CDN. $125,000,000
                      EXTENDIBLE REVOLVING CREDIT FACILITY
                                CREDIT AGREEMENT
                                     among
                         KEYSPAN ENERGY DEVELOPMENT CO.
                                 (as Borrower)
                                      and
                         Certain Financial Institutions
                                  (as Lenders)
                                      with
                                BANK OF MONTREAL
                           (as Agent for the Lenders)
                                  Dated as of:
                                October 13, 2000


                               TABLE OF CONTENTS

ARTICLE 1
INTERPRETATION .................................................... 1
1.1 Definitions ................................................... 1
1.2 Headings and Table of Contents ............................... 26
1.3 References ................................................... 26
1.4 Rules of Interpretation ...................................... 26
1.5 Generally Accepted Accounting Principles ..................... 27
1.6 Time ......................................................... 27
1.7 Monetary References .......................................... 27
1.8 Payment for Value ............................................ 27

ARTICLE 2
REPRESENTATIONS AND WARRANTIES ................................... 27
2.1 Representations and Warranties ............................... 27
2.2 Deemed Representation and Warranty ........................... 36

ARTICLE 3
THE CREDIT FACILITIES ............................................ 36
3.1 Obligations of each Lender ................................... 36
3.2 Purpose ...................................................... 36
3.3 Takeover Notification ........................................ 36
3.4 Accommodations ............................................... 37
3.5 Selection of Libor Interest Periods .......................... 37
3.6 Conditions Applicable to Bankers' Acceptances ................ 38
3.7 Agent's Duties re Bankers' Acceptances ....................... 40
3.8 Notice of Repayment .......................................... 40
3.9 Pro-Rata Treatment of Accommodations ......................... 41
3.10 Conversion Option ........................................... 42
3.11 Rollovers of Libor Loans .................................... 42
3.12 Notices Irrevocable ......................................... 42
3.13 Extension of Maturity Date .................................. 43

ARTICLE 4
REPAYMENT AND PREPAYMENT ......................................... 44
4.1 Reduction of Commitments and Repayment of Accommodations
................................................................... 44
4.2 Repayment of Outstandings In Excess of Commitments ........... 44
4.3 Cancellation of Commitment and Prepayment .................... 45
4.4 Early Repayment of Libor Loans and Bankers' Acceptances ...... 45
4.5 Evidence of Indebtedness ..................................... 46

ARTICLE 5
PAYMENT OF INTEREST AND FEES ..................................... 46
5.1 Interest on Prime Loans ...................................... 46
5.2 Interest on US Base Rate Loans ............................... 46
5.3 Interest on Libor Loans ...................................... 47
5.4 Bankers' Acceptance Fees ..................................... 47
5.5 Interest on Overdue Amounts .................................. 47
5.6 Standby Fees ................................................. 48
5.7 Agent's Fees ................................................. 48
5.8 Maximum Rate Permitted by Law ................................ 48
5.9 Interest Generally ........................................... 49
5.10 Interest and Fee Adjustment ................................. 49

ARTICLE 6
SECURITY ......................................................... 49
6.1 Security ..................................................... 49
6.2 Release and Amendment of Security ............................ 49
6.3 Registrations and Renewals ................................... 50
6.4 Extensions, Etc. ............................................. 50
6.5 Permitted Encumbrances, Permitted Indebtedness and
    Permitted Title Defects ...................................... 50

ARTICLE 7
PAYMENT AND TAXES ................................................ 51
7.1 Time, Place and Currency of Payment .......................... 51
7.2 Application of Payments Prior to an Event of Default ......... 51
7.3 Taxes ........................................................ 51
7.4 Account Debit Authorization .................................. 52

ARTICLE 8
CONDITIONS PRECEDENT TO DISBURSEMENT OF THE ACCOMMODATIONS ....... 52
8.1 Effectiveness and Conditions Precedent ....................... 52
8.2 Continuing Conditions Precedent .............................. 54
8.3 Waiver of a Condition Precedent .............................. 54

ARTICLE 9
COVENANTS ........................................................ 54
9.1 Positive Covenants ........................................... 54
9.2 Negative Covenants ........................................... 60
9.3 Financial Covenants .......................................... 63

ARTICLE 10
EVENTS OF DEFAULT ................................................ 63
10.1 Events of Default ........................................... 63
10.2 Acceleration and Demand ..................................... 67
10.3 Cash Collateral Accounts .................................... 67
10.4 Remedies on Default ......................................... 68
10.5 Right of Set-Off ............................................ 68
10.6 Application and Sharing of Payments Following Acceleration .. 69
10.7 Lenders May Perform Covenants ............................... 69
10.8 Waiver of Default ........................................... 69

ARTICLE 11
EXPENSES AND INDEMNITIES ......................................... 70
11.1 Reimbursement of Expenses ................................... 70
11.2 Increased Cost .............................................. 70
11.3 Illegality .................................................. 71
11.4 Substitute Basis of Accommodation ........................... 72
11.5 Funding Indemnity ........................................... 72
11.6 General Indemnity ........................................... 73
11.7 Environmental Indemnity ..................................... 73

ARTICLE 12
THE AGENT AND THE LENDERS ........................................ 73
12.1 Authorization of Agent ...................................... 74
12.2 Responsibility of Agent ..................................... 74
12.3 Acknowledgment of Lenders ................................... 74
12.4 Rights and Obligations of Each Lender ....................... 75
12.5 Notice to Lenders ........................................... 75
12.6 Notices between the Lenders, the Agent and the Borrower ..... 75
12.7 Agent's Duty to Deliver Documents Obtained from the Borrower. 75
12.8 Arrangements for Accommodations ............................. 76
12.9 Arrangements for Repayment of Accommodations ................ 76
12.10 Repayment by Lenders to Agent .............................. 76
12.11 Adjustments Among Lenders .................................. 77
12.12 Lenders' Consents to Waivers, Amendments, etc. ............. 78
12.13 Reimbursement of Agent's Expenses or Lender's Costs ........ 79
12.14 Reliance by Agent on Notices, etc. ......................... 79
12.15 Relations with Borrower .................................... 79
12.16 Successor Agent ............................................ 79
12.17 Indemnity of Agent ......................................... 80
12.18 Sharing of Information ..................................... 80
12.19 Amendment to this Article .................................. 80

ARTICLE 13
SUCCESSORS AND ASSIGNS AND JUDGMENT CURRENCY ..................... 81
13.1 Successors and Assigns ...................................... 81
13.2 Confidentiality ............................................. 84
13.3 Judgment Currency ........................................... 85

ARTICLE 14
MISCELLANEOUS .................................................... 85
14.1 Severability ................................................ 85
14.2 Survival of Undertakings .................................... 85
14.3 Failure to Act .............................................. 85
14.4 Waivers ..................................................... 86
14.5 Amendments .................................................. 86
14.6 Notice ...................................................... 86
14.7 Whole Agreement ............................................. 86
14.8 Governing Law ............................................... 86
14.9 Term of Agreement ........................................... 87
14.10 Time of Essence ............................................ 87
14.11 Conflict with Loan Documents ............................... 87
14.12 Dealings with Agent ........................................ 87
14.13 Further Assurances ......................................... 87
14.14 Counterpart Execution ...................................... 87


Schedule "A" - Notice of Accommodation, Repayment, Prepayment or Cancellation of
               Total Commitment
Schedule "B" - Power of Attorney Terms - Bankers' Acceptances
Schedule "C" - Notice of Conversion
Schedule "D" - Notice of Rollover
Schedule "E" - Compliance Certificate
Schedule "F" - Request for Extension
Schedule "G" - Lender Transfer Agreement
Schedule "H" - GMS Corporate Policy for Commodity Pricing, Trading and
               Contractual Relationships
Schedule "I" - Labour and Pension Matters
Schedule "J" - Facilities Schedules

               Part I - Gas Plants, Processing Facilities and Compressors

               Part II - Pipelines and Gas Gathering Systems
Schedule "K" - Land Rights
Schedule "L" - Material Contracts
Schedule "M" - Permits
Schedule "N" - Marketing Contracts
Schedule "O" - Sources and Uses of Funds
Schedule "P" - Litigation
Schedule "Q" - Contingent Liabilities
Schedule "R" - Corporate Organization
Schedule "S" - Pro Forma Financial Statements
Schedule "T" - Preferential Rights
Schedule "U" - Outstanding Swaps.

THIS CREDIT AGREEMENT is dated and effective as of the 13th day of October, 2000

AMONG:
KEYSPAN ENERGY DEVELOPMENT CO., an unlimited liability
company under the laws of Nova Scotia, having its principal
offices in Calgary, Alberta, Canada (the "Borrower")

AND:

BANK OF MONTREAL, in its capacity as Lender

AND:
BANK OF MONTREAL, a Canadian chartered bank having its
head office in the City of Montreal, Quebec, Canada and a branch office, in
Toronto, Ontario, Canada, in its capacity as Agent

WHEREAS:

The Borrower has requested that the Lenders and the Agent agree to provide
credit facilities on the terms and conditions hereinafter set forth.

     NOW  THEREFORE,  in  consideration  of the premises,  the covenants  herein
contained  and for  other  good and  valuable  consideration,  the  receipt  and
sufficiency of which is hereby  acknowledged by each of the parties hereto,  the
parties agree as follows:

                                   ARTICLE 1
                                 INTERPRETATION

1.1 Definitions

     In this Agreement,  including the recitals and the Schedules  hereto and in
all notices  pursuant to this Agreement,  unless something in the subject matter
or context is inconsistent therewith, the following words and phrases shall have
the following meanings:

"Acceleration  Notice"  means a  written  notice  delivered  by the Agent to the
Borrower  pursuant to Section  10.2(a)(ii)  declaring  all  Indebtedness  of the
Borrower  outstanding  to the  Agent  and the  Lenders  hereunder  to be due and
payable;

"Accommodations"  means the  advance  of Loans and the  acceptance  of  Bankers'
Acceptances;

"Accounts"  means the accounts and records  established by the Agent pursuant to
Section 4.5 to record the Borrower's liability to each of the Lenders in respect
of the Accommodations  and other amounts  outstanding by the Borrower to each of
the Lenders and the Agent hereunder;

"Administrative  Services Agreement" means the Administrative Services Agreement
dated as of December 1, 1998 between Gulf, GMSL and the Partnership;

"Affiliate"  means any  Person  which,  directly  or  indirectly,  controls,  is
controlled  by or is under  common  control  with  another  Person;  and for the
purposes of this definition,  "control"  (including,  with correlative meanings,
the terms  "controlled  by" or "under common  control  with") means the power to
direct or cause the  direction  of the  management  and  policies of any Person,
whether through the ownership of Voting Shares or by contract or otherwise;

"Agent" means BMO when acting in its capacity as administrative  agent hereunder
and includes any  successor  agent  appointed  pursuant to Section 12.16 and any
successor entity to BMO;

"Agent's Account for Payments" means:

(a)  for all payments in Canadian  Dollars,  an account to be  designated by the
     Agent in  writing  to the  Borrower  to be  maintained  by the Agent at its
     Toronto main branch,  to which  payments and transfers in Canadian  Dollars
     are to be effected; and

(b)  for all payments in US Dollars, an account to be designated by the Agent in
     writing to the Borrower to be  maintained  by the Agent at its Toronto main
     branch, to which payments and transfers in US Dollars are to be effected;

or such  other  places or  accounts  as may be agreed  upon by the Agent and the
Borrower from time to time and notified in writing to the Lenders;

"Agent's Branch of Account" means the Bank of Montreal, After Sales, 19th Floor,
First Canadian Place, 100 King Street West,  Toronto,  Ontario M5X 1A1 (Telecopy
No. (416) 867-5718) or such other office or branch of the Agent in Canada as the
Agent may from time to time advise the Borrower and the Lenders in writing;

"Agreement" means this credit agreement,  all Schedules  attached hereto and any
future amendments or supplements thereto;

"Applicable  Law" means,  in relation to any Person,  property,  transaction  or
event,  all applicable  provisions (or mandatory  applicable  provisions,  if so
specified)  of  federal,  provincial,  state or  local  laws,  statutes,  rules,
regulations,  official directives and orders of all Governmental Authorities and
Governmental  Actions of  Governmental  Authorities in actions or proceedings in
which  the  Person  in  question  is a party or by  which it is bound or  having
application to the Person, property, transaction or event;

"Assets" means,  collectively,  the entire right,  title, estate and interest of
the Loan Parties,  in and to the  Facilities,  the Rimbey Shares,  the Marketing
Business, the Permits and the Land Rights;

"Bankers'  Acceptances"  means the  Accommodations  or any portion  thereof made
available  by the  Lenders  to the  Borrower  by  way  of  bankers'  acceptances
denominated  in Cdn.  Dollars  which are  issued  by the  Borrower  pursuant  to
Sections 3.4 or 3.10 and accepted by the Lenders pursuant to Section 3.6;

"Banking  Day"  means a day  which  is both a  Business  Day and a day on  which
dealings in US Dollars by and between  banks in the  London,  England  interbank
market may be conducted;

"BMO" means Bank of Montreal,  a Canadian  chartered bank and its successors and
permitted assigns;

"Borrower" means KeySpan Energy Development Co., an unlimited  liability company
incorporated  under the laws of Nova  Scotia,  having its  principal  offices in
Calgary, Alberta, Canada;

"Borrowing Notice" means a notice in the form attached as Schedule "A";

"bps" means 1/100 of 1%;

"Branch of Account" means, with respect to each Lender,  the branch or office of
such  Lender  at the  address  set  forth  opposite  such  Lender's  name on the
signature  pages of this  Agreement  or such other branch or office in Canada as
such Lender may from time to time advise the  Borrower and the Agent in writing;
provided that, for purposes of delivering any notice required to be delivered by
the Agent to a Lender pursuant to Section 12.6 and for purposes of effecting any
payments to a Lender in connection with this Agreement,  a Lender may specify in
writing  any other  branch or office of such Lender in Canada and such branch or
office  shall  thereafter  be the  Branch of  Account  of such  Lender  for such
purpose;

"Business  Day" means a day,  excluding  Saturday and Sunday,  on which  banking
institutions  are open for  business in Toronto,  Ontario,  Canada and  Calgary,
Alberta,  Canada and, in respect of any payments  hereunder in US Dollars, a day
on which banking institutions are also open for business in New York, New York;

"Buy/Sell  Agreements" means,  collectively,  the Buy/Sell Agreement dated as of
December 1, 1998 between GMSFL and Gulf and the Buy/Sell  Agreement  dated as of
December 1, 1998 between the Partnership and Gulf;

"Canadian  Dollars",  "Cdn.  Dollars" and the symbol "Cdn.  $" each means lawful
money of Canada;

"Capital Distribution by a Person" means:

(a)  any  declaration  or  payment  by the  Person  of  any  dividend  or  other
     distribution on or in respect of any of the share capital of such Person;

(b)  any  payment  by the  Person  in  respect  of the  redemption,  retraction,
     purchase or other  acquisition or  retirement,  in whole or in part, of any
     Voting  Shares  or any  share or equity  rights  in or in  relation  to its
     capital or equity;

(c)  any  payment by the Person of any amount of  principal,  interest  or other
     amounts in respect of any loan or other  indebtedness  which is owed to any
     of its Affiliates;

(d) any loan, advance, payment of management or consulting fees or reimbursement
of costs  which is made by the  Person  to or in  favour  of a holder  of Voting
Shares in respect of the Person or an Affiliate of such holder; or

(e) the transfer by such Person of any property or assets for  consideration  of
less than its or their fair market value to any of its Affiliates;

whether any of the foregoing is made, paid or satisfied in or for cash, property
or both;

"Capital  Lease"  means,  with  respect  to  any  Person,  any  lease  or  other
arrangement  relating to real or personal  property which should,  in accordance
with Generally  Accepted  Accounting  Principles,  be accounted for as a capital
lease on a balance sheet of such Person;

"Capitalization"  means, in respect of the Borrower,  as at the last day of each
Fiscal Quarter, the aggregate of Shareholders' Tangible Equity and Funded Debt;

"Cash  Collateral  Account"  means an  account of a Loan Party with the Agent or
such  institution  as  designated  by the Agent from which the  Borrower  has no
withdrawal  rights or privileges,  which account and all funds credited  thereto
and  interest  thereon  (all of which shall be for the account of the  Borrower)
shall be the subject of a Security  Interest in favour of the Agent on behalf of
the Lenders;

"CDOR Rate" means with respect to each Bankers'  Acceptance which is required to
be accepted and purchased on any day, the arithmetical average of the percentage
discount  rates  (expressed to 3 decimal  places) for Canadian  Dollar  bankers'
acceptances in comparable  amounts  having an identical  issue and maturity date
which  is  quoted  on  the  "Reuters'  Screen  CDOR  Page"  (as  defined  in the
International Swap Dealer Association, Inc. definitions, as modified and amended
from  time to time)  for  acceptances  of  Schedule  I banks  under the Bank Act
(Canada)  (or if such screen  shall not be  available  any  successor or similar
service selected by the Agent) as at approximately  10:00 a.m. (Toronto time) on
such  day,  or if  such  day is not a  Business  Day,  then  on the  immediately
preceding  Business Day (as adjusted by the Agent in good faith after 10:00 a.m.
(Toronto  time) or as soon  thereafter as  practicable to reflect any error in a
posted rate of interest or in the posted  average  annual rate of interest).  If
neither such screen nor any successor or similar service is available,  then the
"CDOR  Rate" shall  mean,  with  respect to each  Bankers'  Acceptance  which is
required to be accepted  and  purchased  by a Lender  hereunder  on any day, the
percentage discount rate (expressed to 3 decimal places) determined by the Agent
to be the average of the quoted discount rates at which Canadian Dollar bankers'
acceptances in comparable  amounts  having an identical  issue and maturity date
are being bid for  discount by the Lenders  which are Schedule I banks under the
Bank  Act  (Canada)  at  approximately  10:00  a.m.  (Toronto  time)  or so soon
thereafter  as  practical  on the  day of the  acceptance  and  purchase  of the
Bankers'  Acceptances  hereunder.  If any  Lender  does  not  furnish  a  timely
quotation,  the Agent shall determine the relevant discount rate on the basis of
the  quotation  or  quotations   furnished  by  the  remaining   Lenders.   Each
determination of the CDOR Rate shall be conclusive and binding,  absent manifest
error, and be computed using any reasonable averaging and attribution method;

"Circumstance" has the meaning set forth in Section 11.2;

"Collateral"  is a collective  reference  to all  property,  assets,  rights and
things  (whether  real,  personal or mixed),  tangible and  intangible,  and the
proceeds and products  thereof,  subjected or intended to be subjected from time
to time to any Security Interest under any Security;

"Commitment" means each Lender's obligation to make Accommodations  available to
the  Borrower,  subject  to  the  terms  of  this  Agreement,  at any  one  time
outstanding  up to but not exceeding the amount set forth opposite such Lender's
name on the signature pages hereto (or in any Lender Transfer Agreement executed
hereafter)  as  such  Lender's  Commitment,  as such  amount  may  hereafter  be
cancelled,  reduced,  increased or terminated from time to time pursuant to this
Agreement;

"Commodity Swap" means a financial arrangement entered into between a Person and
a  counterparty  on a case by case basis,  the purpose and effect of which is to
mitigate or eliminate its exposure to fluctuations in commodity prices;

"Compliance  Certificate"  means a compliance  certificate  substantially in the
form  attached  hereto as Schedule "E" executed by any 2 of the Chief  Executive
Officer, Chief Operating Officer, Chief Financial Officer, President, Controller
or Treasurer of the Borrower;

"Confidentiality  Agreement" means the  Confidentiality  Agreement made the 27th
day of September,  2000 between the Agent,  the Borrower,  Gulf, the Partnership
and GMSFL, as from time to time amended;

"Contingent   Liabilities"  means,  in  respect  of  a  Person,  any  obligation
whatsoever,  whether  choate or  inchoate,  direct or  indirect,  contingent  or
otherwise,  guaranteeing or assuring, or in effect guaranteeing or assuring, any
Indebtedness  or  obligation  of any other Person,  or  indemnifying  any Person
against loss, in any manner,  whether directly or indirectly including,  without
limitation, Financial Assistance;

"Conversion"  means a conversion of one type of Accommodation  into another type
of Accommodation;

"Conversion  Date"  means a Business  Day or Banking Day that the  Borrower  has
notified  the Agent at the  Agent's  Branch of  Account as the date on which the
Borrower has elected to convert an  Accommodation  or a portion thereof pursuant
to Section 3.10;

"Conversion Notice" means a notice in the form of Schedule "C";

"Credit Facility" has the meaning set forth in Section 3.1;

"Currency Swap" means a financial  arrangement entered into between a Person and
a  counterparty  on a case by case basis in connection  with a foreign  exchange
futures contract,  currency swap,  currency option or currency exchange or other
similar  currency  related  transactions,  the purpose and effect of which is to
mitigate or eliminate the exposure to fluctuations in exchange rates;

"Dedicated Reserves" means all Gas reserves owned or controlled by Persons which
have entered into agreements with any of the Loan Parties dedicating  production
of any Gas from lands specified in such agreement to processing at any Facility;

"Default"  shall mean the  occurrence of any of the events  specified in Section
10.1,  whether  or not any  requirement  for  notice  or  lapse of time or other
condition precedent has been satisfied;

"Demand for Repayment" means an Acceleration Notice given hereunder;

"Discount  Proceeds" means, in respect of any Bankers' Acceptance where required
to be purchased by a Lender  hereunder,  an amount (rounded to the nearest whole
cent  with  1/2 of 1 cent  being  rounded-up)  determined  as of the  applicable
Drawdown Date, Conversion Date or Rollover Date which is equal to:

        Face Amount x Price
        -----------
            100

where "Face Amount" is the face amount of such bankers' acceptance and "Price"
is equal to:

                       100
                -------------------
                1 + (Rate x Term )
                           -----
                            365

where the "Rate" is the  applicable  Discount Rate expressed as a decimal on the
day of purchase; the "Term" is the term of such Bankers' Acceptance expressed as
a number of days;  and the Price as so  determined  is rounded up or down to the
fifth decimal place with .000005 being rounded-up;

"Discount Rate" means:

(a) with respect to an issue of Bankers'  Acceptances  having the same  maturity
date  accepted  by a  Lender  that is a bank  under  Schedule  I of the Bank Act
(Canada), the CDOR Rate; and

(b) with respect to an issue of Bankers'  Acceptances  having the same  maturity
date  accepted  by a Lender  that is a bank  under  Schedule  II to the Bank Act
(Canada),  the  lesser of (i) the CDOR Rate plus 10 bps and (ii) the  percentage
discount rate (expressed to 5 decimal places)  determined by the Agent to be the
average of the quoted discount rates (as at  approximately  10:00 a.m.  (Toronto
time) on such day) of the Reference Lenders for bankers'  acceptances  having an
identical  issue  and  maturity  date  in  amounts  comparable  to the  Bankers'
Acceptances to be accepted and purchased by such Lenders in connection with such
issue of Bankers' Acceptances. If any Reference Lender does not furnish a timely
quotation,  the Agent shall determine the relevant discount rate on the basis of
the  quotation or the  quotations  furnished by the other  reference  lender (if
any).  Each such  determination  by the Agent shall be  conclusive  and binding,
absent  manifest error,  and may be computed using any reasonable  averaging and
attribution methods;

"Drawdown" means the advance of an Accommodation by way of a Prime Loan, US Base
Rate Loan,  Libor  Loan,  or  Bankers'  Acceptance,  other than as a result of a
Conversion or Rollover;

"Drawdown Date" means each Business Day on which  Accommodations  are to be made
pursuant to a request from the Borrower under Section 3.4;

"EBITDA" means, as at the last day of any Fiscal Quarter, an amount,  calculated
in the aggregate on a  consolidated  basis for the Borrower in  accordance  with
GAAP (but excluding any Subsidiaries that are not Guaranteeing Subsidiaries) for
the 4 Fiscal Quarters  ending on the last day of such Fiscal  Quarter,  equal to
the Net Income of the Borrower for such period, excluding extraordinary, unusual
or non-recurring  items net of any applicable  income taxes, as reflected in the
consolidated  statement of income of the Borrower in  accordance  with GAAP (but
excluding any  Subsidiaries  that are not  Guaranteeing  Subsidiaries)  for such
period:

     (a)  plus, to the extent deducted in calculating  such amount,  the amounts
          classified in such consolidated statement of income of the Borrower in
          accordance with GAAP (without duplication) as:

          (i)  income taxes (including deferred income taxes) in respect of such
               period;

          (ii) Interest Expense in respect of such period;

          (iii) depreciation expenses in respect of such period; and

          (iv) amortizations  of other  charges to the extent not  involving  an
               outlay  of cash in such  period  including,  without  limitation,
               losses on the sale or other disposition of assets;

     (b)  minus,  to the extent added in  calculating  such amount in accordance
          with GAAP, the amounts  classified in such  consolidated  statement of
          income as credits to income to the extent not  involving  a receipt of
          cash in such period, including:

          (i)  gains on the sale or other disposition of assets;

          (ii) any amount of  earnings  on sinking  fund  assets  other than any
               amount which is unconditionally available to the Borrower; and

          (iii) amortization of deferred income;

provided  that,  to the extent the  Borrower or a  Guaranteeing  Subsidiary  has
acquired,  during the 4 Fiscal  Quarters  ending on the last day of such  Fiscal
Quarter, any additional Facilities, the Borrower shall be entitled to include in
EBITDA for such period a calculation  of "EBITDA" for such  additional  Facility
taking into  account the  operation of such  acquired  Facility for that part of
such  period  prior to its date of  acquisition  based  on  historical  cost and
revenue  information,  provided that the  calculation  of the amount of any such
inclusion has first been  approved in writing by the Agent.  For the purposes of
calculating  EBITDA  where the  calculation  requires  any  period  prior to the
Effective Date to be taken into account, the calculation as to such period shall
be made after taking into account the effect of the Purchase and Sale  Agreement
and assuming it was in effect for such periods;

"Effective Date" means the date on which the conditions  precedent under Section
8.1 have been satisfied;

"Eligible Assignee" has the meaning ascribed thereto in Section 13.1;

"Environmental  Laws" means all  Applicable  Laws  regarding the  environment or
pursuant  to  which  Environmental  Liabilities  would  arise  or  have  arisen,
including  relating to the Release or threatened  Release of any  contaminant or
the generation, use, storage or transportation of any contaminant;

"Environmental  Liabilities" means any and all Indebtedness for any Release, any
environmental  damage,  any  contamination  or any other  environmental  problem
caused or alleged to have been caused to any Person, property or the environment
as a result of any Release or the condition of any property or asset, whether or
not caused by a breach of applicable Laws,  including,  without limitation,  all
Indebtedness  arising  from  or  related  to:  any  surface,  underground,  air,
groundwater, or surface water contamination;  the abandonment or plugging of any
well;  restorations  and  reclamations;  the removal of or failure to remove any
foundations,  structures or equipment; the cleaning up or reclamation of storage
sites;  any  Release;  violation  of pollution  standards;  and personal  injury
(including  sickness,  disease or death) and  property  damage  arising from the
foregoing and including,  without limiting the generality of the foregoing,  all
common law  principles  in relation to any civil action in  nuisance,  trespass,
negligence or strict  liability;  all applicable  federal,  provincial and local
laws,  by-laws,  rules,  regulations,  policies,  orders,  information  letters,
interim  directives,   general  bulletins,   guidelines,   standards,  or  other
legislation  of any kind,  and any  judicial  or  administrative  interpretation
thereof,  including  any  judicial or  administrative  order,  written  request,
consent decree or judgment or any provision or condition of any permit, license,
approval  or  operating   authorization   relating  to  the  protection  of  the
environment, health, safety or natural resources;

"Equivalent  Amount" in one  currency  (the  "First  Currency")  of an amount in
another currency (the "Other  Currency") means, as of the date of determination,
the amount of the First Currency which would be required to purchase such amount
of the Other Currency at the Bank of Canada noon (Toronto  time)  mid-point spot
rate for such currencies on such date of  determination  (as quoted or published
from time to time by the Bank of Canada)  or, if such date of  determination  is
not a Business  Day, on the  Business  Day  immediately  preceding  such date of
determination,  or at such other rate as may have been agreed to by the Borrower
and the Agent;

"Escrow Funds" has the meaning ascribed thereto in Section 10.3(b);

"Event of Default" means any of the events or circumstances specified in Section
10.1 after the lapse of any cure or notice period;

"Facilities"  means,  collectively,  the pipelines,  the gas processing  plants,
fractionation plants, gathering systems, compressor stations and other equipment
and  facilities   described  in  Schedule  "J"  and  such  additional  Midstream
Facilities in which any Loan Party may hereafter acquire an interest;

"Facilities  Service  Agreement"  means the agreement titled as such dated as of
December 1, 1998 entered into between Gulf and the Partnership;

"Fed Funds Rate" means,  on any day, the rate of interest per annum for that day
set forth in the weekly  statistical  release  designated as  H.15(519),  or any
successor publication,  published by the Federal Reserve Board (the "H.15(519)")
opposite the caption "Federal Funds (Effective)" and, if on any day such rate is
not yet  published  in  H.15(519),  the rate for such day  shall be the rate set
forth in the Composite 3:30 p.m. Quotations for US Government Securities, or any
successor.9  publication,  for such day  published by the Federal  Reserve Board
(the  "Composite  3:30  p.m.  Quotations")  under  the  caption  "Federal  Funds
Effective  Rate";  provided  that if such  rate is not yet  published  in either
H.15(519) or the Composite 3:30 p.m. Quotations,  such rate shall be the average
of the interest  rates per annum quoted for such day on overnight  Federal funds
(such words to have the meaning  generally given to them by money market brokers
of  recognized  standing  doing  business  in  the  United  States  of  America)
transactions  received by the Agent from 3 Federal  funds  brokers of recognized
standing selected by the Agent, acting reasonably;

"Financial  Assistance"  means providing or agreeing to provide (either directly
or indirectly) financial assistance to any Person including, without limitation,
financial  assistance by way of a loan,  Guarantee,  loan purchase or any credit
support  arrangement  or of any nature  whatsoever,  the  purpose of which is to
assure payment to the holder of any Indebtedness of such Person;

"Fiscal  Quarter"  means the 3 month period  commencing on the first day of each
Fiscal Year and each  successive  3 month period  thereafter  during such Fiscal
Year;

"Fiscal Year" means the Borrower's  fiscal year  commencing on January 1 of each
year and ending on  December 31 of such year,  or such other  fiscal year of the
Borrower as agreed to by the Majority Lenders;

"Funded Debt" means, at any time and as determined in accordance with GAAP on a
consolidated basis for the Borrower, an amount equal to the aggregate of:

          (a)  all Indebtedness for Borrowed Money;

          (b)  all  other  obligations  of a Loan  Party  in  respect  of  which
               interest charges are customarily paid; and

          (c)  all  obligations  secured by any  Security  Interest  existing on
               property owned by a Loan Party subject to such Security Interest,
               whether or not the  obligations  secured  thereby shall have been
               assumed;

but, for the purposes of this Agreement,  for so long as the KS Subordination is
in full force and effect, Funded Debt shall not include Intercorporate Debt;

"Funded  Debt to  Capitalization  Ratio"  means,  as of the last day of a Fiscal
Quarter the ratio of Funded Debt to Capitalization;

"Funded Debt to EBITDA Ratio" means, as of the last day of a Fiscal Quarter, the
ratio of Funded Debt to EBITDA;

"Gas"  means  natural  gas,  solution  gas  and any  other  gas,  together  with
associated  substances  before such gas has been  subjected  to any  processing,
except  water  removal,  and  includes  sulphur and all fluid  hydrocarbons  not
defined as crude oil under the  provisions of the Oil and Gas  Conservation  Act
(Alberta) and amendments thereto or substitutions therefore;

"Gas Liquids" means ethane, butane, propane, pentane and pentanes plus;

"Gas Products"  means Gas Liquids,  residue gas and other products  derived from
Gas processing;

"Generally  Accepted  Accounting  Principles" or "GAAP" means generally accepted
accounting principles consistently applied which are in effect from time to time
in Canada;

"GMS Agreements" means, collectively:

          (a)  the Partnership Agreement;

          (b)  the Buy/Sell Agreements;

          (c)  the Facilities Service Agreement;

          (d)  the NGL Purchase and Sale Agreements;

          (e)  the  Indemnity  Agreement  dated as of December  1, 1998  between
               Gulf, the Partnership, GMSFL and the Borrower;

          (f)  the Administrative Services Agreement;

          (g)  the Purchase and Sale Agreement;

          (h)  the  Marketing  Agency  Agreement  dated as of  December  1, 1998
               between Gulf and the Partnership;

          (i)  the letter  agreement  re:  fractionation  and storage at Chevron
               Fort  Saskatchewan  Plant  between  Gulf  and  GMSFL  dated as of
               December 1, 1998; and

          (j)  NGL  Extraction  Agreement  between  Gulf  and  GMSL  dated as of
               December 1, 1998;

"GMSL" means Gulf Midstream Services Limited,  a wholly-owned  Subsidiary of the
Borrower, having its principal office in Calgary, Alberta;

"GMSFL" means GMS Facilities Limited, a wholly-owned Subsidiary of the Borrower,
having its principal office in Calgary, Alberta;

"Governmental Authority" means any federal, state, provincial,  county, local or
municipal government;  any governmental body, agency, authority,  board, bureau,
department or commission  (including any taxing authority);  any instrumentality
or office of any of the foregoing  (including any quarter  tribunal)  exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining to government; or any entity directly or indirectly controlled by any
of the foregoing;

"Governmental Authorization" means an authorization,  consent, approval, waiver,
order, decree, license, exemption, permit,  registration,  filing, qualification
or  declaration  of or with  any  Governmental  Authority  (other  than  routine
reporting requirements) or the giving of notice to any Governmental Authority or
any other action in respect of a Governmental Authority;

"Guarantee"  means any  undertaking  to assume,  guarantee,  indemnify,  endorse
(other  than the  routine  endorsement  of  cheques  in the  ordinary  course of
business),  contingently  agree to purchase or to provide  funds for the payment
of, or otherwise  become liable in respect of, any  Indebtedness  of any Person;
provided that the amount of each  Guarantee  shall be deemed to be the amount of
the  Indebtedness  guaranteed  thereby,  unless  the  Guarantee  is limited to a
specified amount or to realization exclusively on specified assets in which case
the amount of such Guarantee  shall be deemed to be the lesser of such specified
amount or the fair market value of such specified assets, as the case may be, or
the amount of such Indebtedness;

"Guaranteeing  Subsidiary"  means each of GMSL,  GMSFL,  the Partnership and any
other  wholly-owned  Subsidiary  which from time to time provides the Subsidiary
Guarantee and Security Interests provided for by Section 6.1(b) to the Agent;

"Gulf" means Gulf Canada Resources Limited;

"Hazardous  Materials" means any substance,  whether in liquid, solid or gaseous
form, which, if released into the environment,  would likely cause,  immediately
or at some future  time,  harm or  degradation  to the  environment  or to human
health or  safety,  includes  any  substance  defined as or  determined  to be a
pollutant,   contaminant,   hazardous  waste,   hazardous  chemical,   hazardous
substances, toxic substance or dangerous good under any Environmental Law;

"Indebtedness"  means, with respect to any Person,  all the Person's present and
future  indebtedness,  liabilities  and  obligations  of every  nature  and kind
whatsoever,  whether absolute or contingent,  material or not, known or unknown,
direct  or  indirect,  including  indebtedness  created,  incurred,  assumed  or
guaranteed by such Person,  all  indebtedness for borrowed money, any obligation
arising in respect of any Swap or similar  obligation,  the redemption amount of
all preferred shares redeemable at the option of the holder, and all liabilities
which in accordance  with GAAP would appear on the  liability  side of a balance
sheet of such Person prepared as at such time;

"Indebtedness  for Borrowed  Money"  means,  with respect to a Loan Party at any
time, all  indebtedness,  liabilities  and obligations of the Loan Party at such
time:

          (a)  in respect of money borrowed (whether by such Loan Party or not);

          (b)  in respect of any lease which would be accounted  for as either a
               Capital Lease or synthetic  lease or any other  obligation  under
               which interest charges are customarily paid, and being the amount
               thereof  determined  in  accordance  with  GAAP  which  would  be
               required to be classified and accounted for as a Capital Lease;

          (c)  in respect of Swap Indebtedness;

          (d)  in respect of  "take-or-pay"  or similar prepaid  Indebtedness of
               such Loan Party whereby it is obligated to settle, at some future
               date more than 90 days from the date the  obligation is incurred,
               payment  in  respect  of  a  commodity,   whether  by  deliveries
               (accelerated or otherwise) of such commodity, payment of money or
               otherwise howsoever;

          (e)  in respect of reimbursement  obligations  under letters of credit
               and letters of guarantee;

          (f)  in  connection  with the  acquisition  of  assets or  receipt  of
               services  or both  unless the same are  payable  on normal  trade
               terms in less than 6 months  from the date  incurred  and are not
               the  subject  of  any   renewal  or   extension   provisions   or
               arrangements;

          (g)  held  by or  payable  to a  bank,  trust  or  insurance  company,
               financial institution or other Person whose principle business is
               lending  money,  and  including as a result of any  assignment or
               transfer; or

          (h)  for Contingent  Liabilities  in respect of any such  Indebtedness
               for Borrowed Money (as hereinbefore defined);

"Intercorporate  Debt" means  Indebtedness  of the  Borrower  to KeySpan  Energy
Development  Corporation,  Nicodama Beheer V B.V. or Solex Production Ltd. which
has been subordinated to the Outstandings pursuant to the KS Subordination;

"Intercreditor  Subordination  Agreement" means the agreement dated concurrently
herewith entered into between the Loan Parties, the Agent, the Syndicated Agent,
the Syndicated Lenders and KeySpan  Corporation in relation,  inter alia, to the
subordination  of  Indebtedness  under the Syndicated  Facility to  Indebtedness
under the Loan Documents;

"Interest Coverage Ratio" means, as at the end of each Fiscal Quarter, the ratio
of EBITDA to Interest  Expense of the Borrower for the 12 month period ending on
the last day of such Fiscal Quarter;

"Interest Date" means the last Business Day of each month;

"Interest  Determination  Date" means,  with  respect to a Libor Loan,  the date
which is 2 Banking  Days  prior to the first  day of the Libor  Interest  Period
applicable to such Libor Loan;

"Interest  Expense" means, in respect of any period and on a consolidated  basis
for the Borrower,  an amount equal to all interest expenses (including discounts
in respect of bankers'  acceptances  or  commercial  paper) and fees  (including
Guarantee,  standby, commitment,  structuring,  agency, management,  acceptance,
stamping or other fees) in respect of Indebtedness or credit facilities, whether
expensed  or  capitalized  (but as to  capitalized  amounts,  only  that  amount
amortized in the relevant period), in accordance with GAAP, including:

          (a)  that portion of all lease  payments in respect of Capital  Leases
               of the Borrower and its  Subsidiaries  which is or, in accordance
               with GAAP,  should be  classified  as an interest  expense in the
               consolidated statement of income of the Borrower;

          (b)  the net  loss or  gain  associated  with  interest  rate  hedging
               obligations relating to debt obligations; and

(c) amortization of deferred financing charges or premiums on indebtedness;

but excluding  any of the  foregoing to the extent it relates to  Intercorporate
Debt;

"Interest Payment Date" means:

     (a)  with respect to Prime Loans and US Base Rate Loans,  the last Business
          Day of each calendar month;

     (b)  with respect to a Libor Loan, the Libor Interest Date; or

     (c)  such  other date or dates as the  Borrower  and the Agent may agree in
          writing;

"Interest Swap" means a financial  arrangement entered into between a Person and
a counterparty  on a case by case basis,  in connection  with interest rate swap
transactions,  interest  rate options,  cap  transactions,  floor  transactions,
collar  transactions and other similar interest rate related  transactions,  the
purpose  and  effect  of which is to  mitigate  or  eliminate  its  exposure  to
fluctuations in interest rates;

"Judgment Currency" has the meaning set forth in Section 13.3;

"KeySpan  Canada" means TNG Liquids Ltd., a corporation  incorporated  under the
laws of Alberta having its principal offices in Calgary, Alberta;

"KS  Subordination"  means the  subordination  agreement  of even date  herewith
entered into between the Agent, on behalf of the Lenders, the Borrower,  KeySpan
Energy Development Corporation, Solex Production Ltd. and Nicodama Beheer V B.V.
in relation, inter alia, to the subordination of Intercorporate Debt of any Loan
Party to KeySpan Energy  Development  Corporation  (U.S.) and Nicodama  Beheer V
B.V.;

"Land Rights" means easements, rights-of-way, surface leases, fee simple titles,
subleases,  licenses  of  occupation  and permits by virtue of which a Person is
entitled to occupy and access lands used or useful for the purposes of owning or
operating Midstream Facilities,  including,  without limitation, the Land Rights
detailed in Schedule "K";

"Lender's  Proportion"  means, at any time and from time to time with respect to
each Lender,  the proportion that the amount of its Commitment  bears the amount
of the Total Commitment at such time and if the Total Commitment is cancelled or
terminated,  "Lender's  Proportion"  shall mean the Lender's  Proportion of such
Lender in effect immediately prior to such cancellation or termination;

"Lenders" means each of the financial  institutions named on the signature pages
hereto as Lenders and BMO in its capacity as a Lender but  excluding  BMO in its
capacity as the Agent; and any other financial  institution which is an Eligible
Assignee,  has executed a Lender Transfer  Agreement  pursuant to Section 13 and
which Lender Transfer Agreement has been executed by the assignee and the Agent,
and "Lender" means any 1 of them;

"Lender Transfer Agreement" means an agreement in the form attached hereto as
Schedule "G";

"Libor" means,  with respect to any Libor Interest Period  applicable to a Libor
Loan,  the  rate  determined  by the  Agent,  based on a 360 day  year,  rounded
upwards,  if necessary,  to the nearest  whole  multiple of 1/16th of 1%, as the
average of the offered  quotations  appearing  on Reuters  Page LIBO (or if such
Reuters Page LIBO shall not be available  the average of the offered  quotations
appearing  on  Telerate  Page  3750 or if such  Telerate  Page  shall  not be.14
available,  any  successor or similar  services as may be selected by the Agent)
for a period  equal  to the  number  of days in the  applicable  Libor  Interest
Period, for deposits in US Dollars of amounts comparable to the principal amount
of such Libor Loan to be outstanding  during such Libor Interest  Period,  at or
about 11:00 a.m. (London, England time) 2 Banking Days prior to a Drawdown Date,
Conversion  Date or Rollover  Date, as the case may be, for such Libor  Interest
Period.  If neither the Reuters Page LIBO,  Telerate  Page nor any  successor or
similar service is available, then "Libor" shall mean, with respect to any Libor
Interest  Period  applicable to a Libor Loan, the rate  determined by the Agent,
based on a 360 day year,  rounded  upwards,  if necessary,  to the nearest whole
multiple  of 1/16th of 1%, at which the  Agent,  in  accordance  with its normal
practice,  would be prepared to offer to leading  banks in the London  interbank
market  for  delivery  by the  Agent on the first  day of the  applicable  Libor
Interest  Period for a period equal to the number of days in such Libor Interest
Period,  deposits in US Dollars of amounts comparable to the principal amount of
such Libor Loan to be outstanding during such Libor Interest Period, at or about
11:00 a.m.  (London,  England  time) 2 Banking  Days  prior to a Drawdown  Date,
Conversion  Date or Rollover  Date, as the case may be, for such Libor  Interest
Period;

"Libor  Interest  Date"  means the date  falling  on the last day of each  Libor
Interest  Period;  provided that if the Borrower selects a Libor Interest Period
for a period  longer than 3 months,  the Libor  Interest Date shall be each date
falling every 3 months after the beginning of such Libor Interest Period and the
date falling on the last day of such Libor Interest Period;

"Libor  Interest  Period"  means,  with respect to each Libor Loan,  the initial
period (subject to  availability)  of  approximately 1 month, 2 months, 3 months
and 6 months (as  selected  by the  Borrower  and  notified  to the Agent at the
Agent's  Branch of Account  pursuant to Section 3.4 or 3.10)  commencing  on and
including the Drawdown Date,  Conversion  Date or Rollover Date, as the case may
be,  applicable  to such Libor Loan and ending on and  including the last day of
such  initial  period,  and  thereafter,  each  successive  period  (subject  to
availability)  of  approximately  1 month, 2 months,  3 months,  or 6 months (as
selected by the  Borrower  and  notified  to the Agent at the Agent's  Branch of
Account pursuant to Section 3.4) commencing on and including the last day of the
prior Libor  Interest  Period;  provided  that no Libor  Interest  Period may be
selected which ends after the Maturity Date;

"Libor Loans" means the Accommodations or any portion thereof, made available by
the  Lenders  to the  Borrower  pursuant  to  Sections  3.4,  3.10 or  3.11  and
outstanding  from  time  to  time,  which  are  denominated  in US  Dollars,  as
applicable,  and on which the Borrower has agreed to pay interest in  accordance
with Section 5.3;

"Loan Documents" means this Agreement,  the Security,  each Bankers' Acceptance,
and all other certificates,  instruments and documents delivered by or on behalf
of the Borrower or any Guaranteeing Subsidiary in connection therewith from time
to time;

"Loan Parties" means the Borrower and each of the Guaranteeing Subsidiaries, and
"Loan Party" means any of them;

"Loans" means the aggregate principal amount of Accommodations  outstanding from
time to time pursuant to this  Agreement by way of Prime Loans,  Libor Loans and
US Base Rate Loans and "Loan"  means any Prime Loan,  Libor Loan or US Base Rate
Loan;

"Majority Lenders" means:

     (a)  where there is only 1 Lender, such Lender;

     (b)  where there are less than 3 Lenders, all of the Lenders;

     (c)  during  the  continuance  of a Default or an Event of  Default,  those
          Lenders (but in no  circumstances  less than 2) to whom there is owing
          66-2/3% or more of the aggregate Outstandings; and

     (d)  at any other time those Lenders (but in no circumstances less than 2),
          the  Commitments of which are, in the  aggregate,  at least 66-2/3% of
          the Total Commitment;

"Margin" means, at any time, a margin,
expressed as a rate per 365 day period for Prime Loans, US Base Rate Loans and
Bankers' Acceptances or in the case of Libor Loans, per 360 day period, payable
to the Lenders with respect to:

Type of Accommodation                   Funded Debt to EBITDA Ratio

                                                >1.75 to 1.0
                                                      to
                                                <2.75 to 1.0
                                                -
                                <1.75 to 1.0                       >2.75 to 1.0
                                -

Prime Loans and US Base Rate
Loans                             0.0 bps            0.0 bps           0.0 bps

Bankers' Acceptances
(acceptance fees)
                                  62.5 bps           75.0 bps         87.5 bps

Libor Loans                       62.5 bps           75.0 bps         87.5 bps


provided that so long as there is any  Syndicated  Indebtedness  then (i) during
the  period  from the  Effective  Date  until 6 months  thereafter,  the  margin
referred to above shall,  in all cases, be deemed to be that applicable to #1.75
to 1.0 and (ii) during the period  commencing 6 months after the Effective  Date
the  margin  referred  to  above  shall,  in all  cases,  be  deemed  to be that
applicable to >2.75 to 1.0;

"Mark to Market  Amount" means an amount  calculated in the aggregate for all of
the Loan Parties as at a particular date as the sum of the following amounts (in
each case if a positive number):

     (a)  the aggregate Swap Indebtedness of all of the Loan Parties, net of any
          "in the money"  positions  of the Loan Parties on such date in respect
          of outstanding Swaps;

     (b)  an amount,  in respect of all Gas Liquids which,  as of such date, any
          Loan  Party  owns and  holds in  storage  (including  Gas  Liquids  in
          transit)  or  has  an  obligation  to  purchase  (pursuant  to  future
          deliveries) for its own account,  determined as the difference between
          all  amounts  paid or  payable  by any Loan  Party in  respect  of the
          purchase of such Gas Liquids,  and deducting therefrom an amount equal
          to:

     (i)  the aggregate  proceeds  payable to the applicable Loan Party pursuant
          to any then outstanding  sales contracts with arm's length  purchasers
          (or  with  non-arm's  length   purchasers  on  terms  which  would  be
          applicable on an arm's length basis and reflecting  fair market value)
          entered  into by such Loan Party for the sale of such Gas  Liquids and
          under  which the  purchasers  are not then in default  of any  payment
          obligations in excess of 30 days; and

     (ii) in respect of all other Gas Liquids,  an amount equal to the aggregate
          value of such Gas Liquids on such date  calculated on the basis of the
          "NGL Ref.  Price"  and  "Condensate  Ref.  Price"  (as  defined in the
          Buy/Sell  Agreements on the Effective Date) for the month  immediately
          preceding such date, as applicable; and

(c) the aggregate amount which, as of such date, any Loan Party is committed for
its own  account  to pay for the  purchase  of Gas  (whether  for past or future
deliveries)  in respect of which a matching sale  transaction  as referred to in
Section  9.2(i)(v) is not in place,  less an amount equal to the aggregate value
of such Gas on such date,  calculated  as the product of the Monthly Price times
the Remaining Quantity. For the purposes hereof,  "Remaining Quantity" means the
sum of (i) the quantity of Gas previously delivered to, but not yet paid for by,
the Loan  Parties  under such  transactions  and (ii) the total  quantity of Gas
remaining  to be  delivered to the Loan  Parties  under such  transactions,  and
"Monthly  Price" means the "Alberta Spot Price - AECO  C/N.I.T.  (7A) C$/GJ" for
the  applicable  month as published  in the  Canadian Gas Price  Reporter in the
table entitled "Monthly Canadian and U.S. natural gas price summary".

"Marketing  Business"  means  the  marketing  of any Gas  Products  by the  Loan
Parties,  either as principal or agent,  pursuant to the Marketing Contracts and
other similar  contracts  pursuant to which any Loan Party may from time to time
market, or assume an obligation to market, any Gas Products;

"Marketing Contracts" means those contracts and agreements set forth in Schedule
"N" and any similar material  contracts entered into after the Effective Date by
a Loan Party in respect of its Marketing Business;

"Material  Adverse  Effect"  means a material  adverse  effect on the  business,
condition (financial or otherwise),  operations, assets or results of operations
of the Borrower and its  Guaranteeing  Subsidiaries  taken as a whole,  or their
ability to pay amounts  payable by them when due under the Loan Documents or, in
respect of any Loan Party, a material adverse effect on:

     (a)  the validity or  enforceability  of any Loan Document to which it is a
          party;

     (b)  its  ability  to  perform   its   obligations   (other  than   payment
          obligations,  as  aforesaid) in all material  respects  under the Loan
          Documents to which it is a party; or

     (c)  the rights and  remedies of the Agent or the Lenders  under any of the
          Loan Documents to which it is a party;

and, in the case of the  Partnership,  includes a material adverse effect on its
ability to conduct its business as  contemplated  by the GMS  Agreements  or the
Material Contracts;

"Material Contracts" means each of the agreements, contracts and instruments set
forth in Schedule "L" and Schedule "N";

"Maturity Date" means, October 12, 2001; or if such date is extended pursuant to
Section 3.13, the date to which it has been extended;

"Midstream  Facilities" means any Gas pipeline,  Gas compressing  facility,  Gas
processing  plant,  Gas Liquids  fractionation  facility,  Gas  Liquids  storage
facility or other similar  facility in which Gas or Gas Products are  processed,
treated,  compressed,  stored,  transported  or otherwise  handled or dealt with
after being produced;

"Net  Income"  means,  on a  consolidated  basis for the  Borrower,  net  income
calculated in accordance with GAAP;

"NGL Purchase and Sale Agreements"  means the agreements  entitled as such, each
dated December 1, 1998,  between the  Partnership and GMSFL and between Gulf and
the Partnership;

"1 Month B/A Rate" means on any day the CDOR Rate  hereunder  (determined  as of
10:00 a.m.  Toronto time on such day) which would be applicable in respect of an
issuance  of 1  month  Bankers'  Acceptances  in  an  aggregate  amount  of  Cdn
$10,000,000  issued on such day, or if such day is not a Business Day, then such
rate as determined at such time on the immediately preceding Business Day;

"Old  System  Lenders"  means a  Lender  which  is not  able to  issue  bankers'
acceptances  as  depository  bills  under  the  Depository  Bills  and Notes Act
(Canada);

"Outstandings" at a time means, in relation to the Credit Facility the aggregate
at the time of :

     (a)  the  Equivalent  Amount in Canadian  Dollars of the principal  amounts
          outstanding  of, and all overdue and unpaid  interest  outstanding  in
          respect of, Prime Loans, US Base Rate Loans and Libor Loans;

     (b)  the face amount of outstanding Bankers' Acceptances; and

     (c)  the  Equivalent  Amount in  Canadian  Dollars of  Indebtedness  to the
          Lenders or the Agent hereunder not included in any of the foregoing;

"Partnership" means Gulf Midstream Services  Partnership,  a general partnership
formed under the laws of the Province of Alberta of which the sole  partners are
the Borrower and GMSL;

"Partnership   Agreement"  means  the  general  partnership   agreement  of  the
Partnership,  initially  entered  into among Gulf,  the  Borrower and GMSL dated
December 1, 1998 as amended  September 23, 1999 and as from time to time amended
as permitted hereunder;

"Permits" means those licenses,  permits and other  Governmental  Authorizations
set forth in Schedule "M";

"Permitted  Disposition"  means,  in respect of the  Borrower or a  Guaranteeing
Subsidiary, any of the following:

     (a)  sales or dispositions by a Guaranteeing Subsidiary to the Borrower, by
          a Guaranteeing Subsidiary to another Guaranteeing Subsidiary or by the
          Borrower to a Guaranteeing Subsidiary;

     (b)  any sale,  lease,  sublease,  trade,  abandonment,  surrender or other
          disposition   of  any  assets   which  may  have   become   worn  out,
          unserviceable,  obsolete,  unsuitable or  unnecessary in operations or
          activities  relating to the business of the Loan  Parties,  taken as a
          whole,  provided  that  such  sale,  lease,  sublease,  trade or other
          disposition is in keeping with prudent industry practice;

     (c)  any  sale,  lease,  transfer  or other  disposition  of  assets in the
          ordinary course of business if:

          (i)  such  assets are sold,  leased,  transferred  or  disposed of for
               proceeds  not less than  their fair  market  value at the time of
               such disposition;

          (ii) no Default or Event of Default has occurred and is  continuing or
               would exist if such disposition is effected; and

          (iii)an  amount  equal to the  proceeds  of such  disposition,  net of
               direct costs of such disposition,  is reinvested in Assets within
               180 days from the date of the transaction  giving rise thereto or
               such  proceeds  are applied on account of a  cancellation  of the
               Total  Commitment  and a  permanent  reduction  in the  principal
               amount of Indebtedness hereunder;

(d)  dispositions  of Gas Products or other  Petroleum  Substances  constituting
inventory of a Loan Party disposed of in the ordinary course of such Loan Party'
s business;

(e)  the  sale  of  all of the  Rimbey  Shares  pursuant  to the  exercise  of a
Preferential Right arising from the execution of the Purchase and Sale Agreement
and the  terms of the  Articles  of  Continuance  of Rimbey  Pipe Line Co.  Ltd.
provided  that (i) the  price  specified  in the  notice to be  provided  to the
shareholders of Rimbey Pipe Line Co. Ltd. will be not less than  $12,000,000 and
(ii) if any  Preferential  Rights are  exercised  pursuant to such notice,  then
proceeds thereof are reinvested by the Borrower in Assets within 180 days of the
receipt thereof; or

(f) any  other  sale or  disposition  which  the  Majority  Lenders  agree to in
writing;

"Permitted Encumbrances" means, as of any date:

(a)  Security  Interests  granted in favour of the Agent or any Lender to secure
any Indebtedness under any of the Loan Documents;

(b) all rights reserved to or vested in any Government Authority by the terms of
any lease, license, franchise or permit or by a statutory provision to terminate
the lease,  license,  franchise  or permit,  to require  periodic  payments as a
condition of continuance or to effect a termination of any such lease,  license,
franchise  or permit or to distrain  against or to obtain a lien on any property
or assets  of a Loan  Party in the event of  failure  to make any such  periodic
payments;

(c)  undetermined  or  inchoate  Security   Interests   (including   operators',
mechanic's, builder's,  materialmen's and similar liens) arising in the ordinary
course of business,  to the extent such Security Interests relate to obligations
not  due or  delinquent  at  that  time  (or if due  or  delinquent,  are  being
diligently  contested in good faith by the applicable  Loan Party by appropriate
proceedings for amounts in the aggregate not in excess of $5,000,000);

(d) Security Interests for Taxes,  assessments or other governmental  charges or
levies  imposed  upon a Loan Party or upon its  income or  profits  or  property
(including Security Interests securing  assessments under workers'  compensation
laws,  unemployment  insurance or similar social security  legislation),  if the
same are not yet due and payable (or if due or delinquent,  are being diligently
contested in good faith by such Loan Party by appropriate proceedings in respect
of which there is no potential of forfeiture of any material  property  interest
of any Loan Party);

(e) the excess of any amount of any Taxes,  rates,  assessments or  governmental
charges or levies for which final  assessments (to the extent final  assessments
are issued or  applicable)  have not been  received over and above the amount of
such Taxes, rates,  assessments or governmental  charges or levies as set out in
the applicable filings made by the applicable Loan Party;

(f) easements, rights of way, servitudes,  zoning restrictions and other similar
rights and interests in land  (including  surface  rights for railways,  sewers,
drains,  watermains,   pipelines,  gas  mains,  electric,  light,  power,  cable
television and telephone and telegraph poles,  wires and cables (which do not in
the  aggregate  materially  impair  the  use and  benefit  of any  land  subject
thereto);

(g) any Preferential  Rights applicable to a Loan Party as set forth in Schedule
"U";

(h) the  reservations,  limitations,  provisions and conditions  contained in an
original  grant from the Crown of any lands or interests  therein and  statutory
exceptions to title;

(i) Security  Interests in respect of any material judgment  rendered,  or claim
filed,  against any Loan Party which such Loan Party shall be contesting in good
faith and liens  resulting  from a deposit of cash,  security or appeal bonds to
secure  the  costs  of  ongoing  litigation,  provided  that  the  execution  or
enforcement  of any  such  lien,  judgment  or claim is  effectively  stayed  or
appropriate  security  in respect  thereof is posted with the Agent as the Agent
may reasonably require;

(j) any Security  Interest or right of distress reserved in or exercisable under
any lease or sublease for rent or otherwise to effect  compliance with the terms
of such lease or sublease in respect of which the rent or other  obligations are
not at the  time  overdue,  or if  overdue,  the  validity  of which  are  being
contested at the time in good faith for amounts in the  aggregate  not in excess
of Cdn. $5,000,000;

(k) Security  Interests  (including  cash deposits)  securing the performance of
bids, tenders, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations, appeal bonds and performance bonds incurred as incidental
to and in the ordinary  course of a Loan Party  business,  if all such  Security
Interests neither  singularly nor in the aggregate secure  obligations in excess
of Cdn $5,000,000;

(l) Security  Interests  (including  cash  deposits)  given by a Loan Party to a
public  utility or any  Governmental  Authority  when  required  by such  public
utility or Governmental Authority in the ordinary course of the business of such
Loan Party in connection with its operations if such Security  Interests do not,
either  alone or in the  aggregate,  materially  impair the use of the  property
affected in the conduct of the business of such Loan Party;

(m) any other  Security  Interests  which the Majority  Lenders agree in writing
shall be permitted;

(n) any Security Interest to secure a Purchase Money  Obligation,  provided that
the  property  subject to such  Security  Interest is limited to the property in
respect of which the Purchase Money Obligation was incurred or assumed,  and the
identifiable or traceable  proceeds  thereof;  and for purposes hereof "Purchase
Money Obligation" means:

     (i)  indebtedness incurred,  assumed or owed by a Loan Party as all or part
          of, or incurred or assumed by a Loan Party to provide funds to pay the
          purchase  price of any property or assets  acquired by such Loan Party
          provided that:

          A.   the  aggregate  principal  amount  of all such  indebtedness,  in
               respect of all such  purchases of property or assets does not, at
               any time, exceed $500,000; and

          B.   no Loan Party or Affiliate thereof, immediately prior to entering
               into an agreement for the acquisition of such property or assets,
               owns or has any interest in, or any entitlement to own, or has an
               interest in, the property or assets or a portion thereof being so
               acquired; and

     (ii) in the extension,  renewal,  refinancing or replacement (or success of
          extensions, renewals, refinancings or replacements),  whether from the
          same or  another  lender,  in whole or in  part,  of any  Indebtedness
          referred to in paragraph (i) above, provided that the principal amount
          of  Indebtedness  secured by such extension,  renewal,  refinancing or
          replacement shall not exceed the principal amount of such Indebtedness
          immediately   prior  to  such  extension,   renewal,   refinancing  or
          replacement,  and the  security  interests  granted in respect of such
          Indebtedness  shall be  limited  to all or a part of the  property  or
          assets  which  secured  such  Indebtedness  immediately  prior to such
          extension, renewal, refinancing or replacement;

(o) any extension, renewal or replacement (or success of extensions, renewals or
replacements),  as a whole or in part, of any Security  Interest  referred to in
the preceding paragraphs (a) to (m) inclusive of this definition, so long as any
such extension,  renewal or replacement of such Security  Interest is limited to
all or any  part  of the  same  property  that  secured  the  Security  Interest
extended,  renewed or replaced  (plus  improvements  on such  property)  and the
principal  amount of the  Indebtedness  or  obligations  secured  thereby is not
increased;

"Permitted Indebtedness" means:

(a) Indebtedness under the Loan Documents;

(b) Indebtedness of the Borrower to a Guaranteeing Subsidiary or Indebtedness of
a Guaranteeing Subsidiary to the Borrower;

(c)  Indebtedness of the Borrower or a Guaranteeing  Subsidiary  incurred in the
ordinary  course of  business  for (i)  trade  payables  or (ii)  cash  calls or
reimbursement of operators  pursuant to operating or similar  agreements entered
into by it in the ordinary  course of business and provided,  in each case, that
the same are  payable on normal  trade terms in less than 6 months from the date
incurred  and  not  the  subject  of any  renewal  or  extension  provisions  or
arrangements;

(d) Syndicated  Indebtedness not exceeding in principal amount from time to time
the Syndicated Facility Amount;

(e) Intercorporate Debt;

(f) Contingent  Liabilities (other than Guarantees and indemnities in respect of
Indebtedness  for Borrowed Money) incurred in the ordinary course of business of
a Loan Party and which, in any event, (after any time when liability  thereunder
can be reasonably quantified in respect of a particular  circumstance) do not in
the aggregate exceed Cdn. $5,000,000; and

(g) Indebtedness  applicable pursuant to the definition of Mark to Market Amount
not exceeding Cdn. $5,000,000;

"Permitted  Title  Defects"  means,  in respect of any  particular  asset of the
Borrower or any  Guaranteeing  Subsidiary,  the  following  defects in its title
thereto:

(a) Permitted Encumbrances;

(b) title  defects  or  irregularities  which are of a minor  nature  and in the
aggregate  will not  materially  impair the use of the property for the purposes
for which it is held, or impair its saleability,  or cause a material disruption
or reduction in the production or cash flow (if any) associated therewith; and

(c) title defects  which are disclosed to and expressly  consented to in writing
by the Majority Lenders as constituting  Permitted Title Defects hereunder or of
which the Agent has actual (and not merely constructive)  knowledge prior to any
Accommodation first being made hereunder;

"Person" means any individual, firm, partnership,  company, corporation or other
body  corporate,   government,   governmental  body,  agency,   instrumentality,
unincorporated body of persons or association;

"Petroleum  Substances"  means  petroleum,  crude oil, crude bitumen,  synthetic
crude oil,  oilsands,  bituminous  sands,  natural gas,  natural gas liquids and
specific products derived.22 therefrom, condensate, related hydrocarbons and any
and all other substances, whether liquid, solid or gaseous, whether hydrocarbons
or not,  produced or producible in  association  with or derived from any of the
foregoing, including hydrogen sulphide, sulphur and coke;

"Preferential  Right" means any  pre-emptive  right,  right of first  refusal or
right  of  first  offer  pursuant  to  which  any  Person  may  have a right  of
acquisition in relation to any asset, property or undertaking;

"Prime Loans" means the  Accommodations or any portion thereof made available by
the Lenders to the Borrower  pursuant to Section 3.4, and outstanding  from time
to time, which are denominated in Canadian Dollars and on which the Borrower has
agreed to pay interest in accordance with Section 5.1;

"Prime Rate" means, with respect to Prime Loans, the greater on any day of:

     (a)  the annual rate of interest  announced  from time to time by the Agent
          as being its reference  rate then in effect for  determining  interest
          rates on  Canadian  Dollar  denominated  commercial  loans made by the
          Agent in Canada; and

     (b)  a rate of interest  per 365 day period equal to the sum of the 1 Month
          B/A Rate plus 1%;

"Purchase and Sale Agreement"  means the purchase and sale agreement among Gulf,
GMSL, GMSFL, the Partnership and the Borrower dated as of October 13, 2000;

"Rateably"  means the  proportion  that the  amount of the  Outstandings  of any
Lender (as the case may be) bears to the  aggregate of the  Outstandings  of all
Lenders;

"Reference  Lenders"  means,  if there is only 1  Lender  which is a bank  under
Schedule II to the Bank Act  (Canada),  such Lender and, if there is more than 1
such Lender,  any 2 of such Lenders agreed to by the Borrower and the Agent from
time to time;

"Release"  means any  presence,  release,  spill,  emission,  leaking,  pumping,
pouring,  injection,   escaping,  deposit,  disposal,   discharge,  leeching  or
migration  of  any  element  or  compound  in or  into  the  indoor  or  outdoor
environment  (including  the  abandonment  or  disposal of any  barrels,  tanks,
containers or receptacles containing any contaminant), or in, into or out of any
vessel or facility,  including the movement of any contaminant  through the air,
soil, subsoil, surface, water, groundwater, rock formation or otherwise which is
or may be (under any circumstances, whether or not they have not occurred);

     (a)  contrary to any Applicable Laws, Governmental Authorization, the terms
          of any title or  operating  document,  or to any other  authorization,
          permit or license; or

     (b)  harmful to any Person, property or the environment;

"Request for Extension"  means a request of the Borrower in the form attached as
Schedule "F";

"Rimbey  Shares"  means  20,303  common  shares in the  capital  stock of Rimbey
Pipeline Co. Ltd.;

"Rollover" means:

     (a)  with respect to any Libor Loan, the  continuation  of all or a portion
          of  such  Libor  Loan  (subject  to  the  provisions  hereof)  for  an
          additional  Libor  Interest  Period  subsequent  to the initial or any
          subsequent Libor Interest Period applicable thereto, all in accordance
          with Section 3.10; and

     (b)  with  respect to Bankers'  Acceptances,  the  issuance of new Bankers'
          Acceptances  (subject to the  provisions  hereof) in respect of all or
          any  portion  of  Bankers'  Acceptances  which  are  maturing,  all in
          accordance with Section 3.6;

"Rollover  Date"  means a Business  Day or  Banking  Day that the  Borrower  has
notified  the Agent at the  Agent' s Branch of  Account as the date on which the
Borrower  has  elected  to  rollover  an  Accommodation,  or a portion  thereof,
pursuant to Section 3.10;

"Rollover Notice" means a notice in the form of Schedule "D";

"Security" means all documents, instruments or agreements directly or indirectly
assuring  or  securing  the  Lenders  in respect  of the  Outstandings;  and any
amendments to any of the foregoing;  any indentures or instruments  supplemental
to or in  implementation  of  any  of the  foregoing;  and  any  and  all  other
documents,  instruments or agreements  pursuant to which the Agent or any Lender
is  assured or granted or  receives a Security  Interest  pursuant  to the terms
hereof (including as provided in Section 6.1) or thereof;

"Security  Interest"  means  any  security  by way of an  assignment,  mortgage,
charge, pledge, lien, encumbrance, title retention agreement (including, without
limitation,  a Capital Lease) or other security interest  whatsoever,  howsoever
created or arising, whether absolute or contingent, fixed or floating, perfected
or not;

"Shareholders'  Tangible  Equity" means,  in respect of the Borrower,  as at the
last day of any Fiscal  Quarter,  and as determined in accordance with GAAP on a
consolidated basis, the aggregate of (i) shareholders' equity classified as such
on the consolidated balance sheet of the Borrower including, without limitation,
retained  earnings,  the share capital and contributed  surplus  accounts of the
Borrower  appearing on the consolidated  balance sheet of the Borrower excluding
(A) any  subscribed  for  but  unissued  share  capital,  and  (B)  any  amounts
attributable  to shares of the Borrower or any  Subsidiary  which are redeemable
for cash at the option of the holder thereof  (whether or not the  circumstances
entitling the holder to such redemption  have then occurred or are  applicable);
plus  (ii)   Indebtedness  of  the  Borrower  which  has  been  subordinated  to
Indebtedness  of the Borrower to the Lenders and the Agent  hereunder  and under
any other  Loan  Document  pursuant  to a  subordination  agreement  in form and
substance   satisfactory   to  the  Lenders  and   specifically   including  the
Intercorporate Debt but excluding the Syndicated Indebtedness;

"Standby Fee Rate" means , at any time, the rate,  expressed as a rate per annum
based on a year of 365 days,  as set out in the  following  table  opposite  the
applicable Funded Debt to EBITDA Ratio from time to time:

                                Funded Debt to EBITDA Ratio
================================================================================
                                                1.75 to 1.0
                                                     to            >2.75 to 1.0
                                <1.75 to       <2.75 to 1.0
                                   1.0         -



Standby Fee Rate                12.5 bps         12.5 bps               15.0 bps
================================================================================

provided that so long as there is any Syndicated  Indebtedness,  then (i) during
the  period  from the  Effective  Date  until 6 months  thereafter,  the  margin
referred to above shall,  in all cases, be deemed to be that applicable to #1.75
to 1.0 and (ii) during the period  commencing 6 months after the Effective  Date
the  margin  referred  to  above  shall,  in all  cases,  be  deemed  to be that
applicable to >2.75 to 1.0;

"Subsidiary" means:

(a) a Person of which  another  Person  alone or in  conjunction  with its other
Subsidiaries  owns an aggregate number of Voting Shares sufficient to enable the
election of a majority of the  directors (or other  Persons  performing  similar
functions) regardless of the manner in which other Voting Shares are voted;

(b) a Person of which  another  Person  alone or in  conjunction  with its other
Subsidiaries  has,  through the  operation of any  agreement or  otherwise,  the
ability to elect or cause the election of a majority of the  directors (or other
Persons  performing  similar  functions) or otherwise  exercise control over the
management and policies of such Person; and

(c) any partnership or joint venture of which a Person:

     (i)  is the general or managing partner; or

     (ii) directly or indirectly, owns more than 50% of the equity or beneficial
          interest thereof;

and shall  include  any Person in like  relation  to a  Subsidiary,  and for the
purposes hereof in respect of the Borrower includes,  without limitation,  GMSL,
GMSFL and the Partnership;

"Subsidiary  Guarantee"  means a guarantee in the form of  Subsidiary  Guarantee
executed by GMFSC and the  Subsidiary  Guarantee and  Indemnity  executed by the
Partnership on the Effective Date, with such changes as the Agent may approve;

"Swap" means any Commodity Swap, Currency Swap or Interest Swap;

"Swap  Indebtedness"  means at any time for a Person in  respect of all Swaps to
which it is a party or by which it is bound,  the aggregate net amount,  if any,
which  (as of the date of any  determination  of the  amount  thereof)  would be
payable by such Person under all agreements  evidencing such Swaps in settlement
of  obligations  arising  thereunder as a result of an early  termination of all
such Swaps,  together with all interest,  fees and other amounts payable thereon
or in connection therewith;

"Syndicated   Agent"   means  the  Person   from  time  to  time  named  as  the
"Administrative Agent" pursuant to the Syndicated Credit Agreement, being on the
date hereof Royal Bank of Canada;

"Syndicated   Credit   Agreement"   means   the   Cdn.$200,000,000    extendible
revolving/term  credit facility credit agreement among the Borrower,  Royal Bank
of Canada, as agent, and the Syndicated Lenders as Lenders, dated July 29, 1999;

"Syndicated  Facility"  means  the  credit  facility  provided  to the  Borrower
pursuant to the terms of the Syndicated Credit Agreement;

"Syndicated  Facility  Amount" means the principal  amount of the commitments of
the Syndicated  Lenders under the Syndicated  Credit Agreement  aggregating Cdn.
$200,000,000  as such  amount is reduced  (but not  increased)  pursuant  to the
provisions of the Syndicated Credit Agreement;

"Syndicated   Indebtedness"  means  the  outstanding  principal  amount  of  all
Indebtedness  of the Borrower to the  Syndicated  Lenders  under the  Syndicated
Facility,  such amount being determined by including the principal amount of all
outstanding  loans and the face amount of all outstanding  Bankers'  Acceptances
thereunder,   together  with  all  interest,  fees  and  other  amounts  payable
thereunder;

"Syndicated  Lenders" means, on the date hereof, Royal Bank of Canada, The Chase
Manhattan Bank of Canada,  Bank of Montreal,  First Chicago NDB Bank, Canada and
Alberta Treasury Branches and such other lenders as may from time to time become
party to the Syndicated Credit Agreement in addition to or in replacement of any
of the  foregoing  lenders,  and in  accordance  with  and as  permitted  by the
provisions of the Syndicated Credit Agreement;

"Tax" means all present and future taxes, rates, levies,  imposts,  assessments,
dues, government fees, stamp taxes, deductions, charges or withholdings, and all
liabilities  with  respect  thereto,  and  any  interest,  additions  to tax and
penalties  imposed with respect  thereto,  excluding,  with respect to a Lender,
taxes imposed on its income or capital and franchise  taxes imposed on it by any
taxation authority;

"Taylor  Units" means  limited  partnership  interests in the Taylor NGL Limited
Partnership,  a limited partnership holding limited partnership interests in the
Taylor Gas Liquids Limited Partnership;

"Total  Commitment"  means the  amount of Cdn.  $125,000,000  (being  all of the
Commitments)  as hereafter  cancelled,  reduced or terminated  from time to time
pursuant to this Agreement;

"US Base Rate" means, on any day with respect to US Base Rate Loans, the greater
of:

     (a)  the annual rate of interest  announced  from time to time by the Agent
          as being its reference  rate then in effect for  determining  interest
          rates on US Dollar  denominated  commercial loans made by the Agent in
          Canada; and

     (b)  a rate of interest per 365 day period equal to the Fed Funds Rate plus
          100 bps;

"US Base Rate  Loans"  means the  Accommodations  or any portion  thereof,  made
available  by the Lenders to the  Borrower  pursuant to Sections 3.4 or 3.10 and
outstanding  from time to time, which are denominated in US Dollars and on which
the Borrower has agreed to pay interest in accordance with Section 5.2;

"US Dollars"  and the symbol "US$" each means lawful money of the United  States
of America; and

"Voting  Shares"  means  share  capital  of any class of any  corporation  which
carries voting rights to elect the board of directors  under any  circumstances,
but shares which carry the right to so vote  conditionally upon the happening of
an event shall not be  considered  Voting  Shares until the  occurrence  of such
event.

1.2     Headings and Table of Contents

     The headings,  the table of contents and the Article and Section titles are
inserted for convenience of reference only and shall not affect the construction
or interpretation of this Agreement.

1.3     References

     Unless   something  in  the  subject  matter  or  context  is  inconsistent
therewith,  all  references to Sections,  Articles and Schedules are to Sections
and Articles of and Schedules to this Agreement.  The words "hereto",  "herein",
"hereof", "hereunder" and similar expressions mean and refer to this Agreement.

1.4     Rules of Interpretation

     In this Agreement,  unless otherwise  specifically  provided,  the singular
includes the plural and vice versa,  "month"  means  calendar  month,  "quarter"
means  calendar  quarter,  and "in  writing"  or  "written"  includes  printing,
typewriting or any electronic  means of  communication  capable of being visibly
reproduced at the point of reception, including facsimile.

1.5     Generally Accepted Accounting

     Principles  All  financial  statements  required  to be  furnished  by  the
Borrower to the Agent  hereunder  shall be prepared in accordance with Generally
Accepted  Accounting  Principles.  Each  accounting term used in this Agreement,
unless otherwise defined herein,  has the meaning assigned to it under Generally
Accepted  Accounting  Principles  and,  except  as  otherwise  provided  herein,
reference  to any balance  sheet item,  statement of income item or statement of
cash  flows  item  means such item as  computed  from the  applicable  financial
statement prepared in accordance with Generally Accepted Accounting Principles.

1.6     Time

     Unless  otherwise  provided  herein,  all  references  to a  time  in  this
Agreement shall mean local time in the City of Toronto, Ontario.

1.7     Monetary

     References  Whenever an amount of money is referred to herein,  such amount
shall,  unless otherwise  expressly stated, be in Canadian Dollars.  1.8 Payment
for Value All payments  required to be made hereunder shall be made for value on
the required day in same day immediately available funds.

                                   ARTICLE 2
                         REPRESENTATIONS AND WARRANTIES

2.1 Representations and Warranties

     The Borrower  represents  and warrants to each of the Lenders and the Agent
(all of which  representations  and warranties the Borrower hereby  acknowledges
are  being  relied  upon by the  Lenders  and the  Agent in  entering  into this
Agreement) that:

     (a)  Corporate  Existence:  the Borrower and each  Guaranteeing  Subsidiary
          (other than the  Partnership)  is a duly  incorporated,  organized and
          validly existing  corporation,  and each is in good standing under the
          laws of its jurisdiction of incorporation,  and is duly registered and
          qualified as an  extra-provincial  corporation  under the laws of each
          other  jurisdiction  in  Canada in which  the  nature of any  material
          business  transacted by it or the character of any material properties
          and  assets  owned or  leased by it  requires  such  registration  and
          qualification,  provided  that on the  Effective  Date in  respect  of
          Saskatchewan,  applications for registrations  have been submitted but
          acceptance is outstanding;

     (b)  Partnership  Existence:  the  Partnership is a duly formed and validly
          existing  partnership  in good standing  under the laws of Alberta and
          qualified to carry on business as a partnership  under the laws of the
          Province  of  Saskatchewan  and each other  jurisdiction  in Canada in
          which the  nature of any  material  business  transacted  by it or the
          character of any material  properties  or assets owned or leased by it
          require  such   registration   and   qualification,   subject  to  the
          registrations in process as referred to in Section 2.1(a);

     (c)  Corporate Power: the Borrower and each Guaranteeing  Subsidiary (other
          than the Partnership) has full corporate power and capacity to own its
          properties and assets and conduct its business as presently conducted;

     (d)  Partnership  Power:  the  Partnership has full  partnership  power and
          capacity to own its  properties and assets and conduct its business as
          presently conducted;

     (e)  Authorization:  the execution,  delivery and  performance by each Loan
          Party of each of the Loan  Documents  to which it is a party  has been
          duly authorized by all necessary  corporate or partnership  action, as
          applicable  and are  within its  corporate  or  partnership  power and
          capacity, as applicable;

     (f)  Execution:  each Loan  Document to which any Loan Party is a party has
          been duly executed and delivered by such Loan Party;

     (g)  Binding  Obligations:  each Loan Document to which any Loan Party is a
          party is a legal,  valid and  binding  obligation  of such Loan Party,
          enforceable  against  it  in  accordance  with  its  terms  except  as
          enforceability  may be limited by general  principles of equity and by
          bankruptcy,  insolvency,  moratorium,  reorganization  or similar laws
          affecting creditors' rights generally;

     (h)  No  Legal  Bar  or  Resultant   Lien:  the  execution,   delivery  and
          performance  by each Loan Party of each of the Loan  Documents and the
          GMS Agreements to which it is a party will not:

          (i)  violate any  provision of  Applicable  Law  (including  financial
               assistance provisions),  its articles or by-laws, the Partnership
               Agreement   or  any   resolutions   passed   by  the   directors,
               shareholders or (in the case of the Partnership) partners of such
               Loan Party; or

          (ii) result in a breach of or  constitute  a default  or  require  any
               consent under, or result in the creation of any Security Interest
               (other than Permitted  Encumbrances)  upon any of its property or
               assets;

and the  execution,  delivery and  performance by each Loan Party of each of the
Loan  Documents  and the GMS  Agreements to which it is a party and the validity
and  enforceability  thereof  does not  require any  Governmental  Authorization
(other than filings  necessary  to perfect the  Security  and such  Governmental
Authorizations  which have been  obtained) and does not and will not  contravene
any provision of any Governmental Authorization applicable to such Loan Party or
any of its assets, properties or interests;

(i) Title:

          (i)  the  Borrower  is the legal and  beneficial  owner of the  Rimbey
               Shares,  which have been issued as fully paid and  non-assessable
               shares  and which  constitute  not less than  40.6% of the Voting
               Shares of Rimbey  Pipeline Co. Ltd.,  and its title to the Rimbey
               Shares  is free and  clear of all  adverse  claims,  Preferential
               Rights (except  pursuant to the Articles of Continuance of Rimbey
               Pipe Line Co. Ltd.) and Security  Interests and (except  pursuant
               to the Articles of  Continuance  of Rimbey Pipe Line Co. Ltd.) no
               Person, firm or corporation now has any agreement, option, right,
               warrant or privilege to purchase or acquire the Rimbey Shares;

          (ii) subject to  Permitted  Title  Defects,  each Loan Party has good,
               valid and marketable  title to all of its other material  assets,
               properties  and interests,  including,  without  limitation,  its
               undivided  working  interest  ownership  percentage and leasehold
               interest percentage in and to the Facilities as set forth in each
               of the schedules comprising Schedules "J" and "K", free and clear
               of all adverse claims,  Preferential  Rights (except as set forth
               in Schedule  "U") and Security  Interests,  other than  Permitted
               Encumbrances;

(j) Use of Assets:

          (i)  each Loan Party owns,  leases or has the lawful  right to use all
               assets,  rights and  interests  necessary  for the conduct of its
               respective   businesses,   including  all  required  Governmental
               Authorizations, all consents, authorizations and approvals of any
               other Person, and all licenses,  trademarks,  patents, copyrights
               or   agreements   with  respect  to  the  use  of  technology  or
               intellectual  property necessary for the ownership,  operation or
               maintenance of such assets, rights or interests;

          (ii) the ownership, use, occupation, operation and maintenance by each
               Loan  Party  of its  assets  and  businesses  complies  with  all
               Applicable Laws and Governmental  Authorizations and any required
               consents, authorizations and approvals of any other Person; and

          (iii)no  Loan  Party  has   received   any  notice  of  any  claim  of
               infringement or any claim challenging or questioning the validity
               or  effectiveness  of  any  such   Governmental   Authorizations,
               consents, authorizations or approvals of any other Person, or any
               such licenses, trademarks, patents, copyrights or agreements with
               respect to the use or technology or intellectual property;

except to the extent  that  failure to have or  maintain  the same,  or any such
claim of infringement or claim challenging validity or effectiveness, could not,
when taken in the aggregate, reasonably be expected to have any Material Adverse
Effect;

(k)  Required Availability:  all utilities,  services,  means of transportation,
     pipelines,  facilities  and other  materials  and  equipment  necessary  or
     desirable  for  the  operation  of  the  Facilities   (including,   without
     limitation all necessary gas, electrical,  water and sewage and other waste
     disposal services and facilities) are available to the Facilities,  and, to
     the  extent  appropriate,  arrangements  have  been  made  on  commercially
     reasonable  terms for such services,  means of  transportation,  pipelines,
     facilities  and other  materials and  equipment,  except to the extent such
     availability  could not  reasonably be expected to have a Material  Adverse
     Effect;

(l)  Land Rights:  all material  Land Rights  necessary for owning and operating
     the Facilities are held by a Loan Party, in any circumstances  where a Loan
     Party is the  operator  of a  Facility,  or  where a Loan  Party is not the
     operator by a Person holding such Land Rights as agent or trustee for or on
     behalf of the owners of such Facility, including the applicable Loan Party,
     and all of such  Land  Rights  are in full  force  and  effect  and are not
     subject to any material  default or material  defect,  other than Permitted
     Title Defects;

(m)  Liens:  as of the Effective  Date,  and except for Permitted  Encumbrances,
     there are, with respect to the Facilities  operated by any Loan Party,  and
     to the best of the  knowledge,  information  and belief of the Loan Parties
     with respect to any Facilities not operated by a Loan Party, no:

     (i)  material  payments  overdue  that  would  give rise to any  mechanics,
          laborers, materialmen's, builders or other similar liens;

     (ii) material  payments  overdue  that  would  give  rise  to any  Security
          Interests in favour of any Person, other than a Loan Party, conducting
          the operation of such  Facilities in respect of the joint operation of
          any Facility;

     (iii)material  payments  overdue  that  would  give  rise  to any  Security
          Interest in favour of any Person in respect of Taxes,  assessments  or
          water, sewer or other rents or charges; or

     (iv) unsatisfied judgments or executions in any material amount;

(n)  Material  Contracts:  as of the  Effective  Date  and  excluding  Marketing
     Contracts,   the  agreements  identified  in  Schedule  "L"  are  the  only
     agreements, contracts, documents or other writings which:

     (i)  would  involve the payment or receipt of any amounts by or to any Loan
          Party in any 12 month period which would exceed $10,000,000; or

     (ii) would  account  for  5% or  more  of  the  aggregate  volumes  of  Gas
          processed,  stored or  transported  by the  Facilities in any 12 month
          period

and the Persons identified in the last item on Schedule "L" are the only Persons
which  would,  pursuant  to  contracts  with  any  such  Person  (including  its
Affiliates)  be liable to the Loan  Parties for  receivables  which would exceed
$5,000,000 in any 12 month period.


To the best of each Loan Party's  knowledge,  information and belief,  after due
inquiry,

     A.   there are presently no material  defaults by any of the parties to any
          of the Material Contracts;

     B.   no Material  Contract nor any material  term or condition  thereof has
          been  terminated  or  cancelled,  nor have  there  been  any  material
          modifications  or amendments  thereto or material  waivers  granted in
          respect thereof other than as referenced in Schedule "L"; and

     C.   each of the Material  Contracts is a valid and binding  obligation  of
          the parties thereto,  enforceable in accordance with its terms, except
          as   enforcement   may   be   limited   by   bankruptcy,   insolvency,
          reorganization  or similar  laws or equitable  principles  relating to
          creditor's rights generally;

(o)  Marketing  Contracts:  as of the Effective Date, the contracts set forth in
     Schedule "N"  constitute  all of the  material  contracts to which any Loan
     Party is a party in a capacity  as a seller for its own  account  and which
     have a term in  excess of 12 months  or  where,  if any such  contract  was
     terminated, the liability of any Loan Party could exceed $5,000,000;

(p)  Indebtedness:  the Loan Parties have not  incurred,  created or assumed any
     Indebtedness  other than  Permitted  Indebtedness  and, as of the Effective
     Date, the outstanding Syndicated  Indebtedness is Cdn. $200,000,000 and the
     outstanding Indebtedness on account of Intercorporate Debt is $225,600,000;

(q)  Designations:  no Loan Party  operating  a Facility,  nor any other  Person
     operating any Facility on behalf of a Loan Party,  has been designated as a
     "Common  Processor" or "Common  Carrier"  pursuant to the Gas Utilities Act
     (Alberta) or any similar  legislation in any other  jurisdiction  where any
     Facilities are located;

(r)  Operating  Condition:  each of the  Facilities  (with the  exception of the
     Facility set forth in Schedule "J" and described as Paddle River)  operated
     by a Loan Party has, since December,  1998, and in the case of the Facility
     described in Schedule  "J" as Paddle  River since August 1, 2000 has,  been
     maintained and operated in accordance with generally  accepted  engineering
     practices  and in all  material  respects  with  all  Applicable  Laws  and
     Governmental Authorizations (and non-compliance with which could reasonably
     be expected to result in  liabilities  or  obligations to any Loan Party or
     Loan Parties at any time in the aggregate in excess of  $2,500,000)  and is
     in  satisfactory  condition for its intended use in accordance with prudent
     industry practices;

(s)  Novations:  each Loan Party, to the extent of its ownership interest in any
     Facility,  has been properly novated into all Material Contracts applicable
     to such Facility and has all rights and  privileges of an owner  thereunder
     commensurate  with its  interest  in such  Facility  except  to the  extent
     rights, privileges or interests (including legal title), in accordance with
     generally accepted industry  practice,  are held in trust by another Person
     for and on behalf of the applicable Loan Party;

(t)  Dedicated  Reserves:  no Loan Party has done any act or thing, nor is aware
     of any act or thing having been done,  whereby material  Dedicated Reserves
     have been released from dedication or material amendments,  restrictions or
     alterations made to any dedication covenants in respect thereof;

(u)  Operatorship: as of the Effective Date, except for the Facilities described
     in  Schedule  "J  as  Bigoray,  Judy  Creek  and  Fort  Saskatchewan,   the
     Partnership or GMSL is the operator of each of the Facilities and there are
     no outstanding  challenges to such  operatorship or seeking the replacement
     of the Partnership or GMSL;

(v)  Petroleum and Natural Gas Reserves: no Loan Party has acquired any interest
     in any  petroleum  or natural gas  reserves,  except to the extent that (i)
     such  acquisition was required to acquire or hold a corresponding  interest
     in a Facility,  or (ii) such  acquisition  was made  pursuant to  Dedicated
     Reserves,  or (iii) such acquisition was made as ancillary to a transaction
     the primary purpose of which is to allow injection of waste products and in
     circumstances  where the purchase price attributable to such reserves would
     not exceed $25,000.00;

(w)  Default of Contracts:  neither the Borrower nor any Guaranteeing Subsidiary
     is in breach or  default  of, nor has any event or  circumstance  occurred,
     which, but for the passage of time or the giving of notice,  or both, would
     constitute a breach or default,  under any agreement or instrument by which
     the Borrower,  any  Guaranteeing.32  Subsidiary or any of their  respective
     properties,  assets  or  undertakings  are  bound,  except  such  breaches,
     defaults,  events or circumstances which could not,  individually or in the
     aggregate, be reasonably expected to have a Material Adverse Effect;

(x)  Litigation:  except as set forth in  Schedule  "P",  there are no  actions,
     suits or proceedings  (whether or not purportedly on behalf of the Borrower
     or any  Guaranteeing  Subsidiary)  pending or  threatened  against any Loan
     Party or any of its  business,  assets or properties at law or in equity by
     or before any court, tribunal, governmental department,  commission, board,
     bureau,  agent or  instrumentality,  domestic  or  foreign,  or before  any
     arbitrator  of any kind  and  neither  the  Borrower  nor any  Guaranteeing
     Subsidiary  is in  default  with  respect  to any  judgment,  order,  writ,
     injunction,  decree,  award,  rule or  regulation  of any court,  tribunal,
     governmental   department,    commission,    board,   bureau,   agency   or
     instrumentality,  domestic or foreign or any  arbitrator  of any kind,  and
     which actions,  suits or  proceedings  if determined  adversely to any Loan
     Party could,  individually,  or in the aggregate, be reasonably expected to
     have a Material Adverse Effect;

(y)  Engineering and Financial  Information:  all engineering  data,  production
     data,   economic  models,   cash  flow  projections,   capital  expenditure
     requirements,  budgets and other data provided to the Agent by the Borrower
     in respect of the properties,  assets and  undertakings of the Loan Parties
     is, as at the  Effective  Date in respect of  information  delivered  prior
     thereto,  and  in  respect  of  deliveries  thereafter  as at the  date  of
     delivery, true and correct in all material respects and fairly and properly
     reflects the interests of each Loan Party therein and thereto;

(z)  Financial Condition: all financial statements of the Loan Parties submitted
     to the Agent (including the audited  consolidated  financial  statements of
     the Borrower for the Fiscal Year ending  December 31, 1999) fairly reflect,
     as of the  dates  thereof,  the  consolidated  financial  condition  of the
     Borrower,  the  unconsolidated  position  of each Loan  Party to the extent
     provided in such financial statements and the results of its operations for
     the  periods  covered  thereby,  have  been  prepared  in  accordance  with
     Generally Accepted  Accounting  Principles and, from the date of the latest
     of such  financial  statements  submitted  to the Agent,  there has been no
     changes  in  the  financial  condition  of  any  Loan  Party  or any of its
     properties,  assets,  condition or undertakings which have had, or could be
     reasonably  expected to have, a Material  Adverse Effect except those which
     have been specifically  disclosed as such in writing to the Agent as having
     such effect;

(aa) Pro Forma Financial  Statements:  the Borrower has furnished the Agent with
     pro forma  financial  statements for the Borrower on a  consolidated  basis
     which take into account the effect of the Purchase and Sale Agreement.  The
     balance sheet contained in such pro forma financial  statements  represents
     fairly the consolidated pro forma financial  position of the Borrower as of
     the date hereof and the pro forma statement of operations contained therein
     presents  fairly the pro forma  results of its  operations  for the periods
     indicated.  All  information  provided to the Agent in connection  with the
     Purchase and Sale Agreement,  including the pro forma financial  statements
     contained  in Schedule  "S" and the sources and uses of funds  contained in
     Schedule "O" have been prepared in good faith;

(ab) Corporate  Organization:  as of the Effective Date, Schedule "R" accurately
     sets forth the corporate  structure of the Borrower,  its  shareholders and
     its Subsidiaries;

(ac) Risk Management:  neither the Borrower nor any Guaranteeing Subsidiary is a
     party to any Swap on the  Effective  Date  except as set forth in  Schedule
     "U", and as of the Business Day  immediately  preceding the Effective Date,
     the Mark to Market Amount was in an amount not exceeding $5,000,000;

(ad) Subsidiaries:  the Borrower  has no  Subsidiaries  other than GMSL,  GMSFL,
     KeySpan  Canada  and  the  Partnership,  each  of  which  are  wholly-owned
     Subsidiaries.  As of the  Effective  Date,  KeySpan  Canada has no material
     assets, properties or businesses other than ownership of the Taylor Units;

(ae) Taxes:

     (i)  each Loan Party has filed all tax  returns  which were  required to be
          filed,  has paid or made  provision  for payment (in  accordance  with
          Generally Accepted  Accounting  Principles) of all Taxes which are due
          and payable,  and has provided  adequate  reserves (in accordance with
          Generally Accepted Accounting  Principles) for the payment of any Tax,
          the payment of which is being contested;

     (ii) all ad valorem, property, production,  severance and similar taxes and
          assessment  based on or  measured  by the  ownership  of assets or the
          processing  of  Petroleum   Substances  or  the  receipt  of  proceeds
          therefrom  payable by any Loan Party in respect of or in  relation  to
          its assets have been properly paid and fully discharged; and

     (iii)no reassessment,  appeal or material claim is, to the knowledge of any
          Loan Party,  being asserted or processed with respect to Taxes against
          any Loan Party or in respect of any of its assets or properties  which
          could  reasonably  be  expected to have a Material  Adverse  Effect if
          adversely determined;

(af) Insurance:

     (i)  the Borrower and each  Guaranteeing  Subsidiary  has in full force and
          effect such  policies of insurance in such amounts  issued by insurers
          of recognized  standing  insuring its properties and  operations,  and
          providing  such  coverage as would be  maintained by a prudent oil and
          gas operator engaged in the same or similar business in the localities
          where its properties  and operations are located,  and in any event as
          required by Section 9.1(n);

     (ii) there are no  material  outstanding  insurance  claims in  respect  of
          physical  damage,  or for  liability  in respect of the  ownership  or
          operation  of any assets,  properties  or interests of any Loan Party,
          which are being disputed as to any material liability or amount by any
          of the insurers in respect thereof, except such as have been disclosed
          in writing to the Agent;

(ag) Compliance  with  Laws  and  Material  Contracts:  the  Borrower  and  each
     Guaranteeing  Subsidiary is in compliance in all material respects with all
     Applicable Laws and all Material Contracts;

(ah) Environmental Laws:

     (i)  each  Loan  Party has  obtained,  and,  to the best of the  knowledge,
          information  and  belief of the Loan  Parties,  each  operator  of any
          Facility not operated by a Loan Party has obtained (in respect of such
          Facility),  all  material  permits,  licenses  and other  Governmental
          Authorizations  which are  required  under all  Environmental  Laws in
          respect  of its  material  businesses,  operations  and assets and the
          acquisition, ownership and operation thereof;

     (ii) the Borrower and each  Guaranteeing  Subsidiary is, and to the best of
          the  knowledge,  information  and  belief  of the Loan  Parties,  each
          operator of any  Facility  not operated by a Loan Party is (in respect
          of such  Facility)  is, in all material  respects in  compliance  with
          Environmental  Laws in relation to the material  business,  activities
          and  assets  of the Loan  Parties  and the  operation  thereof  and in
          compliance in all material  respects with all terms and  conditions of
          all material permits, licenses and other Governmental Authorizations;

     (iii)as of the  Effective  Date,  no Loan Party has  received  any  written
          notice under any Environmental Laws or Governmental  Authorizations in
          respect of its businesses,  operations or assets which could result in
          any material obligation or liability to any Loan Party; and

     (iv) except as previously  disclosed to the Agent in writing, no Loan Party
          has any  knowledge of any facts which could give rise to any notice of
          non-compliance in any material respect with any Environmental  Laws or
          Governmental  Authorizations  or any  notice  that any  Loan  Party is
          potentially  responsible for any material  clean-up,  remedial action,
          decommissioning or other corrective action;

(ai) Environmental  Condition  of  Property:  the  properties  and assets of the
     Borrower  and  of  each  Guaranteeing  Subsidiary,  including  each  of the
     Facilities:

     (i)  are not the  subject of any  material  outstanding  orders,  claims or
          charges  from any  government  agency,  department  or  commission  or
          otherwise  alleging violation of any Environmental Laws or, if subject
          to any such material claim, charge or order, the applicable Loan Party
          (or the  operator of such asset or property if not  operated by a Loan
          Party) is taking or causing to be taken all  remedial,  corrective  or
          other  action  required  under  the  claim,  charge  or  order  or  is
          diligently and in good faith contesting the validity thereof; and

     (ii) comply,  with respect to their use and  condition  and in all material
          respects,  with all Environmental Laws and all terms and conditions of
          all  permits,  licenses and other  authorizations,  which are required
          under all Environmental Laws;

(aj) Hazardous  Materials:  the  operations of the Assets which have  generated,
     manufactured,  refined, treated,  transported,  stored, handled,  disposed,
     transferred,  produced or  processed  Hazardous  Materials  have done so in
     compliance  with all  Environmental  Laws  and all  permits,  licenses  and
     authorizations thereunder,  except to the extent failure to so comply could
     not reasonably be expected to have a Material Adverse Effect;

(ak) Labour  and  Pension  Matters:  Schedule  "I"  identifies  each  collective
     bargaining agreement,  each material management agreement and each material
     pension  plan and  material  benefit plan  maintained  (or, if  applicable,
     intended to be maintained) by or on behalf of any Loan Party for any of its
     employees.  As of the Effective Date,  there are no strikes or other labour
     disputes against any Loan Party or any of its material  businesses  pending
     or  threatened,  nor is any Loan  Party  aware of any  organizing  activity
     pending  or  threatened  by any  labour  union or group of  employees  with
     respect to any of its material  businesses or any demand for recognition by
     any thereof;

(al) Contingent  Liability:  except as set forth in Schedule  "Q", no Loan Party
     has any  Contingent  Liability  except for (i) ordinary  course of business
     liabilities and  indemnities,  (ii)  obligations  incurred  pursuant to the
     performance of the terms of the Material  Contracts,  and (iii) obligations
     to pay  royalties  and  license  fees  incurred in the  ordinary  course of
     business;

(am) Permits:  As of the Effective Date,  Schedule "M" lists all of the material
     Governmental  Authorizations  required for the operation of the Facilities;
     and

(an) Expropriation:  as of the  Effective  Date,  no part of any  real  property
     owned, leased or used by any Loan Party, or any building or fixture located
     thereon,  has been taken or expropriated by any Governmental Action, nor is
     any Loan Party aware that any written notice or proceeding in respect of an
     expropriation has been given or commenced and no Loan Party is aware of any
     intent  or  proposal  to  give  any  such  notice  or  commence   any  such
     proceedings.

2.2     Deemed Representation and Warranty

     Each  request by the  Borrower for a Drawdown,  Rollover or  Conversion  of
Accommodations  shall be  deemed  to be a  representation  and  warranty  by the
Borrower to the Lenders that,  except as disclosed to the Agent in writing,  (i)
the matters referred to in Section 2.1 are, as of the date of such request,  and
will be as of the applicable  Drawdown Date,  Conversion  Date or Rollover Date,
true and  correct  as of each  such  date  and that  (ii) as of the date of such
request and as of the  applicable  Drawdown  Date,  Conversion  Date or Rollover
Date, there exists no Default or Event of Default, nor will any such event occur
as a result of such Drawdown Date, Conversion Date or Rollover Date.

                                   ARTICLE 3
                             THE CREDIT FACILITIES

3.1 Obligations of each Lender

     Relying on each of the  representations and warranties set out in Article 2
and subject to the terms and conditions of this Agreement, each Lender agrees to
make  Accommodations  available  to  the  Borrower  up  to  the  amount  of  its
Commitment, commencing on the Effective Date and ending on the Maturity Date, by
way of an extendible revolving credit facility in a maximum principal amount not
exceeding the Total Commitment (the "Credit Facility").

3.2 Purpose

     Accommodations  shall  only be used by the  Borrower  for the  purchase  of
interests of Gulf pursuant to the  provisions of the Purchase and Sale Agreement
and thereafter for the  acquisition,  operation,  maintenance,  construction and
expansion of Facilities.

3.3 Takeover Notification

     In the  event  the  Borrower  wishes to  utilize  Accommodations  to, or to
provide  funds to any  Subsidiary  to, offer to acquire  (which shall include an
offer to purchase  securities,  solicitation of an offer to sell securities,  an
acceptance of an offer to sell securities,  whether or not the offer to sell was
solicited,  or any combination of the foregoing)  outstanding  securities of any
Person  (other  than a private  company  as  defined  under the  Securities  Act
(Alberta) or a  corporation  whose shares are directly or  indirectly  held by 1
Person) where,  as of the date of the offer to acquire,  the securities that are
subject to the offer to acquire,  together  with the  securities  of such Person
that are beneficially owned, or over which control or direction is exercised, by
the Borrower or its  Subsidiaries  and any Person  acting  jointly or in concert
with any  thereof on the date that the offer to acquire is made,  constitute  in
the aggregate 5% or more of all of the  outstanding  securities of that class of
securities  of the  Person or are  likely  to  result in a change of the  voting
control of such Person if it is a publicly traded corporation, then the Borrower
shall  require the consent of each Lender,  such consent not to be  unreasonably
withheld.

3.4 Accommodations

     Subject to the provisions of this Agreement, the Borrower may borrow, repay
and reborrow by way of Accommodations  from each Lender pursuant to the Facility
up to the amount of such Lender's Commitment by:

(a)  Prime Loans:  borrowing Prime Loans, in minimum  aggregate  amounts of Cdn.
     $1,000,000 and in integral multiples of Cdn. $100,000  thereafter,  upon at
     least 1 Business Day' s prior written notice;

(b)  Bankers'  Acceptances:  issuing Bankers'  Acceptances to be accepted by the
     Lenders,  in minimum aggregate  amounts of Cdn.  $5,000,000 and in integral
     multiples of Cdn. $100,000 thereafter, upon at least 2 Business Days' prior
     written notice;

(c)  US Base Rate  Loans:  borrowing  US Base Rate Loans,  in minimum  aggregate
     amounts  of  US  $1,000,000  and  in  integral  multiples  of  US  $100,000
     thereafter, upon at least 1 Business Day' s prior written notice; and

(d)  Libor Loans:  borrowing  Libor Loans,  in minimum  aggregate  amounts of US
     $5,000,000  and in integral  multiples of US $500,000  thereafter,  upon at
     least 3 Banking Days' prior written notice;

each such notice to be given to the Agent at the Agent's Branch of Account at or
prior to 12:00 noon  (Toronto  time) on the last day on which such notice can be
given  pursuant  to this  Section  3.4 and to be  substantially  in the  form of
Schedule  "A". Any such notice may be given by telephone  and in such case shall
be followed by delivery on the day of such  telephone  notice of written  notice
substantially in the form of Schedule "A".

     Prior  to  the  Maturity  Date,  the  Borrower  may  increase  or  decrease
Accommodations  under the  Facility by  obtaining  Accommodations  and by making
repayments in respect thereof. The Facility shall terminate on the Maturity Date
and all Outstandings thereunder shall be repaid in full to the Lenders not later
than the Maturity Date.

3.5     Selection of Libor Interest Periods

     If the Borrower elects to borrow by way of a Libor Loan pursuant to Section
3.4,  elects to convert an  Accommodation  into a Libor Loan pursuant to Section
3.10 or elects to Rollover a Libor Loan pursuant to Section  3.11,  the Borrower
shall,  prior to the beginning of the Libor Interest  Period  applicable to such
Libor  Loan,  in  accordance  with the same  period of notice  required  for the
initial  drawdown  of a Libor Loan as set forth in Section 3.4 select and notify
the Agent at the  Agent's  Branch of Account in writing,  of the Libor  Interest
Period  (which  shall begin and end on a Banking Day)  applicable  to such Libor
Loan.

3.6     Conditions Applicable to Bankers' Acceptances

(a)  Purchase  of  Bankers'  Acceptances  by  Lenders:  Subject to the terms and
     conditions of this Agreement,  each Lender hereby agrees to purchase at the
     applicable  Discount Rate its Lender's  Proportion of Bankers'  Acceptances
     issued by the Borrower pursuant to Sections 3.4 and 3.10. Any Lender may at
     any time and from time to time hold, sell,  rediscount or otherwise dispose
     of any or all Bankers' Acceptances purchased by it.

(b) Payment to Borrower:

     (i)  On the Drawdown  Date  relating to any issue of Bankers'  Acceptances,
          each Lender shall deliver the Discount  Proceeds  (less the applicable
          acceptance  fees pursuant to Section 5.4) to the Agent for the account
          of the Borrower through the Agent's Account for Payments.

     (ii) In the case of a Rollover of Bankers'  Acceptances under the Facility,
          the Borrower  shall be liable to the Lenders for the principal  amount
          of maturing Bankers'  Acceptances.  In order to satisfy the continuing
          liability of the Borrower to the Lenders for the  principal  amount of
          the  maturing  Bankers'  Acceptances,  each Lender  shall  receive and
          retain  for its own  account  the.38  Discount  Proceeds  of such  new
          Bankers'  Acceptances  accepted  by it and the  Borrower  shall on the
          maturity date of the maturing  Bankers'  Acceptances  pay to the Agent
          for the  benefit  of such  Lender  an amount  equal to the  difference
          between  the  principal  amount of the  maturing  Bankers  Acceptances
          accepted  by it and  the  Discount  Proceeds  from  the  new  Bankers'
          Acceptances  accepted by it together with the fee to which such Lender
          is entitled pursuant to Section 5.4.

     (iii)In the case of a Conversion  into  Bankers'  Acceptances,  in order to
          satisfy the  continuing  liability  of the Borrower to the Lenders for
          the amount of the converted  Accommodation,  each Lender shall receive
          for its own account the Discount Proceeds of the Bankers'  Acceptances
          accepted by it and the Borrower  shall on the  Conversion  Date pay to
          the Agent for the  benefit of such Lender the  difference  between the
          principal  amount  of the  converted  Accommodation  and the  Discount
          Proceeds from such Bankers'  Acceptances  accepted by it together with
          the fee to which such Lender is entitled to pursuant to Section 5.4.

     (iv) In the  case of a  Conversion  of  Bankers'  Acceptances,  in order to
          satisfy the continuing liability of the Borrower to the Lenders for an
          amount equal to the principal amount of such Bankers' Acceptances, the
          Agent shall record the  obligation  of such Borrower to each Lender as
          an  Accommodation  of  the  type  into  which  the  maturing  Bankers'
          Acceptance has been converted.

(c)  Waiver of Presentment and Other Conditions: The Borrower waives presentment
     for payment  and,  except to the extent of the gross  negligence  or wilful
     misconduct  of the Lenders  referred to in the Power of Attorney - Bankers'
     Acceptances  referred to in Section 3.6(e), any other defence to payment of
     any amounts due to a Lender in respect of a Bankers' Acceptance accepted by
     it pursuant to this  Agreement  which might exist  solely by reason of such
     Bankers'  Acceptance being held, at the maturity thereof, by such Lender in
     its own right  and the  Borrower  agrees  not to claim any days of grace if
     such Lender as holder  sues the  Borrower on the  Bankers'  Acceptance  for
     payment of the amount payable by the Borrower thereunder.  On the specified
     maturity  date of a Bankers'  Acceptance,  or such  earlier  date as may be
     required or permitted  pursuant to the  provisions of this  Agreement,  the
     Borrower shall pay the Agent on behalf of the Lender that has accepted such
     Bankers'  Acceptance,  the full  face  amount of such  Bankers'  Acceptance
     either  through  payment to the Agent's  Branch of Account or conversion of
     such Bankers' Acceptance into a Prime Loan pursuant to Section 3.10.

(d)  Terms of Each Bankers' Acceptance: Each Bankers' Acceptance shall:

          (i)  have a maturity date which shall be on a Business Day;

          (ii) have a term of not less  than 30 days and not more  than 180 days
               (excluding days of grace);

          (iii)have an aggregate  face amount of not less than Cdn.  $10,000,000
               and be in an integral multiple of Cdn. $100,000;

          (iv) be in the standard form of each Lender  accepting same,  provided
               however,  the Agent may require a Lender to use a generic form of
               Bankers'  Acceptance,  in a form satisfactory to the Borrower and
               each Lender,  each acting  reasonably,  provided by the Agent for
               such purpose in place of the Lender's own forms; and

          (v)  have a term which does not extend beyond the Maturity Date.

     It is the intention of the parties that,  pursuant to the Depository  Bills
and Notes Act  (Canada)  ("DBNA"),  all  Bankers'  Acceptances  accepted  by the
Lenders (other than Old System  Lenders) under this Agreement shall be issued in
the form of a "depository  bill" (as defined in the DBNA),  deposited  with, and
made payable to, a "clearing  house" (as defined in the DBNA including,  without
limitation, The Canadian Depository for Securities Limited or its nominee, CDS &
Co.  ("CDS").  The Agent and the Lenders (other than Old System  Lenders) shall,
inter alia,  effect the following  and,  subject to the approval of the Borrower
and the Majority  Lenders,  establish and notify the Borrower and the Lenders of
any additional  procedures,  consistent with the terms of this Agreement and the
quarterly  requirements  of the DBNA, as are reasonably  necessary to accomplish
such intention including, without limitation:

     A.   each  Bankers'  Acceptance  accepted  by a Lender  (other  than an Old
          System Lender) hereunder shall have marked  prominently and legibly on
          its face a  notation  to the effect  that it is issued  subject to the
          DBNA;

     B.   any reference to  authentication  of the Bankers'  Acceptance  will be
          removed; and

     C.   such  Bankers'   Acceptance   shall  not  be  marked  with  any  words
          prohibiting  negotiation,  transfer  or  assignment  of it  or of  any
          interest in it.

(e)  Power of Attorney - Bankers' Acceptances:  As a condition precedent to each
     Lender's obligation to accept and purchase Bankers' Acceptances  hereunder,
     and  subject  to the DBNA  compliance  requirements  set  forth in  Section
     3.6(d),  the  Borrower  agrees to the Power of  Attorney  Terms -  Bankers'
     Acceptances set out in Schedule "B".

(f)  Failure to Give Notice of Repayment:  If the Borrower  fails to give notice
     to the Agent at the Agent's Branch of Account of the method of repayment of
     a  Bankers'  Acceptance  prior to the  date of  maturity  of such  Bankers'
     Acceptance  in accordance  with the same period of notice  required for the
     original  acceptance  of such  Bankers'  Acceptance as set forth in Section
     3.4, the face amount of such Bankers'  Acceptance shall be converted on its
     maturity to a Prime Loan from the Lender pursuant to Section 3.10.

3.7     Agent's Duties re Bankers' Acceptances

(a)  Advice to the Lenders: The Agent, promptly following receipt of a Borrowing
     Notice  by  way  of  Bankers'   Acceptance  or  Conversion   Notice  of  an
     Accommodation  to a Bankers'  Acceptance,  shall so advise the  Lenders and
     shall advise each Lender of the face amount of each Bankers'  Acceptance to
     be purchased by it and the term thereof,  which term shall be identical for
     all Lenders.  By no later than 10:30 a.m.  (Toronto  time) on each Drawdown
     Date or  Conversion  Date on which the  Lenders  are  required  to purchase
     Bankers'  Acceptances  hereunder,  the Agent shall determine the applicable
     CDOR Rate in respect of such Bankers' Acceptances.

(b)  Agent's Confirmation of Bankers' Acceptance Issuance:  On or prior to 11:30
     a.m. (Toronto time) on the Drawdown Date or Conversion Date relating to all
     Bankers' Acceptances to be purchased by the Lenders on such date, the Agent
     shall provide telephone advice to the Borrower and each Lender with respect
     to such Bankers' Acceptances.  Such advice shall be confirmed in writing on
     or prior to 4:30 p.m.  (Toronto  time) on such  Drawdown Date or Conversion
     Date  and  shall  include  reasonable   particulars  as  to  such  Bankers'
     Acceptances.

(c)  Completion of Bankers'  Acceptance:  Upon receipt of such telephone advice,
     each Lender is thereupon authorized to complete bankers' acceptances in the
     manner  applicable  pursuant  to  Section  3.6(e)  in  accordance  with the
     particulars so advised by the Agent.

3.8     Notice of Repayment

     The Borrower shall give the Agent, at the Agent's Branch of Account,  prior
written notice of each repayment of  Accommodations  in respect of each Facility
in accordance with the same period of notice  required  pursuant to Section 3.4,
for the initial drawdown of the basis of the  Accommodation  being repaid,  such
notice to be  substantially  in the form of Schedule  "A".  Notwithstanding  the
foregoing, a Bankers' Acceptance shall only be repaid on its maturity date and a
Libor  Loan  shall  only be repaid  prior to the last day of the Libor  Interest
Period  applicable  to such Libor Loan upon  payment by the  Borrower of amounts
payable in respect  thereof  pursuant to  Sections  4.4 and 11.5.  Such  amounts
deposited by the Borrower  shall belong to the Borrower and shall be held by the
Agent in an  interest  bearing  Cash  Collateral  Account  with  interest  to be
credited to the Borrower at rates prevailing at the time of deposit and shall be
applied by the Agent in  accordance  with the  provisions  hereof to satisfy the
obligations of the Borrower with respect to the outstanding  Bankers' Acceptance
or Libor Loan, as applicable.  Such Cash Collateral Account shall be assigned to
the  Agent  as  security  for the  Obligations  and  amounts  held in such  Cash
Collateral  Account may not be withdrawn by the Borrower  without the consent of
the Agent;  however,  interest on such deposited amount shall be for the account
of the Borrower and, provided no Default or Event of Default has occurred and is
continuing,  may be  withdrawn  from  time  to time by the  Borrower.  If  after
maturity of the Bankers'  Acceptance or expiration of the Libor Interest Period,
as applicable, for which such funds are held and application by the Agent of the
amounts in such Cash Collateral  Account to satisfy the Obligations with respect
to the Bankers' Acceptance or Libor Loan being repaid, any excess remains and no
Default or Event of Default has occurred and is continuing, such excess shall be
promptly paid by the Agent to the Borrower.

3.9     Pro-Rata Treatment of Accommodations

(a)  Pro-Rata Accommodations:  Subject to Section 3.9(b), each Accommodation and
     each basis of Accommodation  shall be made available by each Lender and all
     repayments and reductions in respect thereof shall be made and applied in a
     manner  so  that  the   Accommodations  and  each  basis  of  Accommodation
     outstanding  hereunder  to  each  Lender  will,  to  the  extent  possible,
     thereafter  be in the same  proportion  as the Lender's  Proportion of such
     Lender.  The  Agent  is  authorized  by the  Borrower  and each  Lender  to
     determine,   in  its  sole  and  unfettered   discretion,   the  amount  of
     Accommodations and each basis of Accommodation to be made available by each
     Lender and the  application of repayments and reductions of  Accommodations
     to give effect to the  provisions  of this Section  3.9(a) and Section 7.2;
     provided that,  subject to Section 3.9(b),  no Lender shall, as a result of
     any such determination,  have Accommodations outstanding in an amount which
     is in excess of the amount of its Commitment.

(b)  Agent's  Discretion on  Allocation:  If it is not  practicable  to allocate
     Bankers'  Acceptances  to each  Lender  such that the  aggregate  amount of
     Bankers'  Acceptances  required to be purchased by such Lender hereunder is
     in a whole  multiple  of Cdn.  $100,000,  the  Agent is  authorized  by the
     Borrower and each Lender to make such allocation as the Agent determines in
     its sole and unfettered  discretion may be equitable in the  circumstances.
     In no event shall the  outstanding  Accommodations  of a Lender  exceed its
     Lender's Proportion by more than Cdn. $100,000 as a result of such exercise
     of discretion by the Agent.  In the event it is not practicable to allocate
     each basis of  Accommodation in accordance with Section 3.9(a) by reason of
     the occurrence of  circumstances  described in Sections 11.2, 11.3 or 11.4,
     the  Agent is  authorized  by the  Borrower  and each  Lender  to make such
     allocation as the Agent  determines in its sole and  unfettered  discretion
     may be equitable in the circumstances.

(c)  Further  Assurances by Borrower:  The Borrower and each Lender agrees to be
     bound by and to do all things  necessary or  appropriate  to give effect to
     the provisions of this Section 3.9.

3.10    Conversion Option

     The Borrower may, during the term of this  Agreement,  convert any basis of
Accommodation  in a  currency  to  another  basis of  Accommodation  in the same
currency  upon  giving the Agent at the Agent's  Branch of Account a  Conversion
Notice in accordance with the period of notice and other requirements set out in
Section 3.4 applicable to the basis of Accommodation to which any  Accommodation
is being  converted  (other  than  delivery  of a notice in the form of Schedule
"A"), provided that:

(a)  Bankers'  Acceptances:  a Bankers'  Acceptance may only be converted on its
     maturity date; and

(b)  Libor  Loans:  a Libor Loan may be  converted  on the last day of the Libor
     Interest  Period  applicable  to such Libor Loan or on any other day if the
     Borrower pays all amounts  payable in respect  thereof  pursuant to Section
     11.5. On each  Conversion  Date, the Borrower shall be required to repay to
     the Agent for the account of the Lenders the basis of  Accommodation  which
     is being converted and,  subject to the provisions of this  Agreement,  the
     Lenders   shall  be  required  to  make   available  to  the  Borrower  the
     Accommodations into which such basis of Accommodation is being converted.

3.11    Rollovers of Libor Loans

     The Borrower may,  during the term of this  Agreement,  Rollover all or any
portion of a Libor Loan for an additional  Libor Interest  Period  subsequent to
the initial or any  subsequent  Libor  Interest  Period where the amount of such
continued  Libor Loan will be equal to the amount of the  existing  Libor  Loan,
upon  giving the Agent at the  Agent's  Branch of  Account a Rollover  Notice in
accordance with the period of notice and other  requirements  set out in Section
3.4 to Libor  Loans  (other  than  delivery  of a notice in the form of Schedule
"A"),  unless  immediately  prior to the  commencement  of any subsequent  Libor
Interest Period,  an Event of Default shall have occurred and be continuing,  in
which event the Borrower  shall be deemed to have converted such Libor Loan to a
US Base  Rate  Loan  pursuant  to  Section  3.10 and the  Borrower  shall not be
entitled to continue such Libor Loan  subsequent to the existing  Libor Interest
Period. In the event notice of a Rollover of an existing Libor Loan is not given
pursuant to this Section 3.11 or notice of a Conversion of such  existing  Libor
Loan is not given pursuant to Section 3.10 such Libor Loan shall be converted to
a US Base Rate Loan on the last day of the Libor Interest  Period  applicable to
such existing Libor Loan.

3.12    Notices Irrevocable

     All notices delivered or deemed to be delivered by the Borrower pursuant to
this  Article 3 shall be  irrevocable  and shall oblige the Borrower to take the
action contemplated on the date specified therein.

3.13    Extension of Maturity Date

(a)  Request for  Extension:  The Borrower  may,  from time to time,  request an
     extension  of the  Maturity  Date by  sending  to the Agent at the  Agent's
     Branch of Account a Request for  Extension  in  duplicate  not less than 60
     days and not more than 90 days prior to the then current  Maturity Date and
     the Agent  shall  forthwith  notify the  Lenders of such  request  and each
     Lender shall acknowledge receipt of such notification. Provided the Lenders
     have  previously  received  the  financial  statements  required by Section
     9.1(e) and the budgets and financial  plans required by Sections 9.1(h) and
     9.1(i),  each  Lender  shall  advise the Agent as to whether it agrees with
     such request  within 30 days of being  notified of the  Borrower' s Request
     for  Extension,  provided  that in the event such Lender does not so advise
     the Agent  within such 30 day period,  such Lender  shall be deemed to have
     advised the Agent that it does not agree with such request.

(b)  Extension:  If, pursuant to Section 3.13(a),  Lenders holding less than 50%
     of the  Total  Commitment  agree  to the  request  made  in a  Request  for
     Extension,  then the  Agent  shall,  within 5  Business  Days  after it has
     received the response or deemed  response of each Lender to the Request for
     Extension,  advise the Borrower and the Maturity Date shall not be extended
     and the  further  provisions  of this  Section  3.13  shall have no further
     application  to such Request for  Extension.  If Lenders  holding more than
     50%, but less than 100%, of the Total  Commitment agree to a Request for an
     Extension,  then the Agent shall advise the Borrower within 5 Business Days
     after it has received the response or deemed response of each Lender to the
     Request for Extension,  and the other provisions of this Section 3.13 shall
     be applicable.

(c)  Request  Refused:  If any Lender receiving a Request for Extension does not
     agree or is deemed not to have agreed to such a request  (such Lender being
     a "Non-Agreeing  Lender"), each of the other Lenders which do agree to such
     request  shall  have the right (but not the  obligation)  to  purchase  the
     Commitment  of the  Non-Agreeing  Lender.  Each  of the  other  Lenders  (a
     "Purchasing  Lender")  wishing  to  exercise  its  rights to  purchase  the
     Commitment of a Non-Agreeing Lender shall forthwith so notify the Borrower,
     the Agent, the Non-Agreeing  Lender and each of the other Lenders,  if any,
     and such Purchasing  Lender shall  thereupon be obligated to purchase,  and
     the  Non-Agreeing  Lender  shall  be  obligated  to sell,  not less  than 6
     Business Days prior to the then current Maturity Date, that portion of such
     Commitment which is in the ratio that its Lender's  Proportion bears to the
     aggregate  of the  Lender's  Proportions  of all  Purchasing  Lenders or as
     otherwise   agreed  to  by  the  Borrower  and  the   Purchasing   Lenders.
     Notwithstanding  the foregoing,  and unless  otherwise agreed at that time,
     the  Non-Agreeing  Lender shall not be obligated to sell to any  Purchasing
     Lender unless (i) provision satisfactory to the Non-Agreeing Lender (acting
     reasonably)  has been made for  payment of any costs,  losses,  premiums or
     expenses  incurred by the Non-Agreeing  Lender by reason of any liquidation
     or  re-deployment  of  deposits  or other  funds in respect of Libor  Loans
     outstanding;  and (ii) provision  satisfactory to the  Non-Agreeing  Lender
     (acting  reasonably)  has been made for payment at maturity of  outstanding
     Bankers'  Acceptances  accepted  by  it.  The  Non-Agreeing   Lenders,  the
     Purchasing Lenders,  the Agent, the Borrower and each of the other Lenders,
     if  any,   shall   forthwith   duly  execute  and  deliver  any   necessary
     documentation to give effect to any purchase under this Section 3.13(c).

(d)  Replacement:  If  a  Non-Agreeing  Lender's  Commitment  is  not  purchased
     pursuant to Section  3.13(c),  the Borrower  may arrange for a  replacement
     lender (a "Replacement Lender") (which may be 1 of the Lenders) to purchase
     the Non-Agreeing  Lender's  Commitment on the same basis and subject to the
     same requirements and indemnities as specified in Section 3.13(c). Any such
     Replacement  Lender shall require the approval of the Agent,  such approval
     not to be unreasonably withheld, and no later than 2 Business Days prior to
     the  Maturity  Date  such  Replacement  Lender  shall  have  purchased  the
     Non-Agreeing   Lender's   Commitment   by   execution   of  all   necessary
     documentation  including,  without limitation,  execution and delivery of a
     Lender Transfer Agreement.

(e)  Extension: The Maturity Date shall only be extended pursuant to any Request
     for Extension if:

     (i)  each Lender agrees to the request made in such Request for  Extension;
          or

     (ii) Non-Agreeing  Lenders hold less than 50% of the Total  Commitment  and
          the Commitment of each such Non-Agreeing Lender is either:

          A.   purchased pursuant to Section 3.13(c); or

          B.   replaced by the Borrower pursuant to Section 3.13(d);

and, in any such case, the Maturity Date shall thereupon be extended for 364
days or such other period of time as the Lenders may stipulate in their response
to a Request for Extension. The Borrower understands that consideration of
any Request for Extension constitutes an independent credit decision which each
Lender on its own behalf retains the absolute and unfettered discretion to make
and that no commitment in this regard is hereby given by any Lender and that any
extension of the Maturity Date may be on such terms and conditions in addition
to those set out herein as the Lenders may stipulate and the Borrower may agree
to.

                                   ARTICLE 4
                            REPAYMENT AND PREPAYMENT

4.1     Reduction of Commitments and Repayment of Accommodations

     On the Maturity  Date,  the Borrower  shall repay all  Accommodations  then
outstanding  and the  Commitments  of each Lender shall be reduced to zero.  The
Borrower shall ensure that all Libor Loans and Bankers' Acceptances mature on or
prior to the Maturity Date and shall ensure that the  maturities of all Bankers'
Acceptances and Libor Loans are such that the foregoing mandatory repayments can
be effected.

4.2     Repayment of Outstandings In Excess of Commitments

     If the  amount  of  Outstandings  (determined  in  Cdn.  Dollars  with  all
Accommodations  denominated  in US Dollars  being  converted  to the  Equivalent
Amount of Cdn.  Dollars using the Bank of Canada noon  (Toronto  time) spot rate
for  converting US Dollars to Canadian  Dollars on the first Business Day of the
calendar month for any  determination of the currency  conversion in such month)
outstanding to any Lender is on any day in excess of the amount of such Lender's
Commitment,  the Borrower shall within 5 Business Days thereafter repay, provide
cash cover to be held by the Agent on behalf of such  Lender in the same  manner
provided  for  in  Section   10.3  or   otherwise   reduce  a  portion  of  such
Accommodations to the extent of the amount of such excess.

     Notwithstanding  the  foregoing,  if the excess  referred  to above is as a
result of exchange rate fluctuations then the Borrower shall not be obligated to
provide the cash cover referred to above unless the  Outstandings  in respect of
all Lenders has in the aggregate exceeded the aggregate of all Commitments,  for
5 consecutive Business Days.

4.3     Cancellation of Commitment and Prepayment

     The Borrower may,  without penalty or premium,  at any time upon 3 Business
Days' prior written notice substantially in the form of Schedule "A", cancel all
of the Total  Commitment  or any  portions  thereof in  minimum  amounts of Cdn.
$100,000  and whole  multiples  thereof  if, on or prior to the last day of such
notice period, the Borrower has:

     (a)  identified in writing, the amount of reduction to be applicable to the
          Total Commitment;

     (b)  prepaid or otherwise reduced Accommodations outstanding to each Lender
          in an amount equal to the amount by which  Accommodations  outstanding
          to  such  Lender  would  otherwise  be  in  excess  of  such  Lender's
          Commitment immediately after the reduction of the Commitments provided
          for in such notice; and

     (c)  paid all accrued interest and other charges and fees in respect of the
          Accommodations being repaid or reduced as aforesaid.

     Any such  notice  of  cancellation  is  irrevocable  and the  amount of the
Commitment  of each  Lender  so  cancelled  and  reduced  may not be  reinstated
hereunder.

4.4     Early Repayment of Libor Loans and Bankers' Acceptances

     The Borrower  shall not cancel all or any portion of the  Commitment of any
Lender  pursuant to Section 4.3 if the  Accommodations  required to be repaid to
such Lender as a result thereof include Libor Loans with a Libor Interest Period
falling  subsequent  to the date of such  cancellation  or Bankers'  Acceptances
accepted by such Lender with a maturity  date falling  subsequent to the date of
such  cancellation  unless, on the date of such  cancellation,  the Borrower has
paid to the Agent at the Agent's  Account for Payments,  for the account of such
Lender,  in respect of Libor Loans the amount  required  to be paid  pursuant to
Section 11.5, and, in respect of Bankers' Acceptances,  the amount determined by
such  Lender,  acting  reasonably,  (and  advised to the Agent) to be the amount
required to be paid on such date of cancellation in order to yield to the Lender
the face amount of all such Bankers' Acceptances, as applicable, on the maturity
date thereof.

4.5     Evidence of Indebtedness

     The Agent shall open and  maintain  on the books of the  Agent's  Branch of
Account,  accounts and records  evidencing the  Accommodations and other amounts
owing by the  Borrower to the Agent and each Lender  under this  Agreement.  The
Agent shall debit  therein  the amount of such  Accommodations,  and shall enter
therein each payment of principal of and interest on the Accommodations and fees
and other  amounts  payable  pursuant  to this  Agreement  and shall  record the
Bankers'  Acceptances accepted by each Lender and all other amounts becoming due
to the Agent and each Lender under this Agreement.  The Accounts constitute,  in
the absence of manifest error,  prima facie evidence of the  Indebtedness of the
Borrower to the Agent and each Lender pursuant to this Agreement,  the date each
Lender made each  Accommodation  available  to the  Borrower and the amounts the
Borrower has paid from time to time on account of the  principal of and interest
on the Accommodations, fees payable pursuant to this Agreement and other amounts
owing  hereunder.  The Agent shall,  from time to time,  provide to the Borrower
copies of such accounts and records upon the Borrower' s reasonable request.

                                   ARTICLE 5
                          PAYMENT OF INTEREST AND FEES

5.1     Interest on Prime Loans

     The  Borrower  shall pay to the Agent on behalf of each Lender  interest on
each Prime Loan in  Canadian  Dollars at the Agent's  Account for  Payments at a
rate per 365 day period  equal to the Prime Rate plus the Margin  applicable  to
such  Prime  Loan.  A change  in the  Prime  Rate  will  simultaneously  cause a
corresponding  change in the  interest  payable for a Prime Loan and a change in
the  Margin  will cause a change in the  interest  payable  as  provided  for in
Section 5.10.  Such interest is payable monthly in arrears on each Interest Date
for the period  commencing on and including the immediately  prior Interest Date
up to and  including  the last  day  prior to the  Interest  Date on which  such
interest is to be paid and shall be calculated on a daily basis and on the basis
of the actual number of days elapsed in a year of 365 days.  The annual rates of
interest  to which  the  rates  determined  in  accordance  with  the  foregoing
provisions  of this  Section  5.1 are  equivalent,  are the rates so  determined
multiplied by the actual number of days in a period of 1 year  commencing on the
first day of the period for which such interest is payable and divided by 365.

5.2     Interest on US Base Rate Loans

     The  Borrower  shall pay to the Agent on behalf of each Lender  interest on
each US Base Rate Loan in US Dollars at the Agent's  Account  for  Payments at a
rate per 365 day period equal to the US Base Rate plus the Margin  applicable to
such US Base Rate Loan. A change in the US Base Rate will simultaneously cause a
corresponding  change  in the  interest  payable  for a US Base  Rate Loan and a
change in the Margin will cause a change in the interest payable as provided for
in Section 5.10.  Such  interest is payable  monthly in arrears on each Interest
Date for the period  commencing on and including the immediately  prior Interest
Date up to and  including  the last day prior to the Interest Date on which such
interest is to be paid and shall be calculated on a daily basis and on the basis
of the actual number of days elapsed in a year of 365 days.  The annual rates of
interest  to which  the  rates  determined  in  accordance  with  the  foregoing
provisions  of this  Section  5.2 are  equivalent,  are the rates so  determined
multiplied by the actual number of days in a period of 1 year  commencing on the
first day of the period for which such interest is payable and divided by 365.

5.3     Interest on Libor Loans

     The  Borrower  shall pay to the Agent on behalf of each Lender  interest on
each Libor Loan in US Dollars at the Agent's Account for Payments for the period
commencing  on  and  including  the  first  day  of the  Libor  Interest  Period
applicable to such Libor Loan up to but not including the last day of such Libor
Interest Period at a rate per 360 day period, equal to the sum of Libor plus the
Margin  applicable to such Libor Loan. A change in the Libor Margin will cause a
corresponding change in the interest payable for a Libor Loan as provided for in
Section  5.10.  Such  interest  shall be  payable on each  Libor  Interest  Date
applicable  to such Libor  Interest  Period and shall be  calculated  on a daily
basis and on the basis of the  actual  number of days  elapsed in the period for
which such  interest  is  payable  (including  the first day of such  period but
excluding the date on which such interest is payable) divided by 360. The annual
rates of interest to which the rates determined in accordance with the foregoing
provisions  of this  Section  5.3 are  equivalent,  are the rates so  determined
multiplied by the actual number of days in a period of 1 year  commencing on the
first day of the period for which such interest is payable and divided by 360.

5.4     Bankers' Acceptance Fees

     The Borrower shall pay acceptance fees in Canadian  Dollars to the Agent on
behalf of the Lenders at the Agent's  Account for  Payments  forthwith  upon the
acceptance by each Lender of each Bankers'  Acceptance issued by the Borrower at
a rate per 365 day period equal to the applicable Margin, calculated on the face
amount of such Bankers' Acceptance and on the basis of the number of days in the
term of such Bankers'  Acceptance divided by 365. Acceptance fees payable to the
Lenders  pursuant to this  Section 5.4 shall be paid in the manner  specified in
Section  3.6.  All fees  payable  pursuant  to this  Section  5.4 on any date in
respect of any issuance of Bankers' Acceptances shall be calculated by the Agent
and payable by the  Borrower  based on the  applicable  Margin in effect on such
date as provided for in Section  5.10;  provided  that if during the term of any
such  Bankers'  Acceptance a change in the Margin  occurs,  the fees paid by the
Borrower in respect of such Bankers' Acceptance shall be adjusted,  effective at
the beginning of the Fiscal  Quarter next  following the Fiscal Quarter in which
the change in the Margin occurs  pursuant to Section 5.10, to reflect the Margin
for the remaining term (if any) of the Bankers' Acceptance and the Borrower,  in
the case of an increase in the Margin, shall forthwith after receipt of a notice
from the  Agent  make such  payments  to the Agent at the  Agent's  Account  for
Payments for the account of the Lenders as are  necessary to reflect such change
and the  Lenders,  in the case of a decrease  in the  Margin,  shall  credit any
amount which would  otherwise be refundable to the Borrower  against  amounts in
respect of interest or fees accruing hereunder in relation to the Borrower.

5.5 Interest on Overdue Amounts

     Notwithstanding  any other provision  hereof,  in the event that any amount
due hereunder (including,  without limitation, any interest payment) is not paid
when due (whether by acceleration  or otherwise),  the Borrower shall and hereby
agrees to pay to the Lenders interest on such unpaid amount (including,  without
limitation,  interest on interest),  if and to the fullest  extent  permitted by
Applicable  Law,  from the date that such amount is due until the date that such
amount is paid in full (but excluding the date of such payment if the payment is
made before 10:00 a.m. at the place of payment on the date of such payment), and
such interest  shall accrue  daily,  be  calculated  and  compounded on the last
Business  Day of each  calendar  month and be  payable  in the  currency  of the
relevant Accommodation on demand, as well after as before maturity,  default and
judgment, at a rate per annum that is equal to:

     (a)  if such amount is payable in Canadian Dollars,  the Prime Rate plus 2%
          per annum; and

     (b)  if such amount is payable in US Dollars,  the US Base Rate plus 2% per
          annum.

     The  Borrower  hereby  waives,  to the  fullest  extent  it may do so under
Applicable Law, any provisions of Applicable  Law,  including  specifically  the
Interest  Act  (Canada) or the  Judgment  Interest  Act  (Alberta)  which may be
inconsistent with this Agreement.

5.6     Standby Fees

     The  Borrower  shall pay standby fees to the Agent on behalf of each Lender
at the Agent's Account for Payments calculated  quarterly in arrears on the last
Business Day of each calendar  quarter  commencing with the last Business Day of
the calendar quarter in which the Effective Date occurs,  and payable  quarterly
in arrears on the last Business Day of each calendar  quarter  thereafter and on
the Maturity  Date.  Each payment of standby  fees shall be  calculated  for the
period  commencing on and including the Effective Date or the last date on which
such  standby  fees  were  payable  hereunder,  as the  case  may be,  up to and
including  the last day of the calendar  quarter for which such standby fees are
to be paid and shall be in an amount  equal to the Standby Fee Rate in effect on
each day during such period of  calculation  multiplied  by the  difference,  if
positive,  obtained by  subtracting  the  Accommodations  outstanding  from such
Lender  for each day in the  period of the  calculation  from the amount of such
Lender' s  Commitment  in effect on each such day.  Such  standby  fees shall be
calculated on a daily basis and on the basis of a 365 day year.  For purposes of
calculating  standby  fees  payable  pursuant to this Section 5.6, the amount of
Accommodations  outstanding  from time to time in US  Dollars on each day during
the period for which such  standby fees are payable  shall,  for the purposes of
determining  an Equivalent  Amount on such day, be  notionally  converted to the
Equivalent  Amount in Canadian  Dollars  using the Bank of Canada noon  (Toronto
time) spot rate for  converting  US Dollars to  Canadian  Dollars  for the first
Business Day of such calendar month for any calculation in such month.

5.7     Agent's Fees

     The  Borrower  shall pay an agency fee to the Agent (for the  Agent's  sole
account) at the Agent's Account for Payments, in the amount as from time to time
agreed to between the Borrower and the Agent,  on the Effective Date and on each
extension  of the  Maturity  Date and such  fees  shall,  for  purposes  of this
Agreement, be deemed to be an amount payable pursuant to this Agreement.

5.8     Maximum Rate Permitted by Law

     No interest or fee to be paid  hereunder  shall be paid at a rate exceeding
the maximum rate permitted by Applicable  Law. In the event any such interest or
fee  exceeds  such  maximum  rate,  such  interest  or fee shall be  reduced  or
refunded,  as  the  case  may  be,  so as to be  payable  at  the  highest  rate
recoverable under Applicable Law.

5.9     Interest Generally

     The theory of deemed  reinvestment  shall not apply to the  calculation  of
interest or payment of fees or other amounts hereunder, notwithstanding anything
contained  in this  Agreement  or in any other Loan  Document  now or  hereafter
granted  to or taken by the  Lender  and all  interest  and fees  payable by the
Borrower to any Lender shall accrue from day to day and be computed as described
herein in accordance with the "nominal rate" method of interest calculation.

5.10    Interest and Fee Adjustment

     In the event of a change in the Margin or a change in the  Standby Fee Rate
as a result of a change in the Funded Debt to EBITDA Ratio (at a time when there
is no Syndicated Indebtedness), such change shall become effective on the day on
which the Borrower  delivers a Compliance  Certificate  in  accordance  with the
requirements  hereof  evidencing  the change in the Funded Debt to EBITDA Ratio,
or, if the Borrower has not  delivered a Compliance  Certificate  as required by
the terms  hereof  within 75 days of the end of any  Fiscal  Quarter,  then such
change in the Margin or a change in the Standby Fee Rate shall become  effective
on such 75 th day and the  determination  of the Funded Debt to EBITDA  Ratio on
such  date  shall  be  made by the  Agent,  in its  sole  discretion,  and  such
determination shall be final and binding for all purposes hereof.

                                   ARTICLE 6
                                   SECURITY

6.1     Security

     To  secure  due  repayment  and  satisfaction  of all  Indebtedness  of the
Borrower to the Lenders from time to time pursuant to this  Agreement and any of
the other Loan Documents, including due performance, payment and satisfaction of
all its obligations  and  Indebtedness  hereunder and  thereunder,  the Borrower
shall, in each case in form, substance and amount satisfactory to the Agent:

(a)  execute and deliver a floating charge debenture, a pledge agreement thereof
     and an opinion in respect of such  documents  from counsel to the Borrower;
     and

(b)  cause each  Guaranteeing  Subsidiary  to execute and deliver to the Agent a
     Subsidiary  Guarantee,  a floating  charge  debenture,  a pledge  agreement
     thereof,  and an opinion in respect of such  documents from counsel to such
     Guaranteeing Subsidiary.

6.2     Release and Amendment of Security

     No Lender shall, during the term of this Agreement,  discharge,  surrender,
amend or otherwise modify any Security, without the prior written consent of all
of the Lenders  provided that the Agent and each Lender shall,  when there is no
Default or Event of Default,  discharge Security provided hereunder with respect
to Permitted Dispositions upon the written request of the Borrower,  accompanied
by  evidence  to  the  satisfaction  of the  Agent,  acting  reasonably,  that a
Permitted Disposition has or is about to occur.

6.3     Registrations and Renewals

     The Borrower shall and shall cause each Guaranteeing  Subsidiary to, at the
Borrower'  s sole  cost  and  expense,  do  all  such  acts,  execute  all  such
instruments  and provide  such  further  assurances  as counsel to the Agent may
reasonably request to ensure that the priority of the Security Interests created
by all of the  Security  executed  and  delivered  to the Agent as  contemplated
hereby is duly protected and perfected by registration, filing or recordation of
such  Security  or a  caution,  caveat,  security  notice  or other  appropriate
instrument at all offices where  necessary or of advantage to the  protection or
perfection  thereof including in the Provinces of Alberta and Saskatchewan;  and
to so cooperate  with the Agent and the Agent's  counsel in renewing or refiling
any  registration,  filing or recordation  required hereby in order to preserve,
protect and maintain the priority of such Security Interests, from time to time.

6.4     Extensions, Etc.

     The Lenders  may  directly,  or through the Agent or other duly  authorized
representatives,   grant  extensions,  take  and  give  up  securities,   accept
compositions,  grant  releases  and  discharges  and  otherwise  deal  with  the
Borrower,  any  Guaranteeing  Subsidiary  or  any  other  Persons,  sureties  or
securities as the Lenders,  in their sole  discretion,  may see fit, all without
prejudice to the liability of the Borrower or any Guaranteeing  Subsidiary under
the Loan Documents or the rights of the Lenders under the Loan Documents.

6.5     Permitted Encumbrances, Permitted Indebtedness and Permitted Title
Defects
        None of:

(a)  the fact that the  Borrower or a  Guaranteeing  Subsidiary  is permitted to
     create or suffer to exist any Permitted Encumbrance, Permitted Indebtedness
     or Permitted Title Defect;

(b)  the fact that any  representation,  warranty or covenant herein may make an
     exception   for  the   existence  of  Permitted   Encumbrances,   Permitted
     Indebtedness or Permitted Title Defects; or

(c)  the fact that the Security Interests created pursuant to the Loan Documents
     are stated to be subject to, or are not  required  to rank in priority  to,
     Permitted Encumbrances;

shall in any manner, nor in any cause or proceeding,  directly or indirectly, be
taken to constitute a subordination of any Security Interest created pursuant to
the  Loan  Documents  to any  Permitted  Encumbrance  or to any  other  Security
Interest or other obligation whatsoever, or that the Indebtedness under the Loan
Documents  is in any way  subordinate  or  junior  in  right of  payment  to any
Permitted Indebtedness,  it being the intention of the parties that all Security
Interests  created  pursuant to the Loan  Documents  shall at all times,  to the
maximum  extent  permitted by Applicable  Law, rank as first  priority  Security
Interests in priority to Permitted Encumbrances and all other Security Interests
or  other  obligations  whatsoever  and  that the  Indebtedness  under  the Loan
Documents  will rank in right of payment at all times at least equally with such
Permitted Indebtedness.

                                   ARTICLE 7
                               PAYMENT AND TAXES

7.1     Time, Place and Currency of Payment

     Payments of principal,  interest, fees and all other amounts payable by the
Borrower pursuant to this Agreement shall be paid in the currency in which it is
due for value at or before 1:00 p.m.  (Toronto  time) on the day such payment is
due. If any such day is not a Business  Day, such amount shall be deemed for all
purposes of this Agreement to be due on the Business Day next following such day
and any such  extension  of time shall be  included  in the  computation  of the
payment of any interest or fees payable under this Agreement. All payments shall
be made at the  Agent's  Account  for  Payments.  Receipt  by the Agent from the
Borrower of funds pursuant to this Agreement,  as principal,  interest,  fees or
otherwise,  shall be deemed to be receipt of such funds by the Agent or Lenders,
as the case may be.

7.2     Application of Payments Prior to an Event of Default

     Except  as  otherwise  agreed  to by all  of  the  Lenders  in  their  sole
discretion,  all payments made by or on behalf of the Borrower  pursuant to this
Agreement,  prior to the delivery of an Acceleration Notice or the occurrence of
an Event of Default specified in Section 10.1(f) or 10.1(g), shall be applied by
the Agent  rateably  among the Lenders and the Agent in accordance  with amounts
owed to the  Lenders  and the Agent in respect of each  category  of amounts set
forth below,  each such  application to be made in the following  order with the
balance remaining after application in respect of each category to be applied to
the next succeeding category:

(a)  Expenses:  firstly, in payment of any amounts due and payable as and by way
     of recoverable expenses hereunder;

(b)  Interest and Fees:  secondly,  in payment of any amounts due and payable as
     and by way of interest pursuant to Sections 5.1, 5.2 and 5.3, fees pursuant
     to Sections  5.4, 5.6 and 5.7 and interest on overdue  amounts  pursuant to
     Section 5.5; and

(c)  Other  Amounts  (other  than  Accommodations):  thirdly,  in payment of any
     amounts  (other than  Accommodations)  then due and payable by the Borrower
     hereunder other than amounts hereinbefore referred to in this Section 7.2;

with the balance to be applied to repay or otherwise reduce  Accommodations in a
manner so that the  Accommodations  and each basis of Accommodation  outstanding
hereunder to each Lender will, to the extent possible, be in the same proportion
as its Lender's Proportion.

7.3     Taxes

     The Borrower  shall make all payments to the Agent on behalf of the Lenders
without set-off or counterclaim, free and clear of, and without deduction for or
on account of, any Tax, other than tax withheld in respect of a Lender by reason
of such Lender not being a resident  of Canada  within the meaning of the Income
Tax Act (Canada)  ("Withholding  Tax").  If any Tax is deducted or withheld from
any  payments,  other  than in respect  of any  Withholding  Tax in respect of a
Lender  not a  resident  of Canada  within  the  meaning  of the  Income Tax Act
(Canada),  the  Borrower  shall  promptly  remit to the  Agent on  behalf of the
Lenders the equivalent of the amounts so deducted or withheld  together with the
relevant  official  receipts  or  other  evidence   satisfactory  to  the  Agent
evidencing  payment to the appropriate  taxing authority of each such Tax by the
Borrower on behalf of the Lenders.

7.4     Account Debit Authorization

     The  Borrower  authorizes  and directs  the Agent,  in its  discretion,  to
automatically  debit,  by  mechanical,  electronic  or  manual  means,  the bank
accounts  of the  Borrower  maintained  with  BMO  (for so long as BMO is  Agent
hereunder)  for all amounts  payable  under this  Agreement,  including  but not
limited, to the repayment of principal and the payment of interest, fees and all
charges for the keeping of such bank accounts.

                                   ARTICLE 8
           CONDITIONS PRECEDENT TO DISBURSEMENT OF THE ACCOMMODATIONS

8.1     Effectiveness and Conditions Precedent

This Agreement shall become effective at such time as the
following conditions precedent have been satisfied:

(a)  No Event of Default:  as of such time,  there exists no Default or Event of
     Default;

(b)  Representations  and Warranties  True: the  representations  and warranties
     contained in Article 2 are true and correct as of such time;

(c)  Receipt of  Documentation:  the Agent has  received,  in form and substance
     satisfactory to the Lenders, the following:

     (i)  a duly executed copy of this Agreement for the Agent and each Lender;

     (ii) duly executed  copies of the Security as required  pursuant to Article
          6;

     (iii)a  certificate   of  status  in  respect  of  the  Borrower  and  each
          Guaranteeing Subsidiary that is a corporation issued under the laws of
          the provinces in which any of them carries on any material business;

     (iv) a  certified  copy of the  constating  documents  and  by-laws  of the
          Borrower and each Guaranteeing Subsidiary, and a certified copy of the
          Partnership  Agreement,  the certificate of the  Partnership,  and all
          amendments  to any of the  foregoing,  certified  as of the  Effective
          Date;

     (v)  a certified  copy of a directors'  resolution of the Borrower and each
          Guaranteeing Subsidiary that is a corporation, and a certified copy of
          a partners  resolution  of the  Partnership,  with respect to the Loan
          Documents to which it is a party, certified as of the Effective Date;

     (vi) certified copies of the GMS Agreements;

     (vii)execution  and  delivery by all parties  thereto of the  Intercreditor
          Subordination Agreement and the KS Subordination;

     (viii)  execution  and  delivery  of an  amendment  to the  Confidentiality
          Agreement  in respect of which the only  parties  will be Gulf and the
          Agent;

     (ix) an  officer' s  certificate  from the chief  financial  officer of the
          Borrower  confirming  the  sources  and uses of funds as set  forth in
          Schedule "O", including that such sources are adequate to complete the
          transactions contemplated by the Purchase and Sale Agreement;

     (x)  an  officer's  certificate  from a  senior  officer  of  the  Borrower
          certifying that the transactions provided for in the Purchase and Sale
          Agreement have been successfully  completed and closed,  including the
          purchase  and  transfer  to the  Borrower  of all of Gulf's  remaining
          interests in the Partnership  and each of the Guaranteed  Subsidiaries
          not held by it  immediately  prior to such closing,  and including the
          satisfaction of all conditions  precedent  contained therein,  without
          any waiver or amendment of any terms or conditions thereof;

     (xi) evidence  that James V. Bertram,  David G. Smith,  David J. Lovitt and
          Kenneth W. Merritt have been retained by GMSL;

     (xii)evidence that all regulatory and shareholder  approvals required on or
          before the date hereof  have been  received  with  respect to the Loan
          Documents,  the  Purchase  and  Sale  Agreement,  and  the  execution,
          delivery and performance of the Loan Documents;

     (xiii) submission of an  environmental  check-list in the Agent's  standard
          form in respect of each of the Loan Parties;

     (xiv)an  opinion  of  Macleod   Dixon,   counsel  to  the   Borrower,   the
          Guaranteeing  Subsidiaries and Solex Production Ltd., addressed to the
          Agent and each  Lender,  relating  to,  inter alia,  existence  of the
          Borrower,  each Guaranteeing  Subsidiary and Solex Production Ltd. and
          the authorization,  execution, delivery and enforceability of the Loan
          Documents to which each is a party;

     (xv) an opinion  of Burnet,  Duckworth  & Palmer,  counsel to the  Lenders,
          addressed to the Agent and each Lender;

     (xvi)an opinion of Dickstein  Shapiro Morin & Oshinsky,  counsel to KeySpan
          Energy  Development  Corporation  and an  opinion  of  Loyens & Loeff,
          counsel to Nicodama Beheer V B.V., in respect of the KS Subordination;

     (xvii) an opinion of Dickstein Shapiro Morin & Oshinsky, counsel to KeySpan
          Corporation in respect of the Intercreditor Subordination Agreement;

     (xviii) a duly executed Notice of Borrowing;

     (xix) evidence of insurance in compliance with Section 9.1(n); and

     (xx) such other documents and documentation  which the Agent may reasonably
          request;

(d)  Fees: payment of all advisory,  underwriting,  agency and legal fees of the
     Agent; and

(e)  No Material  Adverse  Effect:  as of such time no circumstance or event has
     occurred  which could  reasonably  be  expected to have a Material  Adverse
     Effect.

8.2     Continuing Conditions Precedent

     The obligation of the Lenders to make available any Accommodations pursuant
to Section 3.4 or to make any Conversion of  Accommodations  pursuant to Section
3.10  or to  make a  Rollover  pursuant  to  Section  3.11,  is  subject  to and
conditional upon the condition precedent that, on each Drawdown Date, Conversion
Date and Rollover Date (i) there exists no Default or Event of Default, and (ii)
after giving  effect to the  Drawdown,  Conversion  or Rollover,  the  aggregate
Outstandings will not exceed the Total Commitment.

8.3     Waiver of a Condition Precedent

     The terms and  conditions of Sections 8.1 and 8.2 are inserted for the sole
benefit of the Agent and the Lenders and may be waived by the  Majority  Lenders
in whole or in part with or without  terms or  conditions,  in respect of all or
any portion of the Accommodations, without affecting the right of the Lenders to
assert  such  terms and  conditions  in whole or in part in respect of any other
Accommodations.

                                   ARTICLE 9
                                   COVENANTS

9.1     Positive Covenants

     During the term of this Agreement,  the Borrower covenants with each of the
Lenders and the Agent that:

(a)  Payment and  Performance of  Indebtedness:  the Borrower  shall,  and shall
     cause  each  Guaranteeing  Subsidiary  to,  pay  duly  and  punctually  all
     Indebtedness  as and when due by it hereunder  and shall  perform all other
     obligations  on its  part to be  performed  under  the  terms  of the  Loan
     Documents at the times and places and in the manner provided for therein;

(b)  Corporate Existence: the Borrower shall maintain its corporate existence in
     good  standing  under the laws of the  Province of Nova Scotia and register
     and qualify and remain  registered  and  qualified  as an  extra-provincial
     corporation  under the laws of each jurisdiction in which the nature of any
     material  business  conducted  by it  or  the  character  of  any  material
     properties and assets owned or leased by it requires such  registration and
     qualification;

(c)  Corporate Existence of Guaranteeing Subsidiaries:  the Borrower shall cause
     each  Guaranteeing  Subsidiary  which  is a  corporation  to  maintain  its
     corporate  existence in good standing under the laws of its jurisdiction of
     incorporation or creation, as the case may be, and shall cause each to duly
     register and qualify and remain duly  registered  and qualified as an extra
     provincial  corporation  under the laws of each  jurisdiction  in Canada in
     which the nature of any material business transacted by it or the character
     of any material  properties  or assets owned or leased by it requires  such
     registration and qualification;

(d)  Partnership Existence of the Partnership: other than as expressly permitted
     hereunder,  the  Borrower  shall  cause the  Partnership  to  maintain  its
     partnership  existence in good standing under the laws of Alberta and under
     the  laws of  Saskatchewan  and  shall  cause  the  Partnership  to be duly
     registered  and  qualified  and remain duly  registered  and qualified as a
     partnership under the laws of Alberta and each other jurisdiction in Canada
     in which  the  nature  of any  material  business  transacted  by it or the
     character  of any  material  properties  or  assets  owned or  leased by it
     require such qualification;

(e)  Annual  Financial  Statements:  the Borrower  shall furnish to the Agent as
     soon as  available  and in any event  within 120 days after the end of each
     Fiscal Year of the  Borrower,  the annual  audited  consolidated  financial
     statements of the Borrower,  and unaudited  unconsolidated annual financial
     statements  for each  Loan  Party.  as at the  close of such  Fiscal  Year,
     setting  forth  in  comparative  form  the  corresponding  figures  of  the
     preceding Fiscal Year together with (i) (in the case of audited statements)
     an auditor's report  confirming that its examinations of such  consolidated
     financial  statements  were  made in  accordance  with  generally  accepted
     auditing standards and accordingly included such tests and other procedures
     as it considered  necessary in the circumstances and that such consolidated
     financial   statements   present  fairly  in  all  material   respects  the
     consolidated  financial position of the Borrower and its Subsidiaries as of
     the close of such Fiscal Year and the results of their  operations  and the
     changes in their  financial  position  for the Fiscal Year then  ended,  in
     accordance  with  Generally  Accepted  Accounting  Principles;  and  (ii) a
     certificate of a senior officer of the Borrower  certifying that, except as
     disclosed  in  such  financial  statements,  no  Loan  Party  has  had  any
     liability,  contingent or otherwise,  or any unrealized or anticipated loss
     that, singularly or in the aggregate,  had, or could reasonably be expected
     to have, a Material Adverse Effect;

(f)  Quarterly Financial Statements:  the Borrower shall furnish to the Agent as
     soon as available  and in any event within 75 days after the end of each of
     the first 3 Fiscal  Quarters of each  Fiscal  Year of each Loan Party,  its
     quarterly unaudited  consolidated  financial statements including unaudited
     consolidated  statements  of income,  changes  in  financial  position  and
     balance sheet prepared in accordance with GAAP consistently applied;

(g)  Quarterly Compliance Certificate:  the Borrower shall furnish to the Agent,
     as soon as reasonably practicable and in any event within 75 days after the
     end of each Fiscal Quarter, and effective as of the last day of each Fiscal
     Quarter,  a  duly  executed  and  completed  Compliance  Certificate,  such
     Compliance  Certificate  to be  substantially  in the form of Schedule  "E"
     hereto and providing,  with detail and supporting calculations satisfactory
     to the Agent,  the  determination  of the  financial  ratios set out in the
     financial covenants in Section 9.3;

(h)  Annual Budget: the Borrower shall furnish to the Agent as soon as available
     and in any event not later than 75 days after each  Fiscal Year and in form
     and  substance  satisfactory  to the Agent,  acting  reasonably,  an annual
     budget for the Borrower and its  Guaranteeing  Subsidiaries for that Fiscal
     Year containing  reasonable detail as to all budgeted capital expenditures,
     an operating  business plan, a projection of revenues and expenses and cash
     flow forecast;

(i)  Five Year  Financial  Plan: the Borrower shall furnish to the Agent as soon
     as available  and in any event within 90 days after each Fiscal Year and in
     form and substance satisfactory to the Agent, acting reasonably, a detailed
     financial plan in respect of the Borrower and its Guaranteeing Subsidiaries
     for the 5 year period commencing with such Fiscal Year;

(j)  Mark to Market Amount: the Borrower shall ensure that at all times the Mark
     to Market Amount does not exceed $5,000,000;

(k)  Inspection and Audit: the Borrower shall, and shall cause each Guaranteeing
     Subsidiary  to, at reasonable  times,  on reasonable  notice and subject to
     observance of applicable  safety rules and procedures,  allow or enable (to
     the extent it is able in  respect  of  Facilities  not  operated  by a Loan
     Party) the Agent, any Lender or any of their  representatives  to visit and
     inspect  the  assets or  properties  of the  Borrower  or any  Guaranteeing
     Subsidiary  (in each case at the risk of the Borrower  except to the extent
     of the  negligence or wilful  misconduct of the Agent,  such Lender or such
     representatives)  during normal business hours and afford to any Lender and
     its  representatives  such access as may be  reasonably  required  for such
     purposes;

(l)  Environmental  Inspection:  where the Majority Lenders  reasonably  believe
     that the Borrower or a Guaranteeing  Subsidiary in is material breach of an
     Environmental  Law and that the result of such breach could  reasonably  be
     expected to have a Material Adverse Effect such Loan Party shall permit, or
     if it is not the operator of the Collateral in question seek the permission
     of the operator for,  properly  qualified  representatives  of the Agent to
     conduct tests,  inspections  and  appraisals on the applicable  Collateral,
     including environmental audits and soil tests, and to remove soil and other
     samples from the subject  Collateral from time to time to determine whether
     there  is a  breach  of  any  Environmental  Law by the  Borrower  or  such
     Guaranteeing  Subsidiary  which  could  reasonably  be  expected  to have a
     Material Adverse Effect,  provided that the results of any such tests shall
     be  delivered  to the  Borrower  or such  Guaranteeing  Subsidiary  and the
     Borrower shall be responsible for the reasonable costs thereof;

(m)  Payment of Taxes:  the Borrower  shall and shall cause each  Subsidiary  to
     file all income tax returns  which are  required  to be filed,  pay or make
     provision for payment (in  accordance  with Generally  Accepted  Accounting
     Principles)  of all Taxes which are due and payable,  and provide  adequate
     reserves (in accordance with Generally Accepted Accounting  Principles) for
     the payment of any Tax, the payment of which is being contested,  and shall
     provide  the  Agent  upon  request  with  evidence,  in form and  substance
     satisfactory  to  the  Agent,  of  such  payment  or,  in  the  case  of  a
     contestation,  evidence  that such  contestation  could not  reasonably  be
     expected to have a Material  Adverse Effect if determined  adversely to the
     applicable Loan Party;

(n)  Insurance:  the Borrower shall and shall cause each Guaranteeing Subsidiary
     to maintain in full force and effect such  policies of insurance  issued by
     insurers of recognized  standing insuring such properties and operations of
     the Borrower and the Subsidiaries,  including all risks property insurance,
     wrap-up  general  liability  insurance,   employee's  liability  insurance,
     business interruption insurance,  sudden and accidental pollution insurance
     and replacement  cost  insurance,  and providing such coverages as would be
     maintained by a prudent oil and gas operator engaged in the same or similar
     business  in the  localities  where  such  properties  and  operations  are
     located,  all with  responsible and reputable  insurance  companies in such
     amounts, with such waivers of insurer's rights of subrogation and with such
     deductibles as are customary and consistent with prudent industry practice,
     and  including the Agent as  additional  insured and first loss payee,  and
     shall, if required,  furnish the Agent with  certificates or other evidence
     satisfactory to the Agent of compliance with the foregoing provisions;

(o)  Defend  Title:  except as otherwise  expressly  provided for  hereunder the
     Borrower shall, and shall cause each Guaranteeing  Subsidiary to, maintain,
     protect and defend  title to all of its  material  assets and take all such
     commercially reasonable acts and steps as are necessary or advisable at any
     time  and  from  time to time  to  retain  its  ownership  and  that of any
     Guaranteeing Subsidiary in all such material assets in good standing (other
     than  Permitted  Title Defects) and to cure any title defects in respect of
     all such material assets (other than Permitted Title Defects);

(p)  Books and  Records:  the Borrower  shall and shall cause each  Guaranteeing
     Subsidiary  to keep  proper  and  adequate  records  and  books of  account
     (including  lists of  accounts  receivable  showing  amounts  owing on each
     account)  in  which  true  and  complete  entries  will be made in a manner
     sufficient to enable the preparation of financial  statements in accordance
     with Generally Accepted  Accounting  Principles as consistently  applied to
     the  Borrower and each  Guaranteeing  Subsidiary  and,  upon request of the
     Agent, make the same available for confidential inspection by the Agent and
     the Lenders and their respective  employees at all reasonable times and for
     the purposes of obtaining copies of and abstracts therefrom;

(q)  Notice of Certain Events:  the Borrower shall, to the extent any Loan Party
     is or becomes aware, provide the Agent with prompt written notice of:

     (i)  any Default or Event of Default, or of any circumstance or event which
          would  constitute  a  material  default by any party to any of the GMS
          Agreements  together  in each  case  with an  officer'  s  certificate
          describing  in  detail  such  Default,  or Event of  Default  or other
          defaults  and  specifying  the steps,  if any,  being taken to cure or
          remedy the same;

     (ii) any material actions,  suits, litigation or other proceedings of which
          any Loan Party has knowledge which are commenced or threatened against
          or adversely affect any Loan Party;

     (iii)the  discovery of any  Hazardous  Material or of any material  Release
          from or upon the land or property of the Borrower or any  Guaranteeing
          Subsidiary  which could  reasonably be expected to result in liability
          to the  Borrower  or any  Guaranteeing  Subsidiary  in  excess of Cdn.
          $5,000,000 in the aggregate;

     (iv) any  Governmental  Authorization  that has been  issued or made by any
          Governmental   Authority  to  the  effect  that  the   Borrower,   any
          Guaranteeing  Subsidiary,  or any  operator of a property in which the
          Borrower or any Guaranteeing Subsidiary has an interest, has failed to
          comply  in  any  material  respect  with  any  Environmental  Laws  or
          requiring any material  remediation,  stop work, cleanup or otherwise;
          and

     (v)  any event, circumstance or condition that has had, or could reasonably
          be expected to have, a Material Adverse Effect;

(r)  Maintenance  of  Assets:   the  Borrower   shall,   and  shall  cause  each
     Guaranteeing  Subsidiary to,  maintain in all material  respects all of its
     businesses,  activities and operations in accordance with prudent  industry
     practice,  including the  maintenance  and renewal of all required  permits
     (including, without limitation, the Permits), Land Rights, licenses, rights
     and  privileges  necessary  to enable the  Borrower  and each  Guaranteeing
     Subsidiary to operate and conduct its respective businesses, activities and
     operations  in accordance  in all material  respects with prudent  industry
     practice;

(s)  Novations:  to the extent that the applicable  Loan Party is not a party to
     any  Material   Contract  on  the  Effective   Date,   to  diligently   and
     expeditiously  pursue the novation of the applicable Loan Party to all such
     Material  Contracts  except to the extent  that any rights,  privileges  or
     interests,  in accordance with generally  accepted industry  practice,  are
     held in trust by another Person for the applicable Loan Party;

(t)  Additional Environmental Information:  the Borrower shall, and the Borrower
     shall cause each Guaranteeing  Subsidiary to, upon the request of the Agent
     (acting reasonably),  make available for discussion with the Lenders at all
     reasonable  times the senior officers of the Borrower and any  Guaranteeing
     Subsidiary  primarily  responsible  for the  environmental  activities  and
     affairs of the Borrower or such Guaranteeing Subsidiary;

(u)  Compliance  with Laws and  Regulations:  the Borrower shall and shall cause
     each Guaranteeing Subsidiary to:

     (i)  comply with all Applicable Laws in all material respects; and

     (ii) observe and conform in all material respects to all valid requirements
          of any  governmental  or  municipal  authority  relative to any of its
          material  assets and all material  covenants,  terms and conditions of
          all  material  agreements  upon or under  which any of its  assets are
          held;

(v)  Guaranteeing  Subsidiary Ownership:  the Borrower shall ensure at all times
     that it beneficially  owns either directly or indirectly  through 1 or more
     Guaranteeing Subsidiaries,  all of the issued and outstanding shares in the
     capital stock of each  Guaranteeing  Subsidiary that is a corporation,  and
     all voting,  equity and  partnership  interests  in any other  Guaranteeing
     Subsidiary;

(w)  Remittance  of Cash  Flow:  the  Borrower  shall  cause  each  Guaranteeing
     Subsidiary  to remit,  on a regular  basis,  all cash flow after  operating
     expenses of such  Subsidiary,  to the Borrower as may be required to ensure
     that the Borrower is able to discharge all of its payment  obligations from
     time to time under the Loan Documents on a timely basis;

(x)  Additional   Information:   the  Borrower  shall,   and  shall  cause  each
     Guaranteeing Subsidiary to, furnish to the Agent any additional information
     regarding the business affairs,  operations and financial  condition of the
     Borrower and its Subsidiaries as the Agent shall reasonably request;

(y)  Further Assurances: the Borrower shall, within 30 days after notice thereof
     from the Agent,  to do all such  further  acts and things and  execute  and
     deliver all such further  documents as shall be reasonably  required by the
     Agent in order to ensure the terms and provisions of the Loan Documents are
     fully performed and carry out;

(z)  Parent  Undertaking:  the  Borrower  shall  use its  best  efforts  and act
     diligently and  expeditiously  to obtain as soon as possible after an Event
     of Default,  or an event of default under the Syndicated  Credit Agreement,
     an undertaking in writing to the Agent from KeySpan Corporation undertaking
     that (i) if there is any demand for payment made upon the Borrower by or on
     behalf of the Syndicated Lenders under the Syndicated Credit Facility and a
     demand  for  payment  under  the  guarantee  thereof  provided  by  KeySpan
     Corporation, then KeySpan Corporation will forthwith make payment under its
     guarantee of all  Indebtedness to the Syndicated  Lenders or will otherwise
     forthwith  fund the  Borrower  such that it is able to effect such  payment
     directly,  and (ii) if it makes payment under its guarantee,  it will enter
     into a  subordination  agreement  in the terms of the KS  Subordination  in
     respect of all Indebtedness of the Borrower to KeySpan  Corporation arising
     as a result of any such payment;

(aa) Disposition  Restrictions:  the  Borrower  shall use and shall  cause  each
     Guaranteeing Subsidiary to use reasonable commercial efforts to ensure that
     all  agreements  in the nature of Material  Contracts  entered  into by the
     Borrower  or any  Guaranteeing  Subsidiary  after  the date  hereof  may be
     subject  to the  Security  Interest  constituted  by the  Security  and may
     thereafter  be  sold,  assigned  and  transferred  in  the  course  of  any
     realization or  enforcement  of such Security to a reasonably  creditworthy
     purchaser,  assignee or transferee who agrees to be bound by the provisions
     of such contracts; and

(ab) Mark to Market Reporting: the Borrower shall:

     (i)  on the 10th  Business  Day of each month  provide a  certificate  of a
          senior  officer  of the  Borrower,  confirming  (A) the Mark to Market
          Amount as of the last Business Day of the immediately preceding month;
          and (B) the amounts of any loss or potential  losses as referred to in
          Section 9.2(i)(vi); and

     (ii) at any time when the threshold  amount provided in Section  9.2(i)(vi)
          is exceeded; provide a notice to the Agent to that effect.

9.2     Negative Covenants

     During the term of this Agreement,  the Borrower covenants with each of the
Lenders and the Agent that it shall not, and shall ensure that each Guaranteeing
Subsidiary shall not:

(a)  Limitation on Indebtedness: issue, create, incur, assume, permit, or suffer
     to exist,  or directly or  indirectly be or become in any way liable for or
     in respect of, any Indebtedness except for Permitted Indebtedness;

(b)  Negative Pledge: except for Permitted  Encumbrances,  create, incur, assume
     or suffer to exist any Security Interest upon or with respect to any of its
     undertaking,  properties,  rights or assets, whether now owned or hereafter
     acquired;

(c)  Mergers,  Etc.:  enter into or become party to any  transaction  of merger,
     amalgamation   (other  than  any   amalgamation  of  the  Borrower  with  a
     Guaranteeing Subsidiary or winding up of a Guaranteeing Subsidiary into the
     Borrower,  or a dissolution of the Partnership  and  distribution of all of
     its assets to the Loan  Parties  which are partners  thereof,  on terms and
     conditions  as approved by the Agent,  acting  reasonably),  consolidation,
     reorganization, winding up, plan of arrangement, or reconstruction with any
     Person  or  become  a  party  to  any  other  transaction  whereby  all  or
     substantially  all the  property or assets of any Loan Party may become the
     property  or  assets  of  another  Person,  including,  in the  case  of an
     amalgamation,  of the continuing company resulting  therefrom,  or take any
     corporate action in pursuance of any of the foregoing;

(d)  Restriction on Dispositions: except for Permitted Dispositions, directly or
     indirectly,  make any sale, exchange,  lease, transfer or other disposition
     of any of its properties and assets to any Person;

(e)  Change of Fiscal  Year:  change its  Fiscal  Year or the basis on which its
     financial records are now maintained;

(f)  Capital  Distributions:  directly or indirectly  reduce  stated  capital or
     surplus accounts,  or make or give effect to any Capital Distribution other
     than:

     (i)  Capital Distributions by a Guaranteeing Subsidiary to the Borrower;

     (ii) Capital  Distributions on account of the payment of dividends on or in
          respect of any share capital of the Borrower,  or reasonable  interest
          payments on account of  Intercorporate  Debt,  provided  that all such
          dividends paid or declared and all such interest  payments made in any
          Fiscal  Year are not in the  aggregate  in excess of 75% of Net Income
          for such Fiscal Year;

(g)  Limit  Activities:  make any material  change in the nature of its business
     and  operations,  or  conduct  any  businesses  or  operations,  which  are
     materially different from those conducted on the date hereof;

(h)  Financial  Assistance:  provide  any form of  Financial  Assistance  to any
     Person except for Financial Assistance provided as between the Borrower and
     any Guaranteeing Subsidiary or between any Guaranteeing Subsidiaries;

(i)  Risk Management: enter into or become subject to:

     (i)  any Swap in respect of which any Security Interest is created, assumed
          or granted;

     (ii) any  Swap  outside  the  ordinary   course  of  its  business  or  for
          speculative  purposes  (determined,  where  relevant,  by reference to
          GAAP),  unless the aggregate Swap  Indebtedness of all Loan Parties in
          respect of Swaps which would be so characterized  does not at any time
          exceed $1,000,000;

     (iii)any Currency Swap having a term to maturity  exceeding 1 year or which
          has as its subject matter any amount which would exceed the applicable
          Loan  Party's  underlying  liability  or exposure in such  currency in
          respect of the  physical or  financial  transaction  mitigated  by the
          Currency Swap;

     (iv) any  Commodity  Swap other than in  respect of Gas  Products  and then
          only:

          A.   in the case of Gas Liquids, if any such Commodity Swap has a term
               not  exceeding 12 months and is entered into with  counterparties
               having an  "Investment  Grade Rating" as defined in Section 13.1;
               and

          B.   in the case of Gas Products  other than Gas Liquids,  if any such
               Commodity  Swap has a term not exceeding 12 months and is entered
               into with  counterparties  having an "Investment Grade Rating" as
               defined  in  Section  13.1 or,  if  entered  into  with any other
               counterparty,  then (x) such counterparty is a customer of any of
               the Loan Parties and the Borrower has determined,  after diligent
               review and inquiry, that such counterparty is a reasonably credit
               worthy  counterparty,  and (y) there is concurrently entered into
               an offsetting  back to back Swap with a counterparty  having such
               Investment Grade Rating;

     (v)  any  agreement  for the purchase for its own account of any  Petroleum
          Substances (other than Gas Liquids) unless it concurrently enters into
          a matching  sale  transaction  having  the same  term,  the same daily
          quantity  purchase  commitment and for a price not less than the price
          to be paid by it and with all other material terms being substantially
          similar,  with the  exception  of purchases of residue gas pursuant to
          contracts not exceeding in the aggregate 30 mmcf/day at any time;

     (vi) any  agreements  whereunder  it, or a Person on behalf of it, would be
          entitled or  required to extract Gas Liquids  from Gas for the account
          or  benefit  of it but  would  incur  or be  subject  to a make  whole
          commitment  obligating it to provide or pay for make-up gas to replace
          lost heating  value  (attributable  to the  extraction)  unless (A) in
          respect of each such  transaction the Gas Liquids sale price,  the Gas
          purchase price, the processing fees and any applicable  transportation
          and  other  costs  are  fixed  at such  time for the  duration  of the
          transaction with the result that it is not exposed to any loss; or (B)
          to the extent any such  transactions  are not so structured,  the Loan
          Parties in the aggregate are not exposed to any loss or potential loss
          that  would  in the  aggregate  for the  remaining  term  of all  such
          transactions exceed $2,000,000; or

     (vii)any  Swap  or any  other  agreement  or  transaction  which  would  be
          contrary to the "GMS Corporate Policy for Commodity  Pricing,  Trading
          and Contractual  Relationships"  dated March 17, 2000 and which policy
          is as attached  hereto as Schedule  "H",  provided that changes may be
          made thereto with the prior written approval of the Agent.

The  restrictions  set forth in this  Section  9.2(i)  are in  addition  to, and
without  qualification  of, the  obligations  with respect to the Mark to Market
Amount as set forth in Section 9.1(j).

(j)  Restriction on Investments:  make any investments in, capitalize or acquire
     any ownership interest in, any Person (other than Guaranteeing Subsidiaries
     which remain as wholly-owned  Subsidiaries of the Borrower) unless any such
     investment is consented to by the Majority Lenders and is made on terms and
     conditions approved by the Majority Lenders (acting reasonably);

(k)  Ownership of Petroleum  and Natural Gas  Reserves:  acquire any interest in
     petroleum  or natural  gas  reserves  except to the extent (i)  required to
     acquire or hold a corresponding interest in a Facility,  (ii) made pursuant
     to Dedicated  Reserves,  or (iii) made as ancillary  to a  transaction  the
     primary  purpose of which is to allow  injection  of waste  products and in
     circumstances  where the purchase price attributable to such reserves would
     not exceed $25,000.00;

(l)     Amendment of Agreements:

     (i)  agree to any material revision, alteration,  modification,  amendment,
          change, extension,  renewal,  replacement or substitution of or under,
          or terminate,  forfeit, surrender or cancel any of the GMS Agreements,
          other than the Administrative Services Agreement;

     (ii) waive any material  failure of any party to any of the GMS  Agreements
          to perform its  obligations  thereunder or release such party from its
          obligations to perform and comply with the terms and provisions of the
          GMS Agreements;

     (iii)suffer or permit anything  (within its control)  allowing  termination
          of any of the GMS Agreements,  other than the Administrative  Services
          Agreement; or

     (iv) assign or consent (to the extent it is  entitled to withhold  same) to
          any assignment or further assignment of any of the GMS Agreements.

9.3     Financial Covenants

The Borrower shall ensure that at
any time when there is no Syndicated Indebtedness:

(a)  its Funded Debt to EBITDA  Ratio as of the last day of each Fiscal  Quarter
     is not more than 3.5 to 1.0;

(b)  its Interest  Coverage  Ratio as of the last day of each Fiscal  Quarter is
     not less than 3 to 1; and

(c)  its Funded Debt to  Capitalization  Ratio as at the last day of each Fiscal
     Quarter is not more than .55 to 1;

and at any time  when  there is any such  Syndicated  Indebtedness,  then to the
extent such  Syndicated  Indebtedness  would  cause any of the ratios  specified
above to be in excess of such  ratios,  the Borrower  shall  ensure that,  after
taking into account such outstanding Syndicated Indebtedness:

(d)  its Funded Debt to EBITDA  Ratio as of the last day of each Fiscal  Quarter
     is not more than 5.6 to 1.0;

(e)  its Interest  Coverage  Ratio as of the last day of each Fiscal  Quarter is
     not less than 2.25 to 1;

(f)  its Funded Debt to  Capitalization  Ratio as at the last day of each Fiscal
     Quarter is not more than .60 to 1.

                                   ARTICLE 10
                               EVENTS OF DEFAULT

10.1    Events of Default

     The  occurrence of any 1 or more of the following  events or  circumstances
constitutes an Event of Default under this Agreement:

(a)  Payments:  (i) the failure of the Borrower to pay or  otherwise  reduce the
     Accommodations  or any  portion  thereof  when  due for  payment  or  other
     reduction  hereunder;  or (ii) the  failure  to pay any  other  amount  due
     hereunder on the date upon which the same is due and payable, which failure
     to pay continues for 2 Business Days after the date such amount is due;

(b)  Covenants:  if there is a  breach  or  failure  of due  performance  by the
     Borrower or any Guaranteeing Subsidiary of any covenant or provision of any
     of the Loan  Documents  (other  than  those  otherwise  dealt  with in this
     Section 10.1), and such breach or failure is not capable of being remedied,
     or if capable of being  remedied such breach or failure is not cured to the
     reasonable  satisfaction  of the  Majority  Lenders  within  30 days  after
     written notice thereof by the Agent to the Borrower;

(c)  Representations  and Warranties:  if any representation or warranty made by
     the Borrower or any Guaranteeing  Subsidiary in Article 2 or any other Loan
     Document or  certificate  or document  delivered to the Agent or any Lender
     shall  prove to have  been  incorrect  in any  material  respect  when made
     hereunder,  or would be incorrect in any material  particular  if then made
     hereunder,  and (if capable of being corrected,  but without changing same)
     such  representation or warranty  continues to be incorrect for a period of
     30  days  after  the  Agent  gives   written   notice  of  such   incorrect
     representation and warranty to the Borrower;

(d)  Cross  Default:  if the Borrower or a  Guaranteeing  Subsidiary  is given a
     valid  notice of a default  under any term or  provision  of any  agreement
     evidencing  Indebtedness  for Borrowed  Money (other than this Agreement or
     Intercorporate Debt, but including, without limitation, any Capital Lease),
     securing or  evidencing  Indebtedness  in the  aggregate  in excess of Cdn.
     $5,000,000  and such  breach or default  shall not be  remedied  within the
     lesser of 30 days from the occurrence  thereof and the cure period (if any)
     allowed in the relevant agreement,  or if any Person shall demand repayment
     of any Indebtedness  which is repayable on demand and is owing to it by the
     Borrower or any Guaranteeing  Subsidiary and such Indebtedness shall not be
     paid within the time required by law, and the aggregate  amount of all such
     Indebtedness  outstanding  at any one time to which  all such  defaults  or
     demands relate is in excess of Cdn.  $5,000,000 or the Equivalent Amount in
     any other currencies;

(e)  Cease to Carry on  Business:  other  than as  permitted  hereunder,  if the
     Borrower or any  Guaranteeing  Subsidiary  ceases or  threatens to cease to
     carry on its business,  or a substantial part thereof, or makes a bulk sale
     of its property;

(f)  Voluntary Insolvency: if the Borrower or any Guaranteeing Subsidiary shall:

     (i)  apply for or  consent to the  appointment  of a  receiver,  trustee or
          liquidator of itself or of all or a substantial part of its assets;

     (ii) be unable,  or admit in writing its  inability or failure,  to pay its
          debts generally as they become due;

     (iii) make a general assignment for the benefit of creditors;

     (iv) commit or threaten to commit an act of bankruptcy under the Bankruptcy
          and  Insolvency  Act  (Canada) or any statute  passed in  substitution
          therefor, as amended from time to time;

     (v)  commence any cause,  proceeding  or other action under any existing or
          future law  relating  to  bankruptcy,  insolvency,  reorganization  or
          relief of debtors  seeking to have an order for  relief  entered  with
          respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
          seeking   reorganization,   arrangement,   adjustment,   winding   up,
          liquidation,  dissolution, composition or other relief with respect to
          it or its debts or an arrangement  with creditors or taking  advantage
          of any insolvency law or proceeding for the relief of debtors, or file
          an answer  admitting  the  material  allegations  of a petition  filed
          against it in any bankruptcy, reorganization or insolvency proceeding;
          or

     (vi) take  corporate  action  for  the  purpose  of  effecting  any  of the
          foregoing;

(g)  Involuntary  Insolvency:  if any cause, proceeding or other action shall be
     instituted in any court of competent jurisdiction,  against the Borrower or
     any  Guaranteeing  Subsidiary  seeking in respect of the  Borrower  or such
     Guaranteeing  Subsidiary an  adjudication  in  bankruptcy,  reorganization,
     dissolution,  winding up,  liquidation,  a composition or arrangement  with
     creditors, a readjustment of debts, the appointment of a trustee, receiver,
     liquidator or the like of the Borrower or any Guaranteeing Subsidiary or of
     all or any  substantial  part of its  assets,  or any other like  relief in
     respect of the Borrower or any Guaranteeing Subsidiary under any bankruptcy
     or insolvency law, and if such cause, proceeding or other action results in
     an entry of an order for relief or any such adjudication or appointment, or
     if such case,  proceeding or other action is being diligently  contested by
     the Borrower or such Guaranteeing  Subsidiary in good faith, the same shall
     continue  undismissed  or  unstayed  and in  effect,  for any  period of 15
     consecutive days;

(h)  Change  of  Control:   if  at  any  time  when  there  is  any   Syndicated
     Indebtedness,  the Borrower ceases to be a wholly-owned  direct or indirect
     Subsidiary  of KeySpan  Corporation,  or, at any time after the  Syndicated
     Indebtedness has been  permanently  repaid in full, if there is a change of
     effective control of the Borrower, direct or indirect,  including,  without
     limitation:

     (i)  the  acquisition  by  any  Person  or  Persons,  (other  than  KeySpan
          Corporation or a  wholly-owned  Subsidiary of it) acting jointly or in
          concert of beneficial  ownership of, or control or direction over, 49%
          or more of the outstanding Voting Shares of the Borrower;

     (ii) the  acquisition  by  any  Person  or  Persons,  (other  than  KeySpan
          Corporation  or a  wholly-owned  Subsidiary  of it) of the  ability to
          elect a majority of its or his  nominees to the board of  directors of
          the Borrower; or

     (iii) any change in the effective control of management of the Borrower;

(i)  Material Adverse Effect: if an event or circumstance  shall occur which, in
     the opinion of the  Majority  Lenders,  on  reasonable  grounds and in good
     faith,  could reasonably be expected to result in a Material Adverse Effect
     and, if capable of remedy, such event shall not be remedied within a period
     of  30  days  from  the  date  of  written  notice  (including   reasonable
     particulars) by the Agent to the Borrower of such event;

(j)  Judgments:  if a final  judgment  or  judgments  for the  payment  of money
     aggregating  in excess of Cdn.  $5,000,000  shall be  rendered  against the
     Borrower  or  any  Guaranteeing   Subsidiary  and  the  same  shall  remain
     undischarged  for a  period  of 30  days  during  which  such  judgment  or
     judgments  shall  not  be on  appeal  or  execution  thereof  shall  not be
     effectively stayed;

(k)  Writs:  if a writ,  execution,  attachment or similar  process is issued or
     levied against any property of the Borrower or any Guaranteeing  Subsidiary
     in  connection  with any judgment or judgments  against the Borrower or any
     Guaranteeing  Subsidiary or in connection with any judgment for non-payment
     of any Tax,  aggregating  in  excess  of Cdn.  $5,000,000  and such  writs,
     executions,  attachments  or similar  processes are not  released,  bonded,
     satisfied,  discharged, vacated or stayed within 30 days after their entry,
     commencement or levy;

(l)  Encumbrancers:  if an encumbrancer  or lienor lawfully takes  possession of
     any property of the Borrower or any  Guaranteeing  Subsidiary  having a net
     book value in excess of Cdn. $5,000,000 and such possession continues for a
     period of 30 consecutive days;

(m)  Actions:  if there  shall be  commenced  in any court or with or before any
     Governmental  Authority any material action,  suit or proceeding against or
     affecting  the  Borrower or any  Guaranteeing  Subsidiary  or any  material
     portion of its assets,  which, if successful,  could reasonably be expected
     to have a Material Adverse Effect unless the action,  suit or proceeding is
     being diligently contested in good faith by appropriate  proceedings and in
     respect of which adequate reserves have been established in accordance with
     Generally Accepted Accounting Principles on the books of the Borrower;

(n)  Invalid Documents:  if any of the Loan Documents,  the GMS Agreements,  the
     Intercreditor Subordination Agreement, the KS Subordination or any material
     provision  thereof  shall at any time  for any  reason  cease to be in full
     force and effect in  accordance  with its terms,  be declared to be void or
     voidable  or shall be  repudiated  or  claimed  to be  ineffective,  or the
     validity or  enforceability  thereof  shall at any time be contested by any
     party  thereto  (other  than the  Lenders);  or if in  respect  of the Loan
     Documents  (i) any Loan  Party  shall  deny that it has any or any  further
     liability  or  obligation  thereunder,  or (ii) at any  time  it  shall  be
     unlawful or  impossible  for any Loan Party to perform any of its  material
     obligations under any such Loan Document;

(o)  Specified  Events:  if there is a breach of or default  under the  covenant
     specified  in Section  9.1(v) or under any of the  covenants  specified  in
     Sections 9.2(a), 9.2(b), 9.2(c), 9.2(f) or 9.2(j); or

(p)  Environmental  Orders: if an order from a Governmental  Authority is issued
     against any Loan Party or any  material  assets or  businesses  of any Loan
     Party alleging a material violation of any Environmental Laws and either:

     (i)  adequate  accounting  reserves have not been established in accordance
          with  GAAP  within a  reasonable  period  of time  after  the order is
          issued; or

     (ii) the order is not being diligently contested in good faith.

10.2    Acceleration and Demand

     Upon the occurrence of any Event of Default the Agent may:

(a) if so required by the Majority Lenders:

     (i)  Terminate Commitment:  by written notice to the Borrower,  declare the
          Total  Commitment and each Lender's  Commitment in respect thereof and
          the  right  of  the  Borrower  to  apply  for  further  Accommodations
          thereunder to be terminated; and

     (ii) Acceleration   Notice:   by  written   notice  to  the   Borrower  (an
          "Acceleration  Notice"),  declare all Indebtedness (whether matured or
          unmatured)  of the  Borrower  outstanding  to the  Agent or any of the
          Lenders (including the face amount of all Bankers'  Acceptances) to be
          immediately  due and  payable  (or to be due and payable at such later
          time  as may  be  stated  in  such  notice)  without  further  demand,
          presentation,  protest or other  notice of any kind,  all of which are
          expressly waived by the Borrower.

10.3    Cash Collateral Accounts

(a)  Exchange  Rate  Fluctuations:  Upon the  receipt of cash cover by the Agent
     pursuant to Section 4.2 and in addition to any other  rights or remedies of
     the Lenders hereunder, the Agent, for the benefit of the Lenders hereunder,
     shall  thereafter  be entitled  to deposit and retain in a Cash  Collateral
     Account, bearing interest (with interest to follow principal) at the Agent'
     s prevailing  rates for demand  deposits of  comparable  amounts  which are
     received  by the Agent from the  Borrower  until the next  Business  Day on
     which  there has been no such  excess  under  Section 4.2 for a period of 5
     consecutive  Business Days, whereupon all such amounts (including interest)
     shall be immediately credited to the Prime Loans outstanding.

(b)  Bankers'  Acceptances,  Libor  Loans:  Upon the  occurrence  of an Event of
     Default or delivery of an Acceleration Notice, the Borrower shall forthwith
     pay to the Agent,  for deposit into a Cash  Collateral  Account,  an amount
     equal to the Lenders' maximum potential liability under the Borrower's then
     outstanding  Bankers' Acceptances and (unless the Borrower makes payment of
     the amount  required  pursuant to Section 11.5) Libor Loans  (collectively,
     the  "Escrow  Funds").  The  Escrow  Funds  shall be held by the  Agent for
     set-off against future Indebtedness owing by the Borrower to the Lenders in
     respect  of such  Bankers'  Acceptances  and Libor  Loans and shall be held
     until repayment of such  Outstandings  in full,  except to apply the amount
     represented thereby to the Outstandings or a portion thereof.  Escrow Funds
     shall bear interest at the Agent' s prevailing rates for demand deposits of
     comparable amounts, with interest to follow principal.

10.4    Remedies on Default

        After an Event of Default:

(a)  Majority  Lenders   Instructions:   If  the  Majority  Lenders  do  provide
     directions  or  instructions  to the  Agent,  the  Agent,  on behalf of all
     Lenders  shall,  take such actions and  commence  such  proceedings  as the
     Majority  Lenders in their sole discretion may determine and may enforce or
     otherwise realize upon any Security, all without any obligation to marshall
     any Security Interests and without additional notice, presentation,  demand
     or  protest,  all of which the  Borrower  hereby  expressly  waives (to the
     extent such rights may be waived under Applicable Law).

(b)  General  Remedies:  The rights and  remedies  of the Agent and each  Lender
     under the Loan  Documents are  cumulative and are in addition to and not in
     substitution for any rights or remedies provided by law. To the extent that
     the  circumstances in paragraph (a) above are applicable,  the Agent may on
     behalf of all Lenders and shall if so required by the Majority Lenders,  to
     the extent  permitted by  Applicable  Law,  bring suit at law, in equity or
     otherwise for any available relief or purpose including but not limited to:

     (i)  Specific  Performance:  the  specific  performance  of any covenant or
          agreement contained in the Loan Documents;

     (ii) Injunction:  enjoining  a  violation  of any of the  terms of the Loan
          Documents;

     (iii)Assistance:  aiding in the  exercise of any power  granted by the Loan
          Documents or by law; or

     (iv) Judgment:  obtaining and  recovering  judgment for any and all amounts
          due in respect of the Accommodation or amounts otherwise due hereunder
          or under the Loan Documents.

10.5    Right of Set-Off

     Upon the occurrence and during the continuance of any Event of Default, and
in addition to any rights now or hereafter  granted under Applicable Law and not
by way of  limitation  of any  such  rights,  the  Agent  and  the  Lenders  are
authorized at any time and from time to time  thereafter,  without notice to the
Borrower or to any other Person,  (any such notice being expressly waived by the
Borrower)  to  set-off  and to  appropriate  and to apply  any and all  deposits
(general  or  special,  time or  demand,  provisional  or  final)  and any other
Indebtedness  at any time held by or owing by the Agent or such Lender to or for
the  credit of or the  account  of the  Borrower  against  and on account of the
obligations  and  Indebtedness of the Borrower to the Agent or such Lender under
this  Agreement  including  without  limitation,  all claims of the Agent or any
Lender of any  nature  or  description  arising  out of or  connected  with this
Agreement,  irrespective  of whether or not the Agent or any Lender has made any
demand under this Agreement and although such obligations, liabilities or claims
of the Borrower or any of them are contingent or unmatured. Any exercise of such
rights by any Lender shall be subject to the obligations of such Lender pursuant
to Section 12.11.

10.6    Application and Sharing of Payments Following Acceleration

     Except as otherwise  agreed to by all the Lenders in their sole discretion,
any sum  received  by the Agent at any time after  delivery  of an  Acceleration
Notice or the occurrence of an Event of Default specified in Sections 10.1(f) or
10.1(g),  shall be  applied  by the  Agent  among the  Lenders  and the Agent in
accordance  with  amounts  owed to the  Lenders and the Agent in respect of each
category of amounts set forth  below,  each such  application  to be made in the
following order with the balance  remaining after application in respect of each
category to be applied to the next succeeding category:

(a)  firstly, in or towards payment of any fees or expenses then due and payable
     to the Agent hereunder or under any other Loan Document;

(b)  secondly,  Rateably among the Lenders in respect of amounts due and payable
     to such Lenders as and by way of  recoverable  expenses  hereunder or under
     any Loan Document;

(c)  thirdly,  Rateably  among the Lenders in respect of amounts due and payable
     to such Lenders by way of interest  pursuant to Sections  5.1, 5.2 and 5.3,
     acceptance  fees  pursuant  to Section  5.4,  interest  on overdue  amounts
     pursuant to Section 5.5,  standby fees  pursuant to Section 5.6 and Agent's
     fees pursuant to Section 5.7; and

(d)  fourthly,  Rateably among the Lenders in respect of any other amount (other
     than  Accommodations)  not  hereinbefore  referred to in this  Section 10.6
     which are then due and payable by the Borrower hereunder or under any other
     Loan Document.

10.7    Lenders May Perform Covenants

     If any Loan Party  shall fail to perform any of its  obligations  under any
covenant  contained in any of the Loan  Documents  within the time permitted for
the performance of any such covenant or for the cure of any default thereof, the
Agent may on behalf of the Lenders, on the instructions of the Majority Lenders,
perform  any such  covenant  capable of being  performed  by it and, if any such
covenant  requires the payment or expenditure of money, it may make such payment
or  expenditure  with its own funds on behalf of the  Lenders.  If the  Majority
Lenders elect to effect such  observance or  performance,  neither the Agent nor
the Majority  Lenders shall be liable for any failure or deficiency,  apart from
fraud, in effecting such  observance or performance,  nor for the payment of any
bills,  invoices or accounts incurred or rendered in connection  therewith.  All
amounts so paid by the Agent hereunder shall be repaid by the Borrower on demand
therefor,  and shall bear interest at the rate set forth in Section 5.5 from and
including  the date paid by the Agent  hereunder to but  excluding the date such
amounts are repaid in full by the Borrower.

10.8    Waiver of Default

     Any single or partial exercise by any Lender,  the Agent or by the Agent on
behalf of any Lender of any right or remedy for a default or breach of any term,
covenant,  condition or agreement  contained in the Loan Documents  shall not be
deemed to be a waiver of or to alter,  affect or  prejudice  any other  right or
remedy to which the Agent or such Lender may be lawfully  entitled  for the same
default or breach,  and any waiver by any  Lender,  the Agent or by the Agent on
behalf of any Lender of the strict  observance,  performance or compliance  with
any term, covenant,  condition or agreement contained in the Loan Documents, and
any  indulgence  granted  thereby,  shall be  deemed  not to be a waiver  of any
subsequent  default.  To the extent  permitted by  Applicable  Law, the Borrower
hereby  waives any rights now or  hereafter  conferred  by statute or  otherwise
which are  inconsistent  with the Agent's or a Lender's rights or remedies under
the Loan Documents.

                                   ARTICLE 11
                            EXPENSES AND INDEMNITIES

11.1    Reimbursement of Expenses

     All statements,  reports (including  engineering  reports and environmental
reports), certificates,  opinions and other documents or information required to
be furnished to the Agent or the Lenders by any Loan Party under this  Agreement
shall be supplied by the Loan Parties  without cost to the Agent or the Lenders.
In  addition,  the Borrower  agrees to pay promptly to the Agent on demand,  all
reasonable legal fees and other  reasonable  out-of-pocket  expenses  (including
travel,  publicity and syndication  expenses) incurred or which may hereafter be
incurred  from  time to time by the  Agent  or the  Lenders  in  respect  of the
documentation,    preparation,   registration,    negotiation,   execution   and
administration  of the Loan Documents  (including any stamp taxes or other Taxes
payable in connection  with the  execution,  delivery or enforcement of the Loan
Documents) and all reasonable legal fees and other out-of-pocket  expenses (on a
solicitor  and his own client basis) which are incurred from time to time by the
Agent or the Lenders in respect of the  enforcement of the Loan  Documents.  The
Borrower  acknowledges that the Agent' s fees payable pursuant to Section 5.7 do
not include any activities which the Agent may undertake hereunder in respect of
any  restructuring  of the Credit  Facility that may be required in the event of
any adverse developments or circumstances affecting the Borrower and that in all
such  circumstances  additional  fees may be required by the Agent in respect of
any such restructuring and in addition to any fees otherwise payable hereunder.

11.2    Increased Cost

     If  the  introduction  of,  any  change  in or  the  implementation  of any
Applicable Law,  (including any capital  adequacy  requirement but excluding any
taxes on the  overall  net income of a Lender or upon the  overall  capital of a
Lender),  regulation,  treaty or official  directive  now or hereafter in effect
(whether or not having the force of law) or any change in the  interpretation or
application  thereof by any court or by any judicial or  Governmental  Authority
charged with the interpretation or administration  thereof,  or if compliance by
any Lender with any request from any central bank or other  fiscal,  monetary or
other  authority  (whether  or not  having  the force of law)  (individually,  a
"Circumstance"):

(a)  subjects a Lender to any Tax,  or changes the basis of taxation of payments
     due to a Lender or increases  any existing  Tax, on payments of  principal,
     interest or other  amounts  payable by the  Borrower to a Lender under this
     Agreement;

(b)  imposes, modifies or deems applicable any reserve, special deposit, capital
     adequacy,  regulatory or similar  requirement against assets or liabilities
     held by a Lender,  or deposits of or for the account of a Lender,  or loans
     by a  Lender,  or any other  acquisition  of funds for loans by a Lender or
     commitments by a Lender to fund loans or obligations of a Lender in respect
     of bankers' acceptances accepted by such Lender; or

(c)  imposes on a Lender any other condition with respect to this Agreement;

and the result of (a), (b) or (c) is, in the sole  determination  of such Lender
acting  reasonably  and in good  faith,  to  increase  the cost in respect of an
Accommodation  to such Lender or to reduce the income  receivable by such Lender
in respect of an  Accommodation or standby fees payable pursuant to Section 5.6,
such Lender shall promptly notify the Agent. The Agent shall promptly notify the
Borrower and the Borrower  shall pay to the Agent for the benefit of such Lender
that amount which  compensates such Lender for such additional cost or reduction
in income (except to the extent such increase in costs or reduction in income is
reflected  in or recovered by an increase in the Prime Rate or the US Base Rate)
("Additional  Compensation")  on the next Libor  Interest  Date in the case of a
Libor Loan, on the next date on which standby fees are payable under Section 5.6
in the case of  standby  fees  and the next  date of  issuance  of any  Bankers'
Acceptances or on the next Interest Date in any other case (and each  successive
Libor Interest  Date, or Interest Date, if applicable)  unless such Lender knew,
on the date of execution of this Agreement,  of such Circumstance and the likely
result  thereof.  The Borrower shall not be obligated to pay any portion of such
Additional Compensation accruing under this Section 11.2 for any period prior to
the date which is 3 months  prior to the date on which the  Agent,  on behalf of
such Lender,  gives notice to the Borrower that such Additional  Compensation is
so accruing.  A photocopy  of the relevant  law,  regulation,  treaty,  official
directive or regulatory  requirement  (or, if it is  impracticable  to provide a
photocopy, a written summary of the same) and a certificate by a duly authorized
officer of such Lender  (prepared in good faith) setting forth the amount of the
Additional  Compensation  and the basis for it must be submitted by the Agent to
the Borrower and is conclusive  evidence,  in the absence of manifest  error, of
the amount of the  Additional  Compensation.  If the Agent notifies the Borrower
that  Additional  Compensation  is owed, the Borrower shall pay such  Additional
Compensation  to the Agent for the account of such Lender and the Borrower shall
have the right,  upon  written  irrevocable  prior notice of at least 3 Business
Days to the Agent at the Agent's  Branch of Account,  to make payment in full to
the  Agent  for  the  account  of  such  Lender  in  respect  of the  applicable
Accommodation  on the date  specified in such notice  together  with accrued but
unpaid  interest  and fees in respect of such  Accommodation  or to convert such
Accommodation   into  another  basis  of  Accommodation   available  under  this
Agreement.

11.3    Illegality

     If the introduction of or any change in Applicable Law, regulation, treaty,
official directive or regulatory requirement now or hereafter in effect (whether
or not  having  the  force  of  law)  or any  change  in the  interpretation  or
application  thereof by any court or by any judicial or  Governmental  Authority
charged with the interpretation or administration  thereof, makes it unlawful or
prohibited  for a Lender  (in its sole  opinion  acting  reasonably  and in good
faith) to make,  to fund or to maintain the  Accommodations  or a portion of the
Accommodations or to perform its obligations  under this Agreement,  such Lender
may  by  written  notice  to  the  Borrower  through  the  Agent  terminate  its
obligations  under this  Agreement to make such  Accommodations  or perform such
obligations and the Borrower shall prepay such Accommodations  within 2 Business
Days together with all accrued but unpaid interest and fees as may be applicable
to the date of payment  or  convert  by notice to the Agent  such  Accommodation
forthwith into another basis of Borrowing available under this Agreement.

11.4    Substitute Basis of Accommodation

     If, on or prior to any  Interest  Determination  Date in respect of a Libor
Loan,  a  Lender   determines   acting  reasonably  and  in  good  faith  (which
determination is final, conclusive and binding upon the Borrower) that:

(a)  adequate and fair means do not exist for  ascertaining the rate of interest
     on such Libor Loan;

(b)  the cost to such Lender of making,  funding or maintaining  such Libor Loan
     does not  accurately  reflect the effective cost to such Lender thereof and
     the costs to such Lender are  increased  or the income  receivable  by such
     Lender is reduced in respect of such Libor Loan;

(c)  the  making or the  continuation  of such  Libor  Loan or a portion of such
     Libor  Loan  by  such  Lender  has  become   impracticable   by  reason  of
     circumstances  which  materially and adversely  affect the London interbank
     market; or

(d)  deposits  in US  Dollars  are not  available  to such  Lender in the London
     interbank  market in sufficient  amounts in the ordinary course of business
     for the  applicable  Libor Interest  Period to make,  fund or maintain such
     Libor Loan during such Libor Interest Period;

then, such Lender shall promptly notify the Agent,  and the Agent shall promptly
notify the Borrower in writing of such determination  setting forth the basis of
such  determination and such Lender shall not thereafter be obligated to provide
such Libor Loan. The Borrower shall thereupon  forthwith  notify the Agent as to
the substitute  basis of  Accommodation  available under this Agreement which it
has selected for such Libor Loan. If the Borrower has not so notified the Agent,
such Libor Loan shall  automatically be converted to a US Base Rate Loan for all
purposes under this  Agreement on the date falling 2 Banking Days  subsequent to
such Interest Determination Date.

11.5    Funding Indemnity

     If, for any reason  whatsoever  and whether or not  required  or  permitted
pursuant to the  provisions of this  Agreement,  the Borrower  repays,  prepays,
converts or cancels a Libor Loan other than on the last day of a Libor  Interest
Period  applicable  to such  Libor  Loan,  or fails for any  reason  to  borrow,
convert,  rollover or otherwise act in accordance  with a notice given hereunder
pursuant to Schedules "A", "C" or "D", the Borrower  shall  indemnify the Lender
for any loss or expense  incurred by such Lender including  without  limitation,
any loss of profit or expenses such Lender  incurs by reason of the  liquidation
or  reemployment  of deposits or other funds acquired by such Lender to maintain
the Libor Loan or any increased  interest or other charges payable to lenders of
funds  borrowed in order to  maintain  such Libor Loan  together  with any other
out-of-pocket  charges,  costs or  expenses  incurred  by such  Lender  relative
thereto.  A certificate of such Lender  (acting  reasonably and prepared in good
faith) submitted by the Agent setting out the basis for the determination of the
amount  necessary to indemnify  such Lender shall be, in the absence of manifest
error, prima facie evidence thereof.

11.6    General Indemnity

     The Borrower hereby  covenants with the Agent and each Lender that it shall
at all  times  hereafter  keep the  Agent,  each  Lender  and  their  respective
officers, directors,  employees, agents, Affiliates,  shareholders and assignees
(the "Indemnified  Persons")  indemnified and held harmless from and against all
suits (whether founded or unfounded),  actions, proceedings,  judgments, demands
or claims  instituted  or made against any  Indemnified  Person,  and all costs,
losses,  liabilities,  damages  and  expenses  (including  all  legal  fees on a
solicitor and his own client basis)  incurred by any  Indemnified  Person in any
way relating to, arising out of, or incidental to any default by the Borrower or
any  Guaranteeing  Subsidiary  under any provision of any of the Loan  Documents
(unless  any  of the  foregoing  arise  from  the  gross  negligence  or  wilful
misconduct of such Indemnified  Person).  Provided there is no Default hereunder
and for so long as there is no Default hereunder, the Borrower, or at its option
another  Loan  Party,  shall be  entitled  to conduct  the defence of such suit,
action or proceeding with the  participation of and taking into account the best
interests  of the  Indemnified  Persons.  If the  Agent  or  such  Lender  shall
determine in good faith that the defence of any such suit,  action or proceeding
is not being  conducted in the best interests of the  Indemnified  Persons,  the
Agent or such Lender  shall on notice to the Borrower and any such Loan Party be
entitled to take over the sole  conduct of the  defence of such suit,  action or
proceeding  and,  unless  the  Agent or  Lender  advises  that the basis of such
determination  is that  counsel  to a Loan  Party  has a  material  conflict  of
interest in representing  both the Loan Party and the Indemnified  Persons,  the
Borrower shall not be obligated to indemnify the Agent or such Lender in respect
of any legal fees and disbursements thereafter incurred in respect of such suit,
action or proceeding.

11.7    Environmental Indemnity

     The Borrower  shall  indemnify  and hold harmless the Agent and the Lenders
(including  any receiver,  receiver-manager  or similar Person  appointed  under
Applicable Law) and their respective Affiliates,  officers, directors, employees
and agents (the "Indemnitees") forthwith on demand by the Agent from and against
any  and  all  suits  (whether  founded  or  unfounded),  actions,  proceedings,
judgments,  demands or claims instituted or made against any Indemnitee, and all
costs, losses, liabilities,  damages and expenses (including all legal fees on a
solicitor  and his own  client  basis)  of any  nature  whatsoever  suffered  or
incurred by any Indemnitee with respect to any Environmental Liabilities (actual
or alleged)  related to any Loan Party's  assets and  properties or arising from
its  operations in respect  thereof (or any  predecessor in interest to any such
Loan  Party),  except to the extent any  thereof  arise as a result of the gross
negligence or wilful misconduct of such Indemnitee.

                                   ARTICLE 12
                           THE AGENT AND THE LENDERS

12.1 Authorization of Agent

     Each Lender irrevocably  appoints and authorizes the Agent to exercise such
powers,  perform  such  duties,  take  such  actions,  make such  decisions  and
determinations  and give such consents  under the Loan Documents as are required
to be exercised,  performed,  taken, made, given or otherwise carried out by the
Agent hereunder or under any other agreement between the Lenders,  together with
all powers  reasonably  incidental  thereto.  As to any  matters  not  expressly
required by this  Agreement,  the other Loan Documents or by any other agreement
between the Lenders to be carried out by the Agent, the Agent is not required to
exercise any discretion or take or to refrain from taking any action except upon
the written  instructions of the Majority Lenders.  Notwithstanding  anything to
the contrary in this Agreement,  the Agent shall not be required to exercise any
discretion  or to take or to refrain  from taking any action in any manner which
is contrary to the Loan Documents, to any other agreement between the Lenders or
to Applicable Law.

12.2 Responsibility of Agent

     The Agent makes no representation or warranty and accepts no responsibility
with   respect  to  the  due   execution,   legality,   validity,   sufficiency,
enforceability  or priority of any of the Loan Documents nor with respect to the
due execution,  legality,  validity,  sufficiency,  enforceability,  accuracy or
authenticity of any documents,  papers, materials or other information furnished
by the Borrower (or any other person,  including  the Agent or any  Guaranteeing
Subsidiary) in connection  with the Loan Documents,  whether  provided before or
after the date of this  Agreement.  The Agent  shall incur no  liability  to the
Lenders under or in respect of the Loan Documents with respect to anything which
it may do or refrain  from doing in the  reasonable  exercise of its judgment or
which may seem to it to be necessary or desirable in the  circumstances,  except
for  its  gross   negligence  or  wilful   misconduct.   The  Agent  assumes  no
responsibility  for the payment of any of the  Accommodations  or other  amounts
outstanding hereunder by the Borrower.

12.3    Acknowledgment of Lenders

     Each Lender  acknowledges  to the Agent that it has been, and will continue
to be,  solely  responsible  for making  its own  independent  appraisal  of and
investigation  into the  financial  condition,  creditworthiness,  environmental
soundness,  affairs,  status and nature of the  Borrower  and  accordingly  each
Lender confirms to the Agent that it has not relied, and will not hereafter rely
on the Agent:

(a)  Information:  to check or inquire on its behalf into the adequacy, accuracy
     or  completeness  of  any  information  provided  by  the  Borrower  or any
     Guaranteeing  Subsidiary or in connection with the Loan Documents  (whether
     or not such information has been or is hereafter  circulated to such Lender
     by the Agent);

(b)  Performance:  to  inquire  as to the  performance  by the  Borrower  or any
     Guaranteeing Subsidiary of its obligations under the Loan Documents; or

(c)  Credit  Review:  to assess or keep under review on its behalf the financial
     condition,  creditworthiness,  environmental soundness,  affairs, status or
     nature of the Borrower or any Guaranteeing Subsidiary.

12.4    Rights and Obligations of Each Lender

     The rights and  obligations of each Lender under this Agreement are several
and no  Lender  shall  be  obligated  to make  Accommodations  available  to the
Borrower in excess of the amount of such Lender's  Commitment.  The failure of a
Lender to perform its obligations under this Agreement shall neither:

(a)  No Liability to Other  Lenders:  result in any other Lender  incurring  any
     liability whatsoever; nor

(b)  No Relief from  Obligations:  relieve the Borrower or any other Lender from
     their respective obligations under any Loan Document.

Nothing  contained  herein or in any other Loan  Document  nor any action  taken
pursuant  hereto  or  thereto  shall be  deemed  to  constitute  the  Lenders  a
partnership, joint venture or any other similar entity.

12.5    Notice to Lenders

     Unless otherwise  specifically  dealt with in this Agreement,  in the event
the Agent  delivers a written  notice to a Lender  requesting  advice  from such
Lender as to whether it consents or objects to any matter in connection with the
Loan Documents,  then,  except as otherwise  expressly  provided herein, if such
Lender does not deliver to the Agent its written  consent or  objection  to such
matter:

(a)  where a time period is  specified  hereunder  for the Agent or the Majority
     Lenders to provide any response,  notice or other  communication,  not less
     than 1 Business Day prior to the end of such period; or

(b)  where no such time period is specified  hereunder,  then within 15 Business
     Days of the delivery of such written notice by the Agent to such Lender;

such Lender shall be deemed not to have consented thereto.

12.6    Notices between the Lenders, the Agent and the Borrower

     All notices by the Lenders to the Agent shall be through the Agent's Branch
of  Account  and all  notices  by the Agent to a Lender  shall be  through  such
Lender's Branch of Account.  All notices or communications  between the Borrower
and the  Lenders  which  are  required  or  contemplated  pursuant  to the  Loan
Documents  shall be given or made  through  the Agent at the  Agent's  Branch of
Account.

12.7    Agent's Duty to Deliver Documents Obtained from the Borrower

     The Agent shall promptly deliver to each Lender,  at its Branch of Account,
such documents,  papers, materials and other information as are furnished by the
Borrower to the Agent on behalf of such Lender pursuant to this  Agreement,  and
the  Borrower  shall  provide  the  Agent  with  sufficient  copies  of all such
information for such purpose.

12.8    Arrangements for Accommodations

     The Agent shall  promptly give written  notice to each Lender at its Branch
of Account upon  receipt by the Agent of any notice given  pursuant to Article 3
or Section  4.3.  The Agent shall  advise  each  Lender of the amount,  date and
details of each Accommodation and of such Lender's share in each  Accommodation.
At or before 1:00 p.m. (Toronto time) on each Drawdown Date,  Conversion Date or
Rollover Date:

(a)  Loans:  each  Lender  will  make  available  to the  Borrower  its share of
     Accommodations  by way of Loans by  forwarding  to the Agent at the Agent's
     Account for Payments the amount of Loans  required to be made  available by
     such Lender; and

(b)  Bankers'  Acceptances:  each Lender will make available to the Borrower its
     share of Accommodations by way of Bankers' Acceptances by forwarding to the
     Agent at the  Agent's  Account  for  Payments  the  amount of the  Discount
     Proceeds  (less the amount of  applicable  fees  payable by the Borrower to
     such Lender pursuant to Section 5.4).

12.9    Arrangements for Repayment of Accommodations

(a)  Prior to Demand or  Acceleration:  Prior to the delivery of an Acceleration
     Notice  or the  occurrence  of an Event of  Default  specified  in  Section
     10.1(f) or 10.1(g), upon receipt by the Agent of payments from the Borrower
     on account of  principal,  interest,  fees or any other payment made to the
     Agent on behalf of the Lenders,  the Agent shall pay over to each Lender at
     its  Branch of  Account  the  amount  to which it is  entitled  under  this
     Agreement  and shall use its best  efforts  to make  such  payment  to such
     Lender on the same  Business  Day on which such  payment is received by the
     Agent. If the Agent does not remit any such payment to a Lender on the same
     Business Day as such payment is received by the Agent,  the Agent shall pay
     interest  thereon  to such  Lender  until  the  date of  payment  at a rate
     determined  by the Agent  (such rate to be  conclusive  and binding on such
     Lender) in accordance with the Agent's usual banking practice in respect of
     deposits  of amounts  comparable  to the amount of such  payment  which are
     received by the Agent at a time  similar to the time at which such  payment
     is  received  by the  Agent,  and no Loan  Party  will  have any  liability
     therefor.

(b)  Subsequent to Acceleration: Following delivery of an Acceleration Notice or
     the  occurrence  of an Event of Default  specified  in  Section  10.1(f) or
     10.1(g),  the Lenders  shall share any  payments  subsequently  received in
     accordance with Section 10.6 of this Agreement.

12.10   Repayment by Lenders to Agent

(a)  Where Borrower Fails to Pay:  Unless the Agent has been notified in writing
     by the  Borrower  at least 1  Business  Day  prior to the date on which any
     payment to be made by the Borrower  hereunder is due that the Borrower does
     not intend to remit such payment, the Agent may, in its discretion,  assume
     that the Borrower has remitted  such payment when so due and the Agent may,
     in its discretion and in reliance upon such  assumption,  make available to
     each  Lender on such  payment  date an amount  equal to the  amount of such
     payment  which is due to such  Lender  pursuant to this  Agreement.  If the
     Borrower does not in fact remit such payment to the Agent,  the Agent shall
     promptly  notify each Lender and each such Lender shall forthwith on demand
     repay to the Agent the amount of such  assumed  payment  made  available to
     such Lender,  together  with  interest  thereon until the date of repayment
     thereof at a rate  determined by the Agent (such rate to be conclusive  and
     binding on such  Lender)  in  accordance  with the  Agent's  usual  banking
     practice for similar advances to financial institutions of like standing to
     such Lender.

(b)  Where a Lender Fails to Pay:  Unless the Agent has been notified in writing
     by an Lender at least 1 Business Day prior to a Drawdown Date or Conversion
     Date that such Lender does not intend to make available the amount required
     to be made  available  by such Lender  pursuant to this  Agreement  on such
     Drawdown Date or Conversion Date, the Agent may, in its discretion,  assume
     that such Lender has remitted  funds to the Agent in an amount equal to the
     amount  required  to be made  available  by such  Lender  pursuant  to this
     Agreement  and the Agent may, in its  discretion  and in reliance upon such
     assumption,  make  available  to the  Borrower  on  such  Drawdown  Date or
     Conversion Date an amount equal to the amount required to be made available
     by such Lender  pursuant to this  Agreement.  If an Lender does not in fact
     remit such funds to the Agent,  the Agent shall promptly notify such Lender
     and such  Lender  shall  forthwith  remit such funds to the Agent,  failing
     which the Borrower  shall  forthwith on demand repay to the Agent  (without
     prejudice  to the  Borrower's  rights  against such Lender) the amount made
     available by the Agent on behalf of such Lender, in each case together with
     interest  thereon until the date of repayment  thereof at a rate determined
     by the Agent (such rate to be conclusive  and binding on such Lender or the
     Borrower,  as the case may be) in accordance with the Agent's usual banking
     practice for similar advances to financial institutions of like standing to
     such Lender.

12.11   Adjustments Among Lenders

(a)  Adjustments to Outstanding  Accommodations:  Each Lender agrees that, after
     delivery of an Acceleration Notice or the occurrence of an Event of Default
     specified in Section 10.1(f) or 10.1(g),  it will at any time and from time
     to time upon the request of the Agent purchase portions of the Outstandings
     outstanding  and make any  other  adjustments  which  may be  necessary  or
     appropriate,  in order that amounts which remain outstanding to each Lender
     are  thereafter  outstanding  in  the  same  proportion  as the  Lender'  s
     Proportion of the Total  Commitment.  The Borrower  agrees to do all things
     reasonably necessary or appropriate to give effect to any and all purchases
     and other  adjustments by and between the Lenders  pursuant to this Section
     12.11.

(b)  Application  of  Payments:  The Lenders  agree that,  after  delivery of an
     Acceleration  Notice or the occurrence of an Event of Default  specified in
     Section  10.1(f)  or  10.1(g),  the  amount  of any  repayment  made by the
     Borrower  under this  Agreement,  and the amount of any  proceeds  from the
     exercise of any rights or remedies of the Lenders under the Loan Documents,
     which are to be applied against amounts owing hereunder, will be so applied
     in a manner so that to the extent  possible  the  amount of  Accommodations
     made available by each Lender which remain  outstanding after giving effect
     to  such  application  will  be in the  same  proportion  as  the  Lender's
     Proportion of such Lender.

(c)  Set-Off:  Notwithstanding  anything  contained in this Section 12.11, there
     shall not be taken into account for the  purposes of  computing  any amount
     payable to any Lender  pursuant to this Section  12.11,  any amount which a
     Lender receives as a result of any payment (whether voluntary, involuntary,
     through the exercise of any right of set-off,  or  otherwise) on account of
     any monies  owing by the  Borrower to such Lender  other than on account of
     liabilities  under  the Loan  Documents;  provided  that,  if at any time a
     Lender receives any payments (whether  voluntary,  involuntary  through the
     exercise of any right of set-off,  or  otherwise)  on account of any monies
     owing by an Loan Party to such Lender other than on account of  liabilities
     arising under the Loan  Documents;  provided  that, if at any time a Lender
     receives any payments (whether voluntary, involuntary, through the exercise
     of any right of set-off,  or  otherwise)  on account of any monies owing or
     payable  to it by any Loan Party in  respect  of  liabilities  of such Loan
     Party arising under the Loan Documents, such Lender shall purchase portions
     of the  Accommodations  made  available by the other  Lenders to the extent
     required pursuant to Section 12.11(a).

(d)  Further Assurances:  The Borrower agrees to be bound by and, at the request
     of the Agent,  to do all things  necessary or appropriate to give effect to
     any and all purchases and other adjustments made by and between the Lenders
     pursuant to this Section  12.11 but shall incur no increased  Indebtedness,
     in aggregate, by reason thereof.

12.12 Lenders' Consents to Waivers, Amendments, etc.

(a) Unanimous Consent of Lenders:  Any waiver of or any amendment to a provision
of the Loan Documents which relates to:

     (i)  a change in the types of Accommodations, interest rates, standby fees,
          the Margin, the Standby Fee Rate, the Discount Rate, notice periods or
          the amount of any payments payable by the Borrower to any Lender under
          this Agreement including any waiver of the time of payment thereof;

     (ii) an increase or decrease in the  Commitment of any Lender other than as
          provided for herein;

     (iii)a change in the definition of "CDOR Rate",  "Discount Rate", "Majority
          Lenders" or "Maturity Date";

     (iv) any  matter  which,  pursuant  to  the  Loan  Documents,  specifically
          requires the consent or  agreement  of all of the Lenders  rather than
          the consent or agreement of "the Lenders" or the "Majority Lenders" or
          the "Agent";

     (v)  the  provisions  of this  Section  12.12(a);

     (vi) an Event of Default under Section 10.1; or

     (vii)any release or  modification  of the Security;

shall bind the Lenders  only if such waiver or amendment is agreed to in writing
by all of the Lenders.


(b)  Except as  otherwise  provided  in the Loan  Documents,  including  Section
     12.12(a)  hereof,  any waiver of or any amendment to the  provisions of the
     Loan Documents and any action, consent or other determination in connection
     with the Loan  Documents  shall  bind all of the  Lenders  if such  waiver,
     amendment,  action,  consent or other determination is agreed to in writing
     by the Majority Lenders.

12.13   Reimbursement of Agent's Expenses or Lender's Costs

     Each  Lender  agrees  that it will  indemnify  the Agent  for its  Lender's
Proportion of any and all costs, expenses and disbursements (including,  without
limitation,  those costs and expenses  referred to in Section 11.1) which may be
incurred  or made by the  Agent  in good  faith  in  connection  with  the  Loan
Documents,  and agrees that it will,  on written  demand  detailing  such costs,
expenses and disbursements,  reimburse the Agent for any such costs, expenses or
disbursements for which the Agent is not promptly  reimbursed at any time by the
Borrower.  The Agent may refrain from exercising any right,  power or discretion
or taking any action to  protect or enforce  the rights of any Lender  under the
Loan Documents until it has been so reimbursed.

12.14   Reliance by Agent on Notices, etc.

        The Agent shall be entitled:

(a)  Reliance on Written Documents:  to rely upon any writing,  letter,  written
     notice,  certificate,  telex,  facsimile copy, cable,  statement,  order or
     other document  believed by the Agent to be genuine and correct and to have
     been signed, sent or made by the proper person or persons; and

(b)  Reliance on Legal Advice: with respect to legal matters, to act upon advice
     of legal advisors  selected by the Agent concerning all matters  pertaining
     to the Loan  Documents  and the Agent's  duties  thereunder;  and the Agent
     shall assume no responsibility and shall incur no liability to the Borrower
     or any Lender by reason of relying  on any such  document  or acting on any
     such advice.

12.15   Relations with Borrower

Except for the transactions provided for in this Agreement, each Lender may deal
     with the Borrower in all transactions and generally do any banking business
     with or provide any financial  services to the Borrower  without having any
     liability  to account to the other  Lenders  therefor.  With respect to its
     Commitment  and  Lender's  Proportion,  BMO shall have the same  rights and
     powers  under this  Agreement as any other Lender and may exercise the same
     as though it were not the Agent.

12.16   Successor Agent

     The Agent shall resign if at any time it is no longer a Lender hereunder by
reason of an assignment of its rights and  obligations  under this Agreement and
the Loan Documents  pursuant to Article 13 and, in such event,  it shall provide
30 days prior  written  notice of any such  intended  assignment  to each of the
Lenders  and the  Borrower.  The Agent may  resign at any time by giving 30 days
prior written notice  thereof to each of the Lenders and the Borrower.  Upon any
such resignation, the remaining Lenders (the "Remaining Lenders") shall have the
right to appoint a successor  agent.  Any successor  agent  appointed under this
Section  12.16  shall be a Lender  which has  offices in  Calgary,  Alberta  and
Toronto,  Ontario.  If no  successor  agent  shall  have been  appointed  by the
Remaining Lenders and shall have accepted such appointment  within 30 days after
the retiring  agent's giving of notice of  resignation,  then the retiring agent
may, on behalf of the Lenders appoint a successor agent.  Upon the acceptance of
any  appointment  as Agent by a  successor  agent,  such  successor  agent shall
thereupon succeed to and become vested with all the rights,  powers,  privileges
and duties of the  retiring  agent as Agent,  and the  retiring  agent  shall be
discharged from its duties and obligations under this Agreement as Agent.  After
any retiring agent's resignation  hereunder as the Agent, the provisions of this
Agreement  shall  continue  in effect for its benefit and for the benefit of the
Lenders in respect of any actions  taken or omitted to be taken by the  retiring
agent while it was acting as the Agent.

12.17   Indemnity of Agent

     Each  Lender  hereby  agrees to  indemnify  the Agent  (to the  extent  not
reimbursed by the Borrower),  as to its Lender's Proportion from and against any
and  all  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  costs,  expenses or disbursements  of any kind or nature  whatsoever
which may be imposed on,  incurred by, or asserted  against the Agent in any way
relating to or arising out of the Loan  Documents or any action taken or omitted
by Agent under or in respect of the Loan  Documents;  provided  that the Lenders
shall not be liable for any portion of such  liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
resulting  from the  Agent's  gross  negligence  or wilful  misconduct.  Without
limiting the  generality of the  foregoing,  each Lender agrees to reimburse the
Agent  promptly  upon demand for its Lender's  Proportion  of any  out-of-pocket
expenses  (including  counsel fees) incurred by the Agent in connection with the
preservation of any rights of the Agent or the Lenders under, or the enforcement
of, or legal  advice in respect of rights or  responsibilities  under,  the Loan
Documents,  but only to the  extent  that the Agent is not  reimbursed  for such
expenses by the Borrower.

12.18   Sharing of Information

     The Borrower authorizes the Agent and each Lender to share among each other
and with any successor,  assignee,  or any potential  assignee,  any information
possessed by it regarding the Borrower, any Guaranteeing  Subsidiary or the Loan
Documents.  The Agent and each Lender agrees to keep all information provided by
the Borrower or any Guaranteeing  Subsidiary confidential and shall not disclose
such  information  other than as provided for herein and other than to employees
and professional advisors in the necessary course of business.

12.19   Amendment to this Article 12

     Save and  except  for the  provisions  of  Sections  12.15 and  12.16,  the
provisions  of this  Article 12 may be  amended or added to,  from time to time,
without the agreement of the Borrower  provided such  amendment or addition does
not adversely  affect the rights of the Borrower  hereunder or increase,  in the
aggregate,  the liabilities of the Borrower hereunder.  A copy of the instrument
evidencing  such  amendment  or addition  shall be forwarded by the Agent to the
Borrower as soon as practicable  following the execution thereof;  provided that
after an Event of  Default  a failure  to do so by the  Agent  that has not been
remedied as required  hereunder or that has not been waived in writing by all of
the Lenders, shall not render it liable in damages to the Borrower.

                                   ARTICLE 13
                  SUCCESSORS AND ASSIGNS AND JUDGMENT CURRENCY

13.1    Successors and Assigns

(a)  Borrower:  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, except that the Borrower may not (except pursuant
     to  Section  9.2(c))  assign or  otherwise  transfer  any of its  rights or
     obligations hereunder without the prior written consent of each Lender (and
     any attempted  assignment or transfer by the Borrower  without such consent
     shall be null and void).  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 and, to
     the extent  expressly  contemplated  hereby,  the Affiliates of each of the
     Agent and the Lenders) any legal or equitable right,  remedy or claim under
     or by reason of this Agreement.

(b)  Lender  Assignment:  Any Lender may assign to 1 or more Eligible  Assignees
     (as  defined  below) all or a portion of its rights and  obligations  under
     this  Agreement  (including  all or a  portion  of its  Commitment  and the
     Accommodations  at the time outstanding to it); provided that (i) except in
     the case of an assignment of the entire  remaining  amount of the assigning
     Lender's  Commitment,  the amount of the Commitment of the assigning Lender
     subject  to each  such  assignment  (determined  as of the date the  Lender
     Transfer  Agreement  with  respect to such  assignment  is delivered to the
     Agent) shall not be less than  $10,000,000  (and provided  further that, so
     long as BMO is the Agent and so long as a Credit  Event (as defined  below)
     with respect to the Borrower or an Event of Default has not occurred and is
     then continuing,  BMO' s Lender' s Proportion of the Total Commitment is at
     all times  greater  than 25% of the Total  Commitment)  unless  each of the
     Agent and,  so long as a Credit  Event with  respect  to the  Borrower  or,
     without limiting the foregoing, an Event of Default has not occurred and is
     then continuing,  the Borrower otherwise  consents in its discretion,  (ii)
     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,  and (iii) the  parties to each  assignment  shall  execute  and
     deliver  to  the  Agent  a  Lender  Transfer  Agreement,  together  with  a
     processing and recordation fee of $5,000, and the Eligible Assignee,  if it
     shall  not be a  Lender,  shall  deliver  to the  Agent  an  administrative
     questionnaire.  Subject to such  conditions,  and  acceptance and recording
     thereof by the Agent,  from and after the effective  date specified in each
     Lender Transfer  Agreement,  the Eligible  Assignee  thereunder  shall be a
     party  hereto  and, to the extent of the  interest  assigned by such Lender
     Transfer Agreement,  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 Lender Transfer  Agreement,  be released from its
     obligations  under this  Agreement  (and, in the case of a Lender  Transfer
     Agreement  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 the  indemnities  in this
     Agreement). Any assignment or transfer by a Lender of rights or obligations
     under this Agreement  that does not comply with this Section  13.1(b) shall
     be treated  for  purposes of this  Agreement  as a sale by such Lender of a
     participation  in such rights and  obligations  in accordance  with Section
     13.1(c).

(c)  Participation:  Any Lender  may,  without the consent of, or notice to, the
     Borrower  (unless there is then no Default or Event of Default  outstanding
     in which case with the  consent  of the  Borrower,  not to be  unreasonably
     withheld)  or the Agent,  sell  participations  to 1 or more banks or other
     entities  (a  "Participant")  in all or a portion of such  Lender's  rights
     and/or obligations under this Agreement  (including all or a portion of its
     Commitment  and/or  the  Accommodations  to it);  provided  that  (i)  such
     Lender's obligations under this Agreement shall remain unchanged, (ii) such
     Lender shall remain solely  responsible to the other parties hereto for the
     performance of such obligations,  and (iii) the Borrower, the Agent and the
     other Lenders  shall  continue to deal solely and directly with such Lender
     in  connection  with  such  Lender's  rights  and  obligations  under  this
     Agreement.  Any  agreement or  instrument  pursuant to which a Lender sells
     such a  participation  shall provide that such Lender shall retain the sole
     right to enforce this Agreement and to approve any amendment,  modification
     or waiver of any provision of this Agreement;  provided that such agreement
     or instrument may provide that such Lender will not, without the consent of
     the Participant,  agree to any amendment,  modification or waiver described
     in Section 12.12 that affects such Participant. Subject to Section 13.1(d),
     the Borrower agrees that each Participant shall be entitled to the benefits
     of the indemnities  contained in this Agreement to the same extent as if it
     were a Lender and had  acquired  its  interest  by  assignment  pursuant to
     Section 13.1(b).

(d)  Participation Indemnity: A Participant shall not be entitled to receive any
     greater payment under Section 13.1(c) than the applicable Lender would have
     been  entitled to receive  with respect to the  participation  sold to such
     Participant,  had no participation been sold. A Participant that would be a
     foreign lender if it were a Lender shall not be entitled to the benefits of
     Section 7.3 unless the Borrower has  requested  the  participation  sold to
     such  Participant  and such  Participant  agrees,  for the  benefit  of the
     Borrower, to comply with Section 7.3 as though it were a Lender.

(e)  Lender Pledge:  Without limiting any right of a Lender to pledge its rights
     under this Agreement to a third party, it is specifically acknowledged that
     any Lender may at any time  pledge or grant a Security  Interest  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,  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.

(f)  Special Definitions: In this Article 13:

"Credit  Event" has the meaning  set forth in the 1999 ISDA  Credit  Derivatives
Definitions as published by the International Swaps and Derivatives Association,
Inc.

"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) a fund
(whether a corporation,  partnership,  trust or other entity) or other financial
institution  that is  engaged  in  making,  purchasing  or  other  investing  in
commercial loans in the ordinary course of its business and that has or has been
structured  to achieve an  Investment  Grade  Rating for at least 1 class of its
securities provided that, unless a Credit Event with respect to the Borrower or,
without  limiting  the  foregoing,  an Event of  Default,  has  occurred  and is
continuing  prior to the time any  assignment  is  effected in  accordance  with
Section  13.1(b),  with the approval of the  Borrower,  such  approval not to be
unreasonably  withheld  or  delayed;  and (d) any other  Person  approved by the
Agent,  and,  unless a Credit Event with  respect to the  Borrower  or,  without
limiting the  foregoing,  an Event of Default,  has  occurred and is  continuing
prior to the time any assignment is effected in accordance with Section 13.1(b),
the  Borrower,  such  approval  not  to be  unreasonably  withheld  or  delayed;
provided,  however,  that  neither the Borrower nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee and provided further that it is understood
that such other Persons may, without limitation, include (i) commercial banks or
savings and loan  associations or savings banks in each case organized under the
laws of the United  States,  or any State thereof or under the laws of any other
country  that is a member  of the  Organization  for  Economic  Cooperation  and
Development  or  that  has  concluded  special  lending  arrangements  with  the
International   Monetary  Fund  associated  with  its  general  arrangements  to
Borrower,  or a political  subdivision of any such country, so long as such bank
is acting through a branch or agency located in Canada; (ii) the central bank of
any country that is a member of the  Organization  for Economic  Cooperation and
Development;  (iii) a finance company;  (iv) an insurance company;  or (v) other
fund or financial  institution.  If the consent of any party to an assignment or
to an  Eligible  Assignee  is  required  hereunder  (including  a consent  to an
assignment which does not meet the minimum  assignment  thresholds  specified in
Section  13.1(b)),  such  party  shall be  deemed to have  given  its  consent 5
Business Days after it has been requested by the assigning  Lender (such request
to refer to the 5 day period) unless consent is expressly  refused by such party
prior to such 5 th Business Day.

"Fitch" means Fitch IBCA Inc.

"Investment  Grade  Rating"  means (i) with  respect  to the  rating of a Person
referred  to in this  Section  13,  that  such  Person  has been  rated at least
investment  grade  (consistent with the standards set forth in the second clause
of this definition) by any of S&P or Moody's,  if such Person is rated by only 1
of such rating  entities or by both S&P and Moody's,  if such Person is rated by
both such  rating  agencies,  and (ii) with  respect  to the  rating of any fund
referred to in clause (c) of the  definition of "Eligible  Assignee",  that such
fund has a long term  unsecured  debt  rating of at least  BBB+ from S&P or Baa1
from Moody's or the equivalent in each case from Fitch or, in the absence of any
such ratings, such entity has a short term unsecured debt rating of at least A-2
from S&P or P-2 from Moody's or the equivalent from Fitch.

"Moody's" means Moody's Investors Service, Inc.

"S&P" means  Standard & Poors Ratings  Services,  a division of The  McGraw-Hill
Companies, Inc.

13.2    Confidentiality

     Each of the Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed:

(a)  to its and its  Affiliates'  directors,  officers,  employees  and  agents,
     including   accountants,   legal  counsel  and  other  advisors  (it  being
     understood  that  the  Persons  to whom  such  disclosure  is made  will be
     required  by the Agent or such Lender to provide an  acknowledgment  to the
     Borrower agreeing to be subject to the confidentiality restrictions of this
     Section 13.2);

     (b)  to the extent requested by any regulatory authority;

     (c)  to the extent  required by applicable  laws or  regulations  or by any
          subpoena or similar legal process;

     (d)  to any other party to this Agreement;

     (e)  in connection with the exercise of any remedies hereunder or any suit,
          action or proceeding  relating to this Agreement or the enforcement of
          rights hereunder;

     (f)  subject to an agreement containing  provisions  substantially the same
          as those of this Section 13.2, to:

          (i)  any Eligible  Assignee of or Participant  in, or any  prospective
               Eligible  Assignee  of or  Participant  in,  any of its rights or
               obligations under this Agreement; or

          (ii) any direct or indirect contractual counterparty in Swaps relating
               to the Borrower or such contractual  counterparty's  professional
               advisor;

          (g)  with the written consent of a Loan Party; or

          (h)  to the extent such Information:

               (i)  becomes  publicly  available  other  than as a  result  of a
                    breach of this Section; or

               (ii) becomes  available  to the Agent or any Lender from a source
                    other than the Borrower and without a breach or default,  to
                    the  knowledge  of the  Agent  or  such  Lender,  after  due
                    inquiry, in respect of a confidentiality  obligation owed to
                    the Borrower by any other Person.

     For the  purposes  of this  Section,  "Information"  means all  information
received from a Loan Party relating to a Loan Party or its business,  other than
any  such  information  that  is  available  to the  Agent  or any  Lender  on a
nonconfidential basis prior to receipt from such Loan Party.

     The provisions of this Section 13.2 shall supersede and replace, as between
the Agent, the Lenders and any Loan Party, the provisions of the Confidentiality
Agreement and the confidentiality agreement made March 3, 2000 between BMO, GMSL
and GMSFL,  each of which  agreements  shall have no further force and effect as
between the Agent,  the Lenders and the Loan  Parties on or after the  Effective
Date.

13.3    Judgment Currency

     If for the purposes of obtaining  judgment in any court in any jurisdiction
with respect to this Agreement it becomes necessary to convert into the currency
of such  jurisdiction  (herein  called the "Judgment  Currency")  any amount due
hereunder in any currency other than the Judgment Currency, then such conversion
shall be made at the rate of exchange  prevailing on the Business Day before the
day on which  judgment is given.  For such purpose "rate of exchange"  means the
spot rate at which the Agent,  on the  relevant  date at or about 12:00  o'clock
noon (Toronto time), would be prepared to sell a similar amount of such currency
in Toronto,  Ontario against the Judgment Currency. In the event that there is a
change in the rate of exchange  prevailing  between the  Business Day before the
day on which the  judgment  is given and the date of payment of the amount  due,
the Borrower shall, on the date of payment, pay such additional amounts (if any)
as may be necessary to ensure that the amount paid on such date is the amount in
the Judgment Currency which when converted at the rate of exchange prevailing on
the date of payment is the amount  then due under this  Agreement  in such other
currency.  Any  additional  amount due from the Borrower under this Section 13.3
shall be due as a separate  debt and shall not be  affected  by  judgment  being
obtained for any other sums due under or in respect of this Agreement.

                                   ARTICLE 14
                                 MISCELLANEOUS

14.1    Severability

     Any  provision  of  this  Agreement  which  is  or  becomes  prohibited  or
unenforceable  in any  jurisdiction  does not  invalidate,  affect or impair the
remaining  provisions  hereof in such  jurisdiction  and any such prohibition or
unenforceability in any jurisdiction does not invalidate or render unenforceable
such provision in any other jurisdiction.

14.2    Survival of Undertakings

     All covenants,  undertakings,  agreements,  representations  and warranties
made  pursuant to this  Agreement  survive the  execution  and  delivery of this
Agreement  and  continue  in full force and effect  until the full  payment  and
satisfaction  of all obligations of the Borrower  incurred  pursuant to the Loan
Documents and the termination of this Agreement.

14.3    Failure to Act

     No  failure,  omission  or delay on the part of the Agent or any  Lender in
exercising  any right,  power or  privilege  hereunder  shall impair such right,
power or  privilege  or  operate  as a waiver  thereof  nor shall any  single or
partial exercise of any right,  power or privilege preclude any further exercise
thereof or the exercise of any other right, power or privilege.

14.4    Waivers

     No  breach of any of the  provisions  of any of the Loan  Documents  may be
waived or discharged verbally;  any such waiver or discharge may only be made by
way of an  instrument  in  writing  signed by either  the Agent on behalf of the
Lenders or the  Majority  Lenders,  as  applicable,  or by the  Lenders  and, if
required by the Agent,  the Borrower,  and such waiver or discharge will then be
effective only in the specific  instance,  for the specific  purpose and for the
specific  length  of time for which it is given.  Any such  waiver or  discharge
which  affects the rights of the Agent may only be made by way of an  instrument
in  writing  signed by the  Agent.

14.5    Amendments

     No provision  of the Loan  Documents  may be amended  verbally and any such
amendment  may only be made by way of an  instrument  in  writing  signed by the
Borrower, the Agent and the Lenders required by Section 12.12.

14.6    Notice

     Except as  otherwise  expressly  provided  herein,  all  notices,  advices,
requests  and  demands  hereunder  shall  be  in  writing  (including  facsimile
transmissions) or, if by telephone,  immediately confirmed in writing, and shall
be given to or made upon the respective  parties hereto at the address set forth
opposite  their names on the signature  pages hereto or at such other address as
any party shall designate for itself. All notices shall be effective upon actual
receipt. In the event of any discrepancy  between any telephone notice,  advice,
request or demand and the written  confirmation  thereof,  the telephone version
shall govern with respect to actions taken by the recipient  thereof before such
recipient  has had a  reasonable  time to act after its  receipt of the  written
confirmation.

14.7    Whole Agreement

     This Agreement together with the other Loan Documents constitutes the whole
and entire  agreement  between the parties and cancels and  supersedes any prior
agreements, undertakings,  declarations and representations,  written or verbal,
in respect of the subject matter of this Agreement and the other Loan Documents.

14.8    Governing Law

     The parties  agree that this  Agreement is  conclusively  deemed to be made
under,  and for all purposes to be governed by and construed in accordance with,
the laws of the  Province of Alberta  and of Canada  applicable  therein.  There
shall be no  application  of any  conflict of law or rules which would result in
any laws other than internal  laws in force in the Province of Alberta  applying
to this Agreement. The parties hereto do hereby irrevocably submit and attorn to
the  jurisdiction  of the  courts of the  Province  of Alberta  for all  matters
arising out of or relating to this Agreement or any other Loan Document,  or any
of the transactions  contemplated hereby or by any thereof, without prejudice to
the rights of the Agent or any Lender to take proceedings in other jurisdictions
in which any assets,  property or  undertakings  secured by the  Security may be
situate.

14.9    Term of Agreement

     The term of this  Agreement is until the later of the  termination  of each
Lender's  Commitment and payment in full of all the  obligations of the Borrower
incurred pursuant to this Agreement.  Notwithstanding any such termination,  all
of the indemnities provided for hereunder shall survive any such termination.

14.10   Time of Essence

     Time shall be of the essence of this Agreement.

14.11   Conflict with Loan Documents

     In the event there is a conflict or  inconsistency as to any matter between
the  provisions  hereof  and the  provisions  of any other  Loan  Document,  the
provisions  of this  Agreement  shall  prevail to the extent of such conflict or
inconsistency;  provided,  however,  that for the purposes of this Section 14.11
there  shall not be  considered  to be a conflict or  inconsistency  between any
provision hereof and any provision of any other Loan Document merely because one
of such Loan  Documents  does,  and the other does not, deal with the particular
matter.

14.12   Dealings with Agent

     Subject to Section  12.12,  the  Borrower  shall be  entitled to accept the
written advice,  instruction or direction of the Agent on behalf of the Majority
Lenders or the Lenders without further inquiry.  Each Lender hereby agrees to be
bound by any advice,  instruction  or direction in writing given to the Borrower
by the Agent on behalf  of the  Majority  Lenders  or the  Lenders,  where it is
authorized to do so in accordance with the terms and conditions  hereof or under
any other Loan  Document,  and each Lender hereby waives any right to contest or
disaffirm any such advice, instruction, or direction in writing of the Agent, in
the absence of manifest error.

14.13   Further Assurances

     The  Borrower,  the Agent and each of the Lenders shall do all such further
acts and things and execute and deliver all such  further  documents as shall be
reasonably  required  in order to fully  perform  and carry out the terms of the
Loan Documents.

14.14 Counterpart Execution

     This  Agreement  may be  executed  in any  number  of  counterparts  and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same instrument.

     IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.

COMMITMENTS AND
ADDRESSES FOR NOTICES:

Borrower:                                         KEYSPAN ENERGY DEVELOPMENT CO.
                                                  By: /s/
                                                     ------------------
                                                     Michael J. Nilsen
                                                     Treasurer and Controller

KeySpan Energy Development Corporation
(U.S.)
One MetroTech Center
Brooklyn, New York
11201-3850 USA

Attention: President

Telefax: (718) 403-6421

with a copy to:
Gulf Midstream S
ervices Limited
(to be renamed KeySpan Energy Canada
Limited)
17 th Floor, 400 - 3 rd Avenue S.W.
Calgary, Alberta
T2P 4H2

Attention: President

Telefax: (403) 205-7677

Lender:                                           BANK OF MONTREAL, as Lender
                                                  By: /s/
                                                     ----------------
                                                      Guy Amato
                                                      Director


Bank of Montreal
Investment Corporate Banking
14th Floor, 421 - 7th Avenue S.W.
Calgary, Alberta
T2P 4K9
Attention: Director
Telefax: (403) 515-3650
Commitment: Cdn. $125,000,000

<PAGE>

Agent:                                          BANK OF MONTREAL, as Lender
                                                By: /s/
                                                   -----------------
                                                   Guy Amato
                                                   Director
Agent' s Branch of Account
After Sales
19th Floor, First Canadian Place
100 King Street West
Toronto, Ontario
M5X 1A1

Attention: Manager, Global Distribution
Services

Telefax: (416) 867-5718