Document:

<PAGE>   1

                                                                    EXHIBIT 10.1

                               AMENDMENT NO. 1 TO
                              CONSULTING AGREEMENT

         THIS AMENDMENT NO. 1 TO THAT CERTAIN CONSULTING AGREEMENT ("Consulting
Agreement") is made and entered into as of August 1, 2000 (the "Effective
Date"), by and between Concorde Cruises, Inc., a South Dakota corporation, (the
"Company"); Michael A. Hlavsa (the "Consultant") and Concorde Gaming
Corporation, a South Dakota corporation (the "Guarantor"). The Company,
Consultant and Guarantor are collectively hereinafter referred to as the
"Parties" and individually as a "Party".

                                   WITNESSETH:

         WHEREAS, the Company and the Consultant entered into that certain
Consulting Agreement as of March 31, 2000; and

         WHEREAS, the Parties agreed to amend, and to the extent non-modified
herein restate, the Consulting Agreement based upon the agreement of the Parties
of the changes in the consulting relationship as forth below.

         NOW, THEREFORE, in consideration for the mutual obligations contained
herein, the Company, Consultant and Guarantor, each intending to be legally
bound hereby, mutually covenant and agree as follows:

         1.       RECITALS. The above recitals are true and correct.

         2.       RESTATEMENT. The provisions of the Consulting Agreement not
                  amended by this Amendment No. 1 shall continue in full force
                  and effect.

         3.       TERMS OF AMENDMENT.

                  a.       Paragraph 1(b) of the Consulting Agreement is deleted
                           in its entirety and replaced with the following:

                           "(b) Term. The term of engagement under this
                           Agreement shall commence on the Effective Date, and
                           shall terminate on May 31, 2001 ("Term").
                           Notwithstanding any other provision set forth herein,
                           this Agreement shall be non-cancelable."

                  b.       Paragraph 2 of the Agreement is amended to delete the
                           last sentence therein.

                  c.       Paragraph 3 of the Consulting Agreement shall be
                           amended by deleting the last sentence thereof.

                  d.       Paragraph 4 of the Consulting Agreement shall be
                           deleted in its entirety.

                  e.       Paragraphs 7(a) and 7(b) shall be deleted in their
                           entirety and be replaced with the following:

                           (1) Monthly Compensation. For the ten (10) month
                           period commencing August 1, 2000 through May 31,
                           2001, the compensation payable to the Consultant for
                           each calendar month shall be $10,000 per month,
                           payable in advance on the first business day of each
                           month. Further, as of August 1, 2000, the Company
                           shall have paid to the Consultant any compensation
                           due and owing for the months of June and July 2000
                           under the terms of the Consulting Agreement prior to
                           this Amendment.

<PAGE>   2

                           (2) Guaranty of Payment. Concorde Gaming Corporation,
                           as Guarantor, shall agreed to guaranty the timely
                           payment by the Company of any all compensation, or
                           expenses, due to Consultant pursuant to the terms of
                           this Agreement."

                  f.       Sections 9.1 and 9.2 of the Consulting Agreement
                           shall be deleted in their entirety. It is the
                           understanding of the Parties that by this amendment
                           to the Consulting Agreement, it shall be
                           non-cancelable from the effective date through May
                           31, 2001.

         4.       EXPENSES. The Parties acknowledge that certain expenses were
                  incurred by Consultant prior to March 31, 2000 while
                  Consultant acted as Managing Partner of Bayfront Ventures.
                  These expenses will be reimbursed promptly upon the submittal
                  of appropriate documentation by the Consultant to the Company.

         5.       COUNTERPARTS. Signatures on this First Amendment may be
                  communicated by facsimile transmission and shall be binding
                  upon the Parties transmitting the same by facsimile
                  transmission. Counterparts with original signatures shall be
                  provided to the other Party within five (5) days of the
                  applicable facsimile transmission, provided, however, that the
                  failure to provide the original counterpart shall have no
                  effect on the validity or the binding nature of this First
                  Amendment. If executed in counterparts, this First Amendment
                  will be as effective as if simultaneously executed.

         [IN WITNESS WHEREOF, the parties have executed and delivered this
Amendment No. 1 to the Consulting Agreement as of the effective date.

                              THE COMPANY:

                              CONCORDE CRUISES, INC., a South Dakota corporation

                              By: /s/ Jerry L. Baum
                                 --------------------------------------------
                              Name: Jerry L. Baum
                              Title: President

                              CONSULTANT:

                              By: /s/ Michael A. Hlavsa
                                 --------------------------------------------
                                  Michael A. Hlavsa

                              GUARANTOR:

                              CONCORDE GAMING CORPORATION, a South Dakota
                              corporation

                              By: /s/ Jerry L. Baum
                                 --------------------------------------------
                              Name: Jerry L. Baum
                              Title: President<PAGE>   1

                                                                    EXHIBIT 4.66

                                CREDIT AGREEMENT

                                      Among

                             TIPPERARY CORPORATION,
                                  as Borrower,

           TIPPERARY OIL & GAS (AUSTRALIA) PTY LTD, (ACN 077 536 871)
                                  as Guarantor,

                        TIPPERARY OIL & GAS CORPORATION,

                        TCW DEBT & ROYALTY FUND VI, L.P.

                                       and

                                    the other
                                     LENDERS
                                  party hereto,

                                       and

                          TCW ASSET MANAGEMENT COMPANY,
                       in the capacities described herein

                                   $17,000,000

                                   Dated as of
                                 April 28, 2000

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              Page
<S>     <C>                <C>                                                                                <C>
Article 1 DEFINITIONS AND ACCOUNTING MATTERS.....................................................................1
         Section 1.1       Defined Term..........................................................................1
         Section 1.2       Accounting Terms and Determinations..................................................21
         Section 1.3       Interpretation.......................................................................22

Article 2 LOANS.................................................................................................22
         Section 2.1       Loan Advances........................................................................22
         Section 2.2       The Notes............................................................................22
         Section 2.3       Request for Advances.................................................................23
         Section 2.4       Use of Proceeds......................................................................23
         Section 2.5       Coupon Interest......................................................................24
         Section 2.6       Accrual and Payment of Coupon Interest...............................................24
         Section 2.7       Computation of Interest..............................................................24
         Section 2.8       Payment of Principal; Quarterly Payments.............................................25
         Section 2.9       Prepayment...........................................................................26
         Section 2.10      General Payment Provision............................................................27
         Section 2.11      Yield Adjustment Payment.............................................................28
         Section 2.12      Collateral Accounts..................................................................28

Article 3 CONDITIONS PRECEDENT TO LENDING.......................................................................30
         Section 3.1       Conditions Precedent to Initial Loan Advance.........................................30
         Section 3.2       Conditions Precedent to Any Advance..................................................32
         Section 3.3       Special Conditions Precedent for an Additional Loan Advance..........................33
         Section 3.4       Special Condition to Any Advance.....................................................34

Article 4 REPRESENTATIONS AND WARRANTIES........................................................................34
         Section 4.1       Representations and Warranties of Borrower, TOGC and TOGA............................34
         Section 4.2       Representations of the Lenders, the Collateral Agent and the Agent...................41

Article 5 COVENANTS OF BORROWER AND TOGA........................................................................42
         Section 5.1       Affirmative Covenants................................................................42
         Section 5.2       Negative Covenants...................................................................53
         Section 5.3       Coverage Ratio.......................................................................55

Article 6 SECURITY..............................................................................................56
         Section 6.1       The Security.........................................................................56
         Section 6.2       Agreement to Deliver Security Documents..............................................56
         Section 6.3       Perfection and Protection of Security Interests and Liens............................56
         Section 6.4       Appointment of Agent and Collateral Agent............................................57

Article 7 EVENTS OF DEFAULT AND REMEDIES........................................................................60
</TABLE>

                                       i
<PAGE>   3

<TABLE>
<S>     <C>                <C>                                                                                <C>
         Section 7.1       Events of Default....................................................................60
         Section 7.2       Remedies.............................................................................63
         Section 7.3       Indemnity............................................................................64

Article 8 MISCELLANEOUS.........................................................................................64
         Section 8.1       Waivers and Amendments; Acknowledgment...............................................64
         Section 8.2       Survival of Agreements; Cumulative Nature............................................66
         Section 8.3       Notices..............................................................................66
         Section 8.4       Parties in Interest..................................................................68
         Section 8.5       Governing Law; Submission to Process.................................................68
         Section 8.6       Limitation on Interest...............................................................68
         Section 8.7       Survival.............................................................................69
         Section 8.8       Severability.........................................................................69
         Section 8.9       Counterparts.........................................................................70
         Section 8.10      Waiver of Jury Trial, Punitive Damages, Etc..........................................70
         Section 8.11      Exhibits and Schedules; Additional Definitions.......................................70
         Section 8.12      Confidentiality of Holders...........................................................70
         Section 8.13      Transfer of Notes....................................................................71
         Section 8.14      Reproduction of Documents............................................................71
         Section 8.15      Currency in Which Payments Shall Be Made.............................................72
         Section 8.16      Judgments in Other Than Dollars......................................................72
</TABLE>

         Exhibits:

         Exhibit A    -    Form of Australian Charge
         Exhibit B    -    Form of Collateral Account Agreement
         Exhibit C    -    Form of Guarantee Agreement
         Exhibit D    -    Form of TC Pledge and Security Agreement
         Exhibit E    -    Form of Royalty Agreement
         Exhibit F    -    Form of TOGA Security Agreement
         Exhibit G    -    Intentionally Deleted
         Exhibit H    -    Form of Subordination Agreement
         Exhibit I    -    Form of TOGA-Borrower Management Agreement
         Exhibit J    -    Form of TOGC Security Agreement
         Exhibit K    -    Form of Senior Secured Promissory Note
         Exhibit L    -    Form of Request for Initial Loan Advance
         Exhibit M    -    Form of Request for Additional Loan Advance
         Exhibit N    -    Form of Term Sheet for Participant Loans
         Exhibit O    -    Form of Form of Letter Directing Payment to
                           Collateral Account
         Exhibit P    -    Form of Omnibus Certificate of Secretary
         Exhibit Q    -    Form of Compliance Certificate
         Exhibit R-1  -    Form of Opinion of Australian counsel
         Exhibit R-2  -    Form of Opinion of Texas counsel
         Exhibit R-3  -    Form of Opinion of New York counsel
         Exhibit S    -    Form of Collateral Properties
         Exhibit T    -    Form of Supplement to Royalty Agreement

                                       ii
<PAGE>   4

         Schedules:

         Schedule 1 -      Disclosure Schedule
         Schedule 2 -      List of Lenders
         Schedule 3 -      Holders' Individual Note Amounts/Pro Rata Shares
         Schedule 4 -      Security Schedule
         Schedule 5 -      Payment Accounts
         Schedule 6 -      Insurance

                                      iii
<PAGE>   5

                                CREDIT AGREEMENT

                  THIS CREDIT AGREEMENT ("AGREEMENT") is entered into as of
April 28, 2000, by:

                  TIPPERARY CORPORATION, a Texas corporation ("BORROWER");

                  TIPPERARY OIL & GAS (AUSTRALIA) PTY. LTD (ACN 077 536 871), a
Queensland, Australia corporation ("TOGA");

                  TIPPERARY OIL & GAS CORPORATION, a Texas corporation ("TOGC");

                  LENDERS (as defined below) that are party hereto;

                  TCW ASSET MANAGEMENT COMPANY, a California corporation
("TAMCO"), as Agent (as defined below); and

                  TAMCO, as Collateral Agent (as defined below).

                                    RECITALS:

         A. Borrower owns all of the outstanding stock of TOGC, which in turn
owns ninety percent (90%) of the outstanding stock of TOGA. The remaining ten
percent (10%) of the outstanding stock of TOGA is owned by Slough Estates USA
Inc.

         B. Borrower seeks to provide funds to TOGA to assist TOGA in (i)
refinancing certain existing debt, (ii) continuing the development of Comet
Ridge Project (as defined below) and (iii) obtaining additional working capital.

         C. Borrower desires to obtain loans from Lenders in the aggregate
principal amount of up to Seventeen Million and 00/100 Dollars ($17,000,000) for
the purpose of financing the activities described in Recital B above and herein
and other related activities.

         D. Lenders are willing to make such loans to Borrower on the terms
herein.

         NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

                                   Article 1
                       DEFINITIONS AND ACCOUNTING MATTERS

         Section 1.1 DEFINED TERM. As used with capital letters in this
Agreement, each of the following terms has the meaning given in this Section 1.1
or in the Sections referred to below:

                                       1
<PAGE>   6

                  "ADDITIONAL ADVANCE FUNDING DATE" means the date on which the
Lenders fund any Additional Loan Advance pursuant to the provisions in Section
2.1(b).

                  "ADDITIONAL LOAN ADVANCE" has the meaning given in Section
2.1.

                  "ADJUSTED INVESTMENT" means the sum, at the time in question,
of:

                           (i) the outstanding principal Obligations under the
         Notes; plus

                           (ii) any past due payments owing for fifteen (15)
         days or more under this Agreement (including interest and un-reimbursed
         professional fees and other advances, expenses and costs payable by a
         Related Person hereunder) and under any Royalty Document; plus

                           (iii) all lessor royalties or similar burdens on the
         Collateral which remain unpaid for thirty (30) days beyond the terms
         contained in the applicable leases (other than disputed royalties for
         which designated cash reserves have been set aside); plus

                           (iv) the absolute value of TOGA's Working Capital,
         but only in the event the Working Capital is negative.

                  "ADVANCE" means an Initial Loan Advance or an Additional Loan
Advance.

                  "AFFILIATE" of a specified Person means:

                           (i) any other Person directly or indirectly owning,
         controlling or holding with power to vote 10% or more of the
         outstanding voting securities of the specified Person;

                           (ii) any other Person 10% or more of whose
         outstanding voting securities are directly or indirectly owned,
         controlled or held with power to vote by the specified Person;

                           (iii) any other Person directly or indirectly
         controlling, controlled by or under common control with the specified
         Person; or

                           (iv) any officer, director, partner or sanguineous or
         affined kin of the specified Person or of any other Person described in
         clause (iii) above.

                  As used herein the term `control' means possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person whether through the direct or indirect ownership of
partnership interests, voting securities or other equity interests, or
otherwise.

                  The preceding sentence notwithstanding, for purposes of the
Loan Documents, Trustco, TAMCO and the Lenders shall be deemed not to be
"Affiliates" of Borrower.

                                       2
<PAGE>   7

                  "AFFILIATE PAYMENTS" means any payments or transfers of any
kind directly or indirectly made to any of Borrower's Affiliates, whether as (i)
distributions, (ii) purchases or redemptions of equity interests in Borrower,
(iii) repayments of any loans from Affiliates, (iv) loans, investments or
advances made from or to Affiliates, or (v) purchases of properties, goods or
services from Affiliates, including without limitation, the payment of
Management Fees by TOGA to either TOGC or Borrower.

                  "AGENT" has the meaning given in Section 6.4(a).

                  "AGREEMENT" has the meaning given in the preamble hereto.

                  "ANCF" (or "ADJUSTED NET CASH FLOW") means, with respect to a
period, the sum of:

         (1) the positive difference of:

                           (i) Project Gross Cash Revenues during any
                  Calculation Period (or other period of calculation, if
                  applicable),

                  less

                           (ii) Actual payments by either Borrower or TOGA
                  during such Calculation Period (or other period of
                  calculation, if applicable), of

                  (A)      Lessor royalties and other burdens on production
                           existing as of the Closing Date with respect to the
                           Project Properties and Royalties;

                  (B)      Direct Taxes with respect to the Project Properties;

                  (C)      Coupon Interest on the Notes (reduced by payments of
                           coupon interest received with respect to the
                           Participant Loans) and payment of other Obligations
                           under the Loan Documents (other than Principal
                           Payments or payments of Late Payment Interest); and

                  (D)      Approved LOE, Approved G&A Costs, Approved Capital
                           Expenditures and Approved Third Party Costs incurred
                           in connection with the Project to the extent and only
                           to the extent such amounts exceed (and are not funded
                           directly or indirectly by) the proceeds of Advances
                           (excluding Advances used to make Participant Loans)
                           and/or the $3,500,000 capital contribution to TOGA
                           pursuant to Section 3.1(a)(xv).

         plus

         (2) Net TOGA Non-Project Cash Flow.

                  "APPROVED" means approved in writing by the Agent.

                                       3
<PAGE>   8

                  "APPROVED CAPITAL EXPENDITURES" means, for any period, Capital
Expenditures made or to be made by or on behalf of TOGA which (i) are included
in the Approved Plan of Development or (ii) otherwise Approved specifically as
"Approved Capital Expenditures" by Agent in its sole and absolute discretion.

                  "APPROVED G&A COSTS" means G&A Costs Approved specifically as
Approved G&A Costs (rather than Permitted G&A Costs) by Agent in its sole and
absolute discretion. The Approved G&A Costs will be $0 per annum until otherwise
approved by the Agent.

                  "APPROVED PLAN OF DEVELOPMENT" means TOGA's plan of
development for the Subject Properties that describes, among other things: (i)
the expenditures and improvements necessary to develop the Project Properties,
(ii) the timetable for such development, and (iii) the sources of capital
(including but not limited to the Advances) to be used for such development, all
as revised and Approved annually by December 1 of each year.

                  "AUSTRALIAN CHARGE DOCUMENT" means that Fixed and Floating
Charge between TOGA and Collateral Agent in substantially the form attached
hereto as Exhibit A.

                  "AUSTRALIAN WITHHOLDING TAXES" means Australian withholding
tax on amounts paid pursuant to this Agreement, the other Loan Documents or the
Project Documents under applicable Australian Governmental Rules.

                  "BANK DEBT" means the Debt owed by Borrower to U.S. Bank N.A.
under the Revolving Credit Agreement between Central Bank National Association,
TOGA, Borrower and Tipperary Petroleum Company dated March 30, 1992, as amended
as of the date thereof.

                  "BORROWER" has the meaning given in the preamble hereto.

                  "BORROWER/TOGC COLLATERAL ACCOUNT" means that certain lockbox
account established with a bank Approved by Agent in its sole discretion
pursuant to the Borrower/TOGC Collateral Account Agreement, or any other lockbox
account established pursuant to a replacement Collateral Account Agreement.

                  "BORROWER/TOGC COLLATERAL ACCOUNT AGREEMENT" means that
certain Collateral Account Agreement among Borrower, TOGA, the Lenders and a
bank Approved by Agent in its sole discretion, as amended from time to time or
as replaced by any other Collateral Account Agreement from time to time.

                  "BUSINESS DAY" means a day, other than a Saturday, Sunday or
legal holiday on which commercial banks are authorized or obligated by law or
executive order to close in either the City of New York, State of New York,
U.S.A. or the City of Brisbane, Queensland, Australia.

                  "CALCULATION PERIOD" means a three month period consisting of
any December through February, any March through May, any June through August,
and any September through November.

                                       4
<PAGE>   9

                  "CALENDAR MONTH" means any of January, February, March, April,
May, June, July, August, September, October, November or December.

                  "CALENDAR QUARTER" means a three Calendar Month period ending
on March 31, June 30, September 30 or December 31 of any year.

                  "CALENDAR YEAR" means a twelve Calendar Month period ending on
December 31 of any year.

                  "CAPITAL EXPENDITURES" shall mean, for any period,
expenditures made or to be made for the drilling and completion of any wells on
the properties in the Collateral, including new drilling, completion, production
facilities, lifting equipment, gathering systems, workovers, redrilling
recompletions and stimulation or other similar types of oil and gas field
operations.

                  "CHANGE IN CONTROL" means with respect to TOGA, Borrower no
longer owns, directly or indirectly, at least seventy percent (70%) of the
issued and outstanding voting equity interests, on a fully diluted basis of TOGA
and at least (70%) of the issued and outstanding non-voting equity interests, on
a fully diluted basis of TOGA.

                  "CLOSING" or "CLOSING DATE" means the date hereof.

                  "COLLATERAL" means all Property of any kind which is subject
to a Lien in favor of Holders or Collateral Agent or which, under the terms of
any Security Document, is purported or intended to be subject to such a Lien.

                  "COLLATERAL ACCOUNTS" means the Borrower/TOGC Collateral
Account, the TOGA Dollar Collateral Account and the TOGA Australian Collateral
Account.

                  "COLLATERAL ACCOUNT AGREEMENTS" means the Borrower/TOGC
Collateral Account Agreement, the TOGA Dollar Collateral Account Agreement and
the TOGA Australian Collateral Account Agreement each in substantially the form
attached hereto as Exhibit B, as may be modified in the sole and absolute
discretion of the Agent.

                  "COLLATERAL AGENT" has the meaning given in Section 6.4(b).

                  "COLLATERAL PROPERTIES" has the meaning given in Section
4.1(t).

                  "COMET RIDGE PROJECT" means the exploration and development
for the recovery of, and production of Hydrocarbons from lands originally
covered by Authority To Prospect Number 526P, including but not limited to all
Property, leases and other interests in connection with such land whether
acquired by assignment or by operation of the Project JOA due to
non-participation of certain parties thereto.

                  "COMMISSION" means the United States Securities and Exchange
Commission.

                  "COMMITMENT PERIOD" means the period from and including the
date hereof until the Funding Expiry Date.

                                       5
<PAGE>   10

                  "COUPON INTEREST" has the meaning given in Section 2.5.

                  "COVERAGE DEFAULT" means that the Coverage Ratio is less than
125%.

                  "COVERAGE DEFICIENCY" means that the Coverage Ratio is less
than 150%.

                  "COVERAGE RATIO" has the meaning given in Section 5.3.

                  "DEBT" means, as to any Person at any date, all or any,
indebtedness, liabilities and obligations of such Person, whether matured or
unmatured, liquidated or unliquidated, primary or secondary, direct or indirect,
absolute, fixed or contingent, and whether or not required to be considered
pursuant to GAAP and includes indebtedness, liabilities or obligations
guaranteed by such Person.

                  "DEDICATION RATE" means 80%, provided that the Dedication Rate
will automatically increase to 100% whenever (a) an Event of Default exists, or
(b) a Coverage Deficiency occurs and Borrower does not cure such Coverage
Deficiency within one month thereafter.

                  "DEFAULT" means any Coverage Default, any Event of Default,
and any default, event or condition which would, with the giving of any
requisite notices and the passage of any requisite periods of time, constitute
an Event of Default without regard to whether such required notices have been
given or such required grace periods have expired.

                  "DIRECT TAXES" means production, severance, ad valorem, excise
or other taxes or governmental charges or assessments on (i) the Eligible Proved
Properties, (ii) the production therefrom or (iii) the proceeds of such
production, but excluding any income or franchise taxes.

                  "DISCLOSURE SCHEDULE" means (i) Schedule 1 and (ii) any
documents listed on such schedule and expressly incorporated therein by
reference, so long as Borrower or TOGA has heretofore delivered true and correct
copies of such documents to the Lenders. Insofar as any representations and
warranties made herein are incorporated by reference or otherwise remade in Loan
Documents delivered as of a date after the date hereof, the term "Disclosure
Schedule" shall in such representations and warranties be deemed to refer as
well to all other documents which Borrower or TOGA has at the time in question
delivered to the Lenders in the manner prescribed for the delivery of notices in
Section 8.3 if and only if Borrower or TOGA shall have delivered to the Lenders
a written notice expressly stating that the same shall be added to and become a
part of the "Disclosure Schedule."

                  "DOLLARS" or "$" means the lawful and official currency of the
United States of America.

                  "ELIGIBLE PROVED PROPERTY" means an oil and gas property which
at the particular time in question (i) is either owned by TOGA or a Comet Ridge
Participant and subject to the enforceable contract or other rights of TOGA or a
Comet Ridge Participant under the Project JOA which entitle it to its
proportional share of Hydrocarbon production therefrom; (ii) is subject to
registered Australian Charge Documents and filed Security Documents or to
registered and filed Participant Loan Documents in each case which create
perfected first security interests in

                                       6
<PAGE>   11

such property or rights in favor of Collateral Agent; (iii) is not subject to
forfeiture under the Project JOA or any other Project Documents; (iv) is not
subject to any Prohibited Liens; and (v) is the subject of favorable title
opinions or other assurance to Lenders from legal counsel acceptable to Agent,
(A) based upon abstract or record examinations to dates acceptable to Agent, (B)
stating or advising that TOGA or a Comet Ridge Participant, as the case may be,
or the source of title of TOGA or a Comet Ridge Participant, has good and
marketable title to such property and that it is subject to no Prohibited Liens,
and (C) covering such other matters as Agent may reasonably request.

                  "ENGINEERING REPORT" means (i) the Initial Engineering Report
and (ii) any engineering report to be delivered to the Lenders pursuant to
Section 5.1(b)(vii).

                  "ENVIRONMENTAL LAWS" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
Governmental Rules relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes into the environment
including ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.

                  "ENVIRONMENTAL REPORT" means an environmental report that
satisfies the same terms and conditions as the Initial Environmental Report.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, together with all rules and regulations
promulgated with respect thereto.

                  "ERISA PLAN" means any pension benefit plan subject to Title
IV of ERISA maintained by any Related Person or any Affiliate thereof with
respect to which Borrower has any fixed or contingent liability.

                  "EVENT OF DEFAULT" has the meaning given in Section 7.1.

                  "EXCESS ANCF" means, with respect to a period, the positive
difference of (i) ANCF for that period, less (ii) the Principal Payment for such
period.

                   "FUNDED AMOUNT" means, as of any date of calculation thereof
the aggregate original principal amount of all Advances made as of such date.

                  "FUNDING EXPIRY DATE" means the earliest to occur of:

                           an Event of Default;

                           March 31, 2001; or

                           a Coverage Deficiency.

                                       7
<PAGE>   12

                  "GAAP" means, with respect to Borrower and TOGA and any
Related Person domiciled in the United States, those generally accepted
accounting principles and practices which are recognized as such by the
Financial Accounting Standards Board (or any generally recognized successor) in
the United States.

                  "G&A COSTS" means all overhead and administrative costs paid
by or on behalf of TOGA.

                  "GOVERNMENTAL APPROVAL" means any authorization, consent,
decree, permit, privilege, approval, certificate, license, lease, ruling,
permit, waiver, exemption, filing, registration or notice by or with any
Governmental Person necessary for the maintenance and operation of the Project,
the ongoing operation of the Borrower or TOGA and the execution of and
performance of the Borrower's and TOGA's obligations under the Loan Documents.

                  "GOVERNMENTAL PERSON" means for any country, such country and
its government and any international, national (Federal or foreign), state or
local government, any political subdivision or any governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
corporation or commission, court, agency, body or entity under the direct or
indirect control of such country.

                  "GOVERNMENTAL RULE" means:

                           (i) any statute, constitutional provision, law, rule,
         regulation, ordinance, order, code, judgment, decree, directive,
         guideline, permit or policy by a Governmental Person; or

                           (ii) any similar form of decision, interpretation or
         administration by a Governmental Person having the force of law of the
         foregoing in clause (i) above, whether in effect as the date of this
         Agreement or thereafter and in each case as amended (including without
         limitation, all Environmental Laws and any of the foregoing pertaining
         to land use or zoning restrictions).

                  "GROSS PROCEEDS" shall have the meaning ascribed thereto in
the Royalty Agreement.

                  "GUARANTEE AGREEMENT" means that certain Guarantee Agreement
in substantially the same form as Exhibit C among TOGA, Agent and Collateral
Agent.

                  "HAZARDOUS MATERIALS" means any substances which are regulated
or could lead to liability under any Environmental Law, whether as pollutants,
contaminants, or chemicals, or as industrial, toxic or hazardous substances or
wastes, or otherwise.

                  "HIGHEST LAWFUL RATE" means the maximum non-usurious rate of
interest that the Lenders or Holders are permitted under applicable law to
contract for, take, charge, or receive with respect to the Obligation in
question.

                  "HOLDERS" means the holders of the Notes from time to time.

                                       8
<PAGE>   13

                  "HYDROCARBONS" shall have the meaning ascribed thereto in the
Royalty Agreement.

                  "INDEMNITORS" means, collectively, Borrower, TOGA and all
subsidiaries of TOGA, if any.

                  "INDEPENDENT ENGINEERING REPORT" means any Engineering Report
prepared by an Independent Engineer.

                  "INDEPENDENT ENGINEERS" means S. A. Holditch & Associates or
other independent petroleum reserve engineers acceptable to both Borrower and
Agent.

                  "INITIAL AMORTIZATION DATE" means the first Quarterly Payment
Date to occur after Closing.

                  "INITIAL ENGINEERING REPORT" means the engineering report
dated October 29, 1999 prepared by S.A. Holditch & Associates evaluating the
Subject Properties.

                  "INITIAL ENVIRONMENTAL REPORT" has the meaning given thereto
in Section 3.1(x).

                  "INITIAL FINANCIAL STATEMENTS" means the unaudited financial
statements of Borrower and TOGA dated as of March 31, 2000, including the notes
thereto.

                  "INITIAL FUNDING DATE" means the date on which the Lenders
fund the Initial Loan Advance pursuant to the provisions of Section 2.1.

                  "INITIAL LOAN ADVANCE" has the meaning given in Section 2.1.

                  "INTER-COMPANY DEBT" means any Debt i) owed by TOGA to
Borrower, ii) owed by TOGA to TOGC or iii) owed by TOGC to Borrower in each case
whether or not such Debt is evidenced by a promissory note.

                  "JOA PROPERTY" means the Authority to Prospect 526P issued
under the Petroleum Act 1923 (Qld) and any tenement or other land to which the
Project JOA applies.

                  "LANDS" has the meaning given in Section 5.1(m).

                  "LATE PAYMENT RATE" means, at the time in question, the lesser
of (i) fourteen percent (14%) per annum or (ii) the Highest Lawful Rate.

                  "LATE PAYMENT RATE INTEREST" means any interest accrued at the
Late Payment Rate.

                  "LENDERS" means the entities set forth on Schedule 2 attached
hereto which have executed a counterpart hereof.

                  "LIEN" means, with respect to any Property, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such Property or which allows him to have such Debt

                                       9
<PAGE>   14

satisfied out of such Property prior to the general creditors of any owner
thereof, including any lien, mortgage, security interest, pledge, deposit,
production payment, rights of a vendor under any title retention or conditional
sale agreement or lease substantially equivalent thereto, right of recoupment
under a gas balancing agreement, tax lien, mechanic's or materialman's lien, or
any other charge or encumbrance for security purposes, whether arising by law or
agreement or otherwise, but excluding any right of offset which arises without
agreement in the ordinary course of business. "Lien" also means any filed
financing statement, any registration of a pledge (such as with an issuer of
unregistered securities), or any other arrangement or action which would serve
to perfect a Lien described in the preceding sentence, regardless of whether
such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists.

                  "LOANS" means the loans contemplated hereby.

                  "LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents, the Royalty Agreement, the Guarantee Agreement and all other
agreements, certificates, documents, instruments and writings at any time
delivered in connection with the Loans (exclusive of the term sheets, commitment
letters, correspondence and similar documents used in the negotiation hereof,
except to the extent the same contain information about Borrower or its
Affiliates or their properties, business or prospects and such information is
the subject of a written representation or certificate upon which the Lenders
shall rely).

                  "LOE" means leasehold operating expenses and other field level
or lease level charges for operations on the properties of TOGA included within
the Collateral including overhead charges of a third party operator under the
Project JOA.

                  "MANAGEMENT FEES" shall mean management fees payable pursuant
to the TOGA-Borrower Management Agreement.

                  "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on any of the following (determined, with respect to any event, occurrence,
circumstance or condition by reference to the situation which would have been in
effect without the occurrence of such event, occurrence, circumstance or
condition):

                           (a) the Property, the Project, the business,
         operations, condition (financial or otherwise), liabilities or
         capitalization of Borrower or any Related Persons taken as a whole,
         which adversely affects the ability of Borrower or the Related Persons
         to perform in a timely manner its and their material obligations under
         any Loan Document and any Project Document;

                           (b) the validity or enforceability of any of the Loan
         Documents and Project Documents;

                           (c) the availability of any material Governmental
         Approval (in whole or in material part) as shall then or thereafter be
         necessary to be obtained under applicable Governmental Rules in
         connection with the development, financing, construction, operation,
         expansion and ownership of the Project which adversely affects

                                       10
<PAGE>   15

         the ability of Borrower and the Related Persons to perform its and
         their material obligations under any Loan Document or any Project
         Document;

                           (d) the validity or enforceability of any of the
         material rights, remedies, powers and privileges of any Lender, Holder,
         Agent or Collateral Agent under the Loan Documents; or

                           (e) the validity or enforceability of the Liens on
         any material item of Collateral under any of the Security Documents.

                  "MATURITY DATE" means March 30, 2006.

                  "MODIFIED NPV10" means the sum of:

                           (i) with respect to any Proved Developed Producing
         Reserves attributable to the Eligible Proved Properties, NPV10 of a
         percentage between 90% and 100% of such Reserves, as such percentage is
         chosen by Agent in its sole and absolute discretion; plus

                           (ii) with respect to any Proved Developed
         Non-Producing Reserves attributable to the Eligible Proved Properties,
         NPV10 of a percentage between 70% and 90% of such Reserves, as such
         percentage is chosen by Agent in its sole and absolute discretion; plus

                           (iii) with respect to any Proved Undeveloped Reserves
         attributable to the Eligible Proved Properties, NPV10 of a percentage
         between 70% and 90% of such Reserves, as such percentage is chosen by
         Agent in its sole and absolute discretion;

         provided, however, that the Modified NPV10 for any particular Proved
         Developed Non-Producing Reserves or Proved Undeveloped Reserves shall
         be zero (0) unless capital expenditures for the development of such
         Reserves, in at least the amounts required pursuant to the most recent
         Engineering Report, have been scheduled and such capital is reasonably
         expected to be available from Advances or as a deduction from ANCF as
         Approved Capital Expenditures.

                  "NET TOGA NON-PROJECT CASH FLOW" means the positive difference
of:

                           (i) Non-Project TOGA Gross Cash Revenues during any
         Calculation Period (or other period of calculation, if applicable),

         less

                           (ii) Actual payments by TOGA during such Calculation
         Period (or other period of calculation, if applicable), of

                  (A)      Lessor royalties and other burdens on production
                           payable to parties other than Affiliates of Borrower
                           with respect to the Non-Project Properties and
                           Royalties;

                                       11
<PAGE>   16

                  (B)      Direct Taxes with respect to the Non-Project
                           Properties;

                  (C)      Permitted LOE, Permitted G&A Costs (excluding any
                           Management Fees), Permitted Capital Expenditures and
                           Permitted Third Party Costs, in each case, incurred
                           in connection with the Non-Project Properties to the
                           extent, and only to the extent, not funded by either
                           capital contributions or advances of Inter-company
                           Debt to TOGA.

                  "NON-PROJECT PROPERTIES" means all Properties of TOGA that are
not Project Properties.

                  "NON-PROJECT TOGA GROSS CASH REVENUES" means all cash and
non-monetary revenues and receipts (excluding accounts receivable and other
accruals) received by or on behalf of TOGA (without duplication) from or in any
way relating to the Non-Project Properties or by or on behalf of TOGA from any
other source, including without limitation interest or other earnings received
in respect of all invested funds and insurance proceeds but excluding cash
receipts from (a) sales of any portion of the Collateral approved by Agent which
are used to make a mandatory prepayment of principal pursuant to Section 2.9,
(b) an Approved refinancing of the Loans which are used to make a mandatory
prepayment of principal pursuant to Section 2.9(b)(ii), and (c) insurance
proceeds necessary and used to replace or repair Non-Project assets.

                  "NOTES" has the meaning given in Section 2.2.

                  "NPV10" means with respect to any Proved Reserves expected to
be produced from the Eligible Proved Properties, the net present value of the
future net revenues expected to accrue to TOGA's interests in such Reserves
during the remaining expected economic lives of such Reserves, discounted at 10%
per annum. Each calculation of such expected future net revenues shall be made
as of the date when requested in accordance with the then existing standards of
the Society of Petroleum Engineers, provided that in any event:

                           (i) appropriate deductions shall be made for (A)
         Direct Taxes and existing burdens that are Permitted Liens (excluding,
         however, the Royalty), (B) LOE, (C) Third Party Costs, and (D) Capital
         Expenditures (including plugging and abandonment costs), all consistent
         with the most recent Engineering Report; and

                           (ii) the pricing assumptions used in determining
         NPV10 for any particular Proved Reserves shall be:

                                (A) the contract price, if any, during the term
                  of any written oil and gas sales contract with respect to such
                  Proved Reserves between Borrower or TOGA and unrelated
                  Persons; or

                                (B) if no sales contract exists:

                                    (I)      for volumes of oil and gas swapped
                                             or hedged with investment grade
                                             counter parties, the hedged price
                                             net of any costs, expenses or
                                             deductions relating thereto; and

                                       12
<PAGE>   17

                                    (II)     for "naked" or long unhedged
                                             volumes, the lower of the last
                                             twelve (12)-month average of prices
                                             actually received or the last six
                                             (6)-month average of prices
                                             actually received.

                  "OBLIGATIONS" means the sum of all Debt from time to time
owing by Related Persons to the Holders, the Lenders, Collateral Agent or Agent
under or pursuant to any of the Loan Documents. "OBLIGATION" means any part of
the Obligations.

                  "OWNED PROPERTIES" means TOGA's interest in Authorities to
Prospect 655P and 675P issued under the Petroleum Act 1923 (Qld) and any other
interest which TOGA has in and which is intended to be used for the purpose of
exploration or extraction of Hydrocarbons.

                  "PARTICIPANT LOANS" shall have the meaning given hereto in
Section 2.4(c).

                  "PARTICIPANT LOAN DOCUMENTS" shall have the meaning given
hereto in Section 2.4(c).

                  "PARTICIPANT ROYALTY DOCUMENTS" shall have the meaning given
hereto in Section 2.4(c).

                  "PERMITTED BORROWER PAYMENTS" means any payment made by TOGA
to Borrower or TOGA whether as a distribution, as a payment of Approved
Management Fees or otherwise, which shall be used by Borrower for the payment of
the Obligations, provided, however, that no payment shall be a Permitted
Borrower Payment if it shall have the effect of reducing the outstanding
Inter-company Debt of TOGA to an amount less than an amount Approved by the
Agent.

                  "PERMITTED CAPITAL EXPENDITURES" means, for any period,
Approved Capital Expenditures and Capital Expenditures made or to be made by or
on behalf of TOGA which are funded by either capital contributions or advances
of Inter-company Debt to TOGA from Borrower or TOGC including such contributions
or advances by Borrower using proceeds of any Advance.

                  "PERMITTED DEBT" means, without duplication:

                           (i) Obligations owing to the Lenders, Holders, Agent
         or Collateral Agent created pursuant to the Loan Documents;

                           (ii) liabilities for taxes, assessments, governmental
         charges or levies which are being contested in good faith with cash
         reserves established pursuant to GAAP;

                           (iii) tax liabilities of TOGA, if any, arising as a
         result of the filing of TOGA's tax return;

                                       13
<PAGE>   18

                           Inter-company Debt which is (a) pledged to the
         Collateral Agent pursuant to the Pledge and Security Agreement and (b)
         subordinated to the Obligations in a manner acceptable to Agent; and

                           Currency hedging contracts relating to the net cash
         flows from TOGA's oil and gas operations at any time not to exceed the
         projected production revenues over the immediately following twelve
         (12) month period.

                  "PERMITTED G&A COSTS" means G&A Costs which (i) are Approved
Management Fees, or (ii) shall not exceed such amounts set forth in an Approved
operating budget of TOGA or (iii) shall be Approved by Agent in its sole and
absolute discretion.

                  "PERMITTED INVESTMENTS" means investments:

                           (i) in open market commercial paper, maturing within
         270 days after acquisition thereof, which at the time of investment has
         the highest or second highest credit rating given by either Standard &
         Poor's Corporation or Moody's Investors Service, Inc.;

                           (ii) in marketable obligations, maturing within
         twelve (12) months after acquisition thereof, issued or unconditionally
         guaranteed by the United States of America or an instrumentality or
         agency thereof and entitled to the full faith and credit of the United
         States of America;

                           (iii) in demand deposits, time deposits or other
         "money market instruments" (including certificates of deposit) maturing
         within twelve (12) months from the date of deposit thereof, with any
         office of a domestic office of any national or state bank or trust
         company which is organized under the laws of the United States of
         America or any state therein, which has capital, surplus and undivided
         profits of at least $500,000,000, and whose certificates of deposit
         have at least the third highest credit rating given by either Standard
         & Poor's Corporation or Moody's Investors Service, Inc.; or

                           (iv) in repurchase agreements entered into with any
         bank or trust company organized under the laws of the United States of
         America or any State thereof and having capital and surplus in an
         aggregate amount not less than $500,000,000 relating to United States
         of America government obligations.

                  "PERMITTED LIENS" means:

                           (i) deposits or pledges (but not other Liens) to
         secure the payment of worker's compensation, unemployment insurance or
         other social security benefits or obligations, or public or statutory
         obligations of a like general nature incurred in the ordinary course of
         business;

                           (ii) Liens securing surety or appeal bonds, bid or
         performance bonds or other obligations of a like general nature
         incurred in the ordinary course of business if such Liens (A) are
         either approved by Agent or reasonably necessary to obtain the bonds,

                                       14
<PAGE>   19

         (B) secure obligations in an aggregate amount not to exceed $500,000 at
         any time, and (C) do not constitute Liens on any of Borrower's
         interests in the Project;

                           (iii) zoning restrictions, easements, licenses, or
         restrictions on the use of real property which do not materially impair
         the use of such property in the operation of the business of Borrower,
         or the value of such property;

                           (iv) inchoate liens arising under applicable
         Governmental Rules to secure current service pension liabilities as
         they are incurred under the provisions of employee benefits plans from
         time to time in effect;

                           (v) state and municipal liens for personal property
         taxes where no enforcement or execution proceedings have been taken in
         respect thereof, and provided same do not exceed $100,000 in the
         aggregate at any time;

                           (vi) the rights of any lessors under any leases
         capitalized in accordance with GAAP which constitute Permitted Debt;

                           (vii) Liens arising by operation of any Governmental
         Rule in connection with trade debt constituting Permitted Debt so long
         as the same are junior and subordinate to the Lien of the Security
         Documents; or

                           (viii)   Liens arising under the Project JOA.

                  "PERMITTED LOE" means LOE relating to Non-Project Properties
to the extent, and only to the extent, funded from Non-Project TOGA Gross Cash
Revenues or capital contributions or advances of Inter-company Debt.

                  "PERMITTED MANAGEMENT FEES" means the Management Fees paid by
TOGA to Borrower pursuant to the Management Agreement all as Approved by Agent.

                  "PERMITTED THIRD PARTY COSTS" means Third Party Costs to the
extent, and only to the extent, funded from Non-Project TOGA Gross Cash Revenues
or capital contributions or advances of Inter-company Debt.

                  "PERSON" means an individual, corporation, partnership,
association, joint stock company, trust or trustee thereof, estate or executor
thereof, unincorporated organization or joint venture, court or governmental
unit or any agency or subdivision thereof, or any other legally recognizable
entity.

                  "PLEDGE AND SECURITY AGREEMENT" means that certain Pledge and
Security Agreement substantially in the form of Exhibit D between Borrower and
Collateral Agent.

                  "PRINCIPAL PAYMENT" shall have the meaning given thereto in
Section 2.8.

                  "PROHIBITED LIEN" means any Lien not expressly allowed under
Section 5.2(b).

                                       15
<PAGE>   20

                  "PROJECT" means the Comet Ridge Project and all related assets
and facilities whether now in existence or hereinafter acquired, including any
other properties funded directly or indirectly with the proceeds of any
Advances.

                  "PROJECT DOCUMENTS" shall mean each agreement or document
necessary for the development, financing, construction operation and ownership
of the Project and shall in any event include without limitation the Project
JOA, Government Approvals, the leases, contracts, or other documents
establishing or evidencing the Collateral or Secured Properties and the
insurance policies required under Section 3.1 of the Loan Agreement.

                  "PROJECT GROSS CASH REVENUES" means all cash and non-monetary
revenues and receipts (excluding accounts receivable and other accruals)
received by or on behalf of TOGA, TOGC or Borrower (without duplication) from or
in any way relating to the Project, including without limitation interest or
other earnings received in respect of all invested funds and insurance proceeds
but excluding cash receipts from (a) sales of any portion of the Collateral
approved by Agent which are used to make a mandatory prepayment of principal
pursuant to Section 2.9, (b) an Approved refinancing of the Loans which are used
to make a mandatory prepayment of principal pursuant to Section 2.9(b)(ii), (c)
insurance proceeds necessary and used to replace or repair Project assets, (d)
Advances, (e) Inter-company Debt payments and (f) payments with respect to
Participant Loans.

                  "PROJECT PROPERTIES" means the Eligible Proved Properties
within the Project.

                  "PROJECT JOA" means that certain Operating Agreement between
Tri-Star, TOGA, and the Comet Ridge Participants dated May 15, 1992, as amended
from time to time.

                  "PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed.

                  "PRO RATA SHARE" means, with respect to each Holder, the
percentage set forth opposite such Holder's name on Schedule 3; provided,
however, that upon any transfer, change or re-issuance of Notes, the Pro Rata
Share for each Holder will be recalculated at the time of such transfer, change
or re-issuance based upon the outstanding principal amounts of the Notes held by
such Holder.

                  "PROVED DEVELOPED NON-PRODUCING RESERVES" are Proved Reserves
that are Shut-in and Behind-pipe Reserves. "SHUT-IN RESERVES" are those expected
to be recovered from completion intervals open at the time of the estimate, but
which had not started producing, or were shut in for market conditions or
pipeline connections, or were not capable of production for mechanical reasons
(including the requirement for installation or restaging of compression), and
the time when sales will start is uncertain. "BEHIND-PIPE RESERVES" are those
expected to be recovered from zones behind casing in existing wells, which will
require additional completion work or a future completion prior to the start of
production.

                  "PROVED DEVELOPED PRODUCING RESERVES" means Proved Reserves
that are expected to be recovered from completion intervals open and producing
at the time of the estimate.

                                       16
<PAGE>   21

                  "PROVED DEVELOPED RESERVES" means Proved Developed Producing
Reserves and Proved Developed Non-Producing Reserves.

                  "PROVED RESERVES" means those Reserves which are "proved oil
and gas reserves" within the meaning of Rule 4-10 of Regulation S-X, 17 C.F.R.
Section 210.4-10 of the Commission.

                  "PROVED UNDEVELOPED RESERVES" means Proved Reserves that are
assigned to undrilled locations which satisfy the following conditions: (i) the
locations are direct offsets to wells which have indicated commercial production
in the objective formation, (ii) it is reasonably certain that the locations are
within the known proved productive limits of the objective formation, (iii) the
locations conform to existing well spacing regulations, if any, and (iv) it is
reasonably certain that the locations will be developed. Reserves for other
undrilled locations are classified as Proved Undeveloped Reserves only in those
cases where interpretations of data from wells indicate that the objective
formation is laterally continuous and contains commercially recoverable
hydrocarbons at locations beyond direct offsets.

                  "QUARTERLY PAYMENT DATE" means the penultimate Business Day of
each Calendar Quarter.

                  "RELATED PERSON" means Borrower, TOGA, TOGC, any Indemnitor,
and any Subsidiary of Borrower or TOGA.

                  "REPAYMENT DATE" means the date the Obligations, other than
Royalties, are repaid in full.

                  "REQUEST FOR ADVANCE" means a written or telephonic request,
or a written confirmation, made by Borrower which meets the requirements of
Section 2.3.

                  "RESERVES" means estimated volumes of crude oil, condensate,
natural gas, natural gas liquids, and associated substances anticipated to be
commercially recoverable from known accumulations from a given date forward,
under then existing economic conditions, by established operating practices, and
under current government regulations. Reserve estimates are based on
interpretation of geologic or engineering data available at the time of the
estimate. Reserves do not include volumes of crude oil, condensate, natural gas
(including storage gas), or natural gas liquids being held in inventory. If
required for financial reporting, reserve estimates or other purposes, Reserves
may be reduced for on-site or processing losses.

                  "RESTRICTED DEBT" of any Person means Debt in any of the
following categories:

                           (i) Debt for borrowed money;

                           (ii) Debt constituting an obligation to pay the
         deferred purchase price of property or services;

                           (iii) Debt evidenced by a bond, debenture, note or
         similar instrument;

                                       17
<PAGE>   22

                           (iv) Debt which would under GAAP or, with respect to
         TOGA, GAAP or Australian generally accepted accounting principles be
         shown on such Person's balance sheet as a liability;

                           (vi) Debt constituting principal under leases
         capitalized in accordance with GAAP;

                           (vii) Debt arising under conditional sales or other
         title retention agreements;

                           (viii) Debt owing under direct or indirect guaranties
         of Debt of any other Person or constituting obligations to purchase or
         acquire or to otherwise protect or insure a creditor against loss in
         respect of Debt of any other Person (such as obligations under working
         capital maintenance agreements, agreements to keep-well, or agreements
         to purchase Debt, assets, goods, securities or services), but excluding
         endorsements in the ordinary course of business of negotiable
         instruments in the course of collection;

                           (ix) Debt with respect to letters of credit or
         applications or reimbursement agreements therefor; or

                           (x) Debt with respect to other obligations to deliver
         goods or services in consideration of advance payments therefor;

provided, however, that the term "Restricted Debt" of any Person shall not
include Debt that was incurred on ordinary trade terms and is owed by the Person
incurring the same to vendors, suppliers, or other Persons providing goods and
services for use by such Person in the ordinary course of its business which
relate to items included in or constituting Permitted Capital Expenditures,
Permitted LOE, Permitted Third Party Cost or Permitted G&A Costs unless such is
more than ninety (90) days past due.

                  "ROYALTY" means any overriding royalty granted or agreed to be
paid pursuant to any Royalty Agreement.

                  "ROYALTY AGREEMENT" shall mean that certain Overriding Royalty
Agreement dated as of even date herewith in substantially the same form attached
hereto as Exhibit E, as the same may be amended or supplemented from time to
time.

                  "ROYALTY AGREEMENTS" means the Royalty Agreement and any
Supplement to Royalty Agreement and any Royalty Conveyance (as defined in the
Royalty Agreement), collectively, or individually as the context may so require.

                  "ROYALTY DETERMINATION DATE" means (i) if Agent or Lenders
shall exercise the right under Section 3.4 hereof to refuse to fund any Advance
or to terminate or cancel the obligation to make future Advances, the later of
(a) the date of disbursement of the last Advance to be funded or (b) the date of
completion of the last work comprising Approved Capital Expenditures deducted in
the calculation of ANCF, or (ii) in all other events, the Repayment Date.

                                       18
<PAGE>   23

                  "ROYALTY PAYEE" means the Payee as defined in the Royalty
Agreements.

                  "SECURITY AGREEMENT" means the Security Agreement
substantially in the form of Exhibit F between TOGA and Collateral Agent.

                  "SECURITY DOCUMENTS" means the Security Agreement, Australian
Charge Document, the Pledge and Security Agreement, the TOGC Security Agreement,
the Subordination Agreement, the financing statements, any other instruments
listed in the Security Schedule, and all other security agreements, deeds of
trust, mortgages, chattel mortgages, pledges, guaranties, financing statements,
continuation statements, extension agreements and other agreements or
instruments now, heretofore, or hereafter delivered by any Related Person to
Lenders, Holders or Collateral Agent in connection with this Agreement or any
transaction contemplated hereby to secure or guarantee the payment of any part
of the obligations or the performance of any Related Person's other duties and
obligations under the Loan Documents.

                  "SECURITY SCHEDULE" means Schedule 4.

                  "SCHEDULED MINIMUM PRINCIPAL PAYMENT" shall have the meaning
given hereto in Section 2.8(c)(ii).

                   "SPOT RATE" means in relation to the conversion of any amount
in a currency other than Dollars to the noon date spot rate of exchange
announced by the Federal Reserve Bank of New York on the Business Day
immediately prior to the date that the calculation or currency is to be made for
the conversion of the currency in question. Each determination of the Spot Rate
shall be made by the Agent and shall be conclusive absent manifest error.

                  "SUBJECT HYDROCARBONS" has the meaning given in the Royalty
Agreement.

                  "SUBJECT PROPERTIES" means, collectively, the oil and gas
leases, oil, gas and mineral leases, mineral leases, licenses, concessions,
authorities to prospect and other mineral interests and properties and the lands
covered thereby described in Exhibit A to the Overriding Royalty Agreement and
by reference to any Royalty Conveyance (as defined in the Overriding Royalty
Agreement).

                  "SUBORDINATION AGREEMENT" means the Subordination Agreement
among Borrower, TOGC and TAMCO substantially in the form attached hereto as
Exhibit H.

                  "SUBSIDIARY" of a specified Person means any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by the specified
Person, provided that associations, joint ventures or other relationships (i)
which are established pursuant to a standard form operating agreement or similar
agreement or which are partnerships for purposes of federal income taxation
only, (ii) which are not corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state law, and (iii) whose businesses are
limited to the exploration, development and operation of oil, gas or mineral
properties and interests owned directly by the parties in such associations,
joint ventures or relationships, shall not be deemed to be "Subsidiaries" of the
specified Person.

                                       19
<PAGE>   24

                  "SUPPLEMENT TO ROYALTY AGREEMENT" has the meaning given in
Section 5.1(l).

                  "TAXES" shall have the meaning given thereto in Section
5.1(h).

                  "TCW GOVERNING DOCUMENTS" shall have the meaning given thereto
in Section 6.4(d).

                  "TERMINATION EVENT" means:

                           (i) the occurrence with respect to any ERISA Plan of
         (A) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
         or (B) any other reportable event described in Section 4043(b) of ERISA
         other than a reportable event not subject to the provision for 30-day
         notice to the Pension Benefit Guarantee Corporation pursuant to a
         waiver by such corporation under Section 4043(a) of ERISA;

                           (ii) the withdrawal of any Related Person or of any
         Affiliate of any Related Person from an ERISA Plan during a plan year
         in which it was a "substantial employer" as defined in Section
         4001(a)(2) of ERISA;

                           (iii) the filing of a notice of intent to terminate
         any ERISA Plan or the treatment of any ERISA Plan amendment as a
         termination under Section 4041 of ERISA;

                           (iv) the institution of proceedings to terminate any
         ERISA Plan by the Pension Benefit Guarantee Corporation under Section
         4042 of ERISA; or

                           (v) any other event or condition which might
         constitute grounds under Section 4042 of ERISA for the termination of,
         or the appointment of a trustee to administer, any ERISA Plan.

                  "THIRD PARTY COSTS" means any costs paid to persons other than
Affiliates of Borrower for the transportation, processing, treating and
marketing of Subject Hydrocarbons.

                  "TOGA AUSTRALIAN COLLATERAL ACCOUNT" means that certain
lockbox account established with the Brisbane office of ANZ Bank pursuant to the
TOGA Australian Collateral Account Agreement, or any other lockbox account
established pursuant to a replacement Collateral Account Agreement.

                  "TOGA AUSTRALIAN COLLATERAL ACCOUNT AGREEMENT" means that
certain Collateral Account Agreement between Borrower, TOGA, the Lenders and ANZ
Bank, as amended from time to time or as replaced by any other Collateral
Account Agreement from time to time.

                  "TOGA-BORROWER MANAGEMENT AGREEMENT" means that certain
Services Agreement to be entered into between TOGA and Borrower in substantially
the form attached hereto as Exhibit I.

                  "TOGA DOLLAR COLLATERAL ACCOUNT" means that certain lockbox
account established with the Brisbane office of ANZ Bank pursuant to the TOGA
Dollar Collateral

                                       20
<PAGE>   25

Account Agreement, or any other lockbox account established pursuant to a
replacement Collateral Account Agreement.

                  "TOGA DOLLAR COLLATERAL ACCOUNT AGREEMENT" means that certain
Collateral Account Agreement between Borrower, TOGA, the Lenders and ANZ Bank,
as amended from time to time or as replaced by any other Collateral Account
Agreement from time to time.

                  "TOGC SECURITY AGREEMENT" means that certain Pledge and
Security Agreement between TOGC and Collateral Agent in substantially the form
attached hereto as Exhibit J.

                  "TOTAL MODIFIED NPV10" means the sum of the Modified NPV10's
for all Proved Developed Producing Reserves, Proved Developed Non-Producing
Reserves and Proved Un-Developed Reserves.

                  "TRI-STAR" has the meaning given in Section 4.1(t).

                  "TRI-STAR LITIGATION" means that certain litigation captioned
Tipperary v. Tri-Star, Case No. CV-42, 256 before the District Court of Midland
County, Texas, 238th Judicial District.

                  "TRUSTCO" means Trust Company of the West, a California trust
company.

                  "WORKING CAPITAL" has the meaning given in Section 5.2(k).

                  "YIELD ADJUSTMENT PAYMENT" has the meaning given in Section
2.11.

         Section 1.2 ACCOUNTING TERMS AND DETERMINATIONS.

                  (a) Except as otherwise expressly provided in this Agreement,
all accounting terms used in this Agreement (including the term "WORKING
CAPITAL") shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders,
Holders, Agent or Collateral Agent under this Agreement shall (unless otherwise
disclosed to the Lenders, Holders, Agent or Collateral Agent in writing at the
time of delivery in the manner described in subsection (b) below) be prepared in
accordance with GAAP applied on a basis consistent with those used in the
preparation of the latest financial statements furnished to the Lenders,
Holders, Agent or Collateral Agent under this Agreement (which, prior to the
delivery of the first audited financial statements under Section 5.1(b)(i),
shall mean the Initial Financial Statements). Except as otherwise expressly
provided in this Agreement, all calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided in this Agreement) be made by application of GAAP applied on a basis
consistent with those used in the preparation of the latest annual or quarterly
financial statements furnished to the Lenders, Holders, Agent or Collateral
Agent pursuant to Section 5.1(b)(i) or (ii).

                  (b) To enable the ready and consistent determination of
compliance with the covenants set forth in this Section 1.2 and Section 5.1,
Borrower will not change the last day of its fiscal year from September 30 of
each year, or the last days of the first three fiscal quarters in

                                       21
<PAGE>   26

each of its fiscal years from December 31, March 31 and June 30 of each year,
respectively, except with Agent's reasonable consent.

         Section 1.3 INTERPRETATION. In this Agreement, unless otherwise
indicated, the singular includes the plural and conversely; words importing one
gender include the others and neuter includes all genders; references to
statutes or regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending or replacing the statute or
regulation referred to; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible visible form; the
word "or" shall not be exclusive (i.e., shall be deemed to include "and/or");
the words "hereof," "herein" and "hereunder" and words of similar import refer
to this Agreement as a whole and not to any particular provision of this
Agreement; the Table of Contents and article and section headings and other
captions are for the purpose of reference only and do not limit or effect the
meaning of the terms and provisions hereof; the words "including," "includes"
and "include" shall be deemed a reference to such agreement and/or instrument
and shall be followed by the words "without limitation"; references to articles,
sections (or subdivisions of sections), exhibits, annexes or schedules are to
such parts of this Agreement; references to agreements and other contractual
instruments shall be deemed a reference to such agreement and/or instrument and
shall include all subsequent amendments, extensions and other modifications to
such instruments (without, however, limiting any prohibition on any such
amendments, extensions and other modifications by the terms of this Agreement);
and references to Persons include their respective permitted successors and
assigns and, in the case of Governmental Persons, Persons succeeding to their
respective functions and capacities.

                                   ARTICLE 2
                                     LOANS

         Section 2.1 LOAN ADVANCES.

                  (a) Subject to the terms and conditions hereof, the Lenders
agree on behalf of the Holders to make an initial advance to Borrower (the
"INITIAL LOAN ADVANCE") on the Initial Funding Date in the aggregate amount of
Six Million and 00/100 Dollars ($6,000,000).

                  (b) Subject to the terms and conditions precedent hereof,
including Section 3.3, the Lenders agree on behalf of the Holders to make
additional advances to Borrower (the "ADDITIONAL LOAN ADVANCES") from time to
time during the Commitment Period so long as the aggregate amount of the
Additional Loan Advances does not exceed Eleven Million and 00/100 Dollars
($11,000,000) and the aggregate amount of all Advances does not exceed Seventeen
Million and 00/100 Dollars ($17,000,000).

         Section 2.2 THE NOTES. Borrower's obligation to repay to the Lenders
the aggregate amount of the Advances, together with interest accruing in
connection therewith, shall be evidenced by senior secured promissory notes (the
"NOTES") made by Borrower in the form of Exhibit E with appropriate insertions,
each payable to the order of the Holders in the stated principal amounts set
forth on Schedule 3 (as the same may be revised, from time to time). All
Advances will be made under the Notes in proportion to their relative stated
principal amounts. The amount of principal owing on each Note at any given time
shall be such proportionate share

                                       22
<PAGE>   27

of the aggregate amount of the Advances theretofore made minus such
proportionate share of all payments of principal theretofore received by the
Holders on such Notes. Interest on the Notes shall accrue and be due and payable
as provided herein and therein. Amounts borrowed and repaid on the Notes may not
be re-borrowed hereunder.

         Section 2.3 REQUEST FOR ADVANCES.

                  (a) Borrower must give the Lenders at least fifteen (15) days
prior written notice (or telephonic notice promptly confirmed in writing by the
Lenders) of any requested Additional Loan Advance. Each such written notice (or
confirmation) must be made (i) if the Initial Loan Advance, in the form and
substance of the "Request for Initial Advance" in Exhibit L duly completed; and
(ii) if an Additional Loan Advance, in the form and substance of the "Request
for Additional Advance" in Exhibit M. Each such telephonic request shall be
deemed a representation, warranty, acknowledgment and agreement by Borrower as
to the matters which are to be set out in the written confirmation.

                  (b) If all conditions precedent to such Advance have been met,
the Lenders will, on the funding date specified in the Borrower's Request for
Advance or on the date such conditions precedent have been met, make such
Advance available to Borrower in immediately available funds.

         Section 2.4 USE OF PROCEEDS.

                  (a) Borrower shall use the proceeds from the Initial Loan
Advance for the sole purpose of capitalizing TOGA by means of either Approved
capital contributions or Approved advances of Inter-company Debt in order for
TOGA to:

                      (i) Refinance approximately $4,800,000 of existing Debt
                  owed by TOGA to Slough Estates USA Inc.; and

                      (ii) Use up to $1,200,000 for Approved Working Capital
                  purposes.

                  (b) Borrower shall use approximately $6,700,000 (or such
additional amount as may be deducted from the amounts in Section 2.4(c) due to
non consent of Persons among interests pursuant to the Project JOA relating to
the Project) of the proceeds from the Additional Loan Advances, which funds may
be drawn upon as set forth in this Section 2.4 and in Article 3, for the sole
purpose of capitalizing TOGA for the continued development of TOGA's interests
in the Project in accordance with the Approved Plan of Development.

                  (c) No more than $4,300,000 of the proceeds from Additional
Loan Advances may be used to make loans to third-party Persons owning interests
pursuant to the Project JOA ("COMET RIDGE PARTICIPANTS") in connection with the
continued development thereof or for other uses Approved by the Agent in its
sole and absolute discretion. All such loans to Comet Ridge Participants
(collectively, "PARTICIPANT LOANS") shall be made pursuant to loan documents in
terms consistent with the terms sheet attached hereto as Exhibit N (which shall
provide for the execution of royalty conveyances in substantially the form of
the Royalty Conveyances) and in form approved by Agent in its sole and absolute
discretion ( the "PARTICIPANT LOAN DOCUMENTS"). All such Participant Loans made
pursuant to this subsection

                                       23
<PAGE>   28

(c) shall be collaterally assigned to Collateral Agent as additional security
for the repayment of the Notes. Upon the full repayment of the Notes, Collateral
Agent shall release such security interest (excluding any security interests or
liens securing the payment of royalties agreed to be paid by such Comet Ridge
Participants) upon written request of the Borrower.

                  (d) In no event shall the funds from any Advance be used
directly or indirectly by any Person for personal, family, household or
agricultural purposes or for the purpose, whether immediate, incidental or
ultimate, of purchasing, acquiring or carrying any "margin stock" or any "margin
securities" (as such terms are defined respectively in Regulations U, G and X
promulgated by the Board of Governors of the Federal Reserve System) or to
extend credit to others directly or indirectly for the purpose of purchasing or
carrying any such margin stock or margin securities. Borrower represents and
warrants to the Lenders, Holders, Agent and Collateral Agent that Borrower is
not engaged principally, or as one of Borrower's important activities, in the
business of extending credit to others for the purpose of purchasing or carrying
such margin stock or margin securities.

         Section 2.5 COUPON INTEREST. Subject to modification pursuant to
Section 2.7, the Notes shall bear interest ("COUPON INTEREST") from and
including the dates of the Advances on the unpaid principal amount from time to
time outstanding at the rate of ten percent (10%) per annum.

         Section 2.6 ACCRUAL AND PAYMENT OF COUPON INTEREST. Coupon Interest
shall accrue on the Notes from and including the Initial Funding Date until
their repayment in full. For each Calendar Quarter (or part thereof) commencing
on or after the Initial Funding Date and ending on or before the Maturity Date,
Coupon Interest on the Notes shall be calculated for the entire such Calendar
Quarter in the manner provided in Section 2.7, but shall be due and payable on
the Quarterly Payment Date of such Calendar Quarter.

         Section 2.7 COMPUTATION OF INTEREST.

                  (a) Coupon Interest shall be computed on the Notes on the
basis of a 360-day year and on the actual number of days elapsed in any period
including the date of Advance but excluding the date by which the Holders are
deemed, pursuant to Section 2.10(a), to have received payment. Coupon Interest
on the Notes for each Calendar Quarter (or part thereof) ending on or before the
Maturity Date shall be computed as the sum of the daily interest for the
Calendar Quarter (or part thereof), taking into account the outstanding
principal balance of the Notes on each day of the period (where such balance on
any given day shall reflect any payment of principal credited on such date
pursuant to Section 2.10 hereof). For purposes of clarity, for purposes of
computing the Coupon Interest due and payable on the Quarterly Payment Date of
such Calendar Quarter, the daily interest for the period from and including the
Quarterly Payment Date through the end of the Calendar Quarter shall be based on
the outstanding principal balance after crediting all payments of principal
through the Quarterly Payment Date.

                  (b) Any principal or Coupon Interest payment due on the Notes
or any other monetary Obligation which is not paid when due, whether at stated
maturity, by notice of acceleration or otherwise, shall bear interest
(calculated in the manner set forth above) at the Late Payment Rate.

                                       24
<PAGE>   29

         Section 2.8 PAYMENT OF PRINCIPAL; QUARTERLY PAYMENTS.

                  (a) Borrower shall not be required to make payments of
principal on the Notes during the period commencing on the Initial Funding Date
and ending on the day before the Initial Amortization Date.

                  (b) The outstanding principal balance of the Notes shall be
due and payable in full on the Maturity Date.

                  (c) Commencing upon the first Quarterly Payment Date after the
Initial Amortization Date, and on every Quarterly Payment Date thereafter until
the Maturity Date, Borrower shall make a principal payment to Lenders on account
of the outstanding principal balance of the Notes (each, a "PRINCIPAL PAYMENT")
in an amount equal to the greater of:

                      (i) The sum of (A) the Dedication Rate multiplied by the
                  ANCF for the preceding Calculation Period plus (B) the amount
                  of all Principal Payments made during such Calculation Period
                  on the Participant Loans; or

                      (ii) The "SCHEDULED MINIMUM PRINCIPAL PAYMENT" applicable
                  on such Quarterly Payment Date, defined as the product of (A)
                  the unpaid principal balance on the Notes as of December 31,
                  2002 and (B) the percentage set forth below for the month and
                  year in which such Quarterly Payment Date occurs, rounded to
                  the next higher $1,000:

                         PERCENTAGES FOR COMPUTATION OF
                      SCHEDULED MINIMUM PRINCIPAL PAYMENTS

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
       YEAR              MARCH             JUNE            SEPTEMBER          DECEMBER          TOTAL
------------------- ----------------- ---------------- ------------------ ----------------- --------------
<S>                 <C>               <C>              <C>                <C>               <C>
       2000                0%               0%                0%                 0%

       2001                0%               0%                0%                 0%

       2002                0%               0%                0%                 0%

       2003                5%               5%                5%                 5%                   20%

       2004                9%               9%                9%                 9%                   36%

       2005               10%               10%               10%               10%                   40%

       2006            Remainder                                                                       4%
------------------- ----------------- ---------------- ------------------ ----------------- --------------
      Total                                                                                          100%
------------------- ----------------- ---------------- ------------------ ----------------- --------------
</TABLE>

                  (d) All payments of principal made by Borrower hereunder shall
be applied to the Notes to which such payments relate ratably among the Holders
of such Notes proportionately to their respective Pro Rata Shares. All
prepayments of principal made pursuant to Section 2.9 shall apply to principal
payments thereafter required in inverse order of their maturity.

                                       25
<PAGE>   30

         Section 2.9 PREPAYMENT.

                  (a) OPTIONAL PREPAYMENTS. In addition to the payments required
under Sections 2.6 and 2.8, Borrower may, from time to time, on or after October
1, 2000 through March 1, 2002, and upon ten (10) Business Days' prior written
notice to Lenders, prepay the Notes, in whole but not in part, so long as such
prepayment is accompanied by the payment of, and there shall be due and payable
upon any prepayment in full of principal during such period whether by optional
prepayment or mandatory prepayment pursuant to Section 2.9(b), a prepayment
premium (the "PREPAYMENT PREMIUM") equal to the product of the applicable
"PREPAYMENT PREMIUM PERCENTAGE" set forth below opposite the time period in
which the date of prepayment occurs multiplied by the principal amount prepaid:

<TABLE>
<CAPTION>
       -------------------------------------------------------------------------------------------------------
       DATE OF PREPAYMENT                                           PREPAYMENT PREMIUM PERCENTAGE
       ------------------------------------------------ ------------------------------------------------------
<S>                                                     <C>
       Prior to October 1, 2000                         No Prepayment Allowed
       ------------------------------------------------ ------------------------------------------------------
       October 1, 2000 to March 31, 2001                12.5%
       ------------------------------------------------ ------------------------------------------------------
       April 1, 2001 to June 30, 2001                   10%
       ------------------------------------------------ ------------------------------------------------------
       July 1, 2001 to September 30, 2001               7.5%
       ------------------------------------------------ ------------------------------------------------------
       October 1, 2001 to December 31, 2001             5%
       ------------------------------------------------ ------------------------------------------------------
       January 1, 2002 to February 28, 2002             2.5%
       ------------------------------------------------ ------------------------------------------------------
</TABLE>

         In addition to the payments required under Sections 2.6 and 2.8,
Borrower may, on or after March 1, 2002, from time to time and upon ten (10)
Business Days' prior written notice to Lenders, prepay the Notes, in whole or in
part, so long as each partial prepayment of principal on the Notes is greater
than or equal to $250,000. Each partial prepayment of principal shall be applied
to the Minimum Principal Payments due under the Notes in the inverse order of
their maturities.

         Each prepayment of principal under this Section 2.9 shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal prepaid pursuant to this Section 2.9 shall be in addition to, and
not in lieu of, all payments otherwise required to be paid under the Loan
Documents at the time of such prepayment.

         (b) MANDATORY PREPAYMENTS.

             (i) If the Agent Approves any request by TOGA to sell all or any
         portion of the Eligible Proved Properties (which approval shall be in
         Agent's sole and absolute discretion as to any Collateral comprising a
         portion of the Project but which approval shall not be withheld
         unreasonably as to any Collateral not comprising a portion of the
         Project, notwithstanding any other provision hereof, all sales proceeds
         must be applied to the prepayment of the Notes unless otherwise
         approved in writing by the Agent, which approval the Agent may withhold
         in its sole and absolute discretion.

             (ii) If Borrower refinances all or any portion of the Loans, which
         prior to October 1, 2000 shall be subject to receipt of Approval of the
         Agent

                                       26
<PAGE>   31

         which may be withheld in Lenders' sole and absolute discretion,
         notwithstanding any other provision hereof, all refinancing proceeds
         shall be applied to prepayment of the Scheduled Principal Payments in
         inverse order of their maturities.

             (iii) Borrower shall apply any Excess ANCF not used for additional
         development expenditures pursuant to the Approved Plan of Development
         within nine months after receipt to the prepayment of the Scheduled
         Principal Payment in inverse order of their maturities.

   Any mandatory prepayments made pursuant to this Section 2.9(b) shall be free
   from prepayment penalties.

                  (c) EFFECT ON ROYALTY. Under no circumstances shall the
Royalty be released in connection with any prepayment pursuant to subsection (a)
or (b) above.

         Section 2.10 GENERAL PAYMENT PROVISION.

                  (a) Borrower shall make each payment which Borrower owes under
any of the Loan Documents not later than 11:00 a.m., Los Angeles, California
time, on the date such payment becomes due and payable, in lawful money of the
United States of America, without set-off, deduction or counterclaim, and in
immediately available funds sent by wire transfer to the payment accounts set
forth on Schedule 5 (or to such other bank and accounts and pursuant to such
other directions as Holders may from time to time specify). Any payment received
by Holders after such time shall be deemed to have been made on the next
following Business Day. Should any such payment become due and payable on a day
other than a Business Day, the maturity of such payment shall be the preceding
Business Day. Each payment under a Loan Document shall be due and payable at the
place provided therein and, if no specific place of payment is provided, shall
be due and payable at the place of payment of the Notes. When the Holders
collect or receive money on account of the Obligations which is insufficient to
pay all Obligations then due and payable, the Holders may apply such money as
they elect to the various Obligations which are then due and payable.

                  (b) Any amount received by the Agent or Collateral Agent, or
any Holder, whether as a Coupon Interest payment or principal payment from or on
behalf of Borrower, shall be applied as follows in descending order of priority:

                      (i) to all costs and expenses (including reasonable
                  attorneys' fees and costs; costs of maintaining, preserving or
                  disposing of any Collateral; and costs of settlement) incurred
                  by the Lenders, Holders, Agent or Collateral Agent either
                  pursuant to Section 5.1(j) or in enforcing any Obligations of,
                  or in collecting any payments from, any obligor hereunder or
                  under the other Loan Documents;

                      (ii) to Obligations (other than principal or interest)
                  then due and owing the Lenders, Holders, Agent or Collateral
                  Agent under any of the Loan Documents;

                                       27
<PAGE>   32

                      (iii) to Late Payment Rate Interest which has accrued on
                  past due payments hereunder pursuant to Section 2.7(b);

                      (iv) to Coupon Interest that is currently due and payable
                  on the Notes pursuant to Sections 2.6 and 2.7(a);

                      (v) to the payment of past due principal on the Notes;

                      (vi) to payment of principal on the Notes currently due
                  and payable pursuant to Section 2.8; and

                      (vii) to the prepayment of principal under the Notes,
                  which prepayment shall be applied to future Scheduled Minimum
                  Principal Payments in inverse order of their maturities.

         Section 2.11 YIELD ADJUSTMENT PAYMENT. Concurrently with the funding of
the Initial Loan Advance, Borrower shall pay in immediately available funds to
Lenders a yield adjustment payment (the "YIELD ADJUSTMENT PAYMENT") in an amount
equal to One Hundred Twenty Thousand Dollars ($120,000).

         Section 2.12 COLLATERAL ACCOUNTS.

                  (a) ESTABLISHMENT OF COLLATERAL ACCOUNTS; RULES.

                      (i) Borrower shall establish and maintain at its expense
                  the Borrower/TOGC Collateral Account pursuant to the
                  Borrower/TOGC Collateral Account Agreement and TOGA shall
                  establish and maintain at its expense the TOGA Dollar
                  Collateral Account pursuant to the TOGA Dollar Collateral
                  Account and the TOGA Australian Collateral Account pursuant to
                  the TOGA Australian Collateral Account Agreement.

                      (ii) TOGA, and to the extent applicable Borrower, shall
                  deposit into the TOGA Dollar Collateral Account or the TOGA
                  Australian Collateral Account all Project Gross Cash Revenues
                  and Net TOGA Non-Project Cash Flow from and after the Initial
                  Funding Date through the Repayment Date.

                      (iii) TOGA may make monthly withdrawals from the TOGA
                  Dollar Collateral Account or the TOGA Australian Collateral
                  Account on the last day of each Calendar Month to pay Approved
                  LOE, Approved Third Party Costs, Approved Capital Expenditures
                  and Direct Taxes provided that all Obligations then due and
                  payable have been paid in full and no Default shall then exist
                  or be outstanding.

                      (iv) From and after the Initial Funding Date through the
                  Repayment Date, Borrower, TOGA and TOGC shall deposit into the
                  Borrower/TOGC Collateral Account all Permitted Borrower
                  Payments, and all payments of Inter-company Debt of TOGC with
                  respect to or in any way relating to the Advances or TOGA.

                                       28
<PAGE>   33

                      (v) Collateral Agent may instruct the administrator of the
                  Collateral Accounts to transfer or disburse amounts from it to
                  Agent only to the extent such amounts are due and payable
                  under the Notes, this Agreement or any other Loan Document.

                      (vi) After the occurrence of an Event of Default under any
                  Loan Document or Borrower's or TOGA's failure to comply with
                  the terms of this Section 2.12, Collateral Agent may, at its
                  option, apply all sums in the Collateral Accounts to the
                  reduction of outstanding principal of, and interest and other
                  sums owed by Borrower on, the Notes.

                      (vii) Upon the satisfaction in full of all amounts owed by
                  Borrower under the Loan Documents, Collateral Agent shall have
                  all amounts remaining in the Borrower/TOGC Collateral Account
                  disbursed to Borrower and all amounts remaining in the TOGA
                  Dollar Collateral Account and the TOGA Australian Collateral
                  Account disbursed to TOGA.

                  (b) NOTICE. Not later than 15 Business Days preceding the
Initial Funding Date or 15 Business Days after the execution of any new or
future gas sales contract, TOGA shall send a notice, substantially in the form
of Exhibit O, to all existing and/or new Hydrocarbon purchasers, including
without limitation, Energex Retail Pty Ltd, directing them to forward all
amounts payable to TOGA directly to the TOGA Dollar Collateral Account at the
mailing address of the depositary bank for deposit into the TOGA Dollar
Collateral Account. The failure of such Hydrocarbon purchasers to comply with
any such notice shall not constitute a Default hereunder by any Related Person,
provided that (i) such Hydrocarbon purchasers' failure to comply with such
notice is not done at the request of Borrower or TOGA and (ii) Borrower and TOGA
shall forward all amounts received from such Hydrocarbon purchasers to the TOGA
Dollar Collateral Account within one (1) Business Day of Borrower's or TOGA's
receipt thereof.

                  (c) ACKNOWLEDGMENTS. Each of Borrower and TOGA hereby
acknowledge that:

                      (i) It has granted and assigned to Collateral Agent a
                  first priority, perfected security interest in the Collateral
                  Accounts, all funds therein and all proceeds thereof pursuant
                  to the Security Agreement; and

                      (ii) Neither Borrower nor TOGA shall be permitted to
                  withdraw, transfer or disburse any funds from the Collateral
                  Accounts except in accordance with the terms hereof and each
                  other Loan Document.

                  (d) ATTORNEY-IN-FACT. Each of Borrower and TOGA hereby appoint
Collateral Agent its attorney-in-fact, with full power of substitution, to
execute and file on behalf of Borrower or TOGA, respectively, any financing
statement, continuation statement or instrument of further assurance to more
effectively perfect, continue or confirm (i) the provisions of this Section 2.12
and of any agreement entered into by Borrower, TOGA, Collateral Agent and the
depositary bank administering the Collateral Accounts and (ii) the security
interest granted in the

                                       29
<PAGE>   34

Collateral Accounts. This power, being coupled with an interest, shall be
irrevocable until all amounts due in connection with the Notes have been paid in
full.

                                   ARTICLE 3
                         CONDITIONS PRECEDENT TO LENDING

         Section 3.1 CONDITIONS PRECEDENT TO INITIAL LOAN ADVANCE. The Lenders
have no obligation to make the Initial Loan Advance unless all of the following
conditions precedent have been satisfied in which event the Initial Loan Advance
shall be made:

                 (a) The Lenders shall have received all of the following at
Agent's office in Los Angeles, California, duly executed and delivered and in
form, substance and date satisfactory to the Lenders:

                      (i) The Notes;

                      (ii) Each Security Document listed in the Security
                  Schedule;

                      (iii) An "OMNIBUS CERTIFICATE" substantially in the form
                  of Exhibit P of the Secretary or the Board of Directors of
                  each of Borrower and TOGA which shall contain the names and
                  signatures of its officers authorized to execute the Loan
                  Documents to which it is a party and which shall certify to
                  the truth, correctness and completeness of the following
                  exhibits attached to the certificate: (i) a copy of
                  resolutions of Borrower's and TOGA's, respectively, board of
                  directors in full force and effect at the time this Agreement
                  is entered into, authorizing the execution of the Loan
                  Documents delivered or to be delivered by Borrower or TOGA in
                  connection herewith and the consummation of the transactions
                  contemplated in the Loan Documents; (ii) a copy of Borrower's
                  and TOGC's Articles of Incorporation and all amendments
                  thereto, certified by the Secretary of the State of Texas; or
                  (iii) a copy of the necessary Authorization authorizing
                  observers to the board of directors of Borrower and TOGA as
                  provided under Section 5.1(c)(iv); and (iv) a copy of the
                  appointment of all legal representatives and attorneys in fact
                  of Borrower and TOGA duly registered;

                      (iv) A "COMPLIANCE CERTIFICATE," substantially in the form
                  of Exhibit Q, of the President and the Chief Financial Officer
                  of Borrower, TOGC and TOGA of even date with such Advance, in
                  which such persons certify to the satisfaction of the
                  conditions set out in clauses (i) through (ii) above;

                      (v) Opinions of Allen, Allen & Hemsley, Australian counsel
                  for the Related Persons, covering the items set forth in
                  Exhibit R-1, and such other matters requested be Agent and
                  otherwise in form acceptable to Agent and its counsel;

                      (vi) An opinion of Morrison & Foerster LLP, or other New
                  York counsel acceptable to Agent for the Related Persons,
                  substantially in the form of

                                       30
<PAGE>   35

                  Exhibit R-2, and such other matters requested be Agent and
                  otherwise in form acceptable to Agent and its counsel;

                      (vii) An opinion of Glast, Phillips & Murray, or other
                  Texas counsel acceptable to Agent for the Related Persons,
                  substantially in the form of and Exhibit R-3, and such other
                  matters requested be Agent and otherwise in form acceptable to
                  Agent and its counsel;

                      (viii) An opinion of counsel to the Lenders, or other
                  assurance satisfactory to the Lenders in their sole
                  discretion, that the Loans are permitted investments by the
                  Lenders under the terms of all governing documents relating to
                  the Lenders and as to such other matters as the Lenders may
                  reasonably request;

                      (ix) The Initial Financial Statements;

                      (x) The Initial Engineering Report;

                      (xi) An environmental report (the "INITIAL ENVIRONMENTAL
                  REPORT") relating to all Properties of TOGA included in the
                  Project prepared by an environmental engineering consultant
                  reasonably approved by Agent which is satisfactory to Agent
                  and its counsel in form and substance, including the
                  satisfactory compliance with all applicable environmental laws
                  and regulations;

                      (xii) Certificates from the Secretary of State of Texas as
                  to the existence, good standing and due qualification to do
                  business of Borrower;

                      (xiii) A certified copy of the Certificates of
                  Incorporation of TOGA issued by the Australia Securities &
                  Investment Commission;

                      (xiv) Title opinions and other title information
                  concerning the Project in form, substance and authorship
                  satisfactory to Agent;

                      (xv) Evidence that the board of directors and any required
                  equity owners of the Borrower and of TOGA have approved the
                  transactions contemplated hereby and any other required
                  governmental or regulatory approval or consent;

                      (xvi) Evidence that TOGA has received $3,500,000 which
                  shall be deposited into the TOGA Dollar Collateral Account in
                  immediately available funds as a capital contribution from
                  Borrower as payment for the newly issued Capital Stock of
                  TOGA;

                      (xvii) A shareholder approval executed by Slough Estates
                  USA Inc., as shareholder in TOGA, in form Approved by Agent in
                  its sole discretion, approving (a) the terms of the issuance
                  of shares of TOGA to TOGC or Borrower in consideration of the
                  transfer to TOGA of interests under the Project JOA heretofore
                  acquired by Borrower or TOGC, the $3.5 million capital
                  contribution described in clause (xvi) above, and the proceeds
                  of any Advance, (b) the

                                       31
<PAGE>   36

                  Management Fees and TOGA - Borrower Management Agreement and
                  (c) the execution and delivery by TOGA of the Guarantee
                  Agreement and other Loan Documents executed by TOGA.

                      (xviii) The Borrower should have prepared a drilling
                  program proposal consisting of at least twenty (20) wells
                  pursuant to the terms of the Project JOA covering the Project,
                  the time periods for consent and non-consent by all parties
                  thereto shall have expired and Agent shall have received
                  copies of all communications relating to such proposals and
                  evidence satisfactory to the Agent in its sole and absolute
                  discretion that such drilling programs will be undertaken on a
                  schedule acceptable to Agent (including copies of the drilling
                  contract executed with respect thereto) and that adequate
                  funding will be available to finance the same;

                      (xix) Evidence that the U.S. Bank Debt has been paid in
                  full and all liens, claims and other security interests have
                  been released;

                      (xx) Evidence that the debt described in subsection
                  2.4(a)(i) shall be paid in full and all liens, claims and
                  other security interests securing the same have been released
                  and all obligations of TOGA to pay any overriding royalty,
                  Contractual Payments (as defined in Section 3 of the
                  Promissory Note dated December 22, 1998 in the original
                  principal amount of $6,000,000 executed by TOGA to Slough
                  Estates USA Inc.) or other amounts thereunder shall be
                  terminated and released concurring with the Initial Loan
                  Advance; and

                      (xxi) Such other information as the Lenders may reasonably
                  require, including evidence satisfactory to the Lenders that
                  all conditions precedent to Initial Funding Date set forth in
                  this Article and to any disbursement to be made at Initial
                  Funding Date have been satisfied.

                  (b) Borrower and TOGA shall have established the TOGA Dollar
Collateral Account.

                  (c) The notices required pursuant to Section 2.12(b) shall
have been delivered.

                  (d) Borrower shall have transferred to TOGA, either directly
or indirectly through TOGC, all rights and interests in the Project heretofore
acquired by Borrower or TOGC from parties to the Project JOA pursuant to
documentation in form and substance satisfactory to Agent.

         Section 3.2 CONDITIONS PRECEDENT TO ANY ADVANCE. The Lenders have no
obligation to make any Advance (including the Initial Loan Advance) unless all
of the following conditions precedent have been satisfied, to the Agent's
satisfaction and in its sole discretion (in which event the Advance shall be
made):

                  (a) All representations and warranties made by Borrower and by
TOGA and any other Related Person in any Loan Document shall be true in all
material respects on and as of the date of such Advance (except to the extent
that the facts upon which such representations are

                                       32
<PAGE>   37

based (i) have been changed by the extension of credit hereunder and (ii) are
true and correct in all material respects only when taken together with all
other representations and warranties thereof in any Loan Document previously
delivered) as if such representations and warranties had been made as of the
date of such Advance.

                  (b) No Default shall exist at the date of such Advance.

                  (c) No Material Adverse Effect shall have occurred to
Borrower's or to TOGA's financial condition or businesses since the date of this
Agreement.

                  (d) Each of Borrower and TOGA shall have performed and
complied in all material respects with all agreements and conditions required in
the Loan Documents to be performed or complied with by it on or prior to the
date of such Advance.

                  (e) The making of such Advance shall not be prohibited by any
law or any regulation or order of any court or governmental agency or authority
and shall not subject the Lenders, Holders, Collateral Agent or Agent to any
penalty or other onerous condition which would impose on any Lender a material
additional cost in making a funding under or pursuant to any such law,
regulation or order.

                  (f) Lenders shall have received or shall have been authorized
and instructed to withhold from the Initial Loan Advance the Yield Adjustment
Payment.

                  (g) Lenders shall have (i) reviewed Borrower's and TOGA's
financial condition, and (ii) found the same to be satisfactory.

                  (h) Each of Borrower, TOGC and TOGA shall have procured and
maintained the insurance required under Schedule 6 hereto.

         Section 3.3 SPECIAL CONDITIONS PRECEDENT FOR AN ADDITIONAL LOAN
ADVANCE. After the Initial Loan Advance, the Lenders shall be obligated to make
an Additional Loan Advance only:

                     (i) before the Funding Expiry Date;

                     (ii) in the amount requested by Borrower in Borrower's
                 Request for Advance, not to exceed $11,000,000 in the aggregate
                 for all Additional Loan Advances;

                     (iii) upon Lenders' receipt of a timely Request for Advance
                 and all documents and instruments which the Lenders have then
                 requested, in addition to those described in Sections 3.1 and
                 3.2 (including opinions of legal counsel, corporate documents
                 and records, documents evidencing Governmental Approvals and
                 exemptions, and certificates of Governmental Persons and of
                 officers and representatives of Borrower, TOGA and other
                 Persons), as to (i) the accuracy and validity of or compliance
                 with, in all material respects, all representations, warranties
                 and covenants made in the Loan Documents, (ii) the satisfaction
                 of all conditions contained therein, and (iii) all other
                 matters

                                       33
<PAGE>   38

                 pertaining thereto. All such additional documents and
                 instruments shall be satisfactory to the Lenders in form,
                 substance and date;

                     (iv) upon Lender's satisfactory review of the Engineering
                 Report for the Comet Ridge Project as set forth in the Approved
                 Plan of Development; and

                     (v) If the Additional Advance is being used to develop
                 properties not covered by the Initial Environmental Report
                 ("ADDITIONAL PROPERTIES"), upon receipt of an Environmental
                 Report covering the Additional Properties.

         Section 3.4 SPECIAL CONDITION TO ANY ADVANCE. Notwithstanding anything
in this Agreement or any other Loan Document to the contrary, the parties
expressly acknowledge and agree that uncertainties exist with respect to the
Tri-Star Litigation and Agent and Lenders reserve the right, in their sole and
absolute discretion, to refuse to fund any Advance and/or terminate or cancel
any obligation to make future Advances if Agent or Lenders determine, in their
sole and absolute discretion, that the operating relationship between TOGA and
the operator of the Project is unacceptable to Agent or Lenders. It is further
acknowledged and agreed that the Lenders and Agent shall have the right to
consider, and approve or disapprove the status of such operating relations prior
to each Advance and the making of any Advance shall not estop, limit or restrict
Agent's or Lenders' rights under the preceding sentence with respect to
subsequent Advances. Borrower, TOGC and TOGA hereby waive and release any and
all claims or causes of action against Agent, Lenders and any Indemnitees (as
defined in Section 7.3 below) arising from the exercise by Agent or Lenders of
the rights set forth in this Section 3.4.

                                   ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

         Section 4.1 REPRESENTATIONS AND WARRANTIES OF BORROWER, TOGC AND TOGA.
To confirm the Lenders' understanding concerning Borrower, TOGC and TOGA and
Borrower's, TOGC's and TOGA's business, Properties and obligations and to induce
the Lenders, the Holders, Collateral Agent and Agent to enter into this
Agreement and to make the Loans, each of Borrower, TOGC and TOGA represents and
warrants to the Holders, Agents and Collateral Agent as of the date hereof and
as of the Initial Funding Date that:

                  (a) NO DEFAULT. None of Borrower, TOGC or TOGA is in default
in the performance of any of the material covenants and agreements contained
herein. No event has occurred and is continuing which, with the passage of time
or giving of notice, would constitute a Default.

                  (b) ORGANIZATION AND GOOD STANDING. Each of Borrower, TOGC and
TOGA is duly organized and validly existing and in good standing under the laws
of its jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby and
by the Loan Documents to which it is a party. Each of Borrower, TOGC and TOGA is
duly qualified, in good standing and authorized to do

                                       34
<PAGE>   39

business in all other jurisdictions wherein the character of the properties
owned or held by it or the nature of the business transacted by it makes such
qualification necessary.

                  (c) AUTHORIZATION AND VALIDITY. Each of Borrower, TOGC and
TOGA has duly taken all requisite corporate action necessary to authorize the
execution and delivery by it of the Loan Documents to which it is a party and to
authorize the consummation of the transactions contemplated thereby and the
performance of its obligations thereunder. Borrower is duly authorized to borrow
funds hereunder.

                  (d) COMPLIANCE WITH LAWS AND CONTRACTS. The execution and
delivery by each of Borrower, TOGC and TOGA of the Loan Documents to which it is
a party, the performance by it of its obligations under such Loan Documents, and
the consummation by it of the transactions contemplated by the various Loan
Documents to which it is a party, do not and will not (i) breach, violate or
conflict with any provision of (A) any Governmental Rule, (B) the articles or
certificate of incorporation, bylaws, charter, or partnership agreement or
certificate of Borrower, TOGC or TOGA, as applicable, or (C) any agreement,
judgment, license, order or permit applicable to or binding upon Borrower, TOGC
or TOGA; (ii) result in the acceleration of any Debt owed by Borrower, TOGC or
TOGA; (iii) require any Governmental Approval other than those already obtained
by Borrower, TOGC or TOGA or not yet required to be obtained by Borrower, TOGC
or TOGA; or (iv) result in or require the creation of any Lien upon any assets
or properties of Borrower, TOGC or TOGA except as expressly contemplated in the
Loan Documents. Except as expressly contemplated in the Loan Documents, no
consent, approval, authorization or order of, and no notice to or filing with,
any court or governmental authority or third party is required in connection
with the execution, delivery or performance by Borrower, TOGC or TOGA of any
Loan Documents to which it is a party or to consummate any transactions
contemplated by the Loan Documents to which it is a party. Each of Borrower,
TOGC and TOGA is fully aware of and has complied with all regulations
promulgated in connection with the U.S. Foreign Corrupt Practices Act of 1974,
as amended and chapter 4 of Division 70 of the Criminal Code Act of 1995 (Cth)
of Australia.

                  (e) ENFORCEABLE OBLIGATIONS. This Agreement is, and the other
Loan Documents to which Borrower, TOGC or TOGA is a party will be, when duly
executed and delivered, legal, valid and binding obligations of Borrower, TOGC
or TOGA, as applicable, enforceable against Borrower, TOGC and TOGA in
accordance with their respective terms except as such enforcement may be limited
by bankruptcy, insolvency or similar laws of general application relating to the
enforcement of creditors' rights and general principles of equity.

                  (f) INITIAL FINANCIAL STATEMENTS. The Initial Financial
Statements were prepared in accordance with GAAP and fairly presented Borrower's
consolidated and TOGA's financial position at the statements' date and the
results of Borrower's consolidated and TOGA's operations and Borrower's
consolidated and TOGA's cash flows for the statements' periods. Since the
statements' date, no Material Adverse Effect has occurred with respect to
Borrower's or TOGA's financial condition or businesses.

                  (g) OTHER OBLIGATIONS AND RESTRICTIONS. Neither Borrower, TOGC
nor TOGA has any outstanding Debt of any kind (including contingent obligations,
tax assessments, and unusual forward or long-term commitments) which is, in the
aggregate, (i) material to

                                       35
<PAGE>   40

Borrower, TOGC or TOGA or material with respect to Borrower's, TOGC's or TOGA's
financial condition and (ii) not (A) shown in the Initial Financial Statements
or (B) disclosed in the Disclosure Schedule. Except as shown in the Initial
Financial Statements or disclosed in the Disclosure Schedule, no Related Person
is subject to or restricted by any franchise, contract, deed, charter
restriction, or other instrument or restriction which is materially likely in
the foreseeable future to materially and adversely affect the businesses,
properties, prospects, operations, or financial condition of Borrower, TOGC or
TOGA.

                  (h) FULL DISCLOSURE. No certificate, written statement or
other written information delivered herewith or heretofore by any Related Person
to the Lenders in connection with the negotiation of this Agreement or the other
Loan Documents or in connection with any transaction contemplated hereby
contains any untrue statement of a material fact or omits to state any material
fact known to Borrower, TOGC or TOGA (other than industry-wide risks normally
associated with the types of businesses conducted by Borrower, TOGC or TOGA,
respectively) necessary to make the statements contained herein or therein not
misleading as of the date made or deemed made. There is no fact known to
Borrower, TOGC or TOGA (other than industry-wide risks normally associated with
the types of businesses conducted by Borrower, TOGC or TOGA, respectively) that
has not been disclosed to the Lenders in writing that might reasonably be
expected to cause a Material Adverse Effect upon Borrower's, TOGC's, TOGA's or
any of TOGA's Subsidiaries' properties, businesses, prospects or condition
(financial or otherwise). Borrower has heretofore delivered to the Lenders true,
correct and complete copies of the Initial Financial Statements and the Initial
Engineering Report.

                  (i) LITIGATION. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to the
knowledge of Borrower, TOGC or TOGA threatened, against any Related Person
before any Governmental Person which could reasonably be expected to have a
Material Adverse Effect on Borrower, TOGC or TOGA, or the right or ability of
Borrower, TOGC or TOGA to enter into the Loan Documents to which it is a party
or to consummate the transactions contemplated thereby or to perform its
obligations thereunder and (ii) there are no outstanding judgments, injunctions,
writs, rulings or orders by any such Governmental Person against any Related
Person which have a material probability of causing a Material Adverse Effect on
such Related Person.

                  (j) ERISA LIABILITIES. There are no currently existing ERISA
Plans or similar plans in Australia. No Related Person is required to contribute
to, or has any other absolute or contingent liability in respect of, any
"multiemployer plan" as defined in Section 4001 of ERISA or any other Australian
law which has a comparable effect to ERISA.

                  (k) ENVIRONMENTAL AND OTHER LAWS. Except as disclosed in the
Disclosure Schedule:

                      (i) each of Borrower, TOGC and TOGA is conducting its
                  businesses in material compliance with all applicable
                  Governmental Rules, including applicable Environmental Laws,
                  and has been and is in compliance in all material respects
                  with all Governmental Approvals required under such
                  Governmental Rules, including applicable Environmental Laws;

                                       36
<PAGE>   41

                      (ii) to the best of Borrower's, TOGC's and TOGA's
                  knowledge, none of the operations or properties of any Related
                  Person is the subject of any applicable Governmental Persons
                  investigation evaluating any release of any Hazardous
                  Materials into the environment or the improper storage or
                  disposal (including storage or disposal at offsite locations)
                  of any Hazardous Materials;

                      (iii) no Related Person (and to the best knowledge of
                  Borrower, TOGC and TOGA, no other Person) has filed any notice
                  under any Governmental Rule indicating that any Related Person
                  is responsible for the release into the environment, or the
                  improper storage or disposal, of any material amount of any
                  Hazardous Materials or that any Hazardous Materials have been
                  released, or are improperly stored or disposed of, upon any
                  property of any Related Person;

                      (iv) no Related Person has transported or arranged for the
                  transportation of any Hazardous Material to any location (A)
                  in contravention of any Environmental Law or (B) is the
                  subject of any applicable Governmental Person's enforcement
                  actions or, to the best of Borrower's, TOGC's and TOGA's
                  knowledge, other Governmental Person's investigations which
                  may lead to claims against any Related Person for clean-up
                  costs, remedial work, damages to natural resources or for
                  personal injury claims (whether under Environmental Laws or
                  otherwise), in each case, where such action could reasonably
                  be expected to have a Material Adverse Effect; and

                      (v) no Related Person otherwise has any known material
                  contingent liability under any Environmental Laws or in
                  connection with the release into the environment, or the
                  storage or disposal, of any Hazardous Materials.

                  (l) NAMES AND PLACES OF BUSINESS. Except as disclosed in the
Disclosure Schedule, neither Borrower, TOGC nor TOGA has, had, been known by, or
used any other partnership, trade, or fictitious name, except as disclosed in
the Disclosure Schedule. The chief executive office and principal place of
business of Borrower, TOGC and TOGA are located at the address for Borrower,
TOGC and TOGA, respectively, set out in Section 8.3.

                  (m) NO SUBSIDIARIES. Except as disclosed in the Disclosure
Schedule, Borrower, TOGC and TOGA have no Subsidiaries, own no stock in any
other Person, and is not a member of any general or limited partnership, joint
venture or association of any kind.

                  (n) REGULATIONS G, U AND X. Neither Borrower, TOGC nor TOGA is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying "margin stock" (as
defined in Regulations G, U and X of the Board of Governors of the Federal
Reserve System) or any Australian law of comparable effect.

                  (o) COMMISSIONS. Except as set forth in the Disclosure
Schedule, neither Borrower, TOGC nor TOGA, nor any other Related Person, has
entered into any agreement or

                                       37
<PAGE>   42

incurred any obligation which might result in the obligation to pay a brokerage
commission or finder's fee (other than fees to one or more Lenders) with respect
to the Loans.

                  (p) CERTAIN REGULATIONS. Neither Borrower, TOGC nor TOGA (i)
is an "investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940 or any other
Australian law which has a comparable effect; (ii) is a "holding company," an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935
or any other Australian law which has a comparable effect; or (iii) is subject
to any other Governmental Rule restricting its ability to incur debt or to grant
Liens.

                  (q) OWNERSHIP OF TOGC AND TOGA. Borrower owns one hundred
percent (100%) of the outstanding stock of TOGC. TOGC owns ninety percent (90%)
of the outstanding stock of TOGA. Except for the rights created under the Loan
Documents, no other Person has a Lien on or any right to acquire any stock,
equity interest or other interest whatsoever in TOCG or TOGA.

                  (r) GOVERNMENTAL APPROVALS; GOVERNMENTAL RULES. To the best of
TOGA's and Borrower's knowledge and belief, Tri-Star as record holder of the
Project Properties and as operator under the Project JOA holds all Governmental
Approvals necessary under Governmental Rules for the ownership and operation of
the Project in the ordinary course as well as the consummation of the
transactions contemplated in the Loan Documents, except for those Governmental
Approvals which are not currently required. TOGA has no reasonable basis to
believe that any Governmental Approvals which have not been obtained by Tri-Star
as of the date of this Agreement, but which will be required in the future, will
not be obtained in due course on or prior to the commencement of the appropriate
stage of the expansion of the Project or that they will not be free from any
condition or requirements, compliance with which could reasonably be expected to
have a Material Adverse Effect on TOGA. The Project, if constructed in
accordance with the Approved Plan of Development and otherwise developed,
constructed, operated and maintained as contemplated by the Loan Documents, is
expected to conform to and comply with all covenants, conditions, restrictions
and reservations in the Governmental Approvals applicable thereto and all
Governmental Rules, except to the extent any such noncompliance could not
reasonably be expected to have a Material Adverse Effect on TOGA.

                  (s) NATURE OF BUSINESS. TOGA has not engaged in any business
other than: (i) its participation in the Project and (ii) other energy related
activities in Australia including ownership and development of authorities to
prospect. Neither the business nor any Property of TOGA are or have been
affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance), that individually
or in the aggregate has had or could reasonably be expected to result in a
Material Adverse Effect on Borrower, TOGC, TOGA or any Related Person.

                  (t) TITLE; SECURITY DOCUMENTS; INTERESTS COMPANY COLLATERAL.
Subject to this paragraph, each of Borrower, TOGC and TOGA own and have good,
legal and marketable title (with respect to personalty) and good, legal and
indefeasible title (with respect to real property) to the Collateral purported
to be so owned and covered by the Security Documents to

                                       38
<PAGE>   43

which it is a party free and clear of all Liens other than Permitted Liens.
Lender and Agent specifically acknowledge that as of the date of this Agreement,
TOGA's interest in the Project is a valid and enforceable contractual or
equitable interest only under the Project JOA. TOGA has brought proceedings in
the Courts of the State of Texas against Tri-Star Petroleum Company ("TRI-STAR")
to remove Tri-Star as the operator of the Project and to require Tri-Star to
transfer to TOGA and the other working group interest owners who are parties to
the Project JOA their proportionate interests in the Authority to Prospect 526P
and other property held in connection with the Project Properties. TOGA's
proportionate interest in the Project Properties is not encumbered by any Liens
other than Permitted Liens. TOGA's ownership of the interest in Eligible Proved
Properties has not been forfeited and there is no basis for a claim of
forfeiture under the Project JOA and other Project Documents and it is entitled
to receive (net of all Permitted Liens) the share of the oil, gas and other
minerals produced from or allocated to the wells, leases and lands listed or
described in Exhibit S hereto or in any Security Document (the "COLLATERAL
PROPERTIES") specified as fractional, percentage or decimal interests in such
Exhibit S hereto or Security Document under the heading "NRI". Such shares of
production which TOGA is entitled to receive (and TOGA's share of expenses
relating to the Collateral Properties with respect to each lease and lands
affected thereby and also specified in Exhibit S or Security Document under the
heading "WI") are not subject to change except, and only to the extent that,
such changes are reflected in Exhibit S; and such shares of production and the
oil and gas interests to which some of them relate are (and, unless and until
released by Collateral Agent, shall remain) encumbered by the Security
Documents. There is no financing statement, mortgage or similar document
covering any Collateral Property on file in any public office naming any party
other than Collateral Agent as mortgagee or secured party other than financing
statements, mortgage or similar documents which have heretofore expired or been
terminated.

                  (u) STATUS OF LEASES, ETC. With respect to the Owned
Properties and the JOA Properties, the leases and other contracts and
agreements, permits and approvals forming a part of the Eligible Proved
Properties, which are material to the operation or value of any Properties, when
taken as a whole, are in full force and effect. All rents, royalties and other
payments due and payable under such leases and other contracts and agreements,
forming a part of the Eligible Proved Properties, or under the Permitted Liens,
have been properly and timely paid in accordance with prudent industry
practices, but in no event later than ninety (90) days past due. TOGA in respect
of the Owned Properties and, to the best of TOGA's knowledge and belief, the
operator under the Project JOA in respect of JOA Properties, is not in default
with respect to its obligations other than to Comet Ridge Participants (and is
not aware of any default by any third party with respect to such third party's
obligations where such default could adversely affect the ownership or operation
of the Eligible Proved Properties) under such leases and other contracts or
agreements, or under Permitted Liens, or otherwise attendant to the ownership or
operation of the Eligible Proved Properties, where such default could have a
Material Adverse Effect.

                  (v) PRODUCTION SALES, ETC. Except as set forth in the
Disclosure Schedule, with respect to the Owned Properties and the JOA Properties
(to the best of TOGA's, TOGC's and the Borrower's knowledge and belief), neither
TOGA, TOGC or Borrower nor to the best of TOGA's, TOGC's and the Borrower's
knowledge and belief, Tri-Star as operator under the Project JOA (in respect of
the JOA Properties) or TOGA's predecessors-in-title (in respect of the Owned
Properties) have received prepayments (including, but not limited to, payments
for gas not taken pursuant to "take or pay" arrangements) for any oil or gas to
be produced from the

                                       39
<PAGE>   44

Eligible Proved Properties after the Closing, no Eligible Proved Property is
subject to any contractual or other arrangement whereby payment for production
from such Eligible Proved Property is to be deferred for a substantial period
after the end of the calendar month in which such production is delivered in the
case of oil, not in excess of thirty (30) days, and in the case of gas, not in
excess of sixty (60) days. Except as heretofore disclosed, in writing by
Borrower, TOGC or TOGA to Agent, no Eligible Proved Property is subject to any
contractual or other arrangement for the sale of hydrocarbons which cannot be
canceled on ninety (90) days' or less notice. No Eligible Proved Property is
subject at the present time to any regulation refund obligation, and to the best
of TOGA's, TOGC's and Borrower's knowledge and belief, no situation exists where
the same might be imposed. Except as heretofore disclosed in writing by Borrower
to Agent, no Eligible Proved Property is subject to a gas balancing arrangement
under which an imbalance exists, with respect to which imbalance TOGA is in an
overproducing status and is required to (i) permit one or more third parties to
take a portion of the production attributable to such Collateral Property
without payment (or without full payment) therefor and/or (ii) make payment in
cash, in order to correct such imbalance.

                  (w) OPERATION OF COLLATERAL PROPERTIES. Borrower has disclosed
to Agent and Lenders that Borrower and TOGA have asserted certain claims in the
Tri-Star Litigation that, among other things, the Project Properties are not
being operated in a good and workmanlike manner in compliance with the Project
JOA and applicable laws, rules and regulations. Notwithstanding such alleged
breaches of the Project JOA and applicable laws, rules and regulations by
Tri-Star, none of Borrower, TOGC or TOGA is aware of any fact or condition that
would cause a material risk that (1) the Project Properties will not continue to
produce Hydrocarbons as projected in the Initial Engineering Report, (2) either
the Hydrocarbons produced from the Project Properties will not be sold or TOGA's
share of sales proceeds not remitted at its direction, in each case as
consistent with prior practice, and (3) once proposed pursuant to the Project
JOA and funded as contemplated hereby, the Approved Plan of Development will not
be conducted as contemplated therein.

                  (x) TAX FILINGS. Except as set forth in the Disclosure
Schedule, each of Borrower, TOGC and TOGA has filed all required tax returns and
paid all taxes and governmental charges or levies (which taxes, charges or
levies are material in the aggregate to Borrower, TOGC or TOGA) imposed upon its
income, properties or profits, before the same became in default, including, but
not limited, to all ad valorem taxes assessed under the Collateral Properties or
any part thereof and all occupational taxes and all production, severance,
windfall profit, excise and other taxes assessed against, or measured by, the
production of (or the value of, proceeds or the production of) oil, gas, or
other minerals accruing to the Collateral Properties.

                  (y) USE OF PROCEEDS. The proceeds of each Funding will be used
solely in accordance with, and solely for the purposes contemplated by, Section
2.4 hereof. No part of the proceeds of any extension of credit hereunder will be
used for the purpose, whether immediate, incidental or ultimate, of buying or
carrying any margin stock within the meaning of Regulations U and X or to extend
credit to others for such purpose.

                                       40
<PAGE>   45

         Section 4.2 REPRESENTATIONS OF THE LENDERS, THE COLLATERAL AGENT AND
THE AGENT. To confirm the Borrower's and TOGA's understanding concerning the
Lenders, the Collateral Agent and the Agent and to induce the Borrower and TOGA
to enter into this Agreement, each of the Lenders, the Collateral Agent and the
Agent severally and not jointly represents and warrants to TOGA and Borrower as
of the date hereof and as of the Initial Funding Date and any Additional Funding
Date that:

                  (a) ORGANIZATION AND GOOD STANDING. Each of the Lenders, the
Collateral Agent and the Agent is duly organized and validly existing and in
good standing under the laws of its jurisdiction of organization, having all
powers required to carry on its business and enter into and carry out the
transactions contemplated hereby and by the Loan Documents to which it is a
party. Each of the Lenders, the Collateral Agent and the Agent is duly
qualified, in good standing and authorized to do business in all other
jurisdictions wherein the character of the properties owned or held by it or the
nature of the business transacted by it makes such qualification necessary.

                  (b) AUTHORIZATION AND VALIDITY. Each of the Lenders, the
Collateral Agent and the Agent has duly taken all requisite corporate action
necessary to authorize the execution and delivery by it of the Loan Documents to
which it is a party and to authorize the consummation of the transactions
contemplated thereby and the performance of its obligations thereunder.

                  (c) ENFORCEABLE OBLIGATIONS. This Agreement is, and the other
Loan Documents to which the each Lender, the Collateral Agent and the Agent is a
party will be, when duly executed and delivered, legal, valid and binding
obligations of the Lenders, the Collateral Agent and the Agent, as applicable,
enforceable against the Lenders, the Collateral Agent and the Agent in
accordance with their respective terms except as such enforcement may be limited
by bankruptcy, insolvency or similar laws of general application relating to the
enforcement of creditors' rights and general principles of equity.

                  (d) INVESTMENT. Each Lender represents to Borrower and TOGA,
as of the dates set forth above:

                      (i) it is an "accredited investor" as such term is defined
                  in Regulation D adopted under the Securities Act; and

                      (ii) it is making the Initial Advance as well as any
                  subsequent Advances and purchasing the Notes for investment
                  purposes and not with a view towards sale or distribution in
                  violation of applicable laws.

                      (iii) it understands that the Notes have not been
                  registered under the Securities Act and may be resold only if
                  registered pursuant to the provisions of the Securities Act or
                  if an exemption from registration is available, except under
                  circumstances where neither such registration nor such an
                  exemption is required by law, and that the Borrower is not
                  required to register the Notes.

                                       41
<PAGE>   46

                                   ARTICLE 5
                         COVENANTS OF BORROWER AND TOGA

         Section 5.1 AFFIRMATIVE COVENANTS. To conform with the terms and
conditions under which the Lenders and the Holders are willing to have credit
outstanding to Borrower, and to induce the Lenders and the Holders to enter into
this Agreement and make the Loans, each of Borrower and TOGA warrants, covenants
and agrees that until the full and final payment of the Obligations and the
termination of this Agreement, unless the Agent previously agrees otherwise:

                  (a) PAYMENT AND PERFORMANCE. Borrower will pay all amounts due
under the Loan Documents in accordance with the terms thereof and each of
Borrower and TOGA will observe, perform and comply in all material respects with
every covenant, term and condition expressed in the Loan Documents to which it
is a party.

                  (b) BOOKS, FINANCIAL STATEMENTS AND REPORTS. Each of Borrower
and TOGA will at all times maintain full and accurate books of account and
records and a standard system of accounting and will furnish the following
statements and reports to the Agent at Borrower's expense:

                      (i) (A) By the date hereof in the case of the 1999 fiscal
                  year ended September 30, 1999 and (B) promptly after becoming
                  available, and in any event not later than ninety (90) days
                  after the close of each fiscal year beginning with the 2000
                  fiscal year, the audited Consolidated and consolidating
                  balance sheets of Borrower and of TOGA as of the end of the
                  Borrower's fiscal year and the audited Consolidated and
                  consolidating statements of profit and loss of Borrower and of
                  TOGA for such fiscal year, all such financial statements
                  prepared without regard to whether Borrower's or TOGA's
                  financial results would otherwise be shown on consolidated
                  financial statements of another Person and setting forth in
                  each case in comparative form the corresponding figures for
                  the preceding fiscal year, all in reasonable detail and all
                  prepared in conformity with GAAP or Australian GAAP, as
                  applicable, certified in a manner by such independent
                  certified public accountants.

                      (ii) Promptly after becoming available, and in any event
                  not later than forty-five (45) days after the end of each
                  fiscal quarter beginning with the 2000 fiscal year, the
                  unaudited Consolidated balance sheets of Borrower and of TOGA
                  as of the end of said fiscal quarter, and the Consolidated
                  statements of profits and loss of Borrower and of TOGA for
                  such quarter and for the period from the beginning of the
                  fiscal year to the end of such quarter, setting forth in each
                  case in comparative form the corresponding figures for the
                  corresponding period of the preceding fiscal year, all
                  prepared in reasonable detail and in accordance with GAAP or
                  Australian GAAP, as applicable.

                      (iii) A certificate signed by Borrower's or TOGA's chief
                  financial officer, to be furnished with each set of financial
                  statements under paragraph (i) and (ii) above. The certificate
                  shall state that, to the officer's knowledge based

                                       42
<PAGE>   47

                  upon his or her due diligence review, under his or her
                  supervision, of Borrower's or TOGA's affairs, respectively,
                  (A) all of the representations and warranties made herein
                  continue to be true and correct as of the date of the
                  certificate (or, if any representation or warranty is not true
                  or correct as of such date, the certificate shall state the
                  nature of the representation or warranty no longer valid and
                  the actions which Borrower or TOGA is taking or proposes to
                  take with respect thereto) and (B) such financial statements
                  are accurate and complete in all material respects. In the
                  case of a certificate accompanying the financial statements in
                  paragraph (ii), the certificate shall also state that the
                  officer reviewed the Loan Documents containing calculations
                  showing compliance (or non-compliance) at the end of the
                  applicable fiscal quarter with the requirements of Sections
                  5.2(a), (e), (f), (g), (j) and (k), and determined that no
                  Default or Coverage Deficiency existed at the end of such
                  Fiscal Quarter or at the time of such certificate (or, if the
                  officer determines otherwise, the certificate shall specify
                  the nature and period of existence of the Default or Coverage
                  Deficiency).

                      (iv) Promptly after becoming available, copies of all
                  financial statements, reports, notices and proxy statements
                  sent by Borrower or TOGA to its stockholders and all
                  registration statements, periodic reports on Forms 8-K, 10-K
                  or 10-Q and other statements and schedules filed by Borrower
                  or TOGA with any securities exchange, the Commission or any
                  similar Governmental Person.

                      (v) Promptly upon receipt thereof, each other report
                  submitted to Borrower or TOGA by an independent certified
                  public accountant in connection with any annual, quarterly,
                  interim or special audit made by such accountant of the books
                  or records of Borrower or TOGA.

                      (vi) On each Quarterly Payment Date, to the extent such
                  information is made available to TOGA from the operator of the
                  Project (and Borrower and TOGA shall exercise all rights and
                  remedies as requested by Agent to obtain such information), a
                  consolidated report in detail acceptable to Agent with respect
                  to the Eligible Proved Properties during the Calendar Quarter
                  immediately prior thereto containing the following
                  information:

                           (A) a description of cash flows for such period with
                      a detailed breakdown of all relevant sources and uses of
                      cash for the applicable quarter;

                           (B) a description by well and field of the gross
                      quantities of Hydrocarbons and water produced from or
                      injected into the Eligible Proved Properties during such
                      period;

                           (C) a description by well and field of the net
                      quantities of Hydrocarbons sold during such period out of
                      production from the Eligible Proved Properties and
                      calculating the average sales prices of such oil, gas, and
                      natural gas liquids;

                                       43
<PAGE>   48

                           (D) a detailed calculation of ANCF and Excess ANCF
                      for such period including a detailed aging of TOGA's
                      accounts receivable and payable;

                           (E) regardless of whether the same are included in
                      such calculation of ANCF, a detailed calculation of any
                      LOE, G&A Costs, Third Party Costs, Capital Expenditures,
                      and other direct charges or overhead costs with respect to
                      the Eligible Proved Properties specifying any material
                      differences from those Approved and those actually
                      incurred;

                           (F) a summary of wells drilled, completed or worked
                      over during the reporting period showing the total depth
                      drilled or tested, the depth at which production casing
                      was set, and the existing or anticipated perforated
                      interval and upon request copies of any well logs across
                      the pay sectors;

                           (G) a discussion of any current operating problems
                      with any wells and any proposed solutions;

                           (H) any technical studies conducted during the
                      reporting period of performance; and

                           (I) a projection of Capital Expenditures for the next
                      Calendar Quarter and if not Approved, all other sources of
                      capital and periods beyond and if any of such Capital
                      Expenditures are not Approved Capital Expenditures the
                      sources of capital for the payment thereof, together with
                      accompanying authority for expenditures if requested by
                      Agent or Lenders.

                      (vii) An annual Engineering Report, to be effective as of
                  October 1 of each year and to be delivered to Agent prior to
                  December 1 of that year (or, in the case of 1999, by the date
                  hereof). Each Engineering Report shall:

                           (A) be prepared by S.A. Holditch & Associates or such
                      other nationally or regionally recognized independent
                      petroleum engineers, which may be chosen by TOGA if
                      acceptable to Agent in its sole and absolute discretion,
                      concerning all of the oil and gas properties of TOGA
                      including without limitation the Eligible Proved
                      Properties, prepared at Borrower's expense;

                           (B) separately report on Proved Developed Producing
                      Reserves, Proved Developed Non-Producing Reserves and
                      Proved Undeveloped Reserves of the Eligible Proved
                      Properties and Subject Properties, and separately
                      calculate the NPV10 and Modified NPV10 of each such
                      category of Reserves;

                           (C) use pricing specified in the definition of NPV10;

                                       44
<PAGE>   49

                           (D) address the various factors to be taken into
                      account in calculating ANCF so that projected ANCF can be
                      readily calculated from the report;

                           (E) take into account TOGA's actual experiences with
                      LOE and other costs in determining projected LOE and other
                      costs;

                           (F) take into account any "over-produced" status
                      under gas balancing arrangements;

                           (G) contain information and analysis comparable in
                      scope to that contained in the Initial Engineering Report;

                           (H) set forth all monetary sums in Dollars using the
                      Spot Rate as of the effective date of such report for the
                      purposes of converting any amounts payable in any currency
                      other than Dollars to Dollars; and

                           (I) otherwise be in form and substance satisfactory
                      to Agent.

In the event that Borrower or TOGA and Agent disagree over whether or not any
work-overs or other remedial Capital Expenditures should be included in the LOE
of an Engineering Report for the purposes of calculating NPV10, the engineers
preparing the report shall resolve such disagreement by determining whether such
expenditures are likely to be required in accordance with prudent industry
practice and shall include or exclude such expenditures based upon such
determination.

                      (viii) Interim engineering reports shall be prepared with
                  an effective date of April 1 and delivered no later than May 1
                  of each year if requested by Agent. Such interim engineering
                  reports shall include, but not be limited to, calculations of
                  NPV10 on the Eligible Proved Properties, and shall use prices
                  supplied by Lenders except as modified by prices actually
                  received as of April 1 by TOGA pursuant to oil and gas sales
                  contracts between TOGA (as seller) and third parties (as
                  buyers).

                      (ix) Within ten (10) days after submission to any
                  Governmental Person, a copy of any and all reports required to
                  be furnished pursuant to any Governmental Rule pertaining to
                  the Eligible Proved Properties.

                      (x) An Independent Engineering Report shall be prepared as
                  of and delivered within thirty (30) days after the Repayment
                  Date covering all properties held by TOGA and all subsidiaries
                  of TOGA, if any.

                  (c) OTHER INFORMATION AND INSPECTIONS.

                      (i) Borrower and TOGA will furnish to the Lenders at
                  Borrower's or TOGA's, respectively, reasonable expense any
                  information which the Agent may from time to time reasonably
                  request concerning any covenant, provision or condition of the
                  Loan Documents or any matter in connection with Borrower's or

                                       45
<PAGE>   50

                  TOGA's businesses and operations. Borrower and TOGA will
                  permit representatives appointed by Lenders (including
                  independent accountants, engineers, agents, attorneys,
                  appraisers and any other Persons) upon reasonable notice to
                  visit and inspect any of Borrower's or TOGA's property,
                  including books of account, other books and records, and any
                  facilities or other business assets, and to make extra copies
                  therefrom and photocopies and photographs thereof, and to
                  record any information such representatives obtain, and shall
                  further permit Lenders or its representatives to investigate
                  and verify the accuracy of the information furnished to
                  Lenders in connection with the Loan Documents and to discuss
                  all such matters with its officers, employees and
                  representatives.

                      (ii) On a Monthly basis or in any event no less than once
                  each Quarter, TOGA will review with Agent (an "OPERATIONS
                  REVIEW") all operational activities on the Subject Properties
                  in sufficient detail so as to give a full account and
                  reconciliation of operational and financial progress from the
                  Closing and from any preceding Operations Review, to the
                  extent that such information has been provided by the operator
                  to the Project, and Such Operations Reviews will include, but
                  not be limited to, progress as of such date on the Approved
                  Plan of Development, any substitutions or changes to the
                  Approved Plan of Development requested by Lenders, and changes
                  to the Approved Plan of Development due to cost or expense
                  overruns, under-runs, unanticipated mechanical problems or
                  differences in reserve or production estimates. Such
                  Operations Reviews shall include, to the extent permitted by
                  the operator of the particular Property, on-site inspections
                  at the Project either by two of Lenders' representatives once
                  per Calendar Year or by one of Lenders' representatives twice
                  per Calendar Year, which inspections shall be at Borrower's
                  expense.

                      (iii) Each of the Lenders, Holders, Agents and Collateral
                  Agent agrees that it will take all reasonable steps to keep
                  confidential any proprietary information given to it by
                  Borrower or TOGA; provided, however, that this restriction
                  shall not apply to information which has at the time in
                  question entered the public domain; provided further that any
                  such party may disclose any such information to the limited
                  extent that such information (i) is required to be disclosed
                  by law or by any order, rule or regulation (whether valid or
                  invalid) of any court or governmental agency, or any
                  regulatory authority (whether or not governmental); (ii) is
                  disclosed to the Affiliates, auditors, attorneys, or agents of
                  the Lenders, provided that such Persons agree to keep any such
                  information confidential to the same extent as any such party
                  is required to; (iii) is furnished to any purchaser or
                  prospective purchaser of participations or other interests in
                  the Loans or the Notes, provided that such Persons agree to
                  keep any such information confidential to the same extent as
                  such party is required to; or (iv) is disclosed by such party
                  in the course of collecting the obligations or enforcing its
                  rights under the Loan Documents following the occurrence of an
                  Event of Default without violating such party's
                  confidentiality obligations to Borrower or TOGA.

                      (iv) The Lenders shall be entitled to have observers to
                  the Borrower's and TOGA's Board of Directors ("Board") who
                  shall have the right

                                       46
<PAGE>   51

                  to attend and receive all materials distributed for or at all
                  meetings (telephonic and otherwise) of directors and shall be
                  entitled to the same rights expense reimbursement rights as
                  directors of the Borrower and TOGA, except that such observers
                  shall not be entitled to vote on matters presented to or
                  discussed by the Board nor participate in attorney-client
                  privileged discussions or receive or review any documents
                  subject to an attorney-client or attorney work product
                  privilege. Lenders will be notified of all meetings of and all
                  proposed actions by the Board as if a representative of each
                  Lender were a member of the Board. Such observers will receive
                  no compensation for their services as observers, but shall be
                  entitled to be reimbursed by the Borrower or TOGA,
                  respectively, for all reasonable costs and expenses incurred
                  in connection with their participation in meetings or other
                  activities of the Board.

                  (d) NOTICE OF MATERIAL EVENTS AND CHANGE OF ADDRESS. Each of
Borrower and TOGA will notify the Lenders of any of the following events
promptly, and in any event within ten (10) Business Days, after learning of the
event's occurrence:

                      (i) a Material Adverse Effect;

                      (ii) a Default;

                      (iii) (A) the acceleration of the maturity of any Debt
                  owed by any Related Person or (B) a default by any Related
                  Person under any indenture, mortgage, agreement, contract or
                  other instrument to which such Related Person is a party or by
                  which it or any of its properties is bound, if such
                  acceleration or default would reasonably be expected to have a
                  Material Adverse Effect upon Borrower's or TOGA's financial
                  condition or a Material Adverse Effect on the value of the
                  Collateral;

                      (iv) a claim of $250,000 or more, any claim or notice of
                  potential liability under any Environmental Laws, or any other
                  material adverse claim asserted against Borrower or TOGA or
                  with respect to its properties;

                      (v) the filing of any suit or proceeding against any
                  Related Person in which an adverse decision would have a
                  material probability of causing a Material Adverse Effect;

                      (vi) a written notice, claim, allegation or assertion that
                  Borrower, TOGA or the Project is in violation or noncompliance
                  of any Governmental Rule of any Governmental Person having
                  jurisdiction over Borrower, TOGA or the Project, which
                  violation or noncompliance would reasonably be expected to
                  have a Material Adverse Effect on Borrower, TOGA or any other
                  Related Person; and

                      (vii) if a Change in Control has occurred with respect to
                  Borrower or TOGA.

Upon the occurrence of any of the foregoing, Borrower and TOGA will take all
necessary or appropriate steps to remedy promptly any such Default under (ii)
above, Material Adverse Effect

                                       47
<PAGE>   52

or acceleration; to protect against any such adverse claim; to defend any such
suit or proceeding; and to resolve all controversies on account of any of the
foregoing. Borrower or TOGA will also notify Agent in writing at least twenty
(20) Business Days prior to the date that Borrower, TOGA or any of TOGA's
Subsidiaries changes its name or the location of its chief executive office or
principal place of business or the place where it keeps its books and records
concerning the Collateral, furnishing with such notice any necessary financing
statement amendments or requesting Agent and its counsel to prepare the same.

                  (e) MAINTENANCE AND DEVELOPMENT OF PROPERTIES; MAINTENANCE OF
AGREEMENTS. Each of Borrower and TOGA will or will cause the operator of the
Project to the extent of Borrower's and TOGA's abilities under the Project JOA,
as applicable to:

                      (i) maintain, preserve, protect and keep all Eligible
                  Proved Properties and all other Collateral used or useful in
                  the conduct of its business in good condition (normal wear and
                  tear excepted) and in compliance in all material respects with
                  all applicable laws, rules and regulations, except where (A)
                  the necessity of compliance therewith is contested in good
                  faith by appropriate proceedings or (B) non-compliance
                  therewith would not have a Material Adverse Effect;

                      (ii) develop the Project in accordance with the Approved
                  Plan of Development;

                      (iii) from time to time make all repairs, renewals and
                  replacements needed to enable the Project and operations
                  carried on in connection therewith to be conducted at all
                  times consistent with prudent industry practices;

                      (iv) maintain bonding and insurance coverages, as set
                  forth in Schedule 6 hereto or as Approved by the Agent;
                  provided, however, that Borrower shall cause the insurance
                  coverages described in Paragraph 1(h) of said Schedule 6 to be
                  in full force and effect at or before the earlier of (1) the
                  time of the first to occur of the issuance of a press release
                  or SEC filing with respect to the execution and delivery of
                  this Agreement or the disclosure to any Comet Ridge
                  Participant or Governmental Person of the execution and
                  delivery of this Agreement or (2) the fifth (5th) date after
                  the date of execution and delivery of this Agreement by the
                  parties hereto; and

                      (v) keep and perform all of the terms, covenants, and
                  conditions of the Loan Documents to which it is a party.

                  (f) MAINTENANCE OF EXISTENCE AND QUALIFICATIONS. Each of
Borrower and TOGA will:

                      (i) maintain and preserve its existence as a corporation
                  under Texas or Australian law, respectively, and its rights in
                  full force and effect; and

                      (ii) qualify to do business as a foreign corporation in
                  every state or jurisdiction where required to do so by
                  applicable law, except in any jurisdiction

                                       48
<PAGE>   53

                  where no Collateral is located and the failure to qualify will
                  have no Material Adverse Effect.

                  (g) PAYMENT OF TRADE DEBT, ETC. Each of Borrower and TOGA
will:

                      (i) pay, within ninety (90) days after the date of
                  invoice, any Debt owed by it on ordinary trade terms to
                  vendors, suppliers or other Persons providing goods and
                  services used by it in the ordinary course of its business;

                      (ii) pay and discharge when due all other Debt, royalties
                  and encumbrances now or hereafter owed by it unless the same
                  is being contested in good faith by appropriate means and for
                  which adequate cash reserves have been established; and

                      (iii) maintain appropriate accruals and reserves for all
                  of the foregoing Debt in accordance with GAAP and Australian
                  GAAP, as applicable.

                      Borrower or TOGA may, however, delay paying or discharging
any such Debt so long as it is in good faith contesting the validity thereof by
appropriate proceedings and has set aside on its books adequate reserves
therefor.

                  (h) PAYMENT OF TAXES, ETC. Each of Borrower and TOGA will:

                      (i) timely file all required tax returns;

                      (ii) timely pay all Taxes, assessments, and other
                  governmental charges or levies properly imposed upon it or
                  upon its income, profits or property; and

                      (iii) maintain appropriate accruals and reserves for all
                  of the foregoing Taxes in accordance with GAAP.

                      Borrower or TOGA may, however, delay paying or discharging
any such Taxes described in clauses (i) through (iii) above so long as it is in
good faith contesting the validity thereof by appropriate proceedings and has
set aside adequate cash reserves therefor.

                      (iv) Each of Borrower and TOGA agrees to pay or to cause
                  to be paid all governmental assessments, charges, taxes,
                  levies, imposts or other liabilities imposed by any Australian
                  Governmental Person (including Australian Withholding Taxes)
                  including any interest or penalties thereon and any stamp or
                  documentary or other excise or property taxes, at any time
                  payable by it or ruled to be payable by it, by reason of any
                  Australian Governmental Person or Australian Governmental Rule
                  (collectively, "TAXES"), and to indemnify and hold the Holders
                  and Collateral Agent harmless against liability fees or
                  additional expense with respect to or in connection with any
                  such Taxes. Each of Borrower and TOGA hereby further agrees as
                  follows:

                                       49
<PAGE>   54

                           (A) Any and all payments made by Borrower and TOGA
                      hereunder and under any of the other Loan Documents,
                      whether of principal, Coupon Interest, Royalty, expenses
                      or otherwise shall be free and clear of and without
                      deduction or withholding for any and all Taxes and all
                      liabilities with respect thereto including Australian
                      Withholding Taxes. If TOGA shall be required by law to
                      deduct or withhold any Taxes (including Australian
                      Withholding Taxes) from or in respect of any sum payable
                      to the Collateral Agent or any Holder hereunder or under
                      any of the other Loan Documents, the sums payable under
                      the Notes or the Loan Documents shall be increased as may
                      be necessary so that after making all required deductions
                      and withholdings (including deductions or withholdings
                      applicable to additional sums payable under this
                      paragraph) the Holders or Collateral Agent receives an
                      amount equal to the sum it would have received had no such
                      deductions or withholdings been made. TOGA shall make such
                      deductions or withholdings and Borrower and TOGA shall pay
                      the full amount deducted or withheld to the relevant
                      Australian or other foreign taxation authority or other
                      Australian or other foreign authority in accordance with
                      applicable law.

                           (B) Indemnitors shall indemnify the Holders and
                      Collateral Agent for the full amount of Taxes paid by the
                      Holders and Collateral Agent and any liability (including
                      penalties, interest and expenses) arising therefrom or
                      with respect thereto, whether or not such Taxes were
                      correctly or legally asserted, provided, that any refunds
                      for any Taxes incorrectly paid shall be remitted to
                      Borrower promptly upon receipt by Collateral Agent or any
                      Holder, to the extent such refunds are received by
                      Collateral Agent, or any Holder and are not otherwise
                      necessary to pay any Obligations then due and payable.
                      Payments under this indemnification shall be made within
                      thirty (30) days from the date the Holders, or Collateral
                      Agent makes written demand therefor after payment of such
                      Taxes. A certificate as to the amount of such Taxes and
                      the calculation thereof (if determinable), submitted to
                      Borrower by the Holders or Collateral Agent shall be
                      conclusive and binding for all purposes, absent manifest
                      error. With respect to any payment request made by any
                      Person pursuant to the tax indemnity set forth in this
                      clause (B), if the Borrower shall request, such Person
                      shall in good faith at Borrower's expense contest the
                      imposition of or the amount of any such request amount,
                      keep the Borrower reasonably informed in respect thereof,
                      consult in good faith with the counsel to Borrower
                      regarding such contest, and shall not compromise or
                      otherwise settle such contest without the consent of
                      Borrower.

                      (v) Upon the reasonable request of Holder, TOGA and
                  Borrower shall furnish to the Holder copies of the presented
                  forms filed in connection therewith and the original or a
                  certified copy of a receipt or certificate evidencing payment
                  thereof. Without prejudice to the survival of any other
                  agreement of Borrower or TOGA hereunder, the agreements and
                  obligations of Borrower and

                                       50
<PAGE>   55

                  TOGA contained in this Section 5.1 shall survive for a period
                  of ten (10) years after the date of termination hereof.

                  (i) PAYMENT OF EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will promptly (and in
any event, within fifteen (15) days after any invoice or other statement or
notice) pay all reasonable costs and expenses incurred by or on behalf of the
Lenders, Holders, Agent or Collateral Agent (including reasonable attorneys'
fees) in connection with (A) the negotiation, preparation, execution and
delivery of the Loan Documents, and any and all amendments, consents, waivers or
other documents or instruments relating thereto, (B) the filing, recording,
refiling and re-recording of any Loan Documents and any other documents or
instruments or further assurances required to be filed or recorded or refiled or
re-recorded by the terms of any Loan Document, (C) the borrowings hereunder and
other action reasonably required in the course of administration of the various
Loan Documents (except for allocations of indirect overhead costs of the Lenders
or its affiliates), (D) the defense or enforcement of the Loan Documents or the
Lenders', Holders' Agent's or Collateral Agent's exercise of their rights
thereunder, and (E) Borrower's or TOGA's performance of its obligations and the
Lenders', Holders', Agent's or Collateral Agent's exercise of their or its
rights under Sections 5.1(c)(i) and (ii).

                  Notwithstanding anything to the contrary herein, on the
Initial Funding Date and the date of each Advance thereafter, and in any event
no later than fifteen (15) days after receipt of invoices for the following,
Borrower shall pay to the Lenders the reasonable fees, office charges and
expenses of Milbank, Tweed, Hadley & McCloy LLP and MinterEllison, counsel to
Agent, Collateral Agent and the Lenders. Notwithstanding anything to the
contrary herein, on or before the Initial Funding Date, Borrower shall pay to
the Lenders:

                            (A) the Yield Adjustment Payment;

                            (B) $30,000 for payment of out-of-pocket costs and
                  expenses incurred by or on behalf of the Lenders, Holders,
                  Agent, Collateral Agent as of the Initial Funding Date which
                  has been paid prior to the execution of this Agreement; and

                            (C) the reasonable fees, office charges and expenses
                  of Milbank, Tweed, Hadley & McCloy LLP and MinterEllison,
                  counsel to Agent, Collateral Agent and the Lenders.

Borrower's obligations under this subsection shall survive the payment of the
Notes.

                  (j) PERFORMANCE ON BORROWER'S BEHALF. If Borrower or TOGA
fails to pay any taxes, insurance premiums, expenses, attorneys' fees or other
amounts it is required to pay under any Loan Document, Holders, Agent or
Collateral Agent may pay the same after giving ten (10) Business Days' prior
notice to Borrower or TOGA, respectively, of the intended payment (except in
cases of exigent circumstances, such as the imminent termination of insurance
coverage, where such notice shall not be required). Borrower or TOGA,
respectively, shall immediately reimburse Holders, Agent or Collateral Agent for
any such payments and each amount paid by Holders, Agent or Collateral Agent
shall constitute an Obligation owed under

                                       51
<PAGE>   56

this Agreement which is due and payable on the date such amount is paid by
Holders, Agent or Collateral Agent and shall accrue interest from such date at
the Late Payment Rate.

                  (k) COMPLIANCE WITH AGREEMENTS AND LAW. Each of Borrower and
TOGA will perform all material obligations it is required to perform under the
terms of each indenture, mortgage, deed of trust, security agreement, lease,
franchise, agreement, contract or other instrument or obligation to which it is
a party or by which it or any of its properties is bound. Each of Borrower and
TOGA will conduct its business and affairs in compliance in all material
respects with all laws, regulations, and orders applicable thereto, including
applicable Environmental Laws, and, within two (2) years of the Initial Funding
Date, except where (i) the necessity of compliance therewith is contested in
good faith by appropriate proceedings (with bonds, cash reserves or other
assurance of compliance reasonably satisfactory to the Lenders) or (ii)
non-compliance therewith would not have a Material Adverse Effect.

                  (l) EVIDENCE OF COMPLIANCE. Each of Borrower and TOGA will
furnish to Holders, Agent or Collateral Agent at Borrower's expense all evidence
which Holders, Agent or Collateral Agent from time to time reasonably request as
to the accuracy and validity of, or compliance in all material respects with,
all representations, warranties and covenants made by Borrower or TOGA in the
Loan Documents, the satisfaction of all conditions contained therein, and all
other matters pertaining thereto.

                  (m) EXECUTION OF SUPPLEMENTS TO ROYALTY AGREEMENT; ASSIGNMENT
OF ROYALTIES FROM COMET RIDGE PARTICIPANTS. Borrower shall execute and deliver
to Royalty Payee from time to time, upon request of Royalty Payee, Supplements
to the Royalty Agreement agreeing to pay, and Borrower hereby agrees to pay,
overriding royalties in the form of Exhibit T (collectively, the "SUPPLEMENT TO
ROYALTY AGREEMENT") with respect to all properties, authorities to prospect,
licenses, leases, wells and other interests (determined in as broad a manner as
practicable with reference to lands covered by any of the foregoing and not just
with respect to wells, spacing units or well bores) (collectively, "LANDS")
beneficially owned or in which interests are owned or held by TOGA or any
Subsidiary of TOGA, whether now or hereafter acquired, at any time after the
Closing Date through and including the Royalty Determination Date which Lands
are (1) categorized or include or have attributed to them reserves which are
categorized as Proved Reserves in any Engineering Report, including without
limitation the Engineering Report to be delivered pursuant to Section 5.1(b)(x),
upon either (i) the request of the Royalty Payee or (ii) the Royalty
Determination Date and (2) either comprise a portion of the Project or
constitute Non-Project Properties which have been developed by Capital
Expenditures which were Approved Capital Expenditures deducted in the
calculation of ANCF. Furthermore, Borrower and TOGA agree to assign, transfer
and convey to Royalty Payee effective upon the receipt thereof by Borrower or
TOGA and without the payment of any additional consideration or amount, all
rights, titles and interests of Borrower or TOGA to any royalty, overriding
royalty, additional interest or similar payments assigned, conveyed or agreed to
be paid by the Comet Ridge Participants in connection with the Participating
Loans or pursuant to the Participating Loan Documents.

                  (n) WITHDRAWAL AS OPERATOR. If at any time TOGA or any
Affiliate thereof assumes operations of the Project and an Event of Default
occurs which is not cured within one hundred twenty (120) days, TOGA will, or
will cause its Affiliate to, withdraw as operator of all

                                       52
<PAGE>   57

or a portion of the Project at the request of Lenders. TOGA will support
Lenders' designee as replacement operator.

                  (o) EXECUTION OF OTHER INSTRUMENTS; ADDITIONAL ACTS. Each of
Borrower and TOGA shall do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged and delivered, such further instruments and
documents in form and substance reasonably satisfactory to Holders, Agent or
Collateral Agent as such Person may reasonably request from time to time in
order to carry out the intent and purpose of this Agreement and the other Loan
Documents.

                  (p) WAIVER OF LITIGATION PAYMENTS. In the event that any
action or lawsuit is initiated by or on behalf of any of the Lenders, Holders,
Agent, Collateral Agent or their successors, transferees or assignees (such
entity being referred to in this Section 5.1 as "PLAINTIFF") in Australia or
elsewhere against Borrower or TOGA, each of Borrower and TOGA irrevocably waives
its right to have, and agrees not to request, plead or claim that, Plaintiff
post, pay or offer any "cautio judicatum solve" bond or "excepcion de arraigo"
due to its status as a foreign entity, and each of Borrower and TOGA further
waives any objection that it may now or hereafter have to a Plaintiff's claim
that such Plaintiff should be exempt or immune from posting, paying, making or
offering any such "cautio judicatum solvi" bond or "excepcion de arraigo" due to
its status as a foreign entity.

         Section 5.2 NEGATIVE COVENANTS. To conform with the terms and
conditions under which the Lenders are willing to have credit outstanding to
Borrower, and to induce the Lenders to enter into this Agreement and make the
Loans, each of Borrower and TOGA warrants, covenants and agrees that until the
full and final payment of the Obligations and the termination of this Agreement,
unless the Lenders have previously agreed otherwise:

                  (a) RESTRICTED DEBT. TOGA will not in any manner owe or be
liable for Restricted Debt, except for Permitted Debt.

                  (b) LIMITATION ON LIENS. TOGA will not create, assume or
permit to exist any Lien upon any of the properties or assets relating to the
Project which TOGA now owns or hereafter acquires, except Permitted Liens.
Borrower will not create, assume or permit to exist any Lien upon (i) any of the
capital stock of TOGC or (ii) any of the Collateral which Borrower or any
subsidiary of Borrower now owns or hereafter acquires.

                  (c) NO MERGERS. Without Agent's prior written consent, neither
Borrower nor TOGA will merge or consolidate with or into any other business
entity, create any additional Subsidiaries of TOGA other than those in existence
on the date hereof or enter into any contracts (including contracts to borrow
money) with any Subsidiaries of TOGA.

                  (d) LIMITATION ON SALES OF PROPERTY. TOGA will not sell,
transfer, lease, exchange, discount, assign, abandon, surrender, alienate or
dispose of any interest in the Project or any material interest therein,
including without limitation the Collateral, without the express written consent
of Agent except for any equipment or other tangible personal property which is
replaced by comparable equipment or other tangible personal property of equal or
greater mutability or value. Borrower will not sell, transfer, lease, exchange,
discount, assign, abandon,

                                       53
<PAGE>   58

surrender, alienate or dispose of (i) any capital stock or other equity of TOGC
or any debt Obligation owed by TOGC to Borrower or (ii) any part of the
Collateral or any material interest therein without the express written consent
of Agent.

                  (e) LIMITATION ON AFFILIATE PAYMENTS. TOGA shall not make any
distributions or Affiliate Payments except for Permitted Borrower Payments.

                  (f) LIMITATION ON INVESTMENTS AND NEW BUSINESS. TOGA will not:

                      (i) make any expenditure or commitment or incur any
                  obligation or enter into or engage in any transaction except
                  in the ordinary course of business;

                      (ii) engage directly or indirectly in any business or
                  conduct any operations except in connection with or incidental
                  to its present business; or

                      (iii) without prior approval of the Agent, form or acquire
                  any or make any other acquisitions of or capital contributions
                  to or investments in any Person, other than Permitted
                  Investments and as contemplated in Section 2.4(c).

                  (g) LIMITATION ON CREDIT EXTENSIONS. Except for Permitted
Investments, as contemplated in Section 2.4(c) or the extension of trade credit
in the ordinary course of business as operator of oil and gas properties, TOGA
will not extend credit, make advances or make loans.

                  (h) TRANSACTIONS WITH AFFILIATES. Except for investments
otherwise expressly permitted under this Agreement, TOGA will not engage,
without Agent's prior written approval, in any material transaction with any
other Related Person or any Affiliate thereof.

                  (i) CERTAIN CONTRACTS: AMENDMENTS; MULTIEMPLOYER ERISA PLANS.
TOGA will not:

                      (i) enter into any "take-or-pay" contract or other
                  contract or arrangement for the purchase of goods or services
                  which obligates TOGA to pay for such goods or service
                  regardless of whether they are delivered or furnished to it;

                      (ii) incur any obligation to contribute to any
                  "multiemployer plan" as defined in Section 4001 of ERISA;

                      (iii) amend or permit any change to any material terms of
                  any Project Document (except, in each case, with the approval
                  of Agent, which approval shall not be unreasonably withheld or
                  delayed);

                      (iv) waive any default under, or breach of, any Project
                  Document or waive, fail to enforce, forgive, compromise,
                  settle, adjust or release any right, interest or entitlement,
                  howsoever arising, under, or in respect of any Project
                  Document;

                                       54
<PAGE>   59

                      (v) exercise any right to initiate an arbitration
                  proceeding under any Project Documents (except, in each case,
                  with the approval of Agent which approval shall not be
                  unreasonably withheld or delayed);

                      (vi) petition, request or take any other legal or
                  administrative action that seeks, or may reasonably be
                  expected, to cancel, suspend, void, or terminate any Project
                  Document; or

                      (vii) amend or permit any change to any contract or lease
                  which releases, qualifies, limits, makes contingent or
                  otherwise detrimentally affects the rights and benefits of
                  Holders, Agent or Collateral Agent under or acquired pursuant
                  to any Security Documents.

Furthermore, TOGA will insure that no other Related Person makes or permits any
amendment described in clause (vii) above.

                  (j) LIMITATION ON TOGA'S G&A COSTS. TOGA shall not incur or
expend any G&A Costs other than Permitted G&A Costs.

                  (k) MINIMUM WORKING CAPITAL. TOGA and its Subsidiaries, if
any, will maintain consolidated working capital ("WORKING CAPITAL") of at least
$1,000,000 (excluding, so long as no default exists, the maturities on the
Notes) at all times. For the purpose of calculating working capital, the
following accounts receivable shall be excluded: (i) those owing by
shareholders, Affiliates, directors or employees, (ii) those payable greater
than sixty (60) days after the end of the related production month and (iii)
those outstanding greater than one hundred twenty (120) days after the end of
the related production month.

                  (l) PRESS RELEASES; PUBLIC ANNOUNCEMENTS. Neither Borrower nor
TOGA will make or permit any public announcement or press release respecting the
transactions contemplated herein or any agreements related hereto without the
Agent's prior Approval unless required by law to comply with disclosure
requirements.

                  (m) DISCRETIONARY SPENDING. To the extent not advanced or
reimbursed by a Related Party as Inter-company Debt or a Capital Contribution to
TOGA, TOGA will not, in the aggregate, expend amounts exceeding $100,000 per
year other than those amounts specifically contemplated in the Approved Plan of
Development, excluding any amounts funded by Borrower as a capital contribution
to TOGA.

                  (n) LIMITATION ON ISSUANCE OF CAPITAL STOCK. TOGA will not
issue any voting or non-voting capital stock to any Person unless such Person
concurrently with the issuance thereof pledges such stock to Collateral Agent to
secure the Obligations by a perfected first priority Lien. Borrower will not
permit any issuance of capital stock by TOGC to any party other than Borrower.

         Section 5.3 COVERAGE RATIO.

                  From and after the Closing Date, Borrower and TOGA in the
aggregate shall maintain a Coverage Ratio (as defined below) of at least 150% at
all times while any of the

                                       55
<PAGE>   60

Obligations under the Loan Documents remain outstanding. If any Coverage
Deficiency exists, Borrower and TOGA shall as soon as reasonably commercially
practicable after obtaining knowledge thereof cure such Coverage Deficiency,
either by furnishing and mortgaging additional engineered producing oil and gas
wells satisfactory to Lenders in order to increase Modified NPV10 or by making
payments (or identifying and segregating cash in the TOGA Dollar Collateral
Account) in order to reduce the Adjusted Investment. If any Coverage Default
exists, Borrower and TOGA shall within thirty (30) days after obtaining
knowledge thereof cure such Coverage Default, either by furnishing and
mortgaging additional engineered producing oil and gas wells satisfactory to
Lenders in order to increase Modified NPV10 or by making payments (or
identifying and segregating cash in the TOGA Dollar Collateral Account) in order
to reduce the Adjusted Investment. As used in this Section 5.3, "COVERAGE RATIO"
means at any time in question the quotient obtained by dividing:

                      (i) The sum of (A) the Total Modified NPV10 as determined
                  from the Engineering Report most recently prepared as of such
                  time (which report shall adjust the projected cash flow and
                  volumes of oil and gas reserves produced since the last report
                  and engineering of new wells all in a manner satisfactory to
                  Lenders) and (B) the Working Capital (if positive);

         by

                      (ii) the Adjusted Investment at such time.

                                   ARTICLE 6
                                    SECURITY

         Section 6.1 THE SECURITY. The Obligations will be secured by perfected
first-priority liens (subject only to Liens permitted under Section 5.2(b) if
expressly permitted to be senior to the Liens securing the Obligations) in the
Collateral and all other assets under the Security Documents listed in the
Security Schedule, and by the liens and security interests (including security
interests in the shares of TOGA) granted in any additional Security Documents
hereafter delivered by any Related Person and accepted by Agent or Collateral
Agent. TOGA agrees that if it is successful in having any additional interest in
the Project Properties transferred to it, it will use its best efforts to
further secure the Obligations to the Collateral Agent at TOGA's cost.

         Section 6.2 AGREEMENT TO DELIVER SECURITY DOCUMENTS. Each of Borrower
and TOGA agrees to deliver or cause to be delivered, to further secure the
Obligations whenever requested by Agent or Collateral Agent in its sole and
absolute discretion, deeds of trust, mortgages, chattel mortgages, security
agreements, financing statements and other Security Documents in form and
substance satisfactory to Collateral Agent for the purpose of granting,
confirming, and perfecting first and prior liens or security interests in any
real or personal property of Borrower or TOGA.

         Section 6.3 PERFECTION AND PROTECTION OF SECURITY INTERESTS AND LIENS.
Each of Borrower and TOGA will from time to time deliver to Collateral Agent any
financing statements, continuation statements, extension agreements and other
documents properly completed and executed (and acknowledged when required) by
the Related Persons in form and

                                       56
<PAGE>   61

substance satisfactory to Collateral Agent, which Agent or Collateral Agent
requests for the purpose of perfecting, confirming, or protecting any Liens or
other rights in Collateral securing any Obligations.

         Section 6.4 APPOINTMENT OF AGENT AND COLLATERAL AGENT.

                  (a) AGENT. Each Lender, for itself in the capacity in which it
is acting herein, and each other Holder hereby appoints TAMCO as agent (together
with its successors in such capacity herein called "AGENT") to act for and on
behalf of the Lenders and each other Holder under or pursuant to this Agreement
and the other Loan Documents, and TAMCO hereby accepts such appointment. Agent
is authorized to act on behalf of the Lenders and each other Holder in (i)
exercising rights and remedies with respect to Collateral (which may be
delegated to Collateral Agent) or with respect to any other matter under any of
the Loan Documents, (ii) giving notices or instructions to Borrower and TOGA,
(iii) receiving information from or notices by Borrower and TOGA, and (iv)
communicating to Borrower and TOGA determinations required or permitted to be
made under this Agreement or any other Loan Document. Agent may, on behalf of
any Lender and any other Holder, take any other action which such Lender or such
Holder is entitled to take hereunder or under any of the Loan Documents. Such
appointment of TAMCO as Agent shall not, however, impair or modify any rights,
obligations or duties which TAMCO or any Affiliate of TAMCO otherwise has with
respect to any Lender or any other Holder. In its administration of this
Agreement and the other Loan Documents, except to the extent to which another
standard applies to TAMCO by reason of any other document between TAMCO and the
Lenders or other Holder, Agent will exercise the same care that it exercises in
the administration or handling of transactions for its own account, subject,
however, to subsection (h) below.

                  (b) COLLATERAL AGENT. Each Lender, for itself in each capacity
in which it is acting herein, and each other Holder hereby appoints TAMCO as
Collateral Agent (herein, together with its successors and assigns in such
capacity, "COLLATERAL AGENT") under the Loan Documents, to exercise such powers
under the Loan Documents as are delegated to Collateral Agent by the terms
thereof, together with all such powers as are reasonably incidental thereto,
including taking, holding and disposing of the Collateral. TAMCO hereby accepts
such appointment. Collateral Agent shall act for and on behalf of the Lenders
and the Holders in connection with all Collateral and Security Documents. In its
administration of this Agreement and the other Loan Documents, except to the
extent to which another standard applies to TAMCO by reason of any other
document between TAMCO and the Lenders and any other Holder, Collateral Agent
will exercise the same care that it exercises in the administration or handling
of transactions for its own account, subject, however, to subsection (h) below.

                  (c) REQUISITE HOLDERS. Except with respect to any matters
expressly provided for by this Agreement, the Notes, the Security Documents, any
other Loan Documents or the TCW Governing Documents (as defined in subsection
(d)(iii) below), each Holder agrees that neither Agent nor Collateral Agent
shall be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and each Holder agrees that Agent and
Collateral Agent shall be fully protected in so acting or refraining from
acting) upon the written instructions of the Requisite Holders. For the purpose
hereof, the "REQUISITE HOLDERS" shall mean, at any time, the Holders holding at
least sixty-six and two-thirds percent (66 2/3%)

                                       57
<PAGE>   62

of the outstanding principal amount of all Notes. The Requisite Holders may, in
their reasonable discretion, remove TAMCO from its respective appointments as
Agent and Collateral Agent and then select a new party to fulfill, in accordance
with the terms hereof, such positions. All powers of Agent and Collateral Agent
shall be exercised for the benefit of all Holders and in accordance with the
directions of the Requisite Holders. Agent and Collateral Agent shall take every
reasonable action to implement the Requisite Holders' directions. If any Note is
ever held by any Person other than the original Holders in accordance herewith,
Agent and Collateral Agent may insist on the execution of any agency agreement
among all holders of Notes, in form satisfactory to Agent and Collateral Agent
and providing for satisfactory indemnification, before carrying out any further
actions under the Loan Documents. Until any such agency agreement is executed:
(i) Agent and Collateral Agent shall be fully protected in acting on the
instructions of Persons holding Notes representing sixty-six and two-thirds
percent (66 2/3%) or more of the aggregate principal indebtedness owing under
all Notes in the manner described herein; (ii) TAMCO shall have the right to
withdraw as Agent and Collateral Agent, respectively, subject, however, to its
rights an duties under any other agreements with the Lenders or any other
Holder; and (iii) any action of Collateral Agent under any Security Document
shall be binding on the Lenders and Holders.

                  (d) LIMITATION OF DUTIES AND FIDUCIARY RELATIONSHIP. Neither
Agent nor Collateral Agent shall have any duties or responsibilities, except
those expressly set forth in:

                      (i) this Agreement;

                      (ii) the Security Documents; and

                      (iii) the other documents entered into between Trustco and
                  TAMCO described in the definitions of "Lenders" and "Holders"
                  (such other documents, collectively the "TCW GOVERNING
                  DOCUMENTS"),

nor shall Agent or Collateral Agent have any additional fiduciary relationship
with any Holder arising under this Section 6.4 and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or the other Loan Documents against Agent or Collateral
Agent.

                  (e) DISTRIBUTION OF PROCEEDS. The Holders shall share in the
proceeds obtained by Agent and in any other benefit either arising under the
Loan Agreement, the Notes and the Security Documents or obtained by Agent or
Collateral Agent in connection therewith, in the relative proportions which the
amounts then owed by Borrower to each of the Holders bear to the total amount
then owed by Borrower to all of the Holders; provided that Agent and Collateral
Agent shall be the first to be reimbursed for all costs and expenses incurred on
behalf of all parties in their respective capacities as Agent and Collateral
Agent to the extent permitted by the TCW Governing Documents. The duties
undertaken by Agent and Collateral Agent have been undertaken as an
accommodation to the Holders and, accordingly, Agent and Collateral Agent shall
not be compensated for their services hereunder except as provided in the TCW
Governing Documents.

                                       58
<PAGE>   63

                  (f) WRITTEN DIRECTIONS. Agent or Collateral Agent may at any
time request written directions from all the Holders with respect to (i) any
interpretation of this Agreement, the Notes and the Security Documents, or (ii)
any action to be taken or not to be taken hereunder or thereunder and may
withhold any action until such directions have been received from the Requisite
Holders. Agent and Collateral Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement in accordance with a
direction of the Requisite Holders under the terms of this Agreement and such
request and any action taken or withheld pursuant to such direction shall be
binding upon all the Holders.

                  (g) AGENTS AND ATTORNEYS. Agent or Collateral Agent may
execute any of its respective duties under this Agreement, the Notes and the
Security Documents by or through agents or attorneys selected by Agent or
Collateral Agent, respectively, using reasonable care. Neither Agent nor
Collateral Agent shall be responsible for the negligence or misconduct of any
agents or attorneys so selected. Agent and Collateral Agent shall be entitled to
the advice of counsel concerning all matters pertaining to their respective
duties hereunder.

                  (h) LIMITATION OF LIABILITY. Agent, Collateral Agent, and
their respective officers, directors, employees, agents, attorneys-in-fact and
affiliates shall not:

                      (i) be liable for any action taken or omitted to be taken
                  by any of such Persons or for any error in judgment under or
                  in connection with this Agreement, the Notes and the Security
                  Documents, except for any such Person's gross negligence or
                  willful misconduct; or

                      (ii) be responsible in any manner to any Holder or any
                  other Person for any failure of any other party to perform its
                  obligations under this Agreement, the Notes and the Security
                  Documents.

Nothing in this subsection, however, shall be deemed to limit or restrict any
liability, fiduciary duty or responsibility of TAMCO in any capacity other than
as Agent or Collateral Agent, including any liability, fiduciary duty or
responsibility under the TCW Governing Documents.

                  (i) RELIANCE UPON DOCUMENTATION. Agent or Collateral Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or any telephone conversation believed, respectively, by Agent or
Collateral Agent to be genuine and correct and to have been signed, sent, made
or spoken by the proper person or persons, and upon the advice and statements of
legal counsel, independent accountants and other experts selected, respectively,
by Agent or Collateral Agent.

                  (j) RELIANCE BY BORROWER AND TOGA. Each Lender and each Holder
agree that, prior to the delivery to Borrower or TOGA of a notice of the removal
or termination of TAMCO as Agent as set forth below, Borrower and TOGA shall be
entitled to rely on TAMCO's or any subsequent Agent's authority to act on behalf
of each Lender and each Holder in all dealings with TAMCO (or any such
subsequent Agent) with respect to the Loans and the Loan Documents; Borrower and
TOGA shall be protected in relying on actions, communications, notices and
terminations relating thereto or required or permitted thereunder by

                                       59
<PAGE>   64

Agent; and Borrower and TOGA shall discharge their obligations under this
Agreement and the Loan Documents by delivering payments, notices and other
information to Agent. In the event of the removal of Agent and the appointment
of a successor Agent by Holders, Borrower and TOGA shall not be required to
recognize any such removal or appointment unless and until Borrower or TOGA
shall have received a writing setting forth such removal and appointment
executed by the Requisite Holders, and Borrower and TOGA shall be entitled to
rely on such writing as being genuine and what it purports to be without any
necessity of any investigation whatsoever. Borrower and TOGA shall be entitled
to rely upon the actions, communications and notices of TAMCO with respect to
the Collateral until Borrower or TOGA receives notice in writing from Agent that
TAMCO has resigned or been replaced as Collateral Agent.

                                   ARTICLE 7
                         EVENTS OF DEFAULT AND REMEDIES

         Section 7.1 EVENTS OF DEFAULT.

                  (a) If any of the following events shall occur and be
continuing, it shall constitute an "EVENT OF DEFAULT" under this Agreement:

                      (i) Borrower or any Related Person fails to pay any
                  Obligation when due and payable, whether at a date for the
                  payment of a fixed installment or as a contingent or other
                  payment becomes due and payable or as a result of acceleration
                  or otherwise and such failure continues for ten (10) Business
                  days thereafter.

                      (ii) Any "default" or "event of default" occurs under any
                  Loan Document which defines either such term and such
                  occurrence is not remedied within the applicable period of
                  grace (if any) provided in such Loan Document.

                      (iii) Borrower, TOGA or any Related Person fails (other
                  than as referred to in paragraphs (i) and (ii) above) to duly
                  observe, perform or comply with any covenant, agreement,
                  condition or provision of any Loan Document, and such failure
                  is not remedied within thirty (30) days after Borrower, TOGA
                  or any Related Person first learns of such failure (whether by
                  notice from the Lenders or otherwise);

                      (iv) Any representation or warranty previously, presently
                  or hereafter made in writing by or on behalf of Borrower, TOGA
                  or any Related Person in connection with any Loan Document
                  shall prove to have been false or incorrect in any material
                  respect on any date on or as of which made, or any Loan
                  Document at any time ceases to be valid, binding and
                  enforceable in any material respect as warranted in Section
                  4.1(e) for any reason other than its release or subordination
                  by the Lenders or Collateral Agent;

                      (v) Borrower, TOGA or any Related Person fails to duly
                  observe, perform or comply with any agreement with any Person
                  or with any material term or condition of any instrument, if
                  such agreement or instrument is material to the

                                       60
<PAGE>   65

                  business or financial condition of Borrower or TOGA, if the
                  effect of such event is to cause or (with the giving of notice
                  or lapse of time or both) to permit such agreement or
                  instrument to be modified or terminated;

                      (vi) (A) Borrower or TOGA fails to pay when due any
                  portion in excess of $100,000 of any of its Debt and such
                  failure continues for sixty (60) days unless the same is being
                  contested in good faith and for which adequate cash reserves
                  have been established, or (B) Borrower or TOGA breaches or
                  defaults in the performance of any material term or condition
                  of any agreement or instrument by which any such Debt is
                  issued, evidenced, governed, or secured, and any such failure,
                  breach or default continues beyond any applicable period of
                  grace provided therefor unless the same is being contested in
                  good faith;

                      (vii) Either (A) any "accumulated funding deficiency" (as
                  defined in Section 412(a) of the Internal Revenue Code of
                  1986, as amended) in excess of $100,000 exists with respect to
                  any ERISA Plan, whether or not waived by the Secretary of the
                  Treasury or his delegate, or (B) any Termination Event occurs
                  with respect to any ERISA Plan and the then current value of
                  such ERISA Plan's benefit liabilities exceeds the then current
                  value of its assets available for the payment of such benefit
                  liabilities by more than $100,000 (or in the case of a
                  Termination Event involving the withdrawal of a substantial
                  employer, the withdrawing employer's proportionate share of
                  such excess exceeds such amount);

                      (viii) Any Governmental Approval necessary for the
                  execution, delivery or performance of this Agreement, the
                  Notes (i) any of the other Loan Documents, or (ii) the
                  validity or enforceability of Borrower's, TOGA's or any
                  Related Person's obligations under this Agreement, the Notes
                  or the other Loan Documents, is not effected or given or is
                  withdrawn or ceases to remain in full force and effect for a
                  period in excess of thirty (30) days;

                      (ix) The occurrence of any of the following with respect
                  to Borrower or TOGA:

                           (A) Borrower or TOGA suffers the entry against it of
                      a judgment, decree or order for relief by a court of
                      competent jurisdiction in an involuntary proceeding
                      commenced under any applicable bankruptcy, insolvency or
                      other similar law of any jurisdiction now or hereafter in
                      effect, including the federal Bankruptcy Code, as from
                      time to time amended, or has any such proceeding commenced
                      against it which remains undismissed for a period of sixty
                      (60) days; or

                           (B) Borrower or TOGA commences a voluntary case under
                      any applicable bankruptcy, insolvency or similar law now
                      or hereafter in effect, including the federal Bankruptcy
                      Code, as from time to time amended; or applies for or
                      consents to the entry of an order for relief in an
                      involuntary case under any such law; or makes a general
                      assignment for

                                       61
<PAGE>   66

                      the benefit of creditors; or fails generally to pay (or
                      admits in writing Borrower's or TOGA's inability to pay)
                      its debts as such debts become due; or takes corporate or
                      other action to authorize any of the foregoing; or

                           (C) Borrower or TOGA suffers the appointment of or
                      taking possession by a receiver, liquidator, assignee,
                      custodian, trustee, sequestrator or similar official of
                      all or a substantial part of Borrower's or TOGA's assets
                      or of any part of the Collateral in a proceeding brought
                      against or initiated by Borrower or TOGA, and such
                      appointment or taking possession is neither made
                      ineffective nor discharged within sixty (60) days after
                      the making thereof, or such appointment or taking
                      possession is at any time consented to, requested by, or
                      acquiesced to by Borrower or TOGA; or

                           (D) Borrower or TOGA suffers the entry against it of
                      a final judgment for the payment of money in excess of
                      $100,000 with respect to Borrower and TOGA unless the same
                      is discharged within thirty (30) days after the date of
                      entry thereof or an appeal or appropriate proceeding for
                      review thereof is taken within such period and a stay of
                      execution pending such appeal is obtained prior to the
                      first date on which such execution is allowed; or

                           (E) Borrower or TOGA suffers a writ or warrant of
                      attachment or any similar process to be issued by any
                      court against all or any substantial part of Borrower's or
                      TOGA's assets or any part of the Collateral, and such writ
                      or warrant of attachment or any similar process is not
                      stayed or released within thirty (30) days after the entry
                      or levy thereof or after any stay is vacated or set aside;
                      or

                           (F) a Change in Control has occurred without the
                      Approval of the Agent.

                      (x) A Material Adverse Effect occurs and is not remedied
                  within thirty (30) days after a Related Person first learns of
                  such occurrence (whether by notice from the Lenders or
                  otherwise);

                      (xi) TOGA shall be dissolved and shall not be
                  reincorporated within fifteen (15) days after the date of such
                  dissolution;

                      (xii) Borrower shall be dissolved;

                      (xiii) This Agreement, the Notes or any Loan Document at
                  any time for any reason ceases to be in full force and effect,
                  or is declared to be void or is repudiated, or the validity or
                  enforceability hereof or thereof is at any time contested by
                  Borrower, TOGA or any Related Person or such documents ceases
                  to give or provide the respective Liens, rights, titles,
                  remedies, powers or privileges intended to be created thereby;
                  and

                                       62
<PAGE>   67

                      (xiv) Any Governmental Person confiscates, takes,
                  restricts, appropriates, condemns, seizes or otherwise
                  expropriates all or a substantial portion of the Project or
                  the properties, assets or the capital stock of Borrower, TOGA
                  or a Related Person, or assumes custody or control or
                  interferes with the administration or management of a material
                  part of such property or other assets or business operations
                  of Borrower or TOGA.

                  (b) Upon the occurrence of an Event of Default described in
paragraph (ix)(A), (ix)(B) or (ix)(C) of subsection (a) above, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower, TOGA and each Related Person who at any
time ratifies or approves this Agreement. During the continuance of any other
Event of Default, the Agent or Requisite Holders at any time and from time to
time may without notice to Borrower, TOGA or any other Related Person declare
any or all of the Obligations immediately due and payable, and all such
obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which, to
the extent provided by applicable law, are hereby expressly waived by Borrower,
TOGA and each Related Person who at any time ratifies or approves this
Agreement. After any such acceleration (whether automatic or due to declaration
by the Agent or Requisite Holders), any obligation of the Lenders or Holders to
make any further Advances or loans of any kind under any agreement with Borrower
shall be permanently terminated.

         Section 7.2 REMEDIES. If any Event of Default shall occur and be
continuing, the Lenders may protect and enforce their rights under the Loan
Documents by any appropriate proceedings, including proceedings for specific
performance of any covenant or agreement contained in any Loan Document, and the
Lenders may enforce the payment of any obligations due or enforce any other
legal or equitable right. All rights, remedies and waivers conferred upon the
Lenders or Collateral Agent under the Loan Documents shall be deemed cumulative
and not exclusive of any other rights, remedies or powers available under the
Loan Documents or at law or in equity.

                  In addition to any and all other rights and remedies that the
Holders shall have, the Holders shall have the option to either:

                      (i) Maintain this Agreement in full force and effect and
                  sue for the Principal Payments and Coupon Interest as they
                  become due and payable;

                      (ii) Accelerate all amounts due under the Notes and sue
                  for the Principal Payment and Coupon Interest as they become
                  due and payable; or

                      (iii) Accelerate all amounts due under the Notes, and to
                  collect in addition to the amount of outstanding principal,
                  accrued Coupon Interest and other amounts owing with respect
                  to the Obligations, all costs and expenses of the

                                       63
<PAGE>   68

                  Holders in enforcing these provisions, including without
                  limitation attorneys' fees and costs; and the Early Payment
                  Premium.

         Section 7.3 INDEMNITY. Indemnitors agree to indemnify the Lenders, the
Holders, Agent and Collateral Agent and their directors, officers, shareholders,
partners, members, employees, affiliates and professional advisers and
consultants (collectively, "INDEMNITEES"), upon demand, from and against any and
all liabilities, obligations, claims, losses, damages, penalties, fines,
actions, judgments, suits, settlements, costs, expenses or disbursements
(including reasonable fees of attorneys, accountants, experts and advisors) of
any kind or nature whatsoever (in this Section 7.3 collectively called
"LIABILITIES AND COSTS") which to any extent (in whole or in part) may be
imposed on, incurred by, or asserted against such Indemnitees growing out of,
resulting from or in any other way associated with any of the Collateral, the
Loan Documents, or the transactions and events (including the enforcement or
defense thereof) at any time associated therewith or contemplated therein
(including any violation or noncompliance with any Environmental Laws by the
Borrower, TOGA or any Related Person or any liabilities or duties of the
Borrower, TOGA or any Related Person or of such Indemnities with respect to
Hazardous Materials found in or released into the environment); provided,
however, that Borrower shall not be obligated to indemnify Indemnitees for
liabilities and costs attributable to taxes imposed on Indemnitees or their
income other than Australian Withholding Taxes. THE FOREGOING INDEMNIFICATION
SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY
EFFECT CAUSED, IN PART BUT NOT IN WHOLE, BY ANY NEGLIGENT ACT OR OMISSION OF ANY
KIND BY THE INDEMNITEES, provided only that any Indemnitee shall not be entitled
under this Section 7.3 to receive indemnification for that portion, if any, of
any liabilities and costs which is proximately caused by its own individual
fraud, gross negligence or willful misconduct, as determined in a final
judgment, or by its own individual actions with respect to Collateral in its
possession. As used in this Section 7.3, the term "LENDERS" shall refer not only
to the Persons designated as such in the preamble hereto, but also to Trustco,
TAMCO, and each director, officer, agent, trustee, manager, attorney, employee,
representative and Affiliate of any such Person.

                                    ARTICLE 8
                                  MISCELLANEOUS

         Section 8.1 WAIVERS AND AMENDMENTS; ACKNOWLEDGMENT.

                  (a) WAIVERS AND AMENDMENTS. No failure or delay (whether by
course of conduct or otherwise) by Lenders, Holders, Agent or Collateral Agent
in exercising any right, power or remedy which any of them may have under any of
the Loan Documents shall operate as a waiver thereof or of any other right,
power or remedy, nor shall any single or partial exercise by Lenders, Holders,
Agent or Collateral Agent of any such right, power or remedy preclude any other
or further exercise thereof or of any other right, power or remedy. No waiver of
any provision of any Loan Document and no consent to any departure therefrom
shall ever be effective unless it is in writing and signed by Agent or by
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Related Person shall in
any case of itself entitle any Related Person to any other or further notice or
demand in similar

                                       64
<PAGE>   69

or other circumstances. This Agreement and the other Loan Documents set forth
the entire understanding and agreement of the parties hereto and thereto with
respect to the transactions contemplated herein and therein and supersede all
prior discussions and understandings with respect to the subject matter hereof
and thereof, and no modification or amendment of or supplement to this Agreement
or the other Loan Documents shall be valid or effective unless the same is in
writing and signed by the party against whom it is sought to be enforced. THIS
WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

                  (b) ACKNOWLEDGMENTS AND ADMISSIONS. Each of Borrower and TOGA
hereby represents, warrants, acknowledges and admits that:

                      (i) it has been advised by counsel in the negotiation,
                  execution and delivery of the Loan Documents to which it is a
                  party;

                      (ii) it has made an independent decision to enter into
                  this Agreement and the other Loan Documents to which it is a
                  party, without reliance on any representation, warranty,
                  covenant or undertaking by the Lenders, Holders, Agent or
                  Collateral Agent, whether written, oral or implicit, other
                  than as expressly set out in this Agreement or in another Loan
                  Document delivered on or after the date hereof;

                      (iii) there are no representations, warranties, covenants,
                  undertakings or agreements by the Lenders, Holders, Agent or
                  Collateral Agent as to the Loan Documents except as expressly
                  set out in this Agreement or in another Loan Document
                  delivered on or after the date hereof;

                      (iv) neither the Lenders, Holders, Agent nor Collateral
                  Agent owes any fiduciary duty to Borrower or TOGA with respect
                  to any Loan Document or the transactions contemplated thereby;

                      (v) the relationship pursuant to the Loan Documents
                  between Borrower or TOGA, on one hand, and the Lenders,
                  Holders, Agent or Collateral Agent, on the other hand, is and
                  shall be solely that of debtor and creditor, respectively;

                      (vi) no partnership or joint venture exists with respect
                  to the Loan Documents between Borrower or TOGA and the
                  Lenders, the Holders, Agent or Collateral Agent;

                      (vii) should an Event of Default or Default occur or
                  exist, each of the Lenders, Holders, Agent and Collateral
                  Agent will determine in its sole discretion and for its own
                  reasons what remedies and actions it will or will not exercise
                  or take at that time;

                                       65
<PAGE>   70

                      (viii) without limiting any of the foregoing, each of
                  Borrower and TOGA is not relying upon any representation or
                  covenant by the Lenders, Holders, Agent or Collateral Agent,
                  or any representative thereof, and no such representation or
                  covenant has been made, that the Lenders, Holders, Agent or
                  Collateral Agent will, at the time of an Event of Default or
                  Default, or at any other time, waive, negotiate, discuss, or
                  take or refrain from taking any action permitted under the
                  Loan Documents with respect to any such Event of Default or
                  Default or any other provision of the Loan Documents; and

                      (ix) The Lenders have relied upon the truthfulness of the
                  acknowledgments in this Section 8.1 in deciding to execute and
                  deliver this Agreement and to make the Loans.

         Section 8.2 SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE. All of the
Related Persons' various representations, warranties, covenants and agreements
in the Loan Documents shall survive the execution and delivery of this Agreement
and the other Loan Documents and the performance hereof and thereof, including
the making or granting of the Loans and the delivery of the Notes and the other
Loan Documents, and shall further survive until all of the Obligations are paid
in full to the Lender, Holders, Agent and Collateral Agent and all of the
Lenders' obligations to Borrower hereunder are terminated. The representations,
warranties, and covenants made by the Related Persons in the Loan Documents, and
the rights, powers and privileges granted to the Lenders, Holders, Agent and
Collateral Agent in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan Document shall be construed in
the context of another to diminish, nullify, or otherwise reduce the benefit to
the Lender, Holders, Agent or Collateral Agent of any such representation,
warranty, covenant, right, power or privilege. In particular and without
limitation, no exception set out in this Agreement to any representation,
warranty or covenant herein contained shall apply to any similar representation,
warranty or covenant contained in any other Loan Document, and each such similar
representation, warranty or covenant shall be subject only to those exceptions
which are expressly made applicable to it by the terms of the various Loan
Documents.

         Section 8.3 NOTICES. All notices, requests, consents, demands and other
communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document, and shall
be deemed sufficiently given or furnished if delivered by personal delivery, by
telecopy, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower, TOGA and the Related
Persons and to the Lenders, Holders, Agent and Collateral Agent at the addresses
specified below (unless changed by similar notice in writing given by the
particular Person whose address is to be changed)

               Borrower:                    Tipperary Corporation
                                            633 Seventeenth Street
                                            Suite 1550
                                            Denver, Colorado  80202
                                            Attention: David L. Bradshaw,
                                                       President
                                            Telephone: (303) 293-9379
                                            Telecopy:  (303) 292-3428

                                       66
<PAGE>   71

               With a copy to:              Jones & Keller, P.C.
                                            Sixteenth Floor
                                            1625 Broadway
                                            Denver, Colorado 80202
                                            Attention:      Reid Godbolt, Esq.
                                            Telephone:      (303) 573-1600
                                            Telecopy:       (303) 573-0769

               TOGA:                        Tipperary Oil & Gas (Australia) Pty.
                                            Ltd (ACN 077 536 871)
                                            Level 5, 359 Queen Street
                                            Brisbane, Queensland 4000
                                            Australia
                                            Attention:      Richard A. Barber
                                            Telephone:      61-7-3229-5774
                                            Telecopy:       61-7-3221-7666

               Lenders and Holders:         Trust Company of the West
                                            865 South Figueroa Street
                                            Los Angeles, California 90017
                                            Attention:      Arthur R. Carlson
                                            Telephone:      (213) 244-0053
                                            Telecopy:       (213) 244-0604

               With a copy to:              TCW Asset Management Company
                                            1000 Louisiana Street, Suite 2175
                                            Houston, Texas 77002
                                            Attention:      Marc MacAluso
                                            Telephone:      (713) 615-7410
                                            Telecopy:       (713) 615-7460

               With a copy to:              Milbank, Tweed, Hadley & McCloy LLP
                                            601 South Figueroa Street
                                            30th Floor
                                            Los Angeles, California 90017
                                            Attention:      David A. Lamb, Esq.
                                            Telephone:      (213) 892-4434
                                            Telecopy:       (213) 629-5063

               Agent and Collateral Agent:  Trust Company of the West
                                            865 South Figueroa Street
                                            Los Angeles, California 90017
                                            Attention:      Arthur R. Carlson
                                            Telephone:      (213) 244-0053
                                            Telecopy:       (213) 244-0604

                                       67
<PAGE>   72

               With a copy to:              TCW Asset Management Company
                                            1000 Louisiana Street, Suite 2175
                                            Houston, Texas 77002
                                            Attention:      Marc MacAluso
                                            Telephone:      (713) 615-7410
                                            Telecopy:       (713) 615-7460

               With a copy to:              Milbank, Tweed, Hadley & McCloy LLP
                                            601 South Figueroa Street
                                            30th Floor
                                            Los Angeles, California 90017
                                            Attention:      David A. Lamb, Esq.
                                            Telephone:      (213) 892-4434
                                            Telecopy:       (213) 629-5063

         Section 8.4 PARTIES IN INTEREST. All grants, covenants and agreements
contained in the Loan Documents shall bind and inure to the benefit of the
parties thereto and their respective successors and assigns; provided, however,
that no Related Person may assign or transfer any of its rights or delegate any
of its duties or obligations under any Loan Document without the prior consent
of the Lenders.

         Section 8.5 GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE EXTENT
THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN DOCUMENT,
THE LOAN DOCUMENTS, INCLUDING THIS AGREEMENT, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE BORROWER HEREBY IRREVOCABLY SUBMITS ITSELF
TO THE NON-EXCLUSIVE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE STATE OF NEW YORK AND THE COUNTY OF NEW YORK AND AGREES AND
CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT OR ANY OF ITS SUBSIDIARIES
IN ANY LEGAL PROCEEDING RELATING TO THE LOAN DOCUMENTS OR THE OBLIGATIONS BY ANY
MEANS ALLOWED UNDER NEW YORK OR FEDERAL LAW. BORROWER IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. BORROWER HAS APPOINTED CT CORPORATION AS ITS
AGENT FOR SERVICE OF PROCESS IN THE STATE OF NEW YORK AND SHALL NOTIFY THE
LENDERS IN WRITING OF ANY CHANGE IN SUCH APPOINTMENT (WHICH MAY BE CHANGED ONLY
TO ANOTHER CORPORATE AGENT HAVING AN ADDRESS IN NEW YORK, NEW YORK).

         Section 8.6 LIMITATION ON INTEREST.

                  (a) The Lenders, Holders, the Related Persons and any other
parties to the Loan Documents intend to contract in strict compliance with
applicable usury law from time to

                                       68
<PAGE>   73

time in effect. In furtherance thereof, such Persons stipulate and agree that
none of the terms and provisions contained in the Loan Documents shall ever be
construed to create a contract to pay, for the use, forbearance or detention of
money, interest in excess of the maximum amount of interest permitted to be
charged by applicable law from time to time in effect. Neither any Related
Person nor any present or future guarantors, endorsers, or other Persons
hereafter becoming liable for payment of any Obligation shall ever be liable for
unearned interest thereon or shall ever be required to pay interest thereon in
excess of the maximum amount that may be lawfully charged under applicable law
from time to time in effect, and the provisions of this Section 8.6 shall
control over all other provisions of the Loan Documents which may be in conflict
or apparent conflict herewith.

                  (b) The Lenders and Holders expressly disavow any intention to
contract for, charge or collect unearned interest or finance charges in the
event the maturity of any Obligation is accelerated. If (i) the maturity of any
Obligation is accelerated for any reason, (ii) any Obligation is prepaid and as
a result any amounts held to constitute interest are determined to be in excess
of the legal maximum, or (iii) the Lenders or any other Holder of any or all of
the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the Obligations to an amount in excess of that permitted to be charged by
applicable law then in effect, then all such sums determined to constitute
interest in excess of such legal limit shall, without penalty, be promptly
applied to reduce the then outstanding principal of the related Obligations or,
at the Lenders' or such Holder's option, promptly returned to Borrower or the
other payor thereof upon such determination.

                  (c) In determining whether or not the interest paid or payable
under any specific circumstances exceeds the maximum amount permitted under
applicable law, the Lenders, Holders and the Related Persons (and any other
payors thereof) shall, to the greatest extent permitted under applicable law,
(i) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing the
Obligations in accordance with the amounts outstanding from time to time
thereunder and the Highest Lawful Rate from time to time in effect under
applicable law in order to lawfully charge the maximum amount of interest
permitted under applicable law.

         Section 8.7 SURVIVAL. Any waivers or admissions made by any Related
Person in any Loan Document and any obligations which any Person may have to
indemnify or compensate the Lenders, Holders, Agent or Collateral Agent shall
survive any termination of this Agreement or any other Loan Document.

         Section 8.8 SEVERABILITY. If any term or provision of any Loan Document
shall be determined to be illegal or unenforceable, all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.

                                       69

<PAGE>   74
         Section 8.9 COUNTERPARTS. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.

         Section 8.10 WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. EACH OF THE
BORROWER, TOGA, AGENT, COLLATERAL AGENT, LENDERS AND HOLDERS HEREBY:

                  (a) KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY
WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR
INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN
DOCUMENTS OR ANY LOAN CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR
AFTER MATURITY;

                  (b) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED
BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR
IN ADDITION TO, ACTUAL DAMAGES;

                  (c) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS; AND

                  (d) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 8.10.

         Section 8.11 EXHIBITS AND SCHEDULES; ADDITIONAL DEFINITIONS. All
Exhibits and Schedules to this Agreement are a part hereof for all purposes.
Certain additional terms may be defined in the Security Schedule and used but
not defined in the body of this Agreement; reference is hereby made to the
Security Schedule for the meaning of any such terms.

         Section 8.12 CONFIDENTIALITY OF HOLDERS.

                  (a) Notwithstanding the termination of this Agreement and
except as otherwise provided in subsection (b), (c) or (d) below, Borrower shall
maintain the confidentiality of the identities of (i) any Holder or any holder
of any Obligation other than the Notes; (ii) any participant in any of the TCW
Funds; and (iii) any owner of a beneficial interest in the Notes (collectively,
"CONFIDENTIAL INFORMATION") and shall not, without Lenders' or the

                                       70

<PAGE>   75

Holder's prior written consent, disclose any such information to another Person
or use such information for purposes other than those contemplated herein.

                  (b) Borrower and TOGA may disclose at any time and to any
Person the fact that Trustco or TAMCO is a party hereto in various agency,
custodial, or fiduciary capacities, without disclosing the identities of the
principals or beneficiaries represented directly or indirectly by Trustco or
TAMCO.

                  (c) Borrower and TOGA may disclose Confidential Information to
its directors, officers, employees, and agents (including attorneys,
accountants, and consultants) to whom such disclosure is reasonably necessary
for the execution or effectuation hereof, provided Borrower or TOGA,
respectively, notifies all such Persons that the Confidential Information
disclosed to them is subject to this Section 8.12 and requires them not to
disclose or use such information in breach of this Section 8.12.

                  (d) If Borrower or TOGA is requested or required by legal
process (including law or regulation, oral questions, interrogatories, request
for information or documents, subpoena, and civil investigative demand) to
disclose any Confidential Information, Borrower or TOGA, respectively, shall
promptly notify the Lenders or the particular Holder of such request prior to
complying with such process so that the Lenders or the particular Holder may
seek an appropriate protective order or waive the respondent's compliance with
this Section 8.12. If, after such notice and after providing the Lenders and
such Holder a reasonable opportunity to obtain a protective order or to grant
such waiver, Borrower or TOGA is nonetheless legally compelled to disclose such
information, Borrower or TOGA, respectively, may do so without liability under
this Section 8.12.

         Section 8.13 TRANSFER OF NOTES. The Lenders and any Holder shall be
entitled to transfer all or a portion of its interests in the Notes to any
Holder or any Affiliate thereof, or to any other Person, provided that any such
transferee as a condition to such transfer shall execute and deliver a
counterpart to this Agreement as then in effect in the capacity as an assignee
Holder and shall thereby be deemed to have ratified and approved each of the
other Loan Documents then in effect. Upon surrender of any of the Notes by any
transferor Holder or any such transferee Borrower shall execute and deliver one
or more substitute notes in such denominations and of a like aggregate unpaid
principal amount issued to the Lenders or Holder or to the designated transferee
or transferees for the Lenders or Holder or to the order of such transferees.
The terms and provisions of this Agreement shall inure to the benefit of any
such assignee or transferee of the Notes or such substitute note(s), and in the
event of such transfer or assignment, the rights and privileges herein conferred
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms hereof. Until notified in writing of the transfer of any
Note(s) or substitute note(s), Borrower shall be entitled to deem the Lenders or
such Person who has been identified to Borrower as the Holder of the Note(s) or
substitute note(s), as the owner and Holder of the Note(s) or substitute
note(s).

         Section 8.14 REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating hereto may be reproduced by any party and by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and any party may destroy any original documents so produced.
Each of the parties hereto agrees and stipulates that, to the

                                       71
<PAGE>   76

extent permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.

         Section 8.15 CURRENCY IN WHICH PAYMENTS SHALL BE MADE. All payments
made by Borrower to any Lender, Holder, Agent or Collateral Agent hereunder or
under any Loan Document shall be made in Dollars.

         Section 8.16 JUDGMENTS IN OTHER THAN DOLLARS. This is a loan
transaction that involves certain international components and in which the
specification of Dollars and payment in Los Angeles is of the essence, and the
obligations of the Borrower or TOGA under this Agreement or any of the other
Loan Documents to make payment to any Lender, Holder, Agent or Collateral Agent
in Dollars shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any other currency or in
another place except to the extent that such tender or recovery results in the
effective receipt by such Lender, Holder, Agent or Collateral Agent in Los
Angeles of the full amount of Dollars payable to such Lender, Holder, Agent or
Collateral Agent under this Agreement. If any judgment in favor of the Lenders,
the Holders, the Agent or the Collateral Agent, or with respect to the
Obligations or any other obligations of Borrower or TOGA under this Agreement
cannot, for any reason, be entered in terms of Dollars, the parties hereto
expressly agree that the amount of such judgment as denominated in a currency
other than Dollars shall be determined using the rate of exchange for such other
currency viz Dollars on the date of entry of judgment. Any payment made to or
for the account of any Lender, any Holder, the Agent or the Collateral Agent in
respect of any amount payable by Borrower or TOGA in Dollars which payment is
made in currency of any other country, whether pursuant to any judgment or order
of a court or tribunal or otherwise, shall constitute a discharge of Borrower or
TOGA only to the extent of the United States currency equivalent thereof using
the Spot Rate on the date payment is actually received by any Lender, any
Holder, the Agent or the Collateral Agent. Each of Borrower and TOGA shall, as a
separate and independent obligation which shall not be merged in any such
judgment or order, pay or cause to be paid the amount not so discharged in
accordance with the foregoing and indemnify and hold harmless any Lender, any
Holder, the Agent or the Collateral Agent against any loss or damage as a result
of any such amount being paid in currency of any other country.

                                       72
<PAGE>   77

                  IN WITNESS WHEREOF, this Agreement is executed as of the date
first written above.

BORROWER:                                TIPPERARY CORPORATION, a Texas
                                         corporation

                                         By:
                                            ------------------------------------
                                         Name: David L. Bradshaw
                                         Title: President

TOGA:                                    TIPPERARY OIL & GAS (AUSTRALIA) PTY
                                         LTD (ACN 077 536 871), a Queensland,
                                         Australia corporation

                                         By:
                                            ------------------------------------
                                         Name: David L. Bradshaw
                                         Title: President

LENDERS:                                 TCW DEBT AND ROYALTY FUND VI, L.P., a
                                         California limited partnership

                                         By: TCW Asset Management Company, a
                                             California corporation, as General
                                             Partner

                                         By:
                                            ------------------------------------
                                         Name:  Arthur R. Carlson
                                         Title: Managing Director

                                         By:
                                            ------------------------------------
                                         Name:  Marc MacAluso
                                         Title: Senior Vice President

                                       73
<PAGE>   78

                                         TCW ASSET MANAGEMENT COMPANY, a
                                         California corporation, as Investment
                                         Manager pursuant to the Investment
                                         Management Agreement dated as of
                                         October 27, 1997 between Delta Air
                                         Lines, Inc., TCW Asset Management
                                         Company and Trust Company of the West

                                         By:
                                            ------------------------------------
                                         Name:  Arthur R. Carlson
                                         Title: Managing Director

                                         By:
                                            ------------------------------------
                                         Name:  Marc MacAluso
                                         Title: Senior Vice President

                                         TCW ASSET MANAGEMENT COMPANY, a
                                         California corporation, as Investment
                                         Manager pursuant to the Investment
                                         Management and Custody Agreement dated
                                         as of October 27, 1997 between
                                         University of Chicago, TCW Asset
                                         Management Company and Trust Company of
                                         the West

                                         By:
                                            ------------------------------------
                                         Name:  Arthur R. Carlson
                                         Title: Managing Director

                                         By:
                                            ------------------------------------
                                         Name:  Marc MacAluso
                                         Title: Senior Vice President

                                       74
<PAGE>   79

                                         TCW ASSET MANAGEMENT COMPANY, a
                                         California corporation, as Investment
                                         Manager pursuant to the Investment
                                         Management and Custody Agreement dated
                                         as of October 27, 1997 between
                                         University of Notre Dame du Lac, TCW
                                         Asset Management Company and Trust
                                         Company of the West

                                         By:
                                            ------------------------------------
                                         Name:  Arthur R. Carlson
                                         Title: Managing Director

                                         By:
                                            ------------------------------------
                                         Name:  Marc MacAluso
                                         Title: Senior Vice President

                                         TCW ASSET MANAGEMENT COMPANY, a
                                         California corporation, as Investment
                                         Manager pursuant to the Investment
                                         Management and Custody Agreement dated
                                         as of October 24, 1997 between William
                                         N. Pennington Separate Property Trust
                                         dated January 1, 1991, TCW Asset
                                         Management Company and Trust Company of
                                         the West

                                         By:
                                            ------------------------------------
                                         Name:  Arthur R. Carlson
                                         Title: Managing Director

                                         By:
                                            ------------------------------------
                                         Name:  Marc MacAluso
                                         Title: Senior Vice President

                                       75
<PAGE>   80

                                       LION II CUSTOM INVESTMENTS LLC
                                       LIFE INSURANCE COMPANY OF GEORGIA
                                       SECURITY LIFE OF DENVER INSURANCE COMPANY
                                       SOUTHLAND LIFE INSURANCE COMPANY

                                          By: TCW Asset Management Company, a
                                          California corporation, as
                                          Investment Manager

                                          By:
                                             ---------------------------------
                                          Name:  Arthur R. Carlson
                                          Title: Managing Director

                                          By:
                                             ---------------------------------
                                          Name:  Marc MacAluso
                                          Title: Senior Vice President

AGENT:                                 TCW ASSET MANAGEMENT COMPANY,
                                       a California corporation

                                       By:
                                          ------------------------------------
                                       Name:  Arthur R. Carlson
                                       Title: Managing Director

                                       By:
                                          ------------------------------------
                                       Name:  Marc MacAluso
                                       Title: Senior Vice President

COLLATERAL AGENT:                      TCW ASSET MANAGEMENT COMPANY,
                                       a California corporation

                                       By:
                                          ------------------------------------
                                       Name:  Arthur R. Carlson
                                       Title: Managing Director

                                       By:
                                          ------------------------------------
                                       Name:  Marc MacAluso
                                       Title: Senior Vice President

                                       76
<PAGE>   81

                                   SCHEDULE 1

                               DISCLOSURE SCHEDULE

1.       Re: Article 4 of the Credit Agreement. The Form 10-Q of Tipperary
         Corporation for the Quarter Ended December 31, 1999, as well as its
         Annual Report on Form 10-K for the Fiscal Year Ended September 30,
         1999, copies of which have been delivered to the Agent, are
         incorporated herein by reference.

2.       Re: Section 4(m) of the Credit Agreement. Subsidiaries of Tipperary
         Corporation:

         Tipperary Oil & Gas Corporation, a Texas corporation - wholly owned;
         Burro Pipeline Corporation, a New Mexico corporation - wholly owned.

3.       Re: Section 4(o) of the Credit Agreement. In connection with the
         execution of the Loan Documents, the Borrower is obligated to pay a fee
         to Weisser, Johnson & Co. under an agreement with said company dated
         October 15, 1998. A copy of this agreement has been delivered to the
         Agent.

4.       Re: Section 4(v) of the Credit Agreement. Copies of all existing gas
         sales contracts of TOGA have been previously delivered to the Agent.

5.       Re: Section 4(v) of the Credit Agreement. A Gas Imbalance Schedule as
         of February, 2000 relating to the Comet Ridge Project has been
         delivered to the Agent.

6.       Re: Section 4(x) of the Credit Agreement. Tipperary Corporation has not
         filed tax returns in Australia for the fiscal years ended September 30,
         1996 and 1997. TOGA has not filed tax returns in Australia for the
         fiscal years ended September 30, 1998 and 1999.

<PAGE>   82

                                   SCHEDULE 2

                                     LENDERS

TCW DEBT AND ROYALTY FUND VI, L.P., a California limited partnership.

TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management Agreement dated as of October 27, 1997
between Delta Air Lines, Inc., TCW Asset Management Company and Trust Company of
the West.

LION II CUSTOM INVESTMENTS LLC.

LIFE INSURANCE COMPANY OF GEORGIA.

SECURITY LIFE OF DENVER INSURANCE COMPANY.

SOUTHLAND LIFE INSURANCE COMPANY.

TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management and Custody Agreement dated as of October
27, 1997 between University of Chicago, TCW Asset Management Company and Trust
Company of the West.

TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management and Custody Agreement dated as of October
27, 1997 between University of Notre Dame du Lac, TCW Asset Management Company
and Trust Company of the West.

TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management and Custody Agreement dated as of October
24, 1997 between William N. Pennington Separate Property Trust dated January 1,
1991, TCW Asset Management Company and Trust Company of the West.

<PAGE>   83

                                   SCHEDULE 3

                HOLDERS' INDIVIDUAL NOTE AMOUNTS/PRO RATA SHARES

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
                                                                    INITIAL
                                                                      NOTE          PRO RATA
                            HOLDER                                   AMOUNT          SHARE
=============================================================== ================== ==============
<S>                                                             <C>                <C>
TCW Debt and Royalty Fund VI, L.P., a California limited           $8,319,177.00        48.936335%
partnership
--------------------------------------------------------------- ------------------ --------------
TRUST COMPANY OF THE WEST, a California trust company, as          $2,849,033.00        16.759019%
Sub-Custodian for the Delta Master Trust dated May 27, 1982,
as amended, under the Sub-Custody Agreement and Power of
Attorney dated October 30, 1997
--------------------------------------------------------------- ------------------ --------------
LION II CUSTOM INVESTMENTS LLC                                       $267,447.00         1.573216%
--------------------------------------------------------------- ------------------ --------------
LIFE INSURANCE COMPANY OF GEORGIA                                    $133,724.00         0.786608%
--------------------------------------------------------------- ------------------ --------------
SECURITY LIFE OF DENVER INSURANCE COMPANY                            $668,617.00         3.933041%
--------------------------------------------------------------- ------------------ --------------
SOUTHLAND LIFE INSURANCE COMPANY                                     $267,447.00         1.573217%
--------------------------------------------------------------- ------------------ --------------
TRUST COMPANY OF THE WEST, a California trust company, as          $1,139,613.00         6.703607%
Custodian for the University of Chicago
--------------------------------------------------------------- ------------------ --------------
TRUST COMPANY OF THE WEST, a California trust company, as            $505,909.00         2.975937%
Custodian for the University of Notre Dame du Lac
--------------------------------------------------------------- ------------------ --------------
TRUST COMPANY OF THE WEST, a California trust company, as          $2,849,033.00        16.759019%
Custodian for William N. Pennington Separate Property Trust
dated January 1, 1991
=============================================================== ================== ==============
TOTAL                                                             $17,000,000.00       100.000000%
--------------------------------------------------------------- ------------------ --------------
</TABLE>

<PAGE>   84

                                   SCHEDULE 4

                                SECURITY SCHEDULE

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                 WHERE           TIMING
      PARTY                     COLLATERAL                        INSTRUMENT(S)                  FILED          REQUIREMENT
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
<S>                <C>                                   <C>                               <C>              <C>
Borrower           o    All interests in TOGA            o    Borrower Pledge and
                   o    All interests in TOGC to              Security Agreement
                        the extent related to TOGA       o    UCC-1 Financing
                   o    Any Inter-company Debt                Statement                         Texas,
                        owed by TOGC or TOGA to                                                 Colorado
                        Borrower
                   o    All rights, claims and
                        interests in the Tri-Star
                        Litigation
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
                   o    All funds received from          o    Borrower-TOGA
                        TOGA or TOGC in Borrower-TOGC         Collateral Account
                        Collateral Account                    Agreement
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
TOGC               o    Capital Stock of TOGA            o    TOGC Pledge and
                   o    Inter-company Debt owed               Security Agreement
                        from TOGA                        o    UCC-1 Financing                   Texas,
                   o    All other interests in TOGA           Statement                         Colorado
                   o    All rights, claims and
                        interests in the Tri-Star
                        Litigation
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
                   o    All funds received from          o    Borrower-TOGA
                        TOGA in Borrower-TOGC                 Collateral Account
                        Collateral Account                    Agreement
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
Guarantor          o    All rights, claims and           o    TOGA Security Agreement
                        interest under Project JOA and   o    UCC-1 Form                        Texas,
                        in the Tri-Star Litigation                                              Colorado
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
                   o    Participant Loans                o    Assignment by way of              Queensland
                                                              Australian Mortgage
                                                              Document
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
                   o    All assets of TOGA               o    Australian Fixed and              Queensland
                        including all interests in            Floating Charge Document
                        ATPs and Leases
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
                   o    All funds  in the TOGA           o    TOGA Dollar Collateral
                        Dollar Collateral Account             Account Agreement
------------------ ------------------------------------- ---------------------------------- ---------------- ------------------
                   o    All funds in the TOGA            o    TOGA Australian
                        Australian Collateral Account         Collateral Account Agreement
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   85

                                   SCHEDULE 5

                                PAYMENT ACCOUNTS

I.       PRINCIPAL AND COUPON INTEREST PAYMENTS

         All payments on account of the Notes shall be made by wire transfer of
         immediately available funds for credit to:

                  Investors Bank & Trust Company
                  ABA #:  011001438
                  F/C Client Funds No. 569530395
                  Attention:  Peter Maescher
                  Account #:  76T02327-4
                  TCW Debt & Royalty Funds VI

II.      YIELD ADJUSTMENT PAYMENT/PREPAYMENT PREMIUM

                  Investors Bank & Trust Company
                  ABA #:  011001438
                  F/C Client Funds No. 569530395
                  Attention:  Peter Maescher
                  Account #:  76T02327-4
                  TCW Debt & Royalty Funds VI

III.     EXPENSE REIMBURSEMENT/PAYMENT AND OTHER EXPENSES

                  Bank of America
                  Los Angeles, CA
                  AC #:  49575-02303
                  Benefit:  TAMCO
                  ABA #:  121000358

<PAGE>   86

                                   SCHEDULE 6

                                    INSURANCE

(1)      Borrower, TOGC and TOGA shall procure at their own expense and maintain
         in full force and effect at all times on and after the Initial Funding
         Date, (except for insurance required by 1(h), which shall be in effect
         as set forth in the Credit Agreement) and continuing throughout the
         term of the Credit Agreement, insurance policies with responsible
         insurance companies authorized to do business in Queensland, Australia
         (if required by law or regulation) with a Best Insurance Reports rating
         of "A-" or better and a financial size category of "IX" or higher, or
         if not rated by Best, a Standard & Poors claims paying ability rating
         of BBB+ or higher (and other companies acceptable to Agent), with
         limits and coverage provisions sufficient to satisfy the requirements
         set forth in each of the Project Documents, but in no event less than
         the limits and coverage provisions set forth below:

         (a)      Employer's Liability Insurance: Employer's liability insurance
                  with a $500,000 minimum limit per accident. A maximum
                  deductible or self-insured retention of $25,000 per occurrence
                  shall be allowed.

         (b)      General Liability Insurance: Liability insurance on an
                  occurrence basis against claims for personal injury (including
                  bodily injury and death) and property damage. Such insurance
                  shall provide coverage for products-completed operations,
                  blanket contractual, broad form property damage, personal
                  injury insurance, and sudden and accidental pollution
                  liability with a $1,000,000 minimum limit per occurrence for
                  combined bodily injury and property damage provided that
                  policy aggregates, if any, shall apply separately to claims
                  occurring with respect to the Project. A maximum deductible or
                  self-insured retention of $25,000 per occurrence shall be
                  allowed.

         (c)      Automobile Liability Insurance. Automobile liability insurance
                  against claims for personal injury (including bodily injury
                  and death) and property damage covering all owned, leased
                  non-owned and hired motor vehicles, including loading and
                  unloading, with a $1,000,000 minimum limit per occurrence for
                  combined bodily injury and property damage and containing
                  appropriate no-fault insurance provisions wherever applicable.
                  A maximum deductible or self-insured retention of $25,000 per
                  occurrence shall be allowed.

         (d)      Excess Insurance: Excess liability insurance on an occurrence
                  basis (with coverage at least as broad as the coverage under
                  all primary policies) covering claims in excess of the
                  underlying insurance described in the foregoing

<PAGE>   87

                  subsections (b), (c) and (d), with a $10,000,000 minimum limit
                  per occurrence, provided that aggregate limits of liability,
                  if any, shall apply separately to claims occurring with
                  respect to the Project.

                  The amounts of insurance required in the foregoing subsections
                  (a), (b), (c) and this subsection (d) may be satisfied by
                  Borrower purchasing coverage in the amounts specified or by
                  any combination of primary and excess insurance, so long as
                  the total amount of insurance meets the requirements specified
                  above.

         (e)      Aircraft Insurance: If the performance of any of the Project
                  Documents requires the use of any aircraft that is owned,
                  leased or chartered by Borrower, aircraft liability insurance
                  with a $25,000,000 minimum limit per occurrence for combined
                  property damage and bodily injury, including passengers and
                  crew.

         (f)      Physical Damage Insurance: Property damage insurance on an
                  "all risk" basis, boiler and machinery insurance on a
                  comprehensive basis (covering all production machinery,
                  including but not limited to pressure vessels, reciprocating
                  engines, generators, transformers and other related equipment,
                  motors, air tanks, machinery, pressure piping or any other
                  similar objects) including coverage against damage or loss
                  caused by earth movement (including but not limited to
                  earthquake, landslide, subsidence and volcanic eruption),
                  sabotage, terrorism and flood and providing coverage for (1)
                  the Project (excluding power transmission lines and towers) in
                  a minimum aggregate amount equal to the "required insured
                  value" of the Project, (2) transit including ocean marine
                  transit, if applicable, with sub-limits sufficient to insure
                  the full replacement value of the property or equipment prior
                  to its being removed from the Project and while located away
                  from the Project, (3) foundations and other property below the
                  surface of the ground, and (4) attorneys fees, engineering and
                  other consulting costs, and permit fees directly incurred in
                  order to repair or replace damaged insured property in a
                  minimum amount of $1,000,000. For purposes of this Section
                  (f), "required insured value" shall mean not less than 75% of
                  the full replacement value of the Project, including any
                  improvements, equipment, spare parts, fuel and supplies,
                  without deduction for physical depreciation and/or
                  obsolescence; all such insurance may have deductibles of not
                  greater than $100,000 per occurrence. Such insurance shall (5)
                  not include any coinsurance provision, (6) provide for
                  increased cost of construction and loss to undamaged property
                  as the result of enforcement of building laws or ordinances
                  with sub-limits not less than 10% of the "full insurable
                  value" of the Project, and (7) include debris removal with
                  sub-limits not less than $500,000 or 25% of the loss,
                  whichever is greater. The earth movement and flood coverage
                  may be insured with a sublimit not less than 100% of the "full
                  insurable value" of the Project plus 100% of the business
                  income amount required by Section (g) below. The sabotage and
                  terrorism coverage may be insured with a sub-limit not less
                  than 50% of the "full insurable value" of the Project plus 50%
                  of the business income amount required by Section (g) below.
                  The property damage coverage shall not contain an exclusion
                  for freezing, mechanical breakdown, loss or damage covered
                  under any guarantee or warranty, or resultant damage caused by
                  faulty workmanship, design or materials.

                                       2
<PAGE>   88

                  If the insurance company providing the physical damage
                  insurance is different from the company providing the boiler &
                  machinery insurance required in this Section, then a joint
                  loss agreement between them will be required and included as
                  part of the respective policies.

         (g)      Business Interruption Insurance: Business Interruption
                  insurance covering 100% of continuing normal operating
                  expenses including payroll and debt service of the Project for
                  a period of twelve (12) months, arising from loss required to
                  be insured by Section (B)(2)(a) above. The maximum deductible
                  shall be no greater than thirty (30) days per occurrence. Such
                  insurance shall also include, (1) an indemnity period of not
                  less than fifteen (15) months and (2) extra expenses (defined
                  as extraordinary expenses incurred after an insured loss to
                  make temporary repairs and expedite the permanent repair of
                  the damaged property in excess of the business interruption
                  even if such expense does not reduce the business interruption
                  loss) in an amount not less than $1,000,000. Such insurance
                  shall not contain any coinsurance clause or include a waiver
                  of such clause.

                  Notwithstanding Subsections (f) and (g) above, if under the
                  applicable Governmental Approvals or Project Documents,
                  Borrower is not obligated to restore the Project in the event
                  of a casualty such that Borrower can apply the Casualty
                  Proceeds against the Obligations, Borrower shall not be
                  required to maintain the insurance described in Subsection (f)
                  above in an amount greater than the sum of (i) the
                  then-outstanding principal balance of the Notes, plus (ii) all
                  accrued and unpaid interest thereon, plus (iii) an amount
                  equal to the total interest payable on the Notes during the
                  succeeding six (6) months.

         (h)      Contractual Liability Insurance. Contractual liability
                  insurance against claims arising from or in connection with
                  Borrower's indemnity obligation to Indemnitees under the Loan
                  Documents including without limitation with respect to third
                  party claims with a $5,000,000 minimum limit.

(2)      Endorsements: All policies of insurance to be maintained by Borrower
         shall provide for waivers of subrogation in favor of the Holders,
         Agent, and Collateral Agent, their Affiliates, and all of their
         respective directors, officers and employees (and such other Persons as
         may be required by the Project Documents). All policies of liability
         insurance required to be maintained by Borrower under Section (1)
         above, other than employer's liability, shall be endorsed as follows:

         (a)      To provide a severability of interest or cross liability
                  clause.

         (b)      That the insurance shall be primary and not excess to or
                  contributing with any insurance or self-insurance maintained
                  by the Holders, Agent, or Collateral Agent, and their
                  Affiliates.

                                       3
<PAGE>   89

         (c)      To name the Holders, Agent, and Collateral Agent, their
                  Affiliates, and all of their respective officers and employees
                  (and such other persons as may be required by the Project
                  Documents) as additional insureds.

         (d)      To name Borrower and its officers and employees as a named
                  insured.

(3)      Waiver of Subrogation: Borrower hereby waives any and every claim for
         recovery from Holders, Agent, or Collateral Agent, and their
         Affiliates, and all of their officers, directors, employees,
         contractors, and agents, for any and all loss or damage covered by any
         of the insurance policies to be maintained under the Credit Agreement
         to the extent that such loss or damage is recovered under any such
         policy. Inasmuch as the foregoing waiver will preclude the assignment
         of any such claim to the extent of such recovery, by subrogation (or
         otherwise), to an insurance company (or other person), Borrower shall
         give written notice of the terms of such waiver to each insurance
         company which has issued, or which may issue in the future, any such
         policy of insurance (if such notice is required by the insurance
         policy) and shall cause each such insurance policy to be properly
         endorsed by the issuer thereof to, or to otherwise contain one or more
         provisions that, prevent the invalidation of the insurance coverage
         provided thereby by reason of such waiver.

(4)      Amendment of Requirements: Agent or Collateral Agent may at any time
         amend the requirements and approved insurance companies of this
         Schedule 7 due to (i) new information not known by Agent or Collateral
         Agent on the date hereof or (ii) changed circumstances after the date
         hereof which in the reasonable judgment of Agent or Collateral Agent
         either renders such coverage materially inadequate or materially
         reduces the financial ability of the approved insurance companies to
         pay claims.

         In the event any insurance (including the limits or deductibles
         thereof) hereby required to be maintained shall not be reasonably
         available and commercially feasible in the commercial insurance market,
         Agent shall not unreasonably withhold its agreement to waive such
         requirement to the extent the maintenance thereof is not so available;
         provided, however, that (i) Borrower shall first request any such
         waiver in writing, which request shall be accompanied by written
         reports prepared by two independent insurance advisors of recognized
         national standing (one of which may be the Borrower's insurance advisor
         and one of which may be Agent's insurance advisor), certifying that
         such insurance is not reasonably available and commercially feasible in
         the commercial insurance market for oil, gas and hydrocarbon producing
         facilities of similar type, location and capacity (and, in any case
         where the required amount is not so available, certifying as to the
         maximum amount which is so available) and explaining in detail the
         basis for such conclusions; (ii) at any time after the granting of any
         such waiver, but not more often than once a year, Agent may request,
         and Borrower shall furnish to Agent within fifteen (15) days after such
         request, supplemental reports reasonably acceptable to Agent from such
         independent insurance broker or an insurance consultant updating their
         prior reports and reaffirming such conclusion; and (iii) any such
         waiver shall be effective only so long as such insurance shall not be
         reasonably available and commercially

                                       4
<PAGE>   90

         feasible in the commercial insurance market, it being understood that
         the failure of Borrower to timely furnish any such supplement report
         shall be conclusive evidence that such waiver is no longer effective
         because such condition no longer exists, but that such failure is not
         the only way to establish such non-existence. The failure at any time
         to satisfy the condition to any waiver of an insurance requirement set
         forth in the proviso to the preceding sentence shall not impair or be
         construed as a relinquishment of Borrower's ability to obtain a waiver
         of an insurance requirement pursuant to the preceding sentence at any
         other time upon satisfaction of such conditions.

(5)      Application of Proceeds:

         (a)      The insurance required by Sections (1)(f) and (g) of this
                  Schedule 7 (the "CASUALTY INSURANCE"), shall (except as
                  provided below) be payable to Agent and Collateral Agent, and
                  Borrower hereby authorizes and directs any affected insurance
                  company to make payment of such proceeds directly to Agent
                  and/or Collateral Agent. If Borrower receives any proceeds of
                  such Casualty Insurance, Borrower (i) shall promptly deposit
                  such proceeds into a segregated account (the "RESTORATION
                  ACCOUNT") in which Collateral Agent shall have a perfected
                  security interest; (ii) to the extent relating to damage or
                  destruction of the Project, such proceeds shall be available
                  for repair or reconstruction as provided in Section (c) below;
                  and (iii) such proceeds so deposited or received directly by
                  Collateral Agent shall be the "CASUALTY PROCEEDS."

         (b)      Borrower is hereby authorized and empowered by Agent to
                  settle, adjust or compromise any and all Casualty Insurance
                  claims in the aggregate amount of $500,000 or less; provided,
                  however, that no Event of Default has occurred and is
                  outstanding. The mutual written agreement of Borrower and
                  Agent shall be required to settle, adjust or compromise any
                  and all Casualty Insurance claims in the aggregate amount of
                  greater than $500,000; provided, however, that no Event of
                  Default has occurred and is outstanding. Collateral Agent is
                  hereby authorized and empowered by Borrower to settle, adjust
                  or compromise any and all claims for loss, damage and
                  destruction under any policy or policies of insurance at any
                  time an Event of Default has occurred and is outstanding.

         (c)      In the event of any damage or destruction of the Project that
                  is insured by the Casualty Insurance (other than business
                  interruption or delayed startup insurance), then, except as
                  provided in Section (4) below, Collateral Agent shall disburse
                  to Borrower from such separate account loss proceeds remaining
                  after deduction of all expenses of collection and settlement
                  thereof, including, without limitation, attorneys' and
                  adjustors' fees and expenses, to pay or reimburse the payment
                  of costs of the restoration of the Project but only as repairs
                  or replacements are effected in a diligent manner with
                  contractors and pursuant to lump-sum contracts reasonably
                  acceptable to Collateral Agent (which contracts shall provide
                  for not less than 5% retainage). If the cost of the
                  restoration, as reasonably determined by Collateral Agent, is
                  less than $500,000, then Collateral Agent shall, except as

                                       5
<PAGE>   91

                  provided in Section (4)(a) below, pay upon receipt thereof the
                  Casualty Insurance proceeds to Borrower in one lump sum to
                  apply to the restoration of the Project to its condition
                  existing prior to the casualty ("RESTORATION").

         (d)

                  (i)      If (i) an Event of Default occurs, (ii) Borrower
                           notifies Agent or Collateral Agent to apply the
                           Casualty Insurance proceeds against the Obligations,
                           or (iii) Agent or Collateral Agent reasonably
                           determines that (A) the proceeds of the insurance are
                           not adequate in amount to complete the Restoration
                           and Borrower has not provided adequate security or
                           other commitments acceptable to Agent in its sole
                           discretion to cover any such deficiency in Casualty
                           Insurance proceeds or (B) the Restoration cannot be
                           achieved due to the unavailability of Governmental
                           Approvals, then Agent and Collateral Agent shall not
                           be obligated to make any further disbursements
                           pursuant to the Loan Documents and Collateral Agent
                           shall apply all Casualty Insurance loss proceeds,
                           after deductions as herein provided, to the repayment
                           of the outstanding balance of the Notes, together
                           with all accrued interest thereon, notwithstanding
                           that the outstanding balance may not be due and
                           payable.

                  (ii)     Without limiting the provisions of Section (c) above,
                           Collateral Agent shall disburse Casualty Proceeds
                           subject to the following conditions:

                           (A)      the contracts, contractors, plans and
                                    specifications for the Restoration shall
                                    have been approved in advance by Collateral
                                    Agent, which approval shall not be
                                    unreasonably withheld or delayed, and Agent
                                    shall be provided with satisfactory proof
                                    that any subordinate lienholder has
                                    consented to the Restoration and has agreed
                                    to make any Casualty Proceeds it is entitled
                                    to available for such Restoration;

                           (B)      such Restoration is then allowed by
                                    applicable Governmental Rules, and all
                                    necessary Governmental Approvals for the
                                    commencement of construction shall have been
                                    obtained or shall be obtained as required to
                                    complete the Restoration in a timely manner;

                           (C)      the net Casualty Proceeds received by
                                    Borrower from time to time plus any
                                    deficiency funded by Borrower shall be
                                    deposited with Agent in the Restoration
                                    Account;

                           (D)      at the time of any disbursement from the
                                    Restoration Account, no Event of Default
                                    shall have occurred since the date of the
                                    casualty;

                                       6
<PAGE>   92

                           (E)      disbursement from the Restoration Account
                                    shall be made by Agent to Borrower in an
                                    amount not exceeding the cost of the work
                                    completed since the date of the last
                                    disbursement, net of retainage provided
                                    under the applicable contracts, within 10
                                    Business Days after receipt by Agent of
                                    reasonably satisfactory evidence of the
                                    stage of completion and of performance of
                                    the work in a good and workmanlike manner in
                                    accordance with the contracts, plans and
                                    specifications; provided that Borrower may
                                    not make requisitions more often than
                                    monthly; and

                           (F)      Notwithstanding anything in this Section
                                    (5)(d) to the contrary, if at any time
                                    during the course of Restoration a
                                    deficiency has been identified in the amount
                                    available for Restoration, no further
                                    disbursements shall be made from the
                                    Restoration Account until Collateral Agent
                                    receives either payment of such deficiency
                                    or commitment to fund such deficiency
                                    acceptable to Collateral Agent in its sole
                                    discretion. All Casualty Proceeds, if any,
                                    remaining in the Restoration Account after
                                    completion of Restoration shall be applied
                                    by Agent to the reduction of the
                                    Obligations.

         (e)      Borrower shall promptly notify Agent of any loss in excess of
                  $100,000 covered by any Casualty Insurance.

(6)      Conditions:

         (1)      All policies of insurance required to be maintained pursuant
                  to this Schedule 6 shall be endorsed such that if at any time
                  such policies are canceled, or coverage be reduced which
                  affects the interests of the Holders, Agent, and/or Collateral
                  Agent, such cancellation or reduction shall not be effective
                  as to the Holders, Agent, or Collateral Agent for forty-five
                  (45) days, except for non-payment of premium which shall be
                  for ten (10) days, after receipt by Agent of written notice
                  from such insurer of such cancellation or reduction.

         (2)      All policies of insurance required to be maintained pursuant
                  to Sections (1)(f) and (g) shall not include any annual or
                  term aggregate limits of liability or clause requiring the
                  payment of additional premium to reinstate the limits after
                  loss except as regards the insurance applicable to the perils
                  of flood, earth movement, sabotage and terrorism.

(7)      Evidence of Insurance: On the Initial Funding Date and on an annual
         basis at least ten (10) days prior to each policy anniversary, Borrower
         shall furnish Agent with (1) approved certification of all required
         insurance and (2) a schedule of the insurance policies held by or for
         the benefit of Borrower and required to be in force by the provisions
         of this Schedule 6. Such certification shall be executed by each
         insurer or by

                                       7
<PAGE>   93

         an authorized representative of each insurer where it is not practical
         for such insurer to execute the certificate itself. Such certification
         shall identify underwriters, the type of insurance, the insurance
         limits and the policy term and shall specifically list the special
         provisions enumerated for such insurance required by this Schedule 6.
         Upon request, Borrower will promptly furnish Agent with copies of all
         insurance policies, binders and cover notes or other evidence of such
         insurance relating to the insurance required to be maintained by
         Borrower. The schedule of insurance shall include the name of the
         insurance company, policy number, type of insurance, major limits of
         liability and expiration date of the insurance policies.

(8)      Reports: Concurrently with the furnishing of the certification referred
         to in this Section (8), Borrower shall furnish Agent with a report of
         an independent broker, signed by an officer of the broker, stating that
         in the opinion of such broker, the insurance then carried or to be
         renewed is in accordance with the terms of this Schedule 6, and
         attaching an updated copy of the schedule of insurance required by this
         Section (8) above. In addition, Borrower will advise Agent in writing
         promptly of any default in the payment of any premium and of any other
         act or omission on the part of Borrower which may invalidate or render
         unenforceable, in whole or in part, any insurance being maintained by
         Borrower pursuant to this Schedule 6.

(9)      Failure to Maintain Insurance: In the event Borrower fails, or fails to
         cause the contractors or the Operator, to take out or maintain the full
         insurance coverage required by this Schedule 6, Agent, upon thirty (30)
         days' prior notice (unless the aforementioned insurance would lapse
         within such period, in which event notice should be given as soon as
         reasonably possible) to Borrower of any such failure, may (but shall
         not be obligated to) take out the required policies of insurance and
         pay the premiums on the same. All amounts so advanced thereof by Agent
         shall become an additional obligation of Borrower to Agent, and
         Borrower shall forthwith pay such amounts to Collateral Agent, together
         with interest thereon at the Late Payment Rate from the date so
         advanced.

(10)     No Duty to Verify or Review: No provision of this Schedule 6 or any
         provision of the Credit Agreement or any Project Document shall impose
         on the Holders, Agent, or Collateral Agent any duty or obligation to
         verify the existence or adequacy of the insurance coverage maintained
         by Borrower, nor shall any of the Holders, Agent, or Collateral Agent
         be responsible for any representations or warranties made by or on
         behalf of Borrower to any insurance company or underwriter. Any failure
         on the part of the Holders, Agent, or Collateral Agent to pursue or
         obtain the evidence of insurance required by the Credit Agreement from
         Borrower and/or failure of the Holders, Agent, or Collateral Agent to
         point out any non-compliance of such evidence of insurance shall not
         constitute a waiver of any of the insurance requirements in the Credit
         Agreement.

(11)     Maintenance of Insurance: Borrower shall at all times maintain the
         insurance coverage required of it under the terms of the Project
         Documents.

                                       8
<PAGE>   94

                                    EXHIBIT A

                           AUSTRALIAN CHARGE DOCUMENT

<PAGE>   95

                                    EXHIBIT B

                          COLLATERAL ACCOUNT AGREEMENT

<PAGE>   96

                                    EXHIBIT C

                               GUARANTEE AGREEMENT

<PAGE>   97

                                    EXHIBIT D

                        TC PLEDGE AND SECURITY AGREEMENT

<PAGE>   98

                                    EXHIBIT E

                                ROYALTY AGREEMENT

<PAGE>   99

                                    EXHIBIT F

                               SECURITY AGREEMENT

<PAGE>   100

                                    EXHIBIT G

                          SLOUGH STOCK PLEDGE AGREEMENT

<PAGE>   101

                                    EXHIBIT H

                             SUBORDINATION AGREEMENT

<PAGE>   102

                                    EXHIBIT I

                                  TOGA-BORROWER
                              MANAGEMENT AGREEMENT

<PAGE>   103

                                    EXHIBIT J

                             TOGC SECURITY AGREEMENT

<PAGE>   104

                                    EXHIBIT K

                         SENIOR SECURED PROMISSORY NOTE

$____________                                                 New York, New York
Note No. _______                                        Date:  April _____, 2000

                  FOR VALUE RECEIVED, the undersigned, TIPPERARY CORPORATION, a
Texas corporation ("PROMISOR"), hereby unconditionally promises to pay to the
order of _______________________________________________________________________
__________________________________________________, or assigns ("HOLDER"), the
principal sum of __________________AND 00/100 DOLLARS ($__________) (or so much
thereof as shall not have been repaid) on or before March 30, 2006. The
undersigned also promises to pay to the Holder hereof interest on the unpaid
principal hereof, at the rate set forth in and in accordance with that certain
Credit Agreement, dated as of even date herewith, among Promisor, TCW Asset
Management Company in the capacities described therein and the other parties
thereto (as amended, modified or restated from time to time, the "CREDIT
AGREEMENT"). All undefined capitalized terms used herein shall have the meaning
given in the Credit Agreement. Payments of principal and interest shall be
computed on the bases set forth in the Credit Agreement and shall be payable as
follows: (i) from and after the Initial Funding Date and until this Note is
repaid in full, Coupon Interest for each Calendar Quarter (or part thereof)
shall be payable quarterly on the Quarterly Payment Date, (ii) from and after
the Initial Amortization Date, principal shall be payable quarterly on the
Quarterly Payment Date in the amount equal to the Principal Payment for such
quarter set forth in the Credit Agreement, (iii) Late Payment Rate Interest
shall be payable immediately upon accrual, and (iv) the outstanding principal
balance shall be payable on the Maturity Date. Payments of principal and
interest are to be made in lawful money of the United States of America in
immediately available funds.

                  This Note is issued pursuant to the Credit Agreement and is
secured by and entitled to the benefits thereof. This Note is also secured by
certain of, and entitled to the benefits provided in, the other Loan Documents
(by the terms of which agreements the Holder hereof, by its acceptance hereof,
agrees to be bound), in each case to the extent provided in said agreements.

                  All principal under and interest on this Note shall be payable
without deduction or withholding for or on account of any present or future
taxes, duties, fees or other charges levied or imposed on this Note or the
Holder by the Commonwealth of Australia or any political subdivision or taxing
authority thereof or therein. If the Promisor is required by law to make any
such deduction or withholding, it will pay the Holder such additional amounts as
may be necessary so that every net payment of principal of and interest on the
Note received by the

<PAGE>   105

Holder will not be less than the amount provided in the Credit Agreement to be
then due and payable.

                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS,
AND TRANSFER OF THIS NOTE IS SUBJECT TO RESTRICTIONS SET FORTH IN THE CREDIT
AGREEMENT.

                  Subject to the terms and conditions set forth in the Credit
Agreement, upon surrender of this Note, duly endorsed, or accompanied by a
written instrument of transfer or assignment or request for reissuance, duly
executed by the registered Holder hereof or such Holder's attorney duly
authorized in writing, one or more new Notes for a like principal amount will be
issued to, and, at the option of the Holder, registered in the name of, such
Holder or the designated transferee(s) or assignee(s). Promisor may deem and
treat the person in whose name this Note is registered as the Holder and owner
hereof for the purpose of receiving payments and for all other purposes
whatsoever.

                  If an Event of Default shall occur and be continuing, the
principal of this Note may, under certain circumstances, become or be declared
due and payable in the manner and with the effect provided in the Credit
Agreement.

                  This Note shall be binding upon the successors and assigns of
the Promisor and shall inure to the benefit of the successors and assigns of the
Holder.

                  This Note shall be governed by and construed in accordance
with the laws of the State of New York, United States of America. Promisor
hereby submits to the nonexclusive jurisdiction of the state and federal courts
sitting in the State of New York and County of New York for the purposes of all
legal proceedings arising out of or relating to this Note or the transactions
contemplated hereby. Promisor irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.

                                              TIPPERARY CORPORATION, a Texas
                                              corporation

                                              By:
                                                 -------------------------------
                                                 Name:  David L. Bradshaw
                                                 Title: President

                                       2
<PAGE>   106

                                    EXHIBIT L

                        REQUEST FOR INITIAL LOAN ADVANCE

                  Reference is made to that certain Credit Agreement dated as of
April _____, 2000 (as from time to time amended), by and among TIPPERARY
CORPORATION, a Texas corporation ("BORROWER"), TIPPERARY OIL & GAS (AUSTRALIA)
PTY. LTD, a Queensland corporation ("TOGA"), and LENDERS that are party thereto,
TCW ASSET MANAGEMENT COMPANY, a California corporation ("TAMCO"), as Agent, and
TAMCO, as Collateral Agent. Terms which are defined in the Credit Agreement are
used herein with the meanings given them in the Credit Agreement.

                  Pursuant to the terms of the Credit Agreement, Borrower hereby
requests the Lenders to make an Initial Loan Advance to Borrower in the
principal amount of $6,000,000 and specifies [__________], as the date Borrower
desires for the Lenders to make such Initial Loan Advance and to deliver to
Borrower the proceeds thereof, by wire transfer to the following:

                  Tipperary Corporation

                  Acct #
                         ----------------------

                  [Bank]
                         ----------------------

                  [City, State]
                               ----------------

                  ABA #
                        -----------------------

                  To induce the Lenders to make such Initial Loan Advance,
Borrower hereby represents, warrants, acknowledges, and agrees that:

                  The officer of Borrower signing this instrument is the duly
         elected, qualified and acting officer of Borrower as indicated below
         such officer's signature hereby, having all necessary authority to act
         for Borrower in making the request herein contained.

                  All representations and warranties made by Borrower, TOGA, or
         each Related Person in any Loan Document are true and correct on and as
         of the date hereof as if such representations and warranties had been
         made as of the date hereof.

                  There does not exist on the date hereof any condition or event
         which constitutes a Default which has not been waived in writing by
         Collateral Agent, Agent and the Lenders; nor will any such Default
         exist upon Borrower's receipt and application of the Initial Loan
         Advance requested hereby. Borrower will use the Initial Loan Advance
         hereby requested in compliance with Section 2.4 of the Credit
         Agreement.

<PAGE>   107

                  Except to the extent waived in writing by Collateral Agent,
         Agent and the Lenders, Borrower, TOGA and each Related Person have
         performed and complied with all agreements and conditions required in
         the Loan Documents to be performed or complied with by it on or prior
         to the date hereof, and each of the conditions precedent to the Initial
         Loan Advance contained in the Credit Agreement shall be satisfied as of
         the date thereof.

                  The Loan Documents have not been modified, amended or
         supplemented by any unwritten representations or promises, by any
         course of dealing, or by any other means not provided for in the Credit
         Agreement.

                  The person signing this instrument hereby certifies, that, to
the best of [his] knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.

                  IN WITNESS WHEREOF, this instrument is executed as of April
_____, 2000.

                                         TIPPERARY CORPORATION, a Texas
                                         corporation

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

ACKNOWLEDGED:

TCW ASSET MANAGEMENT COMPANY, a
California corporation as Agent for the Lenders
party to the Credit Agreement

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

                                       2
<PAGE>   108

                                    EXHIBIT M

                       REQUEST FOR ADDITIONAL LOAN ADVANCE

                   Reference is made to that certain Credit Agreement dated as
of April _____, 2000 (as from time to time amended), by and among TIPPERARY
CORPORATION, a Colorado corporation ("BORROWER"), TIPPERARY OIL & GAS
(AUSTRALIA) PTY. LTD, a Queensland corporation ("TOGA"), and LENDERS that are
party thereto, TCW ASSET MANAGEMENT COMPANY, a California corporation ("TAMCO"),
as Agent, and TAMCO, as Collateral Agent. Terms which are defined in the Credit
Agreement are used herein with the meanings given them in the Credit Agreement.

                   Pursuant to the terms of the Credit Agreement, Borrower
hereby requests the Lenders to make an Additional Loan Advance to Borrower in
the principal amount of $________ and specifies [__________], as the date
Borrower desires for the Lenders to make such Additional Loan Advance and to
deliver to Borrower the proceeds thereof, by wire transfer to the following:

                  Tipperary Corporation

                  Acct #
                         ----------------------

                  [Bank]
                         ----------------------

                  [City, State]
                               ----------------

                  ABA #
                        -----------------------

                   To induce the Lenders to make such Additional Loan Advance,
Borrower hereby represents, warrants, acknowledges, and agrees that:

                  The officer of Borrower signing this instrument is the duly
         elected, qualified and acting officer of Borrower as indicated below
         such officer's signature hereby, having all necessary authority to act
         for Borrower in making the request herein contained.

                  All representations and warranties made by Borrower, TOGA, or
         each Related Person in any Loan Document are true and correct on and as
         of the date hereof as if such representations and warranties had been
         made as of the date hereof.

                  There does not exist on the date hereof any condition or event
         which constitutes a Default which has not been waived in writing by
         Collateral Agent, Agent and the

<PAGE>   109

         Lenders; nor will any such Default exist upon Borrower's receipt and
         application of the Additional Loan Advance requested hereby. Borrower
         will use the Additional Loan Advance hereby requested in compliance
         with Section 2.4 of the Credit Agreement.

                  Except to the extent waived in writing by Collateral Agent,
         Agent and the Lenders, Borrower, TOGA and each Related Person have
         performed and complied with all agreements and conditions required in
         the Loan Documents to be performed or complied with by it on or prior
         to the date hereof, and each of the conditions precedent to Additional
         Loan Advance contained in the Credit Agreement shall be satisfied as of
         the date thereof.

                  The Loan Documents have not been modified, amended or
         supplemented by any unwritten representations or promises, by any
         course of dealing, or by any other means not provided for in the Credit
         Agreement.

                       The person signing this instrument hereby certifies,
that, to the best of [his] knowledge after due inquiry, the above
representations, warranties, acknowledgements, and agreements of Borrower are
true, correct and complete.

                  IN WITNESS WHEREOF, this instrument is executed as of
_________, 2000.

                                         TIPPERARY CORPORATION, a Texas
                                         corporation

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

ACKNOWLEDGED:

TCW ASSET MANAGEMENT COMPANY, a
California corporation as Agent for the Lenders
party to the Credit Agreement

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

                                       2

<PAGE>   110

                                    EXHIBIT N

                        TERM SHEET FOR PARTICIPANT LOANS

<PAGE>   111

                                    EXHIBIT O

             FORM OF LETTER DIRECTING PAYMENT TO COLLATERAL ACCOUNT

              [TIPPERARY OIL & GAS (AUSTRALIA) PTY LTD LETTERHEAD]

[Purchaser Address]

Ladies and Gentlemen:

                  We hereby irrevocably authorize and direct you to make all
payments owed by you to us in connection with that certain Operating Agreement
dated May 15, 1992, as amended, among Tri-Star Petroleum Company, as operator,
and other parties thereto, or otherwise owned by you, payable to Tipperary Oil &
Gas (Australia) Pty Ltd and forward said payments directly by (i) mail to
[_____________________________________________________] or (ii) wire transfer to
[_____________________________________________]. The instructions set forth
herein are irrevocable and are not subject to modification in any manner unless
you are so notified in writing and said writing is executed by both TCW Asset
Management Company and the undersigned.

                                         Very truly yours,

                                         TIPPERARY OIL & GAS (AUSTRALIA) PTY LTD
                                         (ACN 077 536 871), a Queensland
                                         corporation

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

<PAGE>   112

                                    EXHIBIT P

                        OMNIBUS CERTIFICATE OF SECRETARY

                  I, _______________, do hereby certify that I am the duly
elected, qualified and acting Secretary of Tipperary Corporation, a Texas
corporation (the "BORROWER"), and that, in such capacity, I am authorized to
certify on behalf of the Borrower to TCW Asset Management Company, a California
corporation ("Tamco"), acting in the capacity of "COLLATERAL AGENT" and "AGENT,"
pursuant to that certain Credit Agreement dated as of April _____, 2000 (the
"CREDIT AGREEMENT"), by and among the Borrower, Tamco, in the capacities set
forth therein, and the other parties thereto that:

                  1. Attached hereto as Exhibit A are true, correct and complete
         copies of the Articles of Incorporation of the Borrower, and all
         amendments thereto, certified by the _______________, and as in effect
         on the date hereof.

                  2. Attached hereto as Exhibit B are true, correct and complete
         copies of the Bylaws of the Borrower, and all amendments thereto,
         certified by the _______________, and as in effect on the date hereof.

                  3. Attached hereto as Exhibit C are true, correct and complete
         copy of the unanimous written consent of the Board of Directors of the
         Borrower, approving the Loan Documents (as defined in the Credit
         Agreement) and the transactions contemplated in the Loan Documents,
         authorizing the execution, delivery and performance by the Borrower of
         the Loan Documents to which it is a party and the consummation of the
         transactions contemplated therein, which resolutions have not been
         revoked, modified, amended or rescinded and are still in full force and
         effect on the date hereof.

                  4. The below-named persons have been duly elected and
         qualified and on ____________, _____, were and at all time subsequent
         thereto, including the date hereof, have been officers of the Borrower,
         holding the offices indicated opposite their respective names, and the
         signatures set forth opposite their respective names are their genuine
         signatures.

<TABLE>
<CAPTION>
        Name                             Office                                Signature
        ----                             ------                                ---------
<S>                                      <C>                                   <C>
        ------------------               --------------------                  --------------------

        ------------------               --------------------                  --------------------
</TABLE>

<PAGE>   113

                  DATED AND EFFECTIVE as of this _____ day of April, 2000.

                                         TIPPERARY CORPORATION, a Texas
                                         corporation

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

                  The undersigned hereby certifies that _____________ who
executed the foregoing certificate is the duly elected ______________ of the
Borrower, and the signature set forth above his name is his genuine signature.

                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title: [President]

                                       2
<PAGE>   114

                                    EXHIBIT Q

                             COMPLIANCE CERTIFICATE

                  The undersigned, _____________________, the duly elected,
qualified and acting President of TIPPERARY CORPORATION, a Texas corporation,
hereby certifies to TRUST COMPANY OF THE WEST, a California trust company, TCW
ASSET MANAGEMENT COMPANY, a California corporation, and TCW DEBT AND ROYALTY
FUND VI, L.P., a California limited partnership, in connection with that certain
Credit Agreement dated as of April _____, 2000, by and among said aforementioned
parties, in the capacities set forth therein, and the other parties thereto
that:

                                    1. All representations and warranties made
                  by it in any Loan Document shall be true in all material
                  respects on and as of the date hereof (except to the extent
                  that the facts upon which such representations are based (i)
                  have been changed by the extension of credit hereunder and
                  (ii) are true and correct only when taken together with all
                  other representations and warranties thereof in any Loan
                  Document previously delivered) as if such representations and
                  warranties had been made as of the date hereof.

                                    2. No Default exists at the date hereof.

                                    3. No Material Adverse Effect as described
                  in Section 3.2(c) of the Credit Agreement has occurred since
                  the date of the Credit Agreement.

                                    4. It has performed and complied in all
                  material respects with all agreements and conditions required
                  in the Loan Documents to be performed or complied with by it
                  on or prior to the date hereof.

                  Capitalized terms used herein but not otherwise defined shall
have the meanings ascribed thereto in the Credit Agreement.

                  DATED AND EFFECTIVE as of this _____ day of April, 2000.

                                         TIPPERARY CORPORATION, a Texas
                                         corporation

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title: [President]

<PAGE>   115

                                   EXHIBIT R-1

                          OPINION OF AUSTRALIAN COUNSEL

<PAGE>   116

                                   EXHIBIT R-2

                           OPINION OF NEW YORK COUNSEL

<PAGE>   117

                                   EXHIBIT R-3

                            OPINION OF TEXAS COUNSEL

<PAGE>   118

                                    EXHIBIT S

                              COLLATERAL PROPERTIES

1.   PL 90 (Petroleum Lease)

     Principal Holder: Tri-Star Petroleum Company
     Location: Fairview Field

2.   PL 91 (Petroleum Lease)

     Principal Holder: Tri-Star Petroleum Company
     Location: Fairview Field

3.   PL 92 (Petroleum Lease)

     Principal Holder: Tri-Star Petroleum Company
     Location: Fairview Field

4.   PL 99 (Petroleum Lease)

     Principal Holder: Tri-Star Petroleum Company
     Location: Fairview South Extended

5.   PL 100 (Petroleum Lease)

     Principal Holder:  Tri-Star Petroleum Company
     Location:  Fairview Field

6.   ATP 526 (Authority to Prospect)

     Principal Holder: Tri-Star Petroleum Company
     Location: North east of Injune (Bowen/Surat Basins)

7.   ATP 655 (Authority to Prospect)

     Principal Holder: Tipperary Corporation
     Location: Surrounding Injune (Bowen/Surat Basins)

8.   ATP 675 (Authority to Prospect)

     Principal Holder: Tipperary Corporation
     Location: North west of Injune (Bowen/Surat Basins)

<PAGE>   119

OPERATING AGREEMENT between Tri-Star Petroleum Company, Tipperary Oil & Gas
(Australia) Pty Ltd and the Comet Ridge Participants dated May 15, 1992, as
amended from time to time.

                                       -2-

<PAGE>   120

                                    EXHIBIT T

                         SUPPLEMENT TO ROYALTY AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00014-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00014-of-00352.parquet"}]]