Article
      I.





AMENDED
      AND RESTATED CREDIT AGREEMENT








Dated
      as
      of April 27, 2006





Among





ATLAS
      AMERICA, INC.,


as ***Borrower***








AIC,
      INC.


ATLAS
      AMERICA, INC. (PA),


ATLAS
      AMERICA MID-CONTINENT, INC.,


ATLAS
      ENERGY CORPORATION,


ATLAS
      NOBLE CORP.,


ATLAS
      RESOURCES, LLC,


REI-NY,
      INC.,


RESOURCE
      ENERGY, INC.,


RESOURCE
      WELL SERVICES, INC.


VIKING
      RESOURCES CORPORATION


as ***Guarantors***








WACHOVIA
      BANK, NATIONAL ASSOCIATION,


as ***Administrative
      Agent***  ***and***  ***Issuing
      Bank***





BANK
      OF
      AMERICA, N.A.


and


COMPASS
      BANK


as ***Co-Syndication
      Agents***





BANK
      OF
      OKLAHOMA, N.A.,


U.S.
      BANK, NATIONAL ASSOCIATION


and


BNP
      PARIBAS


as ***Co-Documentation
      Agents***





and





THE
      LENDERS SIGNATORY HERETO








$200,000,000
      Senior Secured Revolving Credit Facility








WACHOVIA
      CAPITAL MARKETS, LLC


as ***Lead
      Arranger***





**TABLE
        OF CONTENTS**
  **Page**ARTICLE
                  I Definitions and Accounting Matters
              2Section
                  1.01
              
              Terms
                  Defined Above
              2Section
                  1.02
              
              Certain
                  Defined Terms
              2Section
                  1.03
              
              Accounting
                  Terms and Determinations
              12ARTICLE
                  II Commitments
              13Section
                  2.01
              
              Loans
                  and Letters of Credit
              13Section
                  2.02
              
              Borrowings,
                  Continuations and Conversions, Letters of Credit
              14Section
                  2.03
              
              Commitments;
                  Changes of Commitments
              15Section
                  2.04
              
              Fees
              17Section
                  2.05
              
              Several
                  Obligations
              18Section
                  2.06
              
              Notes
              18Section
                  2.07
              
              Prepayments
              18Section
                  2.08
              
              Borrowing
                  Base
              19Section
                  2.09
              
              Assumption
                  of Risks
              20Section
                  2.10
              
              Obligation
                  to Reimburse and to Prepay
              21Section
                  2.11
              
              Lending
                  Offices
              22ARTICLE
                  III Payments of Principal and Interest
              22Section
                  3.01
              
              Repayment
                  of Loans
              22Section
                  3.02
              
              Interest
              22ARTICLE
                  IV Payments; Pro Rata Treatment; Computations; Etc.
              23Section
                  4.01
              
              Payments
              23Section
                  4.02
              
              Pro
                  Rata Treatment
              23Section
                  4.03
              
              Computations
              24Section
                  4.04
              
              Non-receipt
                  of Funds by the Administrative Agent
              24Section
                  4.05
              
              Set-off,
                  Sharing of Payments, Etc.
              24Section
                  4.06
              
              Taxes
              25ARTICLE
                  V Capital Adequacy
              27Section
                  5.01
              
              Additional
                  Costs
              27Section
                  5.02
              
              Limitation
                  on LIBOR Loans
              29Section
                  5.03
              
              Illegality
              29Section
                  5.04
              
              Base
                  Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03
              29Section
                  5.05
              
              Compensation
              29
 i
  TABLE
        OF
        CONTENTS
 
 **Page**ARTICLE
                  VI Conditions Precedent
              30Section
                  6.01
              
              Initial
                  Funding
              30Section
                  6.02
              
              Initial
                  and Subsequent Loans and Letters of Credit
              31Section
                  6.03
              
              Conditions
                  Precedent for the Benefit of Lenders
              32Section
                  6.04
              
              No
                  Waiver
              32ARTICLE
                  VII Representations and Warranties
              32Section
                  7.01
              
              Corporate
                  Existence
              32Section
                  7.02
              
              Financial
                  Condition
              32Section
                  7.03
              
              Litigation
              33Section
                  7.04
              
              No
                  Breach
              33Section
                  7.05
              
              Authority
              33Section
                  7.06
              
              Approvals
              33Section
                  7.07
              
              Use
                  of Loans
              33Section
                  7.08
              
              ERISA
              33Section
                  7.09
              
              Taxes
              34Section
                  7.10
              
              Titles,
                  etc.
              35Section
                  7.11
              
              No
                  Material Misstatements
              35Section
                  7.12
              
              Investment
                  Company Act
              35Section
                  7.13
              
              [Intentionally
                  Deleted]
              36Section
                  7.14
              
              Partnership
                  Interests
              36Section
                  7.15
              
              Capitalization
                  and Subsidiaries
              36Section
                  7.16
              
              Location
                  of Business and Offices
              37Section
                  7.17
              
              Defaults
              37Section
                  7.18
              
              Environmental
                  Matters
              37Section
                  7.19
              
              Compliance
                  with the Law
              38Section
                  7.20
              
              Insurance
              38Section
                  7.21
              
              Hedging
                  Agreements
              39Section
                  7.22
              
              Restriction
                  on Liens
              39Section
                  7.23
              
              Material
                  Agreements
              39Section
                  7.24
              
              Gas
                  Imbalances
              39Section
                  7.25
              
              Relationship
                  of Obligors
              39Section
                  7.26
              
              Solvency
              39ARTICLE
                  VIII Affirmative Covenants
              39Section
                  8.01
              
              Reporting
                  Requirements
              40Section
                  8.02
              
              Litigation
              41Section
                  8.03
              
              Maintenance,
                  Etc.
              41Section
                  8.04
              
              Environmental
                  Matters
              42Section
                  8.05
              
              Further
                  Assurances
              43Section
                  8.06
              
              Performance
                  of Obligations
              43Section
                  8.07
              
              Engineering
                  Reports
              43Section
                  8.08
              
              Title
                  Curative
              44Section
                  8.09
              
              Additional
                  Collateral
              44Section
                  8.10
              
              ERISA
                  Information and Compliance
              47
  ii
 TABLE
          OF
          CONTENTS
 **Page**ARTICLE
                  IX Negative Covenants
              47Section
                  9.01
              
              Debt
              47Section
                  9.02
              
              Hedging
                  Agreements
              48Section
                  9.03
              
              Liens
              49Section
                  9.04
              
              Investments,
                  Loans and Advances
              49Section
                  9.05
              
              Dividends,
                  Distributions and Redemptions
              50Section
                  9.06
              
              Sales
                  and Leasebacks
              50Section
                  9.07
              
              Nature
                  of Business
              50Section
                  9.08
              
              Limitation
                  on Leases
              50Section
                  9.09
              
              Mergers,
                  Etc.
              50Section
                  9.10
              
              Proceeds
                  of Notes and Letters of Credit
              51Section
                  9.11
              
              ERISA
                  Compliance
              51Section
                  9.12
              
              Sale
                  or Discount of Receivables
              52Section
                  9.13
              
              Current
                  Ratio
              52Section
                  9.14
              
              Funded
                  Debt to EBITDA
              52Section
                  9.15
              
              Consolidated
                  Interest Coverage Ratio
              52Section
                  9.16
              
              Sale
                  of Oil and Gas Properties
              52Section
                  9.17
              
              Environmental
                  Matters
              52Section
                  9.18
              
              Transactions
                  with Affiliates
              53Section
                  9.19
              
              Subsidiaries
              53Section
                  9.20
              
              Negative
                  Pledge Agreements
              53Section
                  9.21
              
              Gas
                  Imbalances, Take-or-Pay or Other Prepayments
              53Section
                  9.22
              
              Accounting
                  Changes
              53ARTICLE
                  X Events of Default; Remedies
              53Section
                  10.01
              
              Events
                  of Default
              53Section
                  10.02
              
              Remedies
              55Section
                  10.03
              
              Present
                  Assignment of Interests
              55ARTICLE
                  XI The Administrative Agent
              56Section
                  11.01
              
              Appointment,
                  Powers and Immunities
              56Section
                  11.02
              
              Reliance
                  by Administrative Agent
              56Section
                  11.03
              
              Defaults
              56Section
                  11.04
              
              Rights
                  as a Lender
              56Section
                  11.05
              
              Indemnification
              56Section
                  11.06
              
              Non-Reliance
                  on Administrative Agent and other Lenders
              58Section
                  11.07
              
              Action
                  by Administrative Agent
              58Section
                  11.08
              
              Resignation
                  or Removal of Administrative Agent
              58
  iii
 TABLE
          OF
          CONTENTS
 **Page**ARTICLE
                  XII Miscellaneous
              59Section
                  12.01
              
              Waiver
              59Section
                  12.02
              
              Notices
              59Section
                  12.03
              
              Payment
                  of Expenses, Indemnities, etc.
              59Section
                  12.04
              
              Amendments,
                  Etc.
              61Section
                  12.05
              
              Successors
                  and Assigns
              61Section
                  12.06
              
              Assignments
                  and Participations
              61Section
                  12.07
              
              Invalidity
              63Section
                  12.08
              
              Counterparts
              63Section
                  12.09
              
              References,
                  Use of Word “Including”
              63Section
                  12.10
              
              Survival
              63Section
                  12.11
              
              Captions
              63Section
                  12.12
              
              NO
                  ORAL AGREEMENTS
              63Section
                  12.13
              
              GOVERNING
                  LAW SUBMISSION TO JURISDICTION
              63Section
                  12.14
              
              Interest
              65Section
                  12.15
              
              Confidentiality
              66Section
                  12.16
              
              USA
                  Patriot Act Notice
              66Section
                  12.17
              
              Restatement
                  of Existing Credit Agreement
              67
 
 **EXHIBITS**Exhibit
                  A
              
              Form
                  of NoteExhibit
                  B
              
              Form
                  of Borrowing, Continuation and Conversion RequestExhibit
                  C
              
              Form
                  of Compliance CertificateExhibit
                  D
              
              Security
                  InstrumentsExhibit
                  E
              
              Form
                  of Assignment AgreementExhibit
                  F
              
              Form
                  of Letter in LieuExhibit
                  G
              
              Form
                  of GuarantyExhibit
                  H
              
              Form
                  of Security Agreement**SCHEDULES**Schedule
                  2.01(b)
              
              Existing
                  Letters of CreditSchedule
                  7.03
              
              LitigationSchedule
                  7.10
              
              Ownership
                  ReportSchedule
                  7.14
              
              Partnership
                  InterestsSchedule
                  7.15
              
              Subsidiary
                  InterestsSchedule
                  7.20
              
              InsuranceSchedule
                  7.21
              
              Hedging
                  AgreementsSchedule
                  7.23
              
              Material
                  AgreementsSchedule
                  7.24
              
              Gas
                  Imbalance Status for Obligors and SubsidiariesSchedule
                  9.01
              
              Debt
 iv


**AMENDED
      AND RESTATED CREDIT AGREEMENT**




THIS
      AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 27, 2006, among ATLAS
      AMERICA, INC., a Delaware corporation (the “ ***Borrower*** ”);
      AIC,
      INC., a Delaware corporation (“ ***AIC*** ”);
      ATLAS
      AMERICA, INC., a Pennsylvania corporation (“ ***Atlas
      PA*** ”);
      ATLAS
      AMERICA MID-CONTINENT, INC., a Delaware corporation (“ ***Atlas
      Mid-Continent*** ”); ****** ATLAS
      ENERGY CORPORATION, an Ohio corporation (“ ***AEC*** ”);
      ATLAS
      NOBLE CORP., a Delaware corporation (“ ***Atlas
      Noble*** ”);
      ATLAS
      RESOURCES, LLC, a Pennsylvania limited liability company (“ ***Atlas
      Resources*** ”);
      REI-NY, INC., a Delaware corporation (“ ***REI*** ”);
      RESOURCE ENERGY, INC., a Delaware corporation (“ ***Resource
      Energy*** ”);
      RESOURCE WELL SERVICES, INC., a Delaware corporation (“ ***RWS*** ”); ****** and
      VIKING RESOURCES CORPORATION, a Pennsylvania corporation (“ ***Viking*** ”)
      (AEC,
      AIC, Atlas Mid-Continent, Atlas Noble, Atlas PA, Atlas Resources, REI, Resource
      Energy, RWS, and Viking collectively, the “ ***Guarantors*** ”;
      the
      Borrower and the Guarantors collectively, the “ ***Obligors*** ”);
      each
      of the lenders that is a signatory hereto or which becomes a signatory hereto
      as
      provided in ***Section
      12.06*** (individually, together with its successors and assigns, a “ ***Lender*** ”
and,
      collectively, the “ ***Lenders*** ”);
      WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders
      (in
      such capacity, together with its successors in such capacity the “ ***Administrative
      Agent*** ”),
      BANK
      OF AMERICA, N.A., AND COMPASS BANK, as co-syndication agents, BANK OF OKLAHOMA,
      N.A., U.S. BANK, NATIONAL ASSOCIATION, and BNP PARIBAS, as co-documentation
      agents, and WACHOVIA BANK, NATIONAL ASSOCIATION, as issuing bank (in such
      capacity, together with its successors in such capacity, the “ ***Issuing
      Bank*** ”).





**R
      E C I T A L S**





A. Administrative
      Agent, the Obligors and the certain lenders (the “ ***Existing
      Lenders*** ”)
      are
      parties to that certain Credit Agreement dated as of March 12, 2004, as amended
      (the “ ***Existing
      Credit Agreement*** ”),
      pursuant to which the Existing Lenders agreed to make loans to and extensions
      of
      credit to the Borrower, as evidenced by promissory notes of the Borrower in
      favor of the Existing Lenders issued pursuant to the Existing Credit Agreement,
      which notes and other indebtedness, obligations and liabilities under the
      Existing Credit Agreement (the “ ***Existing
      Debt*** ”)
      were
      secured by liens and security interests (the “ ***Existing
      Liens*** ”)
      granted by Borrower and certain Guarantors and guaranteed by certain of the
      Guarantors.





B. The
      Borrower desires to amend and restate the Existing Credit Agreement in its
      entirety as set forth herein.





C. The
      Administrative Agent and the Lenders have agreed to amend and restate the
      Existing Credit Agreement and to make such loans and extensions of credit
      subject to the terms and conditions of this Agreement.





D. Each
      of
      the Borrower, Guarantors, the Lenders and Administrative Agent intend that
      loans
      and letters of credit outstanding under the Existing Credit Agreement, shall,
      on
      the Closing Date, be amended, restated and converted into Loans and Letters
      of
      Credit under this Agreement (but shall not be deemed to be repaid or
      terminated), all Existing Liens securing the Existing Debt of the Borrower
      pursuant to the Existing Credit Agreement shall be continued and renewed and
      shall remain in full force and effect as security for the payment of all
      Indebtedness of the Borrower under this Agreement, and the Existing Credit
      Agreement shall be amended and restated in its entirety in the form of this
      Agreement.




NOW,
      THEREFORE, in consideration of the premises, the mutual covenants and agreements
      herein contained and of the loans, extensions of credit and commitments
      hereinafter referred to, the parties hereto agree to amend and restate the
      Existing Credit Agreement as follows:







**ARTICLE
      I**


**Definitions
      and Accounting Matters**






Section
      1.01Terms
      Defined Above **.**
      As used in this Agreement, the terms “Administrative Agent,” “AEC,” “AIC,”
“Atlas Mid-Continent,” “Atlas Noble,” “Atlas PA,” “Atlas Resources,” “Borrower,”
“Existing Credit Agreement,” “Existing Debt,” “Existing Lenders,” “Existing
      Liens,” “Guarantors,” “Issuing Bank,” “Lender,” “Lenders,” “Obligors,” “REI,”
“Resource Energy,” “RWS,” and “Viking” shall have the meanings indicated
      above.




**Section
      1.02** **Certain
      Defined Terms****.** As used
      herein, the following terms shall have the following meanings (all terms defined
      in this Article I or in other provisions of this Agreement in the singular
      to
      have equivalent meanings when used in the plural and vice versa):




***Additional
      Costs*** shall
      have the meaning assigned such term in ***Section
      5.01(a)*** .





***Adjusted
      LIBOR*** shall
      mean, with respect to any LIBOR Loan, a rate per annum (rounded upwards, if
      necessary, to the nearest 1/100 of 1%) determined by the Administrative Agent
      to
      be equal to the quotient of (i) LIBOR for such Loan for the Interest Period
      for
      such Loan divided by (ii) 1 minus the Reserve Requirement for such Loan for
      such
      Interest Period.





***Affected
      Loans*** shall
      have the meaning assigned such term in ***Section
      5.04*** .





***Affiliate*** of any
      Person shall mean (i) any Person directly or indirectly controlled by,
      controlling or under common control with such first Person, (ii) any director
      or
      officer of such first Person or of any Person referred to in clause (i) above
      and (iii) if any Person in clause (i) above is an individual, any member of
      the
      immediate family (including parents, spouse and children) of such individual
      and
      any trust whose principal beneficiary is such individual or one or more members
      of such immediate family and any Person who is controlled by any such member
      or
      trust. For purposes of this definition, any Person which owns directly or
      indirectly 10% or more of the securities having ordinary voting power for the
      election of directors or other governing body of a corporation or 10% or more
      of
      the partnership or other **** ownership
      interests of any other Person (other than as a limited partner of such other
      Person) will be deemed to “ *control* ”
      (including, with its correlative meanings, “ *controlled
      by* ”
and
      “ *under
      common control with* ”)
      such
      corporation or other Person.





***Agreement*** shall
      mean this Credit Agreement, as the same may from time to time be further amended
      or supplemented.





***Aggregate
      Maximum Revolving Credit Amounts*** at any
      time shall equal the sum of the Maximum Revolving Credit Amounts of the Lenders
      (initially, $200,000,000), as the same may be reduced pursuant to ***Section
      2.03(d)*** .





***Aggregate
      Revolving Credit Commitments*** at any
      time shall equal the amount calculated in accordance with ***Section
      2.03*** .





***APH*** shall
      mean Atlas Pipeline Holdings, L.P., a Delaware limited partnership.





***APH
      GP*** shall
      mean Atlas Pipeline Holdings GP, LLC, a Delaware limited liability
      company





***APL*** shall
      mean Atlas Pipeline Partners, L.P., a Delaware limited partnership.





***Applicable
      Lending Office*** shall
      mean, for each Lender and for each Type of Loan, the lending office of such
      Lender (or an Affiliate of such Lender) designated for such Type of Loan on
      the
      signature pages hereof or such other offices of such Lender (or of an Affiliate
      of such Lender) as such Lender may from time to time specify to the
      Administrative Agent and the Borrower as the office by which its Loans of such
      Type are to be made and maintained.





***Applicable
      Margin*** shall
      mean the applicable per annum percentage set forth at the appropriate
      intersection in the table shown below, based on the Borrowing Base Utilization
      as in effect from time to time:


2





**Borrowing
                Base Utilization**
            **Applicable
                Margin****LIBOR
                Loans**
            **Base
                Rate Loans**Less
                than or equal to 25%
            1.00%
            0.00%Greater
                than 25%,
              but
                less than or equal to 50%
            1.25%
            0.25%Greater
                than 50%,
              but
                less than or equal to 75%
            1.50%
            0.50%Greater
                than 75%
            1.75%
            0.75%




Each
      change in the Applicable Margin resulting from a change in the Borrowing Base
      Utilization shall take effect on the day such change in the Borrowing Base
      Utilization occurs.





***Assignment*** shall
      have the meaning assigned such term in ***Section
      12.06(b)*** .





***Atlas
      Pipeline*** shall
      mean Atlas Pipeline Partners, GP, LLC, a Delaware limited liability
      company.





***Base
      Rate*** shall
      mean, with respect to any Base Rate Loan, for any day, a rate per annum equal
      to
      the higher of (i) the Federal Funds Rate for any such day plus 1⁄2 of
      1% or
      (ii) the Prime Rate for such day. Each change in any interest rate provided
      for
      herein based upon the Base Rate resulting from a change in the Base Rate shall
      take effect at the time of such change in the Base Rate.





***Base
      Rate Loans*** shall
      mean Loans that bear interest at rates based upon the Base Rate.





***Borrowing
      Base*** shall
      mean at any time an amount equal to the amount determined in accordance with ***Section
      2.08*** .





***Borrowing
      Base Deficiency*** shall
      mean, and occur at any time when, the amount by which the aggregate outstanding
      principal amount of the Loans plus the LC Exposure exceeds the Borrowing Base,
      whether as the result of a redetermination, a scheduled reduction, or
      otherwise.





***Borrowing
      Base Period*** shall
      mean (i) the period from the Closing Date until June 14, 2006, and (ii) each
      six-month period commencing June 15 and December 15 thereafter.





***Borrowing
      Base Utilization*** shall
      mean at any time, an amount equal to the quotient of (i) the aggregate principal
      amount of Loans outstanding plus LC Exposure, divided by (ii) the Borrowing
      Base.





***Business
      Day*** shall
      mean any day other than a day on which commercial banks are authorized or
      required to close in Texas or North Carolina and, where such term is used in
      the
      definition of “ ***Quarterly
      Date*** ”
or
      if
      such day relates to a borrowing or continuation of, a payment or prepayment
      of
      principal of or interest on, or a conversion of or into, or the Interest Period
      for, a LIBOR Loan or a notice by the Borrower with respect to any such borrowing
      or continuation, payment, prepayment, conversion or Interest Period, any day
      which is also a day on which dealings in Dollar deposits are carried out in
      the
      London interbank market.





***Change
      of Control*** means
      the occurrence of any of the following events: (a) any Person or two or
      more Persons acting as a group shall acquire beneficial ownership (within the
      meaning of Rule 13d-3 of the Securities and Exchange Commission under the
      Exchange Act, and including holding proxies to vote for the election of
      directors other than proxies held by the Borrower’s management or their
      designees to be voted in favor of persons nominated by the Borrower’s Board of
      Directors) of 35% or more of the outstanding voting securities of the Borrower,
      measured by voting power (including both ordinary shares and any preferred
      stock
      or other equity securities entitling the holders thereof to vote with the
      holders of common stock in elections for directors of the Borrower),
      (b) the Borrower shall fail beneficially to own, directly or indirectly,
      85% of the outstanding shares of voting capital stock of AIC, AEC, Atlas
      Mid-Continent, Atlas Noble, Atlas PA, Atlas Resources, REI, Resource Energy,
      RWS, or Viking and any other Wholly Owned Subsidiary now or hereafter existing
      that is a Guarantor, (c) the Borrower shall fail beneficially to own,
      directly or indirectly, 51% of the membership interests of APH GP, or
      (d) the
      first
      day on which a majority of the Board of Directors of Borrower are not Continuing
      Directors .


3


***Closing
      Date*** shall
      mean the date upon which the conditions precedent for initial funding set forth
      in ***Section
      6.01*** are
      satisfied.





***Code*** shall
      mean the Internal Revenue Code of 1986, as amended from time to time and any
      successor statute.





***Commitment*** shall
      mean for any Lender, its Revolving Credit Commitment.





***Consolidated
      Interest Coverage Ratio*** shall
      mean the ratio of (i) EBITDA for such Person and its Consolidated Subsidiaries
      on a consolidated basis for the fiscal quarter ending on such date to (ii)
      cash
      interest payments made for such Person and its Consolidated Subsidiaries on
      a
      consolidated basis for such fiscal quarter.





***Consolidated
      Net Income*** shall
      mean with respect to such Person and its Consolidated Subsidiaries, for any
      period, the aggregate of the net income (or loss) of such Person and its
      Consolidated Subsidiaries after allowances for taxes for such period, determined
      on a consolidated basis in accordance with GAAP; provided that there shall
      be
      excluded from such net income (to the extent otherwise included therein) the
      following: (i) the net income of any other entity in which such Person or
      any Consolidated Subsidiary has an interest (which interest does not cause
      the
      net income of such other entity to be consolidated with the net income of such
      Person and its Consolidated Subsidiaries in accordance with GAAP), except to
      the
      extent of the amount of dividends or distributions actually paid in such period
      by such other entity to such Person or to a Consolidated Subsidiary, as the
      case
      may be; (ii) the net income (but not loss) of any Consolidated Subsidiary
      to the extent that the declaration or payment of dividends or similar
      distributions or transfers or loans by that Consolidated Subsidiary is not
      at
      the time permitted by operation of the terms of its charter or any agreement,
      instrument or Governmental Requirement applicable to such Consolidated
      Subsidiary, or is otherwise restricted or prohibited in each case determined
      in
      accordance with GAAP; (iii) the net income (or loss) of any entity acquired
      in a pooling-of-interests transaction for any period prior to the date of such
      transaction; (iv) any gains or losses attributable to discontinued
      operations, in an aggregate amount not to exceed $5,000,000 or to Property
      sales
      not in the ordinary course of business, and (v) the cumulative effect of a
      change in accounting principles and any gains or losses attributable to writeups
      or write downs of assets.





***Consolidated
      Subsidiaries*** shall
      mean each Subsidiary of a Person (whether now existing or hereafter created
      or
      acquired) the financial statements of which shall be (or should have been)
      consolidated with the financial statements of such Person in accordance with
      GAAP; *provided* , *however* ,
      that
      the Consolidated Subsidiaries of Borrower shall not include the Unrestricted
      Entities, except with respect to the financial statements delivered from time
      to
      time by Borrower pursuant to ***Sections
      8.01 (a)*** and ***(b)*** .





***Continuing
      Directors*** means
      any member of the Board of Directors of the Borrower who (x) is a member of
      such
      Board of Directors as of the date of this Agreement or (y) was nominated for
      election or elected to such Board of Directors with the affirmative vote of
      two-thirds of the Continuing Directors who were members of such Board of
      Directors at the time of such nomination or election.





***Cumulative
      Net Income Amount*** shall
      mean, as of the date of determination, an amount equal to the sum of (a) 50%
      of
      the Borrower’s cumulative Consolidated Net Income during the period from October
      1, 2005, to, and including, the date of determination and (b)
      $5,000,000.





***Debt*** shall
      mean, for any Person the sum of the following (without duplication):
      (i) all obligations of such Person for borrowed money or evidenced by
      bonds, debentures, notes or other similar instruments (including principal,
      interest, fees and charges); (ii) all obligations of such Person (whether
      contingent or otherwise) in respect of bankers’ acceptances, letters of credit,
      surety or other bonds and similar instruments; (iii) all obligations of
      such Person to pay the deferred purchase price of Property or services (other
      than for borrowed money); (iv) all obligations under leases which shall
      have been, or should have been, in accordance with GAAP, recorded as capital
      leases in respect of which such Person is liable (whether contingent or
      otherwise); (v) all obligations under operating leases which require such
      Person or its Affiliate to make payments over the term of such lease, including
      payments at termination, based on the purchase price or appraisal value of
      the
      Property subject to such lease plus a marginal interest rate, and used primarily
      as a financing vehicle for, or to monetize, such Property; (vi) all Debt
      (as described in the other clauses of this definition) and other obligations
      of
      others secured by a Lien on any asset of such Person, whether or not such Debt
      is assumed by such Person; (vii) all Debt (as described in the other
      clauses of this definition) and other obligations of others guaranteed by such
      Person or in which such Person otherwise assures a creditor against loss of
      the
      debtor or obligations of others; (viii) all obligations or undertakings of
      such Person to maintain or cause to be maintained the financial position or
      covenants of others or to purchase the Debt or Property of others;
      (ix) obligations to deliver goods or services including Hydrocarbons in
      consideration of advance payments; (x) obligations to pay for goods or
      services whether or not such goods or services are actually received or utilized
      by such Person; (xi) any capital stock of such Person in which such Person
      has a mandatory obligation to redeem such stock; (xii) any Debt of a
      Subsidiary for which such Person is liable either by agreement or because of
      a
      Governmental Requirement; (xiii) the undischarged balance of any production
      payment created by such Person or for the creation of which such Person directly
      or indirectly received payment; and (xiv) all obligations of such Person
      under Hedging Agreements.


4




***Default*** shall
      mean an Event of Default or an event which with notice or lapse of applicable
      grace period or both would become an Event of Default.





***Dollars*** and ***$*** shall
      mean lawful money of the United States of America.





***EBITDA*** shall
      mean, for any period, the sum of Consolidated Net Income for such period plus
      the following expenses or charges to the extent deducted from Consolidated
      Net
      Income in such period: interest, income taxes, depreciation, depletion and
      amortization.





***Engineering
      Reports*** shall
      have the meaning assigned such term in ***Section
      2.08*** .





***Environmental
      Laws*** shall
      mean any and all Governmental Requirements pertaining to health or the
      environment in effect in any and all jurisdictions in which any Obligor or
      any
      Subsidiary is conducting or at any time has conducted business, or where any
      Property of any Obligor or any Subsidiary is located, including without
      limitation, the Oil Pollution Act of 1990 (“ ***OPA*** ”),
      the
      Clean Air Act, as amended, the Comprehensive Environmental, Response,
      Compensation, and Liability Act of 1980 (“ ***CERCLA*** ”),
      as
      amended, the Federal Water Pollution Control Act, as amended, the Occupational
      Safety and Health Act of 1970, as amended, the Resource Conservation and
      Recovery Act of 1976 (“ ***RCRA*** ”),
      as
      amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
      Act, as amended, the Superfund Amendments and Reauthorization Act of 1986,
      as
      amended, the Hazardous Materials Transportation Act, as amended, and other
      environmental conservation or protection laws. The term “ ***oil*** ”
shall
      have the meaning specified in OPA, the terms “ ***hazardous
      substance*** ”
and
      “ ***release*** ”
or
      “ ***threatened
      release*** ”
have
      the meanings specified in CERCLA, and the terms “ ***solid
      waste*** ”
and
      “ ***disposal*** ”
or
      “ ***disposed*** ”
have
      the meanings specified in RCRA; *provided* , *however* ,
      that
      (i) in the event either OPA, CERCLA or RCRA is amended so as to broaden the
      meaning of any term defined thereby, such broader meaning shall apply subsequent
      to the effective date of such amendment and (ii) to the extent the laws of
      the
      state in which any Property of any Obligor or any Subsidiary is located
      establish a meaning for “ ***oil*** ,”
      “ ***hazardous
      substance*** ,”
      “ ***release*** ,”
      “ ***solid
      waste*** ”
or
      “ ***disposal*** ”
which
      is broader than that specified in either OPA, CERCLA or RCRA, such broader
      meaning shall apply.





***ERISA*** shall
      mean the Employee Retirement Income Security Act of 1974, as amended from time
      to time and any successor statute.





***ERISA
      Affiliate*** shall
      mean each trade or business (whether or not incorporated) which together with
      the Borrower or any Subsidiary would be deemed to be a “ ***single
      employer*** ”
within
      the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or
      (o)
      of section 414 of the Code.





***ERISA
      Event*** shall
      mean (i) a “ ***Reportable
      Event*** ”
      described in Section 4043 of ERISA and the regulations issued thereunder, (ii)
      the withdrawal of the Borrower, any Subsidiary or any ERISA Affiliate from
      a
      Plan during a plan year in which it was a “ ***substantial
      employer*** ”
as
      defined in Section 4001(a)(2) of ERISA, (iii) the filing of a notice of intent
      to terminate a Plan or the treatment of a Plan amendment as a termination under
      Section 4041 of ERISA, (iv) the institution of proceedings to terminate a Plan
      by the PBGC or (v) any other event or condition which might constitute grounds
      under Section 4042 of ERISA for the termination of, or the appointment of a
      trustee to administer, any Plan.


5


***Event
      of Default*** shall
      have the meaning assigned such term in ***Section
      10.01*** .





***Excepted
      Liens*** shall
      mean: (i) Liens for taxes, assessments or other governmental charges or levies
      not yet due or which are being contested in good faith by appropriate action
      and
      for which adequate reserves have been maintained; (ii) Liens in connection
      with
      worker’s compensation, unemployment insurance or other social security, old age
      pension or public liability obligations not yet due or which are being contested
      in good faith by appropriate action and for which adequate reserves have been
      maintained in accordance with GAAP; (iii) operators’ Liens in favor of Persons
      other than Obligors, Subsidiaries and their Affiliates, vendors’, carriers’,
      warehousemen’s, repairmen's, mechanics’, workmen’s, materialmen’s, construction
      or other like Liens arising by operation of law in the ordinary course of
      business or incident to the exploration, development, operation and maintenance
      of Oil and Gas Properties or statutory landlord’s liens, each of which is in
      respect of obligations that have not been outstanding more than 90 days or
      which
      are being contested in good faith by appropriate proceedings and for which
      adequate reserves have been maintained in accordance with GAAP; (iv) any Liens
      reserved in leases by lessors or farmout agreements by farmors for royalties
      and
      for compliance with the terms of the farmout agreements or leases in the case
      of
      leasehold estates, to the extent that any such Lien referred to in this clause
      does not materially impair the use of the Property covered by such Lien for
      the
      purposes for which such Property is held by any Obligor or any Subsidiary or
      materially impair the value of such Property subject thereto; (v) encumbrances
      (other than to secure the payment of borrowed money or the deferred purchase
      price of Property or services), easements, restrictions, servitudes, permits,
      conditions, covenants, exceptions or reservations in any rights of way or other
      Property of any Obligor or any Subsidiary for the purpose of roads, pipelines,
      transmission lines, transportation lines, distribution lines for the
      transportation of gas, oil, or timber, and other like purposes, or for the
      joint
      or common use of real estate, rights of way, facilities and equipment, and
      defects, irregularities, zoning restrictions and deficiencies in title of any
      rights of way or other Property which in the aggregate do not materially impair
      the use of such rights of way or other Property for the purposes of which such
      rights of way and other Property are held by any Obligor or any Subsidiary
      or
      materially impair the value of such Property subject thereto; (vi) deposits
      of
      cash or securities to secure the performance of bids, trade contracts, leases,
      statutory obligations and other obligations of a like nature incurred in the
      ordinary course of business; (vii) the Existing Liens and (viii) Liens permitted
      by the Security Instruments.





***Existing
      Letters of Credit*** shall
      mean the issued and outstanding letters of credit issued under the Existing
      Credit Agreement more particularly described on ***Schedule
      2.01(b)*** attached
      hereto, which Existing Letters of Credit shall be deemed Letters of Credit
      hereunder.





***Federal
      Funds Rate*** shall
      mean, for any day, the rate per annum (rounded upwards, if necessary, to the
      nearest 1/100 of 1%) equal to the weighted average of the rates on overnight
      federal funds transactions with a member of the Federal Reserve System arranged
      by federal funds brokers on such day, as published by the Federal Reserve Bank
      of New York on the Business Day next succeeding such- day, provided that (i)
      if
      the date for which such rate is to be determined is not a Business Day, the
      Federal Funds Rate for such day shall be such rate on such transactions on
      the
      next preceding Business Day as so published on the next succeeding Business
      Day,
      and (ii) if such rate is not so published for any day, the Federal Funds Rate
      for such day shall be the average rate charged to the Administrative Agent
      on
      such day on such transactions as determined by the Administrative
      Agent.





***Fee
      Letter*** shall
      mean that certain letter agreement from Wachovia Bank, National Association
      and
      Wachovia Capital Markets, LLC to the Borrower dated March 22, 2006, concerning
      certain fees in connection with this Agreement and any agreements or instruments
      executed in connection therewith, as the same may be amended or replaced from
      time to time.





***Financial
      Statements*** shall
      mean the financial statement or statements of the Borrower and its Consolidated
      Subsidiaries described or referred to in ***Section
      7.02*** .





***Funded
      Debt*** shall
      mean, for any Person the sum of the following (without duplication):
      (i) all obligations of such Person for borrowed money or evidenced by
      bonds, debentures, notes or other similar instruments (including principal,
      interest, fees and charges); (ii) all obligations of such Person (whether
      contingent or otherwise) in respect of bankers’ acceptances, letters of credit,
      surety or other bonds and similar instruments; (iii) all obligations of
      such Person to pay the deferred purchase price of Property or services (other
      than for borrowed money); (iv) all obligations under leases which shall
      have been, or should have been, in accordance with GAAP, recorded as capital
      leases in respect of which such Person is liable (whether contingent or
      otherwise); (v) obligations to pay for goods or services whether or not
      such goods or services are actually received or utilized by such Person;
      (vi) any capital stock of such Person in which such Person has a mandatory
      obligation to redeem such stock; (vii) the undischarged balance of any
      production payment created by such Person or for the creation of which such
      Person directly or indirectly received payment; and (viii) all obligations
      of such Person under Hedging Agreements. For the avoidance of doubt, the
      Borrower’s obligations under the Tax Matters Agreement and the Transition
      Services Agreement constitute “ ***Funded
      Debt*** ”
of
      the
      Borrower hereunder.


6


***GAAP*** shall
      mean generally accepted accounting principles in the United States of America
      in
      effect from time to time.





***Governmental
      Authority*** shall
      include the country, the state, county, city and political subdivisions in
      which
      any Person or such Person’s Property is located or which exercises valid
      jurisdiction over any such Person or such Person’s Property, and any court,
      agency, department, commission, board, bureau or instrumentality of any of
      them
      including monetary authorities which exercises valid jurisdiction over any
      such
      Person or such Person’s Property. Unless otherwise specified, all references to
      Governmental Authority herein shall mean a Governmental Authority having
      jurisdiction over, where applicable, any Obligor, their Subsidiaries or any
      of
      their Property or the Administrative Agent, any Lender or any Applicable Lending
      Office.





***Governmental
      Requirement*** shall
      mean any law, statute, code, ordinance, order, determination, rule, regulation,
      judgment, decree, injunction, franchise, permit, certificate, license,
      authorization or other directive or requirement (whether or not having the
      force
      of law), including, without limitation, Environmental Laws, energy regulations
      and occupational, safety and health standards or controls, of any Governmental
      Authority.





***Guarantor*** shall
      mean each of the parties named as “ ***Guarantors*** ”
in
      the
      opening paragraph of this Agreement and each of the parties that from time
      to
      time become a party to a Guaranty Agreement pursuant to the terms of this
      Agreement.





***Guaranty
      Agreement*** shall
      mean, collectively, (i) an agreement executed by a Guarantor substantially
      in
      the form of ***Exhibit
      G*** (or such
      other agreement in form and substance satisfactory to the Administrative Agent)
      guarantying, unconditionally, payment of the Indebtedness ,
      together with (ii) any amendment, modification, supplement, restatement,
      ratification, or reaffirmation of any Guaranty Agreement made in accordance
      with
      the Loan Documents .





***Hedging
      Agreements*** shall
      mean any commodity, interest rate or currency swap, cap, floor, collar, forward
      agreement or other exchange or protection agreements or any option with respect
      to any such transaction.





***Highest
      Lawful Rate*** means,
      as of a particular date, the highest non-usurious rate of interest, if any,
      permitted from day to day by applicable law. To the extent Texas law is
      applicable, the Lenders hereby notify and disclose to the Borrower that, for
      purposes of Texas Finance Code §303.001, as it may from time to time be amended,
      the “ *applicable
      ceiling* ”
shall
      be the “ *weekly
      ceiling* ”
from
      time to time in effect as limited by Texas Finance Code §303.009; *provided* , *however* ,
      that to
      the extent permitted by applicable law, the Lender reserves the right to change
      the “ *applicable
      ceiling* ”
from
      time to time by further notice and disclosure to the Borrower.





***Hydrocarbon
      Interests*** shall
      mean all rights, titles, interests and estates now or hereafter acquired in
      and
      to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous
      hydrocarbon leases, mineral fee interests, overriding royalty and royalty
      interests, net profit interests and production payment interests, including
      any
      reserved or residual interests of whatever nature.





***Hydrocarbons*** shall
      mean oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
      distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
      or separated therefrom.





***Indebtedness*** shall
      mean any and all amounts owing or to be owing by the Borrower or any Obligor
      to
      the Administrative Agent, the Issuing Bank and/or the Lenders or any Affiliates
      of Lenders in connection with the Loan Documents, any Letter of Credit
      Agreements, any Hedging Agreements now or hereafter arising between the Borrower
      or any Obligor and the Administrative Agent, the Issuing Bank, any Lender or
      its
      Affiliate and permitted by the terms of this Agreement, and all renewals,
      extensions and/or rearrangements of any of the foregoing.


7


***Indemnified
      Parties*** shall
      have the meaning assigned such term in ***Section
      12.03(a)(ii)*** .





***Indemnity
      Matters*** shall
      mean any and all actions, suits, proceedings (including any investigations,
      litigation or inquiries), claims, demands and causes of action made or
      threatened against a Person and, in connection therewith, all losses,
      liabilities, damages (including, without limitation, consequential damages)
      or
      reasonable costs and expenses of any kind or nature whatsoever incurred by
      such
      Person whether caused by the sole or concurrent negligence of such Person
      seeking indemnification.





***Initial
      Borrowing Base*** shall
      have the meaning assigned such term in ***Section
      2.08(a)*** .





***Initial
      Funding*** shall
      mean the funding of the initial Loans or issuance of the initial Letters of
      Credit upon satisfaction of the conditions set forth in ***Sections
      6.01*** and ***6.02*** .





***Initial
      Reserve Report*** shall
      mean collectively the reports, copies of which have been delivered to the
      Administrative Agent, dated as of September 30, 2005, prepared by Wright &
Company, Inc.





***Intercompany
      Debt*** shall
      mean Funded Debt that is owed by an Obligor to another Obligor.





***Intercompany
      Notes*** shall
      mean the promissory notes executed to evidence the Intercompany
      Debt.





***Interest
      Period*** shall
      mean, with respect to any LIBOR Loan, the period commencing on the date such
      LIBOR Loan is made and ending on the numerically corresponding day in the first,
      second, third, or sixth calendar month thereafter, as the Borrower may select
      as
      provided in ***Section 2.02*** ,
      except
      that each Interest Period which commences on the last Business Day of a calendar
      month (or on any day for which there is no numerically corresponding day in
      the
      appropriate subsequent calendar month) shall end on the last Business Day of
      the
      appropriate subsequent calendar month. Notwithstanding the foregoing:
      (i) no Interest Period may end after the Revolving Credit Termination Date;
      (ii) no Interest Period for any LIBOR Loan may end after the due date of
      any installment, if any, provided for in ***Section
      3.01*** to the
      extent that such LIBOR Loan would need to be prepaid prior to the end of such
      Interest Period in order for such installment to be paid when due;
      (iii) each Interest Period which would otherwise end on a day which is not
      a Business Day shall end on the next succeeding Business Day (or, if such next
      succeeding Business Day falls in the next succeeding calendar month, on the
      next
      preceding Business Day); and (iv) no Interest Period shall have a duration
      of less than one month and, if the Interest Period for any LIBOR Loans would
      otherwise be for a shorter period, such Loans shall not be available
      hereunder.





***Issuing
      Bank*** shall
      have the meaning assigned to such term in the introductory paragraph to this
      Agreement, or any other Lender agreed to between the Borrower and the
      Administrative Agent to issue Letters of Credit.





***LC
      Commitment*** at any
      time shall mean $50,000,000.





***LC
      Exposure*** at any
      time shall mean the difference between (i) the aggregate face amount of all
      undrawn and uncancelled Letters of Credit *plus* (ii) the
      aggregate of all amounts drawn under all Letters of Credit and not yet
      reimbursed.





***Letter
      of Credit Agreements*** shall
      mean the written agreements with the Issuing Bank, as issuing lender for any
      Letter of Credit, executed in connection with the issuance by the Issuing Bank
      of the Letters of Credit, such agreements to be on the Issuing Bank’s customary
      form for letters of credit of comparable amount and purpose as from time to
      time
      in effect or as otherwise agreed to by the Borrower and the Issuing
      Bank.





***Letters
      of Credit*** shall
      mean the stand-by letters of credit issued pursuant to ***Section
      2.01(b)*** and all
      reimbursement obligations pertaining to any such letters of credit, and
“ ***Letter
      of Credit*** ”
shall
      mean any one of the Letters of Credit and the reimbursement obligations
      pertaining thereto.





***LIBOR*** shall
      mean the rate per annum (rounded upwards, if necessary, to the nearest 1/100
      of
      1%) of interest determined on the basis of the rate for deposits in Dollars
      for
      a period equal to the applicable Interest Period commencing on the first day
      of
      such Interest Period appearing on Dow Jones Market Service Page 3750 as of
      11:00
      a.m. (London time) two (2) Business Days prior to the first day of the
      applicable Interest Period. In the event that such rate does not appear on
      Dow
      Jones Market Service Page 3750, “ ***LIBOR*** ”
shall
      be determined by the Administrative Agent to be the rate per annum (rounded
      upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in Dollars
      are offered by leading reference banks in the London interbank market to the
      Administrative Agent at approximately 11:00 a.m. (London time) two Business
      Days
      prior to the first day of the applicable Interest Period for a period equal
      to
      such Interest Period and in an amount substantially equal to the amount of
      the
      applicable Loan.


8


***LIBOR
      Loans*** shall
      mean Loans the interest rates on which are determined on the basis of rates
      referred to in the definition of “ ***Adjusted
      LIBOR*** ”.





***Lien*** shall
      mean any interest in Property securing an obligation owed to, or a claim by,
      a
      Person other than the owner of the Property, whether such interest is based
      on
      the common law, statute or contract, and whether such obligation or claim is
      fixed or contingent, and including but not limited to (i) the lien or security
      interest arising from a mortgage, encumbrance, pledge, security agreement,
      conditional sale or trust receipt or a lease, consignment or bailment for
      security purposes or (ii) production payments and the like payable out of Oil
      and Gas Properties. The term “ ***Lien*** ”
shall
      include reservations, exceptions, encroachments, easements, rights of way,
      covenants, conditions, restrictions, leases and other title exceptions and
      encumbrances affecting Property. For the purposes of this Agreement, each
      Obligor or any Subsidiary shall be deemed to be the owner of any Property which
      it has acquired or holds subject to a conditional sale agreement, or leases
      under a financing lease or other arrangement pursuant to which title to the
      Property has been retained by or vested in some other Person in a transaction
      intended to create a financing.





***Loan
      Documents*** shall
      mean this Agreement, the Notes, all Letters of Credit, all Letter of Credit
      Agreements, the Fee Letter, the Security Instruments, and the Guaranty
      Agreements.





***Loans*** shall
      mean the loans as provided for by ***Section
      2.01(a)*** or any
      Continuations or Conversions thereof.





***Majority
      Lenders*** shall
      mean, at any time while no Loans are outstanding, Lenders having at least
      sixty-six and two-thirds percent (66 2/3%) of the Aggregate Revolving Credit
      Commitments and, at any time while Loans are outstanding, Lenders holding at
      least sixty-six and two-thirds percent (66 2/3%) of the outstanding aggregate
      principal amount of the Loans (without regard to any sale by a Lender of a
      participation in any Loan under ***Section 12.06(c)*** ).





***Material
      Adverse Effect*** shall
      mean any material and adverse effect on (i) the assets, liabilities,
      financial condition, business, operations or affairs of the Borrower and the
      Guarantors taken as a whole, or (ii) the ability of the Borrower or any
      Guarantor to carry out its business as at the Closing Date (excluding the
      dissolution or liquidation of any Guarantor pursuant to a merger to the extent
      permitted under ***Section
      9.09*** )
      or meet
      its obligations under the Loan Documents on a timely basis, or (iii) the
      Administrative Agent’s and the Lenders’ interests in the collateral securing the
      Indebtedness, or the Administrative Agents’ or the Lenders’ ability to enforce
      their rights and remedies under this Agreement or any other Loan Document,
      at
      law or in equity.





***Material
      Agreements*** shall
      have the meaning assigned to such term in ***Section
      7.23.***





***Maximum
      Revolving Credit Amount*** shall
      mean, as to each Lender, the dollar amount of such Lender’s Percentage Share of
      the Aggregate Maximum Revolving Credit Amount (as the same may be reduced
      pursuant to ***Section
      2.03(d)*** pro rata
      to each Lender based on its Percentage Share), as modified from time to time
      to
      reflect any assignments permitted by ***Section 12.06(b)*** .





***Mortgage*** shall
      mean any one of the mortgages listed on ***Exhibit
      D*** hereto,
      and ***Mortgages*** means
      all of them.





***Mortgaged
      Property*** shall
      mean the Property owned by the Obligors and which is subject to the Liens
      existing and to exist under the terms of the Security Instruments.





***Multiemployer
      Plan*** shall
      mean a Plan defined as such in Section 3(37) or 4001(a)(3) of
      ERISA.





***Notes*** shall
      mean the Notes provided for by ***Section 2.06*** ,
      together with any and all renewals, extensions for any period, increases,
      rearrangements, substitutions or modifications thereof.





***Oil
      and Gas Properties*** shall
      mean Hydrocarbon Interests; the Properties now or hereafter pooled or unitized
      with Hydrocarbon Interests; all presently existing or future unitization,
      pooling agreements and declarations of pooled units and the units created
      thereby (including without limitation all units created under orders,
      regulations and rules of any Governmental Authority) which may affect all or
      any
      portion of the Hydrocarbon Interests; all operating agreements, contracts and
      other agreements which relate to any of the Hydrocarbon Interests or the
      production, sale, purchase, exchange or processing of Hydrocarbons from or
      attributable to such Hydrocarbon Interests; all Hydrocarbons in and under and
      which may be produced and saved or attributable to the Hydrocarbon Interests,
      including all oil in tanks, the lands covered thereby and all rents, issues,
      profits, proceeds, products, revenues and other incomes from or attributable
      to
      the Hydrocarbon Interests; all tenements, hereditaments, appurtenances and
      Properties in any manner appertaining, belonging, affixed or incidental to
      the
      Hydrocarbon Interests; and all Properties, rights, titles, interests and estates
      described or referred to above, including any and all Property, real or
      personal, now owned or hereinafter acquired and situated upon, used, held for
      use or useful in connection with the operating, working or development of any
      of
      such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
      equipment or other personal property which may be on such premises for the
      purpose of drilling a well or for other similar temporary uses) and including
      any and all oil wells, gas wells, injection wells or other wells, buildings,
      structures, fuel separators, liquid extraction plants, plant compressors, pumps,
      pumping units, field gathering systems, tanks and tank batteries, fixtures,
      valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
      equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
      and rods, surface leases, rights-of-way, easements and servitudes together
      with
      all additions, substitutions, replacements, accessions and attachments to any
      and all of the foregoing.


9


***Oil
      and Gas Properties Collateral Value*** shall
      mean the collateral value of the Oil and Gas Properties as determined by the
      Lenders in accordance with the procedures set forth under ***Section
      2.08.***





***Other
      Taxes*** shall
      have the meaning assigned such term in ***Section
      4.06(b)*** .





***Ownership
      Report*** shall
      mean a report prepared by the Borrower on a well by well basis reflecting the
      working and net revenue interests for each Obligor, and the gross working
      interest and gross revenue interests for each Partnership and such other
      information reasonably requested by Lender in form attached hereto as ***Schedule
      7.10*** .





***Partnerships*** shall
      mean such partnerships listed on ***Schedule***  ***7.14*** and such
      other partnerships which are principally engaged in the acquisition and
      development of Oil and Gas Properties as may be wholly or partially owned
      directly or indirectly by any Obligor from time to time hereafter other than
      APL
      and APH.





***PBGC*** shall
      mean the Pension Benefit Guaranty Corporation or any entity succeeding to any
      or
      all of its functions.





***Percentage
      Share*** shall
      mean the percentage of the Aggregate Revolving Credit Commitment to be provided
      by a Lender under this Agreement, as modified from time to time to reflect
      any
      assignments permitted by ***Section
      12.06(b)*** .





***Permitted
      Merger*** shall
      mean such merger or consolidation as is permitted under ***Section
      9.09*** .





***Person*** shall
      mean any individual, corporation, company, voluntary association, partnership,
      joint venture, trust, unincorporated organization or government or any agency,
      instrumentality or political subdivision thereof, or any other form of
      entity.





***Plan*** shall
      mean any employee pension benefit plan, as defined in Section 3(2) of ERISA,
      which (i) is currently or hereafter sponsored, maintained or contributed to
      by
      the Borrower, any Subsidiary or an ERISA Affiliate or (ii) was at any time
      during the preceding six calendar years sponsored, maintained or contributed
      to,
      by the Borrower, any Subsidiary or an ERISA Affiliate.





***Post-Default
      Rate*** shall
      mean, in respect of any principal of any Loan or any other amount payable by
      the
      Borrower under this Agreement or any other Loan Document, a rate per annum
      equal
      to two percent (2%) per annum above the Base Rate as in effect from time to
      time
      plus the Applicable Margin (if any), but in no event to exceed the Highest
      Lawful Rate.





***Prime
      Rate*** shall
      mean the rate of interest from time to time announced publicly by the
      Administrative Agent as its prime commercial lending rate. Such rate is set
      by
      the Administrative Agent as a general reference rate of interest, taking into
      account such factors as the Administrative Agent may deem appropriate, it being
      understood that many of the Administrative Agent’s commercial or other loans are
      priced in relation to such rate, that it is not necessarily the lowest or best
      rate actually charged to any customer and that the Administrative Agent may
      make
      various commercial or other loans at rates of interest having no relationship
      to
      such rate.


10


***Principal
      Office*** shall
      mean the principal office of the Administrative Agent, presently located at
      1001
      Fannin, Suite 2255, Houston, Texas 77002-6709.





***Property*** shall
      mean any interest in any kind of property or asset, whether real, personal
      or
      mixed, moveable or immoveable, tangible or intangible.





***Quarterly
      Dates*** shall
      mean the first day of each January, April, July, and October in each year,
      the
      first of which shall be July 1, 2006; *provided* , *however* ,
      that if
      any such day is not a Business Day, such Quarterly Date shall be the next
      succeeding Business Day.





***RAI*** shall
      mean Resource America, Inc., a Delaware corporation.





***Redetermination
      Date*** shall
      mean the date that the redetermined Borrowing Base becomes effective subject
      to
      the notice requirements specified in ***Section
      2.08(b)*** both for
      scheduled redeterminations and unscheduled redeterminations.





***Regulation
      D*** shall
      mean Regulation D of the Board of Governors of the Federal Reserve System (or
      any successor), as the same may be amended or supplemented from time to
      time.





***Regulatory
      Change*** shall
      mean, with respect to any Lender, any change after the Closing Date in any
      Governmental Requirement (including Regulation D) or the adoption or making
      after such date of any interpretations, directives or requests applying to
      a
      class of lenders (including such Lender or its Applicable Lending Office) of
      or
      under any Governmental Requirement (whether or not having the force of law)
      by
      any Governmental Authority charged with the interpretation or administration
      thereof.





***Required
      Payment*** shall
      have the meaning assigned such term in ***Section
      4.04*** .





***Reserve
      Report*** shall
      mean a report, in form and substance satisfactory to the Administrative Agent,
      setting forth, as of each October 1 or April 1, immediately prior to the
      commencement of each Borrowing Base Period, as applicable (or such other date
      in
      the event of an unscheduled redetermination); (i) the oil and gas reserves
      attributable to all of the Obligors’ Oil and Gas Properties whether owned
      directly or indirectly by such Person and expressly including such reserves
      attributable to each Obligor’s net ownership in the Partnerships’ Oil and Gas
      Properties together with a projection of the rate of production and future
      net
      income, taxes, operating expenses and capital expenditures with respect thereto
      as of such date, based upon the pricing assumptions consistent with SEC
      reporting requirements at the time and (ii) such other information as the
      Administrative Agent may reasonably request.





***Reserve
      Requirement*** shall
      mean, for any Interest Period for any LIBOR Loan, the average maximum rate
      at
      which reserves (including any marginal, supplemental or emergency reserves)
      are
      required to be maintained during such Interest Period under Regulation D by
      member banks of the Federal Reserve System in New York City with deposits
      exceeding one billion Dollars against “ ***Eurocurrency
      liabilities*** ”
(as
      such term is used in Regulation D). Without limiting the effect of the
      foregoing, the Reserve Requirement shall reflect any other reserves required
      to
      be maintained by such member banks by reason of any Regulatory Change against
      (i) any category of liabilities which includes deposits by reference to
      which LIBOR is to be determined as provided in the definition of “ ***LIBOR*** ”
or
      (ii)
      any category of extensions of credit or other assets which include a LIBOR
      Loan.





***Responsible
      Officer*** shall
      mean, as to any Person, the Chief Executive Officer, the President or any Vice
      President of such Person and, with respect to financial matters, the term
“ ***Responsible
      Officer*** ”
shall
      include the Chief Financial Officer of such Person. Unless otherwise specified,
      all references to a Responsible Officer herein shall mean a Responsible Officer
      of the Borrower.





***Revolving
      Credit Commitment*** shall
      mean, for any Lender, its obligation to make Loans and participate in the
      issuance of Letters of Credit as provided in ***Section 2.01(b)*** up to
      the lesser of (i) such Lender’s Maximum Revolving Credit Amount and
      (ii) such Lender’s Percentage Share of the then effective Borrowing
      Base.





***Revolving
      Credit Termination Date*** shall
      mean the earliest to occur of (i) the fifth anniversary date of the Closing
      Date, (ii) the date that the Commitments are terminated pursuant to ***Section
      10.02*** ,
      and
      (iii) the date that the Commitments are fully terminated pursuant to ***Section
      2.03(d)*** .


11


***Scheduled
      Redetermination Date*** shall
      have the meaning assigned such term in ***Section 2.08(b)*** .





***SEC*** shall
      mean the Securities and Exchange Commission or any successor Governmental
      Authority.





***Security
      Agreement*** shall
      mean, collectively, (i) an agreement executed by an Obligor substantially in
      the
      form of ***Exhibit
      H*** (or such
      other agreement in form and substance satisfactory to the Administrative Agent)
      pursuant to which such Obligor pledges and assigns the collateral named therein
      as security for repayment of the Indebtedness, together
      with (ii) any amendment, modification, supplement, restatement, ratification,
      or
      reaffirmation of any Security Agreement made in accordance with the Loan
      Documents .





***Security
      Instruments*** shall
      mean the agreements or instruments described or referred to in ***Exhibit
      D*** ,
      and any
      and all other agreements or instruments now or hereafter executed and delivered
      by the Obligors or any other Person (other than participation or similar
      agreements between any Lender and any other lender or creditor with respect
      to
      any Indebtedness pursuant to this Agreement) in connection with, or as security
      for the payment or performance of, the Notes, the Guarantees, the Hedge
      Agreements, this Agreement, or reimbursement obligations under the Letters
      of
      Credit, as such agreements may be amended, supplemented or restated from time
      to
      time.





***Special
      Entity*** shall
      mean any joint venture, limited liability company or partnership, general or
      limited partnership or any other type of partnership or company other than
      a
      corporation in which the Borrower or one or more of its other Subsidiaries
      is a
      member, owner, partner or joint venturer and owns, directly or indirectly,
      at
      least a majority of the equity of such entity or controls such entity, but
      excluding any tax partnerships that are not classified as partnerships under
      state law. For purposes of this definition, any Person which owns directly
      or
      indirectly an equity investment in another Person which allows the first Person
      to manage or elect managers who manage the normal activities of such second
      Person will be deemed to “ ***control*** ”
such
      second Person ( *e.g.* a sole
      general partner controls a limited partnership).





***Subsidiary*** shall
      mean (i) any corporation of which at least a majority of the outstanding shares
      of stock having by the terms thereof ordinary voting power to elect a majority
      of the board of directors of such corporation (irrespective of whether or not
      at
      the time stock of any other class or classes of such corporation shall have
      or
      might have voting power by reason of the happening of any contingency) is at
      the
      time directly or indirectly owned or controlled by the Borrower or one or more
      of its Subsidiaries or by the Borrower and one or more of its Subsidiaries
      and
      (ii) any Special Entity excluding APL.





***Tax
      Matters Agreement*** means
      that certain Tax Matters Agreement dated as of May 14, 2004, between RAI and
      Borrower.





***Taxes*** shall
      have the meaning assigned such term in ***Section 4.06(a)*** .





***Transfer*** shall
      mean any sale, assignment, farm-out, conveyance or other transfer of any Oil
      and
      Gas Property, or any interest in any Oil and Gas Property (including, without
      limitation, any working interest, overriding royalty interest, production
      payments, net profits interest, royalty interest, or mineral fee interest)
      or in
      any Partnership, except for (i) the sale of Hydrocarbons in the ordinary
      course of business on a current basis, or (ii) the sale or transfer of
      equipment in the ordinary course of business that is no longer necessary for
      the
      business of any Obligor or is contemporaneously replaced by equipment of at
      least comparable value and use.





***Transition
      Services Agreement*** means
      that certain Transition Services Agreement dated as of May 14, 2004, between
      RAI
      and Borrower.





***Type*** shall
      mean, with respect to any Loan, a Base Rate Loan or a LIBOR Loan.





***Unrestricted
      Entities*** shall
      mean Subsidiaries of the Borrower designated as ***Unrestricted
      Entities*** by the
      Borrower and approved by Majority Lenders. As of the Closing Date, the
      Unrestricted Entities are APH GP, APH, each of the direct and indirect
      subsidiaries of APH, and each of the Subsidiaries marked with an asterisk on ***Schedule
      7.15*** hereto.





***Wholly
      Owned Subsidiary*** shall
      mean a Subsidiary for which all of the outstanding shares of stock or other
      equity of such entity is owned directly or indirectly by Borrower or one of
      Borrower’s Wholly Owned Subsidiaries.




**Section
      1.03** **Accounting
      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 to the Administrative Agent or the
      Lenders hereunder shall be prepared, in accordance with GAAP, applied on a
      basis
      consistent with the audited financial statements of the Borrower referred to in ***Section 7.02*** (except
      for changes concurred with by the Borrower’s independent public
      accountants).





12




**ARTICLE
      II**


**Commitments**




**Section
      2.01** **Loans
      and Letters of Credit.**




(a)  **Loans** .
      Each
      Lender severally agrees, on the terms and conditions of this Agreement, to
      make
      loans to the Borrower during the period from and including (i) the Closing
      Date or (ii) such later date that such Lender becomes a party to this
      Agreement as provided in ***Section 12.06(b)*** ,
      to and
      up to, but excluding, the Revolving Credit Termination Date in an aggregate
      principal amount at any one time outstanding up to, but not exceeding, the
      amount of such Lender’s Revolving Credit Commitment as then in effect; *provided* , *however* ,
      that
      the aggregate principal amount of all such Loans by all Lenders hereunder at
      any
      one time outstanding together with the LC Exposure shall not exceed the lesser
      of (i) the Borrowing Base and (ii) the Aggregate Maximum Revolving Credit
      Amounts. Subject to the terms of this Agreement, during the period from the
      Closing Date to and up to, but excluding, the Revolving Credit Termination
      Date,
      the Borrower may borrow, repay and reborrow the amount described in this ***Section 2.01(a)*** .




(b)  **Letters
      of Credit** .
      During
      the period from and including the Closing Date to, but excluding, five (5)
      Business Days prior to the Revolving Credit Termination Date, the Issuing Bank,
      as issuing bank for the Lenders, agrees to continue the Existing Letters of
      Credit and extend credit for the account of any Obligor at any time and from
      time to time by issuing, renewing, extending or reissuing Letters of Credit; *provided
      however* ,
      the LC
      Exposure at any one time outstanding shall not exceed the lesser of (i) the
      LC
      Commitment or (ii) the Aggregate Revolving Credit Commitments, as then in
      effect, minus the aggregate principal amount of all Loans then outstanding.
      The
      Lenders shall participate in such Letters of Credit according to their
      respective Percentage Shares. Each of the Letters of Credit shall (i) be
      issued by the Issuing Bank, (ii) contain such terms and provisions as are
      reasonably required by the Issuing Bank, (iii) be for the account of such
      Obligor, and (iv) expire not later than the earlier of (A) twelve
      months from the date of issuance of such Letter of Credit and (B) five (5)
      Business Days before the Revolving Credit Termination Date.




(c)  **Limitation
      on Types of Loans** .
      Subject
      to the other terms and provisions of this Agreement, at the option of the
      Borrower, the Loans may be Base Rate Loans or LIBOR Loans; *provided
      that* ,
      without
      the prior written consent of the Majority Lenders, no more than eight LIBOR
      Loans may be outstanding at any time.




(d)  **Loans
      and Borrowings under the Existing Credit Agreement** .
      On the
      Closing Date:




(i) the
      Borrower shall pay all accrued and unpaid commitment fees, break funding fees
      under ***Section
      5.05*** and all
      other fees that are outstanding under the Existing Credit Agreement for the
      account of each Existing Lender under the Existing Credit
      Agreement;




(ii) each
      “ ***Base
      Rate Loan*** ”
and
      “ ***LIBOR
      Loan*** ”
      outstanding under the Existing Credit Agreement shall be deemed to be repaid
      with the proceeds of a new Base Rate Loan or LIBOR Loan, as applicable, under
      this Agreement;




13




(iii) the
      Administrative Agent shall use reasonable efforts to cause such Existing Lender
      under the Existing Credit Agreement to deliver to the Borrower as soon as
      practicable after the Closing Date, the Note issued by the Borrower to it under
      the Existing Credit Agreement, marked “canceled” or otherwise similarly defaced;
      and




(iv) the
      Existing Credit Agreement and the commitments thereunder shall be superceded
      by
      this Agreement and such commitments shall terminate; *provided,
      that* ,
      the
      provisions of the Existing Credit Agreement that are expressly intended to
      survive termination of the Existing Credit Agreement shall survive.




It
      is the
      intent of the parties that this Agreement not constitute a novation of the
      obligations and liabilities existing under the Existing Credit Agreement or
      evidence repayment of any such obligations and liabilities and that this
      Agreement amend and restate in its entirety the Existing Credit Agreement and
      re-evidence the obligations of the Borrower outstanding thereunder.




**Section
      2.02** **Borrowings,
      Continuations and Conversions, Letters of Credit.**




(a)  **Borrowings** .
      The
      Borrower shall give the Administrative Agent (which shall promptly notify the
      Lenders) advance notice as hereinafter provided of each borrowing hereunder,
      which shall specify (i) the aggregate amount of such borrowing,
      (ii) the Type and (iii) the date (which shall be a Business Day) of
      the Loans to be borrowed, and (iv) (in the case of LIBOR Loans) the
      duration of the Interest Period therefor.




(b)  **Minimum
      Amounts** .
      If a
      borrowing consists in whole or in part of LIBOR Loans, such LIBOR Loans shall
      be
      in amounts of at least $500,000 or any whole multiple of $250,000 in excess
      thereof. If a borrowing consists in whole or in part of Base Rate Loans, such
      Base Rate Loans shall be in amounts of at least $500,000 or integral multiples
      of $250,000 in excess thereof.




(c)  **Notices** .
      All
      borrowings, continuations and conversions shall require advance written notice
      to the Administrative Agent (which shall promptly notify the Lenders) in the
      form of ***Exhibit
      B*** (or
      telephonic notice promptly confirmed by such a written notice), which in each
      case shall be irrevocable, from the Borrower to be received by the
      Administrative Agent not later than 12:00 p.m. Charlotte, North Carolina time
      at
      least one Business Day prior to the date of each Base Rate Loan borrowing and
      three Business Days prior to the date of each LIBOR Loan borrowing, continuation
      or conversion. Without in any way limiting the Borrower’s obligation to confirm
      in writing any telephonic notice, the Administrative Agent may act without
      liability upon the basis of telephonic notice believed by the Administrative
      Agent in good faith to be from the Borrower prior to receipt of written
      confirmation. In each such case, the Borrower hereby waives the right to dispute
      the Administrative Agent’s record of the terms of such telephonic notice except
      in the case of gross negligence or willful misconduct by the Administrative
      Agent.




(d)  **Continuation
      Options** .
      Subject
      to the provisions made in this ***Section 2.02(d)*** ,
      the
      Borrower may elect to continue all or any part of any LIBOR Loan beyond the
      expiration of the then current Interest Period relating thereto by giving
      advance notice as provided in ***Section
      2.02(c)*** to the
      Administrative Agent (which shall promptly notify the Lenders) of such election,
      specifying the amount of such Loan to be continued and the Interest Period
      therefor. In the absence of such a timely and proper election, the Borrower
      shall be deemed to have elected to convert such LIBOR Loan to a Base Rate Loan
      pursuant to ***Section 2.02(e)*** .
      All or
      any part of any LIBOR Loan may be continued as provided herein, provided that
      (i) any continuation of any such Loan shall be (as to each Loan as continued
      for
      an applicable Interest Period) in amounts of at least $500,000 or any whole
      multiple of $250,000 in excess thereof and (ii) no Default shall have occurred
      and be continuing. If a Default shall have occurred and be continuing, each
      LIBOR Loan shall be converted to a Base Rate Loan on the last day of the
      Interest Period applicable thereto.




14




(e)  **Conversion
      Options** .
      The
      Borrower may elect to convert all or any part of any LIBOR Loan on the last
      day
      of the then current Interest Period relating thereto to a Base Rate Loan by
      giving advance notice to the Administrative Agent (which shall promptly notify
      the Lenders) of such election. Subject to the provisions made in this ***Section
      2.02(e)*** ,
      the
      Borrower may elect to convert all or any part of any Base Rate Loan at any
      time
      and from time to time to a LIBOR Loan by giving advance notice as provided
      in ***Section
      2.02(c)*** to the
      Administrative Agent (which shall promptly notify the Lenders) of such election.
      All or any part of any outstanding Loan may be converted as provided herein,
      provided that (i) any conversion of any Base Rate Loan into a LIBOR Loan shall
      be (as to each such Loan into which there is a conversion for an applicable
      Interest Period) in amounts of at least $500,000 or any whole multiple of
      $250,000 in excess thereof and (ii) no Default shall have occurred and be
      continuing. If a Default shall have occurred and be continuing, no Base Rate
      Loan may be converted into a LIBOR Loan.




(f)  **Advances** .
      Not
      later than 12:00 p.m. Charlotte, North Carolina time on the date specified
      for
      each the borrowing hereunder, each Lender shall make available the amount of
      the
      Loan to be made by it on such date to the Administrative Agent, to an account
      which the Administrative Agent shall specify, in immediately available funds,
      for the account of the Borrower. The amounts so received by the Administrative
      Agent shall, subject to the terms and conditions of this Agreement, be made
      available to the Borrower by depositing the same, in immediately available
      funds, in an account of the Borrower, designated by the Borrower and maintained
      at the Principal Office.




(g)  **Letters
      of Credit** .
      The
      Borrower shall give the Issuing Bank (which shall promptly notify the Lenders
      of
      such request and their Percentage Share of such Letter of Credit) advance notice
      to be received by the Issuing Bank not later than 12:00 p.m. Charlotte, North
      Carolina time not less than three Business Days prior thereto of each request
      for the issuance, and at least ten Business Days prior to the date of the
      renewal or extension, of a Letter of Credit hereunder which request shall
      specify (i) the amount of such Letter of Credit, (ii) the date (which shall
      be a
      Business Day) such Letter of Credit is to be issued, renewed or extended, (iii)
      the duration thereof, (iv) the name and address of the beneficiary thereof,
      and
      (v) such other information as the Issuing Bank may reasonably request, all
      of
      which shall be reasonably satisfactory to the Issuing Bank. Subject to the
      terms
      and conditions of this Agreement, on the date specified for the issuance,
      renewal or extension of a Letter of Credit, the Administrative Agent shall
      issue, renew or extend such Letter of Credit to the beneficiary
      thereof.




In
      conjunction with the issuance of each Letter of Credit, the Borrower shall
      execute a Letter of Credit Agreement. In the event of any conflict between
      any
      provision of a Letter of Credit Agreement and this Agreement, the Borrower,
      the
      Issuing Bank, the Administrative Agent and the Lenders hereby agree that the
      provisions of this Agreement shall govern.





The
      Issuing Bank will send to the Borrower and each Lender, immediately upon
      issuance of any Letter of Credit, or an amendment thereto, a true and complete
      copy of such Letter of Credit, or such amendment thereto.




**Section
      2.03** **Commitments;
      Changes of Commitments.**




(a)  **Commitments** .
      The
      initial amount of the Aggregate Revolving Credit Commitments shall be
      $130,000,000. The Aggregate Revolving Credit Commitments may be increased from
      time to time in accordance with ***subsection
      (b)*** **** of
      this
      section, or reduced from time to time in accordance with ***subsection
      (c)*** of this
      section.




(b)  **Increase
      in Revolving Credit Commitments** .




15




(i) Provided
      there exists no Default or Event of Default and subject to the conditions set
      forth under ***clause
      (v)*** below,
      upon notice to the Administrative Agent (which shall promptly notify the
      Lenders), Borrower may from time to time request an increase in the Revolving
      Credit Commitments; *provided* , *that* (A)
      the
      Aggregate Revolving Credit Commitments shall not at any time exceed the lesser
      of (1) the Aggregate Maximum Revolving Credit Amounts after adjustments
      resulting from reductions thereof pursuant to ***Section
      2.03(d)*** and (2)
      the then effective Borrowing Base, and (B) such increase of the Revolving Credit
      Commitments shall be in a minimum amount of $5,000,000, or integral multiples
      of
      $1,000,000 in excess thereof. At the time of sending such notice, Borrower
      (in
      consultation with the Administrative Agent) shall specify the time period within
      which each Lender is requested to respond (which shall in no event be less
      than
      ten (10) Business Days from the date of delivery of such notice to the
      Lenders).




(ii) Each
      Lender shall notify the Administrative Agent within such time period whether
      or
      not it agrees to increase its Revolving Credit Commitment and, if so, whether
      by
      an amount equal to, greater than, or less than its Percentage Share of such
      requested increase. Any Lender not responding within such time period shall
      be
      deemed to have declined to increase its Revolving Credit Commitment.




(iii) The
      Administrative Agent shall notify Borrower of the Lenders’ responses to the
      request made hereunder. To achieve the full amount of a requested increase
      and
      subject to the approval of the Administrative Agent and the Issuing Bank (which
      approvals shall not be unreasonably withheld), Borrower may also invite
      additional Persons to become Lenders pursuant to a joinder agreement in form
      and
      substance satisfactory to the Administrative Agent and its counsel.




(iv) If
      the
      Aggregate Revolving Credit Commitments are increased in accordance with this
      Section, the Administrative Agent and Borrower shall determine the effective
      date (such date, the “ ***Increase
      Effective Date*** ”)
      and
      the final allocation of such increase. The Administrative Agent shall promptly
      (i) notify Borrower of the final allocation of such increase in the Revolving
      Credit Commitment and the Increase Effective Date, and (ii) notify each Lender
      of its Revolving Credit Commitment as of the Increase Effective Date.




(v) As
      a
      condition precedent to such increase, Borrower shall deliver to the
      Administrative Agent a certificate of each Obligor dated as of the Increase
      Effective Date signed by a Responsible Officer of such Obligor (i) certifying
      and attaching the resolutions adopted by such Obligor approving or consenting
      to
      such increase, and (ii) in the case of Borrower, certifying that, before and
      after giving effect to such increase, (A) the representations and warranties
      contained in ***Article
      VII*** and the
      other Loan Documents are true and correct on and as of the Increase Effective
      Date, except to the extent that such representations and warranties specifically
      refer to an earlier date, in which case they are true and correct as of such
      earlier date, and except that for purposes of this ***Section
      2.03(b)*** ,
      the
      representations and warranties contained in ***Section
      7.02*** shall be
      deemed to refer to the most recent statements furnished pursuant to ***clauses
      (a)*** and ***(b)*** ,
      respectively, of ***Section
      8.01*** ,
      (B) no
      Default or Event of Default exists, and (C) no Material Adverse Effect shall
      have occurred. To the extent necessary to keep the outstanding Loans ratable
      with any revised Percentage Shares of the Lenders arising from any nonratable
      increase in the Revolving Credit Commitment under this Section, Borrower shall
      prepay Loans outstanding on the Increase Effective Date and/or Lenders shall
      make assignments pursuant to arrangements satisfactory to the Administrative
      Agent ( *provided,
      that* in each
      case, Borrower shall pay any additional amounts required pursuant to ***Section
      5.05*** ).




16




(vi) This
      Section shall supersede any provisions in ***Sections
      4.05*** or ***12.04*** to the
      contrary.




(c)  **Reduction
      in Aggregate Revolving Credit Commitments** .
      The
      Borrower shall have the right to reduce the amount of the Aggregate Revolving
      Credit Commitments at any time, or from time to time, upon not less than three
      (3) Business Days’ prior notice to the Administrative Agent (who shall promptly
      notify the Lenders) of each such reduction, which notice shall specify the
      effective date thereof and the amount of any such reduction (which shall not
      be
      less than $10,000,000 or any whole multiple of $10,000,000 in excess thereof;
      and no more than an amount by which the Aggregate Revolving Credit Commitments
      would be less than the aggregate outstanding principal amount of the Loans
      plus
      the LC Exposure, after giving effect to any concurrent prepayment pursuant
      to ***Section
      2.07*** )
      and
      shall be irrevocable and effective only upon receipt by the Administrative
      Agent.




(d)  **Reduction
      in Aggregate Maximum Revolving Credit Amounts** .
      The
      Borrower shall have the right to terminate or to reduce the amount of the
      Aggregate Maximum Revolving Credit Amounts at any time, or from time to time,
      upon not less than three (3) Business Days’ prior notice to the Administrative
      Agent (who shall promptly notify the Lenders) of each such termination or
      reduction, which notice shall specify the effective date thereof and the amount
      of any such reduction (which shall not be less than $10,000,000 or any whole
      multiple of $10,000,000 in excess thereof; and no more than an amount by which
      the Aggregate Maximum Revolving Credit Amounts would be less than the Aggregate
      Revolving Credit Commitments) and shall be irrevocable and effective only upon
      receipt by the Administrative Agent. The Aggregate Maximum Revolving Credit
      Amounts once terminated or reduced may not be reinstated.




**Section
      2.04** **Fees.**




(a)  **Commitment
      Fee** .
      The
      Borrower shall pay to the Administrative Agent for the account of each Lender
      a
      commitment fee on the daily average unused amount of the Aggregate Revolving
      Credit Commitments up to, but excluding, the earlier of the date the Aggregate
      Revolving Credit Commitments are terminated or the Revolving Credit Termination
      Date: (a) if such unused amount is equal to or less than twenty-five
      percent (25%) of the then-applicable Aggregate Revolving Credit Commitments,
      at
      the rate of twenty-five basis points (0.250%) per annum; and (b) if such
      unused amount is greater than twenty-five percent (25%) of the then-applicable
      Aggregate Revolving Credit Commitments, at the rate of thirty-seven and one-half
      basis points (0.375%) per annum. Accrued commitment fees shall be payable
      quarterly in arrears on each Quarterly Date and on the earlier of the date
      the
      Aggregate Revolving Credit Commitments are terminated or the Revolving Credit
      Termination Date. Borrower and Lenders acknowledge
      and agree that the unused commitment fees payable hereunder are *bona
      fide* unused
      commitment fees and are intended as reasonable compensation to
      Lenders for
      committing to make
      funds available to
      Borrower as
      described herein and
      for
      no other purposes.




(b)  **Letter
      of Credit Fees** .




(i) The
      Borrower agrees to pay the Administrative Agent, for the account of each Lender,
      commissions for issuing the Letters of Credit on the daily average outstanding
      of the maximum liability of the Issuing Bank existing from time to time under
      such Letter of Credit (calculated separately for each Letter of Credit) at
      the
      rate per annum equal to the Applicable Margin in effect from time to time for
      LIBOR Loans, provided that each Letter of Credit shall bear a minimum commission
      of $500 and further provided, during any period commencing on the date of an
      Event of Default until the same is paid in full or all Events of Default are
      cured and waived, equal to the Post-Default Rate. Each Letter of Credit shall
      be
      deemed to be outstanding up to the full face amount of the Letter of Credit
      until the Issuing Bank has received the canceled Letter of Credit or a written
      cancellation of the Letter of Credit from the beneficiary of such Letter of
      Credit in form and substance acceptable to the Issuing Bank, or for any
      reductions in the amount of the Letter of Credit (other than from a drawing),
      written notification from the beneficiary of such Letter of Credit. Such
      commissions are payable in advance at issuance of the Letter of Credit for
      the
      first year thereof and thereafter, quarterly in arrears on each Quarterly Date
      and upon cancellation or expiration of each such Letter of Credit.




17




(ii) The
      Borrower agrees to pay the Administrative Agent, for the account of the Issuing
      Bank, commissions for issuing the Letters of Credit (calculated separately
      for
      each Letter of Credit) equal to 0.125% of the face amount of each Letter of
      Credit, payable upon issuance of such Letter of Credit.




(c)  **Fee
      Letter** .
      The
      Borrower shall pay to Administrative Agent for its account such other fees
      as
      are set forth in the Fee Letter on the dates specified therein to the extent
      not
      paid prior to the Closing Date.




**Section
      2.05** **Several
      Obligations** **.**
      The failure of any Lender to make any Loan to be made by it or to provide funds
      for disbursements or reimbursements under Letters of Credit on the date
      specified therefor shall not relieve any other Lender of its obligation to
      make
      its Loan or provide funds on such date, but no Lender shall be responsible
      for
      the failure of any other Lender to make a Loan to be made by such other Lender
      or to provide funds to be provided by such other Lender.




Section
      2.06Notes **.**
      The Loans made by each Lender shall be evidenced by a single promissory note
      of
      the Borrower in substantially the form of ***Exhibit
      A*** dated
      (i) the Closing Date or (ii) the effective date of an Assignment pursuant to ***Section
      12.06(b)*** ,
      payable
      to the order of such Lender in a principal amount equal to its Maximum Revolving
      Credit Amount as originally in effect and otherwise duly completed and such
      substitute Notes as required by ***Section
      12.06(b)*** .
      The
      date, amount, Type, interest rate and Interest Period of each Loan made by
      each
      Lender, and all payments made on account of the principal thereof, shall be
      recorded by such Lender on its books for its Note, and, prior to any transfer
      may be endorsed by such Lender on the schedule attached to such Note or any
      continuation thereof or on any separate record maintained by such Lender.
      Failure to make any such notation or to attach a schedule shall not affect
      any
      Lender’s or the Borrower’s rights or obligations in respect of such Loans or
      affect the validity of such transfer by any Lender of its Note.




**Section
      2.07** **Prepayments**




(a)  **Voluntary
      Prepayments** .
      The
      Borrower may prepay the Base Rate Loans upon not less than one (1) Business
      Day’s prior notice to the Administrative Agent (which shall promptly notify the
      Lenders), which notice shall specify the prepayment date (which shall be a
      Business Day) and the amount of the prepayment (which shall be at least $100,000
      or the remaining aggregate principal balance outstanding on the Notes) and
      shall
      be irrevocable and effective only upon receipt by the Administrative Agent,
      provided that interest on the principal prepaid, accrued to the prepayment
      date,
      shall be paid on the prepayment date. The Borrower may prepay LIBOR Loans on
      the
      same conditions as for Base Rate Loans (except that prior notice to the
      Administrative Agent shall be not less than three (3) Business Days for LIBOR
      Loans) and in addition such prepayments of LIBOR Loans shall be subject to
      the
      terms of ***Section
      5.05*** and
      shall be in an amount equal to all of the LIBOR Loans for the Interest Period
      prepaid. In the event of a voluntary prepayment pursuant to this ***Section
      2.07(a)*** ,
      Borrower shall be entitled to reborrow such amounts pursuant to ***Section
      2.01*** .




(b)  **Mandatory
      Prepayments** .
      If a
      Borrowing Base Deficiency results from the redetermination of the Borrowing
      Base
      pursuant to ***Section 2.08(b)*** or ***(d)*** ,
      then
      the Borrower shall, within thirty (30) days notify Administrative Agent of
      Borrower’s election to, (i) prepay the Loans in two equal installments
      equal to one half of the aggregate principal amount sufficient to eliminate
      such
      Borrowing Base Deficiency, together with interest on the principal amount paid
      accrued to the date of each such prepayment due ninety (90) days and one hundred
      and eighty (180) days from the date of such redetermination, (ii) pledge,
      or cause any Subsidiary to pledge, additional unencumbered collateral of
      sufficient value and character (as determined by the Administrative Agent and
      the Lenders in their sole discretion) that when added to the existing collateral
      shall cause the Borrowing Base to equal or exceed the aggregate outstanding
      Loans plus the LC Exposure, or (iii) any combination of (i) and (ii)
      satisfactory to the Administrative Agent and all Lenders. If, because of LC
      Exposure, a Borrowing Base Deficiency remains after prepaying all of the Loans,
      the Borrower shall pay to the Administrative Agent on behalf of the Lenders
      an
      amount equal to such remaining Borrowing Base Deficiency to be held as cash
      collateral as provided in ***Section
      2.10(b)*** .




18




(c)  **Generally** .
      Prepayments permitted or required under this ***Section
      2.07*** shall be
      without premium or penalty, except as required under ***Section
      5.05*** for
      prepayment of LIBOR Loans. Any prepayments on the Loans may be reborrowed
      subject to the then effective Aggregate Revolving Credit
      Commitments.




**Section
      2.08** **Borrowing
      Base.**




(a)  The
      Borrowing Base shall be determined in accordance with ***Section
      2.08(b)*** by the
      Administrative Agent with the concurrence of the Lenders and is subject to
      redetermination in accordance with ***Section
      2.08(d)*** .
      Upon
      any redetermination of the Borrowing Base, such redetermination shall remain
      in
      effect until the next Redetermination Date. So long as any of the Commitments
      are in effect or any LC Exposure or Loans are outstanding hereunder, this
      facility shall be governed by the then effective Borrowing Base. During the
      period from and after the Closing Date until the first redetermination or
      reduction pursuant to ***Section
      2.08*** ,
      the
      amount of the Borrowing Base shall be $130,000,000 (the “ ***Initial
      Borrowing Base*** ”)
      which
      amount is comprised of the Oil and Gas Properties Collateral Value.




(b)  Upon
      receipt of the reports required by ***Section
      8.07*** and such
      other reports, data and supplemental information as may from time to time be
      reasonably requested by the Administrative Agent (the “ ***Engineering
      Reports*** ”),
      the
      Borrowing Base shall be redetermined for each Borrowing Base Period and each
      such redetermination shall be effective as of the date set forth in such notice
      of redetermination delivered by the Administrative Agent to Borrower (the ***“Scheduled
      Redetermination Date”*** ).
      The
      Oil and Gas Properties Collateral Value shall be determined based upon the
      loan
      collateral value assigned to the Mortgaged Properties. The Borrowing Base shall
      be equal to the sum of the Oil and Gas Properties Collateral Value and such
      other credit factors (including without limitation the assets, liabilities,
      cash
      flow, business, properties, prospects, management and ownership of the Borrower
      and its Subsidiaries) which the Lenders deem significant. The Lenders’
determination of the Borrowing Base shall be in their sole discretion and shall
      not be subject to review or challenge. Upon each redetermination of the
      Borrowing Base, the Administrative Agent shall recommend to the Lenders a new
      Borrowing Base and the Lenders in accordance with their customary policies
      and
      procedures for extending credit to oil and gas reserve-based customers shall
      establish the redetermined Borrowing Base by unanimous agreement in the event
      of
      any increase in the Borrowing Base and by agreement of at least the Majority
      Lenders in the event of any redetermination to maintain or reduce the Borrowing
      Base. If a redetermined Borrowing Base is not approved by the Administrative
      Agent and the applicable Lenders within twenty (20) days of the submission
      to
      the Lenders by the Administrative Agent of its recommended Borrowing Base,
      the
      Administrative Agent shall notify each Lender that the recommended Borrowing
      Base has not been approved and request that each Lender submit to the
      Administrative Agent within ten (10) days thereafter its proposed Borrowing
      Base. Promptly following the 10 th day
      after such request, the Administrative Agent shall determine the Borrowing
      Base
      for such Redetermination by calculating the highest Borrowing Base then
      acceptable to the Administrative Agent and a number of Lenders sufficient to
      constitute Majority Lenders (or all Lenders in the case of an increase). If
      the
      Borrower does not furnish the Engineering Reports by the date required, the
      Lenders may nonetheless determine a new Borrowing Base. It is expressly
      understood that the Lenders shall have no obligation to determine the Borrowing
      Base at any particular amount, either in relation to the Maximum Revolving
      Credit Amount or otherwise.




19




(c)  The
      Borrower shall have the right to reduce the amount of the Borrowing Base upon
      not less than thirty (30) days’ prior written notice to the Administrative Agent
      (who shall promptly notify the Lenders) of the reduction, which shall specify
      the effective date thereof and the amount of such reduction (which shall not
      be
      less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof,
      no
      more than an amount which would cause a Borrowing Base Deficiency) and shall
      be
      irrevocable and effective only upon receipt by the Administrative Agent. The
      Borrowing Base once reduced at Borrower’s election may not be reinstated by
      Borrower, nor shall Lenders be obligated to determine the Borrowing Base at
      any
      subsequent Scheduled Redetermination Date or other Special Borrowing Base
      Determination at any particular amount, either in relation to the Borrowing
      Base
      prior or subsequent to any such optional reduction by Borrower.




(d)  In
      addition to “ ***Scheduled
      Redeterminations*** ”
      pursuant to ***Section 2.08(b)*** ,
      the
      Borrower and the Majority Lenders may each request one (1) additional
      redetermination of the Borrowing Base during each Borrowing Base Period. In
      the
      event the Borrower or Majority Lenders request a “ ***Special
      Borrowing Base Determination*** ”
      pursuant to this ***Section 2.08(d)*** ,
      the
      Borrower shall deliver written notice of such request to the Administrative
      Agent which shall include: (i) Engineering Report(s) prepared as of a date
      not more than thirty (30) calendar days prior to the date of such request,
      and
      (ii) such other information as Administrative Agent and the Lenders shall
      request prepared as of a date not more than thirty (30) calendar days prior
      to
      the date of such request. Likewise, in the event the Lenders exercise their
      option for a Special Borrowing Base Determination, the Administrative Agent
      shall give the Borrower notice of the redetermined Borrowing Base which shall
      state the effective date of the redetermination.




Section
      2.09Assumption
      of Risks **.**
      The Borrower assumes all risks of the acts or omissions of any beneficiary
      of
      any Letter of Credit or any transferee thereof with respect to its use of such
      Letter of Credit. Neither the Issuing Bank (except in the case of gross
      negligence or willful misconduct on the part of the Issuing Bank or any of
      its
      employees), its correspondents nor any Lender shall be responsible for the
      validity, sufficiency or genuineness of certificates or other documents or
      any
      endorsements thereon, even if such certificates or other documents should in
      fact prove to be invalid, insufficient, fraudulent or forged; for errors,
      omissions, interruptions or delays in transmissions or delivery of any messages
      by mail, telex, or otherwise, whether or not they be in code; for errors in
      translation or for errors in interpretation of technical terms; the validity
      or
      sufficiency of any instrument transferring or assigning or purporting to
      transfer or assign any Letter of Credit or the rights or benefits thereunder
      or
      proceeds thereof, in whole or in part, which may prove to be invalid or
      ineffective for any reason; the failure of any beneficiary or any transferee
      of
      any Letter of Credit to comply fully with conditions required in order to draw
      upon any Letter of Credit; or for any other consequences arising from causes
      beyond the Issuing Bank’s control or the control of the Issuing Bank’s
      correspondents. In addition, neither the Issuing Bank, the Administrative Agent
      nor any Lender shall be responsible for any error, neglect, or default of any
      of
      the Issuing Bank’s correspondents; and none of the above shall affect, impair or
      prevent the vesting of any of the Issuing Bank’s, the Administrative Agent’s or
      any Lender’s rights or powers hereunder or under the Letter of Credit
      Agreements, all of which rights shall be cumulative. The Issuing Bank and its
      correspondents may accept certificates or other documents that appear on their
      face to be in order, without responsibility for further investigation of any
      matter contained therein regardless of any notice or information to the
      contrary. In furtherance and not in limitation of the foregoing provisions,
      the
      Borrower agrees that any action, inaction or omission taken or not taken by
      the
      Issuing Bank or by any correspondent for the Issuing Bank in good faith in
      connection with any Letter of Credit, or any related drafts, certificates,
      documents or instruments, shall be binding on the Borrower and shall not put
      the
      Issuing Bank or its correspondents under any resulting liability to the
      Borrower.





20




**Section
      2.10** **Obligation
      to Reimburse and to Prepay.**




(a)  If
      a
      disbursement by the Issuing Bank is made under any Letter of Credit, the
      Borrower shall pay to the Administrative Agent within two (2) Business Days
      after notice of any such disbursement is received by the Borrower, the amount
      of
      each such disbursement made by the Issuing Bank under the Letter of Credit
      (if
      such payment is not sooner effected as may be required under this ***Section
      2.10*** or under
      other provisions of the Letter of Credit), together with interest on the amount
      disbursed from and including the date of disbursement until payment in full
      of
      such disbursed amount at a varying rate per annum equal to (i) the then
      applicable interest rate for Base Rate Loans through the second Business Day
      after notice of such disbursement is received by the Borrower and (ii)
      thereafter, the Post-Default Rate for Base Rate Loans (but in no event to exceed
      the Highest Lawful Rate) for the period from and including the third Business
      Day following the date of such disbursement to and including the date of
      repayment in full of such disbursed amount. The obligations of the Borrower
      under this Agreement with respect to each Letter of Credit shall be absolute,
      unconditional and irrevocable and shall be paid or performed strictly in
      accordance with the terms of this Agreement under all circumstances whatsoever,
      including, without limitation, but only to the fullest extent permitted by
      applicable law, the following circumstances: (i) any lack of validity or
      enforceability of this Agreement, any Letter of Credit or any of the Security
      Instruments; (ii) any amendment or waiver of (including any default), or any
      consent to departure from this Agreement (except to the extent permitted by
      any
      amendment or waiver), any Letter of Credit or any of the Security Instruments;
      (iii) the existence of any claim, set-off, defense or other rights which the
      Borrower may have at any time against the beneficiary of any Letter of Credit
      or
      any transferee of any Letter of Credit (or any Persons for whom any such
      beneficiary or any such transferee may be acting), the Issuing Bank, the
      Administrative Agent, any Lender or any other Person, whether in connection
      with
      this Agreement, any Letter of Credit, the Security Instruments, the transactions
      contemplated hereby or any unrelated transaction; (iv) any statement,
      certificate, draft, notice or any other document presented under any Letter
      of
      Credit proves to have been forged, fraudulent, insufficient or invalid in any
      respect or any statement therein proves to have been untrue or inaccurate in
      any
      respect whatsoever; (v) payment by the Issuing Bank under any Letter of Credit
      against presentation of a draft certificate which appears on its face to comply,
      but does not comply, with the terms of such Letter of Credit; and (vi) any
      other
      circumstance or happening whatsoever, whether or not similar to any of the
      foregoing.




Notwithstanding
      anything in this Agreement to the contrary, the Borrower will not be liable
      for
      payment or performance that results from the gross negligence or willful
      misconduct of the Issuing Bank, except (i) where the Borrower or any Subsidiary
      actually recovers the proceeds for itself or the Issuing Bank of any payment
      made by the Issuing Bank in connection with such gross negligence or willful
      misconduct or (ii) in cases where the Administrative Agent makes payment to
      the
      named beneficiary of a Letter of Credit.




21




(b)  In
      the
      event of the occurrence of any Event of Default, a payment or prepayment
      pursuant to ***Section
      2.07(b)*** or the
      maturity of the Notes, whether by acceleration or otherwise, an amount equal
      to
      the LC Exposure (or the excess in the case of ***Section 2.07(b)*** )
      shall
      be deemed to be forthwith due and owing by the Borrower to the Issuing Bank,
      the
      Administrative Agent and the Lenders as of the date of any such occurrence;
      and
      the Borrower’s obligation to pay such amount shall be absolute and
      unconditional, without regard to whether any beneficiary of any such Letter
      of
      Credit has attempted to draw down all or a portion of such amount under the
      terms of a Letter of Credit, and, to the fullest extent permitted by applicable
      law, shall not be subject to any defense or be affected by a right of set-off,
      counterclaim or recoupment which the Borrower may now or hereafter have against
      any such beneficiary, the Issuing Bank, the Administrative Agent, the Lenders
      or
      any other Person for any reason whatsoever. Such payments shall be held by
      the
      Issuing Bank on behalf of the Lenders as cash collateral securing the LC
      Exposure in an account or accounts at the Principal Office; and the Borrower
      hereby grants to and by its deposit with the Administrative Agent grants to
      the
      Administrative Agent a security interest in such cash collateral. In the event
      of any such payment by the Borrower of amounts contingently owing under
      outstanding Letters of Credit and in the event that thereafter drafts or other
      demands for payment complying with the terms of such Letters of Credit are
      not
      made prior to the respective expiration dates thereof, the Administrative Agent
      agrees, if no Event of Default has occurred and is continuing or if no other
      amounts are outstanding under this Agreement, the Notes or the Security
      Instruments, to remit to the Borrower amounts for which the contingent
      obligations evidenced by the Letters of Credit have ceased.




(c)  Each
      Lender severally and unconditionally agrees that it shall promptly reimburse
      the
      Issuing Bank an amount equal to such Lender’s Percentage Share of any
      disbursement made by the Issuing Bank under any Letter of Credit that is not
      reimbursed according to this ***Section
      2.10*** .




(d)  Notwithstanding
      anything to the contrary contained herein, if no Default exists and subject
      to
      availability under the Aggregate Revolving Credit Commitments (after reduction
      for LC Exposure), to the extent the Borrower has not reimbursed the Issuing
      Bank
      for any drawn upon Letter of Credit within one (1) Business Days after notice
      of
      such disbursement has been received by the Borrower, the amount of such Letter
      of Credit reimbursement obligation shall automatically be funded by the Lenders
      as a Loan hereunder and used by the Lenders to pay such Letter of Credit
      reimbursement obligation. If an Event of Default has occurred and is continuing,
      or if the funding of such Letter of Credit reimbursement obligation as a Loan
      would cause the aggregate amount of all Loans outstanding to exceed the
      Aggregate Revolving Credit Commitments (after reduction for LC Exposure), such
      Letter of Credit reimbursement obligation shall not be funded as a Loan, but
      instead shall accrue interest as provided in ***Section
      2.10(a)*** .




Section
      2.11Lending
      Offices **.**
      The Loans of each Type made by each Lender shall be made and maintained at
      such
      Lender’s Applicable Lending Office for Loans of such Type.




**ARTICLE
      III**


**Payments
      of Principal and Interest**




**Section
      3.01** **Repayment
      of Loans.**




(a)  **Loans** .
      On the
      Revolving Credit Termination Date the Borrower shall repay the outstanding
      aggregate principal of the Notes.




(b)  **Generally** .
      The
      Borrower will pay to the Administrative Agent, for the account of each Lender,
      the principal payments required by this ***Section
      3.01*** .




**Section
      3.02** **Interest.**




(a)  **Interest
      Rates** .
      The
      Borrower will pay to the Administrative Agent, for the account of each Lender,
      interest on the unpaid principal amount of each Loan made by such Lender for
      the
      period commencing on the date such Loan is made to, but excluding, the date
      such
      Loan shall be paid in full, at the following rates per annum:




(i) if
      such a
      Loan is a Base Rate Loan, the Base Rate (as in effect from time to time) plus
      the Applicable Margin, but in no event to exceed the Highest Lawful Rate;
      and




22




(ii) if
      such a
      Loan is a LIBOR Loan, for each Interest Period relating thereto, the Adjusted
      LIBOR for such Loan plus the Applicable Margin (as in effect from time to time),
      but in no event to exceed the Highest Lawful Rate.




(b)  **Post-Default
      Rate** .
      Notwithstanding the foregoing, the Borrower will pay to the Administrative
      Agent, for the account of each Lender interest at the applicable Post-Default
      Rate on any Loan made by such Lender, and (to the fullest extent permitted
      by
      law) on any other amount payable by the Borrower hereunder, under any Loan
      Document or under any Note held by such Lender to or for account of such Lender,
      for the period commencing on the date of an Event of Default until the same
      is
      paid in full or all Events of Default are cured or waived.




(c)  **Due
      Dates** .
      Accrued
      interest on Base Rate Loans shall be payable on each Quarterly Date commencing
      on July 1, 2006, and accrued interest on each LIBOR Loan shall be payable on
      the
      last day of the Interest Period therefor and, if such Interest Period is longer
      than three months, at three-month intervals following the first day of such
      Interest Period, except that interest payable at the Post-Default Rate shall
      be
      payable from time to time on demand and interest on any LIBOR Loan that is
      converted into a Base Rate Loan (pursuant to ***Section
      5.04*** )
      shall
      be payable on the date of conversion (but only to the extent so converted).
      Any
      accrued and unpaid interest on the Loans on the Revolving Credit Termination
      Date shall be paid on such date.




(d)  **Determination
      of Rates** .
      Promptly after the determination of any interest rate provided for herein or
      any
      change therein, the Administrative Agent shall notify the Lenders to which
      such
      interest is payable and the Borrower thereof. Each determination by the
      Administrative Agent of an interest rate or fee hereunder shall, except in
      cases
      of manifest error, be final, conclusive and binding on the parties.




**ARTICLE
      IV**


**Payments;
      Pro Rata Treatment; Computations; Etc.**




Section
      4.01Payments **.**
      Except to the extent otherwise provided herein, all payments of principal,
      interest and other amounts to be made by the Borrower under this Agreement,
      the
      Notes, Letters of Credit, and the Letter of Credit Agreements shall be made
      in
      Dollars, in immediately available funds, to the Administrative Agent at such
      account as the Administrative Agent shall specify by notice to the Borrower
      from
      time to time, not later than 12:00 p.m. Charlotte, North Carolina time on the
      date on which such payments shall become due (each such payment made after
      such
      time on such due date to be deemed to have been made on the next succeeding
      Business Day). Such payments shall be made without (to the fullest extent
      permitted by applicable law) defense, set-off or counterclaim. Each payment
      received by the Administrative Agent under this Agreement or any Note for
      account of a Lender shall be paid promptly to such Lender in immediately
      available funds. Except as otherwise provided in the definition of “ ***Interest
      Period*** ”,
      if the
      due date of any payment under this Agreement or any Note would otherwise fall
      on
      a day which is not a Business Day such date shall be extended to the next
      succeeding Business Day and interest shall be payable for any principal so
      extended for the period of such extension. At the time of each payment to the
      Administrative Agent of any principal of or interest on any borrowing, the
      Borrower shall notify the Administrative Agent of the Loans to which such
      payment shall apply. In the absence of such notice the Administrative Agent
      may
      specify the Loans to which such payment shall apply, but to the extent possible
      such payment or prepayment will be applied first to the Loans comprised of
      Base
      Rate Loans.




**Section
      4.02** **Pro
      Rata Treatment.** Except
      to the extent otherwise provided herein each Lender agrees that: (i) each
      borrowing from the Lenders under ***Section
      2.01*** **** and
      each
      continuation and conversion under ***Section
      2.02*** shall be
      made from the Lenders pro rata in accordance with their Percentage Share, each
      payment of fees under ***Sections
      2.04(a)*** and ** ***2.04(b)(i)*** shall be
      made for account of the Lenders pro rata in accordance with their Percentage
      Share, and each termination or reduction of the amount of the Aggregate
      Revolving Credit Commitments or the Aggregate Maximum Revolving Credit Amounts
      under ***Section
      2.03*** shall be
      applied to the Commitment of each Lender, pro rata according to the amounts
      of
      its respective Commitment; (ii) each payment of principal of Loans by the
      Borrower shall be made for account of the Lenders pro rata in accordance with
      the respective unpaid principal amount of the Loans held by the Lenders; and
      (iii) each payment of interest on Loans by the Borrower shall be made for
      account of the Lenders pro rata in accordance with the amounts of interest
      due
      and payable to the respective Lenders; and (iv) each reimbursement by the
      Borrower of disbursements under Letters of Credit shall be made for account
      of
      the Issuing Bank or, if funded by the Lenders, pro rata for the account of
      the
      Lenders, in accordance with the amounts of reimbursement obligations due and
      payable to each respective Lender.




23




Section
      4.03Computations **.**
      Interest on LIBOR Loans and fees shall be computed on the basis of a year of
      360
      days and actual days elapsed (including the first day but excluding the last
      day) occurring in the period for which such interest is payable, unless such
      calculation would exceed the Highest Lawful Rate, in which case interest shall
      be calculated on the per annum basis of a year of 365 or 366 days, as the case
      may be. Interest on Base Rate Loans shall be computed on the basis of a year
      of
      365 or 366 days, as the case may be, and actual days elapsed (including the
      first day but excluding the last day) occurring in the period for which such
      interest is payable.




Section
      4.04Non-receipt
      of Funds by the Administrative Agent **.**
      Unless the Administrative Agent shall have been notified by a Lender or the
      Borrower prior to the date on which such notifying party is scheduled to make
      payment to the Administrative Agent (in the case of a Lender) of the proceeds
      of
      a Loan or a payment under a Letter of Credit to be made by it hereunder or
      (in
      the case of the Borrower) a payment to the Administrative Agent for account
      of
      one or more of the Lenders hereunder (such payment being herein called the
      “ ***Required
      Payment*** ”),
      which
      notice shall be effective upon receipt, that it does not intend to make the
      Required Payment to the Administrative Agent, the Administrative Agent may
      assume that the Required Payment has been made and may, in reliance upon such
      assumption (but shall not be required to), make the amount thereof available
      to
      the intended recipient(s) on such date and, if such Lender or the Borrower
      (as
      the case may be) has not in fact made the Required Payment to the Administrative
      Agent, the recipient(s) of such payment shall, on demand, repay to the
      Administrative Agent the amount so made available together with interest thereon
      in respect of each day during the period commencing on the date such amount
      was
      so made available by the Administrative Agent until, but excluding, the date
      the
      Administrative Agent recovers such amount at a rate per annum which, for any
      Lender as recipient, will be equal to the Federal Funds Rate, and for the
      Borrower as recipient, will be equal to the Base Rate plus the Applicable
      Margin.




**Section
      4.05** **Set-off,
      Sharing of Payments, Etc.**




(a)  The
      Borrower agrees that, in addition to (and without limitation of) any right
      of
      set-off, bankers’ lien or counterclaim a Lender may otherwise have, each Lender
      shall have the right and be entitled (after consultation with the Administrative
      Agent), at its option, to offset balances held by it or by any of its Affiliates
      for account of the Borrower or any Subsidiary at any of its offices, in Dollars
      or in any other currency, against any principal of or interest on any of such
      Lender’s Loans, or any other amount payable to such Lender hereunder, which is
      not paid when due (regardless of whether such balances are then due to the
      Borrower), in which case it shall promptly notify the Borrower and the
      Administrative Agent thereof, provided that such Lender’s failure to give such
      notice shall not affect the validity thereof.




24




(b)  If
      any
      Lender shall obtain payment of any principal of or interest on any Loan made
      by
      it to the Borrower under this Agreement (or reimbursement as to any Letter
      of
      Credit) through the exercise of any right of set-off, banker’s lien or
      counterclaim or similar right or otherwise, and, as a result of such payment,
      such Lender shall have received a greater percentage of the principal or
      interest (or reimbursement) then due hereunder by the Borrower to such Lender
      than the percentage received by any other Lenders, it shall promptly (i) notify
      the Administrative Agent and each other Lender thereof and (ii) purchase from
      such other Lenders participations in (or, if and to the extent specified by
      such
      Lender, direct interests in) the Loans (or participations in Letters of Credit)
      made by such other Lenders (or in interest due thereon, as the case may be)
      in
      such amounts, and make such other adjustments from time to time as shall be
      equitable, to the end that all the Lenders shall share the benefit of such
      excess payment (net of any expenses which may be incurred by such Lender in
      obtaining or preserving such excess payment) pro rata in accordance with the
      unpaid principal and/or interest on the Loans held by each of the Lenders (or
      reimbursements of Letters of Credit). To such end all the Lenders shall make
      appropriate adjustments among themselves (by the resale of participations sold
      or otherwise) if such payment is rescinded or must otherwise be restored. The
      Borrower agrees that any Lender so purchasing a participation (or direct
      interest) in the Loans made by other Lenders (or in interest due thereon, as
      the
      case may be) may exercise all rights of set-off, banker’s lien, counterclaim or
      similar rights with respect to such participation as fully as if such Lender
      were a direct holder of Loans (or Letters of Credit) in the amount of such
      participation. Nothing contained herein shall require any Lender to exercise
      any
      such right or shall affect the right of any Lender to exercise, and retain
      the
      benefits of exercising, any such right with respect to any other indebtedness
      or
      obligation of the Borrower. If under any applicable bankruptcy, insolvency
      or
      other similar law, any Lender receives a secured claim in lieu of a set-off to
      which this ***Section
      4.05*** applies,
      such Lender shall, to the extent practicable, exercise its rights in respect
      of
      such secured claim in a manner consistent with the rights of the Lenders
      entitled under this ***Section
      4.05*** to share
      the benefits of any recovery on such secured claim.




**Section
      4.06** **Taxes.**




(a)  **Payments
      Free and Clear** .
      Any and
      all payments by the Borrower hereunder shall be made, in accordance with ***Section
      4.01*** ,
      free
      and clear of and without deduction for any and all present or future taxes,
      levies, imposts, deductions, charges or withholdings, and all liabilities with
      respect thereto, *excluding* ,
      in the
      case of each Lender, the Issuing Bank and the Administrative Agent, taxes
      imposed on its income, and franchise or similar taxes imposed on it, by (i)
      any
      jurisdiction (or political subdivision thereof) of which the Administrative
      Agent, the Issuing Bank or such Lender, as the case may be, is a citizen or
      resident or in which such Lender has an Applicable Lending Office, (ii) the
      jurisdiction (or any political subdivision thereof) in which the Administrative
      Agent, the Issuing Bank or such Lender is organized, or (iii) any jurisdiction
      (or political subdivision thereof) in which such Lender, the Issuing Bank or
      the
      Administrative Agent is presently doing business which taxes are imposed solely
      as a result of doing business in such jurisdiction (all such non-excluded taxes,
      levies, imposts, deductions, charges, withholdings and liabilities being
      hereinafter referred to as “ ***Taxes*** ”).
      If
      the Borrower shall be required by law to deduct any Taxes from or in respect
      of
      any sum payable hereunder to the Lenders, the Issuing Bank or the Administrative
      Agent (i) the sum payable shall be increased by the amount necessary so that
      after making all required deductions (including deductions applicable to
      additional sums payable under this ***Section
      4.06*** )
      such
      Lender, the Issuing Bank or the Administrative Agent (as the case may be) shall
      receive an amount equal to the sum it would have received had no such deductions
      been made, (ii) the Borrower shall make such deductions and (iii) the Borrower
      shall pay the full amount deducted to the relevant taxing authority or other
      Governmental Authority in accordance with applicable law.




(b)  **Other
      Taxes** .
      In
      addition, to the fullest extent permitted by applicable law, the Borrower agrees
      to pay any present or future stamp or documentary taxes or any other excise
      or
      property taxes, charges or similar levies that arise from any payment made
      hereunder or from the execution, delivery or registration of, or otherwise
      with
      respect to, this Agreement, any Assignment or any Security Instrument
      (hereinafter referred to as “ ***Other
      Taxes*** ”).




25




(c)  **INDEMNIFICATION** .
      TO THE
      FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER WILL INDEMNIFY EACH
      LENDER AND THE ISSUING BANK AND THE ADMINISTRATIVE AGENT FOR THE FULL AMOUNT
      OF
      TAXES AND OTHER TAXES (INCLUDING, BUT NOT LIMITED TO, ANY TAXES OR OTHER TAXES
      IMPOSED BY ANY GOVERNMENTAL AUTHORITY ON AMOUNTS PAYABLE UNDER THIS *SECTION
      4.06* )
      PAID BY
      SUCH LENDER, THE ISSUING BANK OR THE ADMINISTRATIVE AGENT (ON THEIR BEHALF
      OR ON
      BEHALF OF ANY LENDER), AS THE CASE MAY BE, AND ANY LIABILITY (INCLUDING
      PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO,
      WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED
      UNLESS THE PAYMENT OF SUCH TAXES WAS NOT CORRECTLY OR LEGALLY ASSERTED AND
      SUCH
      LENDER’S PAYMENT OF SUCH TAXES OR OTHER TAXES WAS THE RESULT OF ITS GROSS
      NEGLIGENCE OR WILLFUL MISCONDUCT. ANY PAYMENT PURSUANT TO SUCH INDEMNIFICATION
      SHALL BE MADE WITHIN THIRTY (30) DAYS AFTER THE DATE ANY LENDER, THE ISSUING
      BANK OR THE ADMINISTRATIVE AGENT, AS THE CASE MAY BE, MAKES WRITTEN DEMAND
      THEREFOR. IF ANY LENDER, ISSUING BANK OR THE ADMINISTRATIVE AGENT RECEIVES
      A
      REFUND OR CREDIT IN RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH SUCH LENDER,
      ISSUING BANK OR THE ADMINISTRATIVE AGENT HAS RECEIVED PAYMENT FROM THE BORROWER
      IT SHALL PROMPTLY NOTIFY THE BORROWER OF SUCH REFUND OR CREDIT AND SHALL, IF
      NO
      DEFAULT HAS OCCURRED AND IS CONTINUING, WITHIN THIRTY (30) DAYS AFTER RECEIPT
      OF
      A REQUEST BY THE BORROWER (OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS
      REQUESTED APPLICATION FOR SUCH REFUND OR CREDIT PURSUANT HERETO), PAY AN AMOUNT
      EQUAL TO SUCH REFUND OR CREDIT TO THE BORROWER WITHOUT INTEREST (BUT WITH ANY
      INTEREST SO REFUNDED OR CREDITED) PROVIDED THAT THE BORROWER, UPON THE REQUEST
      OF SUCH LENDER, THE ISSUING BANK OR THE ADMINISTRATIVE AGENT, AGREES TO RETURN
      SUCH REFUND OR CREDIT (PLUS PENALTIES, INTEREST OR OTHER CHARGES) TO SUCH LENDER
      OR THE ADMINISTRATIVE AGENT IN THE EVENT SUCH LENDER OR THE ADMINISTRATIVE
      AGENT
      IS REQUIRED TO REPAY SUCH REFUND OR CREDIT.




(d)  **Lender
      Representations** .




26




(i) Each
      Lender represents that it is either (1) a banking association or corporation
      organized under the laws of the United States of America or any state thereof
      or
      (2) it is entitled to complete exemption from United States withholding tax
      imposed on or with respect to any payments, including fees, to be made to it
      pursuant to this Agreement (A) under an applicable provision of a tax convention
      to which the United States of America is a party or (B) because it is acting
      through a branch, agency or office in the United States of America and any
      payment to be received by it hereunder is effectively connected with a trade
      or
      business in the United States of America. Each Lender that is not a banking
      association or corporation organized under the laws of the United States of
      America or any state thereof agrees to provide to the Borrower and the
      Administrative Agent on the Closing Date, or on the date of its delivery of
      the
      Assignment pursuant to which it becomes a Lender, and at such other times as
      required by United States law or as the Borrower or the Administrative Agent
      shall reasonably request, two accurate and complete original signed copies
      of
      either (A) Internal Revenue Service Form W-8ECI (or successor form) certifying
      that all payments to be made to it hereunder will be effectively connected
      to a
      United States trade or business (the “ ***Form
      W-8ECI Certification*** ”)
      or (B)
      Internal Revenue Service Form W-8BEN (or successor form) certifying that it
      is
      entitled to the benefit of a provision of a tax convention to which the United
      States of America is a party which completely exempts from United States
      withholding tax all payments to be made to it hereunder (the “ ***Form
      W-8BEN Certification*** ”).
      In
      addition, each Lender agrees that if it previously filed a Form W-8ECI
      Certification, it will deliver to the Borrower and the Administrative Agent
      a
      new Form W-8ECI Certification prior to the first payment date occurring in
      each
      of its subsequent taxable years; and if it previously filed a Form W-8BEN
      Certification, it will deliver to the Borrower and the Administrative Agent
      a
      new certification prior to the first payment date falling in the third year
      following the previous filing of such certification. Each Lender also agrees
      to
      deliver to the Borrower and the Administrative Agent such other or supplemental
      forms as may at any time be required as a result of changes in applicable law
      or
      regulation in order to confirm or maintain in effect its entitlement to
      exemption from United States withholding tax on any payments hereunder, provided
      that the circumstances of such Lender at the relevant time and applicable laws
      permit it to do so. If a Lender determines, as a result of any change in either
      (i) a Governmental Requirement or (ii) its circumstances, that it is unable
      to
      submit any form or certificate that it is obligated to submit pursuant to this ***Section
      4.06*** ,
      or that
      it is required to withdraw or cancel any such form or certificate previously
      submitted, it shall promptly notify the Borrower and the Administrative Agent
      of
      such fact. If a Lender is organized under the laws of a jurisdiction outside
      the
      United States of America, unless the Borrower and the Administrative Agent
      have
      received a Form W-8BEN Certification or Form W-8ECI Certification satisfactory
      to them indicating that all payments to be made to such Lender hereunder are
      not
      subject to United States withholding tax, the Borrower shall withhold taxes
      from
      such payments at the applicable statutory rate. Each Lender agrees to indemnify
      and hold harmless the Borrower or Administrative Agent, as applicable, from
      any
      United States taxes, penalties, interest and other expenses, costs and losses
      incurred or payable by (i) the Administrative Agent as a result of such Lender’s
      failure to submit any form or certificate that it is required to provide
      pursuant to this ***Section
      4.06*** or (ii)
      the Borrower or the Administrative Agent as a result of their reliance on any
      such form or certificate which such Lender has provided to them pursuant to
      this ***Section
      4.06*** .




(ii) For
      any
      period with respect to which a Lender has failed to provide the Borrower with
      the form required pursuant to this ***Section
      4.06*** ,
      if any
      (other than if such failure is due to a change in a Governmental Requirement
      occurring subsequent to the date on which a form originally was required to
      be
      provided), such Lender shall not be entitled to indemnification under ***Section
      4.06*** with
      respect to taxes imposed by the United States which taxes would not have been
      imposed but for such failure to provide such forms; provided, however, that
      if a
      Lender, which is otherwise exempt from or subject to a reduced rate of
      withholding tax, becomes subject to taxes because of its failure to deliver
      a
      form required hereunder, the Borrower shall take such steps as such Lender
      shall
      reasonably request to assist such Lender to recover such taxes.




(iii) Any
      Lender claiming any additional amounts payable pursuant to this ***Section
      4.06*** shall
      use reasonable efforts (consistent with legal and regulatory restrictions)
      to
      file any certificate or document requested by the Borrower or the Administrative
      Agent or to change the jurisdiction of its Applicable Lending Office or to
      contest any tax imposed if the making of such a filing or change or contesting
      such tax would avoid the need for or reduce the amount of any such additional
      amounts that may thereafter accrue and would not, in the sole determination
      of
      such Lender, be otherwise disadvantageous to such Lender.




**ARTICLE
      V**


**Capital
      Adequacy**




**Section
      5.01** **Additional
      Costs.**




27




(a)  **LIBOR
      Regulations, etc.** The
      Borrower shall pay directly to each Lender from time to time such amounts as
      such Lender may determine to be necessary to compensate such Lender for any
      costs which it determines are attributable to its making or maintaining of
      any
      LIBOR Loans or issuing or participating in Letters of Credit hereunder or its
      obligation to make any LIBOR Loans or issue or participate in any Letters of
      Credit hereunder, or any reduction in any amount receivable by such Lender
      hereunder in respect of any of such LIBOR Loans, Letters of Credit (such
      increases in costs and reductions in amounts receivable being herein called
      “ ***Additional
      Costs*** ”),
      resulting from any Regulatory Change which: (i) changes the basis of taxation
      of
      any amounts payable to such Lender under this Agreement or any Note in respect
      of any of such LIBOR Loans or Letters of Credit (other than taxes imposed on
      the
      overall net income of such Lender or of its Applicable Lending Office for any
      of
      such LIBOR Loans by the jurisdiction in which such Lender has its principal
      office or Applicable Lending Office); or (ii) imposes or modifies any reserve,
      special deposit, minimum capital, capital ratio or similar requirements relating
      to any extensions of credit or other assets of, or any deposits with or other
      liabilities of such Lender, or the Commitment or Loans of such Lender or the
      London interbank market; or (iii) imposes any other condition affecting this
      Agreement or any Note (or any of such extensions of credit or liabilities)
      or
      such Lender’s Commitment or Loans. Each Lender will notify the Administrative
      Agent and the Borrower of any event occurring after the Closing Date which
      will
      entitle such Lender to compensation pursuant to this ***Section
      5.01(a)*** as
      promptly as practicable after it obtains knowledge thereof and determines to
      request such compensation, and will designate a different Applicable Lending
      Office for the Loans of such Lender affected by such event if such designation
      will avoid the need for, or reduce the amount of, such compensation and will
      not, in the sole opinion of such Lender, be disadvantageous to such Lender,
      provided that such Lender shall have no obligation to so designate an Applicable
      Lending Office located in the United States. If any Lender requests compensation
      from the Borrower under this ***Section
      5.01(a)*** ,
      the
      Borrower may, by notice to such Lender, suspend the obligation of such Lender
      to
      make additional Loans of the Type with respect to which such compensation is
      requested until the Regulatory Change giving rise to such request ceases to
      be
      in effect (in which case the provisions of ***Section
      5.04*** shall be
      applicable).




(b)  **Regulatory
      Change** .
      Without
      limiting the effect of the provisions of ***Section 5.01(a)*** ,
      in the
      event that at any time (by reason of any Regulatory Change or any other
      circumstances arising after the Closing Date affecting (A) any Lender, (B)
      the
      London interbank market or (C) such Lender’s position in such market), the
      Adjusted LIBOR, as determined in good faith by such Lender, will not adequately
      and fairly reflect the cost to such Lender of funding its LIBOR Loans, then,
      if
      such Lender so elects, by notice to the Borrower and the Administrative Agent,
      the obligation of such Lender to make additional LIBOR Loans shall be suspended
      until such Regulatory Change or other circumstances ceases to be in effect
      (in
      which case the provisions of ***Section
      5.04*** shall be
      applicable).




(c)  **Capital
      Adequacy** .
      Without
      limiting the effect of the foregoing provisions of this ***Section
      5.01*** (but
      without duplication), the Borrower shall pay directly to any Lender from time
      to
      time on request such amounts as such Lender may reasonably determine to be
      necessary to compensate such Lender or its parent or holding company for any
      costs which it determines are attributable to the maintenance by such Lender
      or
      its parent or holding company (or any Applicable Lending Office), pursuant
      to
      any Governmental Requirement following any Regulatory Change, of capital in
      respect of its Commitment, its Note, or its Loans or any interest held by it
      in
      any Letter of Credit, such compensation to include, without limitation, an
      amount equal to any reduction of the rate of return on assets or equity of
      such
      Lender or its parent or holding company (or any Applicable Lending Office)
      to a
      level below that which such Lender or its parent or holding company (or any
      Applicable Lending Office) could have achieved but for such Governmental
      Requirement. Such Lender will notify the Borrower that it is entitled to
      compensation pursuant to this ***Section
      5.01(c)*** as
      promptly as practicable after it determines to request such
      compensation.




28




(d)  **Compensation
      Procedure** .
      Any
      Lender notifying the Borrower of the incurrence of Additional Costs under this ***Section
      5.01*** shall in
      such notice to the Borrower and the Administrative Agent set forth in reasonable
      detail the basis and amount of its request for compensation. Determinations
      and
      allocations by each Lender for purposes of this ***Section
      5.01*** of the
      effect of any Regulatory Change pursuant to ***Section
      5.01(a)*** or ***(b)*** ,
      or of
      the effect of capital maintained pursuant to ***Section
      5.01(c)*** ,
      on its
      costs or rate of return of maintaining Loans or its obligation to make Loans
      or
      issue Letters of Credit, or on amounts receivable by it in respect of Loans
      or
      Letters of Credit, and of the amounts required to compensate such Lender under
      this ***Section
      5.01*** ,
      shall
      be conclusive and binding for all purposes, provided that such determinations
      and allocations are made on a reasonable basis. Any request for additional
      compensation under this ***Section
      5.01*** shall be
      paid by the Borrower within thirty (30) days of the receipt by the Borrower
      of
      the notice described in this ***Section
      5.01(d)*** .




Section
      5.02Limitation
      on LIBOR Loans **.**
      Anything herein to the contrary notwithstanding, if, on or prior to the
      determination of any Adjusted LIBOR for any Interest Period:




(i) the
      Administrative Agent determines (which determination shall be conclusive, absent
      manifest error) that quotations of interest rates for the relevant deposits
      referred to in the definition of “ ***Adjusted
      LIBOR*** ”
in ***Section
      1.02*** are not
      being provided in the relevant amounts or for the relevant maturities for
      purposes of determining rates of interest for LIBOR Loans as provided herein;
      or




(ii) the
      Administrative Agent determines (which determination shall be conclusive, absent
      manifest error) that the relevant rates of interest referred to in the
      definition of “ ***Adjusted
      LIBOR*** ”
in ***Section
      1.02*** upon the
      basis of which the rate of interest for LIBOR Loans for such Interest Period
      is
      to be determined are not sufficient to adequately cover the cost to the Lenders
      of making or maintaining LIBOR Loans; then the Administrative Agent shall give
      the Borrower prompt notice thereof, and so long as such condition remains in
      effect, the Lenders shall be under no obligation to make additional LIBOR
      Loans.




Section
      5.03Illegality **.**
      Notwithstanding any other provision of this Agreement, in the event that it
      becomes unlawful for any Lender or its Applicable Lending Office to honor its
      obligation to make or maintain LIBOR Loans hereunder, then such Lender shall
      promptly notify the Borrower thereof and such Lender’s obligation to make LIBOR
      Loans shall be suspended until such time as such Lender may again make and
      maintain LIBOR Loans (in which case the provisions of ***Section
      5.04*** shall be
      applicable).




Section
      5.04Base
      Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03 **.**
      If the obligation of any Lender to make LIBOR Loans shall be suspended pursuant
      to ***Sections
      5.01*** *,* ***5.02*** or ***5.03*** (“ ***Affected
      Loans*** ”),
      all
      Affected Loans which would otherwise be made by such Lender shall be made
      instead as Base Rate Loans (and, if an event referred to in ***Section
      5.01(b)*** or ***Section
      5.03*** has
      occurred and such Lender so requests by notice to the Borrower, all Affected
      Loans of such Lender then outstanding shall be automatically converted into
      Base
      Rate Loans on the date specified by such Lender in such notice) and, to the
      extent that Affected Loans are so made as (or converted into) Base Rate Loans,
      all payments of principal which would otherwise be applied to such Lender’s
      Affected Loans shall be applied instead to its Base Rate Loans.




Section
      5.05Compensation **.**
      The Borrower shall pay to each Lender within thirty (30) days of receipt of
      written request of such Lender (which request shall set forth, in reasonable
      detail, the basis for requesting such amounts and which shall be conclusive
      and
      binding for all purposes provided that such determinations are made on a
      reasonable basis), such amount or amounts as shall compensate it for any loss,
      cost, expense or liability which such Lender determines are attributable
      to:




(i) any
      payment, prepayment or conversion of a LIBOR Loan properly made by such Lender
      or the Borrower for any reason (including, without limitation, the acceleration
      of the Loans pursuant to ***Section
      10.01*** )
      on a
      date other than the last day of the Interest Period for such Loan;
      or




29




(ii) any
      failure by the Borrower for any reason (including but not limited to, the
      failure of any of the conditions precedent specified in ***Article
      VI*** to be
      satisfied) to borrow, continue or convert a LIBOR Loan from such Lender on
      the
      date for such borrowing, continuation or conversion specified in the relevant
      notice given pursuant to ***Section
      2.02(c)*** .




Without
      limiting the effect of the preceding sentence, such compensation shall include
      an amount equal to the excess, if any, of (i) the amount of interest which
      would
      have accrued on the principal amount so paid, prepaid or converted or not
      borrowed for the period from the date of such payment, prepayment or conversion
      or failure to borrow to the last day of the Interest Period for such Loan (or,
      in the case of a failure to borrow, the Interest Period for such Loan which
      would have commenced on the date specified for such borrowing) at the applicable
      rate of interest for such Loan provided for herein over (ii) the interest
      component of the amount such Lender would have bid in the London interbank
      market for Dollar deposits of leading banks in amounts comparable to such
      principal amount and with maturities comparable to such period (as reasonably
      determined by such Lender).




**ARTICLE
      VI**


**Conditions
      Precedent**




Section
      6.01Initial
      Funding **.**
      The obligation of the Lenders to amend and restate the Existing Credit Agreement
      to make the Initial Funding and of any Issuing Bank to issue any Letters of
      Credit hereunder is subject to the receipt by the Administrative Agent and
      the
      Lenders of all fees payable pursuant to ***Section
      2.04*** on or
      before the Closing Date and the receipt by the Administrative Agent of the
      following documents and satisfaction of the other conditions provided in this ***Section
      6.01*** ,
      each of
      which shall be satisfactory to the Administrative Agent in form and
      substance:




(a)  A
      certificate of the Secretary or an Assistant Secretary of the Borrower setting
      forth (i) resolutions of its board of directors with respect to the
      authorization of the Borrower to execute and deliver the Loan Documents to
      which
      it is a party and to enter into the transactions contemplated in those
      documents, (ii) the officers of the Borrower (y) who are authorized to sign
      the
      Loan Documents to which Borrower is a party and (z) who will, until replaced
      by
      another officer or officers duly authorized for that purpose, act as its
      representative for the purposes of signing documents and giving notices and
      other communications in connection with this Agreement and the transactions
      contemplated hereby, (iii) specimen signatures of the authorized officers,
      and
      (iv) the articles or certificate of incorporation and bylaws of the Borrower,
      certified as being true and complete. The Administrative Agent and the Lenders
      may conclusively rely on such certificate until the Administrative Agent
      receives notice in writing from the Borrower to the contrary.




(b)  A
      certificate of the Secretary or an Assistant Secretary of each Guarantor setting
      forth (i) resolutions of its board of directors with respect to the
      authorization of such Guarantor to execute and deliver the Loan Documents to
      which it is a party and to enter into the transactions contemplated in those
      documents, (ii) the officers of such Guarantor (y) who are authorized to sign
      the Loan Documents to which such Guarantor is a party and (z) who will, until
      replaced by another officer or officers duly authorized for that purpose, act
      as
      its representative for the purposes of signing documents and giving notices
      and
      other communications in connection with this Agreement and the transactions
      contemplated hereby, (iii) specimen signatures of the authorized officers,
      and
      (iv) the articles or certificate of incorporation and bylaws (or equivalent
      constituent documents) of such Guarantor, certified as being true and complete.
      The Administrative Agent and the Lenders may conclusively rely on such
      certificates until they receive notice in writing from any Guarantor to the
      contrary.




30




(c)  Certificates
      of the appropriate state agencies with respect to the existence, qualification
      and good standing of the Obligors.




(d)  A
      compliance certificate which shall be substantially in the form of ***Exhibit C*** ,
      duly
      and properly executed by a Responsible Officer and dated as of the date of
      the
      Initial Funding.




(e)  The
      Notes, duly completed and executed.




(f)  The
      Security Instruments, including those described on ***Exhibit D*** ,
      duly
      completed and executed by the respective parties thereto in sufficient number
      of
      counterparts for recording, if necessary including delivery of all original
      stock certificates, blank stock powers, and Intercompany Notes duly endorsed
      as
      required under such Security Instruments.




(g)  Review
      of
      Obligors’ financial condition satisfactory to Lenders.




(h)  An
      opinion of Ledgewood, counsel to the Obligors and from other local counsel
      acceptable to the Administrative Agent with respect to enforceability of the
      Security Instruments under the laws of the states wherein the Oil and Gas
      Properties are located, each in form and substance satisfactory to the
      Administrative Agent, as to such matters incident to the transactions herein
      contemplated as the Administrative Agent may reasonably request including,
      without limitation, opinions as to the continued priority and perfection of
      the
      Existing Liens to secure the Obligations.




(i)  A
      certificate of insurance coverage of the Borrower and each Guarantor evidencing
      that the Borrower and each Guarantor are carrying insurance in accordance with ***Section 7.20
      and Section 8.03(b)*** .




(j)  Title
      information as the Administrative Agent may require setting forth the status
      of
      title acceptable to the Administrative Agent to at least 80% of the value of
      the
      Oil and Gas Properties of the Obligors, including the Obligors’ pro rata
      interest in the Partnerships’ Oil and Gas Properties included in the Initial
      Reserve Report.




(k)  The
      Administrative Agent shall have been furnished with appropriate UCC search
      certificates and other evidence satisfactory to the Administrative Agent with
      respect to Obligors’ and the Partnerships’ Oil and Gas Properties reflecting no
      prior Liens other than Excepted Liens.




(l)  Environmental
      assessments and other reports to the extent maintained by Obligors covering
      Obligors’ and the Partnerships’ Oil and Gas Properties reporting on the current
      environmental condition of such Properties satisfactory to Lenders.




(m)  All
      authorizations, approvals or consents as may be necessary for the execution,
      delivery and performance by any Obligor under this Agreement.




(n)  The
      Guaranty Agreements duly completed and executed by the Guarantors.




(o)  Such
      other documents as the Administrative Agent or any Lender or special counsel
      to
      the Administrative Agent may reasonably request.




Section
      6.02Initial
      and Subsequent Loans and Letters of Credit **.**
      The obligation of the Lenders to make Loans to the Borrower upon the occasion
      of
      each borrowing hereunder and to issue, renew, extend or reissue Letters of
      Credit (including the Initial Funding) is subject to the further conditions
      precedent that, as of the date of such Loans and after giving effect
      thereto:





31




(a)  no
      Default shall have occurred and be continuing;




(b)  no
      Material Adverse Effect shall have occurred; and




(c)  the
      representations and warranties made by the Borrower in ***Article VII*** and in
      the Security Instruments shall be true on and as of the date of the making
      of
      such Loans or issuance, renewal, extension or reissuance of a Letter of Credit
      with the same force and effect as if made on and as of such date and following
      such new borrowing, except to the extent such representations and warranties
      are
      expressly limited to an earlier date.




Each
      request for a borrowing or issuance, renewal, extension or reissuance of a
      Letter of Credit by the Borrower hereunder shall constitute a certification
      by
      the Borrower to the effect set forth in ***Section 6.02(c)*** (both as
      of the date of such notice and, unless the Borrower otherwise notifies the
      Administrative Agent prior to the date of and immediately following such
      borrowing or issuance, renewal, extension or reissuance of a Letter of Credit
      as
      of the date thereof).




Section
      6.03Conditions
      Precedent for the Benefit of Lenders **.**
      All conditions precedent to the obligations of the Lenders to make any Loan
      are
      imposed hereby solely for the benefit of the Lenders, and no other Person may
      require satisfaction of any such condition precedent or be entitled to assume
      that the Lenders will refuse to make any Loan in the absence of strict
      compliance with such conditions precedent.




Section
      6.04No
      Waiver **.**
      No waiver of any condition precedent shall preclude the Administrative Agent
      or
      the Lenders from requiring such condition to be met prior to making any
      subsequent Loan or preclude the Lenders from thereafter declaring that the
      failure of the Borrower to satisfy such condition precedent constitutes a
      Default.




**ARTICLE
      VII**


**Representations
      and Warranties**




Each
      of
      the Obligors represents and warrants to the Administrative Agent and the Lenders
      that (each representation and warranty herein is given as of the Closing Date
      and shall be deemed repeated and reaffirmed on the dates of each borrowing
      and
      issuance, renewal, extension or reissuance of a Letter of Credit as provided
      in ***Section
      6.02*** ):




Section
      7.01Corporate
      Existence **.**
      Each of the Obligors: (i) is a corporation, or limited partnership or
      limited liability company duly organized, formed, legally existing and in good
      standing under the laws of the jurisdiction of its incorporation or formation,
      as applicable; (ii) has all requisite corporate power, and has all material
      governmental licenses, authorizations, consents and approvals necessary to
      own
      its assets and carry on its business as now being or as proposed to be
      conducted; and (iii) is qualified to do business in all jurisdictions in
      which the nature of the business conducted by it makes such qualification
      necessary and where failure so to qualify would have a Material Adverse
      Effect.




Section
      7.02Financial
      Condition **.**
      The audited consolidated balance sheet of the Borrower and its Consolidated
      Subsidiaries at September 30, 2005, and the related consolidated statement
      of
      income, stockholders’ equity and cash flow of the Borrower and its Consolidated
      Subsidiaries for the fiscal year ended on said date, heretofore furnished to
      each of the Lenders and the unaudited consolidated balance sheet of the Borrower
      and its Consolidated Subsidiaries at December 31, 2005, and their related
      consolidated statements of income, stockholders’ equity and cash flow of the
      Borrower and its Consolidated Subsidiaries for the three month period ended
      on
      such date heretofore furnished to the Administrative Agent, are/is complete
      and
      correct and fairly present the consolidated financial condition of the Borrower
      and its Consolidated Subsidiaries as at said dates and the results of its
      operations for the fiscal year and the three month period on said dates, all
      in
      accordance with GAAP, as applied on a consistent basis (subject, in the case
      of
      the interim financial statements, to normal year-end adjustments). Neither
      the
      Borrower nor any Guarantor has on the Closing Date any material Debt, contingent
      liabilities, liabilities for taxes, unusual forward or long-term commitments
      or
      unrealized or anticipated losses from any unfavorable commitments. Since
      December 31, 2005, there has been no change or event having a Material Adverse
      Effect.




32




Section
      7.03Litigation **.**
      Except as disclosed to the Lenders in ***Schedule
      7.03*** **** hereto,
      there is no litigation, legal, administrative or arbitral proceeding,
      investigation or other action of any nature pending or, to the knowledge of
      the
      Obligors threatened against or affecting the Obligors or any Subsidiary which
      involves the possibility of any judgment or liability against any Obligor or
      any
      Subsidiary not fully covered by insurance (except for normal deductibles),
      and
      which would have a Material Adverse Effect. ***Schedule
      7.03*** **** attached
      hereto is a list of all litigation in which any Obligor is a party under which
      the amount in controversy including all expenses, fees and costs is greater
      than
      $250,000.




Section
      7.04No
      Breach **.**
      Neither the execution and delivery of the Loan Documents, nor compliance with
      the terms and provisions hereof will conflict with or result in a breach of,
      or
      require any consent which has not been obtained as of the Closing Date under,
      the respective charter or by-laws of the Obligors, or any Governmental
      Requirement, or any agreement or instrument to which any Obligor is a party
      or
      by which it is bound or to which it or its Properties are subject, or constitute
      a default under any such agreement or instrument, or result in the creation
      or
      imposition of any Lien upon any of the revenues or assets of the Obligor
      pursuant to the terms of any such agreement or instrument other than the Liens
      created by the Loan Documents.




Section
      7.05Authority **.**
      Each Obligor has all necessary corporate power and authority to execute, deliver
      and perform its obligations under the Loan Documents to which it is a party;
      and
      the execution, delivery and performance by each Obligor of the Loan Documents
      to
      which it is a party, have been duly authorized by all necessary corporate action
      on its part; and the Loan Documents constitute the legal, valid and binding
      obligations of each Obligor, enforceable in accordance with their
      terms.




Section
      7.06Approvals **.**
      No authorizations, approvals or consents of, and no filings or registrations
      with, any Governmental Authority or any other Person are necessary for the
      execution, delivery or performance by any Obligor of the Loan Documents to
      which
      it is a party or for the validity or enforceability thereof, except for the
      recording and filing of the Security Instruments as required by this
      Agreement.




Section
      7.07Use
      of
      Loans **.**
      The proceeds of the Loans shall be used (i) to refinance the Existing Debt,
      (ii)
      for the development of the Obligors’ Oil and Gas Properties and the acquisition
      of Oil and Gas Properties and related assets by the Obligors, (iii) to fund
      Obligors’ capital contributions under the Partnerships and APH, provided such
      capital contributions may not be used for the purpose of funding partnership
      distributions, (iv) as working capital, (v) for Letters of Credit to
      support the obligations of the Borrower and its Subsidiaries, and (vi) for
      general company purposes of the Borrower and its Subsidiaries. Neither the
      Borrower nor any other Obligor is engaged principally, or as one of its
      important activities, in the business of extending credit for the purpose,
      whether immediate, incidental or ultimate, of buying or carrying margin stock
      (within the meaning of Regulation T, U or X of the Board of Governors of the
      Federal Reserve System) and no part of the proceeds of any Loan hereunder will
      be used to buy or carry any margin stock.




**Section
      7.08** **ERISA.**




33




(a)  Each
      Obligor, each Subsidiary and each ERISA Affiliate have complied in all material
      respects with ERISA and, where applicable, the Code regarding each
      Plan.




(b)  Each
      Plan
      is, and has been, maintained in substantial compliance with ERISA and, where
      applicable, the Code.




(c)  No
      act,
      omission or transaction has occurred which could result in imposition on any
      Obligor, any Subsidiary or any ERISA Affiliate (whether directly or indirectly)
      of (i) either a civil penalty assessed pursuant to section 502(c), (i) or (1)
      of
      ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or
      (ii)
      breach of fiduciary duty liability damages under section 409 of
      ERISA.




(d)  No
      contingent obligations remain due to the termination of any Plan (other than
      a
      defined contribution plan) or any trust created under any such Plan since
      September 2, 1974. The only Plan that has been terminated was for The Atlas
      Group, Inc. No liability to the PBGC (other than for the payment of current
      premiums which are not past due) by any Obligor, any Subsidiary or any ERISA
      Affiliate has been or is expected by any Obligor, any Subsidiary or any ERISA
      Affiliate to be incurred with respect to any Plan. No ERISA Event with respect
      to any Plan has occurred.




(e)  Full
      payment when due has been made of all amounts which any Obligor, any Subsidiary
      or any ERISA Affiliate is required under the terms of each Plan or applicable
      law to have paid as contributions to such Plan, and 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.




(f)  The
      actuarial present value of the benefit liabilities under each Plan which is
      subject to Title IV of ERISA does not, as of the end of each Obligor’s most
      recently ended fiscal year, exceed the current value of the assets (computed
      on
      a plan termination basis in accordance with Title IV of ERISA) of such Plan
      allocable to such benefit liabilities. The term “ *actuarial
      present value of the benefit liabilities* ”
shall
      have the meaning specified in section 4041 of ERISA.




(g)  None
      of
      the Obligors, any Subsidiary or any ERISA Affiliate sponsors, maintains, or
      contributes to an employee welfare benefit plan, as defined in section 3(l)
      of
      ERISA, including, without limitation, any such plan maintained to provide
      benefits to former employees of such entities, that may not be terminated by
      an
      Obligor, a Subsidiary or any ERISA Affiliate in its sole discretion at any
      time
      without any material liability.




(h)  None
      of
      the Obligors, any Subsidiary or any ERISA Affiliate sponsors, maintains or
      contributes to, or has at any time in the preceding six calendar years,
      sponsored, maintained or contributed to, any Multiemployer Plan.




(i)  None
      of
      the Obligors, any Subsidiary or any ERISA Affiliate is required to provide
      security under section 401 (a)(29) of the Code due to a Plan amendment that
      results in an increase in current liability for the Plan.




Section
      7.09Taxes **.**
      Each Obligor and its Subsidiaries has filed all United States federal income
      tax
      returns and all other tax returns which are required to be filed by them, or
      otherwise obtained appropriate extensions to file, and have paid all material
      taxes due pursuant to such returns or pursuant to any assessment received by
      any
      Obligor or any Subsidiary except such taxes that are being contested in good
      faith by appropriate proceedings and for which such Obligor, as applicable,
      has
      set aside on its books adequate reserves in accordance with GAAP. The charges,
      accruals and reserves on the books of each Obligor and its Subsidiaries in
      respect of taxes and other governmental charges are, in the opinion of the
      Borrower, adequate. No tax lien has been filed and, to the knowledge of the
      Obligors, no claim is being asserted with respect to any such tax, fee or other
      charge.




34




**Section
      7.10** **Titles,
      etc.**




(a)  Each
      of
      the Obligors has good and marketable title to its Oil and Gas Properties, free
      and clear of all Liens, except Excepted Liens. After giving full effect to
      the
      Excepted Liens, each Obligor owns either directly in its own name, or indirectly
      through its percentage ownership interest in the Partnerships, the net interests
      in production attributable to its Hydrocarbon Interests reflected in the most
      recently delivered Ownership Report and the ownership of such Oil and Gas
      Properties shall not in any material respect obligate such Obligor to bear
      the
      costs and expenses relating to the maintenance, development and operations
      of
      each such Oil and Gas Property in an amount in excess of the working interest
      of
      each Oil and Gas Property set forth in the most recently delivered Reserve
      Report; provided that to the extent an Obligor is a general partner of a
      Partnership, such Obligor is liable for all of the costs and expenses
      attributable to such Partnership’s interest, but only entitled to such Obligor’s
      percentage interest in such Partnership’s net revenues. In the event an Obligor,
      as a general partner, pays more than its partnership share of such Partnership’s
      costs and expenses, such Obligor is entitled to reimbursement of such excess
      amount out of the future income of such Partnership. All information contained
      in the most recently delivered Ownership Report and Reserve Report is true
      and
      correct in all material respects as of the date thereof.




(b)  All
      leases and agreements necessary for the conduct of the business of the Obligors
      are valid and subsisting, in full force and effect and there exists no default
      or event or circumstance which with the giving of notice or the passage of
      time
      or both would give rise to a default under any such lease or leases, which
      would
      affect in any material respect the conduct of the business of any
      Obligor.




(c)  The
      rights, Properties and other assets presently owned, leased or licensed by
      the
      Obligors including, without limitation, all easements and rights of way, include
      all rights, Properties and other assets necessary to permit each Obligor to
      conduct its business in all material respects in the same manner as its business
      has been conducted prior to the Closing Date.




(d)  All
      of
      the assets and Properties of any Obligor which are reasonably necessary for
      the
      operation of its business are in good working condition and are maintained
      in
      accordance with prudent business standards.




Section
      7.11No
      Material Misstatements **.**
      No written information, statement, exhibit, certificate, document or report
      furnished to the Administrative Agent and the Lenders (or any of them) by any
      Obligor in connection with the negotiation of this Agreement contained any
      material misstatement of fact or omitted to state a material fact or any fact
      necessary to make the statement contained therein not materially misleading
      in
      the light of the circumstances in which made; *provided*  *that* ,
      with
      respect to financial
      projections concerning the Borrower and its Subsidiaries ,
      the
      Borrower represents only that such information was prepared in good faith based
      on assumptions believed to be reasonable at the time. There is no fact peculiar
      to any Obligor which has a Material Adverse Effect or in the future is
      reasonably likely to have a Material Adverse Effect and which has not been
      set
      forth in this Agreement or the other documents, certificates and statements
      furnished to the Administrative Agent by or on behalf of the Obligors prior
      to,
      or on, the Closing Date in connection with the transactions contemplated
      hereby.




Section
      7.12Investment
      Company Act **.**
      None of the Obligors nor any Subsidiary is an “ *investment
      company* ”
or
      a
      company “ *controlled* ”
by
      an
“ *investment
      company* ,”
within
      the meaning of the Investment Company Act of 1940, as amended.




35




Section
      7.13[Intentionally
      Deleted]




Section
      7.14Partnership
      Interests **.**
      Obligors own the percentage general partner and limited partner interests in
      the
      Partnerships set forth on ***Schedule
      7.14*** .
      None of
      the Obligors own any interest in any partnership or other Special Entity other
      than the Partnerships, Atlas Resources, Atlas Pipeline, APL, APH GP and APH.
      The
      principal place of business and chief executive office of each Partnership
      is
      located at the addresses stated on ***Schedule 7.14*** .
      The
      Obligors’ ownership interests in the Partnerships are free and clear of any and
      all liens, claims and encumbrances including any preferential rights to purchase
      and consents to assignments.




**Section
      7.15** **Capitalization
      and Subsidiaries.**




(a)  The
      authorized securities of Borrower consist of Forty-Nine Million (49,000,000)
      shares of common stock and One Million (1,000,000) shares of preferred stock
      and
      all issued and outstand-ing shares of such stock have been validly issued and
      are fully paid and nonassessable.




(b)  The
      authorized securities of Resource Energy consist of One Hundred (100) shares
      of
      common stock and all issued and outstanding shares of such stock have been
      validly issued and are fully paid and nonassessable and are owned by and issued
      to Borrower.




(c)  The
      authorized securities of Viking consist of One Thousand (1,000) shares of common
      stock and all issued and outstanding shares of such stock have been validly
      issued and are fully paid and nonassessable and are owned by and issued to
      Borrower.




(d)  The
      authorized securities of AEC consist of Five Hundred (500) shares of common
      stock and all issued and outstanding shares of such stock have been validly
      issued and are fully paid and nonassessable and are owned by and issued to
      AIC.




(e)  The
      authorized securities of AIC consist of One Thousand (1,000) shares of common
      stock and all issued and outstanding shares of such stock have been validly
      issued and are fully paid and nonassessable and are owned by and issued to
      Borrower.




(f)  The
      authorized securities of Atlas Noble consist of One Thousand (1,000) shares
      of
      common stock and all issued and outstanding shares of such stock have been
      validly issued and are fully paid and nonassessable and are owned by and issued
      to Borrower.




(g)  The
      authorized securities of Atlas PA consist of One Thousand (1,000) shares of
      common stock and all issued and outstanding shares of such stock have been
      validly issued and are fully paid and nonassessable and are owned by and issued
      to Borrower.




(h)  All
      issued and outstanding membership interests in Atlas Resources have been validly
      issued and are fully paid and nonassessable and are owned by and issued to
      AIC.




(i)  The
      authorized securities of REI-NY, Inc. consist of One Thousand (1,000) shares
      of
      common stock and all issued and outstanding shares of such stock have been
      validly issued and are fully paid and nonassessable and are owned by and issued
      to Resource Energy.




(j)  The
      authorized securities of RWS consist of One Hundred (100) shares of common
      stock
      and all issued and outstanding shares of such stock have been validly issued
      and
      are fully paid and nonassessable and are owned by and issued to Resource
      Energy.




36




(k)  The
      authorized securities of Atlas Mid-Continent consist of One Thousand (1,000)
      shares of common stock and all issued and outstanding shares of such stock
      have
      been validly issued and are fully paid and nonassessable and are owned by and
      issued to Borrower.




Except
      for APL, APH, and the Wholly Owned Subsidiaries set forth on ***Schedule
      7.15*** ,
      neither
      Borrower nor any Guarantor owns directly or indirectly any capital stock of
      any
      other Person other than the Partnerships. Borrower and each Guarantor has good
      and marketable title to all the securities of the Subsidiaries (except for
      the
      Unrestricted Entities) issued to it, free and clear of all liens and
      encumbrances, and all such securities have been duly and validly issued and
      are
      fully paid and nonassessable. The authorized securities of the Wholly Owned
      Subsidiaries and the ownership thereof are as shown on ***Schedule
      7.15*** attached
      hereto and made a part hereof.




**Section
      7.16** **Location
      of Business and Offices** Each
      Obligor’s principal place of business and chief executive offices are located at
      the address stated on the signature page of this Agreement.




Section
      7.17Defaults .
      None of
      the Obligors is in default nor has any event or circumstance occurred which,
      but
      for the expiration of any applicable grace period or the giving of notice,
      or
      both, would constitute a default under any Material Agreement or instrument
      to
      which any Obligor is a party or by which any Obligor is bound. No Default
      hereunder has occurred and is continuing.




Section
      7.18Environmental
      Matters **.**
      Except as would not have a Material Adverse Effect (or with respect to ***(c)*** , ***(d)*** and ***(e)*** below,
      where the failure to take such actions would not have a Material Adverse
      Effect):




(a)  Neither
      any Property of Borrower or any Subsidiary nor the operations conducted thereon
      violate any order or requirement of any court or Governmental Authority or
      any
      Environmental Laws;




(b)  Without
      limitation of ***clause (a)*** above,
      no Property of Borrower or any Subsidiary nor the operations currently conducted
      thereon or, to the best knowledge of the Obligors, by any prior owner or
      operator of such Property or operation, are in violation of or Subject to any
      existing, pending or threatened action, suit, investigation, inquiry or
      proceeding by or before any court or Governmental Authority or to any remedial
      obligations under Environmental Laws;




(c)  All
      notices, permits, licenses or similar authorizations, if any, required to be
      obtained or filed in connection with the operation or use of any and all
      Property of Borrower and each Subsidiary, including without limitation past
      or
      present treatment, storage, disposal or release of a hazardous substance or
      solid waste into the environment, have been duly obtained or filed, and Borrower
      and each Subsidiary are in compliance with the terms and conditions of all
      such
      notices, permits, licenses and similar authorizations;




(d)  All
      hazardous substances, solid waste, and oil and gas exploration and production
      wastes, if any, generated at any and all Property of Borrower or any Subsidiary
      have in the past been transported, treated and disposed of in accordance with
      Environmental Laws and so as not to pose an imminent and substantial
      endangerment to public health or welfare or the environment, and, to the best
      knowledge of the Obligors, all such transport carriers and treatment and
      disposal facilities have been and are operating in compliance with Environmental
      Laws and so as not to pose an imminent and substantial endangerment to public
      health or welfare or the environment, and are not the subject of any existing,
      pending or threatened action, investigation or inquiry by any Governmental
      Authority in connection with any Environmental Laws;




37




(e)  Borrower
      has taken all steps reasonably necessary to determine and have determined that
      no hazardous substances, solid waste, or oil and gas exploration and production
      wastes, have been disposed of or otherwise released and there has been no
      threatened release of any hazardous substances on or to any Property of Borrower
      or any Subsidiary except in compliance with Environmental Laws and so as not
      to
      pose an imminent and substantial endangerment to public health or welfare or
      the
      environment;




(f)  To
      the
      extent applicable, all Property of Borrower and each Subsidiary currently
      satisfies all design, operation, and equipment requirements imposed by the
      OPA
      or scheduled as of the Closing Date to be imposed by OPA during the term of
      this
      Agreement, and Borrower does not have any reason to believe that such Property,
      to the extent subject to OPA, will not be able to maintain compliance with
      the
      OPA requirements during the term of this Agreement; and




(g)  Neither
      Borrower nor any Subsidiary has any known contingent liability in connection
      with any release or threatened release of any oil, hazardous substance or solid
      waste into the environment.




Section
      7.19Compliance
      with the Law **.**
      None of the Obligors has violated any Governmental Requirement or failed to
      obtain any license, permit, franchise or other governmental authorization
      necessary for the ownership of any of its Properties or the conduct of its
      business, which violation or failure would have (in the event such violation
      or
      failure were asserted by any Person through appropriate action) a Material
      Adverse Effect. Except for such acts or failures to act as would not have a
      Material Adverse Effect, the Oil and Gas Properties of the Obligors (and
      properties unitized therewith) have been maintained, operated and developed
      in a
      good and workmanlike manner and in conformity with all applicable laws and
      all
      rules, regulations and orders of all duly constituted authorities having
      jurisdiction and in conformity with the provisions of all leases, subleases
      or
      other contracts comprising a part of the Hydrocarbon Interests and other
      contracts and agreements forming a part of such Oil and Gas Properties;
      specifically in this connection, (i) after the Closing Date, no Oil and Gas
      Property of any Obligor is subject to having allowable production reduced below
      the full and regular allowable (including the maximum permissible tolerance)
      because of any overproduction (whether or not the same was permissible at the
      time) prior to the Closing Date and (ii) none of the wells comprising a part
      of
      the Oil and Gas Properties of any Obligor (or properties unitized therewith)
      are
      deviated from the vertical more than the maximum permitted by applicable laws,
      regulations, rules and orders, and such wells are, in fact, bottomed under
      and
      are producing from, and the well bores are wholly within, such Oil and Gas
      Properties (or in the case of wells located on properties unitized therewith,
      such unitized properties).




Section
      7.20Insurance **.** ***Schedule 7.20*** attached
      hereto contains an accurate and complete description of all material policies
      of
      fire, liability, workers’ compensation and other forms of insurance owned or
      held by the Obligors. All such policies are in full force and effect, all
      premiums with respect thereto covering all periods up to and including the
      date
      of the closing have been paid, and no notice of cancellation or termination
      has
      been received with respect to any such policy. Such policies are sufficient
      for
      compliance with all requirements of law and of all agreements to which any
      Obligor is a party; are valid, outstanding and enforceable policies; provide
      adequate insurance coverage in at least such amounts and against at least such
      risks (but including in any event public liability) as are usually insured
      against in the same general area by companies engaged in the same or a similar
      business for the assets and operations of the Obligors; will remain in full
      force and effect through the respective dates set forth in ***Schedule 7.20*** without
      the payment of additional premiums; and will not in any way be affected by,
      or
      terminate or lapse by reason of, the transactions contemplated by this
      Agreement. ***Schedule 7.20*** identifies all material risks, if any, which each Obligor and their respective
      Board of Directors or officers have designated as being self insured. None
      of
      the Obligors has been refused any insurance with respect to its assets or
      operations, nor has its coverage been limited below usual and customary policy
      limits, by an insurance carrier to which it has applied for any such insurance
      or with which it has carried insurance during the last three years.




38




Section
      7.21Hedging
      Agreements **.** ***Schedule 7.21*** sets
      forth, as of the Closing Date, a true and complete list of all Hedging
      Agreements (including commodity price swap agreements, forward agreements or
      contracts of sale which provide for prepayment for deferred shipment or delivery
      of oil, gas or other commodities) of the Obligors, the material terms thereof
      (including the type, term, effective date, termination date and notional amounts
      or volumes), the net mark to market value thereof, all credit support agreements
      relating thereto (including any margin required or supplied), and the counter
      party to each such agreement.




Section
      7.22Restriction
      on Liens **.**
      Other than the Existing Credit Agreement and Existing Liens, neither the
      Borrower nor any Guarantor is a party to any agreement or arrangement (other
      than this Agreement and the Security Instruments), or subject to any order,
      judgment, writ or decree, which either restricts or purports to restrict its
      ability to grant Liens to other Persons on or in respect of their respective
      assets or Properties.




Section
      7.23Material
      Agreements **.**
      Set forth on ***Schedule
      7.23*** is a
      complete list of all agreements, indentures, purchase agreements, obligations
      in
      respect of letters of credit, guarantees, partnership agreements, exploration
      and development agreements, joint venture agreements, and other instruments
      which are material to each Obligor’s business, activities, and operation or
      ownership of such Obligors’ Property (the *“* ***Material
      Agreements*** *”* )
      in
      effect or to be in effect as of the Closing Date (other than the Partnership
      Agreements set forth on ***Schedule
      7.14*** and
      Hedging Agreements set forth on ***Schedule
      7.21*** )
      providing for, evidencing, securing or otherwise relating to any Debt of any
      such Obligor or any of its Subsidiaries, and all obligations of Borrower or
      any
      of the Guarantors to issuers of surety or appeal bonds issued for account of
      any
      such Obligor. The Borrower shall also make available to Administrative Agent
      and
      Lenders all Material Agreements and other agreements and instruments (excluding
      any such agreements and other instruments that are cancelable upon 60 or less
      days notice) of Borrower and each of the Obligors relating to the purchase,
      transportation by pipeline, gas processing, marketing, sale and supply of
      natural gas and other Hydrocarbons, but in any event, any such agreement or
      other instrument that will account for more than 10% of the sales of any such
      Obligor during the Borrower’s current fiscal year. Upon request by
      Administrative Agent, the Borrower shall deliver, or caused to be delivered,
      to
      the Administrative Agent and the Lenders a complete and correct copy of all
      such
      Material Agreements.




Section
      7.24Gas
      Imbalances **.**
      As of the Closing Date, except as set forth on ***Schedule 7.24*** or on
      the most recent certificate delivered pursuant to ***Section 8.07(c)*** ,
      on a
      net basis there are no gas imbalances, take or pay or other prepayments with
      respect to any of the Obligors’ Oil and Gas Properties which would require any
      such Obligors to deliver, in the aggregate, five percent (5%) or more of the
      monthly production of Hydrocarbons produced from their Oil and Gas Properties
      at
      some future time without then or thereafter receiving fall payment
      therefor.




Section
      7.25Relationship
      of Obligors **.**
      The Obligors are engaged in related businesses and each Obligor is directly
      and
      indirectly dependent upon each other Obligor for and in connection with their
      business activities and their financial resources; and each Obligor has
      determined, reasonably and in good faith, that such Obligor will receive
      substantial direct and indirect economic and financial benefits from the
      extensions of credit made under this Agreement, and such extensions of credit
      are in the best interests of such Obligor, having regard to all relevant facts
      and circumstances.




Section
      7.26Solvency **.**
      The Borrower and its Subsidiaries individually and on a consolidated basis
      are
      not insolvent as such term is used and defined in the United States Bankruptcy
      Code.




**ARTICLE
      VIII**


**Affirmative
      Covenants**




39




Each
      of
      the Obligors covenants and agrees that, so long as any of the Commitments are
      in
      effect and until payment in full of all Loans hereunder, all interest thereon
      and all other amounts payable by the Obligors hereunder:




Section
      8.01Reporting
      Requirements **.**
      The Obligors shall deliver, or shall cause to be delivered, to the
      Administrative Agent with sufficient copies of each for the
      Lenders:




(a)  **Annual
      Financial Statements** .
      As soon
      as available and in any event within one hundred (100) days after the end of
      each of its fiscal year, the audited consolidated and unaudited consolidating
      statements of income, stockholders’ equity, changes in financial position and
      cash flow for Borrower and its Consolidated Subsidiaries for such fiscal year,
      and the related consolidated and consolidating balance sheets of Borrower and
      its Consolidated Subsidiaries as at the end of such fiscal year, and setting
      forth in each case in comparative form the corresponding figures for the
      preceding fiscal year, and accompanied by the related opinion of independent
      public accountants of recognized national standing acceptable to the
      Administrative Agent which opinion shall state that said financial statements
      fairly present the consolidated and consolidating financial condition and
      results of operations of such Person and its Consolidated Subsidiaries as at
      the
      end of, and for, such fiscal year and that such financial statements have been
      prepared in accordance with GAAP, except for such changes in such principles
      with which the independent public accountants shall have concurred and such
      opinion shall not contain a “ *going
      concern* ”
or
      like
      qualification or exception, and a certificate of such accountants stating that,
      in making the examination necessary for their opinion, they obtained no
      knowledge, except as specifically stated, of any Default.




(b)  **Quarterly
      Financial Statements** .
      As soon
      as available and in any event within fifty-five (55) days after the end of
      each
      of the first three fiscal quarterly periods of each of its fiscal year for
      each
      of the Borrower, consolidated and consolidating statements of income,
      stockholders’ equity, changes in financial position and cash flow of Borrower
      and its Consolidated Subsidiaries for such period and for the period from the
      beginning of the respective fiscal year to the end of such period, and the
      related consolidated and consolidating balance sheets as at the end of such
      period, and setting forth in each case in comparative form the corresponding
      figures for the corresponding period in the preceding fiscal year, accompanied
      by the certificate of a Responsible Officer, which certificate shall state
      that
      said financial statements fairly present the consolidated and consolidating
      financial condition and results of operations of such Person and its
      Consolidated Subsidiaries in accordance with GAAP, as at the end of, and for,
      such period (subject to normal year-end audit adjustments).




(c)  **Notice
      of Default, Etc** .
      Promptly after any Obligor knows that any Default, Event of Default, labor
      dispute, or any Material Adverse Effect has occurred, a notice of such Default
      or Material Adverse Effect, describing the same in reasonable detail and the
      action the Borrower or any Guarantor proposes to take with respect
      thereto.




(d)  **Other
      Accounting Reports** .
      Promptly upon receipt thereof, a copy of each other report or letter submitted
      to the Obligor or any Subsidiary by independent accountants in connection with
      any annual, interim or special audit made by them of the books of the Obligor
      and its Subsidiaries, and a copy of any response by the Obligor or any
      Subsidiary, or the Board of Directors of the Obligor or such Subsidiary, to
      such
      letter or report.




(e)  **SEC
      Filings, Etc** .
      Promptly upon its becoming available, each financial statement, report, notice
      or proxy statement sent by Borrower and its Subsidiaries to stockholders
      generally and each regular or periodic report and any registration statement,
      prospectus or written communication (other than transmittal letters) in respect
      thereof filed by Borrower and its Subsidiaries with or received by Borrower
      and
      its Subsidiaries in connection therewith from any securities exchange or the
      SEC
      or any successor agency. Documents required to be delivered pursuant to this ***Section
      8.01(e)*** may be
      delivered electronically and if so delivered, shall be deemed to have been
      delivered on the date on which Borrower posts such documents to EDGAR (or such
      other free, publicly-accessible internet database that may be established and
      maintained by the SEC as a substitute for or successor to EDGAR); *provided* that:
      (i) the Borrower shall deliver paper copies of such documents to the
      Administrative Agent or any Lender that requests the Borrower to deliver such
      paper copies until a written request to cease delivering paper copies is given
      by the Administrative Agent or such Lender; and (ii) the Borrower shall notify
      the Administrative Agent and each Lender (by telecopier or electronic mail)
      of
      the posting of any such documents and provide to the Administrative Agent by
      electronic mail electronic versions ( *i.e.* ,
      soft
      copies) of such documents.




40




(f)  **Notices
      Under Other Loan Agreements** .
      Promptly after the furnishing thereof, copies of any statement, report or notice
      furnished by Borrower or any of its Subsidiaries to any Person pursuant to
      the
      terms of any indenture, loan or credit or other similar agreement, other than
      this Agreement and not otherwise required to be furnished to the Lenders
      pursuant to any other provision of this ***Section 8.01*** .




(g)  **Other
      Matters** .
      From
      time to time such other information regarding the business, affairs or financial
      condition of any Obligor or any Subsidiary (including, without limitation,
      any
      Plan or Multiemployer Plan and any reports or other information required to
      be
      filed under ERISA) as any Lender or the Administrative Agent may reasonably
      request.




(h)  **Hedging
      Agreements** .
      As soon
      as available and in any event within fifteen Business Days after the last day
      of
      each fiscal quarter, a report, in form and substance satisfactory to the
      Administrative Agent, setting forth as of the last Business Day of such fiscal
      quarter a true and complete list of all Hedging Agreements (including commodity
      price swap agreements, forward agreements or contracts of sale which provide
      for
      prepayment for deferred shipment or delivery of oil, gas or other commodities)
      of the Obligors, the material terms thereof (including the type, term, effective
      date, termination date and notional amounts or volumes), the net mark to market
      value therefor, any new credit support agreements relating thereto not listed
      on ***Schedule 7.21*** ,
      any
      margin required or supplied under any credit support document, and the counter
      party to each such agreement.




The
      Borrower will furnish to the Administrative Agent, at the time it furnishes
      each
      set of financial statements pursuant to paragraph (a) or (b) above, a
      certificate substantially in the form of ***Exhibit C*** executed
      by a Responsible Officer (i) certifying as to the matters set forth therein
      and stating that no Default has occurred and is continuing (or, if any Default
      has occurred and is continuing, describing the same in reasonable detail),
      and
      (ii) setting forth in reasonable detail the computations necessary to
      determine whether the Borrower is in compliance with ***Sections 9.13,
      9.14,*** and ***9.15*** as of
      the end of Borrower’s fiscal quarter or fiscal year.




Section
      8.02Litigation **.**
      Borrower and its Subsidiaries shall promptly give to the Administrative Agent
      notice of any litigation or proceeding against or adversely affecting
      Borrower or any Subsidiary in which the amount claimed exceeds $1,000,000 or
      an
      aggregate of claims in excess of $5,000,000 and is not otherwise covered in
      full
      by insurance (subject to normal and customary deductibles and for which the
      insurer has not assumed the defense), or in which injunctive or similar relief
      is sought. Borrower will, and will cause each of its Subsidiaries to, promptly
      notify the Administrative Agent and each of the Lenders of any claim, judgment,
      Lien or other encumbrance affecting any Property of Borrower or any Subsidiary
      if the value of the claim, judgment, Lien, or other encumbrance affecting such
      Property shall exceed $1,000,000 or an aggregate of such claims in excess of
      $5,000,000.




**Section
      8.03** **Maintenance,
      Etc*****.***




41




(a)  **Generally** .
      Except
      as permitted under ***Section
      9.09*** ,
      each
      Obligor shall and shall cause each of its Subsidiaries to: preserve and maintain
      its organization, existence and all of its material rights, privileges and
      franchises; keep books of record and account in which full, true and correct
      entries will be made of all dealings or transactions in relation to its business
      and activities; comply with all Governmental Requirements if failure to comply
      with such requirements will have a Material Adverse Effect; pay and discharge
      all taxes, assessments and governmental charges or levies imposed on it or
      on
      its income or profits or on any of its Property prior to the date on which
      penalties attach thereto, except for any such tax, assessment, charge or levy
      the payment of which is being contested in good faith and by proper proceedings
      and against which adequate reserves are being maintained; upon reasonable
      notice, permit representatives of the Administrative Agent or any Lender, during
      normal business hours, to examine, copy and make extracts from its books and
      records, to inspect its Properties, and to discuss its business and affairs
      with
      its officers, all to the extent reasonably requested by such Lender or the
      Administrative Agent (as the case may be); and keep, or cause to be kept,
      insured by financially sound and reputable insurers all Property of a character
      usually insured by Persons engaged in the same or similar business similarly
      situated against loss or damage of the kinds and in the amounts customarily
      insured against by such Persons and carry such other insurance as is usually
      carried by such Persons including, without limitation, environmental risk
      insurance to the extent reasonably available.




(b)  **Proof
      of Insurance** .
      Contemporaneously with the delivery of the financial statements required by ***Section 8.01(a)*** to be
      delivered for each year, the Borrower will furnish or cause to be furnished
      to
      the Administrative Agent and the Lenders a certificate of insurance coverage
      from the insurer in form and substance satisfactory to the Administrative Agent
      listing Administrative Agent as “loss payee” and, if requested, will furnish the
      Administrative Agent and the Lenders copies of the applicable
      policies.




(c)  **Oil
      and Gas Properties** .
      Borrower will and will cause each of its Subsidiaries to, do or cause to be
      done
      all things reasonably necessary to preserve and keep in good repair, working
      order and efficiency all of its Oil and Gas Properties and other material
      Properties including, without limitation, all equipment, machinery and
      facilities, and from time to time will make all the reasonably necessary
      repairs, renewals and replacements so that at all times the state and condition
      of its Oil and Gas Properties and other material Properties will be fully
      preserved and maintained, except to the extent a portion of such Properties
      is
      no longer capable of producing Hydrocarbons in economically reasonable amounts.
      Borrower will and will cause each of its Subsidiaries to promptly: (i) pay
      and discharge, or make reasonable and customary efforts to cause to be paid
      and
      discharged, all delay rentals, royalties, expenses and indebtedness accruing
      under the leases or other agreements affecting or pertaining to its Oil and
      Gas
      Properties, (ii) perform or make reasonable and customary efforts to cause
      to be performed, in accordance with industry standards, the obligations required
      by each and all of the assignments, deeds, leases, sub-leases, contracts and
      agreements affecting its interests in its Oil and Gas Properties and other
      material Properties, (iii) will and will cause each Subsidiary to do all
      other things necessary to keep unimpaired, except for Liens described in ***Section 9.03*** ,
      its
      rights with respect to its Oil and Gas Properties and other material Properties
      and prevent any forfeiture thereof or a default thereunder, except to the extent
      a portion of such Properties is no longer capable of producing Hydrocarbons
      in
      economically reasonable amounts and except for Transfers permitted by ***Section 9.16*** .
      Borrower will and will cause each of its Subsidiaries to operate its Oil and
      Gas
      Properties and other material Properties or cause or make reasonable and
      customary efforts to cause such Oil and Gas Properties and other material
      Properties to be operated in a careful and efficient manner in accordance with
      the practices of the industry and in compliance with all applicable contracts
      and agreements and in compliance in all material respects with all Governmental
      Requirements.




**Section
      8.04** **Environmental
      Matters.**




42




(a)  **Establishment
      of Procedures** .
      The
      Obligors will and will cause each of their Subsidiaries to establish and
      implement such procedures as may be reasonably necessary to continuously
      determine and assure that any failure of the following does not have a Material
      Adverse Effect: (i) all Property of the Obligors and their Subsidiaries and
      the
      operations conducted thereon and other activities of the Obligors and their
      Subsidiaries are in compliance with and do not violate the requirements of
      any
      Environmental Laws, (ii) no oil, hazardous substances or solid wastes are
      disposed of or otherwise released on or to any Property owned by any such party
      except in compliance with Environmental Laws, (iii) no hazardous substance
      will
      be released on or to any such Property in a quantity equal to or exceeding
      that
      quantity which requires reporting pursuant to Section 103 of CERCLA, and (iv)
      no
      oil, oil and gas exploration and production wastes or hazardous substance is
      released on or to any such Property so as to pose an imminent and substantial
      endangerment to public health or welfare or the environment.




(b)  **Notice
      of Action** .
      The
      Obligors will promptly notify the Administrative Agent and the Lenders in
      writing of any threatened action, investigation or inquiry by any Governmental
      Authority of which any Obligor has knowledge in connection with any
      Environmental Laws, excluding routine testing and corrective
      action.




(c)  **Future
      Acquisitions** .
      The
      Obligors will and will cause each of their Subsidiaries to provide environmental
      audits and tests in accordance with American Society for Testing and Materials
      standards as reasonably requested by the Administrative Agent and the Lenders
      (or as otherwise required to be obtained by the Administrative Agent or the
      Lenders by any Governmental Authority) in connection with any future
      acquisitions of Oil and Gas Properties or other material
      Properties.




Section
      8.05Further
      Assurances **.**
      The Obligors will and will cause each of their Subsidiaries to cure promptly
      any
      defects in the creation and issuance of the Notes and the execution and delivery
      of the Security Instruments and this Agreement. The Obligors at their expense
      will and will cause each Subsidiary to promptly execute and deliver to the
      Administrative Agent upon request all such other documents, agreements and
      instruments to comply with or accomplish the covenants and agreements of the
      Obligors or any Subsidiary, as the case may be, in any Loan Document, or to
      further evidence and more fully describe the collateral intended as security
      for
      the Notes, or to correct any omissions in any Loan Document, or to state more
      fully the security obligations set out herein or in any Loan Document, or to
      perfect, protect or preserve any Liens created pursuant to any of the Security
      Instruments, or to make any recordings, to file any notices or obtain any
      consents, all as may be necessary or appropriate in connection
      therewith.




Section
      8.06Performance
      of Obligations **.**
      The Borrower will pay the Notes according to the reading, tenor and effect
      thereof; the Guarantors will pay under the Guarantees according to the terms
      thereof, and the Obligors will and will cause each of their Subsidiaries to
      do
      and perform every act and discharge all of the obligations to be performed
      and
      discharged by them under this Agreement and any other Loan Document, at the
      time
      or times and in the manner specified.




**Section
      8.07** **Engineering
      Reports.**




(a)  Not
      less
      than 30 days prior to each Scheduled Borrowing Base Redetermination Date,
      commencing with the Scheduled Borrowing Base Redetermination to occur on or
      around June 15, 2006, the Borrower shall furnish to the Administrative Agent
      and
      the Lenders a Reserve Report. The Reserve Report of each year delivered in
      connection with the December 15 Scheduled Borrowing Base Redetermination,
      commencing December 15, 2006, shall be prepared by certified independent
      petroleum engineers or other independent petroleum consultant(s) acceptable
      to
      the Administrative Agent. The Reserve Report delivered for each year delivered
      in connection with the June 15 Scheduled Borrowing Base Redetermination,
      commencing June 15, 2006, shall be prepared by or under the supervision of
      the
      chief engineer of the Borrower and a Responsible Officer shall certify such
      Reserve Report to be true and accurate and to have been prepared in accordance
      with the procedures used in the immediately proceeding December 15 Scheduled
      Borrowing Base Redetermination Reserve Report.




43




(b)  In
      the
      event of an unscheduled redetermination, the Borrower shall furnish to the
      Administrative Agent and the Lenders a Reserve Report prepared by or under
      the
      supervision of the chief engineer of the Obligors together with the certificate
      of a Responsible Officer who shall certify such Reserve Report to be true and
      accurate and to have been prepared in accordance with the procedures used in
      the
      immediately preceding Reserve Report. For any unscheduled redetermination
      requested by the Lenders or the Borrower pursuant to ***Section 2.08(d)*** ,
      the
      Borrower shall provide such Reserve Report with an “ *as
      of”* date as
      required by the Lenders as soon as possible, but in any event no later than
      30
      days following the receipt of the request by the Administrative
      Agent.




(c)  With
      the
      delivery of each Reserve Report, the Borrower shall provide, or cause to be
      provided, to the Administrative Agent and the Lenders, a certificate from a
      Responsible Officer certifying that, to the best of his knowledge and in all
      material respects: (i) the information contained in the Reserve Report and
      any other information delivered in connection therewith is true and correct,
      (ii) the Obligors and the Partnerships own good and marketable title to the
      Oil and Gas Properties evaluated in such Reserve Report and such Properties
      are
      free of all Liens except for Liens permitted by ***Section 9.03*** ,
      (iii) except as set forth on an exhibit to the certificate, on a net basis
      there are no gas imbalances, take or pay or other prepayments with respect
      to
      its Oil and Gas Properties evaluated in such Reserve Report which would require
      any Obligor to deliver Hydrocarbons produced from such Oil and Gas Properties
      at
      some future time without then or thereafter receiving full payment therefor,
      (iv) none of Obligor’s or and the Partnerships’ Oil and Gas Properties have
      been sold since the date of the last Borrowing Base determination except as
      set
      forth on an exhibit to the certificate, which certificate shall list all of
      its
      Oil and Gas Properties sold and in such detail as reasonably required by the
      Administrative Agent, (v) attached to the certificate is a list of its Oil
      and Gas Properties added to and deleted from the immediately prior Reserve
      Report and a list showing any change in working interest or net revenue interest
      in its Oil and Gas Properties occurring and the reason for such change,
      (vi) attached to the certificate is a list of all Persons disbursing
      proceeds to the Obligors from their Oil and Gas Properties, and (vii) all
      of the Oil and Gas Properties evaluated by such Reserve Report are Mortgaged
      Property except as set forth on a schedule attached to the
      certificate.




Section
      8.08Title
      Curative **.**
      Borrower shall cure, and shall cause its Subsidiaries to cure or cause to be
      cured, any title defects or exceptions which are not Excepted Liens raised
      by
      such information, or substitute acceptable Mortgaged Properties with no title
      defects or exceptions except for Excepted Liens covering Mortgaged Properties
      of
      an equivalent value, within 30 days after a request by the Administrative Agent
      to cure such defects or exceptions.




**Section
      8.09** **Additional
      Collateral.**




(a)  **Lien
      in Oil and Gas Properties** .
      At all
      times hereunder that the Obligations remain unpaid, including whenever any
      Obligor acquires any additional Oil and Gas Properties or additional interests
      in existing Oil and Gas Properties, Obligors shall grant to the Administrative
      Agent for the benefit of the Lenders as security for the Indebtedness a
      first-priority Lien interest (subject only to Excepted Liens) covering at least
      80% of the total value (based upon the most recent Reserve Report plus the
      value
      of Oil and Gas Properties acquired after the date of such Reserve Report
      determined on a basis consistent with the Reserve Report) of the Obligors’ Oil
      and Gas Properties either directly under the Mortgages or indirectly under
      the
      pledge of their interests in the Partnerships. Such Lien will be created and
      perfected by and in accordance with the provisions of mortgages, deeds of trust,
      security agreements and financing statements, or other Security Instruments,
      all
      in form and substance satisfactory to the Administrative Agent in its sole
      discretion and in sufficient executed (and acknowledged where necessary or
      appropriate) counterparts for recording purposes.




44




(b)  **Title
      Information** .
      Concurrently with the granting of the Lien or other action referred to in ***Section 8.09(a)*** above,
      the Borrower or its Subsidiaries will provide to the Administrative Agent title
      information in form and substance satisfactory to the Administrative Agent
      in
      its sole discretion with respect to such Obligor’s interests in such Oil and Gas
      Properties.




(c)  **Legal
      Opinions** .
      Promptly after the filing of any new Security Instru-ment in any state, upon
      the
      request of the Administrative Agent, Borrower will provide, or cause to be
      provided, to the Administrative Agent an opinion addressed to the Administrative
      Agent for the benefit of the Lenders in form and substance satisfactory to
      the
      Administrative Agent in its sole discretion from counsel acceptable to
      Administrative Agent, stating that the Security Instrument is valid, binding
      and
      enforceable in accordance with its terms and in legally sufficient form for
      such
      jurisdiction.




(d)  **Letters
      in Lieu** .




(i) Upon
      request by Administrative Agent and Majority Lenders, Borrower shall, and shall
      cause its Subsidiaries to, provide to Administrative Agent undated letters,
      in
      form of ***Exhibit
      F*** attached
      hereto, from Borrower or such Subsidiary to each purchaser of production and
      disburser of proceeds of production from or attributable to the Mortgaged
      Properties, along with sufficient copies of additional executed letters with
      the
      addressees left blank, authorizing and directing the addressees to make future
      payments attributable to production from the Mortgaged Properties directly
      to
      Administrative Agent for the ratable benefit of the Lenders.




(ii) Borrower
      and each of its Subsidiaries hereby designates Administrative Agent as its
      agent
      and attorney-in-fact, to act in their name, place, and stead for the purpose
      of
      completing and delivering any and all of the letters in lieu of division orders
      delivered by Borrower and such Subsidiaries to Administrative Agent, including,
      without limitation, completing any blanks contained in such letter and attaching
      exhibits thereto describing the relevant Collateral. The Borrower and each
      of
      its Subsidiaries hereby ratifies and confirms all that Administrative Agent
      shall lawfully do or cause to be done by virtue of this power of attorney and
      the rights granted with respect to such power of attorney. This power of
      attorney is coupled with the interest of Administrative Agent in the Collateral,
      shall commence and be in full force and effect as of the Closing Date and shall
      remain in full force and effect and shall be irrevocable so long as any
      Obligation remains outstanding or unpaid or any Commitment exists. The powers
      conferred on Administrative Agent by this appointment are solely to protect
      the
      interests of Administrative Agent and each of the Lenders under the Loan
      Documents and shall not impose any duty upon Administrative Agent to exercise
      any such powers. Administrative Agent shall be accountable only for amounts
      that
      it actually receives as a result of the exercise of such powers and shall not
      be
      responsible to Borrower, its Subsidiaries, or any other Person for any act
      or
      failure to act with respect to such powers, except for gross negligence or
      willful misconduct.




(iii) Until
      such time as Administrative Agent shall notify Borrower and its Subsidiaries
      to
      the contrary, Borrower and its Subsidiaries shall be entitled to receive from
      the purchasers or disbursers of production all such proceeds of runs, subject
      however to the liens created under the Security Instruments. Upon the occurrence
      and during the continuance of a Default or such other time as Administrative
      Agent shall in its discretion so elect, Administrative Agent may deliver to
      the
      addressees the letters-in-lieu described in ***Subsection
      8.09(d)(i)*** above
      and
      may exercise all rights and remedies granted under the Security Instruments,
      including the right to obtain possession of all proceeds of runs then held
      by
      Borrower and its Subsidiaries or to receive directly from the purchaser or
      disburser of production all other proceeds of runs.




45




(iv) In
      no
      case shall any failure, whether purposed or inadvertent, by Administrative
      Agent
      to collect directly any such proceeds of runs constitute in any way a waiver,
      remission or release of any of its rights under the Security Instruments, nor
      shall any release of any other proceeds of runs or of any rights of
      Administrative Agent to collect other proceeds of runs thereafter.




(e)  **Subordination
      of Obligor’s Liens** .




(i) Each
      Obligor hereby subordinates and assigns in favor of Administrative Agent for
      the
      benefit of the Lenders any and all liens, statutory or otherwise and any rights
      of offset contractual or otherwise it has or may have in the future against
      such
      Obligors' interests in the Mortgaged Properties or in the Oil and Gas Properties
      and revenues attributable to its interest therein, including the Contracts
      and
      Records (defined below).




(ii) Any
      officer or employee of Administrative Agent is expressly granted the right
      at
      its option upon not less than one (1) Business Day’s notice, to visit and
      inspect (a) each Obligors’ offices, including all books and records,
      farmout agreements, area of mutual interest agreements, development agreements,
      geologic and geophysical survey agreements, operating agreements, contracts
      and
      other agreements that relate to any of the Mortgaged Properties or in the Oil
      and Gas Properties, seismic, geological and geophysical, drilling and production
      data and records, all accounting records, joint interest billing records,
      division order records, land files, and contracts and records referring to
      the
      production, sale, purchase, exchange or processing of Hydrocarbons whether
      such
      data, information or agreements are in written form or electronic format (the
      " ***Contracts
      and Records*** "),
      and
      to examine, take copies and extracts therefrom, and (b) any of the
      Mortgaged Properties.




(iii) Following
      the occurrence and during the continuance of an Event of Default, each Obligor
      acknowledges that the Administrative Agent is expressly granted the right to
      exercise any and all liens, statutory or otherwise, rights of offset or
      recoupment it has and to receive the monies, income, proceeds, or benefits
      attributable to the sale of Oil and Gas produced from or attributable to the
      Mortgaged Properties, to hold the same as security for the Indebtedness and
      to
      apply it on the principal and interest or other amounts owing on any of the
      Indebtedness, whether or not then due, in such order or manner as Administrative
      Agent may elect.




(iv) In
      the
      event of a foreclosure, deed in lieu, or other transfer of record or beneficial
      ownership or operations of the Mortgaged Properties, each Obligor, as bailee,
      agrees to cooperate and assist Administrative Agent and its officers, agents
      and
      counsel in the peaceful transfer and delivery of such Contracts and Records
      to
      such party or parties as Administrative Agent may in writing
      direct.




(v) Following
      the occurrence and during the continuance of a Default or Event of Default
      and
      within thirty (30) days after receipt of notice from Administrative Agent,
      Obligors will relinquish their respective rights to operate the Properties
      of
      Obligors to the Administrative Agent or its designee.




(f)  **Pledge
      of Partnerships** .
      Borrower shall and shall cause each of its Wholly Owned Subsidiaries that are
      not Unrestricted Entities to pledge all of its interest in any Partnership
      and
      to provide such information about such Partnership as Lenders may reasonably
      request.




46




(g)  **Subordination
      of Intercompany Debt** .
      Any
      Intercompany Notes or advances of any Obligor howsoever evidenced by journal
      entries or otherwise now or hereafter owed to or held by any other Obligor
      are
      hereby subordinated to the Indebtedness of such other Obligor to the Lenders,
      and any document or instrument evidencing such loans or advances shall contain
      a
      legend giving notice of such subordination. Any Intercompany Notes or advances
      of any other Obligor due to such Obligor, if the Administrative Agent so
      requests, shall be collected, enforced and received by such Obligor as trustee
      for the Lenders and be paid over to the Administrative Agent for the account
      of
      the Lenders on account of the Indebtedness but without affecting in any manner
      the liability of such Obligor under the other provisions of this Agreement
      or
      any other Loan Document. Any Lien, claim, right or other encumbrance on any
      property of any Obligor in favor of any other Obligor is hereby subordinated
      in
      all respects to the Liens granted to the Administrative Agent for the benefit
      of
      the Lenders.




Section
      8.10ERISA
      Information and Compliance **.**
      The Obligors will promptly furnish and will cause the Subsidiaries and any
      ERISA
      Affiliate to promptly furnish to the Administrative Agent with sufficient copies
      to the Lenders (i) promptly after the filing thereof with the United States
      Secretary of Labor, the Internal Revenue Service or the PBGC, copies of each
      annual and other report with respect to each Plan or any trust created
      thereunder, (ii) immediately upon becoming aware of the occurrence of any
      ERISA Event or of any “ *prohibited
      transaction* ,”
as
      described in section 406 of ERISA or in section 4975 of the Code, in
      connection with any Plan or any trust created thereunder, a written notice
      signed by a Responsible Officer specifying the nature thereof, what action
      the
      Obligors, the Subsidiary or the ERISA Affiliate is taking or proposes to take
      with respect thereto, and, when known, any action taken or proposed by the
      Internal Revenue Service, the Department of Labor or the PBGC with respect
      thereto, and (iii) immediately upon receipt thereof, copies of any notice
      of the PBGCs intention to terminate or to have a trustee appointed to administer
      any Plan. With respect to each Plan (other than a Multiemployer Plan), the
      Obligors will, and will cause each Subsidiary and ERISA Affiliate to,
      (i) satisfy in full and in a timely manner, without incurring any late
      payment or underpayment charge or penalty and without giving rise to any lien,
      all of the contribution and funding requirements of section 412 of the Code
      (determined without regard to subsections (d), (e), (f) and (k) thereof) and
      of
      section 302 of ERISA (determined without regard to sections 303, 304 and
      306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a timely
      manner, without incurring any late payment or underpayment charge or penalty,
      all premiums required pursuant to sections 4006 and 4007 of
      ERISA.




**ARTICLE
      IX**


**Negative
      Covenants**




The
      Obligors covenant and agree that, so long as any of the Commitments are in
      effect and until payment in full of Loans hereunder, all interest thereon and
      all other amounts payable by the Obligors hereunder, without the prior written
      consent of the Majority Lenders:




Section
      9.01Debt **.**
      None of the Obligors or their Subsidiaries (other than Unrestricted Entities)
      and none of the Partnerships will incur, create, assume or permit to exist
      any
      Debt, except:




(a)  the
      Notes
      or other Indebtedness or any guaranty of or suretyship arrangement for the
      Notes
      or other Indebtedness;




(b)  Debt
      of
      the Borrower disclosed in ***Schedule 9.01*** ,
      and any
      renewals or extensions (but not increases) thereof;




(c)  accounts
      payable (for the deferred purchase price of Property or services) from time
      to
      time incurred in the ordinary course of business which, if greater than 90
      days
      past the invoice or billing date, are being contested in good faith by
      appropriate proceedings if reserves adequate under GAAP shall have been
      established therefor;




47




(d)  Debt
      under leases permitted under ***Section
      9.08*** ;




(e)  Debt
      associated with bonds or surety obligations pursuant to Governmental
      Requirements in connection with the operation of any Obligor’s Oil and Gas
      Properties;




(f)  Debt
      of
      the Obligors under Hedging Agreements permitted under ***Section
      9.02*** ;




(g)  Intercompany
      Debt; provided,
      that ,
      (i) any
      such Intercompany Debt shall be subordinated to the Obligations upon terms
      and
      conditions satisfactory to the Administrative Agent, and (ii) such Intercompany
      Debt in excess of $250,000 shall be evidenced by an Intercompany Note pledged
      to
      secure the Obligations and in the possession of the Administrative
      Agent;




(h)  Debt
      of
      the Borrower to RAI arising under the Tax Matters Agreement and Transition
      Services Agreement; and




(i)  Debt
      of
      the Borrower and its Subsidiaries not otherwise described under ***subparagraphs
      (a)*** through ***(h)*** above
      not to exceed $5,000,000 in the aggregate.




Section
      9.02Hedging
      Agreements **.**
      Borrower shall
      not
      and shall not permit any Guarantor to enter into or in any manner be liable
      on
      any Hedging Agreement except:




(a)  Hedging
      Agreements entered into with the purpose and effect of fixing prices on oil
      and/or gas expected to be produced by such Person *provided
      that* at all
      times: (1) no such contract shall be for speculative purposes; (2) no such
      contract, when aggregated with all Hedging Agreements permitted hereunder
      requires such Person to deliver more than 80% of total estimated Oil and Gas
      to
      be produced in any month from the Oil and Gas Properties classified as proved
      developed producing on the most recent Reserve Report; (3) the agreements
      documenting such Hedging Agreements do not contain any provision exonerating
      the
      non-defaulting party from its obligation to make payments on outstanding
      transactions to the defaulting party; and (4) each such contract shall be with
      the Administrative Agent, or any of the Lenders or their Affiliates, or with
      a
      counterparty or have a guarantor of the obligation of the counterparty who,
      at
      the time the contract is made, has long-term obligations rated AA or Aa2 or
      better, respectively, by Standard & Poor’s Corporation or Moody’s Investors
      Services, Inc. (or a successor credit rating agency).




(b)  Hedging
      Agreements entered into with the purpose and effect of fixing interest rates
      on
      a principal amount of the Notes of the Borrower that is accruing interest at
      a
      variable rate, *provided
      that* (1) no
      such contract shall be for speculative purposes; (2) the floating rate index
      of
      each such contract generally matches the index used to determine the floating
      rates of interest on the corresponding Indebtedness of the Borrower to be hedged
      by such contract; (3) the aggregate notional amount of such Hedging Agreements
      shall not exceed seventy-five percent (75%) of the principal outstanding under
      the Notes; (4) the tenor of each such contract shall not extend beyond the
      Revolving Credit Termination Date; and (5) each such contract shall be with
      a
      Lender or with a counterparty or have a guarantor of the obligation of the
      counterparty who, at the time the contract is made, has long-term obligations
      rated AA or Aa2 or better, respectively, by Standard & Poor’s Corporation or
      Moody’s Investors Services, Inc. (or a successor credit rating
      agency).




(c)  In
      the
      event the Borrower enters into a Hedging Agreement with any of the Lenders,
      the
      Contingent Obligation evidenced under such Hedging Agreement shall not be
      applied against such Lender’s Commitment nor against the Borrowing Base
      Utilization. Any Indebtedness incurred under any Hedging Agreement with any
      Lender shall be treated as an Obligation *pari
      passu* with all
      Obligations otherwise incurred hereunder or under the other Loan Documents
      and
      shall be secured under the Security Instruments.




48




Section
      9.03Liens **.**
      None of the Borrower nor any of its Subsidiaries will create, incur, assume
      or
      permit to exist any Lien on any of its Properties (now owned or hereafter
      acquired), except:




(a)  Liens
      securing the payment of any Indebtedness;




(b)  Excepted
      Liens;




(c)  Liens
      securing leases allowed under ***Section
      9.08*** ,
      but
      only on the Property under lease;




(d)  Liens
      on
      cash or securities of an Obligor securing the Debt described in ***Section 9.01(f)*** and ***(i)*** ;
      and




(e)  Liens
      on
      the assets of Unrestricted Entities securing Debt of such Unrestricted
      Entities.




Section
      9.04 
Investments,
      Loans and Advances **.**
      Borrower will not and will not permit any Guarantor to make
      or permit to remain outstanding any loans or advances to or investments in
      any
      Person, except that the foregoing restriction shall not apply to:




(a)  accounts
      receivable arising in the ordinary course of business;




(b)  direct
      obligations of the United States or any agency thereof, or obligations
      guaranteed by the United States or any agency thereof, in each case maturing
      within one year from the date of creation thereof;




(c)  commercial
      paper maturing within one year from the date of creation thereof rated in the
      highest grade by Standard & Poor’s Corporation or Moody’s Investors Service,
      Inc.;




(d)  deposits
      maturing within one year from the date of creation thereof with, in-cluding
      certificates of deposit issued by, any Lender or any office located in the
      United States of any other bank or trust company which is organized under the
      laws of the United States or any state thereof, has capital, surplus and
      undivided profits aggregating at least $100,000,000.00 (as of the date of such
      Lender’s or bank or trust company’s most recent financial reports) and has a
      short term deposit rating of no lower than A2 or P2, as such rating is set
      forth
      from time to time, by Standard & Poor’s Corporation or Moody’s Investors
      Service, Inc., respectively;




(e)  deposits
      in money market funds investing exclusively in investments described in ***Section 9.04(c),*** or ***9.04(d)*** ;




(f)  investments,
      loans or advances in or to the Borrower or any Subsidiary permitted under ***Section
      9.01(g)*** ;
      and




(g)  advances
      to fund Borrower and its Wholly Owned Subsidiaries’ capital contributions under
      Partnerships and APH as provided under ***Section
      7.07(iii)*** ;




(h)  Non-hostile
      acquisitions of equity securities, or assets constituting a business unit,
      of
      any Person, *provided
      that* **:** (i)
      immediately prior to and after giving effect to such acquisition, no Default
      or
      Event of Default exists or would result therefrom; (ii) if such acquisition
      is
      of equity securities of a Person (other than an Unrestricted Entity), such
      person becomes a Guarantor; (iii) such Person is principally engaged in the
      same
      business as the Obligors; (iv) the Borrower shall be in pro forma compliance
      with the covenants set forth in ***Sections
      9.13*** , ***9.14*** and ***9.15*** based on
      the trailing 12 quarters and as adjusted for such acquisition; (v) such acquired
      Person or assets shall not be subject to any material liabilities except as
      permitted by this Agreement; and (vi) a first priority perfected lien and
      security interest shall be granted to the Administrative Agent for the benefit
      of the Lenders in such acquired assets; *provided*  *however* ,
      that
      nothing herein shall require any Unrestricted Entity to grant a first priority
      lien in its assets; and




49




(i)  other
      investments, loans or advances not to exceed in the aggregate
      $5,000,000.




Section
      9.05Dividends,
      Distributions and Redemptions **.**
      The Borrower will not declare or pay any dividend, purchase, redeem or otherwise
      acquire for value any of its stock now or hereafter outstanding, return any
      capital to its stockholders or make any distribution of its assets to its
      stockholders if an Event of Default has occurred and is continuing or would
      occur as a result of such distribution or to the extent such distribution plus
      any prior distributions after the Closing Date exceeds the Cumulative Net Income
      Amount; *provided,
      that* ,
      such limitation
      shall not apply to dividends consisting of the proceeds from the sale of APH
      common units in connection with the initial public offering thereof .




Section
      9.06Sales
      and Leasebacks **.**
      Borrower shall not and shall not permit any Guarantor to enter
      into any arrangement, directly or indirectly, with any Person whereby any such
      Obligor shall sell or transfer any of its Property, whether now owned or
      hereafter acquired, and whereby such shall then or thereafter rent or lease
      as
      lessee such Property or any part thereof or other Property which such Obligor
      intends to use for substantially the same purpose or purposes as the Property
      sold or transferred.




Section
      9.07Nature
      of Business **.**
      Borrower shall not and shall not permit any Guarantor to allow
      any material change to be made in the character of its business or the business
      of the Partnerships as an independent oil and gas exploration and production
      company. Borrower shall not and shall not permit any Guarantor to
      materially amend, waive or modify any of their Material Agreements or
      Partnership Agreements in any manner that could reasonably be expected to cause
      any material and adverse effect on the Administrative Agent’s and the Lenders’
interests in the collateral securing the Indebtedness, or the Administrative
      Agents’ or the Lenders’ ability to enforce their rights and remedies under this
      Agreement or any other Loan Document, at law or in equity.




Section
      9.08Limitation
      on Leases **.**
      Borrower shall not and shall not permit any Guarantor to
      create, incur, assume or permit to exist any obligation for the payment of
      rent
      or hire of Property of any kind whatsoever (real or personal including capital
      leases, but excluding leases of Hydrocarbon Interests), under leases or lease
      agreements which would cause the aggregate amount of all payments made by
      Borrower and the Guarantors pursuant to all such leases or lease agreements
      to
      exceed $2,000,000 in any period of twelve consecutive calendar months during
      the
      life of such leases.




**Section
      9.09** **Mergers,
      Etc.** Borrower
      shall not and shall not permit any Guarantor to merge into or with or
      consolidate with any other Person, or liquidate, sell, lease or otherwise
      dispose of (whether in one transaction or in a series of transactions) all
      or
      substantially all of its Property or assets (whether now owned or hereafter
      acquired) to or in favor of any other Person, except, so long as no Default
      exists or would result therefrom, (i) any Guarantor may merge with (A) the
      Borrower, provided the Borrower shall be the continuing or surviving
      Person, or (B) any one or more other Subsidiaries, provided that when any
      Guarantor is merging with another Subsidiary that is not a Guarantor, the
      continuing or surviving Person shall be a Guarantor, and (ii) any Guarantor
      may
      dispose of all or substantially all of its assets (upon voluntary liquidation
      or
      otherwise) to the Borrower or to another Subsidiary; provided if the transferor
      in such a transaction is a Guarantor, then the transferee must either be the
      Borrower or a Guarantor.




50




Section
      9.10Proceeds
      of Notes and Letters of Credit **.**
      The Borrower will not permit the proceeds of the Notes or Letters of Credit
      to
      be used for any purpose other than those permitted by ***Section
      7.07*** .
      Neither
      the Borrower nor any Person acting on behalf of the Borrower has taken or will
      take any action which might cause any of the Loan Documents to violate
      Regulation T, U or X or any other regulation of the Board of Governors of the
      Federal Reserve System or to violate Section 7 of the Securities Exchange Act
      of
      1934 or any rule or regulation thereunder, in each case as now in effect or
      as
      the same may hereinafter be in effect.




Section
      9.11ERISA
      Compliance **.**
      The Borrower shall not, and shall not permit any of its Subsidiaries at any
      time
      to:




(a)  Engage
      in, or permit any Subsidiary or ERISA Affiliate to engage in, any transaction
      in
      connection with which any Obligor, any Subsidiary or any ERISA Affiliate could
      be subjected to either a civil penalty assessed pursuant to section 502(c),
      (i)
      or (1) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the
      Code;




(b)  Terminate,
      or permit any Subsidiary or ERISA Affiliate to terminate, any Plan in a manner,
      or take any other action with respect to any Plan, which could result in any
      liability to any Obligor, any Subsidiary or any ERISA Affiliate to the
      PBGC;




(c)  Fail
      to
      make, or permit any Subsidiary or ERISA Affiliate to fail to make, full payment
      when due of all amounts which, under the provisions of any Plan, agreement
      relating thereto or applicable law, any Obligor, a Subsidiary or any ERISA
      Affiliate is required to pay as contributions thereto;




(d)  Permit
      to
      exist, or allow any Subsidiary or ERISA Affiliate to permit to exist, any
      accumulated funding deficiency within the meaning of Section 302 of ERISA or
      section 412 of the Code, whether or not waived, with respect to any
      Plan;




(e)  Permit,
      or allow any Subsidiary or ERISA Affiliate to permit, the actuarial present
      value of the benefit liabilities under any Plan maintained by any Obligor,
      any
      Subsidiary or any ERISA Affiliate which is regulated under Title IV of ERISA
      to
      exceed the cur-rent value of the assets (computed on a plan termination basis
      in
      accordance with Title IV of ERISA) of such Plan allocable to such benefit
      liabilities. The term “ *actuarial
      present value of the benefit liabilities* ”
shall
      have the meaning specified in section 4041 of ERISA;




(f)  Contribute
      to or assume an obligation to contribute to, or permit any Subsidiary or ERISA
      Affiliate to contribute to or assume an obligation to contribute to, any
      Multiemployer Plan;




(g)  Acquire,
      or permit any Subsidiary or ERISA Affiliate to acquire, an interest in any
      Person that causes such Person to become an ERISA Affiliate with respect to
      any
      Obligor, any Subsidiary or any ERISA Affiliate if such Person sponsors,
      maintains or con-tributes to, or at any time in the six-year period preceding
      such acquisition has sponsored, maintained, or contributed to, (1) any
      Multiemployer Plan, or (2) any other Plan that is subject to Title IV of
      ERISA under which the actuarial present value of the benefit liabilities under
      such Plan exceeds the current value of the assets (computed on a plan
      termination basis in accordance with Title IV of ERISA) of such Plan allocable
      to such benefit liabilities;




(h)  Incur,
      or
      permit any Subsidiary or ERISA Affiliate to incur, a liability to or on account
      of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
      ERISA;




(i)  Contribute
      to or assume an obligation to contribute to, or permit any Subsidiary or ERISA
      Affiliate to contribute to or assume an obligation to contribute to, any
      employee welfare benefit plan, as defined in section 3(l) of ERISA,
      including, without limitation, any such plan maintained to provide benefits
      to
      former employees of such entities, that may not be terminated by such entities
      in their sole discretion at any time without any material liability;
      or




51




(j)  Amend
      or
      permit any Subsidiary or ERISA Affiliate to amend, a Plan resulting in an
      increase in current liability such that any Obligor, any Subsidiary or any
      ERISA
      Affiliate is required to provide security to such Plan under section 401
      (a)(29) of the Code.




Section
      9.12Sale
      or Discount of Receivables **.**
      Borrower shall not, and shall not permit any Guarantor to discount or sell
      (with
      or without recourse) any of its notes receivable or accounts
      receivable.




Section
      9.13Current
      Ratio **.**
      The Borrower will not permit the ratio of its (i) current assets (including
      any
      unused amount under the Borrowing Base but excluding assets under Hedging
      Agreements.) to (ii) current liabilities (excluding liabilities under Hedging
      Agreements, current maturities of the Notes and those portions of the advance
      payments received by the Borrower for the drilling and completion of oil and
      gas
      wells that exceed the cost to Borrower of such drilling and completion and
      are
      classified as current liabilities), to be less than 1.0 to 1.0 at the end of
      any
      quarter. For the purposes of calculating the Borrower’s current ratio, the
      current assets and current liabilities attributable to the Unrestricted Entities
      shall be excluded.




Section
      9.14Funded
      Debt to EBITDA **.**
      The Borrower will not permit the ratio of Funded Debt to EBITDA of the Borrower
      as of the end of any fiscal quarter of the Borrower (on a consolidated basis
      calculated quarterly based upon the four most recently completed quarters)
      to be
      more than 3.50 to 1.00. For the purposes of calculating the ratio of Borrower’s
      Funded Debt to EBITDA, (i) the EBITDA and Funded Debt attributable to the
      Unrestricted Entities (except for cash distributions from APL or APH paid to
      Borrower or Guarantors) shall be excluded, and (ii) Funded Debt shall not
      include: (a) “ *asset
      retirement obligations,* ”
as
      such
      term is used in FASB Statement 143, to the extent such asset retirement
      obligations relate to the plugging and abandonment of wells; (b) liabilities
      under Hedging Agreements; or (c) debt of Borrower to RAI under the Transition
      Services Agreement and the Tax Matters Agreement.





Section
      9.15Consolidated
      Interest Coverage Ratio **.**
      Borrower will not permit its Consolidated Interest Coverage Ratio as of the
      end
      of any fiscal quarter of Borrower beginning June 30, 2006 (calculated upon
      the
      four most recently completed fiscal quarters, quarterly at the end of each
      fiscal quarter) to be less than 2.50 to 1.00. For the purposes of calculating
      the Consolidated Interest Coverage Ratio, the EBITDA and interest payments
      attributable to the Unrestricted Entities (except for cash distributions from
      APL or APH paid to Borrower) shall be excluded.




**Section
      9.16** **Sale
      of Oil and Gas Properties.** The
      Obligors will not Transfer any Oil and Gas Property or any interest in any
      Oil
      and Gas Property for which value was given in the most recent Borrowing Base
      redetermination to any Person other than Obligors, provided, for so long as
      no
      Default exists, Obligors may Transfer up to $500,000 in the aggregate of such
      Oil and Gas Property Assets during any Borrowing Base Period. Upon any Transfer
      of Oil and Gas Properties as permitted herein, the Borrowing Base shall be
      automatically reduced by the current Oil and Gas Collateral Value attributable
      to such Oil and Gas Properties under current Borrowing Base
      determination.




Section
      9.17 
Environmental
      Matters **.**
      None of the Obligors nor any Subsidiary will cause or permit any of its Property
      to be in violation of, or do anything or permit anything to be done which will
      subject any such Property to any remedial obligations under any Environmental
      Laws, assuming disclosure to the applicable Governmental Authority of all
      relevant facts, conditions and circumstances, if any, pertaining to such
      Property where such violations or remedial obligations would have a Material
      Adverse Effect.




52




Section
      9.18Transactions
      with Affiliates **.**
      The Borrower shall not, and shall not permit any Guarantor to enter into any
      transaction, including, without limitation, any purchase, sale, lease or
      exchange of Property or the rendering of any service, with any Affiliate unless
      such transactions are otherwise permitted under this Agreement, are in the
      ordinary course of its business and are upon fair and reasonable terms no less
      favorable to it than it would obtain in a comparable arm’s length transaction
      with a Person not an Affiliate.




Section
      9.19Subsidiaries **.**
      The Borrower shall not, and shall not permit any Subsidiary to create any
      additional Subsidiaries (other than Unrestricted Entities) that do not become
      Guarantors hereunder. Borrower shall not and shall not permit any Guarantor
      to
      sell or to issue any stock or ownership interest of a Subsidiary, except to
      Borrower or any of its Wholly Owned Subsidiaries and except in compliance with ***Section
      9.04*** ,
      Borrower shall not, and shall not permit any Guarantor to, create any new
      Partnerships other than drilling fund limited partnerships on terms
      substantially similar to the Partnerships set forth on ***Schedule
      7.14*** .




Section
      9.20Negative
      Pledge Agreements **.**
      The Borrower shall not and shall not permit any of Guarantor to create, incur,
      assume or permit to exist any contract, agreement or understanding (other than
      this Agreement and the Security Instruments) which in any way prohibits or
      restricts the granting, conveying, creation or imposition of any Lien on any
      of
      its Property or restricts any Guarantor from paying dividends to the Borrower,
      or which requires the consent of or notice to other Persons in connection
      therewith.




Section
      9.21Gas
      Imbalances, Take-or-Pay or Other Prepayments **.**
      The Borrower will not and will not permit any Guarantor to allow gas imbalances,
      take-or-pay or other prepayments with respect to the Oil and Gas Properties
      of
      the Guarantors which would require the Guarantors to deliver in the aggregate
      five percent (5%) or more of their Hydrocarbons produced on a monthly basis
      from
      such Oil and Gas Properties at some future time without then or thereafter
      receiving full payment therefor.




Section
      9.22Accounting
      Changes. Borrower
      shall not and shall not permit any Subsidiary to make any significant change
      in
      accounting treatment or reporting practices except as required by GAAP, or
      change the fiscal year of the Borrower or any Subsidiary.





**ARTICLE
      X**


**Events
      of Default; Remedies**




**Section
      10.01** **Events
      of Default** .
      One or more of the following events shall constitute an “ ***Event
      of Default*** ”:




(a)  the
      Borrower shall default in the payment or prepayment when due of any principal
      of
      or interest on any Loan, or any reimbursement obligation for a disbursement
      made
      under any Letter of Credit, or any fees or other amount payable by it hereunder
      or under any Security Instrument; or




(b)  any
      Obligor shall default in the payment when due of any principal of or interest
      on
      any of its other Debt aggregating $2,500,000 or more, or any event specified
      in
      any note, agreement, indenture or other document evidencing or relating to
      any
      such Debt shall occur if the effect of such event is to cause, or (with the
      giving of any notice or the lapse of time or both) to permit the holder or
      holders of such Debt (or a trustee or agent on behalf of such holder or holders)
      to cause, such Debt to become due prior to its stated maturity; or




(c)  any
      representation, warranty or certification made or deemed made herein or in
      any
      Loan Document by any Obligor or any Subsidiary, or any certificate furnished
      to
      any Lender or the Administrative Agent pursuant to the provisions hereof or
      any
      Security Instrument, shall prove to have been false or misleading as of the
      time
      made or furnished in any material respect; or




53




(d)  any
      Obligor shall default in the performance of any of its obligations under ***Article IX*** or any
      other Article of this Agreement other than under ***Article VIII*** ;
      or any
      Obligor shall default in the performance of any of its obligations under ***Article VIII*** or under
      any Loan Document to which it is a party (other than the payment of amounts
      due
      which shall be governed by ***Section
      10.01(a)*** )
      and
      such default shall continue unremedied for a period of thirty (30) days
      following the occurrence thereof; or




(e)  any
      Obligor shall admit in writing its inability to, or be generally unable to,
      pay
      its debts as such debts become due; or




(f)  any
      Obligor shall (i) apply for or consent to the appointment of, or the taking
      of possession by, a receiver, custodian, trustee or liquidator of itself or
      of
      all or a substantial part of its property, (ii) make a general assignment
      for the benefit of its creditors, (iii) commence a voluntary case under the
      Federal Bankruptcy Code (as now or hereafter in effect), (iv) file a
      petition seeking to take advantage of any other law relating to bankruptcy,
      insolvency, reorganization, winding-up, liquidation or composition or
      readjustment of debts, (v) fail to controvert in a timely and appropriate
      manner, or acquiesce in writing to, any petition filed against it in an
      involuntary case under the Federal Bankruptcy Code, or (vi) take any
      corporate action for the purpose of effecting any of the foregoing;
      or




(g)  a
      proceeding or case shall be commenced, without the application or consent of
      any
      Obligor, in any court of competent jurisdiction, seeking (i) its
      liquidation, reorganization, dissolution or winding-up, or the composition
      or
      readjustment of its debts, (ii) the appointment of a trustee, receiver,
      custodian, liquidator or the like of such Obligor of all or any substantial
      part
      of its assets, or (iii) similar relief in respect of such Obligor under any
      law relating to bankruptcy, insolvency, reorganization, winding-up, or
      composi-tion or adjustment of debts, and such proceeding or case shall continue
      undismissed, or an order, judgment or decree approving or ordering any of the
      foregoing shall be entered and continue unstayed and in effect, for a period
      of
      60 days; or (iv) an order for relief against any Obligor shall be entered
      in an involuntary case under the Federal Bankruptcy Code; or




(h)  a
      judgment or judgments for the payment of money in excess of $2,500,000 in the
      aggregate shall be rendered by a court against any Obligor and the same shall
      not be discharged (or provision shall not be made for such discharge), or a
      stay
      of execution thereof shall not be procured, within the period of time prescribed
      by applicable rules of civil procedure in which to perfect an appeal thereof
      and
      such Obligor shall not, within said period, or such longer period during which
      execution of the same shall have been stayed, or an appeal therefrom shall
      cause
      the execution thereof to be stayed during such appeal; or




(i)  the
      Loan
      Documents after delivery thereof shall for any reason, except to the extent
      permitted by the terms thereof, cease to be in full force and effect and valid,
      binding and enforceable in accordance with their terms, or, with respect to
      the
      Security Instruments, cease to create a valid and perfected Lien of the priority
      required thereby on any of the collateral purported to be covered thereby,
      except to the extent permitted by the terms of this Agreement, or any Obligor
      shall so state in writing; or




(j)  an
      event
      having a Material Adverse Effect shall occur; or




(k)  a
      Change
      of Control occurs; *provided* ,
      any
      Change of Control that occurs as a result of a Permitted Merger shall not
      constitute a Default; or




54




(l)  any
      Obligor conceals any of its Property with the intent to hinder, delay or defraud
      any Lender, the Issuing Bank, or the Administrative Agent with respect to their
      rights in the Mortgaged Property or any other Property of the
      Obligors.




**Section
      10.02** **Remedies.**




(a)  In
      the
      case of an Event of Default other than one referred to in ***clauses
      (e)*** , ***(f)*** or ***(g)*** of ***Section
      10.01*** ,
      the
      Administrative Agent, upon request of the Majority Lenders, shall, by notice
      to
      the Borrower, cancel the Commitments (in whole or part) and/or declare the
      principal amount then outstanding of, and the accrued interest on, the Loans
      and
      all other amounts payable by the Borrower hereunder and under the Notes
      (including without limitation the payment of cash collateral to secure the
      LC
      Exposure as provided in ***Section
      2.10(b)*** )
      to be
      forthwith due and payable, whereupon such amounts shall be immediately due
      and
      payable without presentment, demand, protest, notice of intent to accelerate,
      notice of acceleration or other formalities of any kind, all of which are hereby
      expressly waived by the Borrower.




(b)  In
      the
      case of the occurrence of an Event of Default referred to in ***clauses
      (e)*** , ***(f)*** or ***(g)*** of ***Section 10.01*** ,
      the
      Commitments shall be automatically canceled and the principal amount then
      outstanding of, and the accrued interest on, the Loans and all other amounts
      payable by the Borrower hereunder and under the Notes (including without
      limitation the payment of cash collateral to secure the LC Exposure as provided
      in ***Section 2.10(b)*** )
      shall
      become automatically immediately due and payable without presentment, demand,
      protest, notice of intent to accel-erate, notice of acceleration or other
      formalities of any kind, all of which are hereby expressly waived by the
      Borrower.




(c)  All
      proceeds received after maturity of the Notes, whether by acceleration or
      otherwise shall be applied first to reimbursement of expenses and indemnities
      provided for in this Agreement and the Security Instruments; second to accrued
      interest on the Notes; third to fees; fourth pro rata to principal outstanding
      on the Notes and other Indebtedness; fifth to serve as cash collateral to be
      held by the Administrative Agent to secure the LC Exposure; and any excess
      shall
      be paid to the Borrower or as otherwise required by any Governmental
      Requirement.




**Section
      10.03** **Present
      Assignment of Interests.**




(a)  Notwithstanding
      that, under ***Article
      III*** of the
      Mortgages, the Obligors thereto have unconditionally assigned to Administrative
      Agent for the ratable benefit of the Lenders all of the proceeds of runs
      accruing to the Mortgaged Properties covered thereby:




(i) Until
      such time as Administrative Agent shall notify such Obligors to the contrary,
      Obligors shall be entitled to receive from the purchasers or disbursers of
      production all such proceeds of runs, subject however to the liens created
      under
      the Mortgages, which liens are hereby affirmed and ratified. Automatically
      upon
      an Event of Default under ***Section
      10.01(e), (f)*** or ***(g)*** and upon
      the occurrence and during the continuance of any other Event of Default,
      Administrative Agent may exercise all rights and remedies granted under the
      Mortgages, including the right to obtain possession of all proceeds of runs
      then
      held by Obligors or to receive directly from the purchasers or disbursers of
      production all other proceeds of runs.




(ii) In
      no
      case shall any failure, whether purposed or inadvertent, by Administrative
      Agent
      to collect directly any such proceeds of runs constitute in any way a waiver,
      remission or release of any of its rights under the Mortgages, nor shall any
      release of any other proceeds of runs or of any rights of Administrative Agent
      to collect other proceeds of runs thereafter.




55




(iii) Obligors
      will upon the instruction of Administrative Agent join with Administrative
      Agent
      in notifying, in writing and accompanied (if necessary) by certified copies
      of
      the Mortgages, the purchasers or disbursers of production, produced from the
      Mortgaged Properties, of the existence of the Mortgages, and instructing that
      all proceeds of runs be paid directly to Administrative Agent for the ratable
      benefit of the Lenders.




(b)  Notwithstanding
      that, under ***Article
      VIII*** of the
      Pledge, Assignment and Security Agreement executed by each of the Obligors,
      as
“Debtor” thereto (herein collectively the “ ***Pledges*** ”),
      such
      parties have unconditionally assigned to Administrative Agent for the ratable
      benefit of the Lenders all of the dividends, interest, or other “Distributions”
(as defined therein) paid or payable in respect of the Collateral covered
      thereby:




(i) Until
      such time as Administrative Agent shall notify such Obligors to the contrary,
      Obligors shall be entitled to receive and retain all such Distributions, subject
      however to the security interests created under the Pledges, which liens are
      hereby affirmed and ratified. Automatically upon an Event of Default under ***Section
      10.01(f)*** or ***(g)*** and upon
      the occurrence and during the continuance of any other Event of Default,
      Administrative Agent may exercise all rights and remedies granted under the
      Pledges, including the right to obtain possession of all Distributions then
      held
      by Obligors or to receive directly from the Subsidiaries and Partnerships making
      such payments all future Distributions attributable to the
      Collateral.




(ii) In
      no
      case shall any failure, whether purposed or inadvertent, by Administrative
      Agent
      to collect directly any such Distributions constitute in any way a waiver,
      remission or release of any of its rights under the Pledges, nor shall any
      release of any other Distributions or of any rights of Administrative Agent
      to
      collect other Distributions thereafter.




(iii) Obligors
      will upon the instruction of Administrative Agent join with Administrative
      Agent
      in notifying in writing to the entities responsible for making such
      Distributions of the existence of the Pledges, and instructing that all
      Distributions be paid directly to Administrative Agent for the ratable benefit
      of the Lenders.




**ARTICLE
      XI**


**The
      Administrative Agent**




Section
      11.01Appointment,
      Powers and Immunities **.**
      Each Lender hereby irrevocably appoints and authorizes the Administrative Agent
      to act as its agent hereunder and under the Security Instruments with such
      powers as are specifically delegated to the Administrative Agent by the terms
      of
      this Agreement and the Security Instruments, together with such other powers
      as
      are reasonably incidental thereto. The Administrative Agent (which term as
      used
      in this sentence and in ***Section
      11.05*** and the
      first sentence of ***Section
      11.06*** shall
      include reference to its Affiliates and its and its Affiliates’ officers,
      directors, employees, attorneys, accountants, experts and agents): (i) shall
      have no duties or responsibilities except those expressly set forth in the
      Loan
      Documents, and shall not by reason of the Loan Documents be a trustee or
      fiduciary for any Lender; (ii) makes no representation or warranty to any Lender
      and shall not be responsible to the Lenders for any recitals, statements,
      representations or warranties contained in this Agreement, or in any certificate
      or other document referred to or provided for in, or received by any of them
      under, this Agreement, or for the value, validity, effectiveness, genuineness,
      execution, effectiveness, legality, enforceability or sufficiency of this
      Agreement, any Note or any other document referred to or provided for herein
      or
      for any failure by any of the Obligors or any other Person (other than the
      Administrative Agent) to perform any of its obligations hereunder or thereunder
      or for the existence, value, perfection or priority of any collateral security
      or the financial or other condition of the Borrower, its Subsidiaries or any
      other obligor or guarantor; (iii) except pursuant to ***Section
      11.07*** shall
      not be required to initiate or conduct any litigation of collection proceedings
      hereunder; and (iv) shall not be responsible for any action taken or omitted
      to
      be taken by it hereunder or under any other document or instrument referred
      to
      or provided for herein or in connection herewith including its own ordinary
      negligence, except for its own gross negligence or willful misconduct. The
      Administrative Agent may employ agents, accountants, attorneys and experts
      and
      shall not be responsible for the negligence or misconduct of any such agents,
      accountants, attorneys or experts selected by it in good faith or any action
      taken or omitted to be taken in good faith by it in accordance with the advice
      of such agents, accountants, attorneys or experts. The Administrative Agent
      may
      deem and treat the payee of any Note as the holder thereof for all purposes
      hereof unless and until a written notice of the assignment or transfer thereof
      permitted hereunder shall have been filed with the Administrative Agent. The
      Administrative Agent is authorized to release any collateral that is permitted
      to be sold or released pursuant to the terms of the Loan Documents.




56




Section
      11.02Reliance
      by Administrative Agent **.**
      The Administrative Agent shall be entitled to rely upon any certification,
      notice or other communication (including any thereof by telephone, telex,
      telecopier, telegram or cable) believed by it to be genuine and correct and
      to
      have been signed or sent by or on behalf of the proper Person or Persons, and
      upon advice and statements of legal counsel, independent accountants and other
      experts selected by the Administrative Agent.




Section
      11.03Defaults **.**
      The Administrative Agent shall not be deemed to have knowledge of the occurrence
      of a Default (other than the non-payment of principal of or interest on Loans
      or
      of fees or failure to reimburse for Letter of Credit drawings) unless the
      Administrative Agent has received notice from a Lender or the Borrower
      specifying such Default and stating that such notice is a “ *Notice
      of Default* ”.
      In the
      event that the Administrative Agent receives such a notice of the occurrence
      of
      a Default, the Administrative Agent shall give prompt notice thereof to the
      Lenders. In the event of a payment Default, the Administrative Agent shall
      give
      each Lender prompt notice of each such payment Default.




Section
      11.04Rights
      as a Lender **.**
      With respect to its Commitments and the Loans made by it and its participation
      in the issuance of Letters of Credit, Wachovia Bank, National Association (and
      any successor acting as Administrative Agent) in its capacity as a Lender
      hereunder shall have the same rights and powers hereunder as any other Lender
      and may exercise the same as though it were not acting as the Administrative
      Agent, and the term “ *Lender* ”
or
      “ *Lenders* ”
shall,
      unless the context otherwise indicates, include the Administrative Agent in
      its
      individual capacity. Wachovia Bank, National Association (and any successor
      acting as Administrative Agent) and its Affiliates may (without having to
      account therefor to any Lender) accept deposits from, lend money to and
      generally engage in any kind of banking, trust or other business with the
      Obligors (and any of their Affiliates) as if it were not acting as the
      Administrative Agent, and Wachovia Bank, National Association and its Affiliates
      may accept fees and other consideration from the Obligors for services in
      connection with this Agreement or otherwise without having to account for the
      same to the Lenders.




**Section
      11.05** **Indemnification** **.**
      The Lenders agree to indemnify the Administrative Agent and the Issuing Bank
      ratably in accordance with their Percentage Shares for the indemnity matters
      as
      described in ***Section
      12.03*** to the
      extent not indemnified or reimbursed by the Obligors under ***Section
      12.03*** ,
      but
      without limiting the obligations of the Obligors under said ***Section
      12.03*** **** and
      for
      any and all other liabilities, obligations, losses, damages, penalties, actions,
      judgments, suits, costs, expenses or disbursements of any kind and nature
      whatsoever which may be imposed on, incurred by or asserted against the
      Administrative Agent or the Issuing Bank in any way relating to or arising
      out
      of: (1) this Agreement, the Security Instruments or any other documents
      contemplated by or referred to herein or the transactions contemplated hereby,
      but excluding, unless a Default has occurred and is continuing, normal
      administrative costs and expenses incident to the performance of its agency
      duties hereunder or (ii) the enforcement of any of the terms of this Agreement,
      any Security Instrument or of any such other documents; WHETHER OR NOT ANY
      OF
      THE FOREGOING SPECIFIED IN THIS ***SECTION
      11.05*** ARISES
      FROM THE SOLE OR CONCURRENT NEGLIGENCE OF THE ADMINISTRATIVE AGENT OR THE
      ISSUING BANK, provided that no Lender shall be liable for any of the foregoing
      to the extent they arise from the gross negligence or willful misconduct of
      the
      Administrative Agent.




57




Section
      11.06Non-Reliance
      on Administrative Agent and other Lenders **.**
      Each Lender acknowledges and agrees that it has, independently and without
      reliance on the Administrative Agent or any other Lender, and based on such
      documents and information as it has deemed appropriate, made its own credit
      analysis of the Obligors and its decision to enter into this Agreement, and
      that
      it will, independently and without reliance upon the Administrative Agent or
      any
      other Lender, and based on such documents and information as it shall deem
      appropriate at the time, continue to make its own analysis and decisions in
      taking or not taking action under this Agreement. The Administrative Agent
      shall
      not be required to keep itself informed as to the performance or observance
      by
      the Obligors of this Agreement, the Notes, the Security Instruments or any
      other
      document referred to or provided for herein or to inspect the properties or
      books of the Obligors. Except for notices, reports and other documents and
      information expressly required to be furnished to the Lenders by the
      Administrative Agent hereunder, the Administrative Agent shall not have any
      duty
      or responsibility to provide any Lender with any credit or other information
      concerning the affairs, financial condition or business of the Obligors (or
      any
      of their Affiliates) which may come into the possession of the Administrative
      Agent or any of its Affiliates. In this regard, each Lender acknowledges that
      Haynes and Boone, LLP is acting in this transaction as special counsel to the
      Administrative Agent only, except to the extent otherwise expressly stated
      in
      any legal opinion or any Loan Document. Each Lender will consult with its own
      legal counsel to the extent that it deems necessary in connection with the
      Loan
      Documents and the matters contemplated therein.




Section
      11.07Action
      by Administrative Agent **.**
      Except for action or other matters expressly required of the Administrative
      Agent hereunder, the Administrative Agent shall in all cases be fully justified
      in failing or refusing to act hereunder unless it shall (i) receive written
      instructions from the Majority Lenders (or all of the Lenders as expressly
      required by ***Section
      12.04*** )
      specifying the action to be taken, and (ii) be indemnified to its satisfaction
      by the Lenders against any and all liability and expenses which may be incurred
      by it by reason of taking or continuing to take any such action. The
      instructions of the Majority Lenders (or all of the Lenders as expressly
      required by ***Section 12.04*** )
      and any
      action taken or failure to act pursuant thereto by the Administrative Agent
      shall be binding on all of the Lenders. If a Default has occurred and is
      continuing, the Administrative Agent shall take such action with respect to
      such
      Default as shall be directed by the Majority Lenders (or all of the Lenders
      as
      required by ***Section 12.04*** )
      in the
      written instructions (with indemnities) described in this ***Section 11.07*** ,
      provided that, unless and until the Administrative Agent shall have received
      such directions, the Administrative Agent may (but shall not be obligated to)
      take such action, or refrain from taking such action, with respect to such
      Default as it shall deem advisable in the best interests of the Lenders. In
      no
      event, however, shall the Administrative Agent be required to take any action
      which exposes the Administrative Agent to personal liability or which is
      contrary to this Agreement and the Security Instruments or applicable
      law.




Section
      11.08Resignation
      or Removal of Administrative Agent **.**
      Subject to the appointment and acceptance of a successor Administrative Agent
      as
      provided below, the Administrative Agent may resign at any time by giving notice
      thereof to the Lenders and the Borrower, and the Administrative Agent may be
      removed at any time with or without cause by the Majority Lenders. Upon any
      such
      resignation or removal, the Majority Lenders shall have the right to appoint
      a
      successor Administrative Agent. If no successor Administrative Agent shall
      have
      been so appointed by the Majority Lenders and shall have accepted such
      appointment within thirty (30) days after the retiring Administrative Agent’s
      giving of notice of resignation or the Majority Lenders’ removal of the retiring
      Administrative Agent, then the retiring Administrative Agent may, on behalf
      of
      the Lenders, appoint a successor Administrative Agent. Upon the acceptance
      of
      such appointment hereunder by a successor Administrative Agent, such successor
      Administrative Agent shall thereupon succeed to and become vested with all
      the
      rights, powers, privileges and duties of the retiring Administrative Agent,
      and
      the retiring Administrative Agent shall be discharged from its duties and
      obligations hereunder. After any retiring Administrative Agent’s resignation or
      removal hereunder as Administrative Agent, the provisions of this ***Article
      XI*** and ***Section
      12.03*** shall
      continue in effect for its benefit in respect of any actions taken or omitted
      to
      be taken by it while it was acting as the Administrative Agent.




58




**ARTICLE
      XII**


**Miscellaneous**




Section
      12.01Waiver **.**
      No failure on the part of the Administrative Agent or any Lender to exercise
      and
      no delay in exercising, and no course of dealing with respect to, any right,
      power or privilege under any of the Loan Documents shall operate as a waiver
      thereof, nor shall any single or partial exercise of any right, power or
      privilege under any of the Loan Documents preclude any other or further exercise
      thereof or the exercise of any other right, power or privilege. The remedies
      provided herein are cumulative and not exclusive of any remedies provided by
      law.





Section
      12.02Notices **.**
      All notices and other communications provided for herein and in the other Loan
      Documents (including, without limitation, any modifications of, or waivers
      or
      consents under, this Agreement or the other Loan Documents) shall be given
      or
      made by telex, telecopy, courier or U.S. Mail or in writing and telexed,
      telecopied, mailed or delivered to the intended recipient at the “ ***Address
      for Notices*** ”
      specified below its name on the signature pages hereof or in the Loan Documents
      or, as to any party, at such other address as shall be designated by such party
      in a notice to each other party. Except as otherwise provided in this Agreement
      or in the other Loan Documents, all such communications shall be deemed to
      have
      been duly given when transmitted, if transmitted before 1:00 p.m. local time
      on
      a Business Day (otherwise on the next succeeding Business Day) by telex or
      telecopier and evidence or confirmation of receipt is obtained, or personally
      delivered or, in the case of a mailed notice, three (3) Business Days after
      the
      date deposited in the mails, postage prepaid, in each case given or addressed
      as
      aforesaid.




**Section
      12.03** **Payment
      of Expenses, Indemnities, etc.**




(a)  The
      Obligors agree:




(i) whether
      or not the transactions hereby contemplated are consummated, to pay all
      reasonable expenses of the Administrative Agent in the administration (both
      before and after the execution hereof and including advice of counsel as to
      the
      rights and duties of the Administrative Agent and the Lenders with respect
      thereto) of, and in connection with the negotiation, syndication, investigation,
      preparation, execution and delivery of, recording or filing of, preservation
      of
      rights under, enforcement of, and refinancing, renegotiation or restructuring
      of, the Loan Documents and any amendment, waiver or consent relating thereto
      (including, without limitation, travel, photocopy, mailing, courier, telephone
      and other similar expenses of the Administrative Agent, the cost of
      environmental audits, surveys and appraisals at reasonable intervals, the
      reasonable fees and disbursements of counsel and other outside consultants
      for
      the Administrative Agent and, in the case of preservation or enforcement of
      rights (including restructurings and workouts), the reasonable fees and
      disbursements of counsel for the Administrative Agent and any of the Lenders);
      and promptly reimburse the Administrative Agent for all amounts expended,
      advanced or incurred by the Administrative Agent or the Lenders to satisfy
      any
      obligation of the Obligors under this Agreement or any Security Instrument,
      including without limitation, all costs and expenses of
      foreclosure;




59




(ii) To
      indemnify the Administrative Agent and each Lender and each of their affiliates
      and each of their officers, directors, employees, representatives, agents,
      attorneys, accountants and experts (“ ***Indemnified
      Parties*** ”)
      from,
      hold each of them harmless against and promptly upon demand pay or reimburse
      each of them for, the indemnity matters which may be incurred by or asserted
      against or involve any of them (whether or not any of them is designated a
      party
      thereto) as a result of, arising out of or in any way related to (i) any actual
      or proposed use by the Borrower or any Guarantor of the proceeds of any of
      the
      loans or letters of credit, (ii) the execution, delivery and performance of
      the
      loan documents, (iii) the operations of the business of the Obligors and their
      Subsidiaries, (iv) the failure of the Obligors or any Subsidiary to comply
      with
      the terms of any loan document, or with any governmental requirement, (v) any
      inaccuracy of any representation or any breach of any warranty of the Obligors
      set forth in any of the loan documents, (vi) the issuance, execution and
      delivery or transfer of or payment or failure to pay under any letter of credit,
      or (vii) the payment of a drawing under any letter of credit notwithstanding
      the
      non-compliance, non-delivery or other improper presentation of the manually
      executed draft(s) and certification(s), (viii) any assertion that the Lenders
      were not entitled to receive the proceeds received pursuant to the Security
      Instruments, or (ix) any other aspect of the loan documents, including, without
      limitation, the reasonable fees and disbursements of counsel and all other
      expenses incurred in connection with investigating, defending or preparing
      to
      defend any such action, suit, proceeding (including any investigations,
      litigation or inquiries) or claim and **INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY NEGLIGENCE
      OF
      ANY INDEMNIFIED PARTY,** but
      excluding all indemnity matters arising solely by reason of claims between
      the
      Lenders or any Lender and the Administrative Agent or a Lender’s shareholders
      against the Administrative Agent or Lender or by reason of the gross negligence
      or willful misconduct on the part of the Indemnified Party; and




(iii) TO
      INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE INDEMNIFIED PARTIES FROM
      AND
      AGAINST ANY AND ALL LOSSES, CLAIMS, COST RECOVERY ACTIONS, ADMINISTRATIVE ORDERS
      OR PROCEEDINGS, DAMAGES AND LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME
      SUBJECT (I) UNDER ANY ENVIRONMENTAL LAW APPLICABLE TO THE OBLIGORS OR ANY
      SUBSIDIARY OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE
      TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (II)
      AS A RESULT OF THE BREACH OR NON-COMPLIANCE BY ANY OBLIGOR OR ANY SUBSIDIARY
      WITH ANY ENVIRONMENTAL LAW APPLICABLE TO ANY OBLIGOR OR ANY SUBSIDIARY, (III)
      DUE TO PAST OWNERSHIP BY ANY OBLIGOR OR ANY SUBSIDIARY OF ANY OF THEIR
      PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL
      AND
      FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (IV) THE
      PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES
      ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY ANY OBLIGOR OR ANY
      SUBSIDIARY, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN
      CONNECTION WITH THE LOAN DOCUMENTS.




(b)  No
      Indemnified Party may settle any claim to be indemnified without the consent
      of
      the indemnitor, such consent not to be unreasonably withheld; *provided* ,
      that
      the indemnitor may not reasonably withhold consent to any settlement that an
      Indemnified Party proposes, if the indemnitor does not have the financial
      ability to pay all its obligations outstanding and asserted against the
      indemnitor at that time, including the maximum potential claims against the
      Indemnified Party to be indemnified pursuant to this ***Section 12.03*** .




60




(c)  In
      the
      case of any indemnification hereunder, the Administrative Agent or Lender,
      as
      appropriate shall give notice to the Obligors of any such claim or demand being
      made against the Indemnified Party and the Obligors shall have the non-exclusive
      right to join in the defense against any such claim or demand provided that
      if
      any Obligor provides a defense, the Indemnified Party shall bear its own cost
      of
      defense unless there is a conflict between the Obligors and such Indemnified
      Party.




(d)  THE
      FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES NOTWITHSTANDING
      THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER
      ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT
      LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT
      (SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNIFIED PARTIES OR BY REASON OF
      STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED
      PARTIES. To the extent that an Indemnified Party is found to have committed
      an
      act of gross negligence or willful misconduct, this contractual obligation
      of
      indemnification shall continue but shall only extend to the portion of the
      claim
      that is deemed to have occurred by reason of events other than the gross
      negligence or willful misconduct of the Indemnified Party.




(e)  The
      Obligors’ obligations under this ***Section
      12.03*** shall
      survive any termination of this Agreement and the payment of the Notes and
      shall
      continue thereafter in full force and effect.




(f)  The
      Obligors shall pay any amounts due under this ***Section
      12.03*** within
      thirty (30) days of the receipt by the Obligors of notice of the amount
      due.




**Section
      12.04** **Amendments,
      Etc.** Any
      provision of this Agreement or any other Loan Document may be amended, modified
      or waived with the Obligors’ and the Majority Lenders’ prior written consent;
      provided that (i) no amendment, modification or waiver which extends the final
      maturity of the Loans, increases the Aggregate Maximum Revolving Credit Amounts,
      increases the Borrowing Base, reduces or forgives the principal amount of any
      Indebtedness outstanding under this Agreement (including any principal due
      pursuant to a mandatory prepayment required pursuant to ***Section
      2.07(b)*** ),
      postpones any date scheduled for any payment of principal or interest under
      this
      Agreement (including any principal due pursuant to a mandatory prepayment
      required pursuant to ***Section
      2.07(b)*** ),
      releases any Guarantor, of the Indebtedness, or releases Security Instruments
      which in the aggregate cover a material portion of the Mortgaged Property (as
      reflected on the most recent Reserve Report delivered under ***Section
      8.07*** )
      during
      each Borrowing Base Period, reduces the interest rate applicable to the Loans
      or
      the fees payable to the Lenders generally, affects ***Section
      2.03(a)*** ,
      this ***Section
      12.04*** , ***Section
      12.06(a)*** ,
      any
      provision of ***Section
      4.05(b)*** that
      would alter the pro rata sharing of payments required thereby, or modifies
      the
      definitions of “ ***Majority
      Lenders*** ”
or
      “ ***Percentage
      Share*** ”
shall
      be effective without consent of all Lenders; (ii) no amendment, modification
      or
      waiver which increases the Maximum Revolving Credit Amount or the Commitment
      of
      any Lender shall be effective without the consent of such Lender; and (iii)
      no
      amendment, modification or waiver which modifies the rights, duties or
      obligations of the Administrative Agent shall be effective without the consent
      of the Administrative Agent.




Section
      12.05Successors
      and Assigns **.**
      This Agreement shall be binding upon and inure to the benefit of the parties
      hereto and their respective successors and permitted assigns.




**Section
      12.06** **Assignments
      and Participations**




(a)  The
      Borrower may not assign its rights or obligations hereunder or under the Notes
      or any Letters of Credit without the prior consent of all of the Lenders and
      the
      Administrative Agent.




61




(b)  Any
      Lender may, upon the written consent of the Administrative Agent and, if no
      Default exists, with consent of the Borrower (which consent will not be
      unreasonably withheld or delayed), assign to one or more assignees all or a
      portion of its rights and obligations under this Agreement pursuant to an
      Assignment Agreement substantially in the form of ***Exhibit E*** (an
“ ***Assignment*** ”); *provided* , *however* ,
      that
      (i) any such assignment shall be in the amount of the lesser of (A) at
      least $5,000,000 or (B) the total amount of a Lender’s rights and obligations
      under this Agreement and (ii) the assignee or assignor shall pay to the
      Administrative Agent a processing and recordation fee of $3,500 for each
      assignment. Any such assignment will become effective upon the execution and
      delivery to the Administrative Agent of the Assignment and the consent of the
      Administrative Agent. Promptly after receipt of an executed Assignment, the
      Administrative Agent shall send to the Borrower a copy of such executed
      Assignment. Upon receipt of such executed Assignment, the Borrower, will, at
      its
      own expense, execute and deliver new Notes to the assignor and/or assignee,
      as
      appropriate, in accordance with their respective interests as they appear.
      Upon
      the effectiveness of any assignment pursuant to this ***Section 12.06(b)*** ,
      the
      assignee will become a “ ***Lender*** ,”
if
      not
      already a “ ***Lender*** ,”
for
      all purposes of this Agreement and the Security Instruments. The assignor shall
      be relieved of its obligations hereunder to the extent of such assignment (and
      if the assigning Lender no longer holds any rights or obligations under this
      Agreement, such assigning Lender shall cease to be a “ ***Lender*** ”
      hereunder except that its rights under ***Sections 4.06,
      5.01, 5.05*** and ***12.03*** shall
      not be affected).




(c)  Each
      Lender may transfer, grant or assign participations in all or any part of such
      Lender’s interests hereunder pursuant to this ***Section 12.06(c)*** to any
      Person, *provided* that:
      (i) such Lender shall remain a “ ***Lender*** ”
for
      all
      purposes of this Agreement and the transferee of such participation shall not
      constitute a “ ***Lender*** ”
      hereunder; and (ii) no participant under any such participation shall have
      rights to approve any amendment to or waiver of any of the Loan Documents except
      to the extent such amendment or waiver would (w) modify the definition of
“ ***Majority
      Lenders*** ,”
      (x) forgive any principal owing on any Indebtedness or extend the final
      maturity of the Loans, (y) reduce the interest rate (other than as a result
      of waiving the applicability of any post-default increases in interest rates)
      or
      fees applicable to any of the Commitments or Loans or Letters of Credit in
      which
      such participant is participating, or postpone the payment of any thereof,
      or
      (z) release any guarantor of the Indebtedness or release Security
      Instruments which in the aggregate cover more than five percent (5%) by value
      of
      the Mortgaged Property (as reflected on the most recent Reserve Report delivered
      under ***Section
      8.07*** )
      during
      each Borrowing Base Period supporting any of the Commitments or Loans or Letters
      of Credit in which such participant is participating. In the case of any such
      participation, the participant shall not have any rights under this Agreement
      or
      any of the Security Instruments (the participant’s rights against the granting
      Lender in respect of such participation to be those set forth in the agreement
      with such Lender creating such participation), and all amounts payable by the
      Borrower hereunder shall be determined as if such Lender had not sold such
      participation, *provided* that
      such participant shall be entitled to receive additional amounts under ***Article V*** on the
      same basis as if it were a Lender and be indemnified under ***Section 12.03*** as if it
      were a Lender. In addition, each agreement creating any participation must
      include an agreement by the participant to be bound by the provisions of ***Section 12.15*** .




(d)  The
      Lenders may furnish any information concerning the Borrower in the possession
      of
      the Lenders from time to time to assignees and participants (including
      prospective assignees and participants); *provided* that,
      such Persons agree to be bound by the provisions of ***Section 12.15*** .




(e)  Notwithstanding
      anything in this ***Section 12.06*** to the
      contrary, any Lender may assign and pledge its Note to any Federal Reserve
      Bank.
      No such assignment and/or pledge shall release the assigning and/or pledging
      Lender from its obligations hereunder.




(f)  Notwithstanding
      any other provisions of this ***Section 12.06*** ,
      no
      transfer or assignment of the interests or obligations of any Lender or any
      grant of participations therein shall be permitted if such transfer, assignment
      or grant would require the Borrower to file a registration statement with the
      SEC or to qualify the Loans under the “ *Blue
      Sky* ”
laws
      of
      any state.




62




Section
      12.07Invalidity **.**
      In the event that any one or more of the provisions contained in any of the
      Loan
      Documents shall, for any reason, be held invalid, illegal or unenforceable
      in
      any respect, such invalidity, illegality or unenforceability shall not affect
      any other provision of the Notes, this Agreement or any other Loan
      Document.




Section
      12.08Counterparts **.**
      This Agreement may be executed in any number of counterparts, all of which
      taken
      together shall constitute one and the same instrument and any of the parties
      hereto may execute this Agreement by signing any such counterpart.




Section
      12.09References,
      Use of Word “Including” **.**
      The words “ *herein* ,”
      “ *hereof* ,”
      “ *hereunder* ”
and
      other words of similar import when used in this Agreement refer to this
      Agreement as a whole, and not to any particular article, section or subsection.
      Any reference herein to a Section or Article shall be deemed to refer to the
      applicable Section or Article of this Agreement unless otherwise stated herein.
      Any reference herein to an exhibit, schedule, or other attachment shall be
      deemed to refer to the applicable exhibit, schedule, or other attachment
      attached hereto unless otherwise stated herein. The words “ *including* ,”
      “ *includes* ”
and
      words of similar import mean “ *including,
      without limitation* .”




**Section
      12.10** **Survival** **.**
      The obligations of the parties under ***Section 4.06*** , ***Article V*** ,
      and ***Sections 11.05*** and ***12.03*** shall
      survive the repayment of the Loans and the termination of the Commitments.
      To
      the extent that any payments on the Indebtedness or proceeds of any collateral
      are subsequently invalidated, declared to be fraudulent or preferential, set
      aside or required to be repaid to a trustee, debtor in possession, receiver
      or
      other Person under any bankruptcy law, common law or equitable cause, then
      to
      such extent, the Indebtedness so satisfied shall be revived and continue as
      if
      such payment or proceeds had not been received and the Administrative Agent’s
      and the Lenders’ Liens, security interests, rights, powers and remedies under
      this Agreement and each Security Instrument shall continue in full force and
      effect. In such event, each Security Instrument shall be automatically
      reinstated and the Obligors shall take such action as may be reasonably
      requested by the Administrative Agent and the Lenders to effect such
      reinstatement.




Section
      12.11Captions **.**
      Captions and section headings appearing herein are included solely for
      convenience of reference and are not intended to affect the interpretation
      of
      any provision of this Agreement.




**Section
      12.12** **NO
      ORAL AGREEMENTS** . **THE
      LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES
      AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES
      RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THE LOAN DOCUMENTS REPRESENT
      THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
      OF PRIOR, CONTEMPO-RANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
      ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES** .




**Section
      12.13** **GOVERNING
      LAW, SUBMISSION TO JURISDICTION.**




(a)  THIS
      AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
      THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL
      LAW PERMITS ANY LENDER TO CHARGE INTEREST AT THE RATE ALLOWED BY THE LAWS OF
      THE
      STATE WHERE SUCH LENDER IS LOCATED. CH. 346 OF THE TEXAS FINANCE CODE (WHICH
      REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY
      ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES.




63




(b)  ANY
      LEGAL
      ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN
      THE
      COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
      SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
      THE BORROWER AND EACH GUARANTOR HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT
      PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
      THE
      JURISDICTION OF THE AFORESAID COURTS. THE BORROWER AND EACH GUARANTOR HEREBY
      IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
      TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF *FORUM
      NON CONVENIENS,* WHICH
      IT
      MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
      IN
      SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
      AND DOES NOT PRECLUDE THE ADMINISTRATIVE AGENT OR ANY LENDER FROM OBTAINING
      JURISDICTION OVER THE BORROWER OR ANY GUARANTOR IN ANY COURT OTHERWISE HAVING
      JURISDICTION.




(c)  THE
      BORROWER AND EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM
      LOCATED AT 111 EIGHTH AVENUE, 13 th FLOOR,
      NEW YORK, NEW YORK, 10011, AS THE DESIGNEE, APPOINTEE AND ADMINISTRATIVE AGENT
      OF THE BORROWER AND EACH GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF THE BORROWER
      AND EACH GUARANTOR, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN
      ANY
      LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS. IT IS UNDERSTOOD
      THAT A COPY OF SUCH PROCESS SERVED ON SUCH ADMINISTRATIVE AGENT WILL BE PROMPTLY
      FORWARDED BY OVERNIGHT COURIER TO THE BORROWER AND THE RELEVANT GUARANTOR AT
      THEIR ADDRESSES SET FORTH UNDER ITS SIGNATURE BELOW, BUT THE FAILURE OF
      THE ** BORROWER
      OR SUCH GUARANTOR TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE
      OF SUCH PROCESS. THE BORROWER AND EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS
      TO
      THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
      OR
      PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
      POSTAGE PREPAID, TO THE BORROWER AND ANY GUARANTOR AT ITS SAID ADDRESS, SUCH
      SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.




(d)  NOTHING
      HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER OR
      ANY
      HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
      COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER OR ANY
      GUARANTOR IN ANY OTHER JURISDICTION.




(e)  THE
      BORROWER, EACH GUARANTOR AND EACH LENDER HEREBY (I) IRREVOCABLY AND
      UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY
      IN
      ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY SECURITY
      INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE
      MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
      IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
      DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY
      THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF ADMINISTRATIVE AGENT OR COUNSEL
      FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
      SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
      WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
      AGREEMENT, THE SECURITY INSTRUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY
      AND
      THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
      IN THIS *SECTION
      12.13* .




64




Section
      12.14Interest **.**
      It is the intention of the parties hereto to conform strictly to Applicable
      Usury Laws regarding the use, forbearance or detention of the indebtedness
      evidenced by this Agreement, the Notes and the other Loan Documents, whether
      such laws are now or hereafter in effect, including the laws of the United
      States of America or any other jurisdiction whose laws are applicable, and
      including any subsequent revisions to or judicial interpretations of those
      laws,
      in each case to the extent they are applicable to this Agreement, the Notes
      and
      the other Loan Documents (the “ ***Applicable
      Usury Laws*** ”).
      Accordingly, if any acceleration of the maturity of the Notes or any payment
      by
      Borrower or any other Person produces a rate in excess of the Highest Lawful
      Rate or otherwise results in Borrower or such other Person being deemed to
      have
      paid any interest in excess of the Maximum Amount, as hereinafter defined,
      or if
      any Lender shall for any reason receive any unearned interest in violation
      of
      any Applicable Usury Laws, or if any transaction contemplated hereby would
      otherwise be usurious under any Applicable Usury Laws, then, in that event,
      regardless of any provision contained in this Agreement or any other Loan
      Document or other agreement or instrument executed or delivered in connection
      herewith, the provisions of this ***Section
      12.14*** shall
      govern and control, and neither Borrower nor any other Person shall be obligated
      to pay, or apply in any manner to, any amount that would be excessive interest.
      No Lender shall ever be deemed to have contracted for or be entitled to receive,
      collect, charge, reserve or apply as interest on any Loan (whether termed
      interest therein or deemed to be interest by judicial determination or operation
      of law), any amount in excess of the Highest Lawful Rate, and, in the event
      that
      such Lender ever receives, collects, or applies as interest any such excess,
      such amount which would be excessive interest shall be applied as a partial
      prepayment of principal and treated hereunder as such, and, if the principal
      amount of the applicable Loans are paid in full, any remaining excess shall
      forthwith be paid to Borrower. In determining whether or not the interest
      contracted for, received, collected, charged, reserved, paid or payable,
      including under any specific contingency, exceeds the Highest Lawful Rate,
      Borrower and each Lender shall, to the maximum extent permitted under applicable
      law, (a) characterize any non-principal payment (other than payments which
      are
      expressly designated as interest payments hereunder) as an expense or fee rather
      than as interest, (b) exclude voluntary pre-payments and the effect thereof,
      and
      (c) amortize and spread the total amount of interest throughout the entire
      stated term of the Loans so that the interest rate is uniform throughout such
      term; *provided* that
      if
      the Loans are paid in full prior to the end of the full contemplated term
      hereof, and if the interest received for the actual period of existence thereof
      exceeds the Highest Lawful Rate, if any, then the Lenders shall refund to
      Borrower the amount of such excess, or credit the amount of such excess against
      the aggregate unpaid principal balance of all Loans made by Lender. As used
      herein, the term *“* ***Maximum
      Amount*** *”* means
      the maximum nonusurious amount of interest which may be lawfully contracted
      for,
      reserved, charged, collected or received by Lender in connection with the
      indebtedness evidenced by this Agreement, the Notes and other Loan Documents
      under all Applicable Usury Laws. Texas Finance Code, Chapter 346, which
      regulates certain revolving loan accounts and revolving tri-party accounts,
      shall not apply to any revolving loan accounts created under, or apply in any
      manner to, the Note, this Agreement or the other Loan Documents.




65




Section
      12.15Confidentiality **.**
      Subject to provisions under ***Section
      12.16*** below,
      in the event that the Borrower provides to the Administrative Agent or the
      Lenders written confidential information belonging to the Borrower, if the
      Borrower shall denominate such information in writing as “ *confidential* ,”
the
      Administrative Agent and the Lenders shall thereafter maintain such information
      in confidence in accordance with the standards of care and diligence that each
      utilizes in maintaining its own confidential information. This obligation of
      confidence shall not apply to such portions of the information which
      (i) are in the public domain, (ii) hereafter become part of the public
      domain without the Administrative Agent or the Lenders breaching their
      obligation of confidence to the Borrower, (iii) are previously known by the
      Administrative Agent or the Lenders from some source other than the Borrower,
      (iv) are hereafter developed by the Administrative Agent or the Lenders
      without using the Borrower’s information, (v) are hereafter obtained by or
      available to the Administrative Agent or the Lenders from a third party who
      owes
      no obligation of confidence to the Borrower with respect to such information
      or
      through any other means other than through disclosure by the Borrower,
      (vi) are disclosed with the Borrower’s consent, (vii) must be
      disclosed either pursuant to any Governmental Requirement or to Persons
      regulating the activities of the Administrative Agent or the Lenders provided,
      Administrative Agent and Lenders shall endeavor to provide notice to the
      Borrower as soon as practicable in the event Borrower desires to enjoin the
      disclosure of such information, however, failure of Administrative Agent or
      Lenders to provide such prior notice to Borrower shall not give rise to any
      claim or cause of action by Borrower or any Obligor against Administrative
      Agent
      or such Lenders, or (viii) as may be required by law or regulation or order
      of any Governmental Authority in any judicial, arbitration or governmental
      proceeding. Further, the Administrative Agent or a Lender may disclose any
      such
      information to any other Lender, any independent petroleum engineers or
      consultants, any independent certified public accountants, any legal counsel
      employed by such Person in connection with this Agreement or any Security
      Instrument, including without limitation, the enforcement or exercise of all
      rights and remedies thereunder, or any assignee or participant (including
      prospective assignees and participants) in the Loans; provided, however, that
      the Administrative Agent or the Lenders shall receive a confidentiality
      agreement from the Person to whom such information is disclosed such that said
      Person shall have the same obligation to maintain the confidentiality of such
      information as is imposed upon the Administrative Agent or the Lenders
      hereunder. Notwithstanding anything to the contrary provided herein, this
      obligation of confidence shall cease three (3) years from the date the
      information was furnished, unless the Borrower requests in writing at least
      thirty (30) days prior to the expiration of such three year period, to maintain
      the confidentiality of such information for an additional three year period.
      The
      Borrower waives any and all other rights it may have to confidentiality as
      against the Administrative Agent and the Lenders arising by contract, agreement,
      statute or law except as expressly stated in this ***Section 12.15*** .




**Section
      12.16** **USA
      Patriot Act Notice** .
      Each Lender hereby notifies the Borrower that pursuant to the requirements
      of
      the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
      2001)) (the “ ***Act*** ”),
      it is
      required to obtain, verify and record information that identifies the Borrower,
      which information includes the name and address of the Borrower and other
      information that will allow such Lender to identify the Borrower in accordance
      with the Act.




66




**Section
      12.17** **Restatement
      of Existing Credit Agreement** .
      The
      parties hereto agree that, on the Closing Date, after all conditions precedent
      set forth in *Section 6.01* have
      been satisfied or waived: (i) the Indebtedness (as defined in this Agreement)
      represents, among other things, the restatement, renewal, amendment, extension,
      and modification of the *“Indebtedness”* (as
      defined in the Existing Credit Agreement); (ii) this Agreement is intended
      to,
      and does hereby, restate, renew, extend, amend, modify, supersede, and replace
      the Existing Credit Agreement in its entirety; (iii) the Notes, if any, executed
      pursuant to this Agreement amend, renew, extend, modify, replace, restate,
      substitute for, and supersede in their entirety (but do not extinguish the
      Indebtedness arising under) the promissory notes issued pursuant to the Existing
      Credit Agreement, which existing promissory notes shall be returned to
      Administrative Agent promptly after the Closing Date, marked *“renewed
      and replaced”* ;
      (iv)
      the Security Instruments executed pursuant to this Agreement amend, renew,
      extend, modify, replace, restate, substitute for, and supersede in their
      entirety (but do not extinguish or impair the collateral security created or
      evidenced by) the “ *Security
      Instruments* ”
      executed and delivered pursuant to the Existing Credit Agreement; (v) each
      Guaranty Agreement executed by existing Guarantors pursuant to this Agreement
      amends, renews, extends, modifies, replaces, restates, substitutes for, and
      supersedes in its entirety (but does not extinguish or impair the Indebtedness
      guaranteed by) the Guaranty Agreement executed by the applicable Guarantor,
      as
      the case may be, executed and delivered pursuant to the Existing Credit
      Agreement; and (vi) the entering into and performance of their respective
      obligations under the Loan Documents and the transactions evidenced hereby
      do
      not constitute a novation nor shall they be deemed to have terminated,
      extinguished, or discharged the “ *Indebtedness* ”
under
      the Existing Credit Agreement, the Security Instruments, the Guaranty
      Agreements, or the other Loan Documents (or the collateral security therefor),
      all of which Indebtedness and collateral shall continue under and be governed
      by
      this Agreement and the other Loan Documents, except as expressly provided
      otherwise herein.




***[The
      remainder of this page intentionally left blank. Signatures begin on the next
      page.]***




67


The
      parties hereto have caused this Agreement to be duly executed as of the day
      and
      year first above written.


BORROWER:Address
                  for Notice:
              ATLAS
                  AMERICA, INC., a Delaware corporationAtlas
                  America, Inc.311
                  Rouser Road
              By:Moon
                  Township, Pennsylvania 15108
              
              Matthew
                  A. JonesAttention:
                  Matthew A. Jones
              
              Chief
                  Financial OfficerFax
                  No.: 215-546-4785E-mail:mjones@atlaspipelinepartners.comGUARANTORS:AIC,
                  INC.,a
                  Delaware corporationBy:Matthew
                  A. JonesChief
                  Financial OfficerATLAS
                  AMERICA, INC.,a
                  Pennsylvania corporationBy:Matthew
                  A. JonesChief
                  Financial OfficerATLAS
                  AMERICA MID-CONTINENT, INC.,a
                  Delaware corporationBy:Matthew
                  A. JonesChief
                  Financial Officer
  68
  ATLAS
                  ENERGY CORPORATION,an
                  Ohio corporationBy:Matthew
                  A. JonesChief
                  Financial OfficerATLAS
                  NOBLE CORP.,a
                  Delaware corporationBy:Matthew
                  A. JonesChief
                  Financial OfficerATLAS
                  RESOURCES, LLC,a
                  Pennsylvania limited liability companyBy:Michael
                  L. StainesSenior
                  Vice President and SecretaryREI-NY,
                  INC.,a
                  Delaware corporationBy:Matthew
                  A. JonesChief
                  Financial OfficerRESOURCE
                  ENERGY, INC.,a
                  Delaware corporationBy:Matthew
                  A. JonesChief
                  Financial Officer
  69
  RESOURCE
                  WELL SERVICES, INC.,a
                  Delaware corporationBy:Matthew
                  A. JonesChief
                  Financial OfficerVIKING
                  RESOURCES CORPORATION,a
                  Pennsylvania corporationBy:Matthew
                  A. JonesChief
                  Financial Officer
  70
 
 LENDER,
                  ADMINISTRATIVE AGENT ANDISSUING
                  BANK:WACHOVIA
                  BANK, NATIONAL ASSOCIATIONIndividually,
                  Administrative Agent and Issuing BankBy:Jay
                  BuckmanVice
                  PresidentLending
                  Office for Base Rate Loans andLIBOR
                  Loans and Address for Notices:Wachovia
                  Bank, National Association1001
                  Fannin, Suite 2255Houston,
                  Texas 77002Telecopier
                  No.: 713-650-6354Telephone
                  No.: 713-346-2707Attention:
                  Jay Buckman


71




**SCHEDULE
      2.01(b)**





**LETTERS
      OF CREDIT**








**Applicant**
            **L/C**
              **Number**
            **Amount**
            **Expiration**
              **Date**
            **Beneficiary**Atlas
                America, Inc.
            SM216861
            $5,000,000
            11/30/2006
            Amerada
                Hess CorporationAtlas
                America, Inc.
            SM204112
            $1,000,000
            07/14/2006
            Amerada
                Hess CorporationAtlas
                America, Inc.
            SM205652
            $120,000
            10/31/2006
            Travelers
                Casualty and Surety Company of AmericaAtlas
                America, Inc.
              REI-NY,
                Inc.
            SM205637
            $150,000
            10/31/2006
            New
                York State Department of
              Environmental
                Conservation
              Division
                of Mineral ResourcesResource
                Energy,
              Inc.
            SM205641
            $150,000
            10/31/2006
            New
                York State Department of
              Environmental
                Conservation
              Division
                of Mineral ResourcesAtlas
                Resources,
              Inc..
            SM200159
            $55,000
            07/31/2006
            Travelers
                Indemnity Company


SCHEDULE
            2.01 (B) TO CREDIT AGREEMENT - Page 1




**SCHEDULE
      7.03**





**LITIGATION**





1.
            Cherry,
                et al. v. Resource America, Inc., et al.,
                New York Supreme Court, Chautauqua County, No. K1-2000-171.


SCHEDULE
            7.03 TO CREDIT AGREEMENT - Page 1




**SCHEDULE
      7.10**





**OWNERSHIP
      REPORTS**





(Attached)




SCHEDULE
          7.10 TO CREDIT AGREEMENT - Page 1


**SCHEDULE
      7.14**





**PARTNERSHIP
      INTERESTS**





(Attached)




SCHEDULE
          7.14 TO CREDIT AGREEMENT - Page 1


**SCHEDULE
      7.15**





**SUBSIDIARY
      INTERESTS**




**100%**
            
            **Number
                of**
            
            **Number
                of****Subsidiaries**
            
            **Owner**
            
            **Authorized
                Shares**
            
            **Issued
                Shares**Atlas
                America, Inc. (PA)
            
            Atlas
                America, Inc. (DE)
            
            1,000
            
            100Atlas
                Noble Corp.
            
            Atlas
                America, Inc. (DE)
            
            1,000
            
            100Resource
                Energy, Inc.
            
            Atlas
                America, Inc. (DE)
            
            100
            
            100REI-NY,
                Inc.
            
            Resource
                Energy, Inc.
            
            1,000
            
            1,000Resource
                Well Services, Inc.
            
            Resource
                Energy, Inc.
            
            100
            
            100Viking
                Resources Corporation
            
            Atlas
                America, Inc. (DE)
            
            1,000
            
            100RFI
                Holding Company, Inc.
            
            Viking
                Resources Corporation
            
            750
            
            10AIC,
                Inc.
            
            Atlas
                America, Inc. (DE)
            
            1,000
            
            1,000Anthem
                Securities, Inc.1
            
            AIC,
                Inc.
            
            500
            
            500Atlas
                Energy Corporation
            
            AIC,
                Inc.
            
            500
            
            488Pennsylvania
                Industrial Energy, Inc.
            
            AIC,
                Inc.
            
            500
            
            500Viking
                Investments, Inc.
            
            Viking
                Resources Corporation
            
            1,000Atlas
                Information Management, LLC
            
            AIC,
                Inc.
            
            N/A
            
            N/AAED
                Investments, Inc.
            
            Atlas
                America, Inc. (DE)
            
            1,000
            
            1,000Atlas
                Resources, LLC
            
            AIC,
                Inc.
            
            N/A
            
            N/AARD
                Investments, Inc.
            
            Atlas
                Resources, LLC
            
            1,000
            
            1,000Atlas
                Pipeline Partners GP, LLC
            
            AIC,
                Inc. 33.40%
            
            N/A
            
            N/AViking
                Resources Corp. 23.56%Resource
                Energy, Inc. 20.24%Atlas
                America, Inc. (DE) 10.21%Atlas
                Resources, Inc. 5.96%REI-NY,
                Inc. 6.63%




1 Not a
      Guarantor and securities not pledged hereunder.




SCHEDULE
          7.15 TO CREDIT AGREEMENT - Page 1





**Subsidiaries**
            
            **100%**
              **Owner**
            
            **Number
                of**
              **Authorized
                Shares**
            
            **Number
                of**
              **Issued
                Shares**Atlas
                Pipeline holdings GP, LLC
            
            Atlas
                America, Inc. (DE)
            
            N/A
            
            N/AAtlas
                America Mid-Continent, Inc.
            
            Atlas
                America, Inc. (DE)
            
            1,000
            
            1,000




SCHEDULE
          7.15 TO CREDIT AGREEMENT - Page 2


**SCHEDULE
      7.20**





**INSURANCE**




**Coverage
                Type**
            
            **Policy
                Number**
            
            **Insurance
                Carrier**
            
            **Coverage
                Description**
            
            **Limit**
            
            **Deductible**
            
            **Exp.
                Date**Worker's
            
            1063995-3
            
            NY
                State Insurance Fund
            
            Statutory
            
            NY
            
            
            
            9/18/2006Compensation
            
            
            
            
            
            Employer's
                Liability
            
            UnlimitedDisability
                Insurance
            
            DBL511575-4
            
            NY
                State Insurance Fund
            
            Disability
                Benefits
            
            NY
                - Statutory
            
            
            
            6/15/2006Worker's
            
            WC1-691-544656-045
            
            Liberty
                Mutual Insurance Co
            
            Statutory
            
            AZ,
                KS, NC
            
            
            
            10/27/2006Compensation
            
            
            
            
            
            
            
            MD,
                OK, TNDE,
                SCEmployer's
                LiabilityBodily
                Injury by Accidenteach
                accident
            
            $1,000,000policy
                limit
            
            $1,000,000Bodily
                Injury by Disease
            
            $1,000,000Worker's
            
            WC2-641-436089-016
            
            Liberty
                Mutual Insurance Co
            
            Statutory
            
            PA
            
            
            
            2/6/2007CompensationEmployer's
                LiabilityBodily
                Injury by Accidenteach
                accident
            
            $1,000,000policy
                limit
            
            $1,000,000Bodily
                Injury by Disease
            
            $1,000,000


SCHEDULE
          7.20 TO CREDIT AGREEMENT - Page 1


**Coverage
                  Type**
              
              **Policy
                  Number**
              
              **Insurance
                  Carrier**
              
              **Coverage
                  Description**
              
              **Limit**
              
              **Deductible**
              
              **Exp.
                  Date**Automobile
              
              73200463
              
              Federal
                  Insurance Co.
              
              
              
              
              
              
              
              3/1/2007Bodily
                  Injury & PropertyDamage
                  combinedsingle
                  limit of liability
              
              $1,000,000Hired
                  & Non-Owned Liability
              
              $1,000,000Uninsured
                  MotoristsOH
              
              $25,000PA
                  & NY
              
              $50,000TN
              
              $60,000Applies
                  only to employeesdriving
                acompany
                  owned vehiclewithin
                thescope
                  of their employment.Automobile
                  (continued)
              
              73200463
              
              Federal
                  Insurance Co.
              
              Under
                  Insured MotoristsOH
              
              $25,000PA
                  & NY
              
              $50,000TN
              
              $60,000Physical
                  DamageValuation:
                  Actual Cash ValueComprehensive
                  Perils
              
              
              
              $1,000Collision
              
              
              
              $1,000Towing
                  & LaborHired
                  Automobile PhysicalDamageComprehensive
                  Perils -
              
              
              
              $1,000$30,000Collision
                  - $40,000
              
              
              
              $1,000ATV
                  Deductible
              
              
              
              $500Snowmobile
                  Deductible
              
              
              
              $100


SCHEDULE
          7.20 TO CREDIT AGREEMENT - Page 2


**Coverage
                  Type**
              
              **Policy
                  Number**
              
              **Insurance
                  Carrier**
              
              **Coverage
                  Description**
              
              **Limit**
              
              **Deductible**
              
              **Exp.
                  Date**CommercialPackage
              
              3710-6326
              
              Federal
                  Insurance Co.
              
              *Commercial
                  Property Section*
              
              
              
              
              
              3/1/2007Chubb
                  Broad Form (equivalentto
                  SpecialCause
                  of Loss form)Valuation:
                  Replacement CostAgreed
                  AmountCoinsurance
                  - NoneBlanket
                  Building, Contents &
              
              $5,406,000
              
              $1,000Improvements&
                  BettermentsElectronic
                Data
                ProcessingProperty
              
              819,194
              
              $1,000Blanket
                  Extra Expense
              
              $250,000
              
              NoneValuable
                  Papers$25,000-Limit
                  varies by location
              
              $100,000Pollutant
                  Clean-up at ascheduled
                  locationdue
                  to a covered cause of loss
              
              $25,000
              
              NoneCommercial
              
              
              
              
              
              *Commercial
                  General Liability*Package
              
              3710-6326
              
              Federal
                  Insurance Co.
              
              *Section*
              
              
              
              
              
              3/1/2007Continued
              
              
              
              
              
              Bodily
                  Injury & PropertyDamage
                  combined
              
              
              
              $2,500single
                  limit of liability
              
              
              
              Bodily
                  Injury&
                  PropertyDamagePerOccurrence


SCHEDULE
          7.20 TO CREDIT AGREEMENT - Page 3


**Coverage
                  Type**
              
              **Policy
                  Number**
              
              **Insurance
                  Carrier**
              
              **Coverage
                  Description**
              
              **Limit**
              
              **Deductible**
              
              **Exp.
                  Date**Commercial
              
              
              
              
              
              *Commercial
                  General Liability*Package
              
              3710-6326
              
              Federal
                  Insurance Co.
              
              *Section(cont.)*
              
              
              
              
              
              3/1/2007Per
                  Occurrence
              
              $1,000,000General
                  Aggregate
              
              $2,000,000Products/Completed
              
              $1,000,000Operations
                  AggregatePersonal/Advertising
                  Injury
              
              $1,000,000Fire
                  Legal Liability
              
              $250,000Medical
                  ExpenseStop
                  Gap Employer'sLiability
                  - Ohio
              
              $1,000,000
              
              $1,000Employee
                  Benefits Liability
              
              $1,000,000
              
              $1,000Claims
                  MadeUnderground
                  Resources &EquipmentAggregate
              
              $1,000,000Premises/Operations;Products/Completedperations;
                  XCU*Equipment
                  Floater Section*Scheduled
                  Equipment
              
              $
                  7,313,141All
                  Risk, including breakdownfor
                  compressorengines.Coinsurance:
                  80%Actual
                  Cash ValueMobile
                  Equipment of Others
              
              $
                  100,000Rental
                  Expense
              
              $
                  25,000Employees'
                  Tools & Clothing
              
              $
                  10,000


SCHEDULE
          7.20 TO CREDIT AGREEMENT - Page 4


**Coverage
                  Type**
              
              **Policy
                  Number**
              
              **Insurance
                  Carrier**
              
              **Coverage
                  Description**
              
              **Limit**
              
              **Deductible**
              
              **Exp.
                  Date**Schedule
                  of DeductiblesMechanical
                  Breakdown ofCompressors
              
              $
                  25,000All
                  other causes - 5% peroccurrencesubject
                  to a $5,000 minimumand
                  $25,000maximumSchedule
                  of Deductibles
              
              **-**
              
              **-**(continued)Radio
                  Stations, 2-ways,Tower,
                  Mast, tools
              
              $
                  1,000Extra
                  Expense
              
              $
                  5,000Oil
                  & Gas Lease PropertyForm
              
              $
                  174,000
              
              1,000Scheduled
                  Disposal Wells (2)Pollution
              
              
              
              
              
              Bodily
                  Injury and PropertyLiability
              
              37250307
              
              Federal
                  Insurance Co.
              
              Damage
                  combinedsingle
                  limit per pollutionincident
              
              $1,000,000
              
              $10,000Policy
                  Aggregate
              
              $1,000,000Sub
                  limitOn-site
                  pollution clean-upPer
                  pollution incident
              
              $100,000
              
              $10,000CommercialUmbrella
              
              7972-09-63
              
              Federal
                  Insurance Co.
              
              Underlying
                  policies include:
              
              
              
              
              
              3/1/2007Employers
                  Liability; GeneralLiability;Automobile
                  Liability;Pollution
                  Liability


SCHEDULE
          7.20 TO CREDIT AGREEMENT - Page 5


**Coverage
                  Type**
              
              **Policy
                  Number**
              
              **Insurance
                  Carrier**
              
              **Coverage
                  Description**
              
              **Limit**
              
              **Deductible**
              
              **Exp.
                  Date**Following
                  form on excessliability
                  sectionPer
                  Occurrence
              
              $25,000,000
              
              $10,000*Policy
                  Aggregate
              
              $25,000,000Pollution
                  Sublimit
              
              $10,000,000*Self-Insured
                  RetentionCommercial
              
              
              
              Westchester
                  SurplusExcess
              
              G22036683001
              
              Lines
              
              Underlying
                  policy
              
              $24,000,000
              
              Excess
                  of
              
              3/1/2007Liability
              
              
              
              Insurance
                  Co.
              
              Federal
                  Insurance Co.
              
              
              
              $26,000,000Umbrella
                  PolicyExcess
                  General Liability only-
                  following formOperations
                  of Atlas AmericaInc.
                  as respectsAtlas
                  Resources Inc. / drillingpartnershipsCommercialCrime
              
              492-70-27
              
              National
                  Union Fire
              
              Dishonesty
                  by employees
              
              $1,000,000
              
              $2,500
              
              6/30/2006Insurance
                  Co.
              
              Including
                  ERISAEndorsement1st
                  LayerDirectors
              
              492-58-43
              
              National
                  Union Fire
              
              Limit
                  of Liability
              
              $10,000,000
              
              $250,000*
              
              6/30/2006&
                  OfficersLiability
              
              
              
              Insurance
                  Co.
              
              *Corporate
                  ReimbursementContinuity
                  Date: 9/27/2000SEC
                  Claims Retention
              
              
              
              $350,0002nd
                  Layer
              
              
              
              XL
                  Specialty InsuranceDirectors
              
              ELU089358-05
              
              Co.
              
              Limit
                  of Liability
              
              $10,000,000
              
              Excess
                  of
              
              6/30/2006&
                  Officers
              
              
              
              
              
              Following
                  Form
              
              
              
              National
  SCHEDULE
            7.20 TO CREDIT AGREEMENT - Page 6
 
 **Coverage
                  Type**
              
              **Policy
                  Number**
              
              **Insurance
                  Carrier**
              
              **Coverage
                  Description**
              
              **Limit**
              
              **Deductible**
              
              **Exp.
                  Date**Liability
              
              
              
              
              
              
              
              
              
              UnionEmployment
              
              
              
              
              
              Employment
                  PracticesPractices
              
              RNN506060
              
              Fireman's
                  Fund Insurance
              
              LiabilityLiability
              
              
              
              Co.
              
              Per
                  claim limit
              
              5,000,000
              
              50,000
              
              6/30/2006Aggregate
                  Limit each policy
              
              5,000,000periodPending
                  & Prior Litigation:8/15/2003
 SCHEDULE
              7.20 TO CREDIT AGREEMENT - Page 7
  **SCHEDULE
        7.21**





**HEDGING
      AGREEMENTS**





(Attached)




SCHEDULE
          7.21 TO CREDIT AGREEMENT - Page 1


**SCHEDULE
      7.23**





**MATERIAL
      AGREEMENTS**





1. Gas
      Purchase Agreement, dated March 31, 1999, among FirstEnergy Solutions Corp.
      (f/k/a Northeast Ohio Gas Marketing, Inc.), Atlas Energy Group, Inc., Atlas
      Resources, Inc. and Resource Energy, Inc., as amended by Amendment to Gas
      Purchase Agreement dated February 1, 2001 and Second Amendment to Base Gas
      Purchase Agreement dated July 16, 2003 and Assignment and Novation between
      FirstEnergy Solutions Corp. and Amerada Hess Corporation dated April 1,
      2005.





2. Omnibus
      Agreement, dated February 2, 2000, among Atlas America, Inc., Resource Energy,
      Inc., Viking Resources Corporation, Atlas Pipeline Operating Partnership, L.P.
      and Atlas Pipeline Partners, L.P.





3. Master
      Natural Gas Gathering Agreement, dated February 2, 2000, among Atlas America,
      Inc., Resource Energy, Inc., Viking Resources Corporation, Atlas Pipeline
      Operating Partnership, L.P. and Atlas Pipeline Partners, L.P.





4. Natural
      Gas Gathering Agreement, dated January 5, 2001, among Atlas Pipeline Operating
      Partnership, L.P., Atlas Pipeline Partners, L.P. and Atlas Noble
      Corp.





5. Natural
      Gas Gathering Agreement, dated March 16, 2001, among Atlas Pipeline Operating
      Partnership, L.P., Atlas Pipeline Partners, L.P. and Viking Resources
      Corporation.





6. Natural
      Gas Gathering Agreement, dated January 1, 2002, among Atlas Pipeline Operating
      Partnership, L.P., Atlas Pipeline Partners, L.P., Atlas Resources, Inc., Atlas
      Energy Group, Inc., Atlas Noble Corp., Resource Energy, Inc. and Viking
      Resources Corporation.





7. Amendment
      dated October 25, 2005 among Atlas America, Inc., Atlas Pipeline Operating
      Partnership, L.P., Atlas Pipeline Partners, L.P., Atlas Resources, Inc., Atlas
      Noble Corp., Resource Energy, Inc. and Viking Resources
      Corporation.





8. Gas
      Purchase Agreement, dated November 13, 2002, between UGI Energy Services, Inc.
      d/b/a GASMARK and Viking Resources Corporation as amended by First Amendment
      dated November 22, 2005 among Atlas America, Inc. (PA), Atlas America, Inc.
      (DE)
      and UGI Energy Services, Inc.




SCHEDULE
          7.23 TO CREDIT AGREEMENT - Page 1


**SCHEDULE
      7.24**





**GAS
      IMBALANCES**





None.




SCHEDULE
          7.24 TO CREDIT AGREEMENT - Page 1


**SCHEDULE
      9.01**





[To
      be
      Provided]




SCHEDULE
      9.01 TO CREDIT AGREEMENT - Page 1