[Execution Copy]                                       Exhibit 10.4







                       NORTHSTAR ENERGY CORPORATION



                              U.S. $150,000,000




                         6.79% SENIOR NOTES DUE 2009




                              NOTE AGREEMENT



                          Dated as of March 2, 1998





This Agreement contains confidentiality obligations in paragraph 11X.

<PAGE>
                              TABLE OF CONTENTS

                           (Not Part of Agreement)



1.  AUTHORIZATION OF ISSUE OF NOTES                                         1
2.  PURCHASE AND SALE OF NOTES                                              1
3.  CONDITIONS PRECEDENT                                                    2
 3A. Certain Documents                                                      2
 3B. Opinions of Purchaser's Special Counsel                                4
 3C. Representations and Warranties; No Default                             4
 3D. Purchase Permitted By Applicable Laws                                  4
 3E. Proceedings                                                            5
 3F. Private Placement Number                                               5
 3G. Structuring Fee                                                        5
 4. PREPAYMENTS                                                             5
 4A. Required Prepayments                                                   5
 4B. Optional Prepayment With Yield-Maintenance Amount                      6
 4C. Notice of Optional Prepayment                                          6
 4D. Partial Payments Pro Rata                                              7
 4E. Retirement of Notes                                                    7
 5.  AFFIRMATIVE COVENANTS                                                  8
 5A(1). Financial Statements                                                8
 5A(2). Compliance Certificates                                             9
 5A(3). Auditors Certificate                                               10
 5A(4). Notice of Default or Event of Default                              10
 5B. Information Required by Rule 144A                                     10
 5C. Inspection of Property                                                10
 5D. Covenant to Secure Notes Equally                                      11
 5E. Engineering Reports; Accuracy of Engineering Reports                  11
 5F. Corporate Existence; Existence of Material Subsidiaries               12
 5G. Compliance With Applicable Laws                                       12
 5H. Payment of Taxes                                                      12
 5I. Environmental Matters                                                 13
 5J. Insurance                                                             13
 5K. Ranking With Other Debt                                               14
 5L. Material Subsidiary Test                                              14
 5M. Material Subsidiary Guarantee; Release of Certain Guarantees          14
 5N. Payment and Performance                                               15
 5O. Payment of Other Obligations                                          15
 5P. Maintenance of Books and Records                                      15
 5Q. Subsidiary Designation                                                15
 5R. Proceeds                                                              16
 5S. Filings                                                               16
 5T. Defend Title                                                          16
 5U. West Windsor Power                                                    16
 6.  NEGATIVE COVENANTS                                                    16
 6A. Financial Covenants.                                                  17
 6A(3) Alternate Consolidated Net Worth Test                               17
 6B. Liens and Other Restrictions                                          17
 6C. Joint Venture Company                                                 20
 6D. Change of Business                                                    20
 6E. Actions in Respect of Material Subsidiaries                           20
 6F. Constating Documents                                                  21
 6G. Amendments to Bank Agreement                                          21
 6H. Most Favoured Lender Status                                           21
 6I. Northstar Energy Partnership                                          23
 7.  EVENTS OF DEFAULT                                                     23
 7A. Acceleration                                                          23
 7B. Rescission of Acceleration                                            28
 7C. Notice of Acceleration or Rescission                                  29
 7D. Other Remedies                                                        29
 8.  REPRESENTATIONS, COVENANTS AND WARRANTIES                             29
 8A. Organization                                                          29
 8B. Financial Statements                                                  30
 8C. Actions Pending                                                       31
 8D. Outstanding Indebtedness                                              31
 8E. Title to Properties                                                   31
 8F. Taxes                                                                 32
 8G. Conflicting Agreements and Other Matters                              32
 8H. Private Offering of Notes                                             32
 8I. Use of Proceeds                                                       33
 8J. Governmental Consent                                                  33
 8K. Environmental Compliance                                              33
 8L. Environmental Disclosure                                              35
 8M. Environmental Risk Management                                         35
 8N. Disclosure                                                            35
 8O. Pari Passu                                                            36
 8P. ERISA                                                                 36
 8Q. Foreign Assets Control Regulations, etc.                              36
 8R. Investment Company Act and Public Utility Holding Company Status      36
 8S. Engineering Reports                                                   37
 8T. Subsidiaries                                                          37
 8U. Material Subsidiaries                                                 37
 8V. West Windsor Power                                                    37
 8W. Indeck                                                                37
 8X. PLC-Windsor Ltd.                                                      37
 9.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER            38
 9A. Representations and Warranties of the Purchaser                       38
 9B. Representations, Acknowledgements and Covenants of the Purchaser      39
 10.  DEFINITIONS                                                          40
 10A. Yield-Maintenance Terms                                              40
 10B. Other Terms                                                          42
 10C. Accounting Principles, Terms and Determinations                      65
 11.  MISCELLANEOUS                                                        65
 11A. Note Payments                                                        65
 11B. Expenses                                                             65
 11C. Consent to Amendments                                                66
 11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes       67
 11E. Persons Deemed Owners; Participations                                67
 11F. Survival of Representations and Warranties                           68
 11G. Entire Agreement                                                     68
 11H. Successors and Assigns                                               68
 11I. Notices                                                              68
 11J. Payments Due on Non-Business Days                                    68
 11K. Satisfaction Requirement                                             69
 11L. Governing Law and Submission to Jurisdiction                         69
 11M. Amendments                                                           69
 11N. Severability                                                         69
 11O. Descriptive Headings                                                 70
 11P. Payment Free from Equities                                           70
 11Q. Note Repayment Net of Withholding Imposts                            70
 11R. Interest                                                             72
 11S. Counterparts                                                         73
 11T. Currency References, Conversion and Payments                         73
 11U. Judgment Currency                                                    73
 11V. Time; "Including"; "Assets"; "Property"                              74
 11W. Environmental Indemnity                                              74
 11X. Disclosure to Other Persons; Confidentiality                         75
 11Y. Further Assurances                                                   76
 

PURCHASER SCHEDULE

SCHEDULE A     --   FORM OF NOTE
SCHEDULE B          FORM OF OPINION OF CORPORATION'S COUNSEL
SCHEDULE C     --   EXISTING LIENS, AGREEMENTS RESTRICTING DEBT, AND 
                    OUTSTANDING DEBT
SCHEDULE D     --   MATERIAL SUBSIDIARY GUARANTEE
SCHEDULE E     --   FORM OF COMPLIANCE CERTIFICATE
SCHEDULE F     --   OTHER PERMITTED COUNTRIES
SCHEDULE G     --   SUBSIDIARIES
SCHEDULE H     --   EXCLUDED ASSETS

<PAGE>
                       NORTHSTAR ENERGY CORPORATION
                         3000, 400 - 3rd Avenue S.W.
                             Calgary, Alberta
                                  T2P 4H2



As of March 2, 1998



To:  The Prudential Insurance Company of America 
c/o Prudential Capital Group
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102-4069

     U.S. $150,000,000 6.79% Senior Notes due March 2, 2009

Ladies and Gentlemen:

The undersigned, Northstar Energy Corporation (the "Corporation"), hereby 
agrees with you as follows: 

     PARAGRAPH 1.  AUTHORIZATION OF ISSUE OF NOTES.

     1.   Authorization of Issue of Notes.  The Corporation will authorize the
issue of its senior promissory notes (the "Notes") in the aggregate principal 
amount of U.S. $150,000,000; to be dated the date of issue thereof; to mature 
March 2, 2009; to bear interest on the unpaid balance thereof from the date 
thereof until the principal thereof shall become due and payable at the rate of
6.79% per annum and on overdue payments at the rate specified therein; and to be
substantially in the form of Schedule A attached hereto.  The term "Notes" as 
used herein shall include each Note delivered pursuant to any provision of this
Agreement and each Note delivered in substitution or exchange for any such Note
pursuant to any such provision.  Capitalized terms used herein have the meanings
specified in paragraph 10.

     PARAGRAPH 2.  PURCHASE AND SALE OF NOTES.

     2.     Purchase And Sale Of Notes. The Corporation hereby agrees to sell to
you and, subject to the terms and conditions herein set forth, you agree to 
purchase from the Corporation Notes in the aggregate principal amount of U.S. 
$150,000,000 at 100% of such aggregate principal amount.  The Corporation will
deliver to you, at the offices of Macleod Dixon at 3700, 400 - 3rd Avenue S.W.,
Calgary, Alberta, T2P 4H2, one or more Notes registered in your name, 
evidencing the aggregate principal amount of Notes to be purchased by you and 
in the denomination or denominations specified in the Purchaser Schedule 
attached hereto against payment of the purchase price thereof by transfer of 
immediately available funds for credit to Bank of America NT&SA, One World 
Trade Center, New York, New York, ABA #026-009-593 for credit to Canadian 
Imperial Bank of Commerce, Toronto, Ontario, account # 6550-8-26157, for
further credit to CIBC Place, 309 - 8th Avenue S.W., Calgary, Alberta, 
Transit # 00009, for credit to Northstar Energy Corporation account # 03-38710
on the date of the closing, which shall be March 2, 1998 or any other date on 
or before March 27, 1998 upon which the Corporation and you may mutually agree
(the "Closing" or the "Date of Closing"). 

     If at the Closing the Corporation shall fail to tender such Notes to you as
provided above in this paragraph 2, or any of the conditions specified in 
paragraph 3 shall not have been fulfilled to your satisfaction, you shall, at 
your election, be relieved of all further obligations under this Agreement, 
without thereby waiving any rights you may have by reason of such failure or 
such nonfulfillment.  

     PARAGRAPH 3.  CONDITIONS PRECEDENT.

     3.  Conditions Precedent. Your obligation to purchase and pay for the Notes
to be purchased by you is subject to the satisfaction, on or before the Date of
Closing, of the following conditions:

          3A.  Certain Documents.  You shall have received the following, each 
dated the Date of Closing:

          (i) The Notes to be purchased by you duly executed by the Corporation.

          (ii)  A duly executed Material Subsidiary Guarantee from each Material
     Subsidiary except the Mountain Companies.

          (iii) A certified copy of the resolutions of the Board of Directors of
     the Corporation approving this Agreement and the Notes and authorizing the
     performance by the Corporation of all of its rights and obligations under
     this Agreement from time to time including, without limitation, the 
     issuance of the Notes hereunder and of all documents evidencing other 
     necessary corporate action and governmental approvals, if any, with
     respect to this Agreement and the Notes.

          (iv)  A certified copy of the articles and by-laws of the Corporation.

          (v)   A certificate of the Secretary or an Assistant Secretary of the
     Corporation certifying the names and true signatures of the officers of 
     the Corporation authorized to sign this Agreement, the Notes and the 
     other documents to be delivered by it hereunder.

          (vi)  A certified copy of the resolutions of the Board of Directors of
     each Material Subsidiary or of the partners of Northstar Energy Partnership
     and David Limited Partnership, and in the case any Material Subsidiary 
     which is a corporation subject to a unanimous shareholders agreement or 
     declaration which removes the powers of the directors to the shareholders,
     a certified copy of the resolutions of such shareholders of each such 
     Material Subsidiary, in each case, approving its Material Subsidiary 
     Guarantee and authorizing the performance by such Material Subsidiary of 
     all of its rights and obligations under its Material Subsidiary Guarantee
     from time to time including, without limitation, the delivery of all 
     documents evidencing other necessary corporate or partnership action and
     governmental approvals, if any, with respect to the Loan Documents.

          (vii) A certified copy of the articles, by-laws and any unanimous 
     shareholders agreement or declaration of each Material Subsidiary that is 
     a corporation, and the partnership agreement, as amended, for each of 
     Northstar Energy Partnership and David Limited Partnership.

          (viii)  A certificate of the Secretary or an Assistant Secretary (or 
     Managing Partner in the case of Northstar Energy Partnership and David 
     Limited Partnership) of each Material Subsidiary certifying the names and
     true signatures of the officers or persons for each Material Subsidiary 
     authorized to sign its Material Subsidiary Guarantee, and the other 
     documents to be delivered by it hereunder.

          (ix) A certificate of the Corporation confirming that the Consolidated
     Tangible Assets of the Corporation and its Material Subsidiaries are equal
     to or greater than 95% of the Consolidated Tangible Assets of the 
     Corporation and its Subsidiaries as of December 31, 1997.

          (x)  A certified copy of each of the Morrison Note Agreement, the CIBC
     Credit Agreements, all guarantees issued by Material Subsidiaries and each
     of the documents evidencing the West Windsor Power Indebtedness (including
     the agreements listed in the definition thereof).

          (xi)  An Officer's Certificate of the Corporation confirming that the
     existing Liens publicly registered against the Corporation and its Material
     Subsidiaries, including any referred to in Part A of Schedule C, are 
     permitted hereunder, and that the litigation to which the Corporation and 
     its Material Subsidiaries are presently subject, individually or in the 
     aggregate, is not reasonably expected to have a Material Adverse Effect.

          (xii) A favourable opinion of Bennett Jones Verchere, counsel to the 
     Corporation and each Material Subsidiary, substantially in the form of 
     Schedule B attached hereto and as to such other matters as you may 
     reasonably request.

          (xiii)  A favourable opinion of Paul, Weiss, Rifkind, Wharton & 
     Garrison, United States counsel to the Corporation, upon which you and 
     your Transferees may rely, to the effect that (A) it is not necessary in 
     connection with the offering, issuance, sale and delivery of the Notes 
     under the circumstances contemplated by this Agreement to register
     the Notes under the Securities Act or to qualify an indenture in respect 
     of the Notes under the United States Trust Indenture Act of 1939, as 
     amended, (B) the extension, arranging and obtaining of the credit 
     represented by the Notes do not result in any violation of Regulations G
     or X of the Board of Governors of the United States Federal Reserve System
     and (C) the Corporation is not an investment company or a Person directly
     or indirectly controlled by or acting on behalf of an investment company,
     within the meaning of the United States Investment Company Act of 1940, 
     as amended.

          (xiv) A certified copy of the register of Notes maintained by the 
     Corporation pursuant to paragraph 11D.

          (xv)  Certificates of status/compliance for the Corporation and each 
     Material Subsidiary issued by the corporate registries for its 
     jurisdiction of incorporation and each jurisdiction in which the 
     Corporation or such Material Subsidiary owns material property or carries
     on a material business and, for the purposes of this clause (xv) "material"
     shall mean material in relation to the properties or businesses of the 
     Corporation and its Subsidiaries taken as a whole; in the case of Northstar
     Energy Partnership and David Limited Partnership, evidence of registration
     as a partnership in such jurisdictions.

          3B.  Opinions of Purchaser's Special Counsel. You shall have received
from Macleod Dixon, who are acting as special counsel for you in connection 
with this transaction, favourable opinions satisfactory to you as to such 
matters incident to the matters herein contemplated as you may reasonably 
request.  

          3C.  Representations and Warranties; No Default.  The representations
and warranties contained in paragraph 8 shall be true on and as of the Date of 
Closing; there shall exist on the Date of Closing no Event of Default or 
Default; and the Corporation shall have delivered to you an Officer's 
Certificate, dated the Date of Closing, to both such effects.

          3D.  Purchase Permitted By Applicable Laws.  The offer by the 
Corporation of, and the purchase of and payment for, the Notes to be purchased
by you on the Date of Closing on the terms and conditions herein provided 
(including the use of the proceeds of such Notes by the Corporation) shall not 
violate any Applicable Law (including Section 5 of the Securities Act or 
Regulation G or X of the Board of Governors of the United States Federal 
Reserve System) and shall not subject you to any tax, penalty or liability 
under or pursuant to any Applicable Law and you shall have received such 
certificates or other evidence with respect to factual matters as you may 
request to establish compliance with this condition.

          3E.  Proceedings.  All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to you, and you
shall have received all such counterpart originals or certified or other 
copies of such documents as you may reasonably request. 

          3F.  Private Placement Number. A private placement number issued by 
Standard & Poor's CUSIP Services Bureau (in cooperation with the Securities 
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.

          3G.  Structuring Fee.  The Corporation shall have paid to you a 
structuring fee in the amount of U.S. $185,000 by wire transfer of immediately 
available funds to The Bank of New York, New York, New York, ABA # 021-000-018,
for credit to your account, Account No. 890-0304-391.

     PARAGRAPH 4. PREPAYMENTS.

     4.  Prepayments.  The Notes shall be subject to prepayment only with 
respect to the required prepayments specified in paragraph 4A and the optional 
prepayments permitted by paragraph 4B.

          4A.  Required Prepayments. Until the Notes shall be paid in full, the
Corporation shall apply to the prepayment of the Notes, without Yield-
Maintenance Amount, the sum of U.S. $50,000,000 on March 2, 2007
and March 3, 2008, and such principal amounts of the Notes, together with 
interest thereon to the prepayment dates, shall become due on such
prepayment dates; provided that, upon any partial prepayment of the Notes 
pursuant to paragraph 4B or purchase of the Notes pursuant to paragraph 4E, 
the principal amount of each required prepayment of the Notes becoming due 
under this paragraph 4A on and after the date of such prepayment or purchase 
shall be reduced in the same proportion as the aggregate unpaid principal
amount of the Notes is reduced as a result of such prepayment or purchase.  
The remaining outstanding principal amount of the Notes, together with interest
accrued thereon, shall become due on the maturity date of the Notes, being 
March 2, 2009.

          4B.  Optional Prepayment With Yield-Maintenance Amount.

          (a)  The Notes shall be subject to prepayment, in whole at any time 
     or from time to time in part (in multiples of U.S. $5,000,000), at the 
     option of the Corporation, at 100% of the principal amount so prepaid 
     plus interest thereon to the prepayment date and the Yield-Maintenance 
     Amount, if any, with respect to each Note.  Any partial prepayment
     of the Notes pursuant to this paragraph 4B shall be applied in satisfaction
     of remaining scheduled payments of principal on a pro rata basis.

          (b)   If the Corporation is required to make payments to all Holders 
     under paragraph 11Q(a) or make any indemnity  payment to all Holders under
     paragraph 11Q(b), then the Corporation shall be entitled to prepay the 
     Notes in whole at 100% of the principal amount so prepaid plus interest
     thereon to the prepayment date, plus all accrued but unpaid obligations
     under paragraph 11Q to and including the date of prepayment, subject to 
     the notice requirements in paragraph 4C, plus the Yield-Maintenance Amount,
     if any, with respect to each Note, provided that:
     
               (i)   the Corporation's right to prepay under this clause (b) 
          shall terminate if the Corporation has not given notice of optional 
          prepayment under paragraph 4C(a) on or before the later of (A) 90 
          days after the date that the Corporation is first called upon by any
          Holder to honour its payment or indemnity obligations under paragraph
          11Q(a) or (b), respectively, or (B) 30 days after the date that any
          legislation requiring the Corporation to make any deduction or
          withholding under paragraph 11Q(a), or requiring any Holder to pay
          tax under Part XIII of the Income Tax Act (Canada) as contemplated in
          paragraph 11Q(b), comes into force; and
             
               (ii)  the Corporation shall not be entitled to prepay under this
          clause (b) any Notes in respect of which the Holder thereof has 
          waived in writing the future obligations of the Corporation under 
          paragraph 11Q (without prejudice to accrued obligations thereunder).
          
          4C.  Notice of Optional Prepayment. 

               (a)   The Corporation shall give each Holder irrevocable written
     notice of any prepayment pursuant to paragraph 4B not less than 15 nor more
     than 30 days prior to the prepayment date, specifying (i) such prepayment 
     date (which shall be a Business Day), (ii) the total principal amount of 
     the Notes, and of the Notes held by such Holder, to be prepaid on such 
     date, and (iii) stating that such prepayment is to be made pursuant to 
     paragraph 4B.  Notice of prepayment having been given as aforesaid, the 
     principal amount of the Notes specified in such notice, together with 
     interest thereon to the prepayment date and together with the Yield-
     Maintenance Amount, if any, with respect thereto, shall become due and 
     payable on such prepayment date.
       
               (b)   The Corporation shall, concurrently with giving the notice
     under paragraph 4C(a), give notice by facsimile of the principal amount of
     Notes to be prepaid and the prepayment date to each Holder which shall 
     have designated a facsimile number in the Purchaser Schedule attached 
     hereto or by notice in writing to the Corporation.
        
               (c)   The Corporation shall, at least two Business Days prior to
     the prepayment date, give each Holder facsimile notice (followed by 
     overnight written notice) setting forth the estimated Yield-Maintenance 
     Amount (for the purposes only of such estimate, the yields referred to in 
     the definition of "Reinvestment Yield" shall be those reported three 
     Business Days preceding the Settlement Date instead of the yields on the 
     Business Day next preceding the Settlement Date) payable on such prepayment
     date together with its calculations thereof in reasonable detail, and 
     further setting forth the accrued interest payable on such prepayment date.
        
               (d)   The Corporation shall, on the Business Day prior to the 
     prepayment date, give notice by facsimile (followed by overnight written 
     notice) of the actual Yield-Maintenance Amount (together with its calcula-
     tions thereof in reasonable detail), principal and interest that the 
     Corporation will be paying on the prepayment date to each Holder.
     
          4D.  Partial Payments Pro Rata.  Upon any partial prepayment of the 
Notes pursuant to paragraph 4A or 4B, the principal amount so prepaid shall be 
allocated to all Notes at the time outstanding (including, for the purpose of
this paragraph 4D only, all Notes prepaid or otherwise retired or purchased 
or otherwise acquired by the Corporation or any of its Subsidiaries or 
Affiliates other than by prepayment pursuant to paragraph 4A or 4B), in 
proportion to the respective outstanding principal amounts thereof. 

          4E.  Retirement of Notes.  The Corporation shall not, and shall not 
permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire, in
whole or in part, prior to their stated final maturity (other than by prepay-
ment pursuant to paragraph 4A or 4B or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or 
indirectly, Notes held by any Holder unless the Corporation or such Subsidiary
or Affiliate shall have offered to prepay or otherwise retire or purchase or 
otherwise acquire, as the case may be, the same proportion of the aggregate 
principal amount of Notes held by each other Holder at the time outstanding 
upon the same terms and conditions.  Any Notes so prepaid or otherwise retired
or purchased or otherwise acquired by the Corporation or any of its Subsidiaries
or Affiliates shall not be deemed to be outstanding for any purpose under this 
Agreement, except as provided in paragraph 4D.

     PARAGRAPH 5.  AFFIRMATIVE COVENANTS. 

     5.   Affirmative Covenants.  So long as any Note shall remain unpaid, the 
Corporation covenants that:

          5A(1).    Financial Statements.  The Corporation will deliver to each
Holder in duplicate (unless, in respect of any Holder, such Holder designates a
fewer number of copies in the Purchaser Schedule attached hereto or in a written
notice from such Holder):

          (i)  quarterly statements:  as soon as practicable and in any event 
     within 60 days after the end of each Fiscal Quarter of the Corporation 
     (other than the last Fiscal Quarter) in each Fiscal Year, a consolidated 
     statement of earnings and retained earnings and a consolidated statement of
     cash flow of the Corporation and its Subsidiaries for such Fiscal Quarter,
     and for the period from the beginning of the current Fiscal Year to the 
     end of such Fiscal Quarter, and a consolidated balance sheet of the 
     Corporation and its Subsidiaries as at the end of such Fiscal Quarter, 
     setting forth in each case in comparative form figures for the correspond-
     ing quarter and period in the preceding Fiscal Year, all in reasonable 
     detail and satisfactory in form to the Required Holders and in each case 
     certified by an authorized financial officer of the Corporation, subject 
     to changes resulting from year-end adjustments (provided that delivery 
     pursuant to clause (iii) below of copies of the quarterly consolidated 
     balance sheet and statements of earnings, retained earnings and cash flow
     included in the quarterly reports delivered to its public shareholders and
     filed with provincial securities regulatory authorities shall be deemed to
     satisfy the foregoing requirements);
     
          (ii) annual statements:  as soon as practicable and in any event 
     within 120 days after the end of each Fiscal Year of the Corporation, a 
     consolidated statement of earnings and retained earnings and a consolidated
     statement of cash flow of the Corporation and its Subsidiaries for such
     Fiscal Year, and a consolidated balance sheet of the Corporation and
     its Subsidiaries as at the end of such Fiscal Year, setting forth in each
     case in comparative form corresponding consolidated figures from the 
     preceding annual audited consolidated financial statements and reported
     on by independent public accountants of recognized national or 
     international standing selected by the Corporation whose report shall be 
     without limitation as to the scope of the audit and satisfactory in 
     substance to the Required Holders, all in reasonable detail and 
     satisfactory in form to the Required Holders (provided that delivery 
     pursuant to clause (iii) below of copies of the audited annual consolidated
     balance sheet and statements of earnings, retained earnings and cash flow
     included in the annual reports delivered to its public shareholders and 
     filed with provincial securities regulatory authorities shall be deemed to
     satisfy the foregoing requirements);
     
          (iii)    reports to shareholders:  promptly upon transmission thereof,
     copies of all such financial statements, proxy statements, notices and 
     reports as it shall send to its public shareholders and copies of all 
     prospectuses filed with Canadian and/or United States securities regulatory
     authorities, registration statements (without exhibits) and all reports
     which it files with any Canadian or United States securities regulatory 
     authorities;
     
          (iv) accountants reports:  promptly upon receipt thereof, a copy of 
     each other material report submitted to the Corporation or any Subsidiary 
     by independent accountants in connection with any annual, interim or 
     special audit made by them of the books of the Corporation or any 
     Subsidiary;
     
          (v)  notices:  promptly after any Responsible Officer obtaining 
     knowledge
     
               (A)   of the existence of any condition or event which, in the 
          opinion of management of the Corporation, has or could reasonably be 
          expected to have a Material Adverse Effect; or
             
               (B)   of any action, suit, litigation or other proceeding which 
          is commenced or threatened against the Corporation or any Material
          Subsidiary and which involves a claim in excess of Cdn. $15,000,000 
          or which is reasonably likely to have a Material Adverse Effect;
          
     an Officer's Certificate specifying the nature and period of existence of 
     any such default, event or condition, or specifying the notice given or 
     action taken by such Person and the nature of any such claimed default, 
     event or condition, or specifying the details of such proceeding, litiga-
     tion or dispute and what action the Corporation or any of its Material
     Subsidiaries has taken, is taking or proposes to take with respect thereto;
     and
     
          (vi) other information:  with reasonable promptness and subject to the
     provisions of any confidentiality agreements of third parties, such other 
     information respecting the condition, businesses or operations (financial 
     or otherwise), and properties, of the Corporation or any of its Material 
     Subsidiaries (including in respect of Non-Recourse Debt) as such Holder 
     may reasonably request, and any information that any Holder may request 
     that is required to be filed with the United States National Association
     of Insurance Commissioners.
     
          5A(2).    Compliance Certificates.  Together with each delivery of 
financial statements required by clauses (i) and (ii) above, the Corporation 
will deliver to each Holder a Compliance Certificate, executed by the chief
executive officer, chief operating officer, chief financial officer or 
treasurer of the Corporation (or persons fullfilling equivalent functions),
together with such back-up information, including spread sheets, prepared
by the Corporation for the purpose of preparing the Compliance Certificate
as the Required Holders may reasonably request and stating that there 
exists no Default or Event of Default, or, if any Default or Event of 
Default exists, specifying the nature and period of existence thereof and
what action the Corporation proposes to take with respect thereto.  
Together with the delivery of the Compliance Certificate, the Corporation
shall make the Offers to Amend, if not previously made pursuant to 
paragraph 6G and 6H, and shall deliver the documents required by the last 
sentence of paragraph 6G and 6H if not previously delivered.

          5A(3).    Auditors Certificate.  Together with each delivery of 
financial statements required by clause (ii) above, the Corporation will deliver
to each Holder a certificate of such accountants stating whether, in making 
their audit necessary for their report on the financial statements, they have 
become aware of any condition or event that then constitutes a Default or an 
Event of Default, and, if they are aware that any such condition or event then 
exists, specifying the nature and period of the existence thereof.
     
          5A(4).    Notice of Default or Event of Default.  The Corporation 
will, promptly (and in any event within five Business Days) after any 
Responsible Officer obtains knowledge of the existence of an Event of Default 
or Default, deliver to each Holder an Officer's Certificate specifying the 
nature and period of existence thereof and what action the Corporation is 
taking or proposes to take with respect thereto.

          5B.  Information Required by Rule 144A.5A(4).  The Corporation will, 
upon the request of any Holder, provide to such Holder, and to any qualified 
institutional buyer designated by such Holder, such financial and other 
information as such Holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the 
Securities Act in connection with the resale of Notes, except at such times as
the Corporation is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act. For the purpose of this paragraph 5B, the term "qualified 
institutional buyer" shall have the meaning specified in Rule 144A under the 
Securities Act.

          5C.  Inspection of Property.5A(4).  The Corporation will permit any 
Person designated by any Holder in writing, at such Holder's expense, to examine
the corporate/partnership books, financial records and engineering and property
records and reports of the Corporation and its Material Subsidiaries and make 
copies thereof or extracts therefrom and to discuss the affairs, finances and 
accounts of any of such entities with the principal officers of the Corporation
or its Material Subsidiaries and its independent public accountants and 
independent or in-house petroleum engineers, all at such reasonable times and 
as often as such Holder may reasonably request, provided that the foregoing 
shall be at the Corporation's expense, and shall be reimbursable by the 
Corporation on demand by such Holder, if such visitation, inspection or 
examination is conducted at a time when a Default or Event of Default has 
occurred and is continuing.

          5D.  Covenant to Secure Notes Equally.  The Corporation will, concur-
rently with and as a condition precedent to it or any Material Subsidiary 
creating or assuming any Lien on its assets, whether now owned or hereafter 
acquired, or upon any income, profits or proceeds therefrom, other than Liens 
expressly permitted by paragraph 6B(1):

          (i)   make or cause to be made effective provision whereby the Notes 
     will be secured by such Lien equally and ratably with any and all other 
     Indebtedness thereby secured so long as any such other Indebtedness shall 
     be so secured, pursuant to security arrangements reasonably satisfactory 
     in form, scope and substance to the Required Holders,

          ii)  deliver or cause to be delivered an opinion of its counsel 
     addressed to all Holders as to such Lien, such opinion to be in form and 
     substance reasonably satisfactory to the Required Holders, including an 
     opinion as to the validity, enforceability, registration and perfection of
     such Lien and that all payment obligations of the Corporation under the 
     Notes rank at least pari passu in right of payment with all other obliga-
     tions secured by such Lien, and

          iii) cause the holders of the obligations secured by such other Lien
     to enter into an inter-creditor agreement with all Holders, such inter-
     creditor agreement to be in form and substance satisfactory to the 
     Required Holders.
     
          5E.  Engineering Reports; Accuracy of Engineering Reports.  

          (i)  The Corporation shall furnish to the Holders as soon as available
     and in any event within 120 days after the end of each Fiscal Year, an 
     Engineering Report dated as of the first day of the immediately following 
     Fiscal Year.
          
          (ii) The Corporation shall ensure that each internally prepared 
     Engineering Report and all other related data prepared by and provided by 
     the Corporation or any Subsidiary to the Holders, or an independent 
     engineering firm,with respect to the oil and gas properties evaluated in 
     an Engineering Report or discussed in such related data are substantially 
     accurate and fairly reflect the interests of the Corporation and each 
     Subsidiary therein and thereto net of all royalties and other burdens 
     affecting same, except to the extent that any inaccuracies would not have 
     a Material Adverse Effect.
          
          5F.  Corporate Existence; Existence of Material Subsidiaries.  
          
          (i)   The Corporation shall, except as permitted by paragraph 6B(2),
     maintain its corporate existence and organization in good standing under
     the laws of the Province of Alberta and register and qualify and remain 
     registered and qualified as a corporation authorized to carry on business
     under the laws of each jurisdiction in which the nature of any business 
     conducted by it or the character of any properties and assets owned or 
     leased by it requires such registration and qualification, except to the 
     extent that failure to maintain such registration or qualification does
     not have a Material Adverse Effect.
     
          (ii)  The Corporation shall cause each Material Subsidiary, except as
     permitted by paragraph 6B(2), to maintain its corporate or partnership 
     existence, as the case may be, and organization in good standing under
     the laws of its jurisdiction of incorporation or formation, as applicable,
     and shall cause each Material Subsidiary to duly register and qualify and
     remain duly registered and qualified as a corporation or partnership, as 
     applicable, qualified to carry on business under the laws of each 
     jurisdiction in which the nature of any business conducted by it or the 
     character of any properties and assets owned or leased by it requires 
     such registration and qualification, except to the extent that failure 
     to maintain such registration or qualification does not have a Material
     Adverse Effect.
          
          5G.  Compliance With Applicable Laws.  The Corporation shall and
shall cause each Material Subsidiary to:
          
          (i)  carry on and conduct its business and keep, maintain and operate
     its assets and properties in accordance with all Applicable Laws, including
     Applicable Environmental Laws, and in a good and workmanlike manner and in
     accordance with sound oil and gas industry practice; and
     
          (ii) observe and conform in all respects to all valid requirements of
     any Governmental Approval relative to any of its assets and properties and
     all covenants, terms and conditions of all agreements upon or under which 
     any of its assets and properties are held;
     
except to the extent failure to so comply or failure to so observe and conform 
does not have a Material Adverse Effect.

          5H.  Payment of Taxes.  The Corporation shall and shall cause each
Material Subsidiary:
          
          (i)  to duly file on a timely basis all tax returns which are required
     to be filed by it; and
     
          (ii)    to pay or make provision for payment (in accordance with GAAP)
     of all business, goods and services, income, capital and/or profits taxes 
     and other governmental charges levied or assessed against it or its 
     property which are due and payable by it, or to provide adequate reserves
     (in accordance with GAAP) for the payment of any such amount, the payment 
     of which is being contested by it in good faith.
     
          5I.  Environmental Matters.
          
          (i)  Notice of Environmental Damage. The Corporation shall, promptly 
     upon acquiring knowledge thereof, provide the Holders with written notice 
     of:
     
               (a)  the discovery of any Hazardous Material or of any Release
          of Hazardous Materials into the environment from or upon the land or 
          property of the Corporation or a Material Subsidiary which would 
          reasonably be expected to have a Material Adverse Effect; or
          
               (b)  any order, judgment or claim (if such claim is determined 
          adversely) that has been made by any Person against the Corporation,
          a Material Subsidiary or their assets and properties that would give
          rise to any Environmental Liability which would have a Material 
          Adverse Effect.
     
          (ii) Additional Environmental Information.  The Corporation shall, 
     upon the request of the Required Holders (acting reasonably), make avail-
     able for discussion with any Holder at all reasonable times the senior 
     officers of the Corporation and any Material Subsidiary primarily respon-
     sible for the environmental activities and affairs of the Corporation and 
     its Material Subsidiaries.
     
          (iii) Environmental Audit. Upon the occurrence or discovery of any
     circumstance, condition or event which in the opinion of the Required 
     Holders, acting reasonably, may result in any Environmental Liability 
     which would have a Material Adverse Effect during the continuance of a 
     Default or Event of Default, the Holders may arrange for an environmental
     audit to be conducted by an independent environmental engineer or other 
     environmental consultant, at the expense of the Corporation. The 
     Corporation shall, and shall cause each Material Subsidiary to, upon 
     reasonable notice, and so long as any such engineer or consultant agrees
     to comply with the health and safety standards generally applicable to 
     the property or assets to be audited, provide access to its property and
     assets in order for such engineer or consultant to conduct such environ-
     mental and other inspections as it deems advisable and in that connection
     to examine the books, records, assets, affairs and business operations of
     the Corporation or such Material Subsidiary and to make inquiries of 
     government offices concerning compliance by the Corporation or such 
     Material Subsidiary with Applicable Environmental Laws.
     
          5J. Insurance.  The Corporation shall, and shall cause each Material 
Subsidiary to, maintain in full force and effect such policies of insurance in 
such amounts issued by insurers of recognized standing covering the properties
and operations of the Corporation and its Material Subsidiaries, including their
respective oil and gas properties and related production facilities, in such 
amounts and with such deductibles as are customarily maintained by businesses 
of established reputation engaged in the same or similar business in the 
localities where its properties and operations are located; provided that the
Corporation or any Material Subsidiary may self-insure to the extent it 
determines, acting reasonably and in accordance with good insurance practice, 
that it has the capacity to do so.

          5K. Ranking With Other Debt.  The Corporation shall ensure that its 
payment obligations hereunder and under the Notes and the payment obligations 
of each Material Subsidiary under its Material Subsidiary Guarantee rank at 
least pari passu in right of payment with the other most senior unsecured and
unsubordinated Indebtedness for Borrowed Money of the Corporation (including
any unsecured Bank Indebtedness) or such Material Subsidiary (including any
guarantees of the Bank Indebtedness), as applicable.

          5L. Material Subsidiary Test. The Corporation shall ensure that, 
within 90 days of the end of each Fiscal Quarter, the Consolidated Tangible 
Assets of the Corporation and its Material Subsidiaries as of the last day of
such Fiscal Quarter are equal to or greater than 95% of the Consolidated 
Tangible Assets of the Corporation and its Subsidiaries as of the last day of
such Fiscal Quarter.

          5M. Material Subsidiary Guarantee; Release of Certain Guarantees.  

          (i)  If a Subsidiary is to be included as a Material Subsidiary after
     the Date of Closing for the purposes of ensuring compliance with paragraph
     5L, the Corporation shall cause such Subsidiary to provide to the Holders
     a Material Subsidiary Guarantee on a pari passu basis with all other 
     unsecured and unsubordinated Indebtedness of such Material Subsidiary and,
     in addition thereto, shall provide, or cause to be provided, to each Holder
     a favourable opinion of counsel to the Corporation (such opinion to be 
     satisfactory in form and substance to the Required Holders, acting 
     reasonably), as to the legality, validity and enforceability of such 
     Material Subsidiary Guarantee and as to such other matters as the
     Required Holders may reasonably require, together with such other 
     documents, including certification that the representations and warranties
     contained in paragraph 8 are true and correct with respect to such Material
     Subsidiary and certified resolutions and constating/governing documents
     of such Material Subsidiary, as the Required Holders may reasonably 
     require.  
     
          (ii) If, on or before September 30, 1998, the lenders under the CIBC 
     Credit Agreements (A) release the guarantees of David Limited Partnership 
     and Morrison, the Holders will, upon the request of the Corporation, 
     promptly release the Material Subsidiary Guarantees of such Material 
     Subsidiaries; and (B) reduce the figure "95%" contained in paragraph 5L 
     and 5Q to a percentage greater than or equal to 85%, the Holders will, 
     upon the request of the Corporation, promptly enter into an amendment to 
     this Agreement to reflect such change.
     
          (iii) If the Holders release the guarantee of David Limited 
     Partnership or Morrison and subsequently either David Limited Partnership 
     or Morrison guarantees any portion of the Bank Indebtedness, such 
     Subsidiary will also guarantee the Notes; provided that the Holders will 
     release any such subsequent guarantee of the Notes upon the holders of 
     such Bank Indebtedness releasing their guarantee provided by such 
     Subsidiary.  If the Holders reduce the 95% figure as provided in clause 
     (ii)(B) above, the Corporation will thereafter cause any Subsidiary that 
     guarantees the Bank Indebtedness outstanding under the Corporation's 
     largest unsubordinated bank credit facility to issue a Material Subsidiary
     Guarantee to the Holders; provided that if the holders of such Bank 
     Indebtedness subsequently release such guarantees, the Holders will release
     such Material Subsidiary Guarantees.
     
          5N.  Payment and Performance.  The Corporation shall duly and 
punctually pay all sums of money due by it hereunder and under the Notes and 
the Corporation shall and shall cause each Material Subsidiary to perform all 
other obligations on its part to be performed under the terms of the Loan 
Documents to which it is a party at the times and places and in the manner
provided for therein.

         5O.    Payment of Other Obligations. The Corporation shall and shall 
cause each Material Subsidiary to pay or cause to be paid all material rents, 
royalties and other obligations to pay money validly imposed upon it, or upon 
its properties or assets or any part thereof, as and when the same become due
and payable or shall provide adequate reserves (in accordance with GAAP) for 
payment of any such obligation, the payment of which is being contested in good
faith.

          5P.    Maintenance of Books and Records.  The Corporation shall and 
shall cause each Material Subsidiary to keep proper and adequate records and 
books of account in which true and complete entries will be made in a manner 
sufficient to enable the preparation of financial statements in accordance 
with GAAP and, subject to paragraph 5C, make the same available for 
confidential inspection by each Holder and its employees.

          5Q.    Subsidiary Designation.  The Corporation shall from time to 
time by notice in writing to the Holders be entitled to designate that either:

          i)   a Subsidiary will no longer be a Subsidiary and will become an 
     Excluded Subsidiary; 

          ii)  a Material Subsidiary will no longer be a Material Subsidiary 
     and will become a Subsidiary; or

          iii) an Excluded Subsidiary will no longer be an Excluded Subsidiary 
     and will become a Subsidiary; 

provided that the Corporation shall not be entitled to make any such 
designation if immediately after giving effect to any such designation:
   
          (x)   a Default or Event of Default would occur or remain outstanding;
     and
     
          (y)   the Consolidated Tangible Assets of the Corporation and its 
     Material Subsidiaries (after excluding any Material Subsidiary to be 
     designated as an Excluded Subsidiary or to be otherwise removed as a 
     Material Subsidiary) calculated as of the last day of the immediately 
     preceding Fiscal Quarter is less than 95% of the Consolidated Tangible 
     Assets of the Corporation and its Subsidiaries calculated as of the last 
     day of the immediately preceding Fiscal Quarter; and 
     
provided, further, that, notwithstanding this paragraph 5Q and the definition 
of "Subsidiary," the designation of Northstar Energy Partnership as a Material
Subsidiary shall not be removed without the written consent of the Required 
Holders.
   
If, in compliance with the foregoing, a Material Subsidiary is designated an 
Excluded Subsidiary or is to be otherwise removed as a Material Subsidiary, the
Holders shall (as soon as reasonably practicable) cancel and return to the 
Corporation the Material Subsidiary Guarantee of such Subsidiary.

          5R.    Proceeds.  On or before March 31, 1998, the Corporation will 
use the proceeds from the issuance and sale of the Notes to repay Existing 
Northstar Notes in an aggregate principal amount of U.S. $60,000,000 and repay a
portion of the revolving loans outstanding under the CIBC Credit Agreements, 
directly or indirectly.  The Corporation will deliver to the Holders on or 
before March 16, 1998 an irrevocable notice of prepayment of all of the Existing
Northstar Notes previously delivered to the holders of the Existing Northstar 
Notes in accordance with the Northstar Note Agreement.

          5S.    Filings.  The Corporation will comply with all requirements 
which may exist under applicable securities legislation to file reports concern-
ing the issuance of the Notes pursuant to filing, registration or prospectus 
exemptions under such legislation within the required time after such issuance.

          5T.    Defend Title.  The Corporation will, and will cause each 
Material Subsidiary to, defend its title to its property against every Person 
whomever claiming or attempting to claim the same, or asserting any interest 
adverse to its interest therein, other than Permitted Title Defects, disposi-
tions permitted under this Agreement and such other adverse claims or asserted
interests which, if valid, would not individually or in the aggregate have a
Material Adverse Effect.

          5U.    West Windsor Power.  The Corporation will sell its investment
in West Windsor Power before June 30, 1999.

     PARAGRAPH 6.  NEGATIVE COVENANTS. 

     6.   NEGATIVE COVENANTS.  So long as any Note shall remain unpaid, the
Corporation covenants that:

          6A.  Financial Covenants.   
               
          6A(1)     Consolidated Tangible Net Worth.  The Corporation will not 
permit Consolidated Tangible Net Worth as at the end of each Fiscal Quarter to 
be less than $230,000,000. 
     
          6A(2)     Consolidated Debt to EBITDA Ratio.  The Corporation will not
permit Consolidated Debt (i) at the Date of Closing, to exceed 315% of EBITDA 
for the most recent period of four consecutive completed Fiscal Quarters and 
(ii) as at the end of any Fiscal Quarter commencing with the Fiscal Quarter 
ending March 31, 1998, to exceed 300% of EBITDA for the most recent period of 
four consecutive completed Fiscal Quarters.


          6A(3)     Alternate Consolidated Net Worth Test.  At any time that 
paragraph 6H is not in effect, the Corporation will not permit Consolidated 
Tangible Net Worth as at the end of each Fiscal Quarter to be less than the sum
of (i) $400,000,000 plus (ii) 25% of the proceeds from any sale of capital 
stock or other form of equity by the Corporation after the first day of the 
Fiscal Quarter following the day on which paragraph 6H is no longer effective 
plus (iii) 25% of Consolidated Net Earnings for each Fiscal Quarter (if 
positive) commencing with the first Fiscal Quarter ending after the day on 
which paragraph 6H is no longer effective, up to a maximum required 
Consolidated Tangible Net Worth of $500,000,000.

For greater certainty, (i) the financial covenants in paragraphs 6A(1) and 
6A(3) shall not include the assets, liabilities, income or equity of any 
Excluded Subsidiary or any Excluded Assets and (ii) the financial covenant in 
paragraph 6A(2) shall not include the assets, liabilities, income or equity of
any Excluded Subsidiary or, except to the extent received by the Corporation, 
any Excluded Assets.

          6B.  Liens and Other Restrictions. The Corporation will not, and will
not permit any Material Subsidiary to

          6B(1)  Liens.  Except for Permitted Encumbrances, create, incur, 
assume, suffer to exist or otherwise have outstanding any Lien upon or with 
respect to any of its undertaking, properties, rights or assets, whether now 
owned or hereafter acquired, including its oil and gas properties and related
production facilities.

          6B(2). Restriction on Amalgamation etc.  Except for the winding-up of
all of the assets of, or an amalgamation of,  a Subsidiary into, and the assump-
tion of all Indebtedness of such Subsidiary by, the Corporation or a Wholly-
Owned Subsidiary (or any winding-up or amalgamation between the two Mountain 
Companies), enter into any transaction whereby all or substantially all of its
undertaking, property and assets would become the property of any other 
solvent Person (herein called a "Successor") whether by way of reconstruction, 
reorganization, recapitalization, consolidation, amalgamation, merger, transfer,
sale, arrangement or otherwise (each a "Transaction"), unless:

          (i)  prior to or contemporaneously with the consummation of such 
     Transaction:
     
               (A) the Successor expressly assumes, by an agreement satisfactory
          in substance and form to the Required Holders, acting reasonably, all
          the covenants and obligations of either the Corporation under this 
          Agreement and the other Loan Documents to which it is a party or the
          Material Subsidiary under any Loan Documents to which it is a party,
          as applicable; and

               (B)  this Agreement and the other Loan Documents to which the
          Corporation or the Material Subsidiary was a party immediately prior 
          to entering into the Transaction will (except for any merger at law 
          of any Material Subsidiary Guarantee as a result of the Transaction) 
          be valid and binding obligations of the Successor, enforceable against
          the Successor and entitling each Holder, as against the Successor, to
          exercise all its rights under, as applicable, this Agreement and the
          other Loan Documents;

     and provided that the Successor shall also execute and deliver to the 
     Holders such documents (including favourable legal opinions of counsel to 
     the Corporation and/or Successor in this regard, and in regard to with-
     holding tax matters, acceptable to the Required Holders, acting 
     reasonably), if any, as may, in the reasonable opinion of the Required 
     Holders, be necessary to effect or establish (A) and (B) above;
     
          (ii)  if the Transaction involves the Corporation, the Successor is 
     either (y) a corporation governed (as to corporate matters) by the federal
     laws of Canada or the laws in force in a province of Canada other than 
     Quebec; or (z) a general partnership which partnership is formed under and
     governed (as to partnership matters) by the laws in force in a province in
     Canada, other than Quebec, and, in each case a majority of the assets of
     which Successor are located, and a majority of its business is conducted, 
     in Canada, the United States or some Other Permitted Country;
    
          (iii)  if the Transaction involves a Material Subsidiary but not the 
     Corporation:
     
               (A)   if such Material Subsidiary is governed as to corporate or
          partnership matters by the federal laws of Canada or a province 
          thereof, the Successor is either (y) a corporation governed (as to 
          corporate matters) by the laws of Canada or the laws in force in a 
          province of Canada other than Quebec or (z) a partnership formed under
          and governed (as to partnership matters) by the laws in force in a 
          province in Canada, other than Quebec, and, in each case a majority 
          of the assets of which Successor are located, and a majority of its
          business is conducted, in Canada, the United States of America or 
          some Other Permitted Country; or

               (B)   if such Material Subsidiary is governed as to corporate or
          partnership matters by any other laws, the Successor is governed by 
          the same laws as such Material Subsidiary, including as to corporate 
          or partnership matters; and
          
               (C)  the Successor remains a Material Subsidiary unless, as of
          the date of the completion of the Transaction, the inclusion of such 
          Successor is not required to satisfy the Material Subsidiary Test 
          contained in paragraph 5L as of such date of completion;

          (iv) such Transaction shall be on such terms and shall be carried out
     in such manner as to preserve and not to impair any of the rights and 
     powers of the Holders hereunder and under any other Loan Documents;
     
          (v)  such Transaction shall not result in the undertaking, property 
     and assets of the Successor being subject to any Liens other than Permitted
     Encumbrances; and
     
          (vi) no Event of Default or Default shall have occurred and be con-
     tinuing immediately prior to such Transaction or would exist if such 
     Transaction is effected.
     
          6B(3).    Restriction on Sale.  Directly or indirectly make any sale
(including a Sale-Leaseback), exchange, lease, transfer or other disposition to
any Person of any of its assets or properties classified as property, plant and
equipment on the consolidated balance sheet of the Corporation and its 
Subsidiaries, including the petroleum and natural gas reserves of the Corpora-
tion and its Material Subsidiaries, or any Voting Shares in any Material 
Subsidiary, except:
     
          (i)  Permitted Dispositions; 
     
          (ii)   any other sales or dispositions of any assets or properties 
     classified as property, plant and equipment on the consolidated balance 
     sheet of the Corporation, including a Sale-Leaseback, if the aggregate 
     proceeds of all such sales and dispositions in a Fiscal Year, including 
     therein the proceeds received from any Sale-Leaseback, (net of Eligible 
     Reinvestments) does not exceed 15% of the Consolidated Tangible Assets of
     the Corporation and its Subsidiaries as at the end of the immediately 
     preceding Fiscal Year; and 
  
          (iii) the Corporation and its Material Subsidiaries may sell such 
     assets and properties in excess of the 15% limit described in clause (ii) 
     above during a Fiscal Year if all of the proceeds in excess of the 15% 
     permitted in clause (ii) of this paragraph 6B(3) (the "Excess Cash 
     Proceeds") are reinvested in Eligible Reinvestments before the date that 
     is the earlier of (a) five days after a Responsible Officer has knowledge 
     that sales have occurred generating Excess Cash Proceeds and (b) 60 days 
     after the end of such Fiscal Year, provided that pending such reinvestment
     such Excess Cash Proceeds shall on and after such date be segregated in a 
     separate deposit account in the name of the Corporation with a bank (the 
     short-term deposits of which would qualify as Permitted Investments, and 
     which is not at any relevant time a creditor of the Corporation or any
     Subsidiary), and may thereafter be paid directly out of that account only 
     (x) to acquire Permitted Investments with issuers which are not at any 
     relevant time creditors of the Corporation or any Subsidiary (which shall 
     also be kept separate from the other assets of the Corporation and its
     Subsidiaries), or (y) to acquire Eligible Reinvestments, or a combination 
     of (x) and (y), provided, further, that if any of such Excess Cash 
     Proceeds have not been reinvested in Eligible Reinvestments within 12 
     months of the date of the transaction giving rise thereto, the Corporation
     shall thereupon invest the same in investments of the type referred to in 
     clauses (a) and (b) of the definition of "Permitted Investments" with 
     issuers which are not at any relevant time creditors of the Corporation or
     any Subsidiary pending reinvestment thereof in Eligible Reinvestments;
  
provided that no Default or Event of Default has occurred and is continuing or 
would exist if such sale, exchange, lease, transfer or other disposition is 
effected.
      
          6B(4).    Sale-Leaseback.  Enter into any Sale-Leaseback where the 
assets of the Corporation or a Material Subsidiary subject to such Sale-
Leaseback are being sold for less than their fair market value.

          6C.  Joint Venture Company.  The Corporation will not permit a Joint 
Venture Company to create, incur, assume or suffer to exist any Indebtedness for
Borrowed Money (including, for greater certainty, Prepaid Obligations or by way
of Guarantee), other than Non-Recourse Debt and indebtedness in favour of the 
shareholders of such Joint Venture Company holding Voting Shares or in favour 
of the Corporation or any Material Subsidiary; provided that such covenant 
shall not apply if such Joint Venture Company has been designated as an Excluded
Subsidiary pursuant to paragraph 5Q.

          6D.  Change of Business.  The Corporation will not, and will not 
permit any Material Subsidiary to, change in any material respect the nature of
its business or operations from the exploration for, and development, produc-
tion, transportation, processing and marketing of, petroleum, natural gas and 
related products or investments in West Windsor Power (at any time before June
30, 1999),  nor  engage  directly  or  indirectly in any material business 
activity or purchase or otherwise acquire any material property, in either case
not primarily related to the conduct of its business or operations as presently
carried on.

          6E.  Actions in Respect of Material Subsidiaries.  Notwithstanding 
anything to the contrary provided in paragraphs 5 or 6, where the Corporation 
has covenanted to cause any Material Subsidiary to do or not to do any act or
thing, and the Corporation does not own more than 50% of the Voting Shares of 
such Material Subsidiary, the Corporation shall have complied with its covenants
in that regard if it shall have used all reasonable commercial efforts to cause
such Material Subsidiary to comply with the requirements of paragraphs 5 or 6 
or to remedy any breaches thereof, provided that reasonable commercial efforts 
shall be deemed to include, without limitation, exercising any veto or voting 
power it might have with respect to any such Material Subsidiary; and with 
respect to any breach of paragraphs 5 and 6 caused by any Material Subsidiary 
acting or failing to act in the manner required by such paragraphs 5 or 6, the
Corporation's obligation to use its reasonable commercial efforts to prevent or
remedy such breach shall only be applicable from and after the date that the 
Corporation becomes aware of such breach or the date the Corporation becomes 
aware such breach may occur, as the case may be.

          6F.  Constating Documents.  The Corporation will not, and will not 
permit any Material Subsidiary to, alter its articles or by-laws, or in the 
case of any partnership that is a Material Subsidiary, its partnership agree-
ment, in any manner that would individually or in the aggregate have a Material
Adverse Effect.

          6G.  Amendments to Bank Agreement.  The Corporation will not agree to
any amendment, supplement or modification of the covenants contained in Article
8, or the events of default contained in Article 9, of either of the CIBC Credit
Agreements (except an amendment to the covenant contained in Section 8.3(b) of 
the CIBC Credit Agreements), or agree to any consent, waiver or release with 
respect to such agreements unless the Corporation contemporaneously gives each 
Holder a notice of the amendment, supplement, modification, consent, waiver or 
release and offers to amend this Agreement to incorporate such change (a "CIBC 
Offer to Amend"); provided, however, that (i) in the event the Corporation shall
enter into, assume or otherwise become bound by or obligated under any such 
change without offering to amend this Agreement, the terms of this Agreement 
shall, without any further action on the part of the Corporation or any of the 
Holders, be deemed to be amended automatically and retroactively to include 
such changes, but only for so long as such change remains in effect with respect
to the CIBC Credit Agreements and (ii) the good faith failure to contempora-
neously make a CIBC Offer to Amend shall not constitute an Event of Default if 
such CIBC Offer to Amend is made in accordance with paragraph 5A(2).  The 
Corporation further covenants to promptly execute and deliver at its expense
(including, without limitation, the fees and expenses of counsel for the 
Holders) an amendment to this Agreement in the form and substance satisfactory 
to the Required Holders evidencing the amendment of this Agreement to include 
such change provided that the execution and delivery of such amendment shall 
not be a precondition to the effectiveness of such amendment as provided for
in this paragraph 6H, but shall merely be for the convenience of the parties 
hereto and the good faith failure to promptly deliver such amendment shall not 
constitute an Event of Default unless the Corporation fails to deliver such 
amendment within five Business Days of the request of any Holder.  The 
Corporation shall promptly provide to each Holder a true copy of any such
amendment, supplement or modification of the CIBC Credit Agreements or such 
other credit facility, and any consent, waiver or release given under any 
thereof; provided that the good faith failure to provide such document promptly
shall not constitute an Event of Default if such document is delivered in 
accordance with paragraph 5A(2).

          6H.  Most Favoured Lender Status.  The Corporation will not, and will
not permit any Material Subsidiary that owns more than 30% of the consolidated 
assets of the Corporation and its Subsidiaries to, enter into, assume or other-
wise be bound or obligated under any agreement entered into after the date 
hereof creating or evidencing Indebtedness (other than Non-Recourse Debt or 
Capitalized Lease Obligations) with one or more institutions pertaining to the 
issuance of debt or borrowing of funds in an amount equal to in the aggregate 
U.S. $50,000,000 or more (or the equivalent amount in another currency) which 
contains one or more Additional Covenants, unless the Corporation shall have 
offered to amend this Agreement to include such Additional Covenants (an "Other
Lender Offer to Amend"); provided, however, that (i) in the event the 
Corporation or any Material Subsidiary shall enter into, assume or otherwise 
become bound by or obligated under any such agreement without offering to amend
this Agreement, the terms of this Agreement shall, without any further action 
on the part of the Corporation or any of the Holders, be deemed to be amended 
automatically and retroactively to include each Additional Covenant contained 
in such agreement, but only for so long as such Additional Covenants remain in
effect with respect to such other agreement and (ii) the good faith failure to
contemporaneously make an Other Lender Offer to Amend shall not constitute an 
Event of Default if such Other Lender Offer to Amend is made in accordance with
paragraph 5A(2).  In the case where a Material Subsidiary has entered into such
an agreement containing one or more Additional Covenants, the Corporation will 
covenant to cause such Material Subsidiary to comply with such Additional 
Covenants.  The Corporation further covenants to promptly execute and deliver 
at its expense (including, without limitation, the fees and expenses of counsel
for the Holders) an amendment to this Agreement in the form and substance 
satisfactory to the Required Holders evidencing the amendment of this Agreement
to include such Additional Covenants, provided that the execution and delivery 
of such amendment shall not be a precondition to the effectiveness of such 
amendment as provided for in this paragraph 6H, but shall merely be for the
convenience of the parties hereto and the good faith failure to promptly deliver
such amendment shall not constitute an Event of Default unless the Corporation 
fails to deliver such amendment within five Business Days of the request of any
Holder.  The Corporation shall promptly provide each Holder a true copy of any 
such agreement, or any amendment, supplement or modification thereof or any 
consent, waiver or release given thereunder; provided that the good faith 
failure to provide such document promptly shall not constitute an Event of 
Default if such document is delivered in accordance with paragraph 5A(2).  This
paragraph 6H shall not be effective at any time after the last day of any Fiscal
Quarter of the Corporation if, (x) as of such last day, Consolidated Tangible 
Net Worth of the Corporation exceeds Cdn. $600,000,000 and for so long there-
after that the Consolidated Tangible Net Worth of the Corporation remains in 
excess of Cdn. $600,000,000 and (y) the Corporation shall have elected to have 
this paragraph 6H no longer be effective in the Compliance Certificate delivered
for such Fiscal Quarter.  For clarity, if the Consolidated Tangible Net Worth 
of the Corporation thereafter falls below Cdn. $600,000,000, the Corporation 
shall be required to comply with the provisions of this paragraph 6H.

          6I.  Northstar Energy Partnership.  The Corporation will not permit 
Northstar Energy Partnership to have as a partner any Person which is not 
either the Corporation or a Material Subsidiary.

     PARAGRAPH 7.  EVENTS OF DEFAULT. 

          7A.  Acceleration.  If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be 
voluntary or involuntary or come about or be effected by operation of law or 
otherwise):  

          (i)  failure to pay principal:  the Corporation defaults in the pay-
     ment of any principal of or Yield-Maintenance Amount payable with respect 
     to any Note when the same shall become due, either by the terms thereof or
     otherwise as herein provided; or 
     
          (ii) failure to pay interest:  the Corporation defaults in the payment
     of any interest on any Note for more than five Business Days after the date
     due; or 
     
          (iii) cross-default:  the Corporation or any Material Subsidiary
     
               (A)  defaults (whether as primary obligor or as guarantor or 
          other surety) in any payment of principal of, premium (if any) or 
          interest on any other obligation for money borrowed (or any 
          Capitalized Lease Obligation, any obligation under a conditional sale
          or other title retention agreement, any obligation issued or assumed
          as full or partial payment for property whether or not secured by a 
          purchase money mortgage or any obligation under notes payable or 
          drafts accepted representing extensions of credit) beyond any period 
          of grace provided with respect thereto (including any period of grace
          provided in a waiver), or

               (B)  fails to perform or observe any other agreement, term or 
          condition contained in any agreement under which any such obligation 
          is created or by which it is evidenced (or if any other event there-
          under or under any such agreement shall occur and be continuing) and 
          the effect of such failure or other event is to cause, or permit any 
          holder or holders of such obligation (or any trustee on behalf of such
          holder or holders) to cause, such obligation to become due (or to be 
          repurchased by the Corporation or any Subsidiary) prior to any stated
          maturity,
          
     provided in either case that (x) the aggregate amount of all obligations in
     respect of which such a payment default shall occur and be continuing, or 
     such a failure or other event causing or permitting acceleration (or resale
     to the Corporation or any Subsidiary) shall occur and be continuing, 
     exceeds $15,000,000 (or its then equivalent in U.S. Dollars); and (y) this
     clause (iii) shall not apply to a default or failure in respect of Non-
     Recourse Debt where the same would not individually or in the aggregate 
     have a Material Adverse Effect; or 
     
          (iv) incorrect representations:  any representation or warranty made 
     by the Corporation or by any Material Subsidiary in any Loan Document to 
     which they are a party, or by the Corporation or any Material Subsidiary 
     or any of their officers in any writing furnished in connection with or 
     pursuant to this Agreement or any other Loan Document, shall be false in 
     any material respect on the date as of which made; and if such representa-
     tion is contained in the second sentence of paragraph 8E or paragraph 8F 
     and the falsity thereof can be cured within 20 days, upon the expiration 
     of a period of 20 days if such falsity is not cured; or
     
          (v)  breach of negative covenant:  the Corporation fails to perform 
     or observe any term, covenant or agreement contained in paragraph 5D, 5R, 
     5U or paragraph 6 (other than paragraph 6B(1), 6C or 6I), or the 
     Corporation fails to give notice of a Default or Event of Default as 
     required by paragraph 5A(4); or the Corporation fails to perform or
     observe any term, covenant or agreement contained in paragraph 6B(1), 6C 
     or 6I and such failure shall not be remedied within 30 days; or
     
          (vi) breach of other covenant:  the Corporation or any Material 
     Subsidiary fails to perform or observe any other agreement, covenant, 
     term or condition contained herein or in any other Loan Document, and such
     failure shall not be remedied within 30 days after the earlier of the date
     that (a) the chief executive officer, chief operating/engineering officer,
     chief financial officer or treasurer of the Corporation (or persons ful-
     filling equivalent functions) obtains actual knowledge of such default, 
     and (b) the Corporation receives notice of such default from any Holder; 
     or
     
          (vii)  insolvency (voluntary proceedings):  the Corporation or any 
     Material Subsidiary shall:
     
               (a)  become insolvent, or generally not pay its debts or meet 
          its liabilities as the same become due, or admit in writing its in-
          ability to pay its debts generally, or declare any general moratorium
          on its indebtedness, or propose a compromise or arrangement between 
          it and any class of its creditors,
          
               (b)  commit an act of bankruptcy under the Bankruptcy and 
          Insolvency Act (Canada), or make an assignment of its property for 
          the general benefit of its creditors under such Act, or make a 
          proposal (or file a notice of its intention to do so) under such Act,
          
               (c)  institute any proceeding seeking to adjudicate it an insol-
          vent, or seeking liquidation, dissolution, winding-up, reorganization,
          compromise, arrangement, adjustment, protection, moratorium, relief, 
          stay of proceedings of creditors generally (or any class of 
          creditors), or composition of it or its debts under any other statute,
          rule or regulation relating to bankruptcy, winding-up, insolvency, 
          reorganization, plans of arrangement, relief or protection of debtors
          (including the Bankruptcy and Insolvency Act (Canada), the Companies'
          Creditors Arrangement Act (Canada) and any applicable Business 
          Corporations Act or Company Act), or at common law or in equity,
          
               (d)  apply for the appointment of, or the taking of possession 
          by, a receiver, interim receiver, receiver/manager, custodian, 
          administrator, trustee, liquidator or other similar official for it 
          or any substantial part of its property, or
          
               (e)  threaten to do any of the foregoing, or take any action, 
          corporate or otherwise, to approve, consent to or authorize any of 
          the actions described in this clause (vii) or in clause (viii), or 
          otherwise act in furtherance thereof, or fail to act in defense 
          thereof; or
          
          (viii) insolvency (involuntary proceedings):  any petition shall be 
     filed, application made or other proceeding instituted against or in 
     respect of the Corporation or any Material Subsidiary:
     
               (a)  seeking to adjudicate it an insolvent,
          
               (b)  seeking a receiving order against it under the Bankruptcy 
          and Insolvency Act (Canada),
          
               (c)  seeking liquidation, dissolution, winding-up, reorganiza-
          tion, compromise, arrangement, adjustment, protection, moratorium, 
          relief, stay of proceedings of creditors generally (or any class of 
          creditors), or composition of it or its debts under any statute, rule
          or regulation relating to bankruptcy, winding-up, insolvency, 
          reorganization, plans of arrangement, relief or protection of debtors
          (including the Bankruptcy and Insolvency Act (Canada), the Companies'
          Creditors Arrangement Act (Canada) and any applicable Business 
          Corporations Act or Company Act), or at common law or in equity, or
          
               (d)  seeking the entry of an order for relief or the appointment
          of a receiver, interim receiver, receiver/manager, custodian, admin-
          istrator, trustee, liquidator or other similar official for it or any
          substantial part of its property,
          
     and, if contested by the Corporation or such Material Subsidiary, such 
     petition, application or proceeding shall continue undismissed, or unstayed
     and in effect, for a period of 30 days after the institution thereof, pro-
     vided that if an order, decree or judgment is granted (whether or not 
     entered or subject to appeal) against the Corporation or any Material 
     Subsidiary thereunder in the interim and such order, decree or judgment is
     not stayed or discharged within five days of it being granted, such grace 
     period shall cease to apply; or
     
          (ix) extra-territorial proceedings:  any other event shall occur 
     which, under the laws of any applicable jurisdiction, has an effect equiva-
     lent to any of the events referred to in paragraphs (vii) or (viii); or
     
          (x)  judgments and attachments:  (A) one or more judgments for the 
     payment of money in excess of $15,000,000 (or its then equivalent in U.S. 
     Dollars) in the aggregate shall be rendered against the Corporation or any
     Material Subsidiary and the Corporation or such Material Subsidiary shall
     not have (1) satisfied or provided for the discharge of such judgment in 
     accordance with its terms within 30 days from the date of entry thereof,
     or (2) procured a stay of execution thereof within 30 days from the date 
     of entry thereof and within such period, or such longer period during 
     which execution of such judgment shall have been stayed, appealed such 
     judgment and caused the execution thereof to be stayed during such appeal,
     provided that, if enforcement and/or realization proceedings are commenced
     in respect thereof in the interim, such grace period shall cease to apply;
     or (B) any property of the Corporation or any Material Subsidiary having a
     fair market value in excess of $15,000,000 (or its then equivalent in U.S.
     Dollars) in the aggregate shall be seized (including by way of execution, 
     attachment, garnishment or distraint), or any Lien thereon securing 
     Indebtedness in excess of $15,000,000 (or its then equivalent in U.S. 
     Dollars) in the aggregate shall be enforced, or such property shall become
     subject to any charging order or equitable execution of a Governmental 
     Authority, or any writ of enforcement, writ of execution or distress 
     warrant shall exist in respect of the Corporation, any Material Subsidiary
     or the property of either, or any sheriff or other Person shall become 
     lawfully entitled to seize or distrain upon such property under the Civil
     Enforcement Act (Alberta), the Workers' Compensation Act (Alberta), the 
     Personal Property Security Act (Alberta) or any other Applicable Laws 
     whereunder similar remedies are provided, and in any case such seizure, 
     enforcement, execution, attachment, garnishment, distraint, charging order
     or equitable execution, or other seizure or right, shall continue in 
     effect and not be released or discharged for more than 30 days, provided
     that if the property is removed from the use of the Corporation or Material
     Subsidiary, or is sold, in the interim, such grace period shall cease to 
     apply (provided that this clause (x) shall not apply to Non-Recourse Debt 
     or any realization on security for Non-Recourse Debt where such judgment, 
     seizure, realization or proceeding in respect thereof would not have a 
     Material Adverse Effect); or
     
          (xi) unenforceability of documents:  this Agreement, any Note or any 
     Material Subsidiary Guarantee or any material provision of any thereof 
     shall at any time for any reason cease to be in full force and effect, be 
     declared to be void or voidable or shall be repudiated, or the validity or
     enforceability thereof shall at any time be contested by the Corporation 
     or any Material Subsidiary, or the Corporation or any Material Subsidiary
     shall deny that it has any or any further liability or obligation there-
     under or any action or proceeding shall be commenced to enjoin or restrain
     the performance or observance by the Corporation or any Material Subsidiary
     of any terms thereof or determining the same to be invalid or unenforce-
     able, or at any time it shall be unlawful or impossible for the Corporation
     or any Material Subsidiary to perform any of its obligations thereunder; or
     
          (xii) cessation of business:  other than as permitted hereunder, the 
     Corporation shall cease or threaten to cease to carry on all or any 
     material part of its business as now conducted, or shall make a bulk sale 
     of its assets; or
     
          (xiii) ERISA:  if (a) any Plan shall fail to satisfy the minimum 
     funding standards of ERISA or the Code for any plan year or part thereof 
     or a waiver of such standards or extension of any amortization period is 
     sought or granted under Section 412 of the Code, (b) a notice of intent to
     terminate any Plan shall have been or is reasonably expected to be filed 
     with the PBGC or the PBGC shall have instituted proceedings under ERISA 
     Section 4042 to terminate or appoint a trustee to administer any Plan or 
     the PBGC shall have notified the Corporation or any ERISA Affiliate that a
     Plan may become a subject of any such proceedings, (c) the aggregate 
     "amount of unfunded benefit liabilities" (within the meaning of Section 
     4001(a)(18) of ERISA) under all Plans, determined in accordance with
     Title IV of ERISA, shall exceed $15,000,000, (d) the Corporation or any 
     ERISA Affiliate shall have incurred or is reasonably expected to incur any
     liability pursuant to Title I or IV of ERISA or the penalty or excise tax 
     provisions of the Code relating to employee benefit plans, (e) the 
     Corporation or any ERISA Affiliate withdraws from any Multiemployer Plan, 
     or (f) the Corporation or any Subsidiary establishes or amends any
     employee welfare benefit plan that provides post-employment welfare bene-
     fits in a manner that would increase the liability of the Corporation or 
     any Subsidiary thereunder; and any such event or events described in 
     clauses (a) through (f) above, either individually or together with any 
     other such event or events, could reasonably be expected to have a
     Material Adverse Effect and such default is not cured within 30 days after
     the earlier of the date that (a) the chief executive officer, chief opera-
     ting/engineering officer, chief financial officer or treasurer of the 
     Corporation (or persons fulfilling equivalent functions) obtains actual 
     knowledge of such default, and (b) the Corporation receives notice of such
     default from any Holder.  As used in clause (xiii), the terms "employee 
     benefit plan" and "employee welfare benefit plan" shall have the respective
     meanings assigned to such terms in Section 3 of ERISA;
     
then:

               (a)  if such event is an Event of Default specified in clause (i)
          or (ii) of this paragraph 7A, then any Holder (other than the 
          Corporation or any of its Subsidiaries or Affiliates) may at its 
          option by notice in writing to the Corporation, declare such Note to 
          be, and such Note shall thereupon be and become, immediately due and 
          payable at par together with interest accrued thereon, without 
          presentment, demand, protest or other notice of any kind, all of 
          which are hereby waived by the Corporation;
          
               (b)  if such event is an Event of Default specified in clause 
          (vii), (viii) or (ix) of this paragraph 7A with respect to the 
          Corporation, then all of the Notes at the time outstanding shall 
          automatically become immediately due and payable at par together with
          interest accrued thereon and together with the Yield-Maintenance 
          Amount, if any, with respect to each Note, without presentment, 
          demand, protest or notice of any kind, all of which are hereby waived
          by the Corporation; and
          
               (c)  if such event is not an Event of Default specified in clause
          (vii), (viii) or (ix) of this paragraph 7A with respect to the 
          Corporation, then the Required Holders may at their option, by notice
          in writing to the Corporation, declare all of the Notes to be, and all
          of the Notes shall thereupon be and become, immediately due and pay-
          able together with interest accrued thereon and together with the 
          Yield-Maintenance Amount, if any, with respect to each Note, without
          presentment, demand, protest or other notice of any kind, all of which
          are hereby waived by the Corporation.
          
The Corporation acknowledges, and the parties hereto agree, that each Holder has
the right to maintain its investment in the Notes free from repayment by the 
Corporation (except as herein specifically provided for) and that the provision
for payment of any Yield-Maintenance Amount by the Corporation, in the event 
that the Notes are prepaid or are accelerated as a result of an Event of 
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.

          7B.  Rescission of Acceleration.   At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to paragraph
7A, the Required Holders may, by notice in writing to the Corporation, rescind 
and annul such declaration and its consequences if (i) the Corporation shall 
have paid all overdue interest on the Notes, the principal of and Yield-
Maintenance Amount, if any, payable with respect to any Notes which have become
due otherwise than by reason of such declaration, and interest on such overdue 
interest and overdue principal and Yield-Maintenance Amount at the rate 
specified in the Notes, (ii) the Corporation shall not have paid any amounts 
which have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due 
solely by reason of the circumstances giving rise to such declaration, shall 
have been cured or waived pursuant to paragraph 11C, and (iv) no judgment or 
decree shall have been entered for the payment of any amounts due pursuant to 
the Notes or this Agreement.  No such rescission or annulment shall extend to 
or affect any subsequent Event of Default or Default or impair any right arising
therefrom.  

          7C.  Notice of Acceleration or Rescission.  Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such 
declaration shall be rescinded and annulled pursuant to paragraph 7B, the 
Corporation shall forthwith give written notice thereof to each Holder.

          7D.  Other Remedies.  If any Event of Default or Default shall occur 
and be continuing, the Holder of any Note may proceed to protect and enforce 
its rights under this Agreement and such Note and under any Material Subsidiary
Guarantee by exercising such remedies as are available to such Holder in respect
thereof under Applicable Law, either by suit in equity or by action at law, or 
both, whether for specific performance of any covenant or other agreement con-
tained in this Agreement or any other Loan Document or in aid of the exercise 
of any power granted in this Agreement or any other Loan Document.  No remedy 
conferred in this Agreement upon the Holder of any Note is intended to be exclu-
sive of any other remedy, and each and every such remedy shall be cumulative 
and shall be in addition to every other remedy conferred herein or therein or 
now or hereafter existing at law or in equity or by statute or otherwise.


     PARAGRAPH 8.  REPRESENTATIONS, COVENANTS AND WARRANTIES. 

     8.   Representations, Covenants and Warranties.

          The Corporation represents, covenants and warrants as follows:  

          8A.  Organization.  

          i)   Corporation.  The Corporation is a corporation duly organized 
     and validly existing in good standing under the laws of the Province of 
     Alberta.  The Corporation is validly registered as an extra-provincial 
     corporation under the laws of Saskatchewan and British Columbia, being the
     only other jurisdictions in which it carries on a material business or owns
     material property.  The execution, delivery and performance by the
     Corporation and each Material Subsidiary of the Loan Documents to which it
     is a party are within the Corporation's and such Material Subsidiary's 
     respective corporate or partnership powers, as applicable, and have been 
     duly authorized by all necessary corporate or partnership action.  This 
     Agreement and the Notes constitute legal, valid and binding obligations of
     the Corporation enforceable against it in accordance with their respective
     terms subject to bankruptcy, insolvency, reorganization or other similar 
     laws affecting the enforcement of creditors' rights generally.  
     
          ii)  Material Subsidiaries.  Each Material Subsidiary is duly 
     organized and validly existing in good standing under the laws of the 
     jurisdiction in which it is incorporated or formed as a partnership, as 
     set out in Schedule G attached hereto.  Each Material Subsidiary is validly
     registered as an extra-provincial corporation or partnership under the laws
     of the Provinces set out in Schedule G attached hereto, being the only 
     other jurisdictions in which such Material Subsidiary carries on a material
     business or owns material property.  The Material Subsidiary Guarantee of 
     each Material Subsidiary constitutes the legal, valid and binding obliga-
     tions of such Material Subsidiary enforceable against it in accordance 
     with its terms subject to bankruptcy, insolvency, reorganization or other 
     similar laws affecting the enforcement of creditors' rights generally.
     
          8B.  Financial Statements.6I.Northstar Energy Partnership  The 
Corporation has furnished you with the following financial statements, identi-
fied by a principal financial officer of the Corporation:  (i) a consolidated 
balance sheet of the Corporation and its Subsidiaries as at December 31 in each
of years 1997, 1996 and 1995, and consolidated statements of earnings and 
retained earnings and consolidated statements of cash flow of the Corporation 
and its Subsidiaries for each such year, each of the 1996 and 1995 balance 
sheets and statements reported on by Deloitte & Touche; and (ii) a consolidated
balance sheet of the Corporation and its Subsidiaries as at September 30 in each
of the years 1997 and 1996 and consolidated statements of earnings and retained
earnings and consolidated statements of cash flow for the nine-month period 
ended on each such date, and for the quarter ended on each such date, prepared 
by the Corporation.  Such financial statements (including any related schedules
and/or notes) are true and correct in all material respects (subject, as to 
interim statements, to changes resulting from audits and year-end adjustments),
have been prepared in accordance with GAAP consistently followed throughout the
periods involved and show all liabilities, direct and contingent, of the 
Corporation and its Subsidiaries required to be shown in accordance with GAAP.
The consolidated balance sheets present fairly the financial position of the 
Corporation and its Subsidiaries as at the dates thereof, and the statements of
earnings, retained earnings and cash flows present fairly the results of the 
operations of the Corporation and its Subsidiaries and their cash flows for the
periods indicated.  The 1997 statements, although not reported on by Deloitte &
Touche as of the Date of Closing, will not change (except changes to footnote 
12 thereof and changes to such financial statements relating to the treatment 
of the West Windsor Power disposition).  There has been no material adverse
change in the business, property or assets, condition (financial or otherwise),
operations or prospects of the Corporation and its Subsidiaries taken as a whole
since December 31, 1997.

          8C.  Actions Pending.  There is no action, suit, investigation or pro-
ceeding pending or, to the knowledge of the Corporation, threatened against the
Corporation or any of its Subsidiaries, or any properties or rights of the 
Corporation or any of its Subsidiaries, by or before any Governmental Authority
which, if determined adversely to the Corporation or its Subsidiaries, individu-
ally or in the aggregate would reasonably be expected to have a Material Adverse
Effect.  There is no action, suit, investigation or proceeding pending or, to 
the knowledge of the Corporation, threatened against the Corporation or any of
its Subsidiaries which purports to affect the validity or enforceability of any
Loan Document.

          8D.  Outstanding Indebtedness.  Neither the Corporation nor any of its
Material Subsidiaries has outstanding any Indebtedness except for Indebtedness 
for Borrowed Money that is permitted by paragraph 6A(2) of this Agreement, and 
all such Indebtedness for Borrowed Money, including all guarantees of 
Subsidiaries of any Indebtedness for Borrowed Money of the Corporation, is 
included in Part C of Schedule C attached hereto, together with particulars 
thereof.  There exists no default or event of default under the provisions of 
any instrument evidencing such Indebtedness for Borrowed Money or of any agree-
ment relating thereto, and no waiver of default is currently in effect.  Neither
CIBC nor any other lender under the CIBC Credit Agreements holds any Liens in 
respect of the obligations of the Corporation under the CIBC Credit Agreements.
The holders of Indebtedness of West Windsor Power under the West Windsor Credit
Agreement (exclusive of the agreements set forth in clauses (a) through (e) of 
the definition thereof) have recourse therefor only to the assets of West 
Windsor Power, and not to the Corporation or any Material Subsidiary or any of 
their respective assets (other than the Corporation's partnership interest in 
West Windsor Power, its interest in the partnership agreement governing West 
Windsor Power, and proceeds thereof).  The Corporation has no Sale-Leasebacks, 
Capitalized Lease Obligations, Production Payment Transactions (other than the
Indeck Gas Contract and the Indeck Security), Prepaid Obligations (other than 
the Indeck Gas Contract and the Indeck Security) or Non-Recourse Debt as of the
date hereof.

          8E.  Title to Properties.  Except for Permitted Title Defects, the 
Corporation and each of its Material Subsidiaries has good and marketable title
to its material proved producing oil and gas properties, its material proved 
non-producing oil and gas properties, and all of its other respective material
properties and assets, including partnership interests in Northstar Energy
Partnership and David Limited Partnership, shares in the Material Subsidiaries 
and the other assets reflected in the balance sheet as at December 31, 1997 
referred to in paragraph 8B (other than properties and assets disposed of in 
the ordinary course of business).  None of such properties are subject to any 
Lien of any kind except Liens that are expressly permitted by paragraph 6B(1).
All of the producing and non-producing oil and/or gas properties directly or 
indirectly owned by the Corporation are owned directly by the Corporation and 
its Material Subsidiaries.  All leases (including petroleum and/or natural gas
leases) necessary in any material respect for the conduct of the respective 
businesses of the Corporation and its Material Subsidiaries are valid and
subsisting and are in full force and effect.

          8F.  Taxes.  The Corporation and each of its Material Subsidiaries 
has filed all federal, provincial and other income tax returns which are 
required to be filed, and each has paid all taxes as shown on such returns and
on all assessments received by it to the extent that such taxes have become due,
except such taxes as are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in the 
reasonable opinion of the Corporation and in accordance with GAAP.

          8G.  Conflicting Agreements and Other Matters. Neither the Corporation
nor any of its Subsidiaries is a party to any contract or agreement or subject 
to any charter or other corporate or partnership restriction which individually
or in the aggregate has a Material Adverse Effect.  Neither the execution nor 
delivery of this Agreement, the Notes or the Material Subsidiary Guarantees, 
nor the offering, issuance and sale of the Notes, nor fulfilment of nor com-
pliance with the terms and provisions hereof  and the other Loan Documents will
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Corporation or
any of its Subsidiaries pursuant to, the articles or by-laws of the Corporation
or any of its Subsidiaries, the partnership agreement of Northstar Energy 
Partnership and David Limited Partnership, any Applicable Law or any agreement 
(including any agreement with shareholders), to which the Corporation or any of
its Subsidiaries is subject.  The Corporation and its Subsidiaries are in com-
pliance with Applicable Laws where failure to do so would individually or in 
the aggregate have a Material Adverse Effect.  Neither the Corporation nor any 
of its Subsidiaries is a party to, or otherwise subject to any provision con-
tained in, its articles, by-laws, its partnership agreement, any applicable 
shareholders agreement or shareholder declaration, any instrument evidencing 
Indebtedness of the Corporation or such Subsidiary, any agreement relating
thereto or any other contract or agreement which limits the amount of, or other-
wise imposes restrictions on the incurring of, Indebtedness of the Corporation
of the type to be evidenced by the Notes except as set forth in the agreements 
listed in Part B of Schedule C attached hereto.

          8H.  Private Offering of Notes.  Neither the Corporation nor any agent
acting on its behalf has, directly or indirectly, offered the Notes or any 
similar security of the Corporation for sale to, or solicited any offers to buy
the Notes or any similar security of the Corporation from, or otherwise 
approached or negotiated with respect thereto with, any Person other than 
institutional investors, and neither the Corporation nor any agent acting on its
behalf has taken or will take any action which would subject the issuance or 
sale of the Notes to the provisions of Section 5 of the Securities Act or to the
registration, qualification or similar provisions of any securities or "blue 
sky" laws of any applicable jurisdiction or result in any contravention of the 
provisions of any securities law of Alberta or any other applicable jurisdic-
tion.

          8I.  Use of Proceeds.  Neither the Corporation nor any Subsidiary owns
or has any present intention of acquiring any "margin stock" as defined in 
Regulation G (12 CFR Part 207) of the Board of Governors of the United States 
Federal Reserve System ("margin stock"). The proceeds of the sale of the Notes 
will be used as set forth in paragraph 5R.  None of such proceeds will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or for the purpose of main-
taining, reducing or retiring any Indebtedness which was originally incurred to
purchase or carry any stock that is currently a margin stock or for any other 
purpose which might constitute this transaction a "purpose credit" within the 
meaning of such Regulation G.  Neither the Corporation nor any agent acting on 
its behalf has taken or will take any action which might cause this Agreement or
the Notes to violate Regulation G, Regulation X or any other regulation of the 
Board of Governors of the United States Federal Reserve System or to violate the
Exchange Act, in each case as in effect now or as the same may hereafter be in 
effect. 

          8J.  Governmental Consent.  Neither the nature of the Corporation or 
of any Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Corporation or any Subsidiary and any other Person, nor
any circumstance in connection with the offering, issuance, sale or delivery of
the Notes or the execution or delivery of the Material Subsidiary Guarantees is
such as to require any authorization, consent, approval, exemption or other 
action by or notice to or filing with any Governmental Authority in connection 
with the execution and delivery of this Agreement, the offering, issuance, sale
or delivery of the Notes, or the execution or delivery of the Material 
Subsidiary Guarantees or fulfilment of or compliance with the terms and 
provisions hereof or of the other Loan Documents.

          8K.  Environmental Compliance.  Except where individually or in the 
aggregate no Material Adverse Effect would reasonably be expected to result 
therefrom:

          (a)  environmental compliance:
          
               i)   the Corporation, each Subsidiary and West Windsor Power are
          in compliance with Applicable Environmental Laws, and the condition 
          and use of their property is in compliance with Applicable 
          Environmental Laws;

               ii)  the Corporation, each Subsidiary and West Windsor Power are
          not subject to any environmental protection order or enforcement order
          under any Applicable Environmental Law;

               iii) the Corporation, each Subsidiary and West Windsor Power are
          not subject to any proceeding of any Governmental Authority alleging 
          the violation of any Applicable Environmental Law, or that may lead 
          to a claim or order for clean-up costs, remedial work, reclamation, 
          conservation, damage to natural resources or personal injury, or that
          may lead to the issuance of a stop-work order, environmental protec-
          tion order, enforcement order, suspension order, control order, 
          prevention order or clean-up order;

               iv)  the Corporation, each Subsidiary and West Windsor Power are
          not the subject of any federal, provincial, state, local or foreign 
          review, audit or investigation which may lead to a proceeding referred
          to in clause (iii);

               v)   the Corporation, each Subsidiary and West Windsor Power are
          not aware of any of their predecessors in title to any of their pro-
          perty being the subject of any order referred to in clause (ii), or 
          any federal, provincial, state, local or foreign review, audit or 
          investigation which may lead to a proceeding referred to in clause 
          (iii);

               vi)  none of the Corporation's, any Subsidiary's or West Windsor
          Power's property is (or could reasonably be expected to be) designated
          as a "contaminated site" or has an equivalent designation under 
          Applicable Environmental Laws, nor could it be considered to be an 
          "unsightly property" under Applicable Environmental Laws;

               vii) the Corporation, each Subsidiary and West Windsor Power are
          not subject to any action, suit, claim or proceeding by any Person 
          other than a Governmental Authority, relating to non-compliance with 
          any Applicable Environmental Law or to the release or existence of 
          Hazardous Materials on any property or in the environment;

               viii) the Corporation and each Subsidiary are not subject to any
          well abandonment order or direction from the Alberta Energy and 
          Utilities Board (Alberta) or equivalent agency in any other jurisdic-
          tion, nor are they liable for abandonment costs in respect of property
          in which the Corporation or such Subsidiary no longer is a working 
          interest participant under Section 20.4 of the Oil and Gas 
          Conservation Act (Alberta) or equivalent legislation in another
          jurisdiction;

               ix)  the Corporation and each Subsidiary are not aware of their
          respective property or the property of West Windsor Power ever having
          been the subject of any non-compliance of any Applicable Environmental
          Law, or any order referred to in clause (ii), or any proceeding of the
          nature referred to in clause (iii), or any review, audit or investiga-
          tion of the nature referred to in clauses (iv) or (v), or any 
          designation of the nature referred to in clause (vi), or any action, 
          suit, claim or proceeding of the nature referred to in clause (vii); 
          and

               x)   the Corporation and each Subsidiary are not aware of any 
          Person which is acting or has acted on their behalf, or for which they
          could have any liability under Applicable Environmental Laws, viola-
          ting any Applicable Environmental Laws; and

          (a) environmental permits:  the Corporation, each Subsidiary and West
     Windsor Power have obtained and continue to hold all approvals, permits, 
     licenses, consents, certificates of variance, certificates of qualification
     and other authorizations which are necessary or advisable under Applicable
     Environmental Laws.

          8L.  Environmental Disclosure.  The Corporation, each Subsidiary and 
West Windsor Power have no material contingent liability of which they have 
knowledge or reasonably should have knowledge in connection with any release of
any Hazardous Materials into the environment, and no Hazardous Materials have 
been released on the real property of the Corporation or any Subsidiary (whether
by the Corporation or any Subsidiary or, to their respective knowledge, any pre-
decessor in title), or now exist thereon, in a manner contrary to Applicable 
Environmental Laws and which could result in a material expenditure for clean-
up; the Corporation, each Subsidiary and West Windsor Power do not directly or 
indirectly generate, transport, handle, treat, store, recycle or dispose of 
Hazardous Materials (other than substances associated with the production of 
petroleum, natural gas and electricity).

          8M.  Environmental Risk Management8D.Outstanding Indebtedness .  The 
Corporation, each Subsidiary and West Windsor Power have implemented and are now
maintaining a prudent periodic program for environmental risk management.

          8N.  Disclosure.  Neither this Agreement nor any other document, 
certificate or written statement furnished to you by the Corporation or its 
officers in connection herewith contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements con-
tained herein or therein not misleading.  There is no fact or facts peculiar to
the Corporation or any of its Subsidiaries (excluding conditions general to the
oil and gas industry) or West Windsor Power (excluding conditions general to the
cogeneration industry) which individually or in the aggregate materially 
adversely affects or in the future would reasonably be expected to (so far as 
the Corporation can now foresee) materially adversely affect the business or 
assets, or financial condition of the Corporation and its Subsidiaries taken as
a whole and which has not been set forth in this Agreement or in the other docu-
ments, certificates and statements furnished to you by or on behalf of the 
Corporation prior to the date hereof in connection with the transactions 
contemplated hereby.

          8O.  Pari Passu.  All payment obligations of the Corporation hereunder
and under the Notes rank at least pari passu in priority of payment with the 
Bank Indebtedness and with its other most senior unsubordinated Indebtedness 
for Borrowed Money, subject only to the secured rights of the holders of valid 
Liens expressly permitted by paragraph 6B(1) for Indebtedness owed to them.  
All payment obligations of each Material Subsidiary under any Material 
Subsidiary Guarantee executed by it, rank at least pari passu in priority of 
payment with the guarantees by Material Subsidiaries of the Bank Indebtedness 
and its other most senior unsubordinated Indebtedness, subject only to the 
secured rights of the holders of valid Liens expressly permitted by paragraph 
6B(1) for Indebtedness owed to them.

          8P.  ERISA.  No accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with 
respect to any Plan (other than a Multiemployer Plan).  No liability to the PBGC
has been or is expected by the Corporation or any ERISA Affiliate to be incurred
with respect to any Plan (other than a Multiemployer Plan) by the Corporation, 
any Subsidiary or any ERISA Affiliate which is or would be materially adverse to
the business, condition (financial or otherwise) or operations of the 
Corporation and its Subsidiaries taken as a whole.  Neither the Corporation, any
Subsidiary nor any ERISA Affiliate has incurred or presently expects to incur 
any withdrawal liability under Title IV of ERISA with respect to any 
Multiemployer Plan which is or would be materially adverse to the business, 
condition (financial or otherwise) or operations of the Corporation and its 
Subsidiaries taken as a whole.  The execution and delivery of this Agreement 
and the issuance and sale of the Notes will be exempt from, or will not involve
any transaction which is subject to, the prohibitions of Section 406(a) of 
ERISA and will not involve any transaction in connection with which a
penalty or a tax could be imposed under Section 4975 of the Code.  The 
representation by the Corporation in the next preceding sentence is made in 
reliance upon and subject to the accuracy of your representation in paragraph 
9A(2).

         8Q.  Foreign Assets Control Regulations, etc.  The Corporation is not a
"national" of any foreign country with which the United States of America 
maintains a commercial embargo, or an order freezing assets, pursuant to 
legislation, executive orders of the President, or regulations of the Treasury 
Department.  Neither the sale of the Notes by the Corporation nor the use of the
proceeds thereof by the Corporation will violate any of such legislation, regu-
lations or orders.

          8R.  Investment Company Act and Public Utility Holding Company Status.
The Corporation is not (a) an investment company or a Person directly or 
indirectly controlled by or acting on behalf of an investment company, within 
the meaning of the United States Investment Company Act of 1940, as amended, or
(b) a "holding company" or "subsidiary company" of a "holding company" or an 
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding 
company", or a "public utility", within the meaning of the United States Public
Utility Holding Company Act of 1935, as amended.

          8S.  Engineering Reports. The most recent Engineering Report and other
related engineering data, production and cash flow projections, economic models
and other information provided by the Corporation to you in respect of the 
reserves attributable to the oil and gas properties owned by the Corporation 
and its Subsidiaries is substantially accurate and fairly reflects the interests
of the Persons specified therein and thereto as of the date thereof net of all 
royalties and other burdens affecting same, except to the extent that any 
inaccuracies would not have a Material Adverse Effect.

          8T.  Subsidiaries.  Schedule G attached hereto contains a complete 
list, as of the Date of Closing, of (i) all of the Subsidiaries of the 
Corporation other than Subsidiaries the assets of which do not exceed Cdn. 
$1,000,000 in the aggregate, (ii) all Subsidiaries which have been designated 
as Material Subsidiaries, (iii) all Persons which have been designated as 
Excluded Subsidiaries by the Corporation, and (iv) the direct or indirect 
percentage ownership of the issued and outstanding Voting Shares of such
Subsidiaries and Excluded Subsidiaries.
          
          8U.  Material Subsidiaries. As of the Date of Closing, the Corporation
is, directly or indirectly, the registered and beneficial owner of all of the
issued and outstanding Voting Shares and all other securities of each Material 
Subsidiary, other than the Mountain Companies.
          
          8V.  West Windsor Power.  Neither the Corporation nor any Subsidiary 
has outstanding any commitments, obligations, other Indebtedness or Liens in
favour of or for the benefit of any lender under the West Windsor Credit 
Agreement or any supplier to, buyer from, contractor of, or any other Person 
who may now or hereafter become a creditor of, West Windsor Power, other than 
(i) Non-Recourse Debt under the West Windsor Credit Agreement and obligations 
pursuant to the documents described in paragraphs (a) through (e) of the defini-
tion of West Windsor Power Indebtedness, which documents have not been amended 
to change in any material respect the non-recourse nature of the obligations 
thereunder or (ii) commitments, obligations, other Indebtedness or Liens in 
favour of any supplier to, buyer from, contractor of, or any other Person who
may now or hereafter become a creditor of, West Windsor Power, which in the 
aggregate could have a Material Adverse Effect.
          
          8W.  Indeck.  The total liability of the Corporation and its 
Subsidiaries under the Indeck Gas Contract and Indeck Security is less than 
Cdn. $7,000,000.
          
          8X.  PLC-Windsor Ltd.  The proved producing and proved non-producing 
oil and gas properties formerly owned by PLC-Windsor Ltd. were contributed
to Northstar Energy Partnership, other than the Dover oil sands project near 
Fort McMurray, Alberta.
     
     PARAGRAPH 9.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.

          9A.  Representations and Warranties of the Purchaser.  You represent 
and warrant as follows:

          9A(1) Nature of Purchase.  You are acquiring the Notes to be purchased
by you hereunder as principal and not with a view to or for sale in connection 
with any distribution thereof within the meaning of the Securities Act and the 
Securities Act (Alberta) and such acquisition is in respect of a security which
has an aggregate acquisition cost to you of not less than $97,000, within the 
contemplation of the Securities Act (Alberta), provided that the disposition of
your property shall at all times be and remain within your control.

          9A(2) Source of Funds.  At least one of the following statements is 
an accurate representation as to each source of funds (a "Source") to be used 
by you to acquire the Notes to be purchased by you hereunder:

          (a)     the Source constitutes assets allocated to your "insurance 
     company general account" (as such term is defined under Section V of the 
     United States Department of Labor's Prohibited Transaction Class Exemption
     ("PTCE") 95-60) and, as of the date of the purchase of the Notes, you 
     satisfy all of the applicable requirements for relief under Sections I and
     V of PTCE 95-60;

          (b)     no part of the Source constitutes the assets of any "employee
     benefit plan" as defined in Section 3(3) of ERISA, or its related trust, 
     or any "plan" as defined in Section 4975(e)(1) of the Code, or its related
     trust (in this paragraph 9A(2), each a "Plan");

          (c)     the Source constitutes assets of either (i) an insurance 
     company pooled separate account, within the meaning of PTCE 90-1, or (ii) 
     a bank collective investment fund, within the meaning of PTCE 91-38; and 
     either (x) no Plan (together with any other Plan maintained by the same 
     employer or employee organization) holds more than a 10% interest in such 
     account or fund; and your acquisition of the Notes to be acquired hereunder
     with the Source is eligible for and satisfies the requirements of PTCE 90-1
     or PTCE 91-38 as in effect on the date of this representation and will be 
     exempt from the restrictions of Section 406(a), 406(b)(2) and 407(a) of 
     ERISA and the taxes imposed by Section 4975(a) and (b) of the Code or (y) 
     you have identified in writing to the Corporation those Plans which (to-
     gether with any other Plan maintained by the same employer or employee 
     organization) hold more than a 10% interest in such pooled separate account
     or bank collective investment fund and the Corporation has notified you in
     writing that it is not a party in interest or a disqualified person 
     (as defined in Section 3(14) of ERISA and Section 4975(e)(2) of the Code, 
     respectively) with respect to any such Plan;

         (d)  the Source constitutes assets of one or more Plans which you have
     identified in writing to the Corporation, or one or more separate accounts
     or trust funds in which is included assets of one or more of such identi-
     fied Plans, and the Corporation has notified you in writing that it is not
     a "party in interest" or a "disqualified person" (as defined in Section 
     3(14) of ERISA and Section 4975(e)(2) of the Code, respectively) with 
     respect to any such Plan;

          (e)  the Source constitutes assets of a "governmental plan" as defined
     in Section 3(32) of ERISA; or

          (f)  the Source constitutes assets of an investment fund, the assets 
     of which do not include assets of any employee benefit plan within the 
     meaning of ERISA.
     
          9A(3) Location.  Your head registered office is located outside of 
Canada, and the Notes will be held by you outside Canada.

          9B.  Representations, Acknowledgements and Covenants of the Purchaser.

          9B(1) Acknowledgement.  You (by your execution of this Agreement)
acknowledge that the Notes shall bear the following legend:

          THIS NOTE HAS NOT BEEN QUALIFIED FOR DISTRIBUTION IN
          ALBERTA AND THIS NOTE, OR ANY INTEREST IN THIS NOTE,
          MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED OR
          ASSIGNED TO ANY RESIDENT OR PERSON IN ALBERTA UNTIL
          MAY 31, 1998.
          
The Corporation confirms that on and after May 31, 1998, upon request of the 
registered Holder of such Note for exchange of the certificates evidencing such
Note and compliance with the terms and conditions hereof, the Corporation will
issue a replacement Note without the above-captioned legend, provided that the
registered Holder of such Note delivers to the Corporation a certificate that 
such Note is not beneficially owned by residents of Alberta.  By your execution
of this Agreement, you consent to the Corporation making a notation on its 
records in order to implement the foregoing provisions.

          You, by your execution of this Agreement, 

          (i)   represent that you are an insurance company as defined in 
     Section 2(13) of the Securities Act, and

          (ii)  understand and agree that the Notes have not been registered, 
     and that the Corporation does not intend to register the Notes, under the 
     Securities Act, and that such Notes shall bear the following legend:
     
               THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED
     STATES SECURITIES ACT OF 1933 AS AMENDED, AND NEITHER THIS NOTE
     NOR ANY PARTICIPATION HEREIN MAY BE OFFERED OR SOLD IN
     CONTRAVENTION OF SAID ACT.
     
     9B(2)  Covenants Regarding Transfer of Notes.  You covenant that you 
will not on or before May 31, 1998 sell, offer for sale, transfer or assign such
Notes, or any interest therein, to any Person resident in Alberta.  By its 
acquisition and holding of a Note, each Transferee will be deemed to represent 
that one or more of the statements in clauses (a) through (f) of paragraph 9A(2)
is correct with respect to each Source being used by it to acquire any Note.

     PARAGRAPH 10.  DEFINITIONS. 

     10.  Definitions.

     For the purpose of this Agreement, the terms defined in the introduc-
tory sentence and in paragraphs 1 and 2 shall have the respective meanings 
specified therein, and the following terms shall have the meanings specified 
with respect thereto below (such meanings to be equally applicable to both the 
singular and plural forms of the terms defined): 

     10A. Yield-Maintenance Terms. 

     "Business Day" shall mean, when used in connection with the Yield-
Maintenance Amount, any day other than a Saturday, a Sunday or a day on which 
commercial banks in New York, New York are required or authorized to be closed.

     "Called Principal" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4B, or has become or is
declared to be immediately due and payable pursuant to paragraph 7A, as the 
context requires.

     "Designated Spread" shall mean the following:

           (a)  for all purposes except a prepayment pursuant to paragraph 
      4B(b), 0.50% in the case of each Note, and

           (b)  for purposes of any prepayment of any Notes pursuant to para-
      graph 4B(b), 1.11%.

      "Discounted Value" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with 
respect to such Called Principal from their respective scheduled due dates to 
the Settlement Date with respect to such Called Principal, in accordance with 
accepted financial practice and at a discount factor (applied on the same 
periodic basis as that on which interest on such Note is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

     "Reinvestment Yield" shall mean, with respect to the Called Principal of 
any Note, the Designated Spread over the yield to maturity implied by (i) the 
yields reported, as of 10:00 A.M. (New York City local time) on the Business Day
next preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S. 
Treasury securities having a maturity equal to the Remaining Average Life of 
such Called Principal as of such Settlement Date, or if such yields shall not 
be reported as of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for 
the latest day for which such yields shall have been so reported as of the 
Business Day next preceding the Settlement Date with respect to such Called 
Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a 
constant maturity equal to the Remaining Average Life of such Called Principal 
as of such Settlement Date.  Such implied yield shall be determined, if neces-
sary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields
in accordance with accepted financial practice and (b) interpolating linearly 
between yields reported for various maturities.

     "Remaining Average Life" shall mean, with respect to the Called Principal 
of any Note, the number of years (calculated to the nearest one-twelfth year) 
obtained by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) each Remaining Scheduled Payment of such Called 
Principal (but not of interest thereon) by (b) the number of years (calculated 
to the nearest one-twelfth year) which will elapse between the Settlement Date
with respect to such Called Principal and the scheduled due date of such 
Remaining Scheduled Payment.

     "Remaining Scheduled Payments" shall mean, with respect to the Called 
Principal of any Note, all payments of such Called Principal and interest 
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its 
scheduled due date.

     "Settlement Date" shall mean, with respect to the Called Principal of any 
Note, the date on which such Called Principal is to be prepaid pursuant to 
paragraph 4B, or has become or is declared to be immediately due and payable 
pursuant to paragraph 7A, as the context requires.

     "Yield-Maintenance Amount" shall mean, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Called Principal of
such Note over the sum of (i) such Called Principal plus (ii) interest accrued 
thereon as of (including interest due on) the Settlement Date with respect to 
such Called Principal.  The Yield-Maintenance Amount shall in no event be less
than zero.

     10B. Other Terms. 

     "Additional Covenant" shall mean any affirmative or negative covenant or 
similar restriction applicable to the Corporation or any Subsidiary (regardless 
of whether such provision is labeled or otherwise characterized as a covenant 
or a default or event of default) the subject matter of which either (i) is 
similar to that of the covenants in paragraphs 5D, 5K, 5L, 5M, 5Q, and 6 of this
Agreement, or related definitions in paragraph 10 of this Agreement, but con-
tains one or more percentages, amounts or formulas that is more restrictive than
those set forth herein or more beneficial to the holder or holders of the 
Indebtedness created or evidenced by the document in which such covenant or 
similar restriction is contained (and such covenant or similar restriction shall
be deemed an "Additional Covenant" only to the extent that it is more restric-
tive or more beneficial) or (ii) is different from the subject matter of such 
covenants but contains restrictions or prohibitions on the ability of the 
Corporation or its Subsidiaries to (a) create, incur or permit to exist any 
indebtedness, Liens, leases or other similar obligations, (b) make any loans,
advances or investments, (c) pay any dividends or make any distributions or 
repurchases of securities, (d) sell receivables, stock, debt or other assets, 
(e) concerning pension plans or (f) involving any financial test (other than a 
"Debt to Cash Flow" covenant similar to that contained in Section 8.3(b) of the
CIBC Credit Agreements).

     "Affiliate" shall mean any Person directly or indirectly controlling, 
controlled by, or under direct or indirect common control with, the Corporation,
except a Subsidiary.  A Person shall be deemed to control a corporation or other
entity if such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such corporation or such 
entity, whether through the ownership of voting securities, by contract or
otherwise. 

     "Agreement" shall have the meaning specified in paragraph 11C.

     "Applicable Environmental Laws" shall mean those Applicable Laws which 
pertain to the environment or the release of Hazardous Materials into the 
environment, and includes any condition or requirement contained in a permit, 
license, approval, consent or other document issued pursuant to such laws.

     "Applicable Laws" shall mean, in relation to any Person, property, trans-
action or event:

          (a)  all applicable provisions of laws, statutes, rules and regula-
     tions from time to time in effect of any Governmental Authority, and

          (b)  all judgments, orders, awards, decrees, official directives, 
     writs and injunctions from time to time in effect of any Governmental 
     Authority in any action, proceeding or matter in which the Person is a 
     party or by which it or its property is bound or having application to the
     transaction or event.
     
     "Bank Indebtedness" shall mean the Indebtedness of the Corporation from 
time to time under the CIBC Credit Agreements and any other credit facility 
established in favour of the Corporation by any other bank(s), whether in 
substitution therefor or in addition thereto.

     "Business Day" shall mean, when used other than in connection with the 
Yield-Maintenance Amount, any day other than a Saturday or a Sunday or a day on
which commercial banks in New York, New York or Calgary, Alberta are required 
or authorized to be closed.

     "Canadian Dollars" or "Cdn. $" or "$" shall mean lawful money of Canada.

     "Capitalized Lease Obligation" shall mean, with respect to any Person, any
rental obligation which, under GAAP, would be required to be capitalized on the
books of such Person, taken at the amount thereof accounted for as indebtedness
(net of interest expense) in accordance with such principles.

     "CIBC" shall mean the Canadian Imperial Bank of Commerce, a Canadian 
chartered bank.

     "CIBC Credit Agreements" shall mean the Credit Agreement relating to the 
Cdn. $300,000,000 Extendible Revolving Term Credit Facility between the 
Corporation and CIBC, Royal and TD, as Lenders and CIBC, as Agent for the 
Lenders, and Royal and TD as Co-Agents, dated April 15, 1997, as amended from 
time to time and the Credit Agreement relating to the Cdn. $60,000,000 
Extendible Operating Credit Facility between the Corporation and CIBC, as 
amended from time to time, and the guarantees of David Limited Partnership dated
April 15, 1997, Morrison dated April 15, 1997 and Northstar Energy Partnership 
dated November 1, 1997, each as amended from time to time.  

     "CIBC Offer to Amend" shall have the meaning specified in paragraph 6G.

     "Claims" shall have the meaning specified in paragraph 11P.

     "Closing" shall have the meaning specified in paragraph 2.

     "Code" shall mean the United States Internal Revenue Code of 1986, as 
amended.

     "Commodity Swap" means an agreement entered into between the Corporation 
or a Subsidiary and a counterparty on a case by case basis, the purpose and 
effect of which is to mitigate or eliminate the Corporation's or a Subsidiary's
exposure to fluctuations in commodity prices.

     "Compliance Certificate" means a compliance certificate substantially in 
the form attached hereto as Schedule E or such other form as may be reasonably 
acceptable to the Required Holders, executed on behalf of the Corporation by 
the Chairman, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, President, any Vice President, Treasurer or Controller of the 
Corporation or any other officer of the Corporation involved principally in its
financial administration or controllership function.

     "Confidential Information" shall mean any material non-public information 
regarding the Corporation that is expressly and conspicuously marked as being 
"confidential", that is provided to any Holder, any Person who purchases a 
participation in a Note and any offeree of a Note or a participation therein 
pursuant to this Agreement other than information (a) which was publicly known 
or otherwise known to such Holder, such Person or such offeree at the time of 
the disclosure, (b) which subsequently becomes publicly known through no act or
omission of such Holder, such Person or such offeree or (c) which otherwise 
becomes known to such Holder, such Person or such offeree, other than through 
disclosure by the Corporation or any Subsidiary.

     "Consolidated Debt" shall mean, in respect of the Corporation and its 
Subsidiaries, as of the end of any Fiscal Quarter and as determined in accord-
ance with GAAP on a consolidated basis, without duplication, an amount equal to:

     (a)  the aggregate of:

          (i)  the amount of Indebtedness for Borrowed Money; and

          (ii) to the extent not included in Indebtedness for Borrowed Money:

               (A)  Guarantees in respect of the Indebtedness for Borrowed
          Money of any other Person (including Excluded Subsidiaries), other 
          than a Subsidiary; provided that any such Indebtedness for Borrowed 
          Money of such other Person shall include obligations of the kind 
          described in subparagraphs (A) through (F) inclusive of this paragraph
          (ii) of the definition of Consolidated Debt;

               (B)  obligations:

                    (I)  to purchase indebtedness or to advance or supply funds
               for the payment or purchase of indebtedness, including the pur-
               chase of debt securities, obligations or shares, or

                    (II) to make any payment, loan, advance, capital contribu-
               tion or other investment in  or to a Person, or become or be 
               bound by any agreement to do so, for the purpose of assuring  
               a minimum equity, an asset base, a working capital or other 
               balance sheet test or condition for  any date or to provide funds
               for the payment of any debt liability, dividend or share liquida-
               tion payment, or otherwise to supply funds to or in any manner 
               invest in such Person,

               other than where such Person is a Subsidiary or where any such 
               obligations relate to payments made or to be made on behalf of 
               any such Person in the ordinary course of business in accordance
               with normal petroleum and natural gas industry practice pursuant
               to the provisions of operating agreements which require or permit
               joint operators under any such operating agreements to make such
               payments after such Person has defaulted in the payment thereof;
              
               (C)  obligations with respect to Prepaid Obligations and deferred
          revenues relating to third party obligations;

               (D)  the amount of Capitalized Lease Obligations;

               (E)  any Sale-Leaseback to the extent it constitutes a 
          Capitalized Lease Obligation;

               (F)  obligations arising under Swaps entered into by the 
          Corporation or a Subsidiary for speculative purposes (determined, 
          where relevant, by reference to GAAP) or other than in the ordinary 
          course of its business to the extent of the net amount due or accruing
          due by the Corporation or a Subsidiary thereunder (determined by 
          marking-to-market the same in accordance with their terms); provided
          that Interest Swaps having as a subject matter principal amounts 
          (determined on a net basis taking into account Swaps entered into to
          reverse the position or limit the exposure under an existing Swap) 
          greater than the aggregate indebtedness of the Corporation and its 
          Subsidiaries for borrowed money available to them and Commodity Swaps
          in respect of which the Corporation or a Subsidiary is not permitted 
          to create a Permitted Encumbrance pursuant to paragraph (n) of the 
          definition thereof shall be deemed to be for speculative purposes or 
          other than in the ordinary course of business; and

               (G)  the redemption amount of any preferred shares of the 
          Corporation or its Subsidiaries (if such preferred shares are not 
          owned by the Corporation or a Subsidiary) which are redeemable at the
          option of the holder thereof;
 
     and shall exclude in any event:
    
     (b)  to the extent permitted by GAAP, any particular indebtedness if, upon 
   or prior to the maturity thereof, there shall have been irrevocably deposited
   with the proper depository in trust the necessary funds (or evidences of 
   indebtedness) for the payment, redemption or satisfaction of such indebted-
   ness, and thereafter such funds and evidences of indebtedness or other 
   security so deposited are not included in any computation of the assets of 
   such Person;

     (c)  contingent obligations in respect of court actions, suits or other 
   proceedings which have not come to a final and conclusive judgment before a 
   court of competent jurisdiction or such other Person as may have jurisdiction
   in the premises and the Corporation or any Subsidiary reasonably expects to 
   be successful in the defense of such action, suit or other proceeding;

     (d)  any lease or other arrangement relating to real or personal property 
   which would, in accordance with GAAP, be accounted for as an operating lease
   of such Person;

     (e)  deferred taxes;

     (f)  Non-Recourse Debt; and

     (g)   for greater certainty, any Indebtedness for Borrowed Money included
   on the balance sheet of an Excluded Subsidiary, including Indebtedness of the
   type described in paragraph (a) above.

     "Consolidated Interest Expense" shall mean, with reference to any period, 
the following for the Corporation and its Subsidiaries on a consolidated basis,
after eliminating all intercompany transactions:

     (a)  all interest charges (including amortization of debt discount, 
  bankers' acceptance discounts and stamping fees, commercial paper discounts, 
  guarantee fees, and expense and imputed interest on Capitalized Lease 
  Obligations and on Sale-Leasebacks to the extent they constitute Capitalized 
  Lease Obligations) on Indebtedness properly charged or chargeable to income 
  during such period in accordance with GAAP; plus

     (b)  all interest charges capitalized or deferred in determining 
  Consolidated Net Earnings for such period; less

     (c)  to the extent included in clauses (a) or (b), interest charges in 
  respect of Non-Recourse Debt; less

     (d)  to the extent included in (a) or (b), interest charges paid by 
  Excluded Subsidiaries

provided that any interest charges paid or accrued by any Person acquired by the
Corporation or any Subsidiary through purchase, amalgamation, merger or other-
wise, or paid or accrued by any Person which is a successor to the Corporation 
by amalgamation or merger or as a transferee of its assets, shall be included in
Consolidated Interest Expense only to the extent taken into account in determin-
ing the net income of such Person included in Consolidated Net Earnings for such
period.

     "Consolidated Net Earnings" shall mean, with reference to any period, the 
net earnings (or loss) of the Corporation and its Subsidiaries (other than earn-
ings of Excluded Subsidiaries) (after all taxes) for such period (taken as a 
cumulative whole), all determined in accordance with GAAP on a consolidated 
basis after deducting portions of income properly attributable to minority
interests, if any, in the shares and surplus of Subsidiaries, provided that 
there shall be excluded:

     (a)  the income (or loss) of any Person prior to the date it becomes a 
  Subsidiary or is merged into or amalgamated with the Corporation or a 
  Subsidiary;

     (b)  the income (or loss) of any Person (other than a Subsidiary) in which
  the Corporation or any Subsidiary has an ownership interest, except to the 
  extent that any such income has been actually received by the Corporation or
  such Subsidiary in the form of cash dividends;

     (c)  the undistributed income of any Subsidiary to the extent that the 
  declaration or payment of dividends or similar distributions by such 
  Subsidiary is not at the time permitted by the terms of its articles or any 
  agreement, instrument or Applicable Law;

     (d)  any restoration to income of any contingency reserve taken in the same
  Fiscal Year;

     (e)  any aggregate net gain (or loss) during such period arising from the 
  sale, exchange or other disposition of capital assets (such term to include 
  all fixed assets, whether tangible or intangible, and all inventory sold in 
  conjunction with the disposition of fixed assets);

     (f)  any gains or losses resulting from any write-up or write-down of 
  assets;

     (g)  any net gain from the collection of the proceeds of life insurance 
  policies;

     (h)  any gain or loss arising from the acquisition of any securities, or 
  the extinguishment, under GAAP, of any Indebtedness, of the Corporation or 
  any Subsidiary;

     (i)  any net income or gain or net loss during such period from any change
  in accounting, from any extraordinary items or from any prior period adjust-
  ments;

     (j)  any net income or gain or net loss during such period from any discon-
  tinued operations or the disposition thereof (for clarity, not including the 
  net income or gain arising from the disposition or particular oil and gas 
  properties or related tangibles);

     (k)  in the case of a successor to the Corporation by amalgamation or 
  merger or as a transferee of its assets, any earnings of the Person (other 
  than a Subsidiary) amalgamated with or merged into the Corporation, or whose 
  assets are transferred to the Corporation, prior to the date of such amalgama-
  tion, merger or transfer of assets; 

     (l)  any net income or net loss from operations (for clarity after deduc-
  tion of interest expense relating to such operations) included therein and 
  which are attributable to assets of the Corporation and its Subsidiaries to 
  which a Non-Recourse Debt holder's rights, remedies and recourse are limited;
  and

     (m)  any net income or loss included therein from, and which is attribu-
  table to, Excluded Assets except to the extent received by the Corporation.
 
     "Consolidated Tangible Assets" shall mean, as of the end of any Fiscal 
Quarter and as determined in accordance with GAAP, without duplication, the net
book value of the property, plant and equipment as shown on the consolidated 
balance sheet of a Person for such Fiscal Quarter, less the aggregate of any 
amount included therein which is attributable to:

     (a)  any property, plant and equipment of such Person which is subject to 
  a Lien securing Non-Recourse Debt; and
 
     (b)  any property, plant and equipment of such Person which is not located
  in Canada, the United States of America or Other Permitted Countries;

and, for greater certainty, there shall be excluded from the determination of 
Consolidated Tangible Assets, the net book value of any property, plant and 
equipment of the Excluded Subsidiaries.

     "Consolidated Tangible Net Worth" shall mean, as of the end of any Fiscal 
Quarter, and as determined in accordance with GAAP on a consolidated basis, an 
amount equal to the amount of shareholders' equity of the Corporation and its 
Subsidiaries (including therein retained earnings) but excluding therefrom any 
shareholders' equity attributable to:

     (a)  preferred shares of the Corporation or of a Subsidiary (if such pre-
  ferred shares are not owned by the Corporation or another Subsidiary) which 
  are redeemable at the option of the holder thereof;

     (b)  any Non-Recourse Debt, any Excluded Assets (for so long as the 
  Excluded Assets are subject to a Lien securing Non-Recourse Debt) and any 
  assets of the Corporation and its Subsidiaries to which any such Non-Recourse
  Debt holder's rights, remedies and recourse are limited and all retained earn-
  ings attributable to such assets; 
  
     (c)  goodwill, trademarks, copyrights and other similar intangible assets 
  as shown on the consolidated balance sheet of the Corporation and its 
  Subsidiaries for such Fiscal Quarter; and

     (d)  all amounts properly attributable to minority interests, if any, in 
  the shares and surplus of Subsidiaries;

and, for greater certainty, there shall be excluded from the determination of 
Consolidated Tangible Net Worth all Excluded Subsidiaries and all investments 
(whether by way of equity, loans or otherwise) of the Corporation and its 
Subsidiaries in all Excluded Subsidiaries. 

     "Currency Swap" shall mean a contract entered into between the Corporation
or a Subsidiary and a counterparty on a case by case basis in connection with 
forward rate, currency swap or currency exchange and other similar currency 
related transactions, the purpose and effect of which is to mitigate or elimin-
ate the Corporation's or a Subsidiary's exposure to fluctuations in exchange 
rates.

     "Date of Closing" shall have the meaning specified in paragraph 2.

     "David Limited Partnership" shall mean David Limited Partnership, a limited
partnership formed under the laws of Alberta.

     "EBITDA" shall mean, with reference to any period, the sum of Consolidated
Net Earnings plus, to the extent deducted in determining Consolidated Net 
Earnings, the following for the Corporation and its Subsidiaries (other than 
Excluded Subsidiaries) on a consolidated basis, without duplication, after 
eliminating amounts properly attributable to minority interests and after 
eliminating all intercompany transactions:

          (a)  Consolidated Interest Expense,
     
          (b)  current and deferred income taxes (except current income taxes 
     relating to sales or other dispositions of capital assets the losses from 
     which are included in determining Consolidated Net Earnings),
     
          (c)  depreciation, depletion and amortization expense, and
     
          (d)  other non-cash expenses for such period, 
     
     and for certainty, excluding any non-cash income or gain.  There shall be 
deducted from the foregoing the following for the Corporation and its 
Subsidiaries on a consolidated basis (to the extent included in determining 
Consolidated Net Earnings):  income tax recovery (except income tax recovery 
relating to sales or other dispositions of capital assets the losses from which
are included in determining Consolidated Net Earnings).

     "Eligible Reinvestments" shall mean 

          (a)   all purchases of property, plant and equipment in Canada, the 
     United States of America and Other Permitted Countries made by the 
     Corporation and its Subsidiaries during the relevant Fiscal Year; 
  
          (b)   any proceeds of disposition in the relevant Fiscal Year held as
     cash or other liquid investments at the end of such Fiscal Year; and
  
          (c)   investments to acquire shares in the capital stock of petroleum
     and/or natural gas exploration and production companies organized and 
     existing under the laws of Canada or a province thereof, or any state of 
     the United States of America, with substantially all of its assets located
     and a majority of its business conducted within Canada or the continental
     United States of America (including Alaska), where the Corporation's objec-
     tive in making such acquisition is ultimately to acquire control of the 
     subject company, provided that (i) the Corporation notifies the Holders in
     the next Compliance Certificate delivered pursuant to paragraph 5A(2) that
     it is invoking this clause (c) in order to comply with its obligation in
     paragraph 6B(3), and identifying the original date of the investment and 
     the amount thereof as at the date the Compliance Certificate relates to, 
     and (ii) within 270 days of the date such investment is made, the
     Corporation designates the subject company as a Material Subsidiary in 
     accordance with the terms of this Agreement. For clarity, such investment 
     shall cease to be an "Eligible Reinvestment" if at any time during such 
     270-day period the Corporation becomes unwilling or unable to acquire over
     50% of the total combined voting power of all classes of Voting Shares of 
     the subject company.
  
    "Engineering Report" shall mean an engineering evaluation report prepared by
an independent engineering firm or qualified in-house engineers of the 
Corporation, in form and substance satisfactory to the Required Holders, acting
reasonably, which report shall, as of the date of such report, set forth the 
reserves attributable to the oil and gas properties owned by the Corporation 
and its Subsidiaries and evaluated therein, the royalties and other burdens 
applicable thereto and a projection of the rate of production and future net 
revenue therefrom and shall evaluate at least 70.0% of the proven producing oil
and gas properties of the Corporation and its Subsidiaries determined by 
reference to future net revenue of such proven producing oil and gas properties.

     "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, ground-
water, or surface water contamination; the abandonment or plugging of any well; 
restorations and reclamations; the removal of or failure to remove any founda-
tions, 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.

     "ERISA" shall mean the United States Employee Retirement Income Security 
Act of 1974, as amended.

     "ERISA Affiliate" shall mean any corporation which is a member of the same
controlled group of corporations as the Corporation within the meaning of 
Section 414(b) of the Code, or any trade or business which is under common 
control with the Corporation within the meaning of Section 414(c) of the Code.

     "Event of Default" shall mean any of the events specified in paragraph 7A,
provided that there has been satisfied any requirement in connection with such 
event for the giving of notice, or the lapse of time, or both, or the happening
of any further condition, event or act, and "Default" shall mean any of such 
events, whether or not any such requirement has been satisfied. 

     "Excess Cash Proceeds" shall have the meaning specified in paragraph 6B(3).

     "Exchange Act" shall mean the United States Securities Exchange Act of 
1934, as amended.

     "Excluded Assets" shall mean, in respect of the Corporation or any Material
Subsidiary, any of its assets and properties which are described in Schedule H.

     "Excluded Subsidiary" shall mean a Person which would otherwise be a 
Subsidiary but in respect of which the Corporation has advised the Holders in 
writing, in the circumstances permitted pursuant to paragraph 5R, that such 
Person is no longer a Subsidiary.

     "Existing Northstar Notes" shall mean the 7.03% Senior Notes due November 
7, 2005 of the Corporation outstanding under the Northstar Note Agreement.

     "Fiscal Quarter" shall mean the three month period commencing on the first
day of each Fiscal Year and each successive three month period thereafter during
such Fiscal Year.

     "Fiscal Year" shall mean the Corporation's fiscal year which at present 
commences on January 1 of each year and ends on December 31 of such year.

     "GAAP" shall mean generally accepted accounting principles in Canada from 
time to time approved by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on the date on which the applicable determina-
tion or calculation is made or required to be made.

     "Governmental Approval" means an authorization, consent, approval, waiver,
order, decree, license, exemption, permit, registration, filing, qualification 
or declaration of or with any Governmental Authority or the giving of notice to
any Governmental Authority or any other action in respect of a Governmental 
Authority.

     "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 instru-
mentality or office of any of the foregoing (including any court or tribunal) 
exercising executive, legislative, judicial, regulatory or administrative func-
tions; or any Person directly or indirectly controlled by any of the foregoing.

     "Guarantee" shall mean 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 directly or indirectly liable (contingent or otherwise)
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.

     "Hazardous Materials" shall mean any substance that:

     (a)  when released to the natural environment is likely to cause, immedi-
  ately or at some future time, material harm or degradation to the natural 
  environment or any risk to human health and without restricting the generality
  of the foregoing, includes any pollutant, contaminant, waste or hazardous 
  waste, or any "dangerous goods",  "hazardous chemical", "hazardous substance"
  or "hazardous waste" as may be defined by Applicable Environmental Law for the
  protection of the natural environment or human health, or

     (b)  exhibits characteristics of flammability, corrosivity, reactivity or
  toxicity.
  
     "Holder" or "Holders" shall mean the holder or holders of any Notes from
time to time.
               
     "Indebtedness" shall mean, 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 obliga-
tion arising in respect of any Swap or similar obligation 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, except items of capital, retained
earnings, surplus, deferred tax reserves or accrued taxes.

     "Indebtedness for Borrowed Money" shall mean, at any date of determination
and as determined in accordance with GAAP on a consolidated basis, all indebted-
ness, obligations and liabilities of a Person as of such date of determination 
which would be classified as long term debt upon a consolidated balance sheet 
of such Person (including, without limitation, the current portion of such long
term debt) and all other indebtedness for borrowed money, including loans and 
commercial paper, which would be classified as current liabilities upon a con-
solidated balance sheet of such Person as of such date of determination.

     "Indeck" shall mean Indeck-Yerkes Limited Partnership.

     "Indeck Gas Contract" shall mean the Gas Sales and Purchase Agreement dated
March 9, 1989 between the Corporation and Indeck Gas Supply Corporation ("IGS")
as amended by Amending Agreements dated May 31, 1990, June 28, 1991, and 
November 11, 1991, respectively, and as assigned by IGS to Indeck pursuant to 
an Assignment and Assumption Agreement dated as of May 14, 1992 among IGS, the
Corporation and Indeck, and as further amended by an Amending Agreement dated 
July 6, 1992, between the Corporation and Indeck.

     "Indeck Security" shall mean:

        (a)  the demand debenture dated July 6, 1992 in the principal amount of
     US $25,000,000 made by the Corporation in favour of Indeck;
     
        (b)  the security deposit agreement made as of July 6,1992 between 
     Indeck and the Corporation; and

        (c)  any Lien granted under existing commitments in the Indeck Gas 
     Contract. 

     "Interest Swap" shall mean a contract entered into between the Corporation
or a Subsidiary 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 trans-
actions, the purpose and effect of which is to mitigate or eliminate the 
Corporation's or a Subsidiary's exposure to fluctuations in interest rates.

     "Joint Venture Company" shall mean any corporation which is jointly con-
trolled by the Corporation (either by itself or through any combination of 
itself and its Subsidiaries) and the other shareholders of such corporation; 
provided that no one Person exercises control over such corporation and the 
accounts of any such corporation, in accordance with GAAP, are proportionately
consolidated into the accounts of the Corporation and, for greater certainty, 
"Joint Venture Company" presently includes each Mountain Company.

     "Lien" shall mean any assignment, mortgage, charge, pledge, lien, encum-
brance, title retention agreement (including, without limitation, Capitalized 
Lease Obligation) or any security interest whatsoever, howsoever created or 
arising, whether absolute or contingent, fixed or floating, legal or equitable,
perfected or not.

     "Loan Documents" shall mean this Agreement, each Note, each Material 
Subsidiary Guarantee and all other certificates, instruments and documents con-
taining representations, warranties or covenants delivered from time to time by
or on behalf of the Corporation or any Subsidiary in connection herewith or 
therewith.

     "Material Adverse Effect" shall mean any event, circumstance, occurrence 
or change which would reasonably be expected to materially impair or have a 
material adverse effect on (i) the business, financial condition, operations, 
assets or properties of the Corporation and its Material Subsidiaries taken as 
a whole, (ii) the ability of the Corporation to repay the Notes or any other 
amount outstanding hereunder or any Material Subsidiary to perform its obliga-
tions underits Material Subsidiary Guarantee, or (iii) the validity or enforce-
ability of this Agreement or any other Loan Document.

     "Material Subsidiary" shall mean a Subsidiary which has executed and 
delivered a Material Subsidiary Guarantee to the Holders and, notwithstanding 
that they are unable to provide a Material Subsidiary Guarantee, shall be deemed
as of the Date of Closing to also include the Mountain Companies.

     "Material Subsidiary Guarantee" shall mean a guarantee of the obligations 
of the Corporation by a Subsidiary to or for the benefit of the Holders substan-
tially in the form of Schedule D, as amended from time to time, which in the 
case of Morrison shall initially be limited in an amount to Cdn. $100,000,000.

     "Morrison" shall mean Morrison Petroleums Ltd., a corporation amalgamated 
pursuant to the laws of the Province of Alberta.

     "Morrison Note Agreement" shall mean the Note Agreement dated as of July 
19, 1995, as amended by letter agreement dated November 1, 1997, with respect 
to the issuance by Morrison of U.S. $75,000,000 of 6.76% senior notes due July 
19, 2005, or any substitution therefor or replacement thereof.

     "Mountain Companies" shall mean, collectively, Mountain Energy Inc. and 
659502 Alberta Inc., the two corporations, the first of which ("Mountain 1") is
owned (as to Voting Shares) as to 50% by each of the Corporation and Morrison 
Middlefield Resources Limited and the second of which is owned (as to Voting 
Shares) as to 100% by Mountain 1 and "Mountain Company" means either of them.

     "Multiemployer Plan" shall mean any Plan which is a "multiemployer plan" 
(as such term is defined in Section 4001(a)(3) of ERISA).

     "Non-Recourse Debt" shall mean Indebtedness incurred by the Corporation or
a Subsidiary to finance the construction, development or acquisition of assets 
where the recourse of the lender of such Indebtedness (or any agent, trustee, 
receiver or other Person acting on behalf of the lender in respect of such 
Indebtedness) or any judgment in respect of such Indebtedness is limited, in all
circumstances (other than in respect of false or misleading representations,
warranties and covenants customary in limited recourse financing, in respect of
which the lender's recourse is against the Corporation or a Subsidiary, as 
applicable, on an unsecured basis) to the assets constructed, developed or 
acquired (including all personal property arising from or relating
to such assets) and in respect of which such Indebtedness has been incurred.

     "Northstar Energy Partnership" shall mean Northstar Energy, a general 
partnership formed under the laws of Alberta, the partners of which are the 
Corporation and Morrison .

     "Northstar Note Agreement" shall mean the Note Agreement dated as of 
November 7, 1995 with respect to the issuance by the Corporation of U.S. 
$60,000,000 of 7.03% senior notes due November 7, 2005, as amended.

     "Notes" shall have the meaning specified in paragraph 1.

     "Offers to Amend" shall mean any CIBC Offer to Amend and/or any Other 
Lender Offer to Amend.

     "Officer's Certificate" shall mean a certificate signed in the name of the
Corporation by a Responsible Officer.

     "Other Lender Offer to Amend" shall have the meaning specified in paragraph
6H.

     "Other Permitted Countries" shall mean the countries listed in Schedule F.

     "PBGC" shall mean the United States Pension Benefit Guaranty Corporation 
or any successor entity.

     "Permitted Disposition" shall mean, in respect of the Corporation or any 
Subsidiary, any of the following:

     (a)  a sale or disposition by such Person of oil and gas properties (and 
  related tangibles) resulting from any pooling, unit or farmout agreement 
  entered into in the ordinary course of its business and in accordance with 
  sound industry practice when, in the reasonable judgment of the Corporation 
  or such Subsidiary, it is necessary or desirable to do so in order to facili-
  tate the orderly exploration, development or operation of such oil and gas 
  properties;

     (b)  a sale or other disposition by such Person in the ordinary course of 
  business and in accordance with sound industry practice of tangible personal 
  property that is obsolete, no longer useful for its intended purpose, or being
  replaced in the ordinary course of its business;

     (c)  a sale or disposition by such Person of current production from oil 
  and gas properties made in the ordinary course of its business;

     (d)  sales or dispositions (including Voting Securities) by a Subsidiary 
  to the Corporation, by a Material Subsidiary to a Material Subsidiary and by 
  the Corporation to a Material Subsidiary, including dispositions to a partner-
  ship involving the Corporation and Morrison;
  
     (e) a sale or disposition of assets by such Person which are subject to a 
  Lien securing Non-Recourse Debt; and
     
     (f) any sale or disposition of any assets or properties classified as 
  property, plant and equipment on the most recent consolidated balance sheet 
  of the Corporation and its Subsidiaries, including a Sale-Leaseback and any 
  Prepaid Obligations, where the proceeds of disposition are applied to the pro
  rata prepayment of the Notes (in accordance with paragraph 4B(a)) and the out-
  standing Indebtedness under the CIBC Credit Agreements. The pro rata portion 
  of such proceeds of disposition to be prepaid to the Holders shall be deter-
  mined by multiplying such proceeds by a fraction, the numerator of which is 
  the aggregate principal amount of the Notes then outstanding plus the Yield-
  Maintenance Amount that the Corporation would ordinarily be required to pay 
  on the full payout of the Notes (determined as of the Business Day next 
  preceding the date of prepayment), and the denominator of which is the 
  aggregate principal amount of the Notes outstanding plus the aggregate prin-
  cipal amount of Indebtedness outstanding under the CIBC Credit Agreements, 
  plus all premiums which the Corporation would ordinarily be required to pay
  on the full payout of the Notes and such Indebtedness (determined as of the 
  Business Day next preceding the date of prepayment).
                    
     "Permitted Encumbrances" shall mean any of the following:

     (a)  Liens for taxes, assessments or governmental charges which are not due
  or delinquent, or the validity of which the Corporation or any Subsidiary 
  shall be contesting in good faith; provided the Corporation or such Subsidiary
  shall have made adequate provision therefor in accordance with GAAP;
     
     (b)  the Lien of any judgment rendered, or claim filed, against the 
  Corporation or any Subsidiary which the Corporation or any such Subsidiary 
  shall be contesting in good faith; provided the Corporation or such Subsidiary
  shall have made adequate provision therefor in accordance with GAAP;
     
     (c)  Liens, privileges or other charges imposed or permitted by law such 
  as statutory liens and deemed trusts, carriers' liens, builders' liens, 
  materialmens' liens and other Liens, privileges or other charges of a similar
  nature which relate to obligations not due or delinquent, including any Lien 
  or trust arising in connection with workers' compensation, unemployment 
  insurance, pension and employment laws or regulations;
     
     (d)  Liens arising in the ordinary course of and incidental to construc-
  tion, maintenance or current operations which have not been filed pursuant to
  law against the Corporation or any Subsidiary or in respect of which no steps
  or proceedings to enforce such Lien have been initiated or which relate to 
  obligations which are not due or delinquent or if due or delinquent, which 
  the Corporation or such Subsidiary shall be contesting in good faith; 
  provided the Corporation or such Subsidiary shall have made adequate provision
  therefor in accordance with GAAP;
     
      (e)  Liens incurred or created in the ordinary course of business and in 
  accordance with sound oil and gas industry practice in respect of the explora-
  tion, development or operation of oil and gas properties or related production
  or processing facilities or the transmission of petroleum substances as 
  security in favour of any other Person conducting the exploration, develop-
  ment, operation or transmission of the property to which such Liens relate for
  the Corporation's or any of its Subsidiary's portion of the costs and expenses
  of such exploration, development, operation or transmission, provided that 
  such costs or expenses are not due or delinquent or, if due or delinquent, 
  which the Corporation or such Subsidiary shall be contesting in good faith; 
  provided the Corporation or such Subsidiary shall have made adequate provision
  therefor in accordance with GAAP;
     
      (f)  overriding royalty interests, net profit interests, reversionary 
  interests and carried interests or other similar burdens on production in 
  respect of the Corporation's or any of its Subsidiary's oil and gas properties
  that are entered into with or granted to arm's length third parties in the 
  ordinary course of business and in accordance with sound oil and gas industry
  practice in Alberta;
     
      (g)  Liens for penalties arising under ordinary course non-participation 
  provisions of operating agreements in respect of the Corporation's or any of 
  its Subsidiary's oil and gas properties if such Liens do not materially 
  detract from the value of any material part of the property of the Corporation
  and its Subsidiaries taken as a whole;
     
      (h)  easements, rights-of-way, servitudes, zoning or other similar rights
  or restrictions in respect of land held by the Corporation or any Subsidiary 
  (including, without limitation, rights-of-way and servitudes for railways, 
  sewers, drains, pipe lines, gas and water mains, electric light and power and
  telephone or telegraph or cable television conduits, poles, wires and cables)
  which, either alone or in the aggregate, do not materially detract from the 
  value of such land or materially impair its use in the operation of the 
  business of the Corporation and its Subsidiaries taken as a whole;
     
      (i)  Liens given by the Corporation or any Subsidiary 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 the 
  Corporation or any Subsidiary in connection with operations of the Corporation
  or any Subsidiary if such Lien does not, either alone or in the aggregate, 
  materially detract from the value of any material part of the property of the
  Corporation and its Subsidiaries taken as a whole and relates to obligations 
  not due or delinquent;
     
       (j)  the right reserved to or vested in any Governmental Authority by 
  the terms of any lease, license, grant or permit or by any statutory or regu-
  latory provision to terminate any such lease, license, grant or permit or to 
  require annual or other periodic payments as a condition of the continuance 
  thereof;
     
       (k)  all reservations in the original grant from the Crown of any lands 
  and premises or any interests therein and all statutory exceptions, qualifica-
  tions and reservations in respect of title;
     
       (l)  any Lien from time to time disclosed by the Corporation or any 
  Subsidiary to the Holders and which is consented to by the Required Holders;
     
       (m)  any right of first refusal in favour of any Person granted in the 
  ordinary course of business with respect to all or any of the oil and gas 
  properties of the Corporation or any Subsidiary;
     
       (n)  Liens on cash or marketable securities of the Corporation or any 
  Subsidiary granted in connection with any Swap entered into in the ordinary 
  course of business and not for any speculative purpose provided:
     
            (A) such Liens only secure the obligations of the Corporation or 
       any Subsidiary under such Swap and, in respect of Commodity Swaps, the
       Corporation reasonably expects the Corporation or such Subsidiary to 
       produce sufficient crude oil, natural gas or natural gas liquids in the 
       ordinary cause of business equal to or greater than the amount of 
       production subject to such Commodity Swap; and
     
            (B) the obligations of the Corporation or a Subsidiary under such 
       Swaps are not due and delinquent;
 
       (o)  Liens relating wholly to Non-Recourse Debt or any Lien on the 
  Excluded Assets;

       (p)  Liens in favour of the Holders to secure the Notes;
     
       (q)  Liens to collateralize monies held in a cash collateral account by 
  a lender in respect of the prepayment of bankers' acceptances, letters of 
  credit or similar obligations accepted or issued by such lender but only if at
  the time of such prepayment no default or event of default has occurred and 
  is continuing under the credit facility pursuant to which the bankers' accept-
  ances or letters of credit have been accepted or issued;
     
       (r)  the Indeck Gas Contract and the Indeck Security;

       (s)   the rights of buyers under production sale contracts related to the
  Corporation's or a Subsidiary's share of petroleum substances entered into in
  the ordinary course of business, provided that the contracts create no rights
  (including any Lien) in favour of the buyer or any other Person in, to or over
  any reserves of petroleum substances or other assets of the Corporation or a 
  Subsidiary, other than a dedication of reserves (not by way of Lien or abso-
  lute assignment) on usual industry terms;

       (t)  Liens or trusts created, incurred or assumed by the Corporation or 
  a Subsidiary in respect of Indebtedness for Borrowed Money incurred or assumed
  by the Corporation or a Subsidiary (the "Other Security Interest") where the 
  Corporation or such Subsidiary, concurrently with the creation, incurrence or
  assumption of any Other Security Interest, (I) provides equal and ratable 
  Liens and trusts to or for the benefit of the Holders to secure the Notes on 
  the same property and assets in form and substance satisfactory to the 
  Holders, acting reasonably, together with such other documents (including 
  legal opinions in form and substance reasonably satisfactory to the Required 
  Holders, including an opinion as to the validity, enforceability, registration
  and perfection of such Lien and that all payment obligations of the 
  Corporation under the Notes rank at least pari passu in right of payment with
  all other obligations secured by such Other Security Interest) with respect
  to such Lien and trust as the Holders may reasonably require and (II) causes
  the holders of the obligations secured by such Other Security Interest to 
  enter into an inter-creditor agreement with all Holders, such inter-creditor 
  agreement to be in form and substance satisfactory to the Required Holders; 
  provided that at the time of and immediately after the creation, incurrence 
  or assumption of the Other Security Interest and the Indebtedness for Borrowed
  Money secured thereby, no Default or Event of Default has occurred and is
  continuing;

       (u)  purchase money Liens upon or in any tangible personal property and 
  fixtures (including real property surface rights upon which such fixtures are
  located) acquired by the Corporation or a Subsidiary in the ordinary course of
  business to secure the purchase price of such property or to secure 
  Indebtedness incurred solely for the purpose of financing the acquisition of 
  such property; including any Liens existing on such property at the time of 
  its acquisition (other than any such Lien created in contemplation of any such
  acquisition) provided that the aggregate amount of Indebtedness secured by all
  such Liens is not at any time in excess of 7.0% of the Consolidated Tangible 
  Assets of the Corporation and its Subsidiaries as at the end of the immediate-
  ly preceding Fiscal Quarter;

       (v)  Liens on the assets of the Corporation or any Subsidiary which are 
  not otherwise Permitted Encumbrances; provided that the aggregate amount of 
  Indebtedness secured by all such Liens is not at any time in excess of 3.0% 
  of the Consolidated Tangible Assets of the Corporation and its Subsidiaries 
  as at the end of the immediately preceding Fiscal Quarter and such Liens do 
  not attach generally to all or substantially all of the assets of the 
  Corporation or a Material Subsidiary; and

       (w)  any extension, renewal or replacement (or successive extensions, 
  renewals or replacements), as a whole or in part, of any Lien referred to in 
  the preceding paragraphs (a) to (v) inclusive of this definition, so long as 
  any such extension, renewal or replacement of such Lien is limited to all or 
  any part of the same property that secured the Lien extended, renewed or 
  replaced (plus improvements on such property) and the indebtedness or obliga-
  tion secured thereby is not increased from its original amount or any amount 
  to which it has been repaid;
    
provided that nothing in this definition shall in and of itself constitute or 
be deemed to constitute an agreement or acknowledgment by any Holder that the 
Indebtedness subject to or secured by any such Permitted Encumbrance ranks 
(apart from the effect of any Lien included in or inherent in any such Permitted
Encumbrance) in priority to the Indebtedness of the Corporation hereunder or
of any Material Subsidiary under its Material Subsidiary Guarantee.

     "Permitted Investments" shall mean 

     (a) investments in certificates of deposit or bankers' acceptances of com-
  mercial banks  organized under the laws of Canada or the United States of 
  America having capital, surplus or undivided profits in excess of U.S. 
  $100,000,000 or equivalent in Canadian Dollars, a short term deposit rating 
  of A-1 or better by Standard and Poor's, a division of The McGraw-Hill 
  Companies, Inc. ("S&P"), P-1 or better by Moody's Investors Services, Inc. 
  ("Moody's"), A-1 or better by Canadian Bond Rating Service ("CBRS") or R-1 
  (low) or better by Dominion Bond Rating Service ("DBRS") or their equivalent,
  and a long term unsecured bond rating of A or better by S&P, A2 or better by 
  Moody's, A or better by CBRS and A or better by DBRS, in each case such 
  certificates or acceptances shall be due within one year from the date of
  purchase and payable in Canadian or U.S. Dollars, 
  
     (b)  obligations of the Canadian or United States Government, and obliga-
  tions fully guaranteed by the Canadian or United States Government, in each 
  case due within one year from the date of purchase and payable in Canada or 
  the United States of America in Canadian or U.S. Dollars, and
  
     (c)  commercial paper having a short-term rating of A-1 or better by S&P, 
  P-1 or better by Moody's, A-1 or better by CBRS and R-1 (middle/low) or better
  by DBRS or their equivalent and issued by corporations domiciled in Canada or
  the United States of America, in each case due within one year (in the case of
  Canadian Dollar denominated commercial paper) and 270 days (in the case of 
  U.S. Dollar denominated commercial paper) from the date of purchase and 
  payable in Canadian or U.S. Dollars.
  
     "Permitted Title Defects" shall mean, as at any particular time, any of 
the following rights, limitations, reservations, provisos, conditions, excep-
tions, qualifications, agreements, obligations and interests on or in respect 
of the assets, or any part of the assets, of the Corporation or any Subsidiary:

     (i) easements, rights-of-way, servitudes, zoning, and similar rights in or
  restrictions in respect of land (including rights-of-way and servitudes for 
  railways, sewers, drains, gas and oil pipelines, gas and water mains, electric
  light and power and telephone or telegraph or cable television conduits, 
  poles, wires and cables) granted to or reserved or taken by other Persons,
  which do not, individually or in the aggregate, materially detract from the 
  use or value of the property subject thereto, 

     (ii) the reservations, limitations, provisos and conditions in any original
  grants from the Crown of any land or interests therein and statutory excep-
  tions, qualifications and reservations in respect of title,

     (iii) the unexercised rights reserved or vested in any municipality or 
  governmental or other authority or Person by the terms of any title documents,
  or by any statutory provisions, to terminate any such title documents, or 
  other interests in land, or to require annual or other periodic payments as a
  condition of the continuance thereof,

     (iv)  obligations to deliver petroleum substances to buyers thereof or 
  their assignees or nominees and rights of the buyers, their assignees and 
  nominees under sales contracts entered into in the ordinary course of business
  and in accordance with sound industry practice, as the same may be amended, 
  replaced or renewed from time to time, 

     (v) royalties, overriding royalties, production payments, net profits and 
  other interests and obligations arising in the ordinary course of business 
  and in accordance with sound industry practice,

     (vi) any agreement, or any interest or right created in favour of any 
  Person thereunder, relating to pooling or unitization affecting the property 
  and arising in the ordinary course of business and in accordance with sound 
  industry practice,

     (vii) any rights of first refusal, pre-emption or first purchase or 
  requirements of consent to sale or disposition, created in the ordinary course
  of business, none of which have become exercisable heretofore or  as a result
  of the execution and delivery of this Agreement or will, merely on the passage
  of time, become exercisable, and

     (viii) defects in title which are not general in application and which do 
  not, individually or in the aggregate, materially detract from the value of 
  the  property of the Corporation or any Subsidiary or any significant part 
  thereof or materially impair the use of any thereof in the operation of their
  respective businesses.
  
     "Person" shall mean any individual, firm, partnership, company, corporation
or other body corporate, government, governmental body, agency, instrumentality,
unicorporated body of Persons or association and the heirs, executors, 
administrators or other legal representatives of an individual.

     "Plan" shall mean any "employee pension benefit plan" (as such term is 
defined in Section 3 of ERISA) which is or has been established or maintained, 
or to which contributions are or have been made, by the Corporation or any ERISA
Affiliate or with respect to which the Corporation or any ERISA Affiliate may 
have any liability.

     "Prepaid Obligations" shall mean "take-or-pay" or similar prepaid 
Indebtedness of a Person whereby such Person is obligated to settle, at some 
future date more than 90 days from the date the obligation is incurred, payment
in respect of petroleum substances, whether by deliveries (accelerated or 
otherwise) of petroleum substances, payment of money or otherwise howsoever.

     "Prime Rate" shall mean: 

     (a) in respect of amounts in U.S. Dollars, the rate of interest, expressed
  as a rate per annum, which The Bank of New York from time to time publicly 
  announces in New York City as its Prime Rate, and

     (b) in respect of amounts in Canadian Dollars, the prime lending rate of 
  interest, expressed as a rate per annum, which CIBC from time to time 
  establishes as the reference rate of interest in order to determine the 
  interest rate it will charge for loans in Canadian Dollars to customers in
  Canada.

If either such institution ceases to announce or establish such rates, the 
Required Holders may designate an alternate similar financial institution in 
its place, both for the purposes of this Agreement and (in the case of U.S. 
Dollars) the Notes.

     "Production Payment Transaction" shall mean:

     (i) the sale (including any forward sale) or other transfer of petroleum 
  or natural gas substances, chemicals, minerals or other products of the 
  Corporation or a Subsidiary, whether in place or when produced, for a period 
  of time until, or an amount such that, the purchaser will realize a specified
  amount of money (however determined, including by reference to interest rates
  or other factors which may not be fixed) or a specified amount of such pro-
  ducts, or

     (ii) any other transaction involving an interest in property of the 
  character commonly referred to as a "production payment".
  
     "Rate of Exchange" has the meaning specified in paragraph 11U.

     "Release" shall mean any release, spill, emission, leaking, pumping, 
pouring, injection, escaping, deposit, disposal, discharge, leeching or migra-
tion 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.

     "Required Holders" shall mean the Holder or Holders of at least 51% of the
aggregate principal amount of the Notes outstanding at such time (exclusive of 
Notes held by the Corporation or any of its Affiliates or Subsidiaries).

     "Responsible Officer" shall mean the chief executive officer, chief opera-
ting officer, executive vice-president, chief financial officer, vice-president
finance or treasurer of the Corporation or any other officer of the Corporation
involved principally in its financial administration or its controllership 
function.  

     "Royal" shall mean the Royal Bank of Canada, a Canadian chartered bank.

     "Sale-Leaseback" shall mean an arrangement under which title to any tan-
gible personal property or fixture is transferred by the Corporation or a 
Subsidiary (a "transferor") to another Person which leases or otherwise grants 
the right to use such property to the transferor (or nominee of the transferor),
whether or not in connection therewith the transferor also acquires a right or 
is subject to an obligation to acquire the property, asset or interest, and 
regardless of the accounting treatment of such arrangement. 

     "Securities Act" shall mean the United States Securities Act of 1933, as 
amended.  

     "Subsidiary" shall mean:

     (a)  a Person of which another Person alone or in conjunction with its 
  other Subsidiaries owns an aggregate number of the Voting Shares sufficient 
  to enable the election of a majority of the directors (or other Persons per-
  forming 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)  a Joint Venture Company;

and shall include any Person in like relation to a Subsidiary, but shall exclude
in all circumstances an Excluded Subsidiary; and unless otherwise expressly 
indicated herein, "Subsidiary" shall only refer to and mean a Subsidiary of the
Corporation (including a Joint Venture Company) which is not an Excluded 
Subsidiary.

     "Successor" has the meaning specified in paragraph 6B(2).

     "Swap" shall mean a Commodity Swap, Currency Swap or Interest Swap.  For 
the purposes of this Agreement, the amount of the obligation under any Swap 
shall be the amount determined in respect thereof as of the end of the then most
recently ended Fiscal Quarter of such Person, based on the assumption that such
Swap had terminated at the end of such Fiscal Quarter, and in making such deter-
mination, if any agreement relating to such Swap provides for the netting of 
amounts payable by and to such Person thereunder or if any such agreement 
provides for the simultaneous payment of amounts by and to such Person, then, 
in each such case, the amount of such obligation shall be the net amount so 
determined.

     "TD" shall mean The Toronto-Dominion Bank, a Canadian chartered bank.

     "Transaction" shall have the meaning specified in paragraph 6B(2).

     "Transferee"  shall mean any direct or indirect transferee of all or any 
part of any Note purchased by you under this Agreement. 

     "U.S. Dollars" or "U.S. $" shall mean lawful currency of the United States
of America.

     "Voting Shares" shall mean:

     (a) capital stock of any class of any corporation or other securities of 
  any other Person which carries voting rights to elect the board of directors
  (or other Persons performing similar functions) under any circumstances; and

     (b) an interest in a general partnership, limited partnership, joint 
  venture or similar Person which entitles the holder of such interest to 
  receive a share of the profits, or on dissolution or partition, of the assets,
  of such Person.

     "West Windsor Credit Agreement" has the meaning specified in the definition
of West Windsor Power Indebtedness.

     "West Windsor Power" shall mean West Windsor Power, an Ontario general 
partnership.

     "West Windsor Power Indebtedness" shall mean the Indebtedness of the 
Corporation and any Material Subsidiary in relation to a Cdn. $150,000,000 
Credit Agreement dated as of November 2, 1993 among West Windsor Power, the 
lenders named therein, Banque National de Paris and Citibank Canada as Lead 
Agents, Paribas Bank of Canada and Union Bank of Switzerland (Canada) as 
Co-Agents and Union Bank of Switzerland (Canada) as LC Bank, Administrative 
Agent and Collateral Agent, as amended by a Consent, Waiver and Amendment
Agreement dated April 20, 1994, by a Consent Agreement dated January 13, 1995,
by an Amendment dated February 23, 1996 and by an Amendment and Consent 
Agreement dated as of June 28, 1996 (as so amended, the "West Windsor Credit
Agreement") and any documents related thereto to which the Corporation or any 
Material Subsidiary is a party or is bound, including, without limitation;

     (a) the obligations of the Corporation pursuant to the Amended and Restated
  Sponsor Funding Agreement and Pledge dated as of January 1, 1996 by and among
  the Corporation, American Tractebel Corporation, Sky Energy Corporation, West
  Windsor Power and Union Bank of Switzerland (Canada);

     (b) the obligations of the Corporation under the Amended and Restated 
  Keep-Well Agreement made the 1st day of January, 1996 by and between the 
  Corporation, PLC-Windsor Ltd. and Sky Energy Corporation;

     (c) the obligations of PLC-Windsor Ltd. under the Amended and Restated 
  Equity Subscription Agreement made as of January 1, 1996 by and among 
  PLC-Windsor Ltd., Tractebel Canada Inc., Sky Energy Corporation and West 
  Windsor Power;

     (d) the obligations of PLC-Windsor Ltd. under the Assignment of Partnership
  Interest dated as of November 2, 1993 between PLC-Windsor Ltd. as Assignor and
  Union Bank of Switzerland (Canada) as Collateral Agent, as amended by a Letter
  Agreement dated January 1, 1996; and

     (e) the obligations of the Corporation or PLC-Windsor Ltd. in respect of 
  the "Debt Service Letter of Credit" (as defined in the West Windsor Credit 
  Agreement).

     "Wholly-Owned Subsidiary" shall mean a Subsidiary all of the Voting Shares
and other equity interests of which are owned by the Corporation directly or 
indirectly through one or more Wholly-Owned Subsidiaries.

     10C.    Accounting Principles, Terms and Determinations.  Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all 
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters 
required to be furnished hereunder shall be prepared, in accordance with GAAP,
applied on a basis consistent with the most recent audited consolidated finan-
cial statements of the Corporation and its Subsidiaries delivered pursuant to 
clause (ii) of paragraph 5A or, if no such statements have been so delivered, 
the most recent audited financial statements referred to in clause (i) of 
paragraph 8B.

     PARAGRAPH 11.  MISCELLANEOUS.

     11A. Note Payments.  The Corporation agrees that, so long as you shall hold
any Note, the Corporation will make payments of principal of, interest on and 
any Yield-Maintenance Amount payable with respect to such Note in compliance 
with the terms of the Note and this Agreement, such payments to be made by wire
transfer of immediately available funds for credit (not later than noon, New 
York City local time, on the date due) to your account or accounts as specified
in the Purchaser Schedule attached hereto, or such other account or accounts in
the United States of America as you may designate in writing, notwithstanding 
any contrary provision herein or in any Note with respect to the place of 
payment.  You agree that, before disposing of any Note, you will make a notation
thereon (or on a schedule attached thereto) of all principal payments previously
made thereon and of the date to which interest thereon has been paid.  The
Corporation agrees to afford the benefits of this paragraph 11A to any 
Transferee which shall have made the same agreement as you have made in this 
paragraph 11A. 

     11B. Expenses.  The Corporation agrees, whether or not the transactions 
contemplated by this Agreement are consummated, to pay, and save you and any 
Transferee harmless against liability for the payment of, all out-of-pocket 
expenses arising in connection with such transactions, including (i) all docu-
ment production and duplication charges and the fees and expenses of any special
counsel engaged by you or such Transferee in connection with this Agreement 
(other than the fees and expenses of your special counsel in connection with the
negotiation of and the execution and delivery of the Loan Documents at Closing),
the transactions contemplated hereby and any subsequent proposed modification 
of, or proposed consent or waiver under, this Agreement (including the fees and
expenses of counsel), whether or not such proposed modification shall be 
effected or proposed consent or waiver granted, and (ii) the costs and expenses,
including attorneys' fees and solicitors' fees (on a solicitor and his own 
client basis), incurred by you or such Transferee in enforcing (or determining 
whether or how to enforce) any rights under this Agreement or the other Loan 
Documents or in responding to any subpoena or other legal process or informal 
investigative demand of any Governmental Authority issued in connection with 
this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby or by reason of you or such Transferee being the Holder of 
any Note, including costs and expenses incurred in any bankruptcy case.  The 
obligations of the Corporation under this paragraph 11B shall survive the 
transfer of any Note or portion thereof or interest therein by you or any 
Transferee and the payment of any Note; provided that the Corporation shall not
be liable for legal fees of a Purchaser or Transferee in connection with the 
transfer of a Note or any portion thereof.

     11C. Consent to Amendments. 

     (a)  This Agreement may be amended, and the Corporation may take any action
  herein prohibited, or omit to perform any act herein required to be performed
  by it, if the Corporation shall obtain the written consent to such amendment,
  action or omission to act, of the Required Holders except that, without the 
  written consent of the Holders of all Notes at the time outstanding, no amend-
  ment to this Agreement shall change the stated maturity date of any Note, or 
  change the principal of, or the rate or time of payment of interest on or any
  Yield-Maintenance Amount payable with respect to any Note, or affect the time,
  amount or allocation of any prepayments, amend this paragraph 11C, or change 
  the proportion of the principal amount of the Notes required with respect to 
  any consent, amendment, waiver or declaration.  Each Holder at the time or 
  thereafter outstanding shall be bound by any consent authorized by this para-
  graph 11C, whether or not such Note shall have been marked to indicate such 
  consent, but any Notes issued thereafter may bear a notation referring to any
  such consent.  No course of dealing between the Corporation and any Holder nor
  any delay in exercising any rights hereunder or under any Note shall operate 
  as a waiver of any rights of any Holder of such Note.  As used herein and in 
  the Notes, the term "this Agreement" and references thereto shall mean this 
  Agreement as it may from time to time be amended or supplemented. 

     (b)  The Corporation will provide each Holder with sufficient information,
  sufficiently far in advance of the date a decision is required, to enable such
  Holder to make an informed and considered decision with respect to any pro-
  posed amendment, waiver or consent in respect of any of the provisions hereof
  or of the Notes.  The Corporation will deliver executed or true and correct 
  copies of each amendment, waiver or consent effected pursuant to the provi-
  sions of this paragraph to each Holder promptly following the date on which it
  is executed and delivered by, or receives the consent or approval of, the 
  requisite Holders of Notes.

     11D.  Form, Registration, Transfer and Exchange of Notes; Lost Notes.

     (a)  The Notes are issuable as registered notes without coupons in amounts
  of at least U.S. $1,000,000, except as may be necessary to reflect any prin-
  cipal amount not evenly divisible by U.S. $1,000,000.  Except as repaid or 
  prepaid in accordance herewith, no Holder shall hold less than an aggregate 
  principal amount of U.S. $2,000,000 of Notes.

     (b)  The Corporation shall keep at its principal office in Calgary, Alberta
  a register in which the Corporation shall provide for the registration of 
  Notes and of transfers of Notes. Upon surrender for registration of transfer 
  of any Note at the principal office of the Corporation, the Corporation shall,
  at its expense, promptly execute and deliver one or more new Notes of like 
  tenor and of a like aggregate principal amount, registered in the name of
  such transferee or transferees.  At the option of the Holder of any Note, 
  such Note may be exchanged for other Notes of like tenor and of any authorized
  denominations, of a like aggregate principal amount, upon surrender of the 
  Note to be exchanged at the principal office of the Corporation.  Whenever 
  any Notes are so surrendered for exchange, the Corporation shall, at its 
  expense, promptly execute and deliver the Notes which the Holder making the
  exchange is entitled to receive.  Every Note surrendered for registration of 
  transfer or exchange shall be duly endorsed, or be accompanied by a written 
  instrument of transfer duly executed, by the Holder of such Note or such 
  Holder's attorney duly authorized in writing. Any Note or Notes issued in 
  exchange for any Note or upon transfer thereof shall carry the rights to 
  unpaid interest and interest to accrue which were carried by the Note so 
  exchanged or transferred, so that neither gain nor loss of interest shall 
  result from any such transfer or exchange.  A true and complete copy of such
  register (containing names and addresses of each Holder) shall be provided to
  any Holder promptly upon request therefor.

     (c)  Upon receipt of written notice from the Holder of any Note of the 
  loss, theft, destruction or mutilation of such Note and, in the case of any 
  such loss, theft or destruction, upon receipt of such Holder's unsecured 
  indemnity, or in the case of any such mutilation upon surrender and cancella-
  tion of such Note, the Corporation will make and deliver promptly a new Note,
  of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.

     11E.  Persons Deemed Owners; Participations. Prior to due presentment for
registration of transfer, the Corporation may treat the Person in whose name 
any Note is registered as the owner and Holder of such Note for the purpose of 
receiving payment of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note and for all other purposes whatsoever, whether
or not such Note shall be overdue, and the Corporation shall not be affected by
notice to the contrary.  Subject to the preceding sentence and to Applicable 
Laws, the Holder of any Note may from time to time grant participations in such
Note to any Person on such terms and conditions as may be determined by such 
Holder in its sole and absolute discretion, provided that any such participation
shall be in a principal amount of at least U.S. $1,000,000.

     11F.  Survival of Representations and Warranties.  All representations and
warranties contained herein or made in writing by or on behalf of the 
Corporation in connection herewith shall survive the execution and delivery of 
this Agreement and the Notes, the transfer by you of any Note or portion thereof
or interest therein and the payment of any Note, and may be relied upon by any 
Transferee, regardless of any investigation made at any time by or on behalf of
you or any Transferee.

     11G.  Entire Agreement.  Subject to paragraph 11F, this Agreement and the
Notes embody the entire agreement and understanding between you and the 
Corporation and supersede all prior agreements and understandings relating to 
the subject matter hereof.

     11H.  Successors and Assigns.  All covenants and other agreements in this 
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties 
hereto (including any Transferee) whether so expressed or not.

     11I.  Notices.  All notices or other communications provided for hereunder
(except for the facsimile notice required by paragraph 4C) shall be in writing 
and sent by nationwide overnight delivery service (with charges prepaid) and 
(i) if to you, addressed to you at the address specified for such communications
in the Purchaser Schedule attached hereto, or at such other address as you shall
have specified to the Corporation in writing, (ii) if to any other Holder, 
addressed to such other Holder at such address as such other Holder shall have 
specified to the Corporation in writing or, if any such other Holder shall not 
have so specified an address to the Corporation, then addressed to such other
Holder in care of the last Holder of such Note which shall have so specified an
address to the Corporation, and (iii) if to the Corporation, addressed to it at
3000, 400 - 3rd Avenue S.W., Calgary, Alberta, T2P 4H2, Attention: Chief 
Financial Officer, or at such other address as the Corporation shall have 
specified to each Holder in writing; provided that any such communication to 
the Corporation may also, at the option of any Holder, be delivered by any 
other means either to the Corporation at its address specified above or to any
officer of the Corporation.

     11J. Payments Due on Non-Business Days.  Anything in this Agreement or the
Notes to the contrary notwithstanding, any payment of principal of or interest 
on any Note that is due on a date other than a Business Day shall be made on 
the next succeeding Business Day. If the date for any payment is extended to 
the next succeeding Business Day by reason of the preceding sentence, the 
period of such extension shall not be included in the computation of the 
interest payable on such Business Day.

     11K. Satisfaction Requirement.9B.Representations, Acknowledgements and 
Covenants of the Purchaser   If any agreement, certificate or other writing,
or any action taken or to be taken, is by the terms of this Agreement required 
to be satisfactory to you or to the Required Holders, the determination of such
satisfaction shall be made by you or the Required Holders, as the case may be, 
in the sole and exclusive judgment (exercised in good faith) of the Person or 
Persons making such determination.

     11L. Governing Law and Submission to Jurisdiction.9B.Representations, 
          Acknowledgements and Covenants of the Purchaser 

     (a)  THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND
  ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
  BE GOVERNED BY, THE LAW OF THE PROVINCE OF ALBERTA AND THE LAW OF
  CANADA APPLICABLE THEREIN.

     (b)  The Corporation agrees that the courts of Alberta shall have 
  jurisdiction to hear and determine any suit, action or proceeding and to 
  settle any disputes which may arise out of or in connection with the aforesaid
  documents and it irrevocably submits to the non-exclusive jurisdiction of such
  courts, without prejudice to the rights of any Holder to take proceedings in 
  any other jurisdictions, whether concurrently or not.

     (c)  The Corporation agrees that final judgment in any such suit, action or
  proceeding brought in such courts shall be conclusive and binding upon it and
  may be enforced against it in the courts of Canada (or any other courts to the
  jurisdiction of which it or its property is subject) by a suit upon such 
  judgment, provided that it does not waive any right to appeal any such judg-
  ment, to seek any stay or otherwise to seek reconsideration or review of any 
  such judgment.

     11M.  Amendments.  This Agreement may not be changed orally, but (subject 
to the provisions of paragraph 11C) only by an agreement in writing signed by 
the party against whom enforcement of any waiver, change, modification or 
discharge is sought.

     11N. Severability.  Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the 
remaining provisions hereof, and any such prohibition or unenforceability in 
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

     11O. Descriptive Headings.  The descriptive headings of the several para-
graphs of this Agreement are inserted for convenience only and do not constitute
a part of this Agreement.

     11P. Payment Free from Equities.  The Notes shall be paid by the 
Corporation, and may be assigned by each Holder, absolutely free and clear of 
all equities, rights of set-off, claims, defenses, counterclaims, rights or 
other matters whatsoever (collectively, "Claims"), whether existing between a 
Holder and the Corporation and/or any third parties or intermediate Holders, and
whether now existing or hereafter arising (before or after notice of any assign-
ment to the Corporation) which could impair or adversely affect in any way the 
entitlement of any present or future Holder to enforce the Notes strictly in 
accordance with the terms and provisions hereof and of the Notes, and the 
Corporation hereby agrees not to assert, as against any assignee or any present
or future Holder, any Claims arising out of this Agreement or any Note (other 
than the defenses that obligations hereunder have been performed or observed by
the Corporation, or that such performance has been waived or that the Holders 
have consented to non-performance).  For greater certainty, but without limiting
the generality of the foregoing, the foregoing shall apply:

          (a)  notwithstanding that such Claim arises due to any act or omission
     of any Holder or any intermediate Holder or any other party;

          (b)  regardless of how closely or inseparably connected such Claim is
     to the obligations or whether it flows out of dealings or transactions 
     related thereto; and

          (c)  notwithstanding actual or constructive notice to any assignee or
     any present or future Holder, or to any intermediate Holder or any other 
     third party of such Claim, regardless of when received or deemed to be 
     received.

     The foregoing shall be without prejudice to the right of the Corporation to
subsequently assert any Claim as against the assignor.

     11Q. Note Repayment Net of Withholding Imposts.  (a) All payments by the
Corporation under this Agreement or any Note, whether in respect of principal,
Yield-Maintenance Amount (if any), interest, interest on overdue interest, fees
or any other payment obligations, shall be made in full without any deduction or
withholding on account of taxes or duties of whatsoever nature imposed or levied
by or on behalf of Canada or any Governmental Authority in Canada having power 
to tax unless the Corporation is prohibited by Applicable Law from doing so, in
which event the Corporation shall:

          (i)  forthwith pay to each Holder such additional amount so that the 
     net amount received by such Holder will equal the full amount which would 
     have been received by it had no such deduction or withholding been made;
     
          (ii) pay to the relevant taxation or other authorities within the 
     period for payment permitted by Applicable Law the full amount of the 
     deduction or withholding (including the full amount of any deduction or 
     withholding from any additional amount paid pursuant to this paragraph); 
     and
     
          (iii) furnish to each Holder promptly, as soon as available, an 
     official receipt of the relevant taxation or other authorities involved 
     for all amounts deducted or withheld as aforesaid.
     
     (b)  If as a result of any payment by the Corporation under this Agreement
or any Note, whether in respect of principal, Yield-Maintenance Amount (if any),
interest, interest on overdue interest, fees or other payment obligations, any 
Holder is required to pay tax under Part XIII of the Income Tax Act (Canada) or
any successor provisions (for instance, in accordance with Section 803 of the 
Regulations to the Income Tax Act (Canada)), then the Corporation will, upon 
demand by any Holder, and whether or not such taxes are correctly or legally 
asserted, indemnify each Holder for the payment of any such taxes, together with
any interest, penalties and expenses in connection therewith, and for any taxes
on such indemnity payment.  All such amounts shall be payable by the Corporation
on demand and shall bear interest at 8.79% per annum calculated from the date 
incurred by the Holder to the date paid by the Corporation.

     (c)  If, following any payment made by the Corporation to any Holder under
paragraph (a)(i) above or any indemnity payment made by the Corporation to any 
Holder under paragraph (b) above, such Holder shall receive or be granted a 
refund, credit, allowance or remission in respect of the taxes or duties result-
ing in the payment thereof and such Holder is able to readily identify such 
refund, credit, allowance or remission as being attributable to such taxes or 
duties, such Holder shall, to the extent that it can do so without prejudice to
the retention of the amount of such refund, credit, allowance or remission and 
without prejudice to the right of such Holder to obtain any other relief or 
allowance which may be available to it, reimburse the Corporation with such 
amount as such Holder, acting reasonably, determines to be the amount of
money attributable to such refund, credit, allowance or remission that may be 
paid by such Holder to leave it (after such reimbursement) in no worse position
than it would have been in had there been no such deduction or withholding or 
payment of tax which resulted in the payment under paragraph (a)(i) or (b) 
above.  Such Holder may charge to the Corporation (and may deduct from
amounts reimbursable to the Corporation hereunder) a fee reasonably determined 
by such Holder to compensate it for any additional effort expended or cost 
incurred in determining such credit or remission or allocating it to the 
Corporation.  Notwithstanding the foregoing, no Holder shall be obligated to 
disclose to the Corporation, or any of its agents, any computation made by such
Holder in connection with this paragraph 11Q(c) or any information regarding 
such Holder's tax status or affairs.

     11R. Interest.

          (a)  In respect of any overdue amounts hereunder or under the Notes
     where no provision is made herein or therein for payment of interest 
     thereon, the Corporation shall pay interest on such overdue amounts on 
     demand, calculated from the date such unpaid amount is due until such 
     unpaid amount is paid in full, at 8.79% per annum.
          
          (b)  In no event shall any interest or fee to be paid hereunder or 
     under a Note exceed the maximum rate permitted by Applicable Law.  In the
     event any such interest rate or fee exceeds such maximum rate, such rate 
     shall be adjusted downward to the highest rate (expressed as a percentage 
     per annum) or fee that the parties could validly have agreed to by contract
     on the date hereof under Applicable Law.  It is further agreed that any 
     excess actually received by a Holder shall be credited against the princi-
     pal of the Notes (or, if the principal shall have been or would thereby be
     paid in full, the remaining amount shall be credited to the Corporation).
          
          (c)  All interest (including interest on overdue interest) payable by
     the Corporation hereunder and under the Notes shall accrue from day to day,
     computed as provided herein, and shall be payable after as well as before 
     maturity, demand, default and judgment.
          
          (d)  Interest on the Notes shall be computed on the basis of a 360-day
     year of 12 30-day months. Solely for purposes of the Interest Act (Canada),
     the yearly rate of interest to which interest calculated for a period of 
     less than one year on the basis of a year of 360 days consisting of 12 30-
     day periods is equivalent is such rate of interest multiplied by a fraction
     of which (i) the numerator is the product of (A) the actual number of days
     in the year commencing on the first day of such period, multiplied by (B) 
     the sum of (y) the product of 30 multiplied by the number of complete 
     months elapsed in such period and (z) the actual number of days elapsed in
     any incomplete month in such period; and (ii) the denominator is the 
     product of (a) 360 multiplied by (b) the actual number of days in such 
     period.
          
          (e)  The theory of "deemed reinvestment" shall not apply to the
     computation of interest and no allowance, reduction or deduction shall be 
     made for the deemed reinvestment of interest in respect of any payments.  
     Calculation of interest shall be made using the nominal rate method, and 
     not the effective rate method, of calculation.
          
          (f)  To the extent permitted by law, Section 6 of the Judgment 
     Interest Act (Alberta) is hereby waived and shall not apply to this 
     Agreement or the Notes.
          
     11S. Counterparts.  This Agreement may be executed in any number of coun-
terparts, and by facsimile, all of which together shall constitute one 
instrument.  

     11T. Currency References, Conversion and Payments. 

          (a)  Unless otherwise stated, references in this Agreement to dollar
     amounts, Cdn. $, or $ shall be deemed to be references to Canadian Dollars.
          
          (b)  A reference in this Agreement to the equivalent of one currency 
     in another currency shall mean the equivalent determined using the noon 
     spot rate of exchange for conversion announced by the Bank of Canada on 
     the day for conversion.
          
          (c)  All payments on account of the Notes (including interest and 
     Yield-Maintenance Amounts) shall be made in U.S. Dollars.
          
     11U.  Judgment Currency.  If, for the purposes of obtaining or enforcing 
judgment against the Corporation in any court, or for any other related purpose
hereunder, it is necessary to convert an amount due under this Agreement or any
Note in the currency in which it is due (the "Original Currency") into another 
currency (the "Second Currency"), the rate of exchange applicable shall be the 
daily noon day rate quoted by the Bank of Canada on the relevant date to 
purchase the Original Currency with the Second Currency and includes any premium
and costs of exchange payable in connection with such purchase.  The Corporation
agrees that its obligation in respect of any Original Currency due from it 
shall, notwithstanding any judgment or payment in the Second Currency, be dis-
charged only to the extent that on the Business Day following the receipt
of any sum so paid or adjudged to be due hereunder in the Second Currency the 
payee may purchase in the market the Original Currency with the amount of the 
Second Currency so paid or so adjudicated to be due; and if the amount of the 
Original Currency so purchased is less than the amount originally due in the 
Original Currency, the Corporation agrees that the deficiency shall be a 
separate obligation of it, independent from its obligations under this Agreement
or any Note, and shall constitute in favour of the Holders a cause of action 
which shall continue in full force and effect notwithstanding any such judgment
or order to the contrary, and the Corporation agrees, notwithstanding any such 
payment or judgment, to indemnify the Holders against any such loss or 
deficiency.
          
     11V. Time; "Including"; "Assets"; "Property" 

          (a)  Unless otherwise stated, references to time shall mean local 
     time in Calgary, Alberta.
          
          (b)  The word "including" shall not be construed to limit or restrict
     the generality of the matter that precedes it.
          
          (c)  The words "property" and "assets" of a Person are used 
     interchangeably herein, and each encompasses all property, assets and 
     undertakings of the Person, both real and personal, present and future.
          
     11W. Environmental Indemnity.  The Corporation shall indemnify each 
Holder and hold each harmless against any and all losses, costs, expenses, 
liabilities, actions, suits, claims or damages of any and every kind sustained,
paid or incurred by  any of them as a result of any environmental claims, 
liabilities or obligations of any and every nature whatsoever relating to or
affecting the Corporation, its Subsidiaries or West Windsor Power or the 
property of any of them ("their property"), or the property of others where the
Corporation, any Subsidiary or West Windsor Power could have any liability in 
respect thereof under Applicable Environmental Laws, or personal injury or 
death, including in respect of:

          (i)  any environmental harm or damage to or impairment of their
     property (or any other Person's property) caused by the presence or 
     release of any Hazardous Materials on their property, or by the Corporation
     or any Subsidiary or West Windsor Power, whether or not such presence or 
     release was under control, care or management of a previous owner or of a 
     tenant;
          
          (ii) any decrease or loss in value of their property (or any other 
     Person's property) occasioned by non-compliance with Applicable 
     Environmental Laws;
        
          (iii) the imposition or assertion of any Lien including any expenses
     collectable as taxes affecting their property under Applicable 
     Environmental Laws by any Governmental Authority;
          
          (iv) any claim asserted or order issued by a Governmental Authority
     (including an enforcement order or an environmental protection order issued
     under the Environmental Protection and Enhancement Act (Alberta)) against 
     a Holder or an agent of any of them in respect of any matter referred to 
     in clauses (i), (ii), or (iii), or for any clean-up, restoration, well 
     abandonment, reclamation or other securing or remedial action in respect 
     of their property (or any other Person's property); or
          
          (v)  any non-compliance with any provision herein relating to
     environmental matters.
          
     Without limiting the generality of the foregoing, the indemnities in this 
paragraph shall extend to:

          (i)  legal fees on a solicitor and his own client basis, including 
     the costs of defending and/or counterclaiming or claiming over against 
     third parties in respect of any action or matters; and
          
          (ii) any amounts payable arising out of a settlement of any action 
     entered into between any Holder, and any Person with or without the consent
     of the Corporation;
          
but shall not extend to any claim, liability or obligation to the extent the 
same arises solely due to the gross negligence or willful misconduct of the 
Holder claiming indemnification.

     These indemnities shall extend to the officers, directors, employees, 
agents and assignees of each Holder and the Corporation will hold the benefit of
these indemnities in trust for such indemnified parties to the extent necessary
to give effect hereto.  The provisions of and undertakings and indemnification 
set out in this paragraph 11W shall survive the payment and satisfaction of the
Notes.

     11X. Disclosure to Other Persons; Confidentiality.  Except as provided in
this paragraph, each Holder and each Person who purchases a participation in a 
Note or any part thereof agrees that, prior to the occurrence of a Default, it 
will use its best efforts to hold in confidence and not to disclose the 
Confidential Information.  The Corporation acknowledges that any Holder may 
deliver copies of any financial statements and other documents delivered to
such Holder, and disclose any other information disclosed to such Holder 
(including Confidential Information), by or on behalf of the Corporation or any
Subsidiary in connection with or pursuant to this Agreement to (i) such Holder's
directors, officers, employees, agents and legal counsel, (ii) financial 
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the provisions of this
paragraph 11X, (iii) any other Holder, (iv) any Person to which such Holder 
offers to sell such Note or any part thereof (if such Person has agreed in 
writing prior to its receipt of such Confidential Information to be bound by the
provisions of this paragraph 11X), (v) any Person to which such Holder sells
or offers to sell a participation in all or any part of such Note (if such 
Person has agreed in writing prior to its receipt of such Confidential 
Information to be bound by the provisions of this paragraph 11X), (vi) any 
Person from which such Holder offers to purchase any security of the
Corporation (if such Person has agreed in writing prior to its receipt of such 
Confidential Information to be bound by the provisions of this paragraph 11X), 
(vii) any federal or state regulatory authority having jurisdiction over such 
Holder, (viii) the National Association of Insurance Commissioners or any 
similar organization, (ix) rating agencies that require access to information 
about the Holder's investment portfolio, or (x) any other Person to which such
delivery or disclosure may be necessary or appropriate (a) in compliance with 
any law, rule, regulation or order applicable to such Holder, (b) in response 
to any subpoena or other legal process or informal investigative demand of a 
Governmental Authority, or (c) in connection with any litigation to which such 
Holder is a party.

     11Y. Further Assurances.

          (a)  Each party shall promptly cure any defect by it in the execution
     and delivery of this Agreement or the Notes.

          (b)  The Corporation, at its expense, shall promptly deliver to any 
     Holder, upon request by such Holder in writing, all such other and further
     documents, agreements, opinions, certificates and instruments (executed, 
     as necessary) in order to give effect to the covenants and agreements of 
     the Corporation in this Agreement or the other Loan Documents, and shall 
     make any recording, file any notice or obtain any consent in connection 
     therewith, all as may be reasonably necessary or appropriate in connection
     therewith.
          
     If you are in agreement with the foregoing, please sign the form of accept-
ance on the enclosed counterparts of this letter and return the same to the 
Corporation, whereupon this letter shall become a binding agreement among the 
Corporation and the Purchasers.

NORTHSTAR ENERGY CORPORATION


By:  __________________________________
       John Richels                 c/s
       Chief Financial Officer


The foregoing Agreement is hereby accepted
as of the date first above written.


THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA


By:  ___________________________________
     Robert G. Gwin
     Vice President