<PAGE>
                                                                    Exhibit 10.3

                                    GUARANTY

                          dated as of December 20, 2005

                                      from

                           THE GUARANTORS NAMED HEREIN

                                       and

                  THE ADDITIONAL GUARANTORS REFERRED TO HEREIN

                                   in favor of

                     THE GUARANTEED PARTIES REFERRED HEREIN

<PAGE>

                                        2


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
-------                                                                     ----
<S>                                                                         <C>
Section 1.  Guaranty; Limitation of Liability ...........................     1
Section 2.  Guaranty Absolute ...........................................     2
Section 3.  Waivers and Acknowledgments .................................     3
Section 4.  Subrogation .................................................     4
Section 5.  Payments Free and Clear of Taxes, Etc .......................     5
Section 6.  Representations and Warranties ..............................     7
Section 7.  Covenants ...................................................     8
Section 8.  Amendments, Guaranty Supplements, Etc .......................     8
Section 9.  Notices, Etc ................................................     8
Section 10. No Waiver; Remedies .........................................     9
Section 11. Right of Set-off ............................................     9
Section 12. Indemnification .............................................     9
Section 13. Subordination ...............................................    10
Section 14. Continuing Guaranty; Assignments under the Credit
            Agreement ...................................................    11
Section 15. Execution in Counterparts ...................................    11
Section 16. Terms Generally; References and Titles ......................    12
Section 17. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc ......    13
</TABLE>

Exhibit A - Guaranty Supplement

<PAGE>

                                    GUARANTY

          GUARANTY dated as of December 20, 2005 made by the Persons listed on
the signature pages hereof and the Additional Guarantors (as defined in Section
8(b)) (such Persons so listed and the Additional Guarantors being, collectively,
the "GUARANTORS" and, individually, each a "GUARANTOR") in favor of the
Guaranteed Parties (as defined below).

          PRELIMINARY STATEMENT. AREP Oil & Gas, LLC, a Delaware limited
liability company (the "BORROWER"), is party to a Credit Agreement dated as of
December 20, 2005 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"; capitalized terms defined
therein and not otherwise defined herein being used herein as therein defined)
with certain Lenders party thereto, Citicorp USA, Inc., as administrative agent
(the "ADMINISTRATIVE AGENT"), and Bear, Stearns & Co., Inc., as syndication
agent. Each Guarantor may receive, directly or indirectly, a portion of the
proceeds of the Advances under the Credit Agreement and will derive substantial
direct and indirect benefits from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
that each Guarantor shall have executed and delivered this Guaranty. As
contemplated in the Credit Agreement, the Credit Parties owe, and may hereafter
owe, Lender Hedging Obligations to some or all of the Lender Parties and their
Affiliates, and the Hedging Contracts under which such Lender Hedging
Obligations are owed are herein called the "LENDER HEDGING CONTRACTS". The
Lender Parties, together with all such Affiliates to which Lender Hedging
Obligations are at any time owing, are herein called the "GUARANTEED PARTIES".

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Guaranteed Parties to enter into, and to make Advances and to issue
Letters of Credit under, the Credit Agreement and to enter into Lender Hedging
Contracts from time to time, each Guarantor, jointly and severally with each
other Guarantor, agrees as follows:

          Section 1. Guaranty; Limitation of Liability. (a) Each Guarantor
absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all Obligations and Lender Hedging
Obligations of each other Credit Party now or hereafter existing under or in
respect of the Loan Documents (in each case including, all extensions,
modifications, substitutions, amendments or renewals of the Obligations and
Lender Hedging Obligations), whether direct or indirect, absolute or contingent,
and whether for principal, interest, premiums, fees, indemnities, contract
causes of action, costs, expenses or otherwise (such Obligations and Lender
Hedging Obligations being the "GUARANTEED OBLIGATIONS"), and will pay any and
all expenses (including fees and expenses of counsel) incurred by the
Administrative Agent or any other Guaranteed Party in enforcing any rights under
this Guaranty, any other Loan Document or any Lender Hedging Contract. Without
limiting the generality of the foregoing, each Guarantor's liability shall
extend to all amounts that constitute part of the Guaranteed Obligations and
would be owed by any other Credit Party

<PAGE>

                                       2


to any Guaranteed Party under or in respect of the Loan Documents or Lender
Hedging Contracts but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving such other Credit Party.

          (b) Each Guarantor and by its acceptance of this Guaranty the
Administrative Agent and each other Guaranteed Party, confirm that it is the
intention of all such Persons that this Guaranty and the Obligations of each
Guarantor hereunder not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law (as hereinafter defined), the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign,
federal or state law to the extent applicable to this Guaranty and the
Obligations of each Guarantor hereunder. To effectuate the foregoing intention,
the Administrative Agent, the other Guaranteed Parties and the Guarantors
irrevocably agree that the Obligations of each Guarantor under this Guaranty at
any time shall be limited to the maximum amount as will result in the
Obligations of such Guarantor under this Guaranty not constituting a fraudulent
transfer or conveyance. For purposes hereof, "BANKRUPTCY LAW" means law with
respect to any proceeding of the type referred to in Section 8.1(h) of the
Credit Agreement or Title 11, U.S. Code, or any similar foreign, federal or
state law for the relief of debtors.

          (c) If any payment shall be required to be made to any Guaranteed
Party under this Guaranty or any other guaranty, then, subject to Section 4,
each Guarantor will contribute, to the maximum extent permitted by law, such
amounts to each other Guarantor and each other guarantor so as to maximize the
aggregate amount paid to the Guaranteed Parties under or in respect of the Loan
Documents and the Lender Hedging Contracts.

          Section 2. Guaranty Absolute. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents and Lender Hedging Contracts, regardless of any law, regulation
or order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of any Guaranteed Party with respect thereto. The
Obligations of each Guarantor under or in respect of this Guaranty are
independent of the Guaranteed Obligations or any other obligations of any other
Credit Party under or in respect of the Loan Documents or the Lender Hedging
Contracts, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrower or any other Credit Party or whether the
Borrower or any other Credit Party is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and each Guarantor hereby irrevocably waives
any defenses it may now have or hereafter acquire in any way relating to, any or
all of the following:

          (a) any lack of validity or enforceability of any Loan Document or
     Lender Hedging Contract or any agreement or instrument relating thereto;

          (b) any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Guaranteed Obligations or any other
     Obligations, or obligations under any Lender Hedging Contract, of any other
     Credit Party under or in respect of the Loan Documents or Lender Hedging
     Contracts, or any other amendment or waiver of or any consent to departure
     from any Loan Document or Lender Hedging Contract,

<PAGE>

                                       3


     including any increase in the Guaranteed Obligations resulting from the
     extension of additional credit to any Credit Party or any of its
     Subsidiaries or otherwise;

          (c) any taking, exchange, release or non-perfection of any Collateral
     or any other collateral, or any taking, release or amendment or waiver of,
     or consent to departure from, any other guaranty, for all or any of the
     Guaranteed Obligations;

          (d) any manner of application of Collateral or any other collateral,
     or proceeds thereof, to all or any of the Guaranteed Obligations, or any
     manner of sale or other disposition of any Collateral or any other
     collateral for all or any of the Guaranteed Obligations or any other
     Obligations of any Credit Party under the Loan Documents or obligations of
     any Credit Party under any Lender Hedging Contract or any other assets of
     any Credit Party or any of its Subsidiaries;

          (e) any change, restructuring or termination of the corporate
     structure or existence of any Credit Party or any of its Subsidiaries;

          (f) any failure of any Guaranteed Party to disclose to any Credit
     Party any information relating to the business, condition (financial or
     otherwise), operations, performance, properties or prospects of any other
     Credit Party now or hereafter known to such Guaranteed Party;

          (g) the failure of any other Person to execute or deliver this
     Guaranty, any Guaranty Supplement (as hereinafter defined) or any other
     guaranty or agreement or the release or reduction of liability of any
     Guarantor or other guarantor or surety with respect to the Guaranteed
     Obligations; or

          (h) any other circumstance (including any statute of limitations) or
     any existence of or reliance on any representation by any Guaranteed Party
     that might otherwise constitute a defense available to, or a discharge of,
     any Credit Party or any other guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Guaranteed Party or any other Person upon
the insolvency, bankruptcy or reorganization of the Borrower or any other Credit
Party or otherwise, all as though such payment had not been made.

          Section 3. Waivers and Acknowledgments. (a) Each Guarantor
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that any
Guaranteed Party protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Credit Party
or any other Person or any Collateral.

<PAGE>

                                       4


          (b) Each Guarantor unconditionally and irrevocably waives any right to
revoke this Guaranty and acknowledges that this Guaranty is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future.

          (c) Each Guarantor unconditionally and irrevocably waives:

          (i) any defense arising by reason of any claim or defense based upon
     an election of remedies by any Guaranteed Party that in any manner impairs,
     reduces, releases or otherwise adversely affects the subrogation,
     reimbursement, exoneration, contribution or indemnification rights of such
     Guarantor or other rights of such Guarantor to proceed against any of the
     other Credit Parties, any other guarantor or any other Person or any
     Collateral, and

          (ii) any defense based on any right of set-off or counterclaim against
     or in respect of the Obligations of such Guarantor hereunder.

          (d) Each Guarantor acknowledges that the Administrative Agent may,
without notice to or demand upon such Guarantor and without affecting the
liability of such Guarantor under this Guaranty, foreclose under any mortgage or
other security agreement by non-judicial sale, and each Guarantor hereby waives
any defense to the recovery by the Administrative Agent and the other Guaranteed
Parties against such Guarantor of any deficiency after such non-judicial sale
and any defense or benefits that may be afforded by applicable law.

          (e) Each Guarantor unconditionally and irrevocably waives any duty on
the part of any Guaranteed Party to disclose to such Guarantor any matter, fact
or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Credit Party or
any of its Subsidiaries now or hereafter known by such Guaranteed Party.

          (f) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and Lender Hedging Contracts and that the waivers set forth in
Section 2 and this Section 3 are knowingly made in contemplation of such
benefits.

          Section 4. Subrogation. Each Guarantor unconditionally and irrevocably
agrees not to exercise any rights that it may now have or hereafter acquire
against the Borrower, any other Credit Party or any other insider guarantor that
arise from the existence, payment, performance or enforcement of such
Guarantor's Obligations under or in respect of this Guaranty or any other Loan
Document or obligations under Lender Hedging Contracts, including any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of any Guaranteed Party against the
Borrower, any other Credit Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including the right to take or receive from the
Borrower, any other Credit Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash, all Letters of

<PAGE>

                                       5


Credit and all Lender Hedging Contracts shall have expired or been terminated
and the Commitments shall have expired or been terminated. If any amount shall
be paid to any Guarantor in violation of the immediately preceding sentence at
any time prior to the latest of:

          (a) the payment in full in cash of the Guaranteed Obligations and all
     other amounts payable under this Guaranty,

          (b) the irrevocable termination or expiration in whole of all
     Commitments and

          (c) the latest date of expiration or termination of all Letters of
     Credit and all Lender Hedging Contracts,

such amount shall be received and held in trust for the benefit of the
Guaranteed Parties, shall be segregated from other property and funds of such
Guarantor and shall forthwith be paid or delivered to the Administrative Agent
in the same form as so received (with any necessary endorsement or assignment)
to be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in accordance with
the terms of the Loan Documents and the Lender Hedging Contracts, or to be held
as Collateral for any Guaranteed Obligations or other amounts payable under this
Guaranty thereafter arising. If:

          (i) any Guarantor shall make payment to any Guaranteed Party of all or
     any part of the Guaranteed Obligations,

          (ii) all of the Guaranteed Obligations and all other amounts payable
     under this Guaranty shall have been paid in full in cash,

          (iii) all Commitments shall have been irrevocably terminated or shall
     have irrevocably expired in whole and

          (iv) all Letters of Credit and all Lender Hedging Contracts shall have
     expired or been terminated,

or to the extent otherwise provided in Section 10.9 of the Credit Agreement, the
Guaranteed Parties will, at such Guarantor's request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment or other condition made by such Guarantor pursuant to this Guaranty.

          Section 5. Payments Free and Clear of Taxes, Etc.

          (a) Any and all payments by or on account of any obligation of any
Guarantor hereunder or under any other Loan Document or Lender Hedging Contract
shall be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes; provided that if a Guarantor shall be required
by applicable law to deduct any Indemnified Taxes (including any Other Taxes)
from such payments, then (i) the sum payable shall be increased as

<PAGE>

                                       6


necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, the LC Issuer, or the Lender, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
such Guarantor shall make such deductions and (iii) such Guarantor shall timely
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

          (b) Without limiting the provisions of subsection (a) above, each
Guarantor shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

          (c) Each Guarantor shall indemnify each Guaranteed Party, within 10
days after demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes which (i) arise from any payment made hereunder or under any other
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) and (ii) are paid by such
Guaranteed Party, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority but net of any foreign tax credit or the benefit of any
deduction or other tax benefit determined in good faith by such Guaranteed Party
to be attributable to the imposition of such Indemnified Tax. A certificate as
to the amount of such payment or liability delivered in good faith to a
Guarantor by a Guaranteed Party (with a copy to the Administrative Agent), or by
the Administrative Agent on its own behalf or on behalf of a Guaranteed Party,
shall be conclusive absent manifest error.

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

          (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which a
Guarantor is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any other Loan Document
or any Lender Hedging Contract shall deliver to such Guarantor (with a copy to
the Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by a Guarantor or the Administrative Agent, such properly
completed and executed documentation prescribed by applicable law as will permit
such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if requested by a Guarantor or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by such Guarantor or the Administrative
Agent as will enable such Guarantor or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.

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                                        7


          (f) Without limiting the generality of the foregoing, in the event
that a Guarantor is resident for tax purposes in the United States of America,
any Foreign Lender shall deliver to the Borrower and the Administrative Agent
(in such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under the Credit
Agreement (and from time to time thereafter upon the request of the Borrower or
the Administrative Agent, but only if such Foreign Lender is legally entitled to
do so), whichever of the following is applicable:

          (i) duly completed copies of Internal Revenue Service Form W-8BEN
     claiming eligibility for benefits of an income tax treaty to which the
     United States of America is a party,

          (ii) duly completed copies of Internal Revenue Service Form W-8ECI,

          (iii) in the case of a Foreign Lender claiming the benefits of the
     exemption for portfolio interest under section 881(c) of the Code, (x) a
     certificate to the effect that such Foreign Lender is not (A) a "bank"
     within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent
     shareholder" of Borrower within the meaning of section 881(c)(3)(B) of the
     Code, or (C) a "controlled foreign corporation" described in section
     881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue
     Service Form W-8BEN or

          (iv) any other form prescribed by applicable law as a basis for
     claiming exemption from or a reduction in United States Federal withholding
     tax duly completed together with such supplementary documentation as may be
     prescribed by applicable law to permit the Borrower to determine the
     withholding or deduction required to be made.

          (g) If any Guaranteed Party determines that it has received a refund
of any Taxes or Other Taxes as to which it has been indemnified by a Guarantor
or with respect to which a Guarantor has paid additional amounts pursuant to
this Section, it shall pay to such Guarantor an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by
such Guarantor under this Section with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of such
Guaranteed Party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund), provided that such
Guarantor, upon the request of such Guaranteed Party, agrees to repay the amount
paid over to such Guarantor (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to such Guaranteed Party in the
event Guaranteed Party is required to repay such refund to such Governmental
Authority. This Guaranty shall not be construed to require any Guaranteed Party
to make available its tax returns (or any other information relating to its
taxes that it deems confidential) to any Guarantor or any other Person, and each
Guaranteed Party shall make its determination under this subsection in its sole
discretion.

          Section 6. Representations and Warranties. Each Guarantor makes each
representation and warranty made in the Loan Documents and Lender Hedging
Contracts by the

<PAGE>

                                        8


Borrower with respect to such Guarantor and each Guarantor hereby further
represents and warrants as follows:

          (a) There are no conditions precedent to the effectiveness of this
     Guaranty that have not been satisfied or waived.

          (b) Such Guarantor has, independently and without reliance upon any
     Guaranteed Party and based on such documents and information as it has
     deemed appropriate, made its own credit analysis and decision to enter into
     this Guaranty and each other Loan Document to which it is or is to be a
     party, and such Guarantor has established adequate means of obtaining from
     each other Credit Party on a continuing basis information pertaining to,
     and is now and on a continuing basis will be completely familiar with, the
     business, condition (financial or otherwise), operations, performance,
     properties and prospects of such other Credit Party.

          Section 7. Covenants. So long as any part of the Guaranteed
Obligations shall remain unpaid, any Letter of Credit shall be outstanding, any
Guaranteed Party shall have any Commitment or any Lender Hedging Contract shall
be in effect, each Guarantor will perform and observe, and cause each of its
Subsidiaries to perform and observe, all of the terms, covenants and agreements
set forth in the Loan Documents and Lender Hedging Contracts on its or their
part to be performed or observed or that the Borrower has agreed to cause such
Guarantor or such Subsidiaries to perform or observe.

          Section 8. Amendments, Guaranty Supplements, Etc. (a) No amendment or
waiver of any provision of this Guaranty and no consent to any departure by any
Guarantor herefrom shall in any event be effective unless the same shall be
entered into in accordance with Section 10.1 of the Credit Agreement.

          (b) Upon the execution and delivery by any Person of a guaranty
supplement in substantially the form of Exhibit A hereto (each, a "GUARANTY
SUPPLEMENT"), (i) such Person shall be referred to as an "ADDITIONAL GUARANTOR"
and shall become and be a Guarantor hereunder, and each reference in this
Guaranty to a "GUARANTOR" shall also mean and be a reference to such Additional
Guarantor, and each reference in any other Loan Document to a "SUBSIDIARY
GUARANTOR" shall also mean and be a reference to such Additional Guarantor, and
(ii) each reference herein to "THIS GUARANTY", "HEREUNDER", "HEREOF" or words of
like import referring to this Guaranty, and each reference in any other Loan
Document to the "GUARANTY", "THEREUNDER", "THEREOF" or words of like import
referring to this Guaranty, shall mean and be a reference to this Guaranty as
supplemented by such Guaranty Supplement and all other Guaranty Supplements.

          Section 9. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to any Guarantor, addressed to it in care of the Borrower at the Borrower's
address specified in Section 10.3 of the Credit Agreement, if to the
Administrative Agent or any other Guaranteed Party, at its address specified in
Section 10.3 of the Credit Agreement, or, as to any party, at such other address
as shall be

<PAGE>

                                        9


designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telegraphed, telecopied or
telexed, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier or confirmed by telex answerback,
respectively. Delivery by telecopier of an executed counterpart of a signature
page to any amendment or waiver of any provision of this Guaranty or of any
Guaranty Supplement to be executed and delivered hereunder shall be effective as
delivery of an original executed counterpart thereof.

          Section 10. No Waiver; Remedies. No failure on the part of any
Guaranteed Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

          Section 11. Right of Set-off. To secure the repayment of the
Guaranteed Obligations, each Guarantor grants to each Guaranteed Party, and each
of their respective Affiliates, a security interest, a lien, and a right of
offset, each of which shall be in addition to all other interests, liens, and
rights of any Guaranteed Party or any of their respective Affiliates, at common
Law, under the Loan Documents and Lender Hedging Contracts, or otherwise, and
each of which shall be upon and against:

          (a) any and all moneys, securities or other property (and the proceeds
     therefrom) of such Guarantor now or hereafter held or received by or in
     transit to any Guaranteed Party or any of their respective Affiliates, from
     or for the account of such Guarantor, whether for safekeeping, custody,
     pledge, transmission, collection or otherwise,

          (b) any and all deposits (general or special, time or demand,
     provisional or final) of such Guarantor with any Guaranteed Party, or any
     of their respective Affiliates and

          (c) any other credits and claims of Borrower at any time existing
     against any Guaranteed Party, including claims under certificates of
     deposit. At any time and from time to time after the occurrence of any
     Event of Default, each Guaranteed Party, and each of their respective
     Affiliates, is authorized to foreclose upon, or to offset against the
     Guaranteed Obligations then due and payable (in either case without notice
     to such Guarantor), any and all items hereinabove referred to; irrespective
     of whether or not such Guaranteed Party or Affiliate shall have made any
     demand under this Guaranty, any other Loan Document or any Lender Hedging
     Contract and although such obligations of such Guarantor may be contingent
     or unmatured or are owed to a branch or office of such Guaranteed Party
     different from the branch or office holding such items.

The remedies of foreclosure and offset are separate and cumulative, and either
may be exercised independently of the other without regard to procedures or
restrictions applicable to the other..

          Section 12. Indemnification. (a) Without limitation on any other
Obligations of any Guarantor or remedies of the Guaranteed Parties under this
Guaranty, each Guarantor shall,

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                                       10


to the fullest extent permitted by law, indemnify, defend and save and hold
harmless each Guaranteed Party and each of their Affiliates and their respective
officers, directors, employees, agents and advisors (each, an "INDEMNIFIED
PARTY") from and against, and shall pay on demand, any and all claims, damages,
losses, liabilities and expenses (including reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party in connection with or as a result of any failure of any Guaranteed
Obligations to be the legal, valid and binding obligations of any Credit Party
enforceable against such Credit Party in accordance with their terms.

          (b) None of the Indemnified Parties shall have any liability (whether
direct or indirect, in contract, tort or otherwise) to any of the Guarantors or
any of their respective Affiliates or any of their respective officers,
directors, employees, agents and advisors, and no Guarantor will assert any
claim against any Indemnified Party on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating
to the Loan Documents, the actual or proposed use of the proceeds of the
Advances or the Letters of Credit, the Loan Documents, the Lender Hedging
Contracts or any of the transactions contemplated by the Loan Documents or
Lender Hedging Contracts.

          (c) Without prejudice to the survival of any of the other agreements
of any Guarantor under this Guaranty or any of the other Loan Documents, the
agreements and obligations of each Guarantor contained in Section 1(a) (with
respect to enforcement expenses), the last sentence of Section 2, Section 5 and
this Section 12 shall survive the payment in full of the Guaranteed Obligations
and all of the other amounts payable under this Guaranty.

          Section 13. Subordination. Each Guarantor subordinates any and all
debts, liabilities and other Obligations owed to such Guarantor by each other
Credit Party (the "SUBORDINATED OBLIGATIONS") to the Guaranteed Obligations to
the extent and in the manner hereinafter set forth in this Section 13:

          (a) Except during the continuance of an Event of Default (including
     the commencement and continuation of any proceeding under any Bankruptcy
     Law relating to any other Credit Party), each Guarantor may receive
     regularly scheduled payments from any other Credit Party on account of the
     Subordinated Obligations. After the occurrence and during the continuance
     of any Event of Default (including the commencement and continuation of any
     proceeding under any Bankruptcy Law relating to any other Credit Party),
     however, unless the Administrative Agent otherwise agrees, no Guarantor
     shall demand, accept or take any action to collect any payment on account
     of the Subordinated Obligations.

          (b) In any proceeding under any Bankruptcy Law relating to any other
     Credit Party, the Guaranteed Parties shall be entitled to receive payment
     in full in cash of all Guaranteed Obligations (including all interest and
     expenses accruing after the commencement of a proceeding under any
     Bankruptcy Law, whether or not constituting an allowed claim in such
     proceeding ("POST PETITION INTEREST")) before such Guarantor receives
     payment of any Subordinated Obligations.

<PAGE>

                                       11


          (c) After the occurrence and during the continuance of any Event of
     Default (including the commencement and continuation of any proceeding
     under any Bankruptcy Law relating to any other Credit Party), each
     Guarantor shall, if the Administrative Agent so requests, collect, enforce
     and receive payments on account of the Subordinated Obligations as trustee
     for the Guaranteed Parties and deliver such payments to the Administrative
     Agent on account of the Guaranteed Obligations (including all Post Petition
     Interest), together with any necessary endorsements or other instruments of
     transfer, but without reducing or affecting in any manner the liability of
     such Guarantor under the other provisions of this Guaranty.

          (d) After the occurrence and during the continuance of any Event of
     Default (including the commencement and continuation of any proceeding
     under any Bankruptcy Law relating to any other Credit Party), the
     Administrative Agent is authorized and empowered (but without any
     obligation to so do), in its discretion:

          (i) in the name of each Guarantor, to collect and enforce, and to
     submit claims in respect of, Subordinated Obligations and to apply any
     amounts received thereon to the Guaranteed Obligations (including any and
     all Post Petition Interest), and

          (ii) to require each Guarantor (A) to collect and enforce, and to
     submit claims in respect of, Subordinated Obligations and (B) to pay any
     amounts received on such obligations to the Administrative Agent for
     application to the Guaranteed Obligations (including any and all Post
     Petition Interest).

          Section 14. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall:

          (a) remain in full force and effect until it is released in accordance
     with the Credit Agreement,

          (b) be binding upon the Guarantor, its successors and assigns and

          (c) inure to the benefit of and be enforceable by the Guaranteed
     Parties and their successors, transferees and assigns.

Without limiting the generality of clause (c) of the immediately preceding
sentence, any Guaranteed Party may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement (including all
or any portion of its Commitments, the Advances owing to it and the Note or
Notes held by it) or Lender Hedging Contract to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to such Guaranteed Party herein or otherwise, in each case as and to the
extent provided in Section 10.5 of the Credit Agreement. No Guarantor shall have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Guaranteed Parties.

          Section 15. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by different parties thereto in separate counterparts, each
of which when so executed shall be

<PAGE>

                                       12


deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Guaranty by telecopier shall be effective as delivery of an original
executed counterpart of this Guaranty.

          Section 16. Terms Generally; References and Titles. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." Unless the context requires otherwise:

          (a) any definition of or reference to any agreement, instrument or
     other document herein shall be construed as referring to such agreement,
     instrument or other document as from time to time amended, supplemented or
     otherwise modified (subject to any restrictions on such amendments,
     supplements or modifications set forth herein);

          (b) any reference herein to any Person shall be construed to include
     such Person's successors and assigns;

          (c) the words "herein," "hereof" and "hereunder," and words of similar
     import, shall be construed to refer to this Guaranty in its entirety and
     not to any particular provision hereof;

          (d) all references herein to Articles, Sections and Exhibits shall be
     construed to refer to Articles and Sections of, and Exhibits and Schedules
     to, this Guaranty;

          (e) any reference to any law or regulation herein shall, unless
     otherwise specified, refer to such law or regulation as amended, modified
     or supplemented from time to time; and

          (f) the words "asset" and "property" shall be construed to have the
     same meaning and effect and to refer to any and all tangible and intangible
     assets and properties, including cash, securities, accounts and contract
     rights.

References to any document, instrument, or agreement shall include:

          (i) all exhibits, schedules, and other attachments thereto, and

          (ii) shall include all documents, instruments, or agreements issued or
     executed in replacement thereof.

Titles appearing at the beginning of any subdivisions are for convenience only
and do not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The phrases "this
section" and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive.
Accounting terms have the meanings assigned to them by GAAP, as applied by the
accounting entity to which they refer. References to "days" shall mean calendar

<PAGE>

                                       13


days, unless the term "Business Day" is used. Unless otherwise specified,
references herein to any particular Person also refer to its successors and
permitted assigns.

          Section 17. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

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

     (c) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING
CONTRACT IN ANY COURT REFERRED TO IN SUBSECTION (B) ABOVE. EACH GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

     (d) EACH GUARANTOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 9. NOTHING IN THIS GUARANTY WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

<PAGE>

                                       14


     (e) EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, (I) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY,
ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING CONTRACT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY, AND (II) ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LEGAL
PROCEEDING ANY "SPECIAL DAMAGES," AS DEFINED BELOW. EACH GUARANTOR (X) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (Y) ACKNOWLEDGES THAT THE
OTHER PARTIES TO THE LOAN DOCUMENTS AND LENDER HEDGING CONTRACTS HAVE BEEN
INDUCED TO ENTER THEREIN BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
IN THIS SECTION. AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL
SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW
NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH ANY PARTY HAS EXPRESSLY
PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY.

<PAGE>

                                       15


     IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first-above written.

NATIONAL ONSHORE LP                     NATIONAL OFFSHORE LP


By: /s/ Philip D. Devlin                By: /s/ Philip D. Devlin
    ---------------------------------       ------------------------------------
Name: Philip D. Devlin                  Name: Philip. D. Devlin
Title: Vice President and Secretary     Title: Vice President and Secretary


ONSHORE GP LLC                          ONSHORE LP LLC


By: /s/ Philip D. Devlin                By: /s/ Philip D. Devlin
    ---------------------------------       ------------------------------------
Name: Philip D. Devlin                  Name: Philip D. Devlin
Title: Vice President and Secretary     Title: Vice President and Secretary


OFFSHORE GP LLC                         OFFSHORE LP LLC


By: /s/ Philip D. Devlin                By: /s/ Philip D. Devlin
    ---------------------------------       ------------------------------------
Name: Philip D. Devlin                  Name: Philip D. Devlin
Title: Vice President and Secretary     Title: Vice President and Secretary


GALVESTON BAY PROCESSING CORPORATION    GALVESTON BAY PIPELINE COMPANY


By: /s/ Philip D. Devlin                By: /s/ Philip D. Devlin
    ---------------------------------       ------------------------------------
Name: Philip D. Devlin                  Name: Philip D. Devlin
Title: Vice President and Secretary     Title: Vice President and Secretary


MID RIVER LLC

By: AREP Oil & Gas LLC, sole member


By: /s/ Philip D. Devlin
    ---------------------------------
Name: Philip D. Devlin
Title: Vice President and Secretary

<PAGE>

                                                                       EXHIBIT A
                                                                          TO THE
                                                                        GUARANTY

                           FORM OF GUARANTY SUPPLEMENT

                                                              _________ __, ____

CITICORP USA, INC., as Administrative Agent
388 Greenwich Street
New York, NY 10013

              Credit Agreement dated as of December 20, 2005 among
         AREP Oil and Gas, LLC (the "BORROWER"), the Guaranteed Parties
   party to the Credit Agreement, Citicorp USA, Inc., as Administrative Agent,
               and Bear Stearns & Co., Inc., as Syndication Agent

Ladies and Gentlemen:

          Reference is made to the above-captioned Credit Agreement and to the
Guaranty referred to therein (such Guaranty, as in effect on the date hereof and
as it may hereafter be amended, supplemented or otherwise modified from time to
time, together with this Guaranty Supplement, being the "GUARANTY"). Capitalized
terms defined in the Guaranty or in the Credit Agreement and not otherwise
defined herein are used herein as therein defined.

          Section 1. Guaranty; Limitation of Liability. (a) The undersigned
absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all Obligations of each other Credit Party
now or hereafter existing under or in respect of the Loan Documents and all
Lender Hedging Obligations (in each case including any extensions,
modifications, substitutions, amendments or renewals of any or all of the
foregoing Obligations and Lender Hedging Obligations), whether direct or
indirect, absolute or contingent, and whether for principal, interest, premium,
fees, indemnities, contract causes of action, costs, expenses or otherwise (such
Obligations and Lender Hedging Obligations being the "GUARANTEED OBLIGATIONS"),
and will pay any and all expenses (including fees and expenses of counsel)
incurred by the Administrative Agent or any other Guaranteed Party in enforcing
any rights under this Guaranty Supplement, the Guaranty, any other Loan Document
or any Lender Hedging Contract. Without limiting the generality of the
foregoing, the undersigned's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any other
Credit Party to any Guaranteed Party under or in respect of the Loan Documents
or Lender Hedging Contracts but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such other Credit Party.

          (b) The undersigned, and by their acceptance of this Guaranty
Supplement, the Administrative Agent and each other Guaranteed Party, confirm
that it is the intention of all

<PAGE>

such Persons that this Guaranty Supplement, the Guaranty and the Obligations of
the undersigned hereunder and thereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this Guaranty Supplement, the Guaranty and
the Obligations of the undersigned hereunder and thereunder. To effectuate the
foregoing intention, the Administrative Agent, the other Guaranteed Parties and
the undersigned hereby irrevocably agree that the Obligations of the undersigned
under this Guaranty Supplement and the Guaranty at any time shall be limited to
the maximum amount as will result in the Obligations of the undersigned under
this Guaranty Supplement and the Guaranty not constituting a fraudulent transfer
or conveyance.

          (c) If any payment shall be required to be made to any Guaranteed
Party under this Guaranty Supplement, the Guaranty or any other guaranty, then,
subject to Section 4, the undersigned will contribute, to the maximum extent
permitted by applicable law, such amounts to each other Guarantor and each other
guarantor so as to maximize the aggregate amount paid to the Guaranteed Parties
under or in respect of the Loan Documents and the Lender Hedging Contracts.

          Section 2. Obligations Under the Guaranty. The undersigned hereby
agrees, as of the date first-above written, to be bound as a Guarantor by all of
the terms and conditions of the Guaranty to the same extent as each of the other
Guarantors thereunder. The undersigned further agrees, as of the date first
above written, that each reference in the Subsidiary Guaranty to an "ADDITIONAL
GUARANTOR" or a "GUARANTOR" shall also mean and be a reference to the
undersigned, and each reference in any other Loan Document to a "GUARANTOR" or a
"CREDIT PARTY" shall also mean and be a reference to the undersigned.

          Section 3. Representations and Warranties. As of the date first-above
written, the undersigned makes each representation and warranty set forth in
Section 6 of the Guaranty to the same extent as each other Guarantor.

          Section 4. Delivery by Telecopier. Delivery of an executed counterpart
of a signature page to this Guaranty Supplement by telecopier shall be effective
as delivery of an original executed counterpart of this Guaranty Supplement.

          Section 5. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.

     (b) THE UNDERSIGNED IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY SUPPLEMENT, THE
GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING CONTRACT, OR FOR

<PAGE>

RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE UNDERSIGNED IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. THE
UNDERSIGNED AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY SUPPLEMENT, THE
GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING CONTRACT SHALL AFFECT
ANY RIGHT THAT ANY GUARANTEED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS GUARANTY SUPPLEMENT, THE GUARANTY, ANY OTHER LOAN
DOCUMENT OR ANY LENDER HEDGING CONTRACT AGAINST THE UNDERSIGNED OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

     (c) THE UNDERSIGNED IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY SUPPLEMENT, THE GUARANTY, ANY OTHER LOAN DOCUMENT OR
ANY LENDER HEDGING CONTRACT IN ANY COURT REFERRED TO IN SUBSECTION (B) ABOVE.
THE UNDERSIGNED IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.

     (d) THE UNDERSIGNED IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 9 OF THE GUARANTY. NOTHING IN THIS
GUARANTY SUPPLEMENT OR THE GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

     (e) THE UNDERSIGNED IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, (I) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY,
ANY OTHER LOAN DOCUMENT OR ANY LENDER HEDGING CONTRACT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY, AND (II) ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LEGAL
PROCEEDING ANY "SPECIAL DAMAGES," AS DEFINED BELOW. THE UNDERSIGNED (X)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (Y) ACKNOWLEDGES
THAT THE OTHER PARTIES

<PAGE>

TO THE LOAN DOCUMENTS AND LENDER HEDGING CONTRACTS HAVE BEEN INDUCED TO ENTER
THEREIN BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS SECTION.
AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL,
EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE
ANY PAYMENTS OR FUNDS WHICH ANY PARTY HAS EXPRESSLY PROMISED TO PAY OR DELIVER
TO ANY OTHER PARTY.

                                        Very truly yours,

                                        [NAME OF ADDITIONAL GUARANTOR]


                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------