Document:

[CANADIAN
      CREDIT AGREEMENT]

     

      
        

      

    

    

    CREDIT
      AGREEMENT

     

    dated
      as of July 28, 2006

     

    among

     

    STORM
      CAT ENERGY CORPORATION,

     

    THE
      LENDERS PARTY HERETO,

     

    JPMORGAN
      CHASE BANK, N.A., TORONTO BRANCH,

     

    as
      Canadian Administrative Agent

     

    and

     

    JPMORGAN
      CHASE BANK, N.A.,

     

    as
      Global Administrative Agent

     

    

     

    
      
        

      

    

     

    J.P.
      MORGAN SECURITIES INC.,

     

    as
      Sole Book Manager and Lead Arranger

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

     

    
      	 	 	
              Page

            
	
               ARTICLE
                I
DEFINITIONS

            
	
              Section
                1.1

            	
              Defined
                Terms

            	
              1

            
	
              Section
                1.2

            	
              Classification
                of Loans and Borrowings

            	
              14

            
	
              Section
                1.3

            	
              Terms
                Generally

            	
              14

            
	
              Section
                1.4

            	
              U.S.
                Credit Agreement Definitions

            	
              14

            
	 	 	 
	
               ARTICLE
                II

               THE
                CREDITS

            
	
              Section
                2.1

            	
              Commitments

            	
              15

            
	
              Section
                2.2

            	
              Loans
                and Borrowings

            	
              15

            
	
              Section
                2.3

            	
              Requests
                for Borrowings

            	
              16

            
	
              Section
                2.4

            	
              Letters
                of Credit

            	
              16

            
	
              Section
                2.5

            	
              Funding
                of Borrowings

            	
              20

            
	
              Section
                2.6

            	
              Interest
                Elections

            	
              21

            
	
              Section
                2.7

            	
              Global
                Borrowing Base

            	
              22

            
	
              Section
                2.8

            	
              Termination
                and Reduction of Commitments

            	
              23

            
	
              Section
                2.9

            	
              Repayment
                of Loans; Evidence of Debt

            	
              23

            
	
              Section
                2.10

            	
              Prepayment
                of Loans

            	
              24

            
	
              Section
                2.11

            	
              Fees

            	
              27

            
	
              Section
                2.12

            	
              Interest

            	
              28

            
	
              Section
                2.13

            	
              Alternate
                Rate of Interest

            	
              29

            
	
              Section
                2.14

            	
              Illegality

            	
              30

            
	
              Section
                2.15

            	
              Increased
                Costs

            	
              30

            
	
              Section
                2.16

            	
              Break
                Funding Payments

            	
              31

            
	
              Section
                2.17

            	
              Taxes

            	
              32

            
	
              Section
                2.18

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

            	
              33

            
	
              Section
                2.19

            	
              Mitigation
                Obligations; Replacement of Lenders

            	
              35

            
	
              Section
                2.20

            	
              Currency
                Conversion and Currency Indemnity

            	
              36

            
	
              Section
                2.21

            	
              Bankers’
                Acceptances

            	
              37

            
	 	 	 
	
               ARTICLE
                III 

              REPRESENTATIONS
                AND WARRANTIES

            
	
              Section
                3.1

            	
              Organization;
                Powers

            	
              42

            
	
              Section
                3.2

            	
              Authorization;
                Enforceability

            	
              42

            
	
              Section
                3.3

            	
              Approvals;
                No Conflicts

            	
              42

            
	
              Section
                3.4

            	
              Properties

            	
              43

            
	
              Section
                3.5

            	
              Compliance
                with Laws and Agreements

            	
              43

            
	
              Section
                3.6

            	
              Unfunded
                Pension Liabilities

            	
              43

            
	
              Section
                3.7

            	
              Disclosure

            	
              43

            
	
              Section
                3.8

            	
              Priority;
                Security Matters

            	
              43

            
	
              Section
                3.9

            	
              Solvency

            	
              43

            
	
              Section
                3.10

            	
              Representations
                and Warranties in U.S. Credit Agreement

            	
              44

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

       

    

    
      	
               ARTICLE
                IV

               CONDITIONS

            
	
              Section
                4.1

            	
              Effectiveness

            	
              44

            
	
              Section
                4.2

            	
              Initial
                Loan

            	
              44

            
	
              Section
                4.3

            	
              Each
                Credit Event

            	
              46

            
	 	 	 
	
               ARTICLE
                V 

              AFFIRMATIVE
                COVENANTS

            
	
              Section
                5.1

            	
              Compliance
                Certificate; Notices and Other Information

            	
              47

            
	
              Section
                5.2

            	
              Notice
                of Default

            	
              48

            
	
              Section
                5.3

            	
              Existence;
                Conduct of Business

            	
              48

            
	
              Section
                5.4

            	
              Casualty
                and Condemnation

            	
              48

            
	
              Section
                5.5

            	
              Books
                and Records; Inspection Rights

            	
              48

            
	
              Section
                5.6

            	
              Compliance
                with Laws

            	
              48

            
	
              Section
                5.7

            	
              Use
                of Proceeds and Letters of Credit

            	
              49

            
	
              Section
                5.8

            	
              Additional
                Subsidiaries

            	
              49

            
	
              Section
                5.9

            	
              Further
                Assurances

            	
              49

            
	
              Section
                5.10

            	
              Covenants
                in U.S. Credit Agreement

            	
              50

            
	 	 	 
	
               ARTICLE
                VI 

              [NOT
                USED] 

            
	 	 	 
	
               ARTICLE
                VII 

              NEGATIVE
                COVENANTS

            
	
              Section
                7.1

            	
              Transactions
                with Affiliates

            	
              50

            
	
              Section
                7.2

            	
              Restrictive
                Agreements

            	
              50

            
	
              Section
                7.3

            	
              No
                Action to Affect Security Documents

            	
              51

            
	 	 	 
	
               ARTICLE
                VIII 

              EVENTS
                OF DEFAULT

            
	
              Section
                8.1

            	
              Listing
                of Events of Default

            	
              51

            
	
              Section
                8.2

            	
              Action
                if Bankruptcy

            	
              53

            
	
              Section
                8.3

            	
              Action
                if Other Event of Default

            	
              53

            
	 	 	 
	
               ARTICLE
                IX 

              AGENTS

            
	 	 	 
	
               ARTICLE
                X 

              MISCELLANEOUS

            
	
              Section
                10.1

            	
              Notices

            	
              56

            
	
              Section
                10.2

            	
              Waivers;
                Amendments

            	
              58

            
	
              Section
                10.3

            	
              Expenses;
                Indemnity; Damage Waiver

            	
              59

            
	
              Section
                10.4

            	
              Successors
                and Assigns

            	
              61

            
	
              Section
                10.5

            	
              Survival

            	
              63

            
	
              Section
                10.6

            	
              Counterparts;
                Effectiveness

            	
              63

            
	
              Section
                10.7

            	
              Severability

            	
              64

            
	
              Section
                10.8

            	
              Right
                of Setoff

            	
              64

            

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

       

    

    
      	
              Section
                10.9

            	
              GOVERNING
                LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

            	
              64

            
	
              Section
                10.10

            	
              WAIVER
                OF JURY TRIAL

            	
              65

            
	
              Section
                10.11

            	
              Headings

            	
              65

            
	
              Section
                10.12

            	
              Confidentiality

            	
              65

            
	
              Section
                10.13

            	
              Interest
                Rate Limitation

            	
              66

            
	
              Section
                10.14

            	
              Collateral
                Matters; Hedging Agreements

            	
              67

            
	
              Section
                10.15

            	
              Arranger;
                Other Agents

            	
              67

            
	
              Section
                10.16

            	
              Intercreditor
                Agreement; Loan Documents

            	
              68

            
	
              Section
                10.17

            	
              NO
                ORAL AGREEMENTS

            	
              68

            

    

     

    
      
        
        

      

      
        iv

        
          

        

      

       

    

    LIST
      OF DEFINED TERMS

     

    
      
        	 	
                Page

              
	
                $

              	
                14

              
	
                Acceptance
                  Date

              	
                1

              
	
                Accepting
                  Lender

              	
                1

              
	
                Administrative
                  Questionnaire

              	
                1

              
	
                Agents

              	
                1

              
	
                Agreed
                  Currency

              	
                36

              
	
                Agreement

              	
                1

              
	
                Allocated
                  Canadian Borrowing Base

              	
                1

              
	
                Allocated
                  U.S. Borrowing Base

              	
                2

              
	
                Applicable
                  Lending Office

              	
                2

              
	
                Applicable
                  Percentage

              	
                2

              
	
                Applicable
                  Rate

              	
                2

              
	
                Arranger

              	
                2

              
	
                Assignment
                  and Assumption

              	
                2

              
	
                Authorized
                  Officer

              	
                3

              
	
                Availability
                  Period

              	
                3

              
	
                BA
                  Borrowing

              	
                14

              
	
                BA
                  Exposure

              	
                3

              
	
                BA
                  Loan

              	
                40

              
	
                BA
                  Maturity Date

              	
                3

              
	
                BA
                  Net Proceeds

              	
                3

              
	
                Bankers’
                    Acceptance Liability

              	
                3

              
	
                Bankers’
                  Acceptance Rate

              	
                3

              
	
                Bankers’
                  Acceptance Request

              	
                38

              
	
                Bankers’
                  Acceptances

              	
                4

              
	
                Borrower

              	
                1

              
	
                Borrowing

              	
                4

              
	
                Borrowing
                  Request

              	
                4

              
	
                Business
                  Day

              	
                4

              
	
                C$

              	
                4

              
	
                Canadian
                  Administrative Agent

              	
                4

              
	
                Canadian
                  Borrowing Base Deficiency

              	
                4

              
	
                Canadian
                  Dollars

              	
                4

              
	
                Canadian
                  Lien Searches

              	
                4

              
	
                Canadian
                  Prime

              	
                5

              
	
                Canadian
                  Prime Borrowing

              	
                15

              
	
                Canadian
                  Prime Loan

              	
                15

              
	
                Canadian
                  Prime Rate

              	
                5

              
	
                Casualty
                  Event

              	
                5

              
	
                Change
                  in Control

              	
                5

              
	
                Change
                  in Law

              	
                5

              
	
                Collateral

              	
                5

              
	
                Combined
                  Commitments

              	
                5

              
	
                Combined
                  Credit Agreements

              	
                6

              

      

       

      
        
          
          

        

        
          v

          
            

          

        

        
          
          

        

         

      

      
        	
                Combined
                  Credit Exposure

              	
                6

              
	
                Combined
                  Lenders

              	
                6

              
	
                Combined
                  Loan Documents

              	
                6

              
	
                Combined
                  Loans

              	
                6

              
	
                Combined
                  Obligations

              	
                6

              
	
                Commitment

              	
                6

              
	
                Commitment
                  Fee

              	
                27

              
	
                Credit
                  Exposure

              	
                6

              
	
                Currency

              	
                7

              
	
                DBNA

              	
                41

              
	
                Debenture

              	
                7

              
	
                Default

              	
                7

              
	
                Dollars

              	
                14

              
	
                Election
                  Notice

              	
                25

              
	
                Equivalent
                  Amount

              	
                7

              
	
                Eurodollar

              	
                7

              
	
                Eurodollar
                  Borrowing

              	
                14

              
	
                Eurodollar
                  Loan

              	
                14

              
	
                Event
                  of Default

              	
                52

              
	
                Excluded
                  Taxes

              	
                7

              
	
                Facility
                  Guaranty

              	
                7

              
	
                Federal
                  Funds Effective Rate

              	
                8

              
	
                Fee
                  Letter

              	
                8

              
	
                Financing
                  Transactions

              	
                8

              
	
                Foreign
                  Lender

              	
                8

              
	
                Foreign
                  Subsidiary

              	
                8

              
	
                Global
                  Administrative Agent

              	
                8

              
	
                Global
                  Borrowing Base

              	
                8

              
	
                Global
                  Borrowing Base Deficiency

              	
                8

              
	
                Global
                  Borrowing Base Utilization Percentage

              	
                8

              
	
                Global
                  Effective Date

              	
                8

              
	
                Global
                  Effectiveness Notice

              	
                9

              
	
                Guarantor

              	
                9

              
	
                Hedging
                  Agreement

              	
                9

              
	
                Hedging
                  Obligations

              	
                9

              
	
                Income
                  Tax Act (Canada)

              	
                9

              
	
                Indemnified
                  Taxes

              	
                9

              
	
                Indemnitee

              	
                60

              
	
                Information

              	
                66

              
	
                Initial
                  Reserve Report

              	
                9

              
	
                Intercreditor
                  Agreement

              	
                9

              
	
                Interest
                  Election Request

              	
                9

              
	
                Interest
                  Payment Date

              	
                10

              
	
                Interest
                  Period

              	
                10

              
	
                Issuing
                  Bank

              	
                10

              
	
                Judgment
                  Currency

              	
                37

              

      

       

      
        
          
          

        

        
          vi

          
            

          

        

        
          
          

        

         

      

      
        	
                LC
                  Disbursement

              	
                10

              
	
                LC
                  Exposure

              	
                10

              
	
                Lender
                  Affiliate

              	
                11

              
	
                Lenders

              	
                11

              
	
                Letter
                  of Credit

              	
                11

              
	
                LIBO
                  Rate

              	
                11

              
	
                Loan
                  Document

              	
                11

              
	
                Loan
                  Parties

              	
                11

              
	
                Loans

              	
                11

              
	
                Material
                  Adverse Effect

              	
                12

              
	
                Maturity
                  Date

              	
                12

              
	
                Net
                  Proceeds

              	
                12

              
	
                Note

              	
                12

              
	
                Obligations

              	
                12

              
	
                Other
                  Currency

              	
                37

              
	
                Participant

              	
                63

              
	
                Pledge
                  Agreement

              	
                12

              
	
                Principal
                  Amount

              	
                13

              
	
                Principal
                  Office

              	
                13

              
	
                Register

              	
                63

              
	
                Required
                  Lenders

              	
                13

              
	
                Restricted
                  Subsidiary

              	
                13

              
	
                Schedule
                  I Lender

              	
                13

              
	
                Security
                  Documents

              	
                13

              
	
                Stamping
                  Fee

              	
                13

              
	
                Subsidiary

              	
                13

              
	
                Type

              	
                13

              
	
                U.S.
                  Base Rate

              	
                13

              
	
                U.S.
                  Borrower

              	
                14

              
	
                U.S.
                  Credit Agreement

              	
                14

              
	
                U.S.
                  Dollars

              	
                14

              
	
                U.S.
                  Lenders

              	
                14

              
	
                U.S.
                  Loan Documents

              	
                14

              
	
                U.S.
                  Obligations

              	
                14

              
	
                U.S.
                  Security Documents

              	
                14

              
	
                U.S.$

              	
                14

              
	
                Unutilized
                  Commitment

              	
                13

              
	
                USBR

              	
                14

              
	
                USBR
                  Borrowing

              	
                15

              
	
                USBR
                  Loan

              	
                14

              

      

    

     

    
      
        
        

      

      
        vii

        
          

        

      

      
        
        

      

    

     

    
      EXHIBITS
        AND SCHEDULES

      

        EXHIBITS:

         

        
          	
                  Exhibit
                    A

                	 	
                  Form
                    of Compliance Certificate

                
	
                  Exhibit
                    B

                	 	
                  Form
                    of Assignment and Assumption

                
	
                  Exhibit
                    C-1

                	 	
                  Form
                    of Borrowing Request

                
	
                  Exhibit
                    C-2

                	 	
                  Form
                    of Interest Election Request

                
	
                  Exhibit
                    D

                	 	
                  Form
                    of Facility Guaranty

                
	
                  Exhibit
                    E

                	 	
                  Form
                    of Pledge Agreement 

                
	
                  Exhibit
                    F

                	 	
                  Power
                    of Attorney Terms - Bankers’ Acceptances

                
	
                  Exhibit
                    G

                	 	
                  Form
                    of Bankers’ Acceptance Request

                
	
                  Exhibit
                    H

                	 	
                  Calculation
                    of Net Proceeds of Bankers’ Acceptances

                
	
                  Exhibit
                    I

                	 	
                  Details
                    of Issue of Bankers’ Acceptance

                

        

         

        SCHEDULE:

         

        
          
            	
                    
                      Schedule 2.1

                    

                  	
                    Commitments

                  

          

           

        

      

    

    
      
        
        

      

      
        viii

        
          

        

      

      
        
        

      

    

    

    CREDIT
      AGREEMENT

     

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

     

    WITNESSETH:

     

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

     

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

     

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

     

    ARTICLE
      I

    Definitions

     

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

     

    “Acceptance
      Date”
means
      any date, which must be a Business Day, on which a Bankers’ Acceptance is or is
      to be issued.

     

    “Accepting
      Lender”
means
      any Lender which has accepted a Bankers’ Acceptance under this
      Agreement.

     

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

     

    “Agents”
means
      each of the Global Administrative Agent, the Canadian Administrative Agent
      and
      any other agent appointed hereunder from time to time.

     

    “Agreed
      Currency”
is
      defined in Section
      2.20(a).

     

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

     

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

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

    
      Global
        Borrowing Base Utilization Grid 

    

     

    
      	
              Global
                Borrowing Base Utilization Percentage

            	 	 	
              <50

            	
              %

            	 	
              ≥50%
                <75

            	
              %

            	 	
              ≥75%
                <90

            	
              %

            	 	
              ≥90

            	
              %

            
	
              Eurodollar
                Loans

            	 	 	
              1.250

            	
              %

            	 	
              1.500

            	
              %

            	 	
              1.750

            	
              %

            	 	
              2.000

            	
              %

            
	
              Canadian
                Prime Loans

            	 	 	
              0

            	
              %

            	 	
              0

            	
              %

            	 	
              0.250

            	
              %

            	 	
              0.500

            	
              %

            
	
              USBR
                Loans

            	 	 	
              0

            	
              %

            	 	
              0

            	
              %

            	 	
              0.250

            	
              %

            	 	
              0.500

            	
              %

            
	
              Bankers’
                Acceptance Stamping Fee

            	 	 	
              1.250

            	
              %

            	 	
              1.500

            	
              %

            	 	
              1.750

            	
              %

            	 	
              2.000

            	
              %

            
	
              Commitment
                Fee

            	 	 	
              0.300

            	
              %

            	 	
              0.375

            	
              %

            	 	
              0.375

            	
              %

            	 	
              0.500

            	
              %

            

    

    

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

     

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

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    “BA
      Exposure”
means,
      with respect to any Accepting Lender, the Principal Amount of Bankers’
Acceptances and BA Loans to be paid by Borrower to the Canadian Administrative
      Agent at the Principal Office, for which Borrower has not reimbursed such
      Accepting Lender.

     

    “BA
      Loan”
is
      defined in Section
      2.21(h)
      hereof.

     

    “BA
      Maturity Date”
means
      the date on which a Bankers’ Acceptance is payable.

     

    “BA
      Net Proceeds”
means,
      in respect of any Bankers’ Acceptance, the amount determined as of the
      applicable Acceptance Date in accordance with the formula set forth in
Exhibit
      H,
      subject
      to deduction of the Stamping Fees applicable to such Bankers’ Acceptance in
      accordance with Section
      2.21(b).

     

    “Bankers’
      Acceptance Liability”
means,
      with respect to any Bankers’ Acceptance, the obligation of Borrower to pay to
      the Canadian Administrative Agent at the Principal Office the Principal Amount
      of such Bankers’ Acceptance for which Borrower has not reimbursed the Accepting
      Lender.

     

    “Bankers’
      Acceptance Rate”
      means:

     

    (a) for
      a
      Lender which is a Schedule I Lender, the arithmetic average of the rates for
      the
      Lenders that are Schedule I Lenders as quoted on Reuters Services page CDOR
      as
      at 10:00 a.m. on the Acceptance Date for the appropriate term of the requested
      Bankers’ Acceptance; and

     

    (b) for
      a
      Lender which is not a Schedule I Lender, the arithmetic average of the actual
      discount rates applicable to Bankers’ Acceptances accepted by the Lenders that
      are not Schedule I Lenders as at 10:00 a.m. on the Acceptance Date for the
      appropriate term of the requested Bankers’ Acceptance, but not to exceed the sum
      of (i) Banker’s Acceptance Rate in paragraph (a)
      of this
      definition plus
      (ii) 10
      basis points per annum.

     

    “Bankers’
      Acceptance Request”
is
      defined in Section
      2.21(b)
      and
      contains the information set forth in Exhibit
      G.

     

    “Bankers’
      Acceptances”
means
      bankers’ acceptances denominated in Canadian Dollars in the form of either a
      depository bill, as defined in the Depository
      Bills and Notes Act (Canada),
      or a
      blank non-interest bearing bill of exchange, as defined in the Bills
      of Exchange Act (Canada),
      in
      either case issued by Borrower and accepted by a Lender (and, if applicable,
      purchased by a Lender) at the request of Borrower, such depository bill or
      bill
      of exchange to be substantially in the standard form of such
      Lender.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Bankruptcy
      and Insolvency Act (Canada)”
means,
      collectively, the Bankruptcy and Insolvency Act (Canada) and the Companies’
      Creditor Arrangement Act (Canada),
      each as
      amended from time to time and any similar statute of Canada or any province
      thereof.

     

    “Borrower”
is
      defined in the preamble.

     

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

     

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

     

    “Business
      Day”
means
      any day that is not a Saturday, Sunday or other day on which commercial banks
      in
      Dallas, Texas, New York, New York and Toronto, Canada are authorized or required
      by law to remain closed; provided
      that,
      (a) when used in connection with a Eurodollar Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
      deposits in the London interbank market, (b) when used in connection with a
      Canadian Prime Loan, BA Loan or Banker’s Acceptance, the term “Business Day”
shall also exclude any day on which commercial banks in Calgary, Canada and
      Toronto, Canada are authorized or required by law to remain closed, and (c)
      when
      used in connection with a USBR Loan, the term “Business Day” shall also exclude
      any day on which commercial banks in Calgary, Canada, Toronto, Canada, Dallas,
      Texas and New York, New York are authorized or required by law to remain
      closed.

     

    “Canadian
      Administrative Agent”
means
      JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as Canadian
      administrative agent for the Lenders hereunder, and any successor thereto.
      

     

    “Canadian
      Borrowing Base Deficiency”
means
      the amount by which (a) the aggregate Credit Exposure of the Lenders exceeds
      (b)
      the then-current Allocated Canadian Borrowing Base.

     

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

     

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

     

    “Canadian
      Prime”,
      when
      used in reference to any Loan or Borrowing, refers to whether such Loan, or
      the
      Loans comprising such Borrowing, are bearing interest at a rate determined
      by
      reference to the Canadian Prime Rate.

     

    “Canadian
      Prime Rate”
means
      the greater of (a) per annum floating rate of interest established from time
      to
      time by the Canadian Administrative Agent as the base rate the Canadian
      Administrative Agent will use to determine rates of interest on Canadian Dollar
      loans to its customers in Canada and (b) the sum of (i) the discount rate
      expressed as a rate of interest per annum payable by the purchasers of
      thirty-day bankers’ acceptances, duly accepted by the Canadian Administrative
      Agent, as established by the Canadian Administrative Agent and (ii) 100 basis
      points. Without notice to Borrower or any other Person, the Canadian Prime
      Rate
      shall change automatically from time to time as and in the amount by which
      said
      prime rate shall fluctuate. The Canadian Prime Rate is a reference rate and
      does
      not necessarily represent the lowest or best rate actually charged to any
      customer. The Canadian Administrative Agent may make commercial loans and other
      loans at rates of interest at, above or below the Canadian Prime Rate. For
      purposes of this Agreement, any change in any interest rate due to a change
      in
      the Canadian Prime Rate shall be effective on the date such change in the
      Canadian Prime Rate is announced.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “Combined
      Credit Agreements”
means
      this Agreement and the U.S. Credit Agreement.

     

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

     

    “Combined
      Lenders”
means
      the Lenders hereunder and the U.S. Lenders.

     

    “Combined
      Loan Documents”
means
      the Loan Documents and the U.S. Loan Documents.

     

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

     

    “Combined
      Obligations”
means
      the aggregate of the Equivalent Amount of the Obligations (expressed in U.S.
      Dollars) and the U.S. Obligations.

     

    “Commitment”
means,
      with respect to each Lender, the commitment of such Lender to make Loans, to
      acquire participations in Letters of Credit hereunder, and to accept Bankers’
Acceptances or make BA Loans hereunder, expressed as an amount representing
      the
      maximum aggregate amount of such Lender’s Credit Exposure hereunder, as such
      commitment may be (a) reduced from time to time pursuant to Section
      2.8,
      (b)
      reduced or increased from time to time pursuant to assignments by or to such
      Lender pursuant to Section
      10.4,
      and (c)
      terminated pursuant to Section
      8.2
      or
Section
      8.3.
      The
      initial amount of each Lender’s Commitment is set forth on Schedule
      2.1,
      or in
      the Register following any Assignment and Assumption to which such Lender is
      a
      party. The initial aggregate amount of the Commitments of the Lenders is
      U.S.$0.

     

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

     

    “Credit
      Exposure”
means,
      with respect to any Lender at any time, the Equivalent Amount in U.S. Dollars
      of
      the sum of (a) the outstanding principal amount of such Lender’s Loans
      (excluding BA Loans and Bankers’ Acceptances) plus
      (b) its
      LC Exposure plus
      (c) its
      BA Exposure at such time.

     

    “Currency”
means,
      with respect to any Loan, Letter of Credit or Bankers’ Acceptance, whether such
      Loan, Letter of Credit or Bankers’ Acceptance is denominated in Canadian Dollars
      or U.S. Dollars.

     

    “DBNA”
is
      defined in Section
      2.21(l).

     

    “Debenture”
means
      any Demand Debenture and Negative Pledge delivered pursuant to the Loan
      Documents, substantially in form and substance satisfactory to the Canadian
      Administrative Agent and the Global Administrative Agent, in each case as
      amended, supplemented, restated or otherwise modified from time to time in
      accordance with the Loan Documents. The term “Debentures” shall include each and
      every Debenture executed and delivered pursuant to the Loan
      Documents.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “Default”
means
      any event or condition which constitutes an Event of Default or which upon
      notice, lapse of time or both would, unless cured or waived, become an Event
      of
      Default.

     

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

     

    “Eurodollar”,
      when
      used in reference to any Loan or Borrowing, refers to whether such Loan, or
      the
      Loans comprising such Borrowing, are bearing interest at a rate determined
      by
      reference to the LIBO Rate.

     

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

     

    “Excluded
      Taxes”
means,
      with respect to any Agent, any Lender, any Issuing Bank or any other recipient
      of any payment to be made by or on account of any obligation of Borrower
      hereunder, (a) income, capital or franchise taxes imposed on (or measured by)
      its net income or capital by the federal, or any provincial, government of
      Canada, or by the jurisdiction under the laws of which such recipient is
      organized or in which its principal office is located or, in the case of any
      Lender, in which its Applicable Lending Office is located, and (b) any branch
      profits taxes imposed by the federal, or any provincial, government of Canada
      or
      any similar tax imposed by any other jurisdiction in which Borrower is
      located.

     

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

     

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

     

    “Fee
      Letter”
means
      that certain Fee Letter dated as of July 28, 2006, by and between Borrower
      and JPMorgan Chase Bank, N.A., as such letter may be amended, supplemented,
      restated or otherwise modified from time to time in accordance with the Loan
      Documents.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

    “Foreign
      Lender”
means
      any Lender that is a non-resident in Canada for purposes of the Income
      Tax Act (Canada)
      and not
      an “authorized foreign bank” under Section 2 of the Bank
      Act (Canada).
      For
      purposes of this definition, Canada and each province thereof shall be deemed
      to
      constitute a single jurisdiction.

     

    “Foreign
      Subsidiary”
means
      any Subsidiary that is organized under the laws of a jurisdiction other than
      Canada or any province thereof.

     

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

     

    “Global
      Borrowing Base”
means
      the “Global Borrowing Base” (as defined in the U.S. Credit Agreement) as
      determined from time to time pursuant to Section 2.7
      of the
      U.S. Credit Agreement.

     

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

     

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

     

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

     

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

     

    “Guarantor”
means
      collectively (a) U.S. Borrower and (b) each other Restricted
      Subsidiary of Borrower that executes and delivers a Facility Guaranty, including
      each Restricted Subsidiary that is required to execute a Facility Guaranty
      pursuant to Section
      5.8.

     

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

     

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

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

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

     

    “Income
      Tax Act (Canada)”
means
      the Income Tax Act (Canada), as amended from time to time.

     

    “Indemnified
      Taxes”
means
      Taxes other than Excluded Taxes.

     

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

     

    “Information”
is
      defined in Section
      10.12.

     

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

     

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

     

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

     

    “Interest
      Payment Date”
means
      (a) with respect to any Canadian Prime Loan or USBR Loan, the last day of each
      March, June, September and December, (b) with respect to any Eurodollar Loan,
      the last day of the Interest Period applicable to the Borrowing of which such
      Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
      Period of more than three (3) months’ duration, each day prior to the last day
      of such Interest Period that occurs at intervals of three (3) months’ duration
      after the first day of such Interest Period, and (c) with respect to any BA
      Loan, the maturity date of the Bankers’ Acceptances issued concurrently with the
      advance of such BA Loan.

     

    “Interest
      Period”
means
      (a) with respect to any Eurodollar Borrowing, the period commencing on the
      date
      of such Borrowing and ending on the numerically corresponding day in the
      calendar month that is one, two or three months (or, with the consent of each
      Lender, six months) thereafter, as Borrower may elect and (b) with respect
      to
      any BA Loan, each period commencing on the date such BA Loan is made or
      converted from another Type of Loan or the last day of the next preceding
      Interest Period for such BA Loan and ending on the date not less than 30 days
      or
      more than 90 days thereafter, as Borrower may select as provided in Section
      2.6;
      provided,
      that
      (a) if any Interest Period would end on a day other than a Business Day, such
      Interest Period shall be extended to the next succeeding Business Day unless
      such next succeeding Business Day would fall in the next calendar month, in
      which case such Interest Period shall end on the next preceding Business Day,
      (b) any Interest Period pertaining to a Eurodollar Borrowing that commences
      on
      the last Business Day of a calendar month (or on a day for which there is no
      numerically corresponding day in the last calendar month of such Interest
      Period) shall end on the last Business Day of the last calendar month of such
      Interest Period, (c) no Interest Period may end later than the last day of
      the
      Availability Period, and (d) the Interest Period for a BA Loan shall end on
      the
      BA Maturity Date of the Bankers’ Acceptances issued concurrently therewith. For
      purposes hereof, the date of a Borrowing initially shall be the date on which
      such Borrowing is made and thereafter shall be the effective date of the most
      recent conversion or continuation of such Borrowing.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

    “Judgment
      Currency”
is
      defined in Section
      2.20(b).

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

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

     

    “Loan
      Parties”
means
      Borrower, each Guarantor and, after the date of this Agreement, any other
      Affiliate or Restricted Subsidiary of Borrower that executes a Loan Document,
      for so long as such Loan Document is in effect.

     

    “Loans”
means
      (a) the loans (including, without limitation, the Canadian Prime Loans, the
      Eurodollar Loans, the USBR Loans and the BA Loans) made by the Lenders to
      Borrower pursuant to this Agreement and (b) the acceptance and purchase by
      the
      Lenders of Bankers’ Acceptances pursuant hereto.

     

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

     

    “Maturity
      Date”
means
      July 28, 2010.

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    “Other
      Currency”
is
      defined in Section
      2.20(a).

     

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

     

    “Pledge
      Agreement”
means
      any Pledge Agreement delivered pursuant to the Loan Documents, substantially
      in
      the form of Exhibit
      E,
      in each
      case as amended, supplemented, restated or otherwise modified from time to
      time
      in accordance with the Loan Documents. The term “Pledge Agreements” shall
      include each and every Pledge Agreement executed and delivered pursuant to
      the
      Loan Documents.

     

    “Principal
      Amount”
means,
      for a Bankers’ Acceptance, the face amount thereof, for a BA Loan, the principal
      amount thereof determined in accordance with Section
      2.21(g),
      and for
      any other Loans, the outstanding principal amount thereof.

     

    “Principal
      Office”
means
      the principal office of the Canadian Administrative Agent, which on the date
      of
      this Agreement is located at 200 Bay Street, Royal Bank Plaza, Suite 1800,
      Toronto, Ontario M5J 2J2.

     

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

     

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

     

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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    “Schedule
      I Lender”
means
      a
      Lender which is a Canadian chartered bank listed on Schedule I to the
Bank
      Act (Canada),
      as
      amended from time to time.

     

    “Security
      Documents”
means
      each Facility Guaranty, each Debenture, each Pledge Agreement, each U.S.
      Security Document and each other instrument or document executed and delivered
      pursuant to Section
      5.8
      or
Section
      5.9
      or
      pursuant to the Loan Documents to secure any of the Obligations.

     

    “Stamping
      Fee”
means,
      in respect of any Bankers’ Acceptance or BA Loan, the fee payable by Borrower
      described in Section
      2.21(b).

     

    “Subsidiary”
means
      any subsidiary of Borrower.

     

    “Type”,
      when
      used in reference to any Loan or Borrowing, refers to whether the rate of
      interest on such Loan, or on the Loans comprising such Borrowing, is determined
      by reference to the LIBO Rate or the Canadian Prime Rate or the Bankers’
Acceptance Rate or the U.S. Base Rate.

     

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

     

    “U.S.
      Base Rate”
means,
      with respect to USBR Loans, the greater of:

     

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

     

    (b) a
      rate of
      interest per three hundred sixty-five (365) day period equal to the Federal
      Funds Effective Rate (equated, for these purposes, to a rate based on a year
      of
      365 days rather than 360 days) plus
      1/2 of
      1%.

     

    “U.S.
      Borrower”
means
      Storm Cat Energy (USA) Corporation, a Colorado corporation.

     

    “USBR”,
      when
      used in reference to any Loan or Borrowing, refers to whether such Loan, or
      the
      Loans comprising such Borrowing, are bearing interest at a rate determined
      in
      reference to the U.S. Base Rate.

     

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

     

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

    
       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

     

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

     

    “U.S.
      Loan Documents”
means
      the “Loan Documents,” as defined in the U.S. Credit Agreement. 

     

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

     

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

     

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

     

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

     

    SECTION
      1.4 U.S.
      Credit Agreement Definitions.
      Unless
      the context otherwise requires, capitalized terms used herein and not otherwise
      defined shall have the meanings given to them in the U.S. Credit
      Agreement.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II

    The
      Credits

     

    SECTION
      2.1 Commitments.
      Subject
      to the terms and conditions set forth herein, (a) each Lender agrees to
      make Loans (including BA Loans made in accordance with Section
      2.21)
      to
      Borrower and (b) each Accepting Lender agrees to accept Bankers’
Acceptances presented to it by Borrower pursuant to Section
      2.21,
      in each
      case from time to time during the Availability Period in an aggregate principal
      amount that will not result in (i) the Credit Exposure of any Lender
      exceeding the lower of (A) the Commitment of such Lender, or (B) such
      Lender’s Applicable Percentage of the Allocated Canadian Borrowing Base then in
      effect, or (ii) the aggregate amount of the Credit Exposure of all Lenders
      exceeding the lesser of (1) the aggregate amount of the Allocated Canadian
      Borrowing Base then in effect and (2) the aggregate amount of the
      Commitments of the Lenders. Within the foregoing limits and subject to the
      terms
      and conditions set forth herein, Borrower may repay (but not prepay) Bankers’
Acceptances and BA Loans and may borrow, prepay and reborrow Loans.

     

    SECTION
      2.2 Loans
      and Borrowings.

     

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

     

    (b) Subject
      to Section
      2.13
      and
Section
      2.14,
      each
      Borrowing shall be comprised entirely of Canadian Prime Loans, Eurodollar Loans
      or USBR Loans as Borrower may request in accordance herewith or shall be
      comprised of Bankers’ Acceptances and BA Loans made in accordance with
Section
      2.21.
      Each
      Lender at its option may make any Eurodollar Loan by causing any domestic or
      foreign branch or Affiliate of such Lender to make such Loan; provided
      that any
      exercise of such option shall not affect the obligation of Borrower to repay
      such Loan in accordance with the terms of this Agreement.

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

    SECTION
      2.3 Requests
      for Borrowings.
      To
      request a Borrowing, Borrower shall notify the Global Administrative Agent
      and
      the Canadian Administrative Agent of such request by telephone (a) in the
      case of a Eurodollar Borrowing, not later than 1:00 p.m., Toronto time, three
      Business Days before the date of the proposed Borrowing or (b) in the case
      of a Canadian Prime Borrowing or USBR Borrowing, not later than 11:00 a.m.,
      Toronto time, on the date of the proposed Borrowing. Each such telephonic
      Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
      delivery or telecopy (or other electronic transmission approved by the Global
      Administrative Agent and the Canadian Administrative Agent) to the Global
      Administrative Agent and the Canadian Administrative Agent of a written
      Borrowing Request executed by an Authorized Officer of Borrower, substantially
      in the form of Exhibit
      C-1
      or
      otherwise in a form approved by the Global Administrative Agent and the Canadian
      Administrative Agent. Each such telephonic and written Borrowing Request shall
      specify the following information in compliance with Section
      2.2:

     

    (i) the
      aggregate amount of the requested Borrowing (which amount will be in the
      appropriate Currency as required pursuant to the last sentence of this
Section
      2.3);

     

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

     

    (iii) whether
      such Borrowing is to be a Canadian Prime Borrowing, a USBR Borrowing or a
      Eurodollar Borrowing; and

     

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

     

    If
      no
      election as to the Type of Borrowing is specified, then the requested Borrowing
      shall be a Canadian Prime Borrowing. If no Interest Period is specified with
      respect to any requested Eurodollar Borrowing, then Borrower shall be deemed
      to
      have selected an Interest Period of one month’s duration. Promptly following
      receipt of a Borrowing Request in accordance with this Section, the Canadian
      Administrative Agent shall advise each Lender of the details thereof and of
      the
      amount of such Lender’s Loan (which shall be made in the appropriate Currency
      based on the Currency of the Borrowings being requested) to be made as part
      of
      the requested Borrowing. Notwithstanding anything herein to the contrary,
      Canadian Prime Loans and BA Loans may only be denominated in Canadian Dollars
      and USBR Loans and Eurodollar Loans may only be denominated in U.S.
      Dollars.

     

    SECTION
      2.4 Letters
      of Credit.

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (b) Notice
      of Issuance, Amendment, Renewal, Extension; Certain Conditions.
      To
      request the issuance of a Letter of Credit (or the amendment, renewal or
      extension of an outstanding Letter of Credit), Borrower shall, prior to 1:00
      p.m., Toronto time, at least three (3) Business Days prior to the proposed
      date
      of issuance or modification, hand deliver or telecopy (or transmit by electronic
      communication, if arrangements for doing so have been approved by the relevant
      Issuing Bank) to an Issuing Bank, the Canadian Administrative Agent and the
      Global Administrative Agent (reasonably in advance of the requested date of
      issuance, amendment, renewal or extension) a notice requesting the issuance
      of a
      Letter of Credit, or identifying the Letter of Credit to be amended, renewed
      or
      extended, and specifying the date of issuance, amendment, renewal or extension
      (which shall be a Business Day), the date on which such Letter of Credit is
      to
      expire (which shall comply with paragraph (c)
      of this
      Section), the amount of such Letter of Credit, the Loan Party for whose account
      such Letter of Credit shall be issued, the name and address of the beneficiary
      thereof and such other information (including, if applicable, the Currency
      of
      such Letter of Credit (which shall be Canadian Dollars or U.S. Dollars) as
      shall
      be necessary to prepare, amend, renew or extend such Letter of Credit. If
      requested by the Issuing Bank, Borrower also shall submit a letter of credit
      application on the Issuing Bank’s standard form in connection with any request
      for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed
      or
      extended only if (and upon issuance, amendment, renewal or extension of each
      Letter of Credit Borrower shall be deemed to represent and warrant that), after
      giving effect to such issuance, amendment, renewal or extension (i) the LC
      Exposure shall not exceed the least of (A) the aggregate Commitments
      hereunder, (B) the Allocated Canadian Borrowing Base as then in effect at
      such time and (C) U.S.$10,000,000; and (ii) the aggregate Credit
      Exposure of the Lenders shall not exceed the lesser of (x) the aggregate
      Commitments of the Lenders or (y) the Allocated Canadian Borrowing Base then
      in
      effect.

     

    (c) Expiration
      Date.
      Each
      Letter of Credit shall expire at or prior to the close of business on the
      earlier of (i) the date one year after the date of the issuance of such
      Letter of Credit (or, in the case of any renewal or extension thereof, one
      year
      after such renewal or extension) and (ii) five (5) Business Days prior to
      the Maturity Date. 

     

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

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (i) Cash
      Collateralization.
      If any
      Event of Default shall occur and be continuing, on the Business Day that
      Borrower receives notice from the Global Administrative Agent, the Canadian
      Administrative Agent or the Required Lenders (or, if the maturity of the Loans
      has been accelerated, Lenders with LC Exposure representing 66-2/3% or more
      of
      the total LC Exposure) demanding the deposit of cash collateral pursuant to
      this
      paragraph, Borrower shall deposit in an account with the Canadian Administrative
      Agent, in the name of the Canadian Administrative Agent and for the benefit
      of
      the Lenders, an amount in cash (in the applicable Currency) equal to the LC
      Exposure as of such date plus
      any
      accrued and unpaid interest thereon; provided
      that the
      obligation to deposit such cash collateral shall become effective immediately,
      and such deposit shall become immediately due and payable, without demand or
      other notice of any kind, upon the occurrence of any Event of Default with
      respect to Borrower described in Section
      8.1(g).
      Borrower also shall deposit cash collateral pursuant to this paragraph as and
      to
      the extent required by Section
      2.10,
      and any
      such cash collateral so deposited and held by the Canadian Administrative Agent
      hereunder shall constitute part of the Global Borrowing Base for purposes of
      determining compliance with Section
      2.5.
      Each
      such deposit shall be held by the Canadian Administrative Agent as collateral
      for the payment and performance of the obligations of Borrower under this
      Agreement. The Canadian Administrative Agent shall have exclusive dominion
      and
      control, including the exclusive right of withdrawal, over such account. Other
      than any interest earned on the investment of such deposits, which investments
      shall be made at the option and sole discretion of the Canadian Administrative
      Agent and at Borrower’s risk and expense, such deposits shall not bear interest.
      Interest or profits, if any, on such investments shall accumulate in such
      account. Moneys in such account shall be applied by the Canadian Administrative
      Agent to reimburse the Issuing Bank for LC Disbursements for which it has not
      been reimbursed and, to the extent not so applied, shall be held for the
      satisfaction of the reimbursement obligations of Borrower for the LC Exposure
      at
      such time or, if the maturity of the Loans has been accelerated (but subject
      to
      the consent of Lenders with LC Exposure representing 66-2/3% or more of the
      total LC Exposure), be applied to satisfy other obligations of Borrower under
      this Agreement. If Borrower is required to provide an amount of cash collateral
      hereunder as a result of the occurrence of an Event of Default, such amount
      (to
      the extent not applied as aforesaid) shall be returned to Borrower within three
      (3) Business Days after all Events of Default have been cured or waived. If
      Borrower is required to provide an amount of cash collateral hereunder pursuant
      to Section
      2.5,
      such
      amount (to the extent not applied as aforesaid) shall be returned to Borrower
      as
      and to the extent that, after giving effect to such return, Borrower would
      remain in compliance with Section
      2.5
      and no
      Default shall have occurred and be continuing.

     

    
      
        
        

      

      
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    SECTION
      2.5 Funding
      of Borrowings.

     

    (a) Each
      Lender shall make each Loan to be made by it hereunder on the proposed date
      thereof by wire transfer of immediately available funds by 12:00 noon, Toronto
      time, to the account of the Canadian Administrative Agent most recently
      designated by it for such purpose by notice to the Lenders, which Loan shall
      be
      in the appropriate Currency (based on the relevant Borrowing Request). The
      Canadian Administrative Agent will make such Loans available to Borrower by
      promptly crediting the amounts so received, in like funds, to an account of
      Borrower maintained with the Canadian Administrative Agent in Toronto;
provided
      that
      Canadian Prime Loans and/or USBR Loans made to finance the reimbursement of
      an
      LC Disbursement as provided in Section
      2.4(e)
      shall be
      remitted by the Canadian Administrative Agent to the applicable Issuing
      Bank.

     

    
      
        
        

      

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

     

    (c) Borrowings,
      conversion or continuations of Loans, and prepayments of Loans of different
      Currencies at the same time hereunder shall be deemed to be separate Borrowings,
      continuations, conversions and prepayments, respectively, one for each
      Currency.

     

    SECTION
      2.6 Interest
      Elections.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (iii) whether
      the resulting Borrowing is to be a Canadian Prime Borrowing or USBR Borrowing
      or
      a Eurodollar Borrowing; and

     

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

     

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

     

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

     

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

     

    SECTION
      2.7 Global
      Borrowing Base.

     

    (a) Effectiveness.
      Notwithstanding anything to the contrary in this Agreement, for so long as
      any
      of the Combined Commitments are in effect and/or any Combined Obligation is
      outstanding, the Global Borrowing Base shall be determined in accordance with,
      and as provided in, Section 2.7 of the U.S. Credit Agreement.

     

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

     

    
      
        
        

      

      
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    SECTION
      2.8 Termination
      and Reduction of Commitments.

     

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

     

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

     

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

     

    SECTION
      2.9 Repayment
      of Loans; Evidence of Debt.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    SECTION
      2.10 Prepayment
      of Loans.

     

    (a) Borrower
      shall have the right at any time and from time to time to prepay any Borrowing
      in whole or in part, subject to the requirements of this Section. Borrower
      shall
      not be permitted to prepay any Bankers’ Acceptance or BA Loans at any
      time.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (d) Borrower
      shall notify the Global Administrative Agent and the Canadian Administrative
      Agent by telephone (confirmed by telecopy) of any prepayment hereunder
      (i) in the case of prepayment of a Eurodollar Borrowing, not later than
      1:00 p.m., Toronto time, two Business Days before the date of prepayment or
      (ii) in the case of prepayment of a Canadian Prime Borrowing or USBR
      Borrowing, not later than 11:00 a.m., Toronto time, on the date of prepayment.
      Each such notice shall be irrevocable and shall specify the prepayment date
      and
      the principal amount of each Borrowing or portion thereof to be prepaid (which
      amount shall be in a minimum principal amount of U.S.$1,000,000 or C$1,000,000,
      as the case may be (or the aggregate amount of the Obligations hereunder at
      such
      time, if a lesser amount), and in U.S.$500,000 or C$500,000 increments in excess
      thereof (or such other lesser amount in excess thereof in the event that
      prepayment is with respect to all Obligations hereunder)); provided
      that, if
      a notice of prepayment is given in connection with a conditional notice of
      termination of the Commitments as contemplated by Section
      2.8,
      then
      such notice of prepayment may be revoked if such notice of termination is
      revoked in accordance with Section 2.8. Promptly following receipt of any such
      notice relating to a Borrowing, the Canadian Administrative Agent shall advise
      the Lenders of the contents thereof. Each partial prepayment of any Borrowing
      shall be in an amount that would be permitted in the case of an advance of
      a
      Borrowing of the same Type as provided in Section
      2.2.
      Each
      prepayment of a Borrowing shall be applied ratably to the Loans included in
      the
      prepaid Borrowing. Prepayments shall be accompanied by accrued interest to
      the
      extent required by Section
      2.12
      and by
      any other amounts then due under this Agreement (including all amounts due
      under
Section
      2.16).

     

    
      
        
        

      

      
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    SECTION
      2.11 Fees.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (d) Unless
      otherwise set forth herein, all fees payable hereunder shall be paid on the
      dates due, in immediately available funds in U.S. Dollars, to the Global
      Administrative Agent or the Canadian Administrative Agent (or the Issuing Bank,
      in the case of fees payable to it), as the case may be, for distribution, in
      the
      case of Commitment Fees and participation fees, to the Lenders entitled thereto.
      Fees paid shall not be refundable under any circumstances. 

     

    SECTION
      2.12 Interest.

     

    (a) Subject
      to Section
      2.12(f),
      (g)
      and
(h)
      and
Section
      10.13,
      the
      Loans comprising each Canadian Prime Borrowing shall bear interest at the
      Canadian Prime Rate plus
      the
      Applicable Rate for Canadian Prime Loans, and Loans comprising each USBR
      Borrowing shall bear interest at the USBR plus
      the
      Applicable Rate for U.S. Base Rate Loans.

     

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

     

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

     

    (d) Subject
      to Section
      2.12(f),
      (g)
      and
(h)
      and
Section
      10.13,
      accrued
      interest on each Loan (other than a Loan consisting of the acceptance of a
      Bankers’ Acceptance) shall be payable in arrears on each Interest Payment Date
      for such Loan and upon termination of the Commitments; provided
      that
      (i) interest accrued pursuant to paragraph (c)
      of this
      Section shall be payable on demand of the Canadian Administrative Agent or
      the
      Required Lenders (through the Canadian Administrative Agent), (ii) in the
      event of any repayment or prepayment of any Loan, accrued interest on the
      principal amount repaid or prepaid shall be payable on the date of such
      repayment or prepayment and (iii) in the event of any conversion of any
      Eurodollar Loan prior to the end of the current Interest Period therefor,
      accrued interest on such Loan shall be payable on the effective date of such
      conversion.

     

    (e) Subject
      to Section
      2.12(f),
      (g)
      and
(h)
      and
Section
      10.13,
      all
      interest hereunder shall be computed on the basis of a year of 360 days, except
      that interest computed by reference to the Canadian Prime Rate or the U.S.
      Base
      Rate and interest associated with BA Loans shall be computed on the basis of
      a
      year of 365 days (or 366 days in a leap year), and in each case shall be payable
      for the actual number of days elapsed (including the first day but excluding
      the
      last day). The applicable Canadian Prime Rate, U.S. Base Rate or LIBO Rate
      shall
      be determined by the Canadian Administrative Agent, and such determination
      shall
      be conclusive absent manifest error.

     

    
      
        
        

      

      
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    (f) To
      the
      extent permitted by applicable law, any provision of the Interest
      Act (Canada)
      or the
Court
      Order Interest Act
      (British
      Columbia)
      which
      restricts any rate of interest set forth herein shall be inapplicable to this
      Agreement and is hereby waived by Borrower.

     

    (g) The
      theory of deemed reinvestment shall not apply to the calculation of interest
      or
      payment of fees or other amounts hereunder, notwithstanding anything contained
      in this Agreement, acceptance or other evidence of indebtedness or in any other
      Loan Document now or hereafter taken by any Agent or any Lender for the
      obligations of Borrower under this Agreement, or any other instrument referred
      to herein, and all interest and fees payable by Borrower to the Lenders, shall
      accrue from day to day, computed as described herein in accordance with the
      “nominal rate” method of interest calculation.

     

    (h) Where,
      in
      this Agreement, a rate of interest or fees is to be calculated on the basis
      of a
      360-day year, such rate is, for the purpose of the Interest
      Act (Canada),
      equivalent to the said rate (i) multiplied by the actual number of days in
      the one year period beginning on the first day of the period of calculation
      and
      (ii) divided by 360.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    SECTION
      2.14 Illegality.

     

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

     

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

     

    SECTION
      2.15 Increased
      Costs.

     

    (a) If
      any
      Change in Law shall:

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    SECTION
      2.16 Break
      Funding Payments.
      In the
      event of (a) the payment (including prepayment) of any principal of any
      Eurodollar Loan or BA Loan or Bankers’ Acceptance other than on the last day of
      an Interest Period applicable thereto (including as a result of an Event of
      Default), (b) the conversion of any Eurodollar Loan or BA Loan or Bankers’
Acceptance other than on the last day of the Interest Period applicable thereto,
      (c) the failure to borrow, convert, continue or prepay any Loan on the date
      specified in any notice delivered pursuant hereto (regardless of whether such
      notice may be revoked under Section
      2.10(b)
      and is
      revoked in accordance therewith), or (d) the assignment of any Eurodollar
      Loan or BA Loans or Bankers’ Acceptances other than on the last day of the
      Interest Period applicable thereto as a result of a request by Borrower pursuant
      to Section
      2.19
      then, in
      any such event, Borrower shall compensate each Lender for the loss, cost and
      expense attributable to such event. In the case of a Eurodollar Loan, such
      loss,
      cost or expense to any Lender shall be deemed to include an amount determined
      by
      such Lender to be the excess, if any, of (i) the amount of interest which
      would have accrued on the principal amount of such Loan had such event not
      occurred, at the LIBO Rate that would have been applicable to such Loan, for
      the
      period from the date of such event to the last day of the then current Interest
      Period therefor (or, in the case of a failure to borrow, convert or continue,
      for the period that would have been the Interest Period for such Loan),
over
      (ii) the amount of interest which would accrue on such principal amount for
      such period at the interest rate which such Lender would bid were it to bid,
      at
      the commencement of such period, for dollar deposits of a comparable amount
      and
      period from other banks in the London interbank market. A certificate of any
      Lender setting forth any amount or amounts that such Lender is entitled to
      receive pursuant to this Section shall be delivered to Borrower, the Global
      Administrative Agent and the Canadian Administrative Agent and shall be
      conclusive absent manifest error. Borrower shall pay such Lender the amount
      shown as due on any such certificate within ten (10) days after receipt
      thereof.
      Nothing
      in this Section
      2.16
      confers
      upon the Borrower any right to prepay a BA Loan or a Bankers’
Acceptance.

     

    
      
        
        

      

      
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    SECTION
      2.17 Taxes.

     

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

     

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

     

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

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

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

     

    (e) Each
      Lender represents and warrants that it is not a Foreign Lender.

     

    (f) If
      Borrower at any time pays an amount under Section
      2.17(a),
      (b)
      or
(c)
      to any
      Lender, the Global Administrative Agent, the Canadian Administrative Agent
      or
      any Issuing Bank, and such payee receives a refund of or credit for any part
      of
      any Indemnified Taxes or Other Taxes which such payee determines in its sole
      judgment is made with respect to such amount paid by Borrower, such Lender,
      the
      Global Administrative Agent, the Canadian Administrative Agent or any Issuing
      Bank, as the case may be, shall pay to Borrower the amount of such refund or
      credit promptly, and in any event within 60 days, following the receipt of
      such
      refund or credit by such payee.

     

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

     

    (a) Borrower
      shall make each payment required to be made by it hereunder or under any other
      Loan Document (whether of principal, interest, fees or reimbursement of LC
      Disbursements, or of amounts payable under Section
      2.15,
      Section
      2.16
      or
Section
      2.17,
      or
      otherwise) prior to the time expressly required hereunder or under such other
      Loan Document for such payment (or, if no such time is expressly required,
      prior
      to 12:00 noon, Toronto time), on the date when due, in immediately available
      funds in the appropriate Currency, without set off or counterclaim. Any amounts
      received after such time on any date may, in the discretion of the Canadian
      Administrative Agent, be deemed to have been received on the next succeeding
      Business Day for purposes of calculating interest thereon. All such payments
      shall be made to the Canadian Administrative Agent c/o JPMorgan Chase Bank,
      N.A., Toronto Branch, 200 Bay Street, Royal Bank Plaza, Suite 1800, Mail
      Code ON1-1800, Toronto, Ontario, M5J 2J2, Attention: Indrani Lazarus,
      Telephone: 416.981.2329, Fax: 416.981.9174, with a copy to JPMorgan Chase Bank,
      N.A., Toronto Branch, 200 Bay Street, Royal Bank Plaza, South Tower, Suite
      2000,
      Toronto, Ontario, M5J 2J2, Attention: Michael Tam, Telephone: 416.981.2323,
      Fax: 416.981.2375, with a further copy to JPMorgan Chase Bank, N.A., 1717 Main
      Street, 4th Floor, Mail Code TX1-2448, Dallas, Texas 75201, Attention: Scott
      Fowler, Telephone: 214.290.2162, Fax: 214.290.2332, with a further copy to
      JPMorgan Chase Bank, N.A., 10 South Dearborn, Floor 19, Chicago,
      Illinois 60603-2003, Attention: Susan Dugan, Telephone: 312.385.7143, Fax:
      312.385.7096, except payments to be made directly to an Issuing Bank as
      expressly provided herein and payments pursuant to Section
      2.15,
      Section
      2.16
      or
Section
      2.17(a),
      Section
      2.17(c)
      and
Section
      10.3
      shall be
      made directly to the Persons entitled thereto and payments pursuant to other
      Loan Documents shall be made to the Persons specified therein. The Canadian
      Administrative Agent shall distribute any such payments received by it for
      the
      account of any other Person to the appropriate recipient promptly following
      receipt thereof. Except as set forth in clause (a) of the definition of
“Interest Period”, if any payment under any Loan Document shall be due on a day
      that is not a Business Day, the date for payment shall be extended to the next
      succeeding Business Day, and, in the case of any payment accruing interest,
      interest thereon shall be payable for the period of such extension. All payments
      under each Loan Document shall be made in the appropriate Currency as required
      pursuant to the Loan Documents. 

     

    
      
        
        

      

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

     

    (c) If
      any
      Lender shall, by exercising any right of set off or counterclaim or otherwise,
      obtain payment in respect of any principal of or interest on any of its Loans
      or
      participations in LC Disbursements resulting in such Lender receiving payment
      of
      a greater proportion of the aggregate amount of its Loans and participations
      in
      LC Disbursements and accrued interest thereon than the proportion received
      by
      any other Lender, then the Lender receiving such greater proportion shall
      purchase (for cash at face value) participations in the Loans and participations
      in LC Disbursements of other Lenders to the extent necessary so that the benefit
      of all such payments shall be shared by the Lenders ratably in accordance with
      the aggregate amount of principal of and accrued interest on their respective
      Loans and participations in LC Disbursements; provided
      that
      (i) if any such participations are purchased and all or any portion of the
      payment giving rise thereto is recovered, such participations shall be rescinded
      and the purchase price restored to the extent of such recovery, without
      interest, and (ii) the provisions of this paragraph shall not be construed
      to apply to any payment made by Borrower pursuant to and in accordance with
      the
      express terms of this Agreement or any payment obtained by a Lender as
      consideration for the assignment of or sale of a participation in any of its
      Loans or participations in LC Disbursements to any assignee or participant,
      other than to Borrower or any Subsidiary or Affiliate thereof (as to which
      the
      provisions of this paragraph shall apply). Borrower consents to the foregoing
      and agrees, to the extent it may effectively do so under applicable law, that
      any Lender acquiring a participation pursuant to the foregoing arrangements
      may
      exercise against Borrower rights of set-off and counterclaim with respect to
      such participation as fully as if such Lender were a direct creditor of Borrower
      in the amount of such participation.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    SECTION
      2.19 Mitigation
      Obligations; Replacement of Lenders.

     

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

     

    (b) If
      (i) any Lender asserts that events have occurred suspending its obligation
      to make or maintain Eurodollar Loans under Section
      2.14
      when
      substantially all other Lenders have not also done so, (ii) any Lender
      requests compensation under Section
      2.15,
      (iii) Borrower is required to pay any additional amount to any Lender or
      any Governmental Authority for the account of any Lender pursuant to
Section
      2.17,
      or
      (iv) any Lender defaults in its obligation to fund Loans hereunder, then
      Borrower may, at its sole expense and effort, upon notice to such Lender, the
      Canadian Administrative Agent and the Global Administrative Agent, require
      such
      Lender to assign and delegate, without recourse (in accordance with and subject
      to the terms of Section
      10.4),
      all
      its interests, rights and obligations under this Agreement to an assignee that
      shall assume such obligations (which assignee may be another Lender, if a Lender
      accepts such assignment); provided
      that
      (1) Borrower shall have received the prior written consents of the Global
      Administrative Agent and the Canadian Administrative Agent, which consents
      shall
      not unreasonably be withheld or delayed, (2) such Lender shall have
      received payment of an amount equal to the outstanding principal of its Loans
      and participations in LC Disbursements, accrued interest thereon, accrued fees
      and all other amounts payable to it hereunder as of such time, from the assignee
      (to the extent of such outstanding principal and accrued interest and fees)
      or
      Borrower (in the case of all other amounts), (3) the assignee and assignor
      shall have entered into an Assignment and Assumption, and (4) in the case
      of any such assignment resulting from a claim for compensation under
Section
      2.15
      or
      payments required to be made pursuant to Section
      2.17,
      such
      assignment will result in a reduction in such compensation or
      payments.

     

    
      
        
        

      

      
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    SECTION
      2.20 Currency
      Conversion and Currency Indemnity.

     

    (a) Payments
      in Agreed Currency.
      Borrower shall make payment relative to any Obligation in the currency (the
      “Agreed
      Currency”)
      in
      which the Obligation was effected. If any payment is received on account of
      any
      Obligation in any currency (the “Other
      Currency”)
      other
      than the Agreed Currency (whether voluntarily or pursuant to an order or
      judgment or the enforcement thereof or the realization of any Collateral or
      the
      liquidation of Borrower or otherwise howsoever), such payment shall constitute
      a
      discharge of the liability of Borrower hereunder and under the other Loan
      Documents in respect of such obligation only to the extent of the amount of
      the
      Agreed Currency which the relevant Lender or Agent, as the case may be, is
      able
      to purchase with the amount of the Other Currency received by it on the Business
      Day next following such receipt in accordance with its normal procedures and
      after deducting any premium and costs of exchange.

     

    (b) Conversion
      of Agreed Currency into Judgment Currency.
      If, for
      the purpose of obtaining or enforcing judgment in any court in any jurisdiction,
      it becomes necessary to convert into a particular currency (the “Judgment
      Currency”)
      any
      amount due in the Agreed Currency then the conversion shall be made on the
      basis
      of the rate of exchange prevailing on the next Business Day following the date
      such judgment is given and in any event Borrower shall be obligated to pay
      the
      Agents and the Lenders any deficiency in accordance with Section
      2.20(c).
      For the
      foregoing purposes “rate of exchange” means the rate at which the relevant
      Lender or Agent, as applicable, in accordance with its normal banking procedures
      is able on the relevant date to purchase the Agreed Currency with the Judgment
      Currency after deducting any premium and costs of exchange.

     

    (c) Circumstances
      Giving Rise to Indemnity.
      To the
      fullest extent permitted by applicable law, if (i) any Lender or any Agent
      receives any payment or payments on account of the liability of Borrower
      hereunder pursuant to any judgment or order in any Other Currency, and
      (ii) the amount of the Agreed Currency which the relevant Lender or Agent,
      as applicable, is able to purchase on the Business Day next following such
      receipt with the proceeds of such payment or payments in accordance with its
      normal procedures and after deducting any premiums and costs of exchange is
      less
      than the amount of the Agreed Currency due in respect of such liability
      immediately prior to such judgment or order, then Borrower on demand shall,
      and
      Borrower hereby agrees to, indemnify the Lenders and the Agents from and against
      any loss, cost or expense arising out of or in connection with such
      deficiency.

     

    
      
        
        

      

      
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    (d) Indemnity
      Separate Obligation.
      To the
      fullest extent permitted by applicable law, the agreement of indemnity provided
      for in Section
      2.20(c)
      shall
      constitute an obligation separate and independent from all other obligations
      contained in this Agreement, shall give rise to a separate and independent
      cause
      of action, shall apply irrespective of any indulgence granted by the Lenders
      or
      Agents or any of them from time to time, and shall continue in full force and
      effect notwithstanding any judgment or order for a liquidated sum in respect
      of
      an amount due hereunder or under any judgment or order.

     

    SECTION
      2.21 Bankers’
      Acceptances.
      Subject
      to the terms and conditions of this Agreement, the Commitments may be utilized,
      upon the request of Borrower, in addition to the Loans provided for by
Section
      2.2
      and the
      issuance of Letters of Credit provided for by Section
      2.4,
      for the
      acceptance by the Lenders of Bankers’ Acceptances issued by Borrower,
provided
      that in
      no event shall (i) the aggregate amount of all Bankers’ Acceptance
      Liabilities together with the Equivalent Amount in U.S. Dollars of the aggregate
      principal amount of the Loans (excluding Bankers’ Acceptances and BA Loans) and
      the aggregate amount of all LC Exposure exceed (A) in the event that
      availability under this Agreement and the U.S. Credit Agreement is governed
      by
      the Global Borrowing Base, the lesser of (1) the aggregate amount of the
      Allocated Canadian Borrowing Base then in effect and (2) the aggregate
      amount of the Commitments of the Lenders or (B) otherwise, the aggregate
      amount of the Commitments of the Lenders, and (ii)  Bankers’ Acceptances
      shall have maturities of 30, 60, or 90 days from the Acceptance Date (and shall
      in no event mature on a date after the Maturity Date). Whenever Borrower is
      required to furnish a notice to the Canadian Administrative Agent pursuant
      to
      the following additional provisions of this Section, it shall give a copy of
      such notice to the Global Administrative Agent. The following additional
      provisions shall apply to Bankers’ Acceptances:

     

    (a) In
      order
      to facilitate and expedite the issuance and acceptance of Bankers’ Acceptances
      hereunder, Borrower agrees to the terms and conditions of the Power of Attorney
      with respect to the Bankers’ Acceptance attached hereto as Exhibit
      F.

     

    (b) When
      Borrower wishes to make a Borrowing by way of Bankers’ Acceptances, Borrower
      shall submit to the Canadian Administrative Agent and the Global Administrative
      Agent prior written notice with respect to the issuance of the Bankers’
Acceptances (such written notice a “Bankers’
      Acceptance Request”)
      by not
      later than 1:00 p.m., Toronto time, three (3) Business Days’ prior to the
      Acceptance Date. Each Bankers’ Acceptance Request shall be irrevocable and
      binding on Borrower. Borrower shall indemnify each Lender against any loss
      or
      expense incurred by such Lender as a result of any failure by Borrower to
      fulfill or honor before the date specified as the Acceptance Date, the
      applicable conditions set forth in Article
      IV,
      if, as
      a result of such failure the requested Bankers’ Acceptance is not made on such
      date. Unless otherwise agreed among the Canadian Administrative Agent, the
      Global Administrative Agent and the Lenders, the aggregate amount of all
      Bankers’ Acceptances issued on any Acceptance Date hereunder shall be in amounts
      not less than C$1,000,000 and in integral multiples of C$500,000, and shall
      be
      accepted pro rata by all Lenders relative to their respective Applicable
      Percentage, rounded, upwards or downwards, as the case may be, to the nearest
      C$500,000. Upon receipt of a Bankers’ Acceptance Request, the Canadian
      Administrative Agent shall advise each Lender of the contents
      thereof.
      There
      shall not at any time be more than a total of six (6) Bankers’ Acceptances
      outstanding.

     

    
      
        
        

      

      
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    (c) [Intentionally
      omitted.]

     

    (d) On
      the
      Acceptance Date at 10:30 a.m., Toronto time, the Canadian Administrative Agent
      shall determine the Bankers’ Acceptance Rate for each of the Accepting Lenders.
      Not later than 2:00 p.m., Toronto time, each such Accepting Lender shall accept
      and purchase its share of the Bankers’ Acceptances that are issued and shall
      make available to the Canadian Administrative Agent, in accordance with
Section
      2.5,
      the BA
      Net Proceeds of the purchase of Bankers’ Acceptances on such day by such Lender.
      The Canadian Administrative Agent shall transfer to Borrower those BA Net
      Proceeds of the Bankers’ Acceptances and shall notify Borrower and each such
      Lender by facsimile or telephone (if by telephone, to be confirmed subsequently
      in writing) of the details of the issue, pursuant to a notice in substantially
      the form attached hereto as Exhibit
      I.
      Each
      Accepting Lender may at any time and from time to time hold, sell, rediscount
      or
      otherwise dispose of any or all Bankers’ Acceptances accepted and purchased by
      it.

     

    On
      the
      Acceptance Date, Borrower shall pay each Accepting Lender and each Lender
      providing a BA Loan a Stamping Fee with respect to each Bankers’ Acceptance and
      each BA Loan and each Lender is hereby authorized to deduct such Stamping Fee
      prior to remitting the BA Net Proceeds to the Canadian Administrative
      Agent.

     

    For
      each
      Bankers’ Acceptance or BA Loan, the Stamping Fee payable by Borrower shall be
      the product obtained by multiplying:

     

    (i) the
      applicable Bankers’ Acceptance Stamping Fee specified in the definition of
      Applicable Rate in effect from time to time; by

     

    (ii) the
      Principal Amount of that Bankers’ Acceptance or BA Loan;

     

    and
      prorating that product for the number of days in the term from and including
      the
      Acceptance Date to but not including the BA Maturity Date of that Bankers’
Acceptance or the Interest Period for the BA Loan, as the case may be, on the
      basis of a year of 365 days.

     

    (e) On
      each
      day during the period commencing with the issuance by Borrower of any Bankers’
Acceptance and until such Bankers’ Acceptance Liability shall have been paid by
      Borrower, the Commitment of each Accepting Lender that is able to extend credit
      by way of Bankers’ Acceptances shall be deemed to be utilized for all purposes
      of this Agreement in an amount equal to the Principal Amount of such Bankers’
Acceptance.

     

    The
      Commitment of any Lender providing a BA Loan rather than Bankers’ Acceptances
      shall be deemed utilized during this period in an amount equal to the Principal
      Amount of such BA Loan.

     

    (f) Borrower
      agrees to pay on the BA Maturity Date for each Bankers’ Acceptance, to the
      Canadian Administrative Agent for account of each Accepting Lender, an amount
      equal to the Bankers’ Acceptance Liability for such Bankers’
Acceptance.

     

    Borrower
      hereby waives presentment for payment of Bankers’ Acceptances by the Accepting
      Lenders and any defense to payment of amounts due to an Accepting Lender in
      respect of a Bankers’ Acceptance which might exist by reason of such Bankers’
Acceptance being held at maturity by the Accepting Lender which accepted it
      and
      agrees not to claim from such Lenders any days of grace for the payment at
      maturity of Bankers’ Acceptances.

     

    
      
        
        

      

      
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    (g) In
      the
      event Borrower fails to notify the Canadian Administrative Agent in writing
      not
      later than 1:00 p.m., Toronto time, on the Business Day prior to any BA Maturity
      Date that Borrower intends to pay with Borrower’s own funds the Bankers’
Acceptance Liabilities due on such BA Maturity Date or fails to make such
      payment, Borrower shall be deemed for all purposes to have given the Canadian
      Administrative Agent notice of a borrowing of a Canadian Prime Loan pursuant
      to
Section
      2.3
      for an
      amount equal to the Principal Amount of such Bankers’ Acceptances; provided
      that:

     

    (i) the
      BA
      Maturity Date for such Bankers’ Acceptances shall be considered to be the date
      of such borrowing;

     

    (ii) the
      proceeds of such Canadian Prime Loan shall be used to pay the amount of the
      Bankers’ Acceptance Liability due on such BA Maturity Date;

     

    (iii) if
      after
      giving effect to such Canadian Prime Loan, a Canadian Borrowing Base Deficiency
      would exist, the Global Administrative Agent shall so advise Borrower and
      Borrower shall comply with the provisions of Section
      2.10;

     

    (iv) each
      Lender which has made a maturing BA Loan (in accordance with Section
      2.21(h)
      hereof)
      shall continue to extend credit to Borrower by way of a Canadian Prime Loan
      (without further advance of funds to Borrower) in the Principal Amount equal
      to
      its Applicable Percentage of the total amount of credit requested to be extended
      by Bankers’ Acceptances when the BA Loan was made; and

     

    (v) the
      Canadian Administrative Agent shall promptly and in any event within three
      (3)
      Business Days following the BA Maturity Date of such Bankers’ Acceptances,
      notify Borrower in writing of the making of such Canadian Prime Loan pursuant
      to
      this Section
      2.21(g).

     

    (h) If,
      in
      the sole judgment of a Lender, such Lender is unable, as a result of applicable
      law or customary market practice, to extend credit by way of Bankers’ Acceptance
      in accordance with this Agreement, such Lender shall give notice to such effect
      to the Canadian Administrative Agent and Borrower prior to 1:00 p.m., Toronto
      time, on the date of the requested credit extension (which notice may, if so
      stated therein, remain in effect with respect to subsequent requests for
      extension of credit by way of Bankers’ Acceptance until revoked by notice to the
      Global Administrative Agent, the Canadian Administrative Agent and Borrower)
      and
      shall make available to the Canadian Administrative Agent, in accordance with
      Section
      2.1
      hereof
      prior to 2:00 p.m., Toronto time, on the date of such requested credit extension
      a Canadian Dollar loan (a “BA
      Loan”)
      in the
      Principal Amount equal to such Lender’s Applicable Percentage of the total
      amount of credit requested to be extended by way of Bankers’ Acceptances. The
      Stamping Fee for that BA Loan shall be calculated on that Principal Amount.
      Such
      BA Loan shall have an Interest Period equal to the term of the Bankers’
Acceptances for which it is a substitute and shall bear interest throughout
      such
      Interest Period applicable to that BA Loan at a rate per annum equal to the
      Bankers’ Acceptance Rate for such Bankers’ Acceptances plus the Applicable Rate.
      On the maturity date of the Bankers’ Acceptances issued concurrently with the
      advance of the BA Loan, Borrower shall pay to each Lender which made a BA Loan,
      in satisfaction of the BA Loan and accrued interest thereon, an amount equal
      to
      the Principal Amount of such BA Loan, failing which such Principal Amount shall
      be converted to a Canadian Prime Loan. The amount of the proceeds of that BA
      Loan to be disbursed to Borrower on the Acceptance Date shall be the same amount
      as if that Lender had accepted and purchased its Lender’s Applicable Percentage
      of the requested Bankers’ Acceptances at a discount from the Principal Amount of
      that Bankers’ Acceptance calculated at a discount rate per annum equal to the
      Bankers’ Acceptance Rate for the term of such Bankers’ Acceptances in the same
      manner that BA Net Proceeds are calculated; provided
      that the
      Principal Amount of such BA Loan shall be the same amount as the face amount
      of
      the Bankers’ Acceptance which such Lender would have accepted but for this
Section
      2.21(h).

     

    
      
        
        

      

      
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    (i) [Intentionally
      omitted.]

     

    (j) [Intentionally
      omitted.]

     

    (k) If
      a
      Lender determines in good faith, which determination shall be final, conclusive
      and binding upon Borrower, and notifies Borrower that, by reason of
      circumstances affecting the money market:

     

    (i) there
      is
      no market for Bankers’ Acceptances generally or of a requested duration;
      or

     

    (ii) the
      demand for Bankers’ Acceptances is insufficient to allow the sale or trading of
      the Bankers’ Acceptances created and purchased hereunder generally or in
      connection with a requested duration;

     

    then:

     

    (x) the
      right
      of Borrower to request Bankers’ Acceptances or a BA Loan of the affected
      duration from that Lender shall be suspended until such Lender determines that
      the circumstances causing such suspension no longer exist and such Lender so
      notifies Borrower; and

     

    (y) any
      Bankers’ Acceptance Request for an affected duration which is outstanding shall
      be canceled and the Bankers’ Acceptances or BA Loan requested therein shall not
      be made and a Bankers’ Acceptance or BA Loan having the shortest duration
      available (or if none) a Canadian Prime Loan shall be made in its
      place.

     

    (l) It
      is the
      intention of the Canadian Administrative Agent, the Lenders and Borrower that,
      except to the extent a Lender advises otherwise, pursuant to the Depository
      Bills and Notes Act
      (“DBNA”),
      all
      Bankers’ Acceptances accepted by the Lenders under this Agreement shall be
      issued in the form of a “depository bill” (as defined in the DBNA), deposited
      with the Canadian Depository for Securities Ltd. and made payable to CDS &
Co. In order to give effect to the foregoing, the Canadian Administrative Agent
      shall, subject to the approval of Borrower and the Lenders, establish and notify
      Borrower and the Lenders of any procedure, consistent with the terms of this
      Agreement and the requirements of the DBNA, as is reasonably necessary to
      accomplish such intention, including, without limitation:

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    (i) any
      instrument held by the Canadian Administrative Agent or a Lender for purposes
      of
      Bankers’ Acceptances shall have marked prominently and legibly on its face and
      within its text, at or before the time of issue, the words “This is a depository
      bill subject to the Depository
      Bills and Notes Act (Canada)”;

     

    (ii) any
      reference to the authentication of the Bankers’ Acceptances will be removed;
      and

     

    (iii) any
      reference to “bearer” will be removed and no Bankers’ Acceptance shall be marked
      with any words prohibiting negotiation, transfer or assignment of it or of
      an
      interest in it.

     

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

     

    
      
        
        

      

      
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    ARTICLE
      III

    Representations
      and Warranties

     

    In
      order
      to induce the Global Administrative Agent, the Canadian Administrative Agent,
      the other Agents, any Issuing Bank and the Lenders to enter into this Agreement
      and to make Loans (including making BA Loans and accepting Bankers’ Acceptances)
      and issue or participate in any Letters of Credit hereunder, Borrower represents
      and warrants to the Global Administrative Agent, the Canadian Administrative
      Agent, any Issuing Bank and the Lenders as set forth in this
      Article.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    SECTION
      3.4 Properties.
      Each of
      Borrower and its Restricted Subsidiaries owns its Properties free and clear
      of
      all Liens (other than Liens permitted by Section 7.2 of the U.S. Credit
      Agreement).

     

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

     

    SECTION
      3.6 Unfunded
      Pension Liabilities.
      The
      unfunded pension or similar liabilities of Borrower and its Subsidiaries do
      not
      in the aggregate exceed an amount which could reasonably be expected to have
      a
      Material Adverse Effect.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    SECTION
      3.10 Representations
      and Warranties in U.S. Credit Agreement.
      Borrower represents and warrants that each of the representations and warranties
      contained in the U.S. Credit Agreement, including, without limitation, Article
      III of the U.S. Credit Agreement, pertaining or otherwise applicable to Borrower
      and its Restricted Subsidiaries is true, correct and complete in all respects
      (except with respect to such representations and warranties which expressly
      relate to an earlier date, in which case such representations and warranties
      are
      true, correct and complete as of such earlier date).

     

    ARTICLE
      IV

    Conditions

     

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

     

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

     

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

     

    SECTION
      4.2 Initial
      Loan.
      The
      obligations of (a) the Lenders to make Loans (including making BA Loans and
      accepting Bankers’ Acceptances) or (b) any Issuing Bank to issue Letters of
      Credit hereunder shall not become effective until the date on which each of
      the
      following conditions is satisfied (or waived in accordance with Section
      10.2):

     

    (i) Certain
      Loan Documents.
      The
      Global Administrative Agent (or its counsel) shall have received from each
      party
      thereto either a counterpart of each of the following documents duly executed
      on
      behalf of such party or written evidence satisfactory to the Global
      Administrative Agent (which may include telecopy transmission of a signed
      signature page of such document) that each such party has duly executed for
      delivery to the Global Administrative Agent a counterpart of each of the
      following documents: a Facility Guaranty from each Guarantor and the Fee
      Letter.

     

    
      
        
        

      

      
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    (ii) U.S.
      Loan Documents.
      The
      Global Administrative Agent shall have received copies of the executed U.S.
      Loan
      Documents (other than the U.S. Credit Agreement) and the conditions for making
      Loans provided in the U.S. Credit Agreement shall have been contemporaneously
      satisfied.

     

    (iii) Opinions
      of Counsel.
      The
      Global Administrative Agent shall have received opinions, dated the Global
      Effective Date, addressed to the Global Administrative Agent, the Canadian
      Administrative Agent, and the Combined Lenders, from (A) Bull, Houser &
Tupper LLP, counsel to Borrower, (B) Hogan & Hartson L.L.P., U.S.
      counsel to Borrower, and (C) Blake, Cassels & Graydon, LLP,
      counsel to the Canadian Lenders and the U.S. Lenders, in each case in form
      and
      substance acceptable to the Global Administrative Agent, the Canadian
      Administrative Agent and its counsel.

     

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

     

    (A) that
      attached to each such certificate is (1) a true and complete copy of the
      Organic Documents of such Loan Party, as the case may be, as in effect on the
      Global Effective Date, (2) a true and complete copy of a certificate from
      the Governmental Authority of Canada or the province of such entity’s
      organization certifying that such entity is duly organized and validly existing
      in such jurisdiction, and (3) a true and complete copy of a certificate
      from the appropriate Governmental Authority of each province (without
      duplication) certifying that such entity is duly qualified and in good standing
      to transact business in such province as an extra-provincial corporation, if
      the
      failure to be so qualified or in good standing could reasonably be expected
      to
      have a Material Adverse Effect; 

     

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

     

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

     

    (v) Canadian
      Lien Searches.
      The
      Global Administrative Agent shall have received (A) the Canadian Lien
      Searches, all dated reasonably close to the Global Effective Date, in the
      discretion of the Global Administrative Agent and in form and substance
      satisfactory to the Global Administrative Agent, and (B) evidence
      reasonably satisfactory to the Global Administrative Agent that the Liens
      indicated by the financing statements (or similar documents) in such Canadian
      Lien Searches are permitted by Section 7.2
      of the
      U.S. Credit Agreement or have been released.

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    (b) No
      Defaults.
      At the
      time of and immediately after giving effect to such Borrowing or the issuance,
      amendment, renewal or extension of such Letter of Credit, as applicable, no
      Default shall have occurred and be continuing.

     

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

     

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

     

    ARTICLE
      V

    Affirmative
      Covenants

     

    Borrower
      agrees with the Global Administrative Agent, the Canadian Administrative Agent,
      any Issuing Bank and each Lender that, until the Commitments have expired or
      been terminated and Obligations shall have been paid and performed in full
      and
      all Letters of Credit shall have expired or terminated and all LC Disbursements
      shall have been reimbursed and no Bankers’ Acceptances Liabilities are
      outstanding, Borrower will perform the obligations set forth in this
      Article.

     

    SECTION
      5.1 Compliance
      Certificate; Notices and Other Information.
      Borrower will furnish to each Lender, the Global Administrative Agent and the
      Canadian Administrative Agent the following financial statements, reports,
      notices and information:

     

    (a) Concurrently
      with any delivery of financial statements under clause (a) or (b) of
Section 5.1
      of the
      U.S. Credit Agreement (which shall also be delivered to the Canadian
      Administrative Agent for delivery to the Lenders under this Agreement), Borrower
      shall deliver a compliance certificate substantially in the form of Exhibit
      A
      hereto
      certifying as to whether a Default has occurred and, if a Default has occurred,
      specifying the details thereof and any action taken or proposed to be taken
      with
      respect thereto; and

     

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

     

    
      
        
        

      

      
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    SECTION
      5.2 Notice
      of Default.
      Promptly, and in any event within three (3) Business Days of Borrower or any
      of
      its Restricted Subsidiaries becoming aware of a Default, Borrower will furnish
      to the Global Administrative Agent and each Lender written notice thereof,
      which
      written notice shall be accompanied by a statement of an Authorized Officer
      of
      Borrower setting forth the details of the event or development requiring such
      notice and any action taken or proposed to be taken with respect
      thereto.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    SECTION
      5.8 Additional
      Subsidiaries.
      If any
      additional Restricted Subsidiary is formed or acquired after the Global
      Effective Date, then Borrower will cause such Subsidiary (a) to execute a
      Facility Guaranty within fifteen (15) Business Days after such Subsidiary
      is formed or acquired, (b) to execute a Debenture and a Pledge Agreement
      (to the extent necessary to comply with Section 5.15(c) of the U.S. Credit
      Agreement) and promptly take such actions to create and perfect Liens on such
      Subsidiary’s assets to secure the Obligations as the Global Administrative Agent
      shall reasonably request and (c) to pledge or cause to be pledged, pursuant
      to such foregoing Debentures and Pledge Agreements, all Equity Interests in
      such
      Restricted Subsidiary within fifteen (15) Business Days after such
      Subsidiary is formed or acquired.

     

    SECTION
      5.9 Further
      Assurances.

     

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

     

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

     

    
      
        
        

      

      
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    SECTION
      5.10 Covenants
      in U.S. Credit Agreement.
      Until
      the payment in full in cash of all Obligations and the termination or expiration
      of all Commitments and Letters of Credit and Bankers’ Acceptances, Borrower
      covenants and agrees that Borrower will perform, comply with, observe and
      fulfill, and will cause each of its Restricted Subsidiaries to perform, comply
      with, observe and fulfill, each of the covenants, agreements and obligations
      contained in the U.S. Credit Agreement (or, if the U.S. Credit Agreement has
      been terminated, the covenants, agreements and obligations in effect immediately
      prior to the termination of the U.S. Credit Agreement) including, without
      limitation, Article V, Article VI and Article VII of the U.S. Credit
      Agreement, pertaining or otherwise applicable to Borrower and its Restricted
      Subsidiaries. Borrower hereby irrevocably and unconditionally agrees to be
      bound
      by such covenants, agreements and obligations applicable to it and such
      covenants, agreements, and obligations applicable to it in such capacity are
      hereby reaffirmed by Borrower.

     

    ARTICLE
      VI
[Not
      Used]

     

    ARTICLE
      VII

    Negative
      Covenants

     

    Borrower
      agrees with the Global Administrative Agent, the Canadian Administrative Agent,
      any Issuing Bank, and each Lender that, until the Commitments have expired
      or
      been terminated and Obligations shall have been paid and performed in full
      and
      all Letters of Credit shall have expired or terminated and all LC Disbursements
      shall have been reimbursed and no Bankers’ Acceptances Liabilities are
      outstanding, Borrower will perform the obligations set forth in this
      Article.

     

    SECTION
      7.1 Transactions
      with Affiliates.
      Borrower will not, and will not permit any Restricted Subsidiary to, sell,
      lease
      or otherwise transfer any Property or assets to, or purchase, lease or otherwise
      acquire any Property or assets from, or otherwise engage in any other
      transactions with, any of its Affiliates, except (a) transactions in the
      ordinary course of business and that are at prices and on terms and conditions
      not less favorable to Borrower or such Restricted Subsidiary than could be
      obtained on an arm’s-length basis from unrelated third parties,
      (b) transactions between or among Borrower and the Restricted Subsidiaries
      not involving any other Affiliate, (c) any Restricted Payment permitted by
      Section 7.8 of the U.S. Credit Agreement, and (d) any Investment permitted
      by Section 7.4 of the U.S. Credit Agreement.

     

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

     

    
      
        
        

      

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

     

    ARTICLE
      VIII

    Events
      of Default

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

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

     

    (f) [Intentionally
      omitted.]

     

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

     

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

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
      IX

    Agents

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    ARTICLE
      X

    Miscellaneous

     

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

     

    (a) if
      to
      Borrower, to:

     

    Storm
      Cat
      Energy Corporation

    1125
      17th
      Street,
      Suite 2310

    Denver,
      Colorado 80202

    Attention: Paul
      Wiesner

    Telephone: 303-991-5070

    Facsimile: 303-991-5075

    

    with
      copy
      to:

    

    Hogan
      & Hartson L.L.P.

    One
      Tabor
      Center, Suite 1500

    1200
      Seventeenth Street

    Denver,
      Colorado 80202

    Attention:
      Richard Mattera

    Telephone:
      303.454.2471

    Facsimile:
      303.899.7333

    

    with
      an
      additional copy to:

    

    Bull,
      Housser & Tupper LLP

    3000
      Royal Center

    1055
      West
      Georgia Street

    Vancouver
      British Columbia

    Canada
      V6E 3R3

    Attention:
      David M. Hunter

    Telephone:
      604.641.4963

    Facsimile:
      604.646.2634

    

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

     

    JPMorgan
      Chase Bank, N.A.

    10
      South
      Dearborn

    Floor
      19

    Chicago,
      Illinois 60603-2003

    Attention:
      Susan Dugan

    Telephone:
      312.385.7143

    Facsimile:
      312.385.7096

    

    
      
        
        

      

      
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    with
      a
      copy to:

    

    JPMorgan
      Chase Bank, N.A.

    1717
      Main
      Street, 4th
      Floor

    Mail
      Code
      TX1-2448

    Dallas,
      Texas 75201

    Attention: Scott
      Fowler

    Telephone: 214.290.2162

    Facsimile: 214.290.2332

    

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

     

    JPMorgan
      Chase Bank, N.A., Toronto Branch

    200
      Bay
      Street

    Royal
      Bank Plaza, Suite 1800

    Mail
      Code
      ON1-1800

    Toronto,
      Ontario M5J 2J2

    Attention: Lehong
      Zhang

    Telephone: 416.981.2329

    Facsimile: 416.981.2339

    

    with
      a
      copy to:

    

    JPMorgan
      Chase Bank, N.A., Toronto Branch

    200
      Bay
      Street

    Royal
      Bank Plaza South Tower, Suite 2000

    Toronto,
      Ontario M5J 2J2

    Attention: Michael
      Tam

    Telephone: 416.981.2323

    Facsimile: 416.981.2375

    

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

     

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

     

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

     

    
      
        
        

      

      
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    SECTION
      10.2 Waivers;
      Amendments.

     

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

     

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

     

    
      
        
        

      

      
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    SECTION
      10.3 Expenses;
      Indemnity; Damage Waiver.

     

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

     

    
      
        
        

      

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

     

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

     

    (d) To
      the
      extent permitted by applicable law, Borrower shall not assert, and hereby
      waives, any claim against any Indemnitee, on any theory of liability, for
      special, indirect, consequential or punitive damages (as opposed to direct
      or
      actual damages) arising out of, in connection with, or as a result of, this
      Agreement or any agreement or instrument contemplated hereby, the Financing
      Transactions, any Loan or Letter of Credit or the use of the proceeds
      thereof.

     

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

     

    
      
        
        

      

      
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    SECTION
      10.4 Successors
      and Assigns.

     

    (a) The
      provisions of this Agreement shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns permitted hereby
      (including any Affiliate of an Issuing Bank that issues any Letter of Credit),
      except that Borrower may not assign or otherwise transfer any of its rights
      or
      obligations hereunder without the prior written consent of the Global
      Administrative Agent, each Issuing Bank and each Combined Lender (and any
      attempted assignment or transfer by Borrower without such consent shall be
      null
      and void). Nothing in this Agreement, expressed or implied, shall be construed
      to confer upon any Person (other than the parties hereto, their respective
      successors and assigns permitted hereby (including any Affiliate of an Issuing
      Bank that issues any Letter of Credit) and, to the extent expressly contemplated
      hereby, the Related Parties of each of the Global Administrative Agent, the
      Issuing Banks and the Lenders) any legal or equitable right, remedy or claim
      under or by reason of this Agreement.

     

    (b) Any
      Lender may assign to one or more assignees all or a portion of its rights and
      obligations under this Agreement (including all or a portion of its Commitment
      and the Loans at the time owing to it) to any Person who is not a Foreign
      Lender; provided
      that
      (i) except in the case of an assignment to a Lender or a Lender Affiliate,
      each of Borrower (unless an Event of Default has occurred and is continuing),
      the Canadian Administrative Agent and the Global Administrative Agent (and,
      in
      the case of an assignment of all or a portion of a Commitment or any Lender’s
      obligations in respect of its LC Exposure, the Issuing Banks) must give their
      prior written consent to such assignment (which consent shall not be
      unreasonably withheld), (ii) except in the case of an assignment to a
      Lender or a Lender Affiliate or an assignment of the entire remaining amount
      of
      the assigning Lender’s Commitment or Loans, the amount of the Commitment or
      Loans of the assigning Lender subject to each such assignment (determined as
      of
      the date the Assignment and Assumption with respect to such assignment is
      delivered to the Global Administrative Agent) shall be in increments of
      U.S.$1,000,000 and not less than U.S.$5,000,000 unless each of Borrower (unless
      an Event of Default has occurred and is continuing)and the Global Administrative
      Agent otherwise consent, (iii) each partial assignment shall be made as an
      assignment of a proportionate part of all the assigning Lender’s rights and
      obligations under this Agreement, except that this clause (iii) shall not
      be construed to prohibit the assignment of a proportionate part of all the
      assigning Lender’s rights and obligations in respect of its Commitments or Loans
      in conformity with the Intercreditor Agreement, (iv) the parties to each
      assignment shall execute and deliver to the Global Administrative Agent an
      Assignment and Assumption, together with a processing and recordation fee of
      U.S.$3,500, (v) the assignee, if it shall not be a Lender, shall deliver to
      the Global Administrative Agent an Administrative Questionnaire, and
      (vi) after giving effect to any assignment hereunder, the assigning Lender
      shall have a Commitment of at least U.S.$5,000,000 unless each of Borrower
      and
      the Global Administrative Agent otherwise consents; and provided further
      that any
      consent of Borrower otherwise required under this paragraph shall not be
      required if an Event of Default under Section
      8.1
      has
      occurred and is continuing. Subject to acceptance and recording thereof pursuant
      to paragraph (d)
      of this
      Section, from and after the effective date specified in each Assignment and
      Assumption, the assignee thereunder shall be a party hereto and to the other
      Loan Documents and, to the extent of the interest assigned by such Assignment
      and Assumption, have the rights and obligations of a Lender under this
      Agreement, and the assigning Lender thereunder shall, to the extent of the
      interest assigned by such Assignment and Assumption, be released from its
      obligations under this Agreement and the other Loan Documents (and, in the
      case
      of an Assignment and Assumption covering all of the assigning Lender’s rights
      and obligations under this Agreement, such Lender shall cease to be a party
      hereto but shall continue to be entitled to the benefits of Section
      2.15,
      Section
      2.16,
      Section
      2.17,
      Section
      2.18,
      Section
      2.20
      and
Section
      10.3
      and be
      subject to the terms of Section
      10.12).
      Any
      assignment or transfer by a Lender of rights or obligations under this Agreement
      that does not comply with this paragraph shall be treated for purposes of this
      Agreement as a sale by such Lender of a participation in such rights and
      obligations in accordance with paragraph (e)
      of this
      Section.

     

    
      
        
        

      

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

     

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

     

    (e) Any
      Lender may, without the consent of Borrower, the Global Administrative Agent,
      the Canadian Administrative Agent or any Issuing Bank, sell participations
      to
      one or more banks or other entities which are resident in Canada for purposes
      of
      the Income Tax Act (Canada) (a “Participant”)
      in all
      or a portion of such Lender’s rights and obligations under this Agreement
      (including all or a portion of its Commitment and the Loans owing to it);
provided
      that
      (i) such Lender’s obligations under this Agreement shall remain unchanged,
      (ii) such Lender shall remain solely responsible to the other parties
      hereto for the performance of such obligations, and (iii) Borrower, the
      Global Administrative Agent, the Canadian Administrative Agent, the Issuing
      Banks and the other Lenders shall continue to deal solely and directly with
      such
      Lender in connection with such Lender’s rights and obligations under this
      Agreement. Any agreement or instrument pursuant to which a Lender sells such
      a
      participation shall provide that such Lender shall retain the sole right to
      enforce the Loan Documents and to approve any amendment, modification or waiver
      of any provision of the Loan Documents; provided
      that
      such agreement or instrument may provide that such Lender will not, without
      the
      consent of the Participant, agree to any amendment, modification or waiver
      described in the second proviso to Section
      10.2(b)
      that
      affects such Participant. Subject to paragraph (f)
      of this
      Section, Borrower agrees that each Participant shall be entitled to the benefits
      of Section
      2.15,
      Section
      2.16
      and
Section
      2.17
      to the
      same extent as if it were a Lender and had acquired its interest by assignment
      pursuant to paragraph (b)
      of this
      Section. To the extent permitted by law, each Participant also shall be entitled
      to the benefits of Section
      10.8
      and
Section
      10.12
      as
      though it were a Lender, provided
      such
      Participant agrees to be subject to Section
      2.18(c)
      as
      though it were a Lender.

     

    
      
        
        

      

      
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    (f) A
      Participant shall not be entitled to receive any greater payment under
Section
      2.15,
      Section
      2.16
      or
Section
      2.17
      than the
      applicable Lender would have been entitled to receive with respect to the
      participation sold to such Participant.

     

    (g) Any
      Lender may at any time pledge or assign a Lien in all or any portion of its
      rights under this Agreement to secure obligations of such Lender, and this
      Section shall not apply to any such pledge or assignment; provided
      that no
      such pledge or assignment of a security interest shall release a Lender from
      any
      of its obligations hereunder or substitute any such pledgee or assignee for
      such
      Lender as a party hereto.

     

    SECTION
      10.5 Survival.
      All
      covenants, agreements, representations and warranties made by the Loan Parties
      in the Loan Documents and in the certificates or other instruments delivered
      in
      connection with or pursuant to this Agreement or any other Loan Document shall
      be considered to have been relied upon by the other parties hereto and shall
      survive the execution and delivery of the Loan Documents and the making of
      any
      Loans and issuance of any Letters of Credit, regardless of any investigation
      made by any such other party or on its behalf and notwithstanding that any
      Agent, any Issuing Bank, the Arranger or any Lender may have had notice or
      knowledge of any Default or incorrect representation or warranty at the time
      any
      credit is extended hereunder, and shall continue in full force and effect as
      long as the principal of or any accrued interest on any Loan or any fee or
      any
      other amount payable under this Agreement is outstanding and unpaid or any
      Letter of Credit is outstanding and so long as the Commitments have not expired
      or terminated. The provisions of Section
      2.15,
      Section
      2.16,
      Section
      2.17,
      Section
      2.18,
      Section
      2.20,
      Section
      10.3
      and
Section
      10.12
      and
Article
      IX
      shall
      survive and remain in full force and effect regardless of the consummation
      of
      the transactions contemplated hereby, the repayment of the Loans, the expiration
      or termination of the Letters of Credit and the Commitments or the termination
      of this Agreement or any provision hereof.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    (a) THIS
      AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY
      EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE
      LAWS
      OF THE PROVINCE OF BRITISH COLUMBIA AND OF CANADA APPLICABLE
      THEREIN.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    SECTION
      10.12 Confidentiality.
      Each of
      the Agents, the Issuing Banks, and the Lenders agrees to maintain the
      confidentiality of the Information (as defined below), except that Information
      may be disclosed (a) to its and its Affiliates’ directors, officers,
      employees and agents, including accountants, legal counsel and other advisors
      (it being understood that the Persons to whom such disclosure is made will
      be
      informed of the confidential nature of such Information and instructed to keep
      such Information confidential), (b) to the extent requested by any
      regulatory authority, (c) to the extent required by applicable laws or
      regulations or by any subpoena or similar legal process, (d) to any other
      party to this Agreement, (e) in connection with the exercise of any
      remedies hereunder or any suit, action or proceeding relating to this Agreement
      or any other Loan Document or the enforcement of rights hereunder or thereunder,
      (f) subject to an agreement containing provisions substantially the same as
      those of this Section, to (i) any assignee of or Participant in, or any
      prospective assignee of or Participant in, any of its rights or obligations
      under this Agreement or (ii) any actual or prospective counterparty (or its
      advisors) to any Hedging Agreement(g) with the consent of Borrower or
      (h) to the extent such Information (i) becomes publicly available
      other than as a result of a breach of this Section by any Person or
      (ii) becomes available to any Agent, any Issuing Bank or any Lender on a
      nonconfidential basis from a source other than Borrower or any of its
      Affiliates. For purposes of this Section, “Information”
means
      all information received from Borrower or its Affiliate relating to Borrower
      and
      its Subsidiaries or their business, other than any such information that is
      available to any Agent, any Issuing Bank or any Lender on a nonconfidential
      basis prior to disclosure by Borrower or any of its Affiliates; provided
      that, in
      the case of information received from Borrower after the date of this Agreement,
      such information is clearly identified at the time of delivery as confidential.
      Any Person required to maintain the confidentiality of Information as provided
      in this Section shall be considered to have complied with its obligation to
      do
      so if such Person has exercised the same degree of care to maintain the
      confidentiality of such Information as such Person would accord to its own
      confidential information. 

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    [SIGNATURES
      BEGIN ON FOLLOWING PAGE]

     

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	 	 
	 	STORM
              CAT
              ENERGY CORPORATION,
a
              corporation amalgamated under the laws of British
              Columbia
	 
 	 
 	 
 
	 	By:  	/s/ Paul Wiesner
	 	
              
Paul
              Wiesner,
	 	Chief
              Financial Officer

    

     

     

    
      
        [Signature
          Page to Canadian Credit Agreement]

        
           

        

      

      
        S-1

        
          

        

      

      
        
        

      

    

    

    
      	 	 	 
	 	JPMORGAN
              CHASE BANK, N.A.,
              
as Global Administrative Agent
	 
 	 
 	 
 
	 	By:  	/s/ J. Scott Fowler
	 	
              
J.
              Scott Fowler, Senior Vice President
	 	 

    

     

    

    
      
        [Signature
          Page to Canadian Credit Agreement]

        
        

      

      
        S-2

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	
              JPMORGAN
                CHASE BANK, N.A., TORONTO BRANCH,
as
                Canadian Administrative Agent and as a Lender

            
	 
 	 
 	 
 
	 	By:  	/s/
              Michael N. Tam
	 	
              
Name
              Michael N. Tam
	 	Title:
              Senior Vice President

    

     

    
      
        [Signature
          Page to Canadian Credit Agreement]

        
        

      

      
        S-3EXHIBIT
      10.1

     

     

    
      		
              On2
                Technologies, Inc.

              21
                Corporate Drive Suite 103

              Clifton
                Park, NY 12065

              www.on2.com

            

    

    
 

    May
      5,
      2006 

    

    Tim
      Reusing

    11
      Cragswood Road

    New
      Paltz, NY 12561

    

    Dear
      Tim:

    

    This
      amendment and restatement (this “Agreement”) of that certain employment
      agreement (the "Original Agreement"), dated as of November 10, 2003,between
      you
      (the "Executive") and On2 Technologies, Inc. (the "Company"), a Delaware
      corporation, is effective as of February 28, 2006 (the “Effective Date”). This
      letter sets forth the terms of your employment as Executive Vice President,
      Corporate Development. 

    

    1.
      EMPLOYMENT; ACCEPTANCE OF EMPLOYMENT The Company hereby employs the Executive
      during the Term (as defined below) on a full-time basis to render exclusive
      services to the Company as Executive Vice President and General Counsel. The
      Executive hereby accepts this employment and will render his services as
      required by the Company conscientiously, loyally, competently and to the best
      of
      his talents and abilities throughout the Term in accordance with the direction
      and control of his designated supervisor. 

    

    2.
      TERM
      OF AGREEMENT. The initial term of this Agreement shall commence on the date
      hereof and terminate on December 31, 2006. This Agreement may be renewed by
      the
      Company upon 90 days' written notice to the Executive prior to the expiration
      of
      the initial term or any renewal term and acceptance of such offer of renewal
      by
      the Executive. The initial term, as extended by any renewal term, is referred
      to
      herein as the "Term". 

    

    3.
      EXECUTIVE'S DUTIES. 

    

    a.
      The
      Executive's duties will include developing relationships with current and
      prospective customers and assisting in the structuring, negotiation and closing
      of pending license and other transactions. The Executive will report directly
      to
      the Company’s CEO. 

    

    b.
      The
      Executive's services shall be rendered primarily at the Company's offices in
      New
      York, New York and at such other locations as the Company may from time to
      time
      reasonably request consistent with its business needs. Travel (and related
      expenses) to such other locations will be at the Company's expense.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.
      EXCLUSIVITY, RESTRICTIVE AGREEMENTS. 

    

    a.
      During
      his employment, the Executive shall devote all of his business time, skill
      and
      energies exclusively to the business of the Company. 

    

    b.
      The
      Executive acknowledges that the nature of the services, position and expertise
      of the Executive are such that he is capable of competing with the Company
      and
      seriously damaging its business and its prospects to the detriment of its
      stockholders and employees. In consideration of the Company's performance of
      its
      obligations under this Agreement, during the Term and while under the employ
      of
      the Company the Executive shall not (i) directly or indirectly render any advice
      or services, whether or not for compensation, to, any Person (as defined below)
      engaged in any Competitive Business (as defined below); (ii) directly or
      indirectly engage in any Competitive Business; and (iii) directly or indirectly
      become interested, whether or not for compensation, in any Competitive Business
      as an individual, partner, shareholder, creditor, director, officer, principal,
      agent, employee, trustee, consultant, advisor or in any other relationship
      or
      capacity or, in the case of any such company whose securities are traded on
      a
      national securities exchange in the United States or otherwise or in the
      over-the-counter market, acquire, directly or indirectly, an interest in excess
      of one percent (1%) of the outstanding capital stock of such company. The
      Company's business is worldwide in scope; accordingly, the Executive agrees
      that
      this covenant not to compete shall not be subject to any geographical limit.
      

    

    c.
      For
      purposes of this Section, any "Competitive Business" shall mean any business
      (including, for the avoidance of doubt, any division, unit, subsidiary or
      affiliate of any other business whether or not such other business is a
      Competitive Business unless the Executive can demonstrate upon the Company's
      request that his employment by, engagement in, or his interest in, such unit,
      division, subsidiary or affiliate does not and will not require him to provide
      services, information, advice or relevant knowledge, skill, know-how or contacts
      to the Competitive Business during the Restricted Period) which is principally
      engaged in the design or development of digital compression, decompression
      or
      playback technologies in the computing, telecommunications or entertainment
      industries. 

    

    d.
      For
      purposes of this Section, "Person" shall mean any corporation, partnership,
      trust, individual or any other entity. 

    

    e.
      For
      all purposes of this Section 4, "Restricted Period" shall be the 180 days
      immediately following termination of employment whether such termination is
      by
      resignation or termination by the Company with or without Cause (as defined
      below) or upon the expiration of the Term. 

    

    5.
      COMPENSATION. 

    

    a.
      During
      the Term the Executive shall receive base compensation at the rate of $192,500
      per year, payable monthly. Such base salary as may be increased from time to
      time and is hereinafter referred to as "Base Salary". The Executive is
      guaranteed (i) payment of his Base Salary, (ii) all benefits to which he is
      entitled pursuant to this Agreement, including, without limitation, those set
      forth in Section 6 hereof during the Term, and (iii) retention of his title
      and
      use of his office space, in each case regardless of whether Executive is
      terminated for Cause or not for Cause or resigns his position or is otherwise
      unable to perform his duties on account of his death or disability; provided,
      however, that Executive shall not be entitled to retain his title and use of
      his
      office space if he resigns his position. The foregoing sentence sets forth
      all
      of Executive’s rights to receive compensation upon his termination or departure
      from his employment, irrespective of anything set forth in this Agreement
      including, without limitation, in Sections 7 or 8 hereof. Upon the cessation
      of
      the Executive’s employment with the Company (regardless of whether such
      cessation is due to Executive’s resignation, termination for Cause, termination
      without Cause or due to Executive’s death or disability): (i) the Company shall
      have the obligations set forth in Section 8.a. iv. and Section 8.c., (ii) all
      of
      the Executive's stock options which would have vested and become exercisable
      had
      the Executive's employment continued to the later of (x) October 15, 2006 or
      (y)
      the date upon which Executive employment ceases, shall vest and become
      exercisable, and the Executive may exercise all stock options held by him which
      have thereby vested and become exercisable during the period ending on the
      last
      day on which the Executive may exercise such options under the terms of the
      applicable option plan or 90 days from the date Executive’s employment ceases,
      whichever is later.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    b.
      The
      Company will reimburse the Executive for expenses related to its business
      actually incurred or paid by the Executive in the performance of his duties
      under this Agreement, including without limitation home cable modem and
      satellite modem bills and cell phone bills, upon presentation of accountings,
      expense statements, vouchers or such other supporting information as may be
      required by the Company's policies. 

    

    c.
      Executive will receive a percentage set forth on a schedule to be mutually
      agreed (the “Percentage”) of all monies actually received by the Company from or
      in connection with or arising out of any licenses, deals or transactions entered
      into with or through any of the entities set forth on a schedule to be mutually
      agreed to; provided, however, that such amount shall not in the case of any
      single entity exceed the amount set forth next to the entity’s name on such
      schedule, if any. The license, deal or transaction must be entered into or
      be
      effective prior to the end of the Term in order for it to be eligible for the
      Percentage fee. The Percentage fee shall be payable to Executive regardless
      of
      whether some or all eligible monies are received after the end of the Term
      or
      after the cessation of Executive’s employment with the Company; provided,
      however, that Executive’s right to receive the Percentage fee shall not extend
      to royalty fees, revenue shares, or other similar fees, to the extent such
      fees
      are received after the cessation of Executive’s employment with the
      Company.

     

    6.
      EXECUTIVE BENEFITS. 

    

    a.
      During
      the Term, the Executive shall be entitled to participate in such group health,
      retirement, profit sharing, 401(k) and other benefits programs or plans,
      qualified or unqualified, including any future stock option, bonus or other
      incentive program, which are or become available to other senior executives
      of
      the Company, subject to the policies of the Company with respect to all of
      such
      programs or plans. Nothing in this clause 6a. shall be construed to create
      a
      contractual obligation to provide the Executive with any particular form or
      type
      of benefit or to limit the discretion of the Board of Directors or Compensation
      Committee or any other duly authorized or appointed plan administrator is
      permitted to exercise under any such benefit programs or plans. 

    

    b.
      During
      the Term the Executive shall be entitled to four weeks' paid vacation per year
      of employment to be scheduled on reasonable notice to the Company and to be
      taken, accrued and paid on the same basis as other employees of the Company.
      

    

    7.
      TERMINATION OF EMPLOYMENT FOR CAUSE. 

    

    a.
      The
      Company may terminate employment of Executive for any of the following reasons,
      each of which is defined as "Cause:" 

    

    i.
      commission of a felony, any crime of moral turpitude or any act of fraud or
      dishonesty; 

    

    ii.
      repeated failure to satisfactorily perform material services required under
      this
      Agreement in accordance with the requests of the Board of Directors;

    

    iii.
      willful misconduct or gross negligence in the performance of his duties;

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    iv.
      disregard or violation of the legal rights of any employees of the Company
      or of
      the Company's written policies regarding harassment or discrimination; or

    

    v.
      a
      breach of any material provisions of this Agreement (including, but not limited
      to, any breach of Sections 3 or 9). 

    

    If
      the
      Company terminates the employment of the Executive for Cause, or if the
      Executive resigns during the Term, the Company's obligations under this
      Agreement to pay further compensation shall cease forthwith, except that the
      Company will pay the Executive, within 30 days from the date of termination
      of
      his employment, in full and complete satisfaction of all of the Company's
      obligations under this Agreement, (i) the Base Salary and, subject to submission
      of all required documentation, reimbursable expenses accrued (but unpaid) to
      the
      date of termination and (ii) any accrued but unused vacation days paid at the
      rate of the Executive's Base Salary and during the six months after such
      termination will further provide all benefits as would have been provided had
      employment continued including medical, disability and life insurance; PROVIDED,
      that in the case of the death of the Executive during such six-month period,
      medical insurance will be continued for the Executive's domestic partner and
      children for the duration of such period. Nothing contained in this Section
      7.a
      shall be construed to alter the Executive's right under any stock option plan
      pursuant to which options have been issued to Executive. 

    

    b.
      If the
      Executive dies during the Term, such death shall be deemed termination for
      Cause
      and the Company's obligation to Executive's estate shall be the same as those
      for termination for cause as defined in Section 7.a above. 

    

    c.
      If, as
      a result of the Executive's disability or incapacity during the Term due to
      physical illness or condition, or mental illness during his employment with
      the
      Company, the Executive is unable to perform his duties hereunder for a
      consecutive 6-calendar week period, or an aggregate period of 12 calendar weeks
      during any 12 months (or such longer period as may be required to comply with
      the Family Leave Act or other applicable law), the Company shall have the right,
      upon written notice to the Executive, to terminate the Executive's employment
      under this Agreement. Such a termination shall be deemed termination for Cause
      as defined in Section 7.a but shall in no case become effective until the date
      at which the Company's long-term disability plan pays benefits to him.

    

    d.
      Any
      alleged breach of this Agreement by either party shall not be deemed a breach
      until such time as the breaching party shall have received written notice from
      the non-breaching party setting forth the alleged breach ("Alleged Breach
      Notice") and the breaching party shall not have cured (if curable) the breach
      set forth in the Alleged Breach Notice in the 15 days (10 days for defaults
      in
      payments) after receipt of such Alleged Breach Notice. If the breach set forth
      in the Alleged Breach Notice is not curable and has not resulted in a
      substantive and material adverse effect on the party sending the Alleged Breach
      Notice, the Company and the Executive shall, at the request of the other,
      attempt to meet and discuss such alleged breach before resorting to remedies
      or
      rights under this Agreement or otherwise. Notwithstanding the foregoing, this
      Section shall not apply to, and the Executive shall have no right to cure,
      a
      breach by him under clauses (i) and (iv) of the definition "Cause" contained
      in
      Section 7.a, above. 

    

    8.
      TERMINATION OTHER THAN FOR CAUSE. 

    

    a.
      If the
      Company terminates the Executive's employment without Cause, the Company's
      obligations under this Agreement shall be as follows: 

    

    i.
      The
      Company will continue to pay to the Executive, or in the case of death of the
      employee to his successors or legal representatives or to his estate, during
      the
      180 days immediately following such termination of employment, as the case
      may
      be (such period is hereinafter referred to as the "Severance Period"), his
      Base
      Salary on a monthly basis as would have been paid to the employee had his
      employment with the Company continued; 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ii.
      The
      Company shall pay to the Executive his proportionate share of any bonus
      compensation to which he would have received had he continued to be employed
      until the end of the relevant bonus calculation period. Such bonus compensation
      shall be payable in a lump sum within 30 days of determination of Executive's
      bonus amount; 

    

    iii.
      The
      Company will continue to provide all benefits to the Executive during the
      Severance Period as would have been provided had employment continued, including
      medical, disability and life insurance. In the case of the death of the
      employee, medical insurance will be continued for Executive's domestic partner
      and children for the duration of the Severance Period; and 

    

    iv.
      The
      Company will reimburse the Executive for all reimbursable expenses accrued
      (but
      unpaid) to the date of termination or expiration of the Term, as the case may
      be; and within 10 business days after such termination, any accrued but unused
      vacation days paid at Executive's Base Salary. 

    

    b.
      If a
      termination without Cause takes effect prior to the expiration of the Term,
      all
      of the Executive's stock options which would have vested and become exercisable
      had the Executive's employment continued to the end of the Term in which such
      termination without Cause has occurred shall vest and become exercisable, and
      the Executive may exercise all options held by him which have thereby vested
      and
      become exercisable during the period ending on the last day on which the
      Executive may exercise such options under the terms of the applicable option
      plan or 90 days from the date of termination, whichever is later. 

    

    c.
      Notwithstanding Section 8(b), if the Company terminates the Executive's
      employment without Cause following a business combination (including sale of
      assets, merger, consolidation or other transaction that results in the
      stockholders of the Company receiving liquid consideration for a majority of
      the
      holdings in the Company accompanied by a change in actual control of the
      Company), all stock options theretofore granted to the Executive shall vest
      and
      become exercisable, and the Executive may thereafter exercise all options held
      by him during the period ending on the last day on which the Executive may
      exercise such options under the terms of the applicable option plan or 90 days
      from the date of termination, whichever is later. 

    

    9.
      NONDISCLOSURE. 

    

    a.
      Except
      as required in order to perform his obligations under this Agreement, the
      Executive shall not, without the express prior written consent of the Company,
      directly or indirectly, disclose or divulge to any other person or entity any
      of
      the Company's Confidential Information or Trade Secrets at any time (during
      or
      after the Executive's employment) during which such data or information
      continues to constitute Confidential Information or a Trade Secret. Except
      as
      required to be disclosed to his attorney, accountant or financial advisor,
      the
      Executive shall not disclose or divulge to any other person (particularly to
      any
      other employee) any terms of the Executive's compensation under this Agreement.
      Upon any termination or expiration of his employment, the Executive will
      promptly deliver to the Company all data, lists, information, memoranda,
      documents and all other property belonging to the Company or containing
      Confidential Information or Trade Secrets of the Company. 

    

    b.
      As
      used in this Agreement: 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    i.
      "Confidential Information" of the Company shall mean any valuable, competitively
      sensitive data and information related to the Company's business other than
      Trade Secrets that are not generally known by or readily available to the
      Company's competitors, including, among other things, that which relates to
      services performed by the Executive for the Company, or was created or obtained
      by the Executive while performing services for the Company or by virtue of
      the
      Executive's relationship with the Company; and 

    

    ii.
      "Trade Secrets" shall mean information or data of the Company, including but
      not
      limited to technical or non-technical data, compilations, programs, devices,
      methods, techniques, processes, financial data and financial plans, that: (a)
      derive economic value, actual or potential, from not being generally known
      to,
      and not being readily ascertainable by proper means by, other persons who can
      obtain economic value from their disclosure or use; and (b) are the subject
      of
      efforts that are reasonable under the circumstances to maintain their secrecy.
      To the extent that the foregoing definition is inconsistent with a definition
      of
      "trade secret" mandated under applicable law, the latter definition shall govern
      for purposes of interpreting the Executive's obligations under this Agreement.
      

    

    iii.
      The
      obligations set forth in this Section shall not be applicable to any information
      which: (i) the Company has authorized the Executive in writing to publicly
      disclose, copy or use, but only to the extent of such authorization;

    (ii)
      is
      generally known or becomes part of the public domain through no fault of the
      Executive; (iii) is disclosed to the Company by third parties without
      restrictions on disclosure; or (iv) is required to be disclosed in the context
      of any administrative or judicial proceedings; PROVIDED that, if the Executive
      is requested or becomes legally compelled to disclose any Confidential
      Information or Trade Secrets, the Executive will provide the Company with prompt
      written notice so that the Company may seek a protective order or other
      appropriate remedy and/or waive compliance with the provisions of this Section
      and the Executive will cooperate with the Company in any effort the Company
      undertakes to obtain a protective order or other remedy. If such a protective
      order or other remedy is not obtained or the Company waives compliance with
      this
      Section, the Executive will furnish only that portion of the Confidential
      Information and Trade Secrets that is legally required and will exercise all
      reasonable efforts to obtain reliable assurance that confidential treatment
      will
      be accorded the Confidential Information to be disclosed. The Company hereby
      agrees to indemnify and hold harmless Executive from all costs and expenses,
      including attorneys' fees, he incurs in carrying out his obligations under
      the
      proviso provisions of this subsection 9.b.iii and further agrees upon the
      written request of Executive to advance to Executive the anticipated cost of
      complying with his obligations under such proviso provisions. 

    

    10.
      REPRESENTATIONS AND WARRANTIES. The Executive hereby represents and warrants
      that (a) he has the right to enter into this Agreement with the Company and
      to
      grant the rights contained in this Agreement, and (b) the provisions of this
      Agreement do not violate any other contracts or agreements that the Executive
      has entered into with any other individual or entity. 

    

    11.
      SERVICES OF THE EXECUTIVE. In the course of his employment under this Agreement,
      the Executive will have access to Trade Secrets, the disclosure or unauthorized
      use of which, the Company seeks to protect and the Executive has agreed to
      protect. As a result of benefits accruing to the Executive from his access
      to
      such Trade Secrets, and of the improvement in his knowledge, and proficiency
      arising therefrom, the Executive acknowledges that (a) his services are and
      will
      remain special and extraordinary, and have and will have a peculiar value,
      the
      loss of which cannot be reasonably or adequately compensated in damages in
      any
      action at law; (b) he is willing to comply with the restrictions contained
      in
      Sections 4.b and 4.c; (c) the restrictions contained in those Sections will
      not
      impair his ability to earn a living in any businesses other than those
      businesses from which he is prohibited during the time of such restriction;
      and
      (d) a material breach of his obligations under Sections 4.b, 4.c or 10 will
      cause the Company irreparable injury and damage. It is, therefore, agreed that
      the Company, in addition to any other remedies, shall be entitled to injunctive
      and other equitable relief to enforce its rights under, and to prevent a breach
      of, Sections 4.b, 4.c and 9 of this Agreement by the Executive. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11A.
      REPRESENTATIONS. Executive represents that he has provided to date truthful
      and
      complete information to the Company’s outside attorneys, and, aside from those
      disclosures, knows of no other facts or circumstances arising out of his actions
      or omissions on which a claim or action could be asserted against the Company
      or
      its subsidiaries. Based upon the foregoing representation, the Company does
      hereby and forever release and discharge Executive, his heirs, assigns,
      representatives and successors from any and all causes of action, actions,
      judgments, liens, debts, contracts, indebtedness, damages, losses, claims,
      liabilities, rights, interests and demands of whatsoever kind or character,
      known or unknown, suspected to exist or not suspected to exist, anticipated
      or
      not anticipated, whether or not heretofore brought before any state or federal
      court or before any state or federal agency or other governmental entity, which
      the Company has or may have against Executive by reason of any and all acts,
      omissions, events or facts occurring or existing prior to the date hereof
      relating to or arising out of Executive’s employment, including, without
      limitation, all claims attributable to the employment of Executive, and all
      claims attributable to the termination of that employment, excepting only those
      obligations expressly recited to be performed hereunder; provided, that, the
      foregoing release shall not apply to claims which the Company has or may have
      against Executive by reason of any willful misconduct, criminal acts or acts
      of
      fraud of Executive involving the Company or its subsidiaries.

    

    12.
      ASSIGNABILITY ETC. This Agreement shall be nondelegable and nonassignable by
      the
      Executive, and shall inure to the benefit of heir and assigns the Executive.
      This Agreement shall be binding upon and inure to the benefit of the Company
      and
      any entity succeeding to all or substantially all of the business assets of
      the
      Company by merger, consolidation, purchase of assets or otherwise. 

    

    13.
      NOTICES. Any notice pertaining to this Agreement shall be in writing and shall
      be served by delivering said notice (i) by hand, (ii) by overnight mail by
      a
      internationally recognized carrier, (iii) by sending it by certified mail,
      postage prepaid, return receipt requested, or (iv) by confirmed telefax, with
      notice confirmed, to the Executive at the address first stated above or his
      office at the Company, and to the Company at: 

    

    21
      Corporate Dr.

    Ste.
      103

    Clifton
      Park, NY 12065

    Attn:
      CEO

    

    The
      addresses for notice may be changed by notice given to the other party pursuant
      to this Section. 

    

    14.
      MISCELLANEOUS. 

    

    a.
      This
      Agreement shall be governed by and construed under the laws and decisions of
      the
      State of New York applicable without regard to the principles of conflicts
      of
      laws. The parties to this Agreement agree that the state or federal courts
      in
      the State of New York shall have personal jurisdiction over them with respect
      to, and shall be the exclusive forum for the resolution of, any matter or
      controversy arising from or with respect to this Agreement. Service of a summons
      and complaint concerning any such matter or controversy may, in addition to
      any
      other lawful means, be effected by sending a copy of such summons and complaint
      by certified mail to the party to be served as specified in Section 13 of this
      Agreement or at such other address as the party to be served shall have provided
      in writing to the other from time to time in accordance with Section 13.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    b.
      To the
      extent permitted by law, the Executive and the Company irrevocably waive trial
      by jury and any objection which he or it may now or hereafter have to the venue
      of any suit, action or proceeding arising out of or relating to this Agreement
      brought in the City of New York, and to the extent permitted by law, the
      Executive and the Company hereby further irrevocably waive any claim that any
      such suit, action or proceeding brought in the City of New York has been brought
      in an inconvenient forum. 

    

    c.
      This
      Agreement contains the entire understanding of the parties to this Agreement
      with respect to the subject matter of this Agreement and supersedes all previous
      written and oral agreements between the parties with respect to the subject
      matter set forth in this Agreement. 

    

    d.
      This
      Agreement may not be modified or amended except by a writing signed by the
      parties to this Agreement. 

    

    e.
      Any
      provision of this Agreement that is deemed invalid, illegal or unenforceable
      in
      any jurisdiction shall, as to that jurisdiction and subject to this Section,
      be
      ineffective to the extent of such invalidity, illegality or unenforceability,
      without affecting in any way the remaining provisions of this Agreement in
      such
      jurisdiction or rendering that or any other provision of this Agreement invalid,
      illegal or unenforceable in any other jurisdiction. If the covenant should
      be
      deemed invalid, illegal or unenforceable because its scope is considered
      excessive, such covenant shall be modified so that the scope of the covenant
      is
      reduced only to the minimum extent necessary to render the modified covenant
      valid, legal and enforceable. 

    

    f.
      The
      following provisions of this Agreement shall survive in accordance with their
      terms, the expiration or termination of this Agreement for any reason: Sections
      4, 7, 8, 9, 10, 11 and 14. 

    

    g.
      A
      waiver by either party of any Section, term or condition of this Agreement
      in
      any instance shall not be deemed or construed to be a waiver of such Section,
      term or condition for the future or of any subsequent breach thereof, and any
      such waiver must be in writing, signed by the party to be charged. All rights
      and remedies contained in this Agreement are cumulative, and none of them shall
      be construed so as to limit any other right or remedy of either party.

    

    h.
      This
      Agreement may be executed in counterparts, all of which shall constitute one
      and
      the same agreement. 

    

    i.
      The
      headings and titles to the Sections of this Agreement are inserted for
      convenience only and shall not be deemed a part of or affect the construction
      or
      interpretation of any provisions of this Agreement. 

    

    j.
      All
      references to Sections shall be to sections and schedules of this Agreement.
      

    

    k.
      All
      references using male pronouns shall be deemed to include female pronouns.
      

    

    l.
      This
      Agreement maybe signed in multiple counterparts, each of which shall be deemed
      an original. Any executed counterpart returned by facsimile shall be deemed
      an
      original executed counterpart. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    If
      the
      foregoing accurately reflects the Executive's understanding, please countersign
      and return one counterpart of this Agreement to the Company. 

    

    Sincerely
      yours, 

    

    ON2
      TECHNOLOGIES, INC. 

    

    By:
      /s/
      Jim
      Meyer              

    Name:
      James Meyer 

    Title:
      Interim CEO 

    

    

    /s/
      Tim
      Reusing                 

    Tim
      Reusing

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