, consent or
      acquiescence, permit or suffer to exist the appointment of a trustee, receiver,
      receiver and manager, sequestrator or other custodian for any Loan Party, or
      for
      a substantial part of the property of any thereof, and such trustee, receiver,
      receiver and manager, sequestrator or other custodian shall not be discharged
      within 60 days, provided
      that
      each Loan Party hereby expressly authorizes the Global Administrative Agent
      to
      appear in any court conducting any relevant proceeding during such 60-day period
      to preserve, protect and defend the rights of the Combined Lenders under the
      Loan Documents; (11) permit or suffer to exist the commencement of any
      bankruptcy, reorganization, debt arrangement or other case or proceeding under
      any bankruptcy or insolvency law (including the Bankruptcy and Insolvency Act
      (Canada)), or any dissolution, winding up or liquidation proceeding, in respect
      of any Loan Party, and, if any such case or proceeding is not commenced by
      such
      Loan Party, such case or proceeding shall be consented to or acquiesced in
      by
      such Loan Party or shall result in the entry of an order for relief or shall
      remain for 60 days undismissed, provided
      that
      each Loan Party hereby expressly authorizes the Global Administrative Agent
      to
      appear in any court conducting any such case or proceeding during such 60-day
      period to preserve, protect and defend the rights of the Combined Lenders under
      the Loan Documents; or (12) take any corporate or partnership action
      authorizing, or in furtherance of, any of the foregoing.

     

    (h) Judgments.
      One or
      more judgments or orders for the payment of money in excess of U.S.$500,000
      in
      the aggregate (exclusive of amounts fully covered by valid and collectible
      insurance in respect thereof subject to customary deductibles or fully covered
      by an indemnity with respect thereto reasonably acceptable to the Required
      Lenders) shall be rendered against any Loan Party and either (13) enforcement
      proceedings shall have been commenced by any creditor upon such judgment or
      order, or (14) such judgment shall have become final and non-appealable and
      shall have remained outstanding for a period of 60 consecutive
      days.


    
      
        
        

      

      
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    (i) Change
      in Control.
      A
      Change in Control shall occur.

    


    (j) Failure
      of Liens.
      The
      Liens created by the Security Documents shall at any time not constitute a
      valid
      and perfected Lien on the collateral intended to be covered thereby (to the
      extent perfection by filing, registration, recordation or possession is required
      herein or therein) in favor of the Global Administrative Agent or, except for
      expiration in accordance with its terms, any of the Security Documents shall
      for
      whatever reason be terminated or cease to be in full force and effect, or the
      enforceability thereof shall be contested by any Loan Party.

    


    (k) Event
      of Default under Canadian Loan Documents.
      Any
“Event of Default” as defined in the Canadian Loan Documents shall occur;
provided
      that the
      occurrence of a “Default” as defined in the Canadian Loan Documents shall
      constitute a Default under this Agreement; provided further
      that if
      such “Default” or “Event of Default” is cured or waived under the Canadian Loan
      Documents, as applicable, then such “Default” or “Event of Default” shall no
      longer constitute a Default or an Event of Default, respectively, under this
      Agreement.

     

    Section
      8.2 Action
      if Bankruptcy.
      If any
      Event of Default described in Section
      8.1(g)
      shall
      occur, the Commitments (if not theretofore terminated) shall automatically
      terminate and the outstanding principal amount of all outstanding Loans and
      all
      other Obligations hereunder shall automatically be and become immediately due
      and payable, without demand, protest or presentment or notice of any kind,
      all
      of which are hereby expressly waived by Borrower, Parent and their Subsidiaries.
      Without limiting the foregoing, the Lenders shall be entitled to exercise any
      and all other remedies available to them under the Loan Documents and applicable
      law.

     

    Section
      8.3 Action
      if Other Event of Default.
      If any
      Event of Default (other than any Event of Default described in Section
      8.1(g))
      shall
      occur for any reason, whether voluntary or involuntary, and be continuing,
      the
      Required Lenders, may, by notice to Borrower declare tt) the Commitments (if
      not
      theretofore terminated) to be terminated and/or uu) all of the outstanding
      principal amount of the Loans and all other Obligations hereunder to be due
      and
      payable, whereupon the Commitments shall terminate and the full unpaid amount
      of
      such Loans and other Obligations shall be and become immediately due and
      payable, without demand, protest or presentment or notice of any kind, all
      of
      which are hereby waived by Borrower, Parent and their Subsidiaries. Without
      limiting the foregoing, the Lenders shall be entitled to exercise any and all
      other remedies available to them under the Loan Documents and applicable
      law.

    


    ARTICLE
      IX

    AGENTS

    


    Each
      of
      the Lenders, the Issuing Banks and the other Agents hereby irrevocably appoints
      JPMorgan Chase Bank, N.A. as the Global Administrative Agent, and authorizes
      the
      Global Administrative Agent to take such actions on its behalf and to exercise
      such powers as are delegated to the Global Administrative Agent by the terms
      of
      the Loan Documents, together with such actions and powers as are reasonably
      incidental thereto.


    
      
        
        

      

      
        75

        
          

        

      

      
        
        

      

    

    


    Any
      bank
      serving as an Agent hereunder shall have the same rights and powers in its
      capacity as a Lender as any other Lender and may exercise the same as though
      it
      were not an Agent, and such bank and its Affiliates may accept deposits from,
      lend money to and generally engage in any kind of business with Parent or any
      other Subsidiary or other Affiliate thereof as if it were not an Agent
      hereunder.

    


    The
      Agents shall not have any duties or obligations except those expressly set
      forth
      in the Loan Documents. Without limiting the generality of the foregoing, (a)
      the
      Agents shall not be subject to any fiduciary or other implied duties, regardless
      of whether a Default has occurred and is continuing, (b) each Agent shall not
      have any duty to take any discretionary action or exercise any discretionary
      powers, except discretionary rights and powers expressly contemplated by the
      Loan Documents that such Agent is required to exercise following its receipt
      of
      written instructions from the Required Lenders (or such other number or
      percentage of the Combined Lenders as shall be necessary under the circumstances
      as provided in Section
      10.2),
      and
      (c) except as expressly set forth in the Loan Documents, the Agents shall not
      have any duty to disclose, and shall not be liable for the failure to disclose,
      any information relating to Parent or any of its Subsidiaries that is
      communicated to or obtained by the bank serving as such Agent or any of its
      Related Parties in any capacity. Each Agent shall not be liable for any action
      taken or not taken by it with the consent or at the request of the Required
      Lenders (or such other number or percentage of the Combined Lenders as shall
      be
      necessary under the circumstances as provided in Section
      10.2)
      or in
      the absence of its own gross negligence or willful misconduct; PROVIDED,
      HOWEVER,
      THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH OF THE AGENTS BE
      INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE),
      REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR
      PASSIVE, IMPUTED, JOINT OR TECHNICAL.
      Each
      Agent shall be deemed not to have knowledge of any Default unless and until
      written notice thereof is given to such Agent by Borrower, Parent or a Lender,
      and such Agent shall not be responsible for or have any duty to ascertain or
      inquire into (1) any statement, warranty or representation made in or in
      connection with any Loan Document, (2) the contents of any certificate, report
      or other document delivered thereunder or in connection therewith, (3) the
      performance or observance of any of the covenants, agreements or other terms
      or
      conditions set forth in any Loan Document, (4) the validity, enforceability,
      effectiveness or genuineness of any Loan Document or any other agreement,
      instrument or document, or (5) the satisfaction of any condition set forth
      in
Article
      IV
      or
      elsewhere in any Loan Document, other than to confirm receipt of items expressly
      required to be delivered to such Agent.

    


    The
      Global Administrative Agent and the other Agents shall be entitled to rely
      upon,
      and shall not incur any liability for relying upon, any notice, request,
      certificate, consent, statement, instrument, document or other writing believed
      by it to be genuine and to have been signed or sent by the proper Person. The
      Global Administrative Agent and the other Agents also may rely upon any
      statement made to it orally or by telephone and believed by it to be made by
      the
      proper Person, and shall not incur any liability for relying thereon. The Global
      Administrative Agent and the other Agents may consult with legal counsel (who
      may be counsel for Borrower), independent accountants and other experts selected
      by it, and shall not be liable for any action taken or not taken by it in
      accordance with the advice of any such counsel, accountants or
      experts.


    
      
        
        

      

      
        76

        
          

        

      

      
        
        

      

    

    


    Any
      Agent
      may perform any and all of its duties and exercise its rights and powers by
      or
      through any one or more sub-agents appointed by such Agent. Any Agent and any
      such sub agent may perform any and all of its duties and exercise its rights
      and
      powers through their respective Related Parties. The exculpatory provisions
      of
      the preceding paragraphs shall apply to any such sub-agent and to the Related
      Parties of such Agent and any such sub-agent, and shall apply to their
      respective activities in connection with the syndication of the credit
      facilities provided for herein as well as activities as an Agent.

    


    Subject
      to the appointment and acceptance of a successor Global Administrative Agent
      as
      provided in this paragraph, the Global Administrative Agent may resign at any
      time by notifying the Combined Lenders, Borrower and Parent. Upon any such
      resignation, the Required Lenders shall have the right, in consultation with
      Borrower and Parent, to appoint a successor. If no successor shall have been
      so
      appointed by the Required Lenders and shall have accepted such appointment
      within 30 days after the retiring Global Administrative Agent gives notice
      of
      its resignation, then the retiring Global Administrative Agent may, on behalf
      of
      the Combined Lenders and the Issuing Banks, appoint a successor Global
      Administrative Agent which shall be a bank with an office in New York City
      or an
      Affiliate of any such bank. Upon the acceptance of its appointment as Global
      Administrative Agent hereunder by a successor, such successor shall succeed
      to
      and become vested with all the rights, powers, privileges and duties of the
      retiring Global Administrative Agent, and the retiring Global Administrative
      Agent shall be discharged from its duties and obligations hereunder (other
      than
      its obligations under Section
      10.12).
      The
      fees payable by Borrower to a successor Global Administrative Agent shall be
      the
      same as those payable to its predecessor unless otherwise agreed between
      Borrower and such successor. After the Global Administrative Agent’s resignation
      hereunder, the provisions of this Article and Section
      10.3
      shall
      continue in effect for the benefit of such retiring Global Administrative Agent,
      its sub agents and their respective Related Parties in respect of any actions
      taken or omitted to be taken by any of them while it was acting as Global
      Administrative Agent.

    


    Each
      Lender acknowledges that it has, independently and without reliance upon any
      Agent or any other Lender and based on such documents and information as it
      has
      deemed appropriate, made its own credit analysis and decision to enter into
      this
      Agreement and the Intercreditor Agreement. Each Lender also acknowledges that
      it
      will, independently and without reliance upon any Agent or any other Lender
      and
      based on such documents and information as it shall from time to time deem
      appropriate, continue to make its own decisions in taking or not taking action
      under or based upon this Agreement, any other Loan Document or any related
      agreement or any document furnished hereunder or thereunder.

    


    Each
      of
      the Lenders, for itself and on behalf of any of its Affiliates, and the Issuing
      Banks hereby irrevocably appoints the Global Administrative Agent to act as
      its
      agent under the Intercreditor Agreement and authorizes the Global Administrative
      Agent to execute the Intercreditor Agreement on its behalf and to take such
      actions on its behalf and to exercise such powers as are delegated to the Global
      Administrative Agent by the terms hereof and thereof, together with such actions
      and powers as are reasonably incidental thereto.


    
      
        
        

      

      
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    ARTICLE
      X

    MISCELLANEOUS

     

    Section
      10.1 Notices.
      Except
      in the case of notices and other communications expressly permitted to be given
      by telephone, all notices and other communications provided for herein shall
      be
      in writing and shall be delivered by hand or overnight courier service, mailed
      by certified or registered mail or sent by telecopy, as follows:

    


    (a) if
      to
      Borrower, to:

    


    
      	 	
              Storm
                Cat Energy (USA) Corporation

              c/o
                Storm Cat Energy Corporation 

              1125
                17th
                Street, Suite 2310

              Denver,
                Colorado 80202

              Attention:
                Paul Wiesner

              Telephone:
                303.991.5070

              Facsimile:
                303.991.5075

            
	 	 
	 	
              with
                copy to:

            
	 	 
	 	
              Hogan
                & Hartson L.L.P.

              One
                Tabor Center, Suite 1500

              1200
                Seventeenth Street

              Denver,
                Colorado 80202

              Attention:
                Richard Mattera

              Telephone:
                303.454.2471

              Facsimile:
                303.899.7333

            
	 	 
	 	
              with
                an additional copy to:

            
	 	 
	 	
              Bull,
                Housser & Tupper LLP

              3000
                Royal Center

              1055
                West Georgia Street

              Vancouver
                British Columbia

              Canada
                V6E 3R3

              Attention:
                David M. Hunter

              Telephone:
                604.641.4963

              Facsimile:
                604.646.2634

            


    

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

    


    


    (b) if
      to
      Parent, to:

     

    
      	 	
              Storm
                Cat Energy Corporation

              1125
                17th
                Street, Suite 2310

              Denver,
                Colorado 80202

              Attention:
                Paul Wiesner

              Telephone:
                303.991.5070

              Facsimile:
                303.991.5075

            
	 	 
	 	
              with
                copy to:

            
	 	 
	 	
              Hogan
                & Hartson L.L.P.

              One
                Tabor Center, Suite 1500

              1200
                Seventeenth Street

              Denver,
                Colorado 80202

              Attention:
                Richard Mattera

              Telephone:
                303.454.2471

              Facsimile:
                303.899.7333

            
	 	 
	 	
              with
                an additional copy to:

            
	 	 
	 	
              Bull,
                Housser & Tupper LLP

              3000
                Royal Center

              1055
                West Georgia Street

              Vancouver
                British Columbia

              Canada
                V6E 3R3

              Attention:
                David M. Hunter

              Telephone:
                604.641.4963

              Facsimile:
                604.646.2634

            


    

     

    (c) if
      to the
      Global Administrative Agent, to:

    


    
      	 	
              JPMorgan
                Chase Bank, N.A.

              10
                South Dearborn

              Floor
                19

              Chicago,
                Illinois 60603-2003

              Attention:
                Susan Dugan

              Telephone:
                312.385.7143

              Facsimile:
                312.385.7096

            


    


    
      
        
        

      

      
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              with
                a copy to:

            
	 	 
	 	
              JPMorgan
                Chase Bank, N.A.

              1717
                Main Street, 4th
                Floor

              Mail
                Code TX1-2448

              Dallas,
                Texas 75202

              Attention:
                Scott Fowler

              Telephone:
                214.290.2162

              Facsimile:
                214.290.2332

            


    

    


    


    (d) if
      to any
      other Lender, to it at its address (or telecopy number) provided to the Global
      Administrative Agent and Borrower or as set forth in its Administrative
      Questionnaire; and

    


    (e) if
      to any
      Canadian Lender, to it at its address (or telecopy number) provided to the
      Canadian Administrative Agent and Canadian Borrower or as set forth in its
      “Administrative Questionnaire” as defined in the Canadian Credit
      Agreement.

    


    Any
      party
      hereto may change its address or telecopy number for notices and other
      communications hereunder by notice to the other parties hereto. All notices
      and
      other communications given to any party hereto in accordance with the provisions
      of this Agreement shall be deemed to have been given on the date of
      receipt.

     

    Section
      10.2 Waivers;
      Amendments.

    


    (a) No
      failure or delay by the Global Administrative Agent, any Issuing Bank or any
      Lender in exercising any right or power hereunder or under any other Loan
      Document shall operate as a waiver thereof, nor shall any single or partial
      exercise of any such right or power, or any abandonment or discontinuance of
      steps to enforce such a right or power, preclude any other or further exercise
      thereof or the exercise of any other right or power. The rights and remedies
      of
      the Global Administrative Agent, the Issuing Banks and the Lenders hereunder
      and
      under the other Loan Documents are cumulative and are not exclusive of any
      rights or remedies that they would otherwise have. No waiver of any provision
      of
      any Loan Document or consent to any departure by any Loan Party therefrom shall
      in any event be effective unless the same shall be permitted by paragraph (b)
      of this
      Section, and then such waiver or consent shall be effective only in the specific
      instance and for the purpose for which given. Without limiting the generality
      of
      the foregoing, the making of a Loan or issuance of a Letter of Credit shall
      not
      be construed as a waiver of any Default, regardless of whether the Global
      Administrative Agent, any Lender or any Issuing Bank may have had notice or
      knowledge of such Default at the time.

     

    (b) Neither
      this Agreement nor any of the Combined Loan Documents nor any provision hereof
      or thereof may be waived, amended or modified except, in the case of this
      Agreement, pursuant to an agreement or agreements in writing entered into by
      Borrower, Parent and the Required Lenders or by Borrower, Parent and the Global
      Administrative Agent with the consent of the Required Lenders, or, in the case
      of any other Combined Loan Document, pursuant to an agreement or agreements
      in
      writing entered into by the relevant Loan Parties thereto and the Required
      Lenders or by the relevant Loan Parties thereto and the Global Administrative
      Agent with the consent of the Required Lenders; provided
      that the
      same waiver, amendment or modification is requested by Borrower or Parent in
      connection with each of the Combined Credit Agreements; and provided further
      that no
      such agreement shall (6) increase the Commitment of any Lender without the
      written consent of such Lender, (7) reduce, or otherwise release Borrower from
      its obligation to pay, the principal amount of any Loan or LC Disbursement
      or
      reduce the rate of interest thereon, or reduce any fees payable hereunder,
      without the written consent of each Lender affected thereby, (8) postpone the
      scheduled date of payment of the principal amount of any Loan or LC
      Disbursement, or any interest thereon, or any fees payable hereunder, or reduce
      the amount of, waive or excuse any such payment, or postpone the scheduled
      date
      of expiration of any Commitment, without the written consent of each Lender
      affected thereby, (9) change Section
      2.18(b)
      or
(c)
      in a
      manner that would alter the pro rata sharing of payments required thereby,
      without the written consent of each Lender, (10) change any of the provisions
      of
      this Section
      10.2,
      Section
      2.7
      (unless
      a lesser vote is otherwise required pursuant to this Section
      10.2),
      Section
      2.10
      (unless
      a lesser vote is otherwise required pursuant to this Section
      10.2),
      or the
      definition of “Required Lenders,” “U.S. Required Lenders” or any other provision
      of any Combined Loan Document specifying the number or percentage of Lenders,
      Canadian Lenders or Combined Lenders required to determine or redetermine the
      Global Borrowing Base, the U.S. Borrowing Base, the Allocated U.S. Borrowing
      Base or the Allocated Canadian Borrowing Base or required to waive, amend or
      modify any rights thereunder or make any determination or grant any consent
      thereunder, without the written consent of each Combined Lender, (11) release
      any Loan Party from its Facility Guaranty (except as expressly provided herein
      or in such Facility Guaranty), or limit its liability in respect of such
      Facility Guaranty, without the written consent of each Combined Lender, or
      (12)
      except as expressly provided herein, in the Intercreditor Agreement or in the
      Security Documents, release all or any part of the Collateral from the Liens
      of
      the Security Documents, without the written consent of each Combined Lender;
      provided,
      further,
      that no
      such agreement shall (i) change any provision regarding when determinations
      of
      the Global Borrowing Base and the U.S. Borrowing Base are required pursuant
      to
Section
      2.7,
      (ii)
      postpone or defer scheduled Global Borrowing Base or U.S. Borrowing Base
      redeterminations pursuant to Section
      2.7,
      or
      (iii) change any provision regarding remedies for a Global Borrowing Base
      Deficiency or a U.S. Borrowing Base Deficiency pursuant to Section
      2.10,
      without
      the written consent of the Required Lenders; provided further
      that no
      such agreement shall amend, waive, modify or otherwise affect the rights or
      duties of any Agent (as defined herein and in the Canadian Credit Agreement)
      or
      any Issuing Bank (as defined herein and in the Canadian Credit Agreement)
      without the prior written consent of such Agent (as defined herein and in the
      Canadian Credit Agreement) or any Issuing Bank (as defined herein and in the
      Canadian Credit Agreement), as the case may be; provided further
      that the
      Global Administrative Agent shall have the right to execute and deliver any
      release of Lien (or other similar instrument) without the consent of any Lender
      to the extent such release is required to permit a Loan Party to consummate
      a
      transaction permitted by this Agreement or the other Combined Loan
      Documents.


    
      
        
        

      

      
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    Section
      10.3 Expenses;
      Indemnity; Damage Waiver.

     

    (a) Borrower
      shall pay (13) all reasonable legal, printing, recording, syndication, travel,
      advertising and other reasonable out of pocket expenses incurred by the Global
      Administrative Agent, the Arranger and their Affiliates, including the
      reasonable fees, charges and disbursements of counsel for the Global
      Administrative Agent and the Arranger, in connection with the syndication of
      the
      credit facilities provided for herein, the preparation, execution, delivery
      and
      administration of this Agreement, the Loan Documents and each other document
      or
      instrument relevant to this Agreement or the Loan Documents and any amendments,
      modifications or waivers of the provisions hereof or thereof (whether or not
      the
      transactions contemplated hereby or thereby shall be consummated), (14) all
      reasonable out of-pocket expenses incurred by an Issuing Bank in connection
      with
      the issuance, amendment, renewal or extension of any Letter of Credit or any
      demand for payment thereunder, (15) the filing, recording, refiling or
      rerecording of the Mortgages, the Pledge Agreement and the other Security
      Documents and/or any Uniform Commercial Code financing statements relating
      thereto and all amendments, supplements and modifications to, and all releases
      and terminations of, any thereof and any and all other documents or instruments
      of further assurance required to be filed or recorded or refiled or rerecorded
      by the terms hereof or of the Mortgages, the Pledge Agreement and the other
      Security Documents, and (16) all out-of-pocket expenses incurred by the Agents,
      any Issuing Bank or any Lender, including the fees, charges and disbursements
      of
      any counsel for the Agents, any Issuing Bank or any Lender, in connection with
      the enforcement or protection of its rights in connection with the Loan
      Documents, including its rights under this Section, or in connection with the
      Loans made or Letters of Credit issued hereunder, including all such out-of
      pocket expenses incurred during any workout, restructuring or negotiations
      in
      respect of such Loans or Letters of Credit.


    
      
        
        

      

      
        81

        
          

        

      

      
        
        

      

    

    


    (b) Borrower
      and Parent shall jointly and severally indemnify the Agents, each Issuing Bank,
      the Arranger and each Lender, and each Related Party of any of the foregoing
      Persons (each such Person being called an “Indemnitee”)
      against, and hold each Indemnitee harmless from, any and all losses, claims,
      damages, liabilities and related expenses, including the reasonable
      out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee,
      incurred by or asserted against any Indemnitee arising out of, in connection
      with, or as a result of ((17) the execution or delivery of any Loan Document
      or
      any other agreement or instrument contemplated hereby, the performance by the
      parties to the Loan Documents of their respective obligations thereunder or
      the
      consummation of the Financing Transactions or any other transactions
      contemplated hereby, (18) any Loan or Letter of Credit or the use of the
      proceeds therefrom (including any refusal by an Issuing Bank to honor a demand
      for payment under a Letter of Credit if the documents presented in connection
      with such demand do not strictly comply with the terms of such Letter of
      Credit), (19) any actual or alleged presence or release of Hazardous Materials
      on or from any Mortgaged Property or any other property currently or formerly
      owned or operated by any Loan Party, or any Environmental Liability related
      in
      any way to any Loan Party, or (20) any actual or prospective claim, litigation,
      investigation or proceeding relating to any of the foregoing, whether based
      on
      contract, tort or any other theory and regardless of whether any Indemnitee
      is a
      party thereto; provided
      that
      such indemnity and release shall not, as to any Indemnitee, be available to
      the
      extent that such losses, claims, damages, liabilities or related expenses are
      determined by a court of competent jurisdiction by final and nonappealable
      judgment to have resulted from the gross negligence or willful misconduct of
      such Indemnitee (IT BEING UNDERSTOOD THAT IT IS THE INTENTION OF THE PARTIES
      HERETO THAT EACH OF THE INDEMNITEES BE INDEMNIFIED IN THE CASE OF ITS OWN
      NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE
      IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR
      TECHNICAL).


    
      
        
        

      

      
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    (c) To
      the
      extent that Borrower and Parent fail to pay any amount required to be paid
      by
      Borrower and Parent to the Global Administrative Agent or an Issuing Bank under
      paragraph (a)
      or
(b)
      of this
      Section, each Lender severally agrees to pay to the Global Administrative Agent
      or such Issuing Bank, as the case may be, such Lender’s Applicable Percentage
      (determined as of the time that the applicable unreimbursed expense or indemnity
      payment is sought) of such unpaid amount; provided
      that the
      unreimbursed expense or indemnified loss, claim, damage, liability or related
      expense, as the case may be, was incurred by or asserted against the Global
      Administrative Agent or such Issuing Bank in its capacity as such.

    


    (d) To
      the
      extent permitted by applicable law, neither Borrower nor Parent shall assert,
      and each hereby waive, any claim against any Indemnitee, on any theory of
      liability, for special, indirect, consequential or punitive damages (as opposed
      to direct or actual damages) arising out of, in connection with, or as a result
      of, this Agreement or any agreement or instrument contemplated hereby, the
      Financing Transactions, any Loan or Letter of Credit or the use of the proceeds
      thereof.

    


    (e) All
      amounts due under this Section shall be payable not later than fifteen (15)
      days
      after written demand therefor.

     

    Section
      10.4 Successors
      and Assigns.

    


    (a) The
      provisions of this Agreement shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns permitted hereby
      (including any Affiliate of an Issuing Bank that issues any Letter of Credit),
      except that neither Borrower nor Parent may assign or otherwise transfer any
      of
      their rights or obligations hereunder without the prior written consent of
      the
      Global Administrative Agent, each Issuing Bank and each Combined Lender (and
      any
      attempted assignment or transfer by Borrower or Parent without such consent
      shall be null and void). Nothing in this Agreement, expressed or implied, shall
      be construed to confer upon any Person (other than the parties hereto, their
      respective successors and assigns permitted hereby (including any Affiliate
      of
      an Issuing Bank that issues any Letter of Credit) and, to the extent expressly
      contemplated hereby, the Related Parties of each of the Global Administrative
      Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy
      or claim under or by reason of this Agreement.

     

    (b) Any
      Lender may assign to one or more assignees all or a portion of its rights and
      obligations under this Agreement (including all or a portion of its Commitment
      and the Loans at the time owing to it); provided
      that
      (21) except in the case of an assignment to a Lender or a Lender Affiliate,
      each
      of Borrower (unless an Event of Default has occurred and is continuing) and
      the
      Global Administrative Agent (and, in the case of an assignment of all or a
      portion of a Commitment or any Lender’s obligations in respect of its LC
      Exposure, the Issuing Banks) must give their prior written consent to such
      assignment (which consent shall not be unreasonably withheld), (22) except
      in
      the case of an assignment to a Lender or a Lender Affiliate or an assignment
      of
      the entire remaining amount of the assigning Lender’s Commitment or Loans, the
      amount of the Commitment or Loans of the assigning Lender subject to each such
      assignment (determined as of the date the Assignment and Assumption with respect
      to such assignment is delivered to the Global Administrative Agent) shall be
      in
      increments of U.S.$1,000,000 and not less than U.S.$5,000,000 unless each of
      Borrower (unless an Event of Default has occurred and is continuing) and the
      Global Administrative Agent otherwise consent, (23) each partial assignment
      shall be made as an assignment of a proportionate part of all the assigning
      Lender’s rights and obligations under this Agreement, except that this
      clause (iii) shall not be construed to prohibit the assignment of a
      proportionate part of all the assigning Lender’s rights and obligations in
      respect of its Commitments or Loans in conformity with the Intercreditor
      Agreement, (24) the parties to each assignment shall execute and deliver to
      the
      Global Administrative Agent an Assignment and Assumption, together with a
      processing and recordation fee of U.S.$3,500, (25) the assignee, if it shall
      not
      be a Lender, shall deliver to the Global Administrative Agent an Administrative
      Questionnaire, and (26) after giving effect to any assignment hereunder, the
      assigning Lender shall have a Commitment of at least U.S.$5,000,000 unless
      each
      of Borrower and the Global Administrative Agent otherwise consents; and
provided further
      that any
      consent of Borrower otherwise required under this paragraph shall not be
      required if an Event of Default under Section
      8.1
      has
      occurred and is continuing. Subject to acceptance and recording thereof pursuant
      to paragraph (d)
      of this
      Section, from and after the effective date specified in each Assignment and
      Assumption, the assignee thereunder shall be a party hereto and to the other
      Loan Documents and, to the extent of the interest assigned by such Assignment
      and Assumption, have the rights and obligations of a Lender under this
      Agreement, and the assigning Lender thereunder shall, to the extent of the
      interest assigned by such Assignment and Assumption, be released from its
      obligations under this Agreement and the other Loan Documents (and, in the
      case
      of an Assignment and Assumption covering all of the assigning Lender’s rights
      and obligations under this Agreement, such Lender shall cease to be a party
      hereto but shall continue to be entitled to the benefits of Section
      2.15,
      Section
      2.16,
      Section
      2.17,
      Section
      2.18,
      Section
      10.3
      and be
      subject to the terms of Section
      10.12).
      Any
      assignment or transfer by a Lender of rights or obligations under this Agreement
      that does not comply with this paragraph shall be treated for purposes of this
      Agreement as a sale by such Lender of a participation in such rights and
      obligations in accordance with paragraph (e)
      of this
      Section.

     

    
      
        
        

      

      
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    (c) The
      Global Administrative Agent, acting for this purpose as an agent of Borrower,
      shall maintain at one of its offices in Dallas, Texas, a copy of each Assignment
      and Assumption delivered to it and a register for the recordation of the names
      and addresses of the Lenders, and the Commitment of, and principal amount of
      the
      Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
      from time to time (the “Register”).
      The
      entries in the Register shall be conclusive, and Borrower, Parent, the Global
      Administrative Agent, the Issuing Banks and the Lenders may treat each Person
      whose name is recorded in the Register pursuant to the terms hereof as a Lender
      hereunder for all purposes of this Agreement and the other Loan Documents,
      notwithstanding notice to the contrary. The Register shall be available for
      inspection by Borrower, Parent, any Issuing Bank and any Lender, at any
      reasonable time and from time to time upon reasonable prior notice.

     

    (d) Upon
      its
      receipt of a duly completed Assignment and Assumption executed by an assigning
      Lender and an assignee, the assignee’s completed Administrative Questionnaire
      (unless the assignee shall already be a Lender hereunder), the processing and
      recordation fee referred to in paragraph (b)
      of this
      Section and any written consent to such assignment required by paragraph (b)
      of this
      Section, the Global Administrative Agent shall accept such Assignment and
      Assumption and record the information contained therein in the Register and
      will
      provide prompt written notice to Borrower of the effectiveness of such
      assignment. No assignment shall be effective for purposes of this Agreement
      unless it has been recorded in the Register as provided in this
      paragraph.

     

    
      
        
        

      

      
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    (e) Any
      Lender may, without the consent of Borrower, Parent, the Global 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
      (27) such Lender’s obligations under this Agreement shall remain unchanged, (28)
      such Lender shall remain solely responsible to the other parties hereto for
      the
      performance of such obligations, and (29) Borrower, Parent, the Global
      Administrative Agent, the Issuing Banks and the other Lenders shall continue
      to
      deal solely and directly with such Lender in connection with such Lender’s
      rights and obligations under this Agreement. Any agreement or instrument
      pursuant to which a Lender sells such a participation shall provide that such
      Lender shall retain the sole right to enforce the Loan Documents and to approve
      any amendment, modification or waiver of any provision of the Loan Documents;
      provided
      that
      such agreement or instrument may provide that such Lender will not, without
      the
      consent of the Participant, agree to any amendment, modification or waiver
      described in the second proviso to Section
      10.2(b)
      that
      affects such Participant. Subject to paragraph (f)
      of this
      Section, Borrower and Parent agree that each Participant shall be entitled
      to
      the benefits of Section
      2.15,
      Section
      2.16
      and
Section
      2.17
      to the
      same extent as if it were a Lender and had acquired its interest by assignment
      pursuant to paragraph (b)
      of this
      Section. To the extent permitted by law, each Participant also shall be entitled
      to the benefits of Section
      10.8
      and
Section
      10.12
      as
      though it were a Lender, provided
      such
      Participant agrees to be subject to Section
      2.18(c)
      as
      though it were a Lender.

     

    (f) A
      Participant shall not be entitled to receive any greater payment under
Section
      2.15,
      Section
      2.16
      or
Section
      2.17
      than the
      applicable Lender would have been entitled to receive with respect to the
      participation sold to such Participant. A Participant that would be a Foreign
      Lender if it were a Lender shall not be entitled to the benefits of Section
      2.17
      unless
      Borrower is notified of the participation sold to such Participant and such
      Participant agrees, for the benefit of Borrower, to comply with Section
      2.17(e)
      as
      though it were a Lender.

    


    (g) Any
      Lender may at any time pledge or assign a Lien in all or any portion of its
      rights under this Agreement to secure obligations of such Lender, including
      any
      pledge or assignment to secure obligations to a Federal Reserve Bank or, in
      the
      case of a Lender organized in a jurisdiction outside of the United States,
      a
      comparable Person, and this Section 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.

     

    Section
      10.5 Survival.
      All
      covenants, agreements, representations and warranties made by the Loan Parties
      in the Loan Documents and in the certificates or other instruments delivered
      in
      connection with or pursuant to this Agreement or any other Loan Document shall
      be considered to have been relied upon by the other parties hereto and shall
      survive the execution and delivery of the Loan Documents and the making of
      any
      Loans and issuance of any Letters of Credit, regardless of any investigation
      made by any such other party or on its behalf and notwithstanding that any
      Agent, any Issuing Bank, the Arranger or any Lender may have had notice or
      knowledge of any Default or incorrect representation or warranty at the time
      any
      credit is extended hereunder, and shall continue in full force and effect as
      long as the principal of or any accrued interest on any Loan or any fee or
      any
      other amount payable under this Agreement is outstanding and unpaid or any
      Letter of Credit is outstanding and so long as the Commitments have not expired
      or terminated. The provisions of Section
      2.15,
      Section
      2.16, Section
      2.17,
      Section
      2.18,
      Section
      10.3
      and
Section
      10.12and
      Article
      IX
      shall
      survive and remain in full force and effect regardless of the consummation
      of
      the transactions contemplated hereby, the repayment of the Loans, the expiration
      or termination of the Letters of Credit and the Commitments or the termination
      of this Agreement or any provision hereof.

     

    
      
        
        

      

      
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    Section
      10.6 Counterparts;
      Effectiveness.
      This
      Agreement may be executed in counterparts (and by different parties hereto
      on
      different counterparts), each of which shall constitute an original, but all
      of
      which when taken together shall constitute a single contract. Except as provided
      in Section
      4.1,
      this
      Agreement shall become effective when it shall have been executed by the Global
      Administrative Agent and when the Global Administrative Agent shall have
      received counterparts hereof which, when taken together, bear the signatures
      of
      each of the other parties hereto, and thereafter shall be binding upon and
      inure
      to the benefit of the parties hereto and their respective successors and
      assigns. Delivery of an executed counterpart of a signature page of this
      Agreement by telecopy shall be effective as delivery of a manually executed
      counterpart of this Agreement.

     

    Section
      10.7 Severability.
      Any
      provision of this Agreement held to be invalid, illegal or unenforceable in
      any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such invalidity, illegality or unenforceability without affecting the validity,
      legality and enforceability of the remaining provisions hereof; and the
      invalidity of a particular provision in a particular jurisdiction shall not
      invalidate such provision in any other jurisdiction.

     

    Section
      10.8 Right
      of Setoff.
      If an
      Event of Default shall have occurred and be continuing, each of the Agents,
      the
      Issuing Banks, the Lenders and their Affiliates is hereby authorized at any
      time
      and from time to time, to the fullest extent permitted by law, to set off and
      apply any and all deposits (general or special, time or demand, provisional
      or
      final) at any time held and other obligations at any time owing by such Lender
      or Affiliate to or for the credit or the account of any Loan Party against
      any
      and all the obligations of Borrower or Parent now or hereafter existing under
      this Agreement held by such Lender, irrespective of whether or not such Lender
      shall have made any demand under this Agreement and although such obligations
      may be unmatured; provided,
      however,
      that
      any such set off and application shall be subject to the provisions of
Section
      2.18. 

     

    Section
      10.9 GOVERNING
      LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

    


    (a) THIS
      AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY
      EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE
      LAWS
      OF THE STATE OF NEW YORK.

     

    (b) BORROWER
      AND PARENT HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR ITSELF AND ITS
      PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE
      OF
      NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT
      OF
      THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF,
      IN
      ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
      LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
      OF
      THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS
      IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
      SUCH
      NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH
      OF THE PARTIES HERETO AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
      LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
      AND
      MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
      MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT
      THE AGENTS OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
      RELATING TO THIS AGREEMENT AGAINST BORROWER OR PARENT OR THEIR PROPERTIES IN
      THE
      COURTS OF ANY JURISDICTION.

    


    
      
        
        

      

      
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    (c) BORROWER
      AND PARENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT
      THEY MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH THEY MAY NOW OR
      HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
      OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (b)
      OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
      FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
      MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
      COURT.

    


    (d) EACH
      PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY REGISTERED
      MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
      NEW
      YORK. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS
      AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
      LAW.

     

    Section
      10.10 WAIVER
      OF JURY TRIAL.
      EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
      LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
      OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
      DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
      TORT OR ANY OTHER THEORY). EACH PARTY HERETO vv)
      CERTIFIES
      THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
      EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
      LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND ww)
      ACKNOWLEDGES
      THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
      AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
      THIS
      SECTION.

     

    
      
        
        

      

      
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    Section
      10.11 Headings.
      Article
      and Section headings and the Table of Contents used herein are for convenience
      of reference only, are not part of this Agreement and shall not affect the
      construction of, or be taken into consideration in interpreting, this
      Agreement.

     

    Section
      10.12 Confidentiality.
      Each of
      the Agents, the Issuing Banks, and the Lenders agrees to maintain the
      confidentiality of the Information (as defined below), except that Information
      may be disclosed xx) 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), yy) to the extent requested by any regulatory or
      self-regulatory authority, zz) to the extent required by applicable laws or
      regulations or by any subpoena or similar legal process, aaa) to any other
      party
      to this Agreement, bbb) in connection with the exercise of any remedies
      hereunder or any suit, action or proceeding relating to this Agreement or any
      other Loan Document or the enforcement of rights hereunder or thereunder, ccc)
      subject to an agreement containing provisions substantially the same as those
      of
      this Section, to (1) any assignee of or Participant in, or any prospective
      assignee of or Participant in, any of its rights or obligations under this
      Agreement or (2) any actual or prospective counterparty (or its advisors) to
      any
      Hedging Agreement, ddd) with the consent of Borrower or eee) to the extent
      such
      Information (1) becomes publicly available other than as a result of a breach
      of
      this Section by any Person or (2) becomes available to any Agent, any Issuing
      Bank or any Lender on a non-confidential basis from a source other than
      Borrower, Parent or any of their Affiliates. For purposes of this Section,
      “Information”
means
      all information received from Borrower, Parent or their Affiliates relating
      to
      the Loan Parties or their business, other than any such information that is
      available to any Agent, any Issuing Bank or any Lender on a non-confidential
      basis prior to disclosure by Borrower, Parent or any of their Affiliates;
provided
      that, in
      the case of information received from Borrower or Parent after the date of
      this
      Agreement, such information is clearly identified at the time of delivery as
      confidential. Any Person required to maintain the confidentiality of Information
      as provided in this Section shall be considered to have complied with its
      obligation to do so if such Person has exercised the same degree of care to
      maintain the confidentiality of such Information as such Person would accord
      to
      its own confidential information.

     

    Section
      10.13 Interest
      Rate Limitation.
      It is
      the intention of the parties hereto to conform strictly to applicable interest,
      usury and criminal laws and, anything herein to the contrary notwithstanding,
      the obligations of Borrower and the Guarantors to a Lender, any Issuing Bank
      or
      any Agent under this Agreement or any Loan Document shall be subject to the
      limitation that payments of interest shall not be required to the extent that
      receipt thereof would be contrary to provisions of law applicable to such
      Lender, such Issuing Bank or Agent limiting rates of interest which may be
      charged or collected by such Lender, such Issuing Bank or Agent. Accordingly,
      if
      the transactions contemplated hereby or thereby would be illegal, unenforceable,
      usurious or criminal under laws applicable to a Lender, any Issuing Bank or
      any
      Agent (including the laws of any jurisdiction whose laws may be mandatorily
      applicable to such Lender or Agent notwithstanding anything to the contrary
      in
      this Agreement or any other Loan Document then, in that event, notwithstanding
      anything to the contrary in this Agreement or any other Loan Document, it is
      agreed as follows:

    


    
      
        
        

      

      
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    (a) the
      provisions of this Section shall govern and control;

     

    (b) the
      aggregate of all consideration which constitutes interest under applicable
      law
      that is contracted for, taken, reserved, charged or received under this
      Agreement or any Loan Document or otherwise in connection with this Agreement
      or
      any Loan Document by such Lender, such Issuing Bank or such Agent shall under
      no
      circumstances exceed the maximum amount of interest allowed by applicable law
      (such maximum lawful interest rate, if any, with respect to each Lender, each
      Issuing Bank and the Agents herein called the “Highest
      Lawful Rate”),
      and
      any excess shall be cancelled automatically and if theretofore paid shall be
      credited to Borrower by such Lender, such Issuing Bank or such Agent (or, if
      such consideration shall have been paid in full, such excess refunded to
      Borrower);

    


    (c) all
      sums
      paid, or agreed to be paid, to such Lender, such Issuing Bank or such Agent
      for
      the use, forbearance and detention of the indebtedness of Borrower to such
      Lender, such Issuing Bank or such Agent hereunder or under any Loan Document
      shall, to the extent permitted by laws applicable to such Lender, such Issuing
      Bank or such Agent, as the case may be, be amortized, prorated, allocated and
      spread throughout the full term of such indebtedness until payment in full
      so
      that the actual rate of interest is uniform throughout the full term
      thereof;

    


    (d) if
      at any
      time the interest provided pursuant to this Section or any other clause of
      this
      Agreement or any other Loan Document, together with any other fees or
      compensation payable pursuant to this Agreement or any other Loan Document
      and
      deemed interest under laws applicable to such Lender, such Issuing Bank or
      such
      Agent, exceeds that amount which would have accrued at the Highest Lawful Rate,
      the amount of interest and any such fees or compensation to accrue to such
      Lender, such Issuing Bank or such Agent pursuant to this Agreement or such
      other
      Loan Document shall be limited, notwithstanding anything to the contrary in
      this
      Agreement or any other Loan Document, to that amount which would have accrued
      at
      the Highest Lawful Rate, but any subsequent reductions, as applicable, shall
      not
      reduce the interest to accrue to such Lender, such Issuing Bank or such Agent
      pursuant to this Agreement or such other Loan Document below the Highest Lawful
      Rate until the total amount of interest accrued pursuant to this Agreement
      or
      such other Loan Document, as the case may be, and such fees or compensation
      deemed to be interest equals the amount of interest which would have accrued
      to
      such Lender or Agent if a varying rate per annum equal to the interest provided
      pursuant to any other relevant Section hereof (other than this Section) or
      thereof, as applicable, had at all times been in effect, plus
      the
      amount of fees which would have been received but for the effect of this
      Section; and

    


    (e) with
      the
      intent that the rate of interest herein shall at all times be lawful, and if
      the
      receipt of any funds owing hereunder or under any other agreement related hereto
      (including any of the other Loan Documents) by such Lender, such Issuing Bank
      or
      such Agent would cause such Lender to charge Borrower a criminal rate of
      interest, the Lenders, the Issuing Banks and the Agents agree that they will
      not
      require the payment or receipt thereof or a portion thereof which would cause
      a
      criminal rate of interest to be charged by such Lender, such Issuing Bank or
      such Agent, as applicable, and if received such affected Lender, such Issuing
      Bank or Agent will return such funds to Borrower so that the rate of interest
      paid by Borrower shall not exceed a criminal rate of interest from the date
      this
      Agreement was entered into.

     

    
      
        
        

      

      
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    Section
      10.14 Collateral
      Matters; Hedging Agreements.
      The
      benefit of the Security Documents and of the provisions of this Agreement
      relating to the Collateral shall also extend to and be available to those
      Lenders or their Affiliates which are counterparties to the Hedging Agreements
      on a pro rata basis in respect of any Hedging Obligations of any Loan Party
      that
      are in effect at such time as such Person (or its Affiliate) is a Lender, but
      only while such Person or its Affiliate is a Lender; provided
      that it
      is the intention of the Lenders that receipt of payment in respect of Hedging
      Obligations of any Loan Party under any Hedging Agreement with a Combined
      Lender, or any Affiliate of a Combined Lender from realization of any
      Collateral, shall be subject to the terms of the Intercreditor Agreement and
      the
      Security Documents.

     

    Section
      10.15 Arranger;
      Other Agents.
      None of
      the Persons identified on the facing page or the signature pages of this
      Agreement as the “Sole Book Manager and Lead Arranger” or any future
      documentation agent or syndication agent shall have any right, power,
      obligation, liability, responsibility or duty under this Agreement or any other
      Loan Document other than, except in the case of the Arranger, those applicable
      to all Lenders as such. Without limiting the foregoing, none of the Arranger,
      any documentation agent or any syndication agent shall have or be deemed to
      have
      any fiduciary relationship with any Lender or any Loan Party. Borrower, Parent
      and each Lender acknowledge that they have not relied, and will not rely, on
      any
      of the Arranger, any documentation agent or syndication agent in deciding to
      enter into this Agreement or in taking or not taking any action hereunder or
      under the Loan Documents.

     

    Section
      10.16 Intercreditor
      Agreement; Loan Documents.
      Each
      Lender on behalf of itself and any Affiliate which is a counterparty to a
      Hedging Agreement acknowledges and agrees that the Global Administrative Agent
      has entered into the Intercreditor Agreement and the Security Documents on
      behalf of itself, the other Agents, Lenders and Affiliates thereof that are
      parties to a Hedging Agreement, and each of them (by their signature hereto
      or
      acceptance of the benefits of the Security Documents) hereby agrees to be bound
      by the terms of the Intercreditor Agreement and such Security Documents,
      acknowledge receipt of copies of the Intercreditor Agreement and such Security
      Documents and consents to the rights, powers, remedies, indemnities and
      exculpations given to the Global Administrative Agent thereunder. For so long
      as
      the Intercreditor Agreement shall be in effect, the terms and conditions of
      this
      Agreement and the other Loan Documents are subject to the terms of the
      Intercreditor Agreement. In the event of any inconsistency between this
      Agreement or any other Loan Document and the terms of the Intercreditor
      Agreement, the Intercreditor Agreement shall control. In the event of any
      inconsistency between this Agreement and the terms of any other Loan Document
      (other than the Intercreditor Agreement), this Agreement shall
      control.

     

    Section
      10.17 USA
      PATRIOT Act Notice.
      Each
      Lender hereby notifies Borrower and Parent 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 Borrower
      and
      Parent, which information includes the name and address of Borrower and Parent
      and other information that will allow such Lender to identify Borrower and
      Parent in accordance with the Act.

     

    
      
        
        

      

      
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    Section
      10.18 NO
      ORAL AGREEMENTS.
      THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
      AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
      THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
      OR
      SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
      AGREEMENTS AMONG THE PARTIES.

    


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    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed by their respective authorized officers as of the day and year first
      above written.

     

    
      	 	 	 
	 	
              STORM CAT ENERGY CORPORATION,

              a
                corporation amalgamated under the laws of British
                Columbia

            
	 
 	 
 	 
 
	 	By:  	/s/
              Paul Wiesner
	 	
              

              Paul
                Wiesner,

              Chief
                Financial Officer

            


    

     

    
      	 	 	 
	 	
              STORM
                CAT ENERGY (USA) CORPORATION,
                

              a
                Colorado corporation

            
	 
 	 
 	 
 
	 	By:  	/s/ Paul Wiesner
	 	
              

              Paul
                Wiesner,

              Secretary
                and Treasurer

            
	 	 


    

     

    
      
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              JPMORGAN
                CHASE BANK, N.A.,
                

              as
                Global Administrative Agent and as a Lender

            
	 
 	 
 	 
 
	 	By:  	/s/ J. Scott Fowler
	 	
              
J.
              Scott Fowler, Senior Vice President
	 	 


    

     

    
      
        

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